Groupon, Inc.
Groupon, Inc. (Form: 8-K/A, Received: 03/30/2012 16:24:02)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K/A

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): February 8, 2012

 

GROUPON, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-35335

 

27-0903295

(State or other

 

(Commission

 

(I.R.S. Employer

jurisdiction

 

File Number)

 

Identification No.)

of incorporation)

 

 

 

 

 

600 West Chicago Avenue

 

 

Suite 620

 

 

Chicago, Illinois

 

60654

(Address of principal executive offices)

 

(Zip Code)

 

(312) 676-5773

(Registrant’s telephone number, including area
code)

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 2.02

Results of Operations and Financial Condition.*

 

On March 30, 2012, Groupon, Inc. (the “Company”) issued a press release announcing revised financial results for its fiscal quarter and year ended December 31, 2011 and reaffirming its previously provided guidance for its fiscal quarter ending March 31, 2012. This press release revises financial results for the fiscal quarter ended December 31, 2011 contained in the Company’s press release dated February 8, 2012 as previously furnished on Form 8-K.  Financial results for prior periods, including as of and for the nine months ended September 30, 2011, were not impacted by the revisions. A copy of the press release dated March 30, 2012 is attached hereto as Exhibit 99.1.

 

A revised version of the contents of the Company’s press release dated February 8, 2012 is below.

 

GROUPON ANNOUNCES FOURTH QUARTER 2011 RESULTS

 

·                   Revenue of $492.2 million, up 186% year-over-year

·                   Free Cash Flow of $155.1 million, up 258% year-over-year

·                   Operating Loss of $15.0 million, down from $336.1 million loss

·                   Non-GAAP EPS of negative $0.06, including $0.06 of tax from international operations, up from negative $0.53

·                   Active customers increase to over 33 million, up over 275% year-over-year

 

Groupon, Inc. (NASDAQ: GRPN) today announced financial results for its fourth quarter ended December 31, 2011.

 

Revenue increased 186% to $492.2 million in the fourth quarter 2011, compared to $172.2 million in the fourth quarter 2010. The unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter was $2.9 million.  Gross billings, which reflects the gross amounts collected from customers for Groupons sold, excluding any applicable taxes and net of estimated refunds, increased 196% to $1.2 billion in the fourth quarter 2011, compared with $415.3 million in the fourth quarter 2010.

 

“Groupon had a strong fourth quarter and we finished 2011 having helped 250,000 local merchants across 47 countries grow their businesses while saving Groupon customers billions of dollars,” said Andrew Mason, CEO and Co-Founder of Groupon. “We will continue to invest in new services and tools that help our merchant partners be more successful and drive local commerce around the world.”

 

Operating loss was $15.0 million in the fourth quarter 2011, compared with a loss from operations of $336.1 million in the fourth quarter 2010. The unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter was $8.4 million. Consolidated segment operating income (CSOI), which is a non-GAAP financial measure that excludes the impact of stock-based compensation and acquisition-related charges, improved to a gain of $18.0 million in the fourth quarter, compared with a loss of $143.4 million in the fourth quarter 2010. Fourth quarter 2011 operating results included losses of over $40.0 million principally from less mature markets within the international segment.

 

Operating cash flow increased 226% to $169.1 million for fourth quarter 2011, compared with $51.9 million for fourth quarter 2010. Free cash flow, which is a non-GAAP financial measure

 

1



 

that reflects cash flow from operations less purchases of property and equipment, increased 258% to $155.1 million for the three months ended December 31, 2011, compared with $43.3 million for the three months ended December 31, 2010. At the end of the quarter, Groupon had $1.2 billion in cash and cash equivalents and no long-term debt.

 

Fourth quarter 2011 net loss attributable to common stockholders decreased by 83% to $65.4 million, or a loss of $0.12 per share, from a net loss attributable to stockholders of $378.6 million, or a loss of $1.08 per share, in fourth quarter 2010. Pro-forma net income attributable to common stockholders for the fourth quarter improved to a loss of $32.5 million, or a pro-forma loss of $0.06 per share, from a prior year pro-forma net loss attributable to common stockholders of $185.8 million, or a pro-forma loss per share of $0.53. Pro-forma net income is a non-GAAP financial measure that excludes the impact of stock-based compensation and acquisition-related charges. The pro-forma loss of $0.06 per share includes $34.2 million of tax expense, an effective tax rate of approximately 134%, related to profitability in certain international countries as well as additional income tax provisions related to the establishment of the company’s international headquarters in Switzerland. This resulted in an unusually high effective tax rate as compared to the company’s current average statutory rate of approximately 33%.

 

Full-Year 2011

 

Revenue increased 415% to $1.6 billion in 2011, compared with $312.9 million in revenue in 2010. The favorable impact on revenue from year-over-year changes in foreign exchange rates throughout the year was $44.0 million.

 

Gross billings increased 435% to $4.0 billion in 2011, compared with $745.3 million in gross billings in 2010.

 

Full year 2011 loss from operations was $233.4 million, compared with the loss from operations of $420.3 million in 2010. The unfavorable impact from year-over-year changes in foreign exchange rates throughout the year was $13.0 million. Consolidated segment operating losses improved to a loss of $144.3 million in 2011 from a loss of $181.0 million in 2010.

