Groupon Files For IPO (GRPN, GOOG, AMZN, TZOO, RLOC, LOCM)

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Groupon, Inc. has just filed for an initial public offering.  No terms were disclosed other than that the sale is for up to $750 million in common stock.  The company plans to trade under the stock ticker “GRPN” but it has not selected the New York Stock Exchange or a NASDAQ listing as of yet.  Yet one more of our Top 17 IPOs to Watch in 2011 is coming public.  Google Inc. (NASDAQ: GOOG) tried to acquire this company, but the offer was turned down.

One warning we have made is that everyone may be competition ahead. Just a few are Google Inc. (NASDAQ: GOOG), Amazon.com Inc. (NASDAQ: AMZN), Travelzoo Inc. (NASDAQ: TZOO), ReachLocal, Inc. (NASDAQ: RLOC), Local.com (NASDAQ: LOCM), and more.  The social couponing website said that it now has over 7,000 employees offering more than 1,000 daily deals, and it offers those to more than 83 million subscribers in 43 countries.  More statistics are as follows:

  • Revenue rose from $3.3 million in the second quarter of 2009 to $644.7 million in the first quarter of 2011; 2010 revenue was over $713 million.
  • Gross profit in 2010 was $279.9 million versus $270 million for the first quarter of 2011; the net income appropriate for common holders was a loss of -$456 million in 2010 and -$146.5 million for the first quarter of 2011.
  • It expanded from five North American markets as of June 30, 2009 to 175 North American markets and 43 countries as of March 31, 2011.
  • It increased its subscriber base from 152,203 as of June 30, 2009 to 83.1 million as of March 31, 2011 and the number of merchants featured in its marketplace from 212 in the second quarter of 2009 to 56,781 in the first quarter of 2011.
  • Groupon sold 116,231 Groupons in the second quarter of 2009 compared to 28.1 million Groupons in the first quarter of 2011.  The company also noted that has sold over 70 million “Groupons” since its inception in just 30 months.
  • Employees grew from 37 as of June 30, 2009 to 7,107 employees as of March 31, 2011.

The only underwriters so far as listed as Morgan Stanley, Goldman Sachs, and Credit Suisse.  As of March 31, 2011, Groupon had some $208.68 million in cash and cash equivalents.  The latest valuation we have seen is somewhere in the $20 billion range.  Whether or not you trust that value is something we will let you decide upon for yourself.

There are a few things that investors need to know here.  There is a CEO letter attached from Anrew Mason that notes, “Our customers and merchants are all we care about…..” and then it also notes, “We don’t measure ourselves in conventional ways.”  Whoops, that may not work for investors and valuation.

The letter goes on to note… “There are three main financial metrics that we track closely. First, we track gross profit, which we believe is the best proxy for the value we’re creating. Second, we measure free cash flow—there is no better metric for long-term financial stability. Finally, we use a third metric to measure our financial performance—Adjusted Consolidated Segment Operating Income, or Adjusted CSOI. This metric is our consolidated segment operating income before our new subscriber acquisition costs and certain non-cash charges; we think of it as our operating profitability before marketing costs incurred for long-term growth.”

Experian Hitwaise also just sent us over some key statistics….

  • Groupon.com was the 64th most visited site in the US (out of 1mm+) for the week ending May 28th.
  • It captured 14 million+ total US visits for the week ending May 28th.
  • The market share of US visits was up 564% comparing last week versus the same week in 2010.
  • Groupon captured 76% of visits among a category of 81 Group Buying sites for the week ending May 28th.
  • Searches for “groupon” in the US have increased 462% comparing last week vs. same week in 2010.

Also noted by Experian Hitwise was the following: Regarding the Expedia.com deal – Group Buying sites sent 5% of visits to Travel sites last week. That represents a 16% increase in referral traffic from Group Buying sites to Travel sites comparing last week vs. same week in 2010.

The full S-1 IPO filing is here.

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JON C. OGG

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