No discount: Groupon files for $750 million IPO

June 2, 2011, 11:07 PM UTC

Groupon, the original and largest daily deals company, has filed to raise $750 million in an initial public offering. Morgan Stanley and Goldman Sachs are listed as co-lead underwriters, with Credit Suisse also participating.

The company did not say if it plans to trade on the NYSE or Nasdaq, but did say its ticker symbol would by GRPN. It features a dual-class stock structure, as have other recent Internet issuers like LinkedIn (LNKD) and Yandex (YNDX).

The Chicago-based company reports a $413 million net loss for 2010, on $713 million in revenue. For the first three months of 2011, it’s a $113 million net loss on $664 million in revenue (14x rev increase from year-earlier period). It has over 7,000 employees and has sold more than 70 million “Groupons” to 83.1 million subscribers in 43 countries.

The company had raised over $560 million in venture capital funding, plus another $573 million that provided liquidity to early employees and shareholders (including those angry that Groupon had turned down a $6 billion acquisition offer from Google). Major outside shareholders include New Enterprise Associates and Accel Partners.

Groupon says that some of the IPO shares will come from “selling shareholders” — as opposed to only from the company — but does not provide any information about quantity or identity.

[Update: It seems, from this tweet, as if the selling shareholder info has not yet been determined.]

Groupon had been widely expected to go public this year, but its plans hiccuped when chief operating officer Rob Solomon surprisingly resigned back in March. Ex-Google executive Margo Georgiadis was hired one month later to succeed Solomon, but that’s still a very short turnaround from new senior management to IPO filing.

Then again, Groupon is not the most conventional of companies. Its IPO registration includes am introductory letter from iconoclastic CEO Andrew Mason, which includes the following nuggets:

We are unusual and we like it that way.

We want the time people spend with Groupon to be memorable. Life is too short to be a boring company.

And this (which is a direct response to those who argue Groupon cannot stay wildly successful in an enterprise that has few traditional barriers to entry):

Our customers and merchants are all we care about.

We believe that when once-great companies fall, they don’t lose to competitors, they lose to themselves—and that happens when they stop focusing on making people happy. As such, we do not intend to be reactive to competitors. We will watch them, but we won’t distract ourselves with decisions that aren’t designed primarily to make our customers and merchants happy.


We don’t measure ourselves in conventional ways.

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.


As with any business in a 30-month-old industry, the path to success will have twists and turns, moments of brilliance and other moments of sheer stupidity. Knowing that this will at times be a bumpy ride, we thank you for considering joining us.

Speaking of that bumpy ride, it’s perhaps worth noting that LinkedIn shares today are trading below $80 per share. In other words, those who bought first-day shares on the open market are currently underwater. These two companies are obviously quite different in both purpose and scale, but it’s a reminder of how retail investors without I-bank ties can get burned even while the bubble is inflated…