 

Operating cash flow increased 234% to $290.5 million in 2011, compared with $86.9 million in 2010. Free cash flow increased 242% to $246.6 million for the twelve months ended December 31, 2011, compared with $72.2 million for the twelve months ended December 31, 2010.

 

Net loss attributable to common stockholders decreased to $373.5 million in 2011, or a loss of $1.03 per share, from a net loss attributable to common stockholders of $456.3 million, or a loss of $1.33 per share, in 2010. Pro-forma net loss attributable to common stockholders for the full year resulted in a loss of $284.4 million, or a pro-forma loss of $0.79 per share, from a prior year pro-forma net loss attributable to common stockholders of $217.0 million, or a pro-forma loss per share $0.63.  The pro-forma loss per share of $0.79 includes $43.7 million of tax expense related to profitability in certain international countries as well as additional income tax provisions related to the establishment of the company’s international headquarters in Switzerland.

 

2



 

Summary Consolidated and Segment Results

 

 

 

Three Months Ended

 

 

 

Twelve Months Ended

 

 

 

 

 

December 31,

 

Y/Y %

 

December 31,

 

Y/Y %

 

 

 

2010

 

2011

 

Growth

 

2010

 

2011

 

Growth

 

 

 

(dollars in thousands, except per share data)

 

 

 

(unaudited)

 

(unaudited)

 

 

 

 

 

(unaudited)

 

 

 

Revenue (gross billings of $415,269, $1,230,868, $34,082, $745,348 and $3,985,501)

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

$

88,363

 

$

179,638

 

103.3

%

$

200,412

 

$

634,980

 

216.8

%

International

 

83,861

 

312,526

 

272.7

%

112,529

 

975,450

 

766.8

%

Consolidated revenue

 

$

172,224

 

$

492,164

 

185.8

%

$

312,941

 

$

1,610,430

 

414.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

(336,129

)

(14,972

)

95.5

%

(420,344

)

(233,386

)

44.5

%

Consolidated segment operating (loss) income

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

$

(21,905

)

$

18,239

 

183.3

%

$

(10,437

)

$

4,796

 

146.0

%

International

 

(121,456

)

(287

)

99.8

%

(170,556

)

(149,129

)

12.6

%

CSOI(1)

 

$

(143,361

)

$

17,952

 

112.5

%

$

(180,993

)

$

(144,333

)

20.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to common stockholders

 

$

(378,610

)

$

(65,379

)

82.7

%

$

(456,320

)

$

(373,494

)

18.2

%

Pro-forma net loss attributable to common stockholders(2)

 

$

(185,842

)

$

(32,455

)

82.5

%

$

(216,969

)

$

(284,441

)

31.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common stockholders

 

$

(1.08

)

$

(0.12

)

 

 

$

(1.33

)

$

(1.03

)

 

 

Pro-forma loss per share(3)

 

$

(0.53

)

$

(0.06

)

 

 

$

(0.63

)

$

(0.79

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average basic shares

 

351,494,664

 

528,421,712

 

 

 

342,698,772

 

362,261,324

 

 

 

Weighted average diluted shares

 

351,494,664

 

528,421,712

 

 

 

342,698,772

 

362,261,324

 

 

 

 


(1)  Consolidated segment operating (loss) income, or CSOI, is a non-GAAP financial measure. See ‘‘Reconciliation of Non-GAAP Financial Measures’’ for a reconciliation of this measure to the most applicable financial measure under U.S. GAAP. We do not allocate stock-based compensation and acquisition-related expense to the segments.

 

(2)  Pro-forma net income attributable to common stockholders is a non-GAAP financial measure. This measure excludes stock-based compensation and acquisition-related costs. See ‘‘Reconciliation of Non-GAAP Financial Measures’’ for a reconciliation of this measure to the most applicable financial measure under U.S. GAAP.

 

(3)  Pro-forma loss per share attributable to common stockholders is a non-GAAP measure. It calculates loss per share based on pro forma net income attributable to common stockholders, which is described above. See ‘‘Reconciliation of Non-GAAP Financial Measures’’ for a reconciliation of this measure to the most applicable financial measure under U.S. GAAP.

 

Fourth Quarter and Full-Year 2011 Highlights

 

·                   As of December 31, 2011, Groupon’s worldwide active customer base grew to over 33 million, an increase of over 275% year-over-year and more than 20% quarter-over-quarter. Active customers are defined as customers who have purchased a Groupon in the trailing twelve months and may include individual customers with multiple registrations.

·                   Trailing twelve month gross billings per average active customer, which is a proxy for the total annualized spend per average customer, increased to $187 in fourth quarter 2011 from $160 in fourth quarter 2010.

·                   Fourth quarter 2011 North America segment results were aided by the company’s second annual Grouponicus seasonal promotion, which served 40 North American markets with local deals, travel deals and goods chosen specifically for their ‘giftability.’

·                   Worldwide, more than 26 million people have downloaded the Groupon mobile app on their smartphones.

·                   In just over six months from launching Groupon Now!, Groupon has expanded this offering to 31 markets and served deals from nearly 20,000 merchant partners in North America.

·                   Groupon continued to invest in creating additional value for its merchant partners, with fourth quarter 2011 releases of merchant tools including Groupon Merchant Center, Groupon Scheduler, and Groupon Rewards.

