Groupon to Raise up to $540 Million at $11.4 Billion Valuation
Groupon has filed an early-morning surprise, putting to rest speculation about its IPO. It is on, albeit at a slightly lower valuation than originally expected.
It intends to raise $480 million to $540 million in the public markets, setting a valuation range between $10.1 billion and $11.4 billion. Here’s the entire document Groupon shared with Wall Street investors while on its road show.
In addition, the daily deals giant released third-quarter results today, which included improved numbers and a profit in North America.
It will trade on the Nasdaq exchange under the ticker “GRPN.”
The company said it plans to sell 30 million shares at $16 to $18 apiece, which will raise about half of the original $750 million it had intended to raise when it filed for the IPO back in June.
There will be an over-allotment of 4.5 million shares. In all, the company will end up selling nearly 5 percent of its Class A common stock before the allotment.
Since the company’s original filing, the Chicago-based darling has gone through the wringer. Updated amendments led to questions about the company’s strength, or whether it could sustain a profitable business over the long term. Additionally, a number of top-level executives have left the company under the watch of Groupon’s CEO Andrew Mason.
Some of those concerns will be muted, given the company’s financial performance in the quarter ended Sept. 30. In that period, it helped to demonstrate it can scale back its marketing costs and still grow.
Q3 revenues increased 426 percent year over year and 9.6 percent sequentially to $430.2 million. The company’s third-quarter net loss totaled $10.6 million, narrowed substantially from the prior quarter and year-ago period when it lost $101.2 million and $49 million, respectively.
Contributing to improved results was a profit in North America of $18.8 million, reversing a loss of $10.5 million in the second quarter. This is primarily due to a decrease in marketing expenses while still maintaining customer growth, which resulted in higher revenue.
The international markets had similar improvements; however, Groupon continued to invest heavily in countries such as South Korea, Australia and Japan, which adversely affected results. A bulk of the company’s revenues, or about 64 percent, occur in North America.
Critics skeptical that Groupon would have a hard time swapping losses for growth definitely have something to think about.
It now has $244 million cash on hand, up 8 percent since the prior quarter, and 255 percent since last year.
Groupon said in the filing that it plans to use the money to increase revenues by expanding domestically and internationally through gaining new subscribers and investing in technology.