GROUPON

Groupon



Groupon

Introduction

One of the fastest growing businesses in history, Groupon and its latest daily deals were news the business media could not resist. From the local corner bakery to national retailers such as Gap, sizzling offers were projected to triple Groupon's 50 million subscribers by the end of the year. But while the limelight remained focused on the headline “feature” deals, Groupon was quietly testing new models to expand this core platform. In late 2010, the company introduced Groupon Stores, a self-service model that equipped stores with the tools to build their own promotions. Sales chief and co-founder Eric Lefkofsky mused that when customers could “go on their own and put up a deal, Groupon would become their commerce strategy,” alluding to yet another new angle of the business, Merchant Services. That said, Lefkofsky quickly cautioned that such lighter-touch models were still very new and represented just one faction of the many tests Groupon was running.

SWOT Analysis

Strengths of Groupon

Large customer and Merchant base (Currently have 35 million registered customers)

Efficient Management

Aggressively expanding its emerging markets

Weakness of Groupon

Lack of network effect

High cost of customer acquisition

Opportunities for Groupon

Increase Market share in its market (currently have approx 80% market share)

Foray in to less penetrated markets

Economies of scale

Threats for Groupon

New players such as Google are planning to enter

No technology barriers to entry

Aggressive expansion could lead to managerial / financial problems

Company Financials

Income Statement

Balance Sheet

Report Date

12/31/2010

12/31/2009

Currency

USD

USD

Audit Status

Not Qualified

Not Qualified

Consolidated

Yes

Yes

Scale

Thousands

Thousands

Cash & cash equivalents

118,833

12,313

Accounts receivable, net

42,407

601

Prepaid expenses & other current assets

12,615

1,293

Total current assets

173,855

14,207

Furniture & fixtures

6,691

258

Leasehold improvements

5,233

-

Computer hardware & other property & equipment

3,396

-

External software

1,767

33

Office & telephone equipment

1,408

57

Property & equipment, gross

18,495

348

Less: accumulated depreciation & amortization

2,005

74

Property & equipment, net

16,490

274

Goodwill

132,038

-

Intangible assets, net

40,775

239

Deferred income taxes, non-current

14,544

-

Other non-current assets

3,868

242

Total assets

381,570

14,962

Accounts payable

57,543

182

Accrued merchant payable

162,409

4,324

Accrued marketing

48,244

572

Accrued refunds reserve

13,938

2,932

Accrued payroll & benefits

12,187

337

Accrued customer rewards

8,333

199

Accrued rent

3,169

26

Accrued credit card fees

2,500

301

Accrued professional fees

2,341

-

Other accrued expenses

7,611

469

Accrued expenses

98,323

4,836

Due to related parties

13,321

-

Deferred income taxes, current

17,210

-

Other current liabilities

21,613

877

Total current liabilities

370,419

10,219

Deferred income taxes, non-current

604

-

Other non-current liabilities

1,017

-

Total liabilities

372,040

10,219

Series B, redeemable convertible preferred stock

-

20

Series D, redeemable convertible preferred stock

-

4,727

Series E, redeemable convertible preferred stock

-

29,965

Redeemable noncontrolling interests

2,983

-

Series D, convertible preferred stoc

1

-

Series F, convertible preferred stoc

1

-

Series G, convertible preferred stock

1

-

Voting common stock

4

3

Treasury stock

503,173

-

Additional paid-in capital

921,122

-

Stockholder receivable

(286)

(144)

Retained earnings (accumulated deficit)

(419,468)

(29,828)

Accumulated other comprehensive income (loss)

9,875

-

Total Groupon, Inc. stockholders' (deficit) equity

8,077

(29,969)

Non-controlling interests

(1,530)

-

Total equity (deficit)

6,547

(29,969)

Cash Flows

Report Date

12/31/2010

12/31/2009

12/31/2008

Currency

USD

USD

USD

Audit Status

Not Qualified

Not Qualified

Not Qualified

Consolidated

Yes

Yes

Yes

Scale

Thousands

Thousands

Thousands

Net income (loss)

(413,386)

(1,341)

(1,542)

Depreciation & amortization

12,952

80

17

Stock based compensation

36,168

115

24

Deferred income taxes

(7,349)

-

-

Excess tax benefit on stock-based compensation

(32)

(143)

-

Non-cash interest expense

106

-

-

Acquisition-related expense

203,183

-

-

Accounts receivable

(34,905)

(601)

-

Prepaid expenses & other current assets

(2,467)

(67)

(4)

Accounts payable

50,835

182

-

Accrued merchant payable

149,044

4,305

(3)

Accrued expenses & other current liabilities

94,592

5,038

(18)

Due to related parties

(319)

(20)

-

Other assets & liabilities

(1,537)

(38)

-

Net cash flows from operating activities

86,885

7,510

(1,526)

Purchases of property & equipment

(14,681)

(290)

(19)

Acquisitions of businesses, net of acquired cash

3,816

-

-

Purchases of intangible assets

(922)

(271)

-

Changes in restricted cash

(92)

(1,400)

-

Net cash flows from investing activities

(11,879)

(1,961)

(19)

Issuance of stock, net of issuance costs

584,658

29,946

4,746

Excess tax benefit on stock-based compensation

32

143

-

Loans from related parties

5,035

-

-

Preferred stock distributions

-

-

(339)

Repurchase of common stock

(503,173)

-

-

Proceeds from exercise of stock options

195

72

1

Dividends paid on common & preferred stock

(1,299)

(26,363)

-

Redemption of preferred stock

(55,003)

-

-

Net cash flows from financing activities

30,445

3,798

4,408

Effect of exchange rate changes on cash & cash equivalents

1,069

-

-

Net increase (decrease) in cash & cash equivalents

106,520

9,347

2,863

Cash & cash equivalents, beginning of year

12,313

2,966

103

Cash & cash equivalents, end of year

118,833

12,313

2,966

Cash paid for income taxes

140

-

-

Cash ...