·                   Groupon increased its long-term technology investments, expanding into new facilities in Palo Alto to accommodate the more than four times growth in its engineering and product development staff in 2011.

 

3



 

First Quarter 2012 Guidance

 

·                   Revenue is expected to be between $510 million and $550 million, an increase of between 73% and 86% compared with first quarter 2011.

·                   Income from operations is expected to be between $15 million and $35 million, compared with a loss from operations of $117.1 million in first quarter 2011.

·                   This guidance includes approximately $35 million for stock-based compensation and acquisition-related expense, and it assumes, among other things, no additional business acquisitions or investments and no further revisions to stock-based compensation estimates.

 

Non-GAAP Financial Measures

 

This release includes the following financial measures defined as “non-GAAP financial measures” by the SEC: Free cash flow, CSOI and pro-forma net income. Groupon believes free cash flow is an important indicator for its business because it measures the amount of cash the company generates after spending on marketing, wages and benefits, capital expenditures and other items.  Free cash flow also reflects changes in working capital.  Groupon believes CSOI is an important measure for management to evaluate the performance of its business as it represents the operating results of its segments as reported under U.S. GAAP and does not include certain non-cash expenses.  Groupon believes pro-forma net income is an important measure for management to evaluate the performance of its business, as it represents the net income of its segments as reported under U.S. GAAP and also does not include certain non-cash expenses. Free cash flow, CSOI and pro-forma net income may be different from similar measures used by other companies.  The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For a reconciliation of these non-GAAP financial measures to the nearest comparable U.S. GAAP measures, see “Reconciliation of Non-GAAP Financial Measures” included in this release.

 

Note on Forward Looking Statements

 

The statements in this release that refer to plans and expectations for the next quarter or the future are forward-looking statements that involve a number of risks and uncertainties, and actual results could differ materially from those discussed. The risks and uncertainties that could cause our results to differ materially from those included in the forward-looking statements include, but are not limited to, our ability to continue to expand our business and continue revenue growth; our ability to manage the growth of our organization; responding to changes in the markets in which we compete for business; retaining existing merchant partners and adding new merchant partners; competing against smaller competitors and competitors with more financial resources than us; developing new product and service offerings that are appealing to customers; maintaining a strong brand; effectively dealing with challenges arising from our international operations; integrating our technology platforms; managing refund risks; retaining our executive team; regulations, including the CARD Act and regulation of the Internet; tax liabilities; tax legislation; maintaining our information technology infrastructure; security breaches; protecting our intellectual property; handling acquisitions, joint ventures and strategic investments effectively; seasonality; payment-related risks; customer and merchant partner fraud; global economic uncertainty; compliance with rules and regulations associated with being a public company; and our ability to raise capital if necessary.  We urge you to refer to the factors included under the headings “Risk Factors” and “Management’s Discussion and Analysis of

 

4



 

Financial Condition and Results of Operations” in the Company’s Form 10-K for the year ended December 31, 2011, copies of which may be obtained by visiting the company’s Investor Relations web site at http://investor.groupon.com or the SEC’s web site at www.sec.gov. Groupon’s actual results could differ materially from those predicted or implied and reported results should not be considered an indication of future performance.

 

You should not rely upon forward-looking statements as predictions of future events. Although Groupon believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither the company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements reflect Groupon’s expectations as of March 30, 2012. Groupon undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this earnings release to conform these statements to actual results or to changes in its expectations.

 

Groupon encourages investors to use its investor relations website as a way of easily finding information about the company. Groupon promptly makes available on this website, free of charge, the reports that the company files or furnishes with the SEC, corporate governance information (including Groupon’s Code of Business Conduct and Ethics), and select press releases and social media postings.

 

Contacts:

Groupon Investor Relations

 

Groupon Public Relations

Kartik Ramachandran, 312-999-3098

 

Julie Mossler, 312-242-2033

ir@groupon.com

 

 

 

5



 

Groupon, Inc.

Consolidated Statements of Cash Flows

 

 

 

Year Ended December 31,

 

 

 

2009

 

2010

 

2011

 

 

 

(in thousands)

 

 

 

 

 

 

 

(unaudited)

 

Net cash provided by operating activities

 

$

7,510

 

$

86,885

 

$

290,447

 

Net cash used in investing activities

 

(1,961

)

(11,879

)

(147,433

)

Net cash provided by financing activities

 

3,798

 

30,445

 

867,205

 

Effect of exchange rate changes on cash and cash equivalents

 

 

1,069

 

(6,117

)

Net increase in cash and cash equivalents

 

9,347

 

106,520

 

1,004,102

 

Cash and cash equivalents, beginning of year

 

2,966

 

12,313

 

118,833

 

Cash and cash equivalents, end of year

 

$

12,313

 

$

118,833

 

$

1,122,935

 

 

6


 


 

Groupon, Inc.

