Groupon Accounting Chief Needs To Bring Credibility To Its Books

By
A A A

Groupon ( GRPN ) has appointed Brian Stevens, an ex KPMG LLP audit partner, as its new chief accounting officer. Mr. Stevens spent 16 years with KPMG prior to joining Groupon. The company has had its share of accounting woes with metrics such as Adjusted Consolidated Segment Operating Income ("Adjusted COSI") which excluded marketing costs. In a disclosure in March, Groupon stated that its fourth quarter 2011 results were worse than earlier reported due to customer refund requests on new and expensive deals that it ventured into. In a regulatory filing, Groupon admitted that "there is a material weakness in the design and operating effectiveness of our internal control over financial reporting."

Check out our complete analysis of Groupon


Nevertheless, in Q2 2012, Groupon managed to rein in some of its costs as its marketing expenses dropped by nearly half y-o-y to $88 million. North American revenues grew by 66 percent y-o-y to reach $260 million. We have modeled our estimate based on the dropping customer acquisition costs and growing revenues. Mobile adoption is key for the growth of new business lines such as Groupon Now! and in July 2012 nearly a third of the North American transactions were completed on mobile devices, which is a 35 percent increase y-o-y.

Outlook For Q3

The company expects revenue to be between $580 and $620 million, an increase of 35-44 percent y-o-y. Interestingly, the outlook assumes no further acquisitions or investments, which indicates it may push to grow organically.

We currently have a ~$8 Trefis price estimate for Groupon , which stands nearly 90% above its current market price.

Understand How a Company's Products Impact its Stock Price at Trefis



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: AMZN , GOOG , GRPN , YELP

Trefis

Trefis

More from Trefis:

Related Videos

Renovating the Empty Nest
Renovating the Empty Nest           

Stocks

Referenced

Most Active by Volume

93,878,383
  • $2.23 ▲ 39.38%
51,087,031
  • $16.73 ▼ 0.06%
49,332,388
  • $2.02 ▼ 35.26%
41,208,585
  • $35.07 ▲ 1.30%
39,602,660
  • $93.88 ▲ 3.51%
38,838,128
  • $131.39 ▲ 1.02%
38,654,579
  • $27.72 ▲ 0.29%
38,235,949
  • $6.16 ▼ 0.96%
As of 5/21/2015, 04:15 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com