Groupon files for $750m IPO
CHICAGO – Daily deals juggernaut Groupon Inc. has filed a prospectus for an initial public offering of up to $750 million, ending months of speculation about when the Chicago-based company would go public.
“While we’re looking forward to being a public company, we intend to continue operating according to the long-term focused principles that have gotten us to this point,” founder and Chief Executive Andrew Mason said in a letter to “potential stockholders” that was part of a filing made Thursday with the U.S. Securities and Exchange Commission.
The prospectus offered the first detailed public glimpse at Groupon’s operations and finances. The company brought in $644.7 million in revenue in the first quarter of 2011 but posted a net loss of $147 million for the period. In 2010, revenue was $713 million, and the company recorded a net loss of $456 million.
The filing showed that Groupon has high operating expenses, particularly related to marketing and customer acquisition. The company spent $241.5 million in 2010 and $179.9 million in the first quarter of 2011 on online marketing related to getting new subscribers.
“We anticipate that our operating expenses will increase substantially in the foreseeable future as we continue to invest to increase our subscriber base, increase the number and variety of deals we offer each day, expand our marketing channels, expand our operations, hire additional employees and develop our technology platform,” Groupon said.
Groupon said it prefers to track three other financial measures: gross profit, free cash flow and Adjusted Consolidated Segment Operating Income. This last measure represents operating income before subscriber acquisition costs and certain non-cash charges, Groupon said, and is considered “operating profitability before marketing costs incurred for long-term growth.”
In 2010, Groupon generated gross profit of $280 million, free cash flow of $72.2 million and Adjusted CSOI of $60.6 million.
Groupon is in 175 North American markets and 43 countries, as of the end of March, and has 83.1 million subscribers. The company’s headcount as of the end of March was 7,107 employees, up from 37 in June 2009.