Consolidated Statements of Operations

 

 

 

Three Months Ended
December 31,

 

Year Ended December 31,

 

 

 

2010

 

2011

 

2009

 

2010

 

2011

 

 

 

(dollars in thousands, except per share data)

 

 

 

(unaudited)

 

(unaudited)

 

 

 

 

 

(unaudited)

 

Revenue (gross billings of $415,269, $1,230,868, $34,082, $745,348 and $3,985,501)

 

$

172,224

 

$

492,164

 

$

14,540

 

$

312,941

 

$

1,610,430

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

25,191

 

96,265

 

4,716

 

42,896

 

258,879

 

Marketing

 

200,927

 

155,299

 

5,053

 

290,569

 

768,472

 

Selling, general and administrative

 

116,896

 

255,316

 

5,848

 

196,637

 

821,002

 

Acquisition-related

 

165,339

 

256

 

 

203,183

 

(4,537

)

Total operating expenses

 

508,353

 

507,136

 

15,617

 

733,285

 

1,843,816

 

Loss from operations

 

(336,129

)

(14,972

)

(1,077

)

(420,344

)

(233,386

)

Interest and other income (expense), net

 

(1,646

)

(3,835

)

(16

)

284

 

5,973

 

Equity-method investment activity, net of tax

 

 

(6,678

)

 

 

(26,652

)

Loss before provision for income taxes

 

(337,775

)

(25,485

)

(1,093

)

(420,060

)

(254,065

)

(Benefit) provision for income taxes

 

(2,172

)

34,194

 

248

 

(6,674

)

43,697

 

Net loss

 

(335,603

)

(59,679

)

(1,341

)

(413,386

)

(297,762

)

Less: Net loss (income) attributable to noncontrolling interests

 

22,373

 

(5,267

)

 

23,746

 

18,335

 

Net loss attributable to Groupon, Inc.

 

(313,230

)

(64,946

)

(1,341

)

(389,640

)

(279,427

)

Dividends on preferred stock

 

(62

)

 

(5,575

)

(1,362

)

 

Redemption of preferred stock in excess of carrying value

 

(52,893

)

(433

)

 

(52,893

)

(34,327

)

Adjustment of redeemable noncontrolling interests to redemption value

 

(12,425

)

 

 

(12,425

)

(59,740

)

Net loss attributable to common stockholders

 

$

(378,610

)

$

(65,379

)

$

(6,916

)

$

(456,320

)

$

(373,494

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(1.08

)

$

(0.12

)

$

(0.02

)

$

(1.33

)

$

(1.03

)

Diluted

 

$

(1.08

)

$

(0.12

)

$

(0.02

)

$

(1.33

)

$

(1.03

)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

 

 

 

 

 

 

 

 

 

Basic

 

351,494,664

 

528,421,712

 

337,208,284

 

342,698,772

 

362,261,324

 

Diluted

 

351,494,664

 

528,421,712

 

337,208,284

 

342,698,772

 

362,261,324

 

 

7



 

Groupon, Inc.

Consolidated Balance Sheets

 

 

 

December 31,

 

 

 

2010

 

2011

 

 

 

(in thousands)

 

 

 

 

 

(unaudited)

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

118,833

 

$

1,122,935

 

Accounts receivable, net

 

42,407

 

108,747

 

Prepaid expenses and other current assets

 

12,615

 

91,645

 

Total current assets

 

173,855

 

1,323,327

 

Property and equipment, net

 

16,490

 

51,800

 

Goodwill

 

132,038

 

166,903

 

Intangible assets, net

 

40,775

 

45,667

 

Other non-current assets

 

18,412

 

186,779

 

Total Assets

 

$

381,570

 

$

1,774,476

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable and accrued merchant payable

 

$

219,952

 

$

561,641

 

Other current liabilities

 

150,467

 

433,521

 

Total current liabilities

 

370,419

 

995,162

 

Deferred income taxes, non-current

 

604

 

7,428

 

Other non-current liabilities

 

1,017

 

70,766

 

Total Liabilities

 

372,040

 

1,073,356

 

Redeemable noncontrolling interest

 

2,983

 

1,653

 

Total Equity

 

6,547

 

699,467

 

Total Liabilities and Equity

 

$

381,570

 

$

1,774,476

 

 

8



 

Groupon, Inc.

Segment Information

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2010

 

2011

 

2010

 

2011

 

 

 

(in thousands)

 

 

 

(unaudited)

 

(unaudited)

 

 

 

(unaudited)

 

North America

 

 

 

 

 

 

 

 

 

Revenue

 

$

88,363

 

$

179,638

 

$

200,412

 

$

634,980

 

Segment operating expenses(1)

 

110,268

 

161,399

 

210,849

 

630,184

 

Segment operating (loss) income

 

(21,905

)

18,239

 

(10,437

)

4,796

 

 

 

 

 

 

 

 

 

 

 

International

 

 

 

 

 

 

 

 

 

Revenue

 

$

83,861

 

$

312,526

 

$

112,529

 

$

975,450

 

Segment operating expenses(1)

 

205,317

 

312,813

 

283,085

 

1,124,579

 

Segment operating (loss) income

 

(121,456

)

(287

)

(170,556

)

(149,129

)

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

Revenue

 

$

172,224

 

$

492,164

 

$

312,941

 

$

1,610,430

 

Segment operating expenses(1)

 

315,585

 

474,212

 

493,934

 

1,754,763

 

Segment operating (loss) income

 

(143,361

)

17,952

 

(180,993

)

(144,333

)

Stock-based compensation

 

27,429

 

32,668

 

36,168

 

93,590

 

Acquisition-related

 

165,339

 

256

 

203,183

 

(4,537

)

Interest and other expense (income), net

 

1,646

 

3,835

 

(284

)

(5,973

)

Equity-method investment activity, net

 

 

6,678

 

 

26,652

 

Loss before income taxes

 

(337,775

)

(25,485

)

(420,060

)

(254,065

)

Provision (benefit) for income taxes

 

(2,172

)

34,194

 

(6,674

)

43,697

 

Net loss

 

$

(335,603

)

$

(59,679

)

$

(413,386

)

$

(297,762

)

 


(1) Represents operating expenses, excluding stock-based compensation and acquisition-related expense, which are not allocated to segments.

