The inevitable happened yesterday. Groupon officially filed to be traded on the public market.
The daily online coupon company has been heavily talked about ever since it spurned high-priced acquisition attempts. Now, it’s hoping to raise $750 million with an IPO. Of course, we love reading prospectus. So we scoured Groupon’s S-1 for 10 fast, but fascinating, facts about this hot company.
Cutting Groupons
Just how many “Groupons” has Groupon sold? 70 million. For some perspective on the company’s growth, 28.1 million of those Groupons were sold in the first quarter of this year. More than 1,000 daily deals have been served up to subscribers since Groupon’s inception.
Won’t You Be My Subscriber?
Groupon puts a lot of stock into the continued growth of its subscriber base, which has been meteoric. Between June 30, 2009 and March 31, 2011, subscribers grew from 152,203 to 83.1 million. That’s a lot of people hitting the subscriber button.
Revenue Rising
With all those Groupons being sold it makes sense that the company is reaping revenue. Groupon’s revenue in the second quarter of 2009 was $3.3 million. Its revenue in the first quarter of 2011 was $644.7 million. The company saw more than 2,000% increase in revenue between fiscal 2009 and 2010.
What’s The Net?
Yup. But with that rise in revenue comes a rise in costs. Groupon posted losses of $389.6 million in 2010 and $102.7 million for the first quarter of 2011. As of March 31, Groupon had accumulated $522.1 million.
Jump The Pond
In May of 2010, Groupon bought the European company CityDeal, which immediately added 1.9 million subscribers and a solid foothold in that region’s market. As a result, the company now generates more business internationally (53.8% of revenue) than in North America (46.2% of revenue). Groupon does business in 43 countries.
Keep It Online
Controversial Super Bowl ads notwithstanding, Groupon channels most of its marketing dollars online. The company spent $241.5 million in online marketing in 2010. It’s already spent nearly 75% of that ($179.9 million) in the first quarter of 2011 on online marketing.
Groupon Hearts eBay
Groupon is seeing solid success in partnering with big brands like Microsoft, Yahoo and Zynga. A partnership with Redbox in December resulted in 200,000 new customers for Groupon. A similar partnership to sell Daily Deals to eBay users in March added another 290,000 customers.
Coupon Quota
Groupon has rapidly added staff to its workforce. It’s now above 7,000 employees. Understandably, a lot of those jobs have been sales positions. The company now has more than 3,500 inside and outside sales representatives to build relationships with local merchants. In the first quarter of this year, the average revenue per month per sales person is $172,000.
Deals On The Go
What a difference a year makes. It was just over a year ago that Groupon released its mobile application. Since then it’s been downloaded 8.8 million times.
Editorial Matters
Sure, Groupon is spending big on sales and marketing. But we all know the way Groupon writes its ads that makes it unique. The company has invested a lot in the editorial side, and as of March 31 it has 925 editorial staffers. So that’s where all those journalism graduates are going.
Groupon has been an undeniable success in the short-term, but it has a fatal flaw.
I’ve never seen an advertiser offer a Groupon more than once. And I know many advertisers who have been disappointed in the results.
Why? Because they lose money on every deal.
The deal is offered at half-price, and Groupon takes half of that money, leaving only 25 cents on the dollar for the advertiser.
That’s a great “loss-leader” to bring customers in the door, but it only makes financial sense if some of those half-price customers are impressed enough to come back and become full-price customers.
It’s not happening.
Groupon subscribers are bargain-hunters. They are in your restaurant this week because you are half-price. Next week they are in someone else’s restaurant for half-price.
A business cannot survive (let alone grow) making 25 cents on the dollar.
Ask any local business in your city what their feelings are about their Groupon participation, and you’ll see. This business model has no future unless the advertiser gets more of the revenue. And since Groupon is already posting big losses, that’s not likely to happen.