Curry flow 8 amazon9/5/2023 “The debate is whether the merchants are actually floating the business. “There has always been a discussion on whether they actually need the money,” noted one investment banker. Groupon, which collects cash upfront from the sale of its discount coupons and pays merchants offering those discounts their revenue share at a later date, held US$243.9m in cash and cash equivalents at June 30 (up from $225m at June 30) but had an accrued merchant payable balance of US$465.6m. Yet those close to the IPO say Groupon is simply eager to finalize its IPO and emerge from SEC quiet period restrictions that have limited its ability to defend itself against the critics (despite several valiant efforts by management to test the rules). Groupon critics believe the company falls into the former category, arguing that even though operating cash flow is positive, it relies heavily on short-term cash from slowly paying its merchants and needs more cash to fund its working capital. “Most CEOs and