 

Segment highlights

 

 

 

 

 

 

 

 

 

Y/Y revenue growth:

 

 

 

 

 

 

 

 

 

North America

 

855

%

103

%

1,278

%

217

%

International

 

100

%

273

%

100

%

767

%

Consolidated

 

1,761

%

186

%

2,052

%

415

%

Y/Y segment operating income growth:

 

 

 

 

 

 

 

 

 

North America

 

1,302

%

183

%

985

%

146

%

International

 

(100

)%

100

%

(100

)%

13

%

Consolidated

 

9,078

%

113

%

18,174

%

20

%

Revenue mix

 

 

 

 

 

 

 

 

 

North America

 

51

%

37

%

64

%

39

%

International

 

49

%

64

%

36

%

61

%

 

 

100

%

100

%

100

%

100

%

 

9



 

Groupon, Inc.

Supplemental Financial Information

Historical Consolidated Statements of Cash Flows

 

 

 

Twelve
Months
Ended

 

Three Months Ended

 

Twelve
Months
Ended

 

 

 

Dec. 31,

 

Mar. 31,

 

June 30,

 

Sept. 30,

 

Dec. 31,

 

Dec. 31,

 

 

 

2010

 

2011

 

2011

 

2011

 

2011

 

2011

 

 

 

(in thousands)

 

 

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

Net cash provided by operating activities

 

$

86,885

 

$

17,940

 

$

39,019

 

$

64,411

 

$

169,077

 

$

290,447

 

Net cash used in investing activities

 

(11,879

)

(44,294

)

(25,184

)

(43,048

)

(34,907

)

(147,433

)

Net cash provided by (used in) financing activities

 

30,445

 

112,106

 

(422

)

8,608

 

746,913

 

867,205

 

Effect of exchange rate changes on cash and cash equivalents

 

1,069

 

4,103

 

2,992

 

(11,129

)

(2,083

)

(6,117

)

Net increase in cash and cash equivalents

 

106,520

 

89,855

 

16,405

 

18,842

 

879,000

 

1,004,102

 

Cash and cash equivalents, beginning of period

 

12,313

 

118,833

 

208,688

 

225,093

 

243,935

 

118,833

 

Cash and cash equivalents, end of period

 

$

118,833

 

$

208,688

 

$

225,093

 

$

243,935

 

$

1,122,935

 

$

1,122,935

 

 

10



 

Groupon, Inc.

Supplemental Financial Information

Historical Consolidated Statements of Operations

 

 

 

Twelve
Months
Ended

 

Three Months Ended

 

Twelve
Months
Ended

 

 

 

Dec. 31,

 

Mar. 31,

 

June 30,

 

Sept. 30,

 

Dec. 31,

 

Dec. 31,

 

 

 

2010

 

2011

 

2011

 

2011

 

2011

 

2011

 

 

 

(dollars in thousands, except per share data)

 

 

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

Revenue

 

$

312,941

 

$

295,523

 

$

392,582

 

$

430,161

 

$

492,164

 

$

1,610,430

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

42,896

 

39,765

 

54,803

 

68,046

 

96,265

 

258,879

 

Marketing

 

290,569

 

230,085

 

212,739

 

170,349

 

155,299

 

768,472

 

Selling, general and administrative

 

196,637

 

142,821

 

226,067

 

196,798

 

255,316

 

821,002

 

Acquisition-related

 

203,183

 

 

 

(4,793

)

256

 

(4,537

)

Total operating expenses

 

733,285

 

412,671

 

493,609

 

430,400

 

507,136

 

1,843,816

 

Loss from operations

 

(420,344

)

(117,148

)

(101,027

)

(239

)

(14,972

)

(233,386

)

Interest and other income (expense), net

 

284

 

1,060

 

479

 

8,269

 

(3,835

)

5,973

 

Equity-method investment activity, net of tax

 

 

(882

)

(7,881

)

(11,211

)

(6,678

)

(26,652

)

Loss before provision for income taxes

 

(420,060

)

(116,970

)

(108,429

)

(3,181

)

(25,485

)

(254,065

)

(Benefit) provision for income taxes

 

(6,674

)

(3,079

)

1,347

 

11,235

 

34,194

 

43,697

 

Net loss

 

(413,386

)

(113,891

)

(109,776

)

(14,416

)

(59,679

)

(297,762

)

Less: Net loss (income) attributable to noncontrolling interests

 

23,746

 

11,223

 

8,536

 

3,843

 

(5,267

)

18,335

 

Net loss attributable to Groupon, Inc.

