The Groupon monkey rides like a bat out of hell before the IPO window closes
Groupon scales back its IPO, now valued at $10.1 billion and $11.4 billion – original estimates were $20-30bn - Will only raise $480 to $540 million not the original $750 million originally sought
Groupon has filed amended papers ahead of its IPO, suggested an $11.4 billion valuation, down from an earlier valuation of $20 billion, Deal Journal's Shira Ovide reports on Markets Hub. Photo: AP.
LITTLE ANDY SAYS, 'IT'S ON BITCH'
Groupon has filed an early morning surprise, putting to rest speculation about it’s IPO. It is on, albeit at a slightly lower valuation than originally expected.
It intends to raise between $480 million to $540 million in the public markets, setting a valuation range between $10.1 billion and $11.4 billion.
In addition, the daily deals giant released third-quarter results today, which included improved numbers including a profit in North America.
It will trade on Nasdaq exchanged under the ticker “GRPN.”
The company said it plans to sell 30 million shares at $16 to $18 apiece, which will raise about half of the original $750 million it had intended to raise when it filed for the IPO back in June.
There will be an over-allotment of 4.5 million shares. In all, the company will end up selling nearly 5 percent of its Class A common stock before the allotment.
Since the company’s original filing, the Chicago-based darling has gone through the ringer. Updated amendments led to questions about the company’s strength, or whether it could sustain a profitable business over the long-term. Additionally, a number of top-level executives have left the company under the watch of Groupon’s CEO Andrew Mason.
Some of those concerns will be muted, given the company’s financial performance in the quarter ended Sept. 30. In that period, it helped to demonstrate it can scale back its marketing costs and still grow.
Q3 revenues increased 426 percent year-over-year to $430.2 and 9.6 percent sequentially to $430.2 million. The company’s third-quarter net loss totaled $10.6 million narrowed substantially from the prior quarter and year-ago period when it lost $101.2 million and $49 million, respectively.
Contributing to improved results was a profit in North America of $18.8 million, reversing a loss of $10.5 million in the second quarter. This is primarily due to a decrease in marketing expenses while still maintaining customer growth, which resulted in higher revenue.
The international markets had similar improvements, however, it continued to invest heavily in countries, such as S. Korea, Australia and Japan, which adversely affected results. A bulk of the company’s revenues, or about 64 percent, occur in North America.
Critics skeptical that Groupon would have a hard time swapping losses for growth definitely has something to think about now.
It now has $244 million cash on hand, up 8 percent since the prior quarter, and 255 percent since last year.
Groupon said in the filing that it plans to use the money to increase revenues by expanding domestically and internationally through adding gaining new subscribers and investing in technology.
THIRD QUARTER 2011 PERFORMANCE
The daily deals giant cut back on marketing expenses and still showed it could make a profit in North America and delivered on a number of other key metrics.
Marketing costs are the primary way Groupon gets subscribers to sign-up for its email list that offers a deal everyday, and therefore, is the lifeblood of its growth engine.
But it is also costly and unsustainable.
In today’s filing with the SEC today, it showed it could continue to grow despite reducing its marketing expenses by 20.4 percent during the quarter in the U.S. alone.
Here’s some key takeaways from the quarter as compared the prior quarter on a worldwide basis:
- Revenues before the merchant’s cut: $1.16 million vs. $929 million.
- Revenues after the merchant's cut: $430.6 million vs. $430.2 million (9/30/10)
- Net profit or (loss): ($10.6 million loss) vs. ($101.2 million loss)
- Subscribers: 142.9 million vs. 115.7 million.
- Paying Customers: 29.5 million vs. 23 million.
- Participating merchants: 78,649 vs. 78,466.
- Groupons sold: 33 million vs. 32.5 million.
- Avg. revenue per subscriber: $3.30 vs. $3.90.
- Avg. revenue per Groupon sold: $13 vs. $12.1.
- Groupons sold per paying customer since 2009: 4.2 vs. 4.
- Total unique paying customers: 16 million vs. 12.1 million.
COMMENTARY: I can hardly wait for the Groupon IPO, and see it crash and burn in an early trading disappointment. The IPO window is rapidly closing, and the beleagured group buying startup really doesn't have any choice anymore. This is a last ditch effort to pull a rabbit out of the hat for Little Andy and his management team. At this point, something is better than nothing.
Courtesy of an article dated October 21, 2011 appearing in All Things Digital, an article dated October 21, 2011 appearing in All Things Digital, and an article dated October 21, 2011 appearing in Business Insider
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