As Groupon Publicly Struggles, LivingSocial Continues to Grow

While Groupon’s problems continue to play out in a very public forum, the No. 2 daily deals provider is quietly gaining momentum.

In the first quarter, LivingSocial’s revenues totaled $110 million, increasing 168 percent compared to the same period a year earlier. The Washington, D.C., company also recorded a profit of $156 million during the period, compared to a loss of $60 million a year earlier.

[Update: To clear up any confusion, a footnote in Amazon's filing explains that LivingSocial's net income in the first quarter was boosted by non-cash gains from acquisitions during the quarter. Otherwise, it reported an operating loss of $92 million.]

The results of the privately held company were reported last week by Amazon, which holds a 29 percent stake in the company.

The positive results were echoed in a report released yesterday by Yipit, which independently tracks the performance of the daily deals market. According to its data, LivingSocial gross billings are accelerating and are up 15 percent in the first quarter compared to the previous period.

A LivingSocial spokesperson declined to comment on third-party estimates.

Despite what information is publicly available, LivingSocial’s operations remain a mystery compared to its largest competitor, Groupon.

Since going public late last year, Groupon has tripped up multiple times, leading its stock price to tank and critics to question the sustainability of the entire industry. Just yesterday, Kara Swisher reported that two of Groupon’s board members were being replaced with board members who have more of an accounting background.

Any LivingSocial screw-ups, as well as its accomplishments, are masked by the fact that it is privately held.

According to Yipit, LivingSocial’s gains in North America during the first quarter were propped up by Escapes, its travel division. It said Escapes grew by 31 percent to $38 million in gross bookings in the first quarter, up from $29 million in Q4.

What’s most impressive, according to Yipit, is that LivingSocial’s growth comes as it showcases more deals — sometimes more than a dozen in one city.

In the first quarter, it offered roughly 21,000 deals, a 15 percent jump compared to the fourth quarter. Despite offering more deals, gross bookings per deal have remained relatively steady — in other words, as it offers more deals, customers buy more deals.

At the same time, the company continues to experiment with new products, including 918 F Street, which is a venue where LivingSocial can host a number of experiences. It also recently launched Takeout & Delivery services, where users can order full-priced meals online.

That option replaced the company’s instant deals, which offered last-minute discounts on meals, pedicures and other offers.

Just yesterday, Groupon reaffirmed its commitment to a similar product called Groupon Now by announcing that it had sold 1.5 million mobile offers since launching a year ago. It said it was live in 31 of its 175 North American markets with more coming soon.

In late afternoon trading today, Groupon’s stock was finally trading up 2.5 percent, or 27 cents, to $10.98 a share, after sliding for multiple weeks. At that level, the company was worth $7 billion. In comparison, LivingSocial was last presumed to be valued at somewhere between $4 billion and $5 billion.


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