 

$

(389,640

)

$

(102,668

)

$

(101,240

)

$

(10,573

)

$

(64,946

)

$

(279,427

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(1.33

)

$

(0.48

)

$

(0.35

)

$

(0.18

)

$

(0.12

)

$

(1.03

)

Diluted

 

$

(1.33

)

$

(0.48

)

$

(0.35

)

$

(0.18

)

$

(0.12

)

$

(1.03

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

342,698,772

 

307,849,412

 

303,414,676

 

307,605,060

 

528,421,712

 

362,261,324

 

Diluted

 

342,698,772

 

307,849,412

 

303,414,676

 

307,605,060

 

528,421,712

 

362,261,324

 

 

11



 

Groupon, Inc.

Supplemental Financial Information

Historical Consolidated Balance Sheets

 

 

 

Dec. 31,

 

Mar. 31,

 

June 30,

 

Sept. 30,

 

Dec. 31,

 

 

 

2010

 

2011

 

2011

 

2011

 

2011

 

 

 

(in thousands)

 

 

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

118,833

 

$

208,688

 

$

225,093

 

$

243,935

 

$

1,122,935

 

Accounts receivable, net

 

42,407

 

60,717

 

99,674

 

109,852

 

108,747

 

Prepaid expenses and other current assets

 

12,615

 

21,324

 

50,947

 

111,856

 

91,645

 

Total current assets

 

173,855

 

290,729

 

375,714

 

465,643

 

1,323,327

 

Property and equipment, net

 

16,490

 

26,928

 

36,532

 

41,374

 

51,800

 

Goodwill

 

132,038

 

154,438

 

162,796

 

169,152

 

166,903

 

Intangible assets, net

 

40,775

 

43,052

 

39,516

 

50,141

 

45,667

 

Other non-current assets

 

18,412

 

26,263

 

23,154

 

69,257

 

186,779

 

Total Assets

 

$

381,570

 

$

541,410

 

$

637,712

 

$

795,567

 

$

1,774,476

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued merchant payable

 

$

219,952

 

$

328,587

 

$

440,927

 

$

505,931

 

$

561,641

 

Other current liabilities

 

150,467

 

190,890

 

239,691

 

260,762

 

433,521

 

Total current liabilities

 

370,419

 

519,477

 

680,618

 

766,693

 

995,162

 

Deferred income taxes, non-current

 

604

 

1,437

 

2,180

 

4,788

 

7,428

 

Other non-current liabilities

 

1,017

 

13,353

 

23,533

 

39,719

 

70,766

 

Total Liabilities

 

372,040

 

534,267

 

706,331

 

811,200

 

1,073,356

 

Redeemable noncontrolling interest

 

2,983

 

2,744

 

681

 

2,198

 

1,653

 

Total Equity

 

6,547

 

4,399

 

(69,300

)

(17,831

)

699,467

 

Total Liabilities and Equity

 

$

381,570

 

$

541,410

 

$

637,712

 

$

795,567

 

$

1,774,476

 

 

12



 

Reconciliation of Non-GAAP Financial Measures

 

Free Cash Flow

 

The following is a reconciliation of free cash flow to the most comparable U.S. GAAP measure, “Net cash provided by operating activities,” for the years ended December 31, 2011, 2010, and 2009, and the three months ended December 31, 2011 and 2010:

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

December 31,

 

Year Ended December 31,

 

 

 

2010

 

2011

 

2009

 

2010

 

2011

 

 

 

(in thousands)

 

 

 

(unaudited)

 

Net cash provided by operating activities

 

$

51,919

 

$

169,077

 

$

7,510

 

$

86,885

 

$

290,447

 

Purchases of property and equipment

 

(8,589

)

(13,986

)

(290

)

(14,681

)

(43,811

)

Free cash flow

 

$

43,330

 

$

155,091

 

$

7,220

 

$

72,204

 

$

246,636

 

 

Consolidated Segment Operating Income (CSOI)

 

The following is a reconciliation of CSOI to the most comparable U.S. GAAP measure, “Loss from operations,” for the years ended December 31, 2011 and 2010 and the three months ended December 31, 2011 and 2010:

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2010

 

2011

 

2010

 

2011

 

 

 

(in thousands)

 

 

 

(unaudited)

 

Loss from operations

 

$

(336,129

)

$

(14,972

)

$

(420,344

)

$

(233,386

)

Stock-based compensation(1)

 

27,429

 

32,668

 

36,168

 

93,590

 

Acquisition-related(2)

 

165,339

 

256

 

203,183

 

(4,537

)

CSOI

 

$

(143,361

)

$

17,952

 

$

(180,993

)

$

(144,333

)

 


(1)

Represents non-cash stock-based compensation expense recorded within selling, general and administrative expenses, marketing expenses and cost of revenue on the income statement.

 

 

(2)

Primarily represents non-cash charges for remeasurement of the fair value of contingent consideration related to acquisitions made by us in 2010 and 2011.

