Groupon Adjusts its IPO Filing, Looks Less Rosey
Remember Groupon’s IPO filing from early June? It was a pretty bold statement, claiming the company made $60.6 million in 2010 and a whopping $81.6 million in the first quarter of 2011. However, the company took criticism as their numbers relied on something called “adjusted consolidated segment operating income” or ACSOI, which effectively removed the huge costs Groupon incurred to build up its user base.
Yesterday, Groupon released an updated IPO filing, sans ACSOI, which revealed that the company ran a $420 million loss in 2010 and an additional $117.1 million loss for the first quarter of 2011. On the numbers alone, that’s a startling turnabout.
Andrew Mason, Groupon’s CEO, maintains that ACSOI is a valuable tool. He’s quoted by CNN Money as saying:
“We exclude those costs because, unlike our other marketing expenses, they are an up-front investment to acquire new subscribers that we expect to end when this period of rapid expansion in our subscriber base concludes,” Mason wrote.
Building up a subscriber base is essential for Groupon, which offers coupon deals to consumers provided that a pre-set number of users agree to purchase a product. Without a large user base, the service just doesn’t work. It’s worth noting that while the company did not turn a profit last year or the first quarter of this year, it did manage to jump from 83 million subscribers to 116 million.
Also out with the new report was news of how the company fared in the second quarter of 2011, which showed a record $878 million in sales but a continued $102.7 million loss. Of course, there’s a million ways to slice these numbers down. For instance, CNN Money points out that this revenue figure does not account for the money Groupon pays to merchants that agree to use the service. Adjusted for that loss, it’s more like $341 million in sales for the second quarter and $611 million for the first six months of the year.
This new IPO filing is likely to stoke the concerns of critics who believe that we’re living in a second tech bubble, full of overvalued companies and fly-by-night startups. Of course, we won’t actually know if there’s really any bubble until it bursts.