initial public offerings (IPOs) trading on American exchanges

Thursday, June 2, 2011

Groupon Files for $750 Million IPO

The social buying site Groupon filed on Thursday to go public with plans to raise an estimated $750 million in a highly anticipated debut that comes amid a frenzy for new technology companies like LinkedIn and Yandex.

Groupon, a Chicago-based start-up, has enjoyed a meteoric rise in its short life. Shortly after starting in 2008, Groupon notched revenue of $94 million. Two years later, it had swelled to $713 million.

The company reported $644.7 million of revenue in the first quarter of 2011 alone, with 83 million subscribers across 43 countries, according to its filing.

As its prospects have grown, so has investor interest.

Last year, the company was worth roughly $1.4 billion, based on a fund-raising round led by D.S.T. Global. Groupon spurned a $6 billion bid from Google in December. A month later, the start-up raised nearly $1 billion from large institutional investors like Fidelity Investments and T. Rowe Price. Groupon’s value was pegged at $25 billion just a couple of months ago, based on discussions for the initial public offering.

In a letter to prospective shareholders, Groupon’s chief executive, Andrew Mason, highlighted the company’s growth opportunity but cautioned investors to temper their expectations.

“In the past, we’ve made investments in growth that turned a healthy, forecasted quarterly profit into a sizable loss,” he said. “When we see opportunities to invest in long-term growth, expect that we will pursue them regardless of certain short-term consequences.”

Like many start-ups, Groupon is still struggling to turn a profit. Last year, the company’s loss topped $450 million, compared with $6.9 million in 2009 and $2.2 million in 2008.

According to the June 1st filing, Groupon has 7,000 employees and has offered over 1,000 daily deals to 83 million subscribers across 43 countries, and has sold over 70 million Groupons. (Subscribers are the total number of individuals that have completed registration through a specific date, less those who have unsubscribed.)

In 2010, it featured 66,289 merchants, and in the first 3 months of 2011, it featured 56,781 merchants.

Its 2010 revenue was $713.4 million compared to $30.5 million in 2009. During the first quarter of 2011, it generated revenue of $644.7 million.

Forty-six percent of revenue was generated from North America in the first quarter 2011, and 54% was generated from Europe. In May 2010, Groupon acquired CityDeal, which added 1.9 million subscribers as of the date of the acquisition in several major European markets, including London, Berlin and Paris, and ended the year with operations in 38 countries.

Groupon has offered deals involving over 140 different types of businesses, services and activities that fall into six broad categories; the following shows the percentage of deals offered worldwide across those categories during the first quarter of 2011: Health & Beauty: 31%; Food & Drink: 23%; Activities: 15%; Events: 11%; Services: 11%; Retail: 9%.

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