Groupon Retracts “Wildly Profitable” Statement in Latest SEC Filing
Groupon has updated its IPO filing to add in several new pieces of information, the most glaring of which is the retraction of statements one of its founders made to the press.
The updates come after the Securities and Exchange Commission reviewed the documents and made comments, according to sources.
The latest document will likely be looked at under a magnifying lens, given that the daily deals company faced a series of negative reports following the news on June 2 that it intended to raise roughly $750 million in an initial public offering.
The day after its IPO filing, Eric P. Lefkofsky, co-founder and executive chairman of the board, told Bloomberg in an interview that Groupon will be “wildly profitable,” referencing worries about losses unveiled in its financial statements and his past record of start-ups.
In today’s filing, Groupon backpedaled, explaining that, “You should not rely on a reported statement in a June 2011 news report by our co-founder and Executive Chairman in making your investment decision.”
It goes on to say that Lefkofsky did not agree to be interviewed and that Groupon representatives had requested that the statement not be published. “The reported statement does not accurately or completely reflect Mr. Lefkofsky’s views and should not be considered by prospective investors in isolation or at all.”
Along the same lines, Groupon CEO Andrew Mason’s letter to potential shareholders, which could be construed as overly positive, was moved from one of the first pages to page 32.
Besides that, the major update to the document includes a full list of the company’s underwriters. The newest addition is J.P. Morgan, which will be joining Morgan Stanley, Credit Suisse and Goldman Sachs as the lead investment banks.
Another 11 investment banks are also joining the process in supporting roles. The full list: Allen & Co., B of A, Merrill Lynch, Barclays Capital, Citi, Deutsche Bank Securities, William Blair & Co., Loop Capital Markets, RBC Capital Markets, Citadel Securities and the Williams Capital Group.
Also new to the filing was a breakdown of the company’s international business, which is actually larger in terms of revenues than in the U.S.
Revenue from its international and domestic operations was $346.8 million and $297.9 million, respectively, in the first quarter 2011. In addition, it said that its gross profit margins (which is the amount Groupon retains after paying a percentage to the merchant) are higher internationally.
It said that overall gross margins were 41.9 percent at the end of the first quarter, dropping from 45.2 percent in the year-ago period. The decrease was primarily due to an increase in national deals in North America, which resulted in lower margins for the purpose of acquiring new subscribers and establishing its brand.
[Photo: Asa Mathat | Clip art iStockphoto/Jules Kitano]