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Groupon Revises Q4 Results Lower; Stock Down

Groupon Revises Q4 Results Lower; Stock Down
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3/30/2012 6:52 PM ET

Online discount site Groupon Inc. (GRPN: Quote), Friday restated its fourth quarter results after disclosing material weaknesses in its internal accounting controls. As a result of the restatement, Groupon now reports an increase in fourth-quarter loss and as well as lower revenues.

The tweaking of its first ever financial statement since going public last November dragged Groupon shares down nearly 7 percent in after-hours trade on the Nasdaq.

Groupon said "The revisions are primarily related to an increase to the Company's refund reserve accrual to reflect a shift in the Company's fourth quarter deal mix and higher price point offers, which have higher refund rates."

The company indicated the revisions to have impacted both revenue and cost of revenue, with disclosure of a material weakness in its annual report.

The revision shows an increase in quarterly loss by $22.6 million or $0.04 per share, and a reduction of $14.3 million in revenue for the period. The change also indicates higher operating expenses.

Fourth quarter net loss to common shares now amounts to $65.4 million or $0.12 per share, compared to a net loss of $378.6 million or $1.08 per share last year.

Adjusted loss for the quarter now totals $32.5 million or $0.06 per share, compared to $185.8 million or $0.53 last year.

Initially in February, Groupon reported a fourth-quarter net loss of $42.7 million or $0.08 per share, and an adjusted loss of $9 million or $0.02 per share.

For the fourth quarter, restated revenues were $492 million, compared to $172 million last year. Previously, fourth-quarter revenue was reported at $506.5 million.

Looking to the first quarter, Groupon said it continues to expect revenue of $510 million to $550 million. Analysts currently expect revenue of $533.79 million for the quarter.

The issue was highlighted by the company's independent auditors Ernst & Young, noting weaknesses in internal controls for its financial accounting period. While admitting to a material weakness in its internal controls over its financial statement close process, Groupon assured that issues have been brought under control. As part of the process, Groupon has also engaged another auditor to look into the effectiveness of its internal controls by the end of 2012.

Jason Child, Groupon CFO said, "We remain confident in the fundamentals of our business, as our performance continues to highlight the value that we provide to customers and merchants."

Interestingly, Groupon has had several accounting issues prior to going public and had to amend details of its financial information last year. Groupon last September amended a S-1 public offering filing and dropped a reference to a controversial accounting metric it earlier intended to use to report profits.

Groupon went public last November following an IPO of 35 million shares at a price of $20 per share in what was said to be the biggest public offer by a US-based internet company after Google Inc. (GOOG).

The company grew out of a website called The Point that was launched in November 2007, which lets users start a campaign asking people to give money or do something as a group.

GRPN closed Friday on the Nasdaq at $18.38, up $0.68 or 3.84%, on a volume of about 2.6 million shares. In after hours, the stock slid $1.24 or 6.25%. Since its debut, the stock has ranged between $14.85 and $31.14.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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