 

13



 

Pro-forma net loss attributable to common stockholders

 

The following is a reconciliation of pro-forma net loss attributable to common stockholders to the most comparable U.S. GAAP measure, “Net loss attributable to common stockholders,” for the years ended December 31, 2011 and 2010 and the three months ended December 31, 2011 and 2010:

 

 

 

December 31,

 

Year Ended December 31,

 

 

 

2010

 

2011

 

2010

 

2011

 

 

 

(in thousands)

 

 

 

(unaudited)

 

Net loss attributable to common stockholders

 

$

(378,610

)

$

(65,379

)

$

(456,320

)

$

(373,494

)

Stock-based compensation(1)

 

27,429

 

32,668

 

36,168

 

93,590

 

Acquisition-related(2)

 

165,339

 

256

 

203,183

 

(4,537

)

Pro-forma net loss attributable to common stockholders

 

$

(185,842

)

$

(32,455

)

$

(216,969

)

$

(284,441

)

 

 

 

 

 

 

 

 

 

 

Weighted average basic shares

 

351,494,664

 

528,421,712

 

342,698,772

 

362,261,324

 

Pro-forma loss per share

 

$

(0.53

)

$

(0.06

)

$

(0.63

)

$

(0.79

)

 


(1)

Represents non-cash stock-based compensation expense recorded within selling, general and administrative expenses, marketing expenses and cost of revenue on the income statement.

 

 

(2)

Primarily represents non-cash charges for remeasurement of the fair value of contingent consideration related to acquisitions made by us in 2010 and 2011.

 

Foreign exchange rate neutral operating results

 

The effect on the company’s consolidated statements of operations from changes in exchange rates versus the U.S. Dollar is as follows:

 

 

 

Three Months Ended

 

Year Ended

 

 

 

December 31, 2011

 

December 31, 2011

 

 

 

At Avg.

 

Exchange

 

 

 

At Avg.

 

Exchange

 

 

 

 

 

Q4 2010 Rates

 

Rate

 

As

 

2010

 

Rate

 

As

 

 

 

Rates (1)

 

Effect (2)

 

Reported

 

Rates (1)

 

Effect (2)

 

Reported

 

 

 

(in thousands)

 

 

(unaudited)

Revenue

 

$

495,085

 

$

(2,921

)

$

492,164

 

$

1,566,450

 

$

43,980

 

$

1,610,430

 

Loss from operations

 

 

(23,403

)

 

8,431

 

 

(14,972

)

 

(220,397

)

 

(12,989

)

 

(233,386

)

 


(1)

Represents the outcome that would have resulted had exchange rates in the reported period been the same as those in effect in the comparable prior year period for operating results.

 

 

(2)

Represents the increase or decrease in reported amounts resulting from changes in exchange rates from those in effect in the comparable prior year period for operating results.

 

14



 

Item 9.01

 

Financial Statements and Exhibits.

 

 

 

 

 

(d)

 

Exhibits:

 

 

 

 

 

 

 

 

 

Exhibit No.

 

Description

 

 

99.1*

 

Press Release dated March 30, 2012.

 


*The information furnished under Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

15



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

GROUPON, INC.

 

 

 

 

 

Dated: March 30, 2012

By:

/s/ Jason E. Child

 

Name:

Jason E. Child

 

Title:

Chief Financial Officer

 

16



 

Exhibit Index

 

Exhibit No.

 

Description

99.1*

 

Press Release dated March 30, 2012.

 


*The information in Exhibit 99.1 is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

17


Exhibit 99.1

 

GRAPHIC

 

GROUPON ANNOUNCES REVISED FOURTH QUARTER AND FULL YEAR 2011 RESULTS, CONFIRMS FIRST QUARTER GUIDANCE

 

Refund reserve accrual increased to better reflect Q4 evolution in Groupon’s deal mix.

No change to previously announced Operating Cash Flow and Free Cash Flow results.

 

CHICAGO—(BUSINESS WIRE)—March 30, 2012—Groupon, Inc. (NASDAQ: GRPN) today announced a revision of its reported financial results for its fourth quarter and year ended December 31, 2011. Groupon also affirmed its guidance for the first quarter of 2012.

 

The revisions resulted in a reduction to fourth quarter 2011 revenue of $14.3 million. The revisions also resulted in an increase to fourth quarter operating expenses that reduced operating income by $30.0 million, net income by $22.6 million, and earnings per share by $0.04. Financial results for prior periods, including as of and for the nine months ended September 30, 2011, were not affected by the revisions.

 

There is no change to Groupon’s previously reported operating cash flow of $169.1 million for the fourth quarter 2011 and $290.5 million for the full year 2011. There is also no change to Groupon’s previously reported free cash flow, which is a non-GAAP financial measure that reflects cash flow from operations less purchases of property and equipment, of $155.1 million for the fourth quarter 2011 and $246.6 million for the full year 2011.

 

The revisions are primarily related to an increase to the Company’s refund reserve accrual to reflect a shift in the Company’s fourth quarter deal mix and higher price point offers, which have higher refund rates. The revisions have an impact on both revenue and cost of revenue. A more detailed explanation of the refund reserve is included in the Critical Accounting Policies and Estimates section of Groupon’s Annual Report on Form 10-K for the year ended December 31, 2011, filed today with the Securities and Exchange Commission (SEC).

 

“We remain confident in the fundamentals of our business, as our performance continues to highlight the value that we provide to customers and merchants,” said Jason Child, Groupon CFO. Groupon affirmed its guidance contained in its February 8, 2012 press release regarding expectations for first quarter 2012 revenue of $510 million to $550 million and income from operations of $15 million to $35 million.  This guidance includes approximately $35 million for stock-based compensation and acquisition-related expense, and it assumes no material business acquisitions or investments and no further revisions to stock-based compensation estimates.

 



 

In conjunction with the completion of the audit of Groupon’s financial statements for the year ended December 31, 2011 by its independent auditor, Ernst & Young LLP, the Company included a statement of a material weakness in its internal controls over its financial statement close process in its Annual Report on Form 10-K for year ended December 31, 2011. The Company has been working for several months with another global accounting firm in preparation for reporting on the effectiveness of its internal controls by the end of 2012, as required following Groupon’s initial public offering last year. The Company continues to implement process improvement initiatives and augment its staffing, and is expanding the accounting firm’s engagement scope to address the underlying causes of the material weakness. Further discussion of the material weakness can be found in the Company’s Form 10-K, filed today with the SEC.

 

Final financial results for Groupon’s year ended December 31, 2011 are included in its Form 10-K, filed today with the SEC. Revised financial results for Groupon’s fourth quarter ended December 31, 2011 are included in its amended Form 8-K, filed today with the SEC.

 

Groupon to Webcast First Quarter Financial Results Conference Call on May 14, 2012

 

The Company also announced today that it intends to hold a conference call to discuss its first quarter 2012 financial results on Monday, May 14th, 2012, at 5:00 p.m. EDT.  The webcast can be accessed live at http://investor.groupon.com.

 

Extension of Lock-Up Period

 

In connection with Company’s initial public offering, the underwriters and certain holders of Groupon common stock entered into agreements restricting the sale or transfer of shares of common stock during the 180-day period following the closing of the IPO. These agreements provide for an automatic extension in the event the Company announced that it will release earnings or other material news within the 16-day period following the originally-scheduled expiration of the agreements. These agreements were originally scheduled to expire on May 2, 2012. As a result of the Company’s scheduled release of its earnings on May 14, 2012, the lock-up agreements described above will be automatically extended through June 1, 2012.

 

Non-GAAP Financial Measures

 

This release includes the following financial measure defined as a non-GAAP financial measure by the SEC: free cash flow. Groupon believes free cash flow is an important indicator for its business because it measures the amount of cash the Company generates after spending on marketing, wages and benefits, capital expenditures and other items.  Free cash flow also reflects changes in working capital. Free cash flow may be different from similar measures used by other companies.  The presentation of this financial information, which is not prepared under any comprehensive set of

 



 

accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For a reconciliation of this non-GAAP financial measure to the nearest comparable U.S. GAAP measure, see “Reconciliation of Non-GAAP Financial Measure” included in this release.

 

Note on Forward-Looking Statements

 

The statements in this release that refer to plans and expectations for the next quarter or the future are forward-looking statements that involve a number of risks and uncertainties, and actual results could differ materially from those discussed. The risks and uncertainties that could cause our results to differ materially from those included in the forward-looking statements include, but are not limited to, our ability to continue to expand our business and continue revenue growth; our ability to manage the growth of our organization; responding to changes in the markets in which we compete for business; retaining existing merchant partners and adding new merchant partners; competing against smaller competitors and competitors with more financial resources than us; developing new product and service offerings that are appealing to customers; maintaining a strong brand; effectively dealing with challenges arising from our international operations; integrating our technology platforms; managing refund risks; retaining our executive team; litigation; regulations, including the CARD Act and regulation of the Internet; tax liabilities; tax legislation; maintaining our information technology infrastructure; security breaches; protecting our intellectual property; handling acquisitions, joint ventures and strategic investments effectively; seasonality; payment-related risks; customer and merchant partner fraud; global economic uncertainty; compliance with rules and regulations associated with being a public company; and our ability to raise capital if necessary.  We urge you to refer to the factors included under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Form 10-K for the year ended December 31, 2011, copies of which may be obtained by visiting the Company’s Investor Relations web site at http://investor.groupon.com or the SEC’s web site at www.sec.gov. Groupon’s actual results could differ materially from those predicted or implied and reported results should not be considered an indication of future performance.

 

You should not rely upon forward-looking statements as predictions of future events. Although Groupon believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements reflect Groupon’s expectations as of March 30, 2012. Groupon undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this earnings release to conform these statements to actual results or to changes in its expectations.

 



 

Groupon encourages investors to use its investor relations website as a way of easily finding information about the Company. Groupon promptly makes available on this website, free of charge, the reports that the Company files or furnishes with the SEC, corporate governance information (including Groupon’s Code of Conduct), and select press releases and social media postings.

 

Contacts:

 

 

Groupon Investor Relations

 

Groupon Public Relations

Kartik Ramachandran, 312-999-3098

 

Julie Mossler, 312-242-2033

ir@groupon.com

 

 

 



 

Reconciliation of Non-GAAP Financial Measures

 

Free Cash Flow

 

The following is a reconciliation of free cash flow to the most comparable U.S. GAAP measure, “Net cash provided by operating activities,” for the years ended December 31, 2011, 2010, and 2009, and the three months ended December 31, 2011 and 2010:

 

 

 

Three Months Ended
December 31,

 

Year Ended December 31,

 

 

 

2010

 

2011

 

2009

 

2010

 

2011

 

 

 

(in thousands)

 

 

 

(unaudited)

 

Net cash provided by operating activities

 

$

51,919

 

$

169,077

 

$

7,510

 

$

86,885

 

$

290,447

 

Purchases of property and equipment

 

(8,589

)

(13,986

)

(290

)

(14,681

)

(43,811

)

Free cash flow

 

$

43,330

 

$

155,091

 

$

7,220

 

$

72,204

 

$

246,636