With Flubbed Revenue Numbers, Groupon IPO In State of Flux
Company's reported revenue disparities are like many of its deals -- close to 50% off
Six-billion dollars has probably never looked so good.
That’s the amount Google offered to acquire Groupon last year. And after flubbing the exact totals of its 2010 and 2011 revenues as well as the departure of three key executives, Groupon has announced the delay of its Initial Public Offering. The company initially reported 2010 sales at $713.4 million, but the number was actually $312.9 million. Through the first half of 2011, sales reached $688.1 million, not the $1.52 billion Groupon first reported.
In its earlier accounting, Groupon counted the total amount of its daily-deal sales as revenue, including fees paid to merchants. The company makes money by selling discounts -- known as Groupons -- from businesses such as restaurants and nail salons. It then splits the revenue with the businesses.
“The company restated its reporting of revenues from Groupons to be net of the amounts related to merchant fees,” Groupon said in the filing. “Historically, the company has reported the gross amounts billed to its subscribers as revenue.”
TheStreet.com insists that Groupon’s leadership is mostly to blame for the public meltdown:
But when it comes to the Groupon deal, things have been much different. The company is a leader in the daily deals space and its IPO is much anticipated. But the company's 29-year-old CEO, Andrew Mason, can't seem to do anything right.
The latest bad stuff came in a Friday filing. First of all, Groupon's No. 2 senior executive, Margo Georgiadis, has left the company to go back to Google. She held the post for a mere five months. Interestingly enough, Mason blogged about the departure, "It would have been great if I could say that we batted 1,000%, but that's rarely the case." (In fact, lately it seems he has only been able to strike out.)
In spite of the chorus of problems, Groupon announced Wednesday its plan to roll out a customer loyalty program for frequent visitors. Groupon hopes it addresses problems daily deal sites have yet to help merchants tackle -- customer retention.