Groupon Announces Third Quarter 2012 Results

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Groupon, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
		Three Months Ended September 30,									Nine Months Ended September 30,
		2011				2012					2011				2012
Operating activities
Net (loss) income		$	(14,416	)		$	(940	)			$	(238,083	)		$	29,016
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization			7,058				15,310					22,754				39,836
Stock-based compensation			3,340				22,619					60,922				77,706
Deferred income taxes			2,839				(3,389	)				602				9,608
Excess tax benefits on stock-based compensation			(7,791	)			(2,870	)				(11,323	)			(24,620	)
Loss on equity method investees			11,211				138					19,974				8,694
Acquisition-related (benefit) expense, net			(4,793	)			2,431					(4,793	)			744
Gain on redemption of common stock			(4,916	)			-					(4,916	)			-
Gain on E-Commerce transaction			-				-					-				(56,032	)
Change in assets and liabilities, net of acquisitions:
Restricted cash			(7,116	)			973					(8,141	)			(1,855	)
Accounts receivable			(16,618	)			(10,274	)				(69,690	)			(2,189	)
Prepaid expenses and other current assets			(23,802	)			(3,192	)				(41,023	)			(24,937	)
Accounts payable			(7,550	)			(5,094	)				(21,924	)			13,174
Accrued merchant payables			98,002				21,868					314,872				53,889
Accrued expenses and other current liabilities			34,207				4,933					108,963				68,010
Other, net			(5,244	)			(425	)				(6,824	)			10,073
Net cash provided by operating activities			64,411				42,088					121,370				201,117
Net cash used in investing activities			(43,048	)			(35,629	)				(112,526	)			(142,226	)
Net cash provided by financing activities			8,608				2,707					120,292				18,590
Effect of exchange rate changes on cash and cash equivalents			(11,129	)			6,047					(4,034	)			595
Net increase in cash and cash equivalents			18,842				15,213					125,102				78,076
Cash and cash equivalents, beginning of period			225,093				1,185,798					118,833				1,122,935
Cash and cash equivalents, end of the period		$	243,935			$	1,201,011				$	243,935			$	1,201,011

Groupon, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2011				2012				2011				2012
Revenue:
Third party and other revenue		$	422,989			$	423,564			$	1,111,094			$	1,466,602
Direct revenue			7,172				144,988				7,172				229,568
Total revenue			430,161				568,552				1,118,266				1,696,170
Cost of revenue:
Third party and other revenue			62,339				54,173				156,907				233,834
Direct revenue			5,707				127,613				5,707				202,634
Total cost of revenue			68,046				181,786				162,614				436,468
Operating expenses:
Marketing			170,349				70,919				613,173				275,941
Selling, general and administrative			196,798				287,978				565,686				871,455
Acquisition-related (benefit) expense, net			(4,793	)			2,431				(4,793	)			744
Total operating expenses			362,354				361,328				1,174,066				1,148,140
(Loss) income from operations			(239	)			25,438				(218,414	)			111,562
Interest and other income, net			8,269				617				9,808				54,445
Loss on equity method investees			(11,211	)			(138	)			(19,974	)			(8,694	)
(Loss) income before provision for income taxes			(3,181	)			25,917				(228,580	)			157,313
Provision for income taxes			11,235				26,857				9,503				128,297
Net (loss) income			(14,416	)			(940	)			(238,083	)			29,016
Less: Net loss (income) attributable to noncontrolling interests			3,843				(706	)			23,602				(2,806	)
Net (loss) income attributable to Groupon, Inc.			(10,573	)			(1,646	)			(214,481	)			26,210
Redemption of preferred stock in excess of carrying value			-				-				(34,327	)			-
Adjustment of redeemable noncontrolling interests to redemption value			(43,656	)			(1,333	)			(59,307	)			(12,498	)
Net (loss) income attributable to common stockholders		$	(54,229	)		$	(2,979	)		$	(308,115	)		$	13,712
Net (loss) earnings per share
Basic		$	(0.18	)		$	(0.00	)		$	(1.01	)		$	0.02
Diluted		$	(0.18	)		$	(0.00	)		$	(1.01	)		$	0.02
Weighted average number of shares outstanding
Basic			307,605,060				653,223,610				305,288,502				648,021,943
Diluted			307,605,060				653,223,610				305,288,502				663,557,250

Groupon, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)
			December 31, 2011				September 30, 2012
							(unaudited)
Assets
Current assets:
Cash and cash equivalents			$	1,122,935			$	1,201,011
Accounts receivable, net				108,747				110,058
Prepaid expenses and other current assets				91,645				121,338
Total current assets				1,323,327				1,432,407
Property and equipment, net of accumulated depreciation of $14,627 and $37,564, respectively				51,800				103,876
Goodwill				166,903				196,978
Intangible assets, net				45,667				51,447
Investments in equity interests				50,604				131,039
Deferred income taxes, non-current				46,104				48,753
Other non-current assets				90,071				68,314
Total Assets			$	1,774,476			$	2,032,814
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable			$	40,918			$	60,016
Accrued merchant payables				520,723				573,477
Accrued expenses				212,007				245,083
Deferred income taxes, current				76,841				75,203
Other current liabilities				144,673				171,422
Total current liabilities				995,162				1,125,201
Deferred income taxes, non-current				7,428				28,585
Other non-current liabilities				70,766				74,643
Total Liabilities				1,073,356				1,228,429
Commitments and contingencies
Redeemable noncontrolling interests				1,653				7,190
Stockholders' Equity
Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 641,745,225 shares issued and outstanding at December 31, 2011; 2,000,000,000 shares authorized, 652,501,880 shares issued and outstanding at September 30, 2012				64				65
Class B common stock, par value $0.0001 per share, 10,000,000 shares authorized, 2,399,976 shares issued and outstanding at December 31, 2011 and September 30, 2012				-				-
Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, no shares issued and outstanding at December 31, 2011 and September 30, 2012				-				-
Additional paid-in capital				1,388,253				1,459,485
Accumulated deficit				(698,704	)			(672,494	)
Accumulated other comprehensive income				12,928				11,956
Total Groupon, Inc. Stockholders' Equity				702,541				799,012
Noncontrolling interests				(3,074	)			(1,817	)
Total Equity				699,467				797,195
Total Liabilities and Equity			$	1,774,476			$	2,032,814

Groupon, Inc.
Segment Information
(in thousands)
(unaudited)
		Three Months Ended September 30,									Nine Months Ended September 30,
		2011				2012					2011				2012
North America
Gross Billings (1)		$	400,978			$	552,369				$	1,086,119			$	1,654,201
Revenue		$	161,525			$	291,603				$	455,342			$	790,349
Segment operating expenses (2)			142,689				252,510					468,785				667,655
Segment operating income (loss)		$	18,836			$	39,093				$	(13,443	)		$	122,694
Segment income (loss) as a percent of segment revenue			11.7		%		13.4		%			(3.0	)	%		15.5		%
International
Gross Billings (1)		$	756,232			$	665,887				$	1,668,514			$	2,205,531
Revenue		$	268,636			$	276,949				$	662,924			$	905,821
Segment operating expenses (2)			289,164				265,554					811,766				838,503
Segment operating (loss) income		$	(20,528	)		$	11,395				$	(148,842	)		$	67,318
Segment (loss) income as a percent of segment revenue			(7.6	)	%		4.1		%			(22.5	)	%		7.4		%
Consolidated
Gross Billings (1)		$	1,157,210			$	1,218,256				$	2,754,633			$	3,859,732
Revenue		$	430,161			$	568,552				$	1,118,266			$	1,696,170
Segment operating expenses (2)			431,853				518,064					1,280,551				1,506,158
Segment operating (loss) income		$	(1,692	)		$	50,488				$	(162,285	)		$	190,012
Segment (loss) income as a percent of segment revenue			(0.4	)	%		8.9		%			(14.5	)	%		11.2		%
Stock-based compensation			3,340				22,619					60,922				77,706
Acquisition-related (benefit) expense, net			(4,793	)			2,431					(4,793	)			744
Operating (loss) income			(239	)			25,438					(218,414	)			111,562
Interest and other income, net			(8,269	)			(617	)				(9,808	)			(54,445	)
Loss on equity method investees			11,211				138					19,974				8,694
(Loss) income before provision for income taxes			(3,181	)			25,917					(228,580	)			157,313
Provision (benefit) for income taxes			11,235				26,857					9,503				128,297
Net (loss) income		$	(14,416	)		$	(940	)			$	(238,083	)		$	29,016

(1) Represents the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds.

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