Groupon Annual Revenues Actually $2 Billion

December 3, 2010 at 4:46 pm PT

According to sources close to the situation, Groupon’s actual run rate for this year is clocking in at $2 billion in revenue, rather than the widely quoted $500 million.

Who knew hawking spas treatments and stripper pole lessons could be so lucrative?

About 50 percent ofhat revenue is paid out to the myriad of local merchants–called a pass-through–that the social buying phenom does discount deals with, those kind of numbers give some insight into why Google has been willing to entertain paying up to $6 billion to acquire Groupon.

The pair have been in discussions about an acquisition by the search giant, which was first reported here.

Over the last several weeks, a much lower $500 million to $600 million annual revenue figure has been used for Groupon–including here.

Apparently, that’s only in one quarter of the year.

The Chicago-based start-up is privately held and does not have to release its financial information.

As in all acquisition talks, there is a chance they will not result in a purchase. Google and reviews site Yelp, for example, held serious discussions that resulted in no purchase by the search giant.

[UPDATE: The Google-Groupon talks are over, as Chicago-based start-up decided to go it alone.]

One thing not true: A split between CEO Andrew Mason and his two original partners–Brad Keywell and Eric Lefkofsky over the possible sale.

That tension has been rumored by some, with Mason more interested in keeping Groupon independent and focused on an IPO and the others wanting to sell.

Sources said the trio are not at odds over the future of Groupon.

Tagged with: acquisition, Andrew Mason, annual, BoomTown, Brad Keywell, buying, Chicago, digital, discount, discussion, Eric Lefkofsky, financial, Google, Groupon, Illinois, independent, information, Internet, IPO, Kara Swisher, lesson, merchant, partner, pole, privately held, quarter, revenue, search, Silicon Valley, social networking, spa, Start-up, stripper, treatment, Yelp

comments so far. Add yours.

http://twitter.com/Cutcaster Cutcaster

Wow that is a lot of cash. Interesting to see that the deal is now off. I wonder how much Groupon would have sold for based on those numbers of how much they wanted.
Anonymous

Oh the difference between what is and what could be…
Anonymous

Sometimes you gotta group off before you can really get your group on.
Anonymous

This sounds an awful lot like InnerWorkings.
http://www.rajeshsetty.com/blog/ rajesh301

Hi Kara,

Bold move by Andrew Mason and team at Groupon. Being a private company they don’t have to clearly say the rationale behind rejecting what seems like a handsome offer. From the past successes of Andrew and his team, it only shows that there must be something exciting gong on there.

On a side note, the revenue number of $2B is a bit misleading for companies with a “passthrough” business model. While yes, this might be the number that passed through them, the real revenue must be 20 to 30 percent of that number. If we take an aggressive approach and say that this was 30% of the passthrough, then the revenue will be $600M. So the $6B offer is 10X the real revenue and hence a a handsome offer.

Rejecting that only shows they have bigger plans.

Looking forward to what’s in store for them.
Anonymous

Its good to see Groupon rejecting Google’s offer to acquire. 2011 would be an interesting year to watch and see how they grow from now on…

It shows the confidence in themselves ..& maybe they have something up their sleeves..

Cheers,

Venugopal
Vengo Ventures.
http://twitter.com/ilamont ilamont

“Run rate”?
Anonymous

Wow, incredible. Must be nice having train loads of cash laying around!

http://www.real-privacy.edu.tc
Anonymous

While “run-rate” is nice, I prefer a business to be PROFITABLE, 200 billion in run-rate is worthless if they are paying out $202 billion!
http://rendion.myopenid.com/ render

You know that groupons revenue is not 2 Billion for this year and that you are printing a lie right?
http://twitter.com/shameerc Shameer Chamal

Groupon has proved there is something in this world that does not comes under Google… Its really Great…
Taylor D

Anyone else think that including that “pass-through” revenue is misleading?

Seems akin to Visa and American Express including the totals of all the transactions they process as “revenue.”
Anonymous

What happens then when Google starts its own group buying? They should have taken the deal.
http://twitter.com/Y_S_Bacchus Y.S.Bacchus

Please, correct me if I am mistaken, but as far as I remember in April this year a group of investors led by Digital Sky Technologies bought roughly a 10% stake in Groupon for 140 million USD. It seems to be at odds with 2 billion in revenues, unless I am missing something here.
http://twitter.com/yahvision Steven Rowles

I guess Groupon got a good look into the future and has planned for it, there must be a bigger pay out down the road. (YAHVISION.COM)
http://www.twitter.com/stevenkane Steven Kane

“sources close to the situation”?

this is spin control, plain and simple

no way groupon would have raised money last round at that valuation with this kind of truly massive revenue growth

i realize anonymous sources are necessary. but the practice of simply printing whatever silly unsubstantiated numbers groupon or facebook or twitter or anyone whispers to make themselves look good, has become ridiculous, and ridiculously common

kara, we expect better from you…?
http://pulse.yahoo.com/_2QWDQ6LIC2UI64EJGZ7NHLCTBM LoonyCutie652256

Check out “JoomABC” Then you will get to know start a Groupon business is so easy!
http://www.facebook.com/people/Manuell-Labor/100000650220992 Manuell Labor

Groupon has to go beyond the spa and food segments. Until they get the major retailers, hospitality and travel industry to buy into the group deal concept their revenue and feet on the street business to signup merchants will not be sustainable and in fact will result in fragile market share.

It is easy to create look alike coupon social media variants with little capital to enter into the business. There are close to 500 such vendors since Sept 2010 following Groupon’s approach.

50% off offers with 50% rev share is perhaps good for short term brand awareness for small retailers but they can’t maintain that marketing budget since deals such as this have no profit margin to the retailer.

Being in this business for the last 15 years, I know the metrics and ROI. Groupon won’t be able to maintain growth to get to the tipping point of users where all stakeholders think that they all benefit: Groupon franchisees, investors, merchants, consumers.