SEC Scrutiny May Delay Groupon IPO

Groupon's upcoming IPO has been the subject of some pretty intense scrutiny from financial analysts ever since the prospectus filed with the SEC raised questions about the company's losses and how Groupon is valuating their own company.

Groupon CEO Andrew Mason told investors, “We don’t measure ourselves in conventional ways." And that has attracted the attention of the SEC with the IPO looming. What SEC regulators are concerned about are those unconventional ways with which Mason said Groupon measures profitability: gross profits and consolidated segment operating income (CSOI).

Last year, Groupon's generated adjusted CSOI was $60.6 million. Since Groupon also reported a loss of $413 million last year, the SEC wants some clarification as to how Groupon came to its CSOI number. One way to look at it is to take a look at what Groupon doesn't report for CSOI - marketing costs and other expenses to expand its list of subscribers; stock issued to employees, acquisitions of other companies; interest expenses or other outlays to repay debt; tax payments.

Groupon filed an amended S-1 with their prospectus a couple of weeks back that offers a more detailed rationale for how it measures profitability, as opposed to the original letter which mentioned "CSOI" 45 times. It also toned down the company's importance on CSOI.

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By Chuck Sudo in News on July 28, 2011 9:00 AM

Comments [rss]

BlueFairlane

I'd say I'm not one to say I told you so, but I am.

ChicagoD

He's still got $6 billion and a plane ticket. He ain't beat yet!

twocee

And another reason why Groupon needs to cash out while it can....

http://www.chicagotribune.com/...

twocee

He should've just let Google buy them when he had the chance.

Prescott Carlson

I'm not sure that was as much of a missed opportunity as people say. I can't imagine that Google offer didn't include tons of conditions, such as being able to first review Groupon's financials in detail -- we were talking 10 figures here -- and with what has come out since, Google likely would have ran away, not exactly a good message to send when your endgame is an IPO.

ChicagoD

I'm not so sure of that. As the dearly departed Matilda was always saying, the value in Groupon for some purchasers would have been the user data. Google might not have much cared if this clown actually made money off it if they had their own plan.

In any case, I bet this will be fine. He just needs to shut up and not screw the IPO up again. There are plenty of people who are itching to get in on Tech Bust 2.0.

ChicagoD

The CEO over there is his own worst enemy. He needs to shut his pie hole, do the IPO, cash out, hide the money in the Caymans and head to a jurisdiction that doesn't extradite. Idiot.

reilly3

Really, it's like Steve Rubell going on TV and boasting about Studio 54 making more money than the mafia, basically asking the IRS to pay him a visit.

Joseph Palmer

While I'm sure many of you have made some awesome deals using these sites, what a scheme to make money in a shitty economy. Awesome how our "economy" works.