Groupon–More Financial Trouble As It Revises Results, Again (Will CFO Stay?)
March 30, 2012 by Douglas A. McIntyre
Groupon (NASDAQ: GRPN), the troubled online coupon company, has trouble getting its financials correct before its IPO. Now, post-IPO, it it in trouble again.
Groupon revised both its Q4 2011 and full year 2001 numbers. In a statement, the firm said
The revisions resulted in a reduction to fourth quarter 2011 revenue of $14.3 million. The revisions also resulted in an increase to fourth quarter operating expenses that reduced operating income by $30.0 million, net income by $22.6 million, and earnings per share by $0.04. Financial results for prior periods, including as of and for the nine months ended September 30, 2011, were not affected by the revisions.
There is no change to Groupon’s previously reported operating cash flow of $169.1 million for the fourth quarter 2011 and $290.5 million for the full year 2011. There is also no change to Groupon’s previously reported free cash flow, which is a non-GAAP financial measure that reflects cash flow from operations less purchases of property and equipment, of $155.1 million for the fourth quarter 2011 and $246.6 million for the full year 2011.
The revisions are primarily related to an increase to the Company’s refund reserve accrual to reflect a shift in the Company’s fourth quarter deal mix and higher price point offers, which have higher refund rates. The revisions have an impact on both revenue and cost of revenue. A more detailed explanation of the refund reserve is included in the Critical Accounting Policies and Estimates section of Groupon’s Annual Report on Form 10-K for the year ended December 31, 2011, filed today with the Securities and Exchange Commission (SEC).
Jason Child, Groupon CFO, may not keep he job. And, he should not.
Groupon shares fell over 6% after hours to $17.20 against a 52-week high of $31.14
Douglas A. McIntyre
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