Groupon Soars on Surprise Profit - Is Giftify the Next Gift Card Marketplace Ready to Deliver?

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With Groupon shares hitting a three-year high, investors may want to consider this smaller alternative in the gift card marketplace space

Groupon Delivers Unexpected Profits, Stock Skyrockets

Groupon (GRPN) shares surged as much as 34.6% on Thursday, reaching a three-year high of $22.85 following the company's unexpectedly strong first-quarter 2025 results. The Chicago-based e-commerce platform, known for connecting consumers with local businesses and deals, reported a profit of $0.17 per share, stunning analysts who had projected a loss of $0.10 per share.

Revenue for the quarter came in at $117.19 million, surpassing the consensus estimate of $115.67 million. While global revenue declined 5% year-over-year, the company showed impressive growth in key segments, with North America Local billings up 11% - marking the first double-digit growth in this segment since 2017.

"With North America Local Billings accelerating to double-digit growth and our local marketplace strategy showing green shoots across geographies and verticals, we are building momentum and expect to continue to accelerate our growth," stated Dusan Senkypl, Chief Executive Officer of Groupon, in the company's earnings release.

The market's enthusiastic reaction highlights the potential of gift card and local deal marketplaces even amid economic uncertainty. In fact, analysts suggest Groupon has been reinvigorated as consumers seek out deals amid inflation concerns, with its platform largely immune to import tariffs and trade barriers due to its local focus. These same favorable market dynamics directly apply to Giftify's business model as well, with its CardCash and Restaurant.com platforms positioned to benefit from identical consumer spending trends.

Based on this performance, Groupon raised its 2025 billings growth guidance from 2-4% to 3-5%, while maintaining its revenue outlook of $493-500 million and adjusted EBITDA target of $70-75 million.

Is Giftify the Next Gift Card Marketplace Ready to Break Out?

While Groupon enjoys its moment in the spotlight, retail investors seeking opportunities in the same sector might want to consider Giftify, Inc. (GIFT), a smaller but growing player in the gift card marketplace space that could offer significant upside potential.

Business Model and Strategic Position

Giftify operates two complementary platforms: CardCash.com and Restaurant.com. CardCash.com serves as a secondary gift card marketplace where consumers can buy discounted gift cards from over 1,100 retailers including major brands like Target, Home Depot, Starbucks, and TJ Maxx. The platform also allows consumers to sell unwanted gift cards for cash, creating a comprehensive marketplace.

Restaurant.com, the company's other division, offers discount certificates for 10,000 restaurants and discount dining passes for 170,000 restaurants and retailers nationwide. This dual business model gives Giftify exposure to both retail and dining sectors, potentially providing greater stability than single-focus competitors.

Recent Strategic Developments

Giftify has been executing a focused growth strategy throughout early 2025:

1. Vertical Market Expansion - The company has strategically expanded into high-margin sectors including:
   • Pharmacy and healthcare, offering savings on high-cost GLP-1 medications through discounted CVS and Walgreens gift cards
   • Sports merchandise and ticketing, providing discounts on tickets and fan gear from major retailers ahead of the MLB season
   • Travel, partnering with brands like Carnival Cruise, Royal Caribbean, Hilton Hotels, and American Airlines
   • Grocery, helping consumers offset rising egg and food prices with discounted gift cards for major supermarket chains
2. White Label Partnerships - CardCash powers CVS's gift card exchange program, now entering its second year, demonstrating the scalability of its technology platform
3. AI Implementation - The company has deployed enterprise AI solutions to enhance operational efficiencies, optimize marketing campaigns, improve customer service response times, and enable data-driven decision making
4. Leadership Expansion - Giftify strengthened its management team with the addition of experienced executives, including CFO Steve Handy in August 2024

Giftify Reports Q1 Growth, Showing Similar Market Momentum

Giftify recently reported its first quarter 2025 financial results, delivering 3.5% revenue growth to $22.3 million and a 10% increase in gross profit to $3.6 million compared to the prior year period. The company also improved its gross margin to 16.1% from 15.1% year-over-year.

"Our first quarter results demonstrate solid execution against our growth strategy," said Ketan Thakker, CEO of Giftify, in the company's earnings release. "Our strategic initiatives are gaining traction even in this challenging economic environment, positioning us well for continued improvement throughout 2025."

Like Groupon, Giftify is benefiting from increased consumer focus on value and savings. Several positive indicators suggest continued momentum in 2025:

• The company recently reported a substantial week-over-week increase in pharmacy retailer gift card volume following its healthcare savings initiative
• Current NBA and NHL playoff seasons have driven increased transaction volume, with the company noting a 21% increase in unique customers and 13% rise in order volume during these periods
• Strategic AI implementation across operations is driving measurable efficiencies and cost reductions

These developments support Giftify's targeted growth in high-margin vertical markets including pharmacy savings, sports merchandise, and travel services.

Why Giftify Looks Attractive if You Like Groupon

If Groupon's surprise performance has caught your attention, Giftify offers several compelling reasons to consider adding it to your watchlist:

1. Similar Business Model with Greater Diversification - While Groupon focuses primarily on local deals, Giftify offers both gift card exchange (CardCash) and restaurant deals (Restaurant.com), potentially providing more resilience across different economic conditions
2. Ground-Floor Growth Opportunity - With a significantly smaller market capitalization than Groupon, Giftify offers investors the chance to participate in potential growth at an earlier stage, possibly leading to greater percentage returns
3. Strategic Expansion into High-Margin Verticals - Giftify's targeted moves into healthcare savings, sports merchandise, travel, and grocery demonstrate management's ability to identify and capitalize on high-growth opportunities
4. Inflation-Resistant Business Model - Like Groupon, Giftify's platforms become more valuable to consumers during inflationary periods as shoppers seek savings, creating a counter-cyclical aspect to the investment thesis
5. Technology Advantage - Giftify's implementation of AI across its operations may provide efficiency advantages and scaling capabilities that could translate to improved margins over time
6. White Label Potential - The CVS partnership demonstrates Giftify's ability to power gift card exchanges for major retailers, opening additional revenue streams beyond direct consumer transactions

The Bottom Line

Groupon's dramatic post-earnings surge demonstrates investor appetite for companies that can help consumers save money in an inflationary environment. For investors who like Groupon's fundamental business thesis but want to explore a smaller, potentially higher-growth alternative in the same sector, Giftify offers many of the same inflation-resistant characteristics with additional diversification benefits.

With its dual-platform approach, expansion into multiple high-value verticals, and ongoing technology improvements, Giftify appears well-positioned to capitalize on the same consumer spending trends driving Groupon's success. With its just-announced Q1 2025 results showing improved margins and strategic growth initiatives gaining traction, now might be an opportune time for growth-oriented investors to evaluate this smaller player in the gift card and local deals marketplace.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always conduct your own research and consult with a financial advisor before making investment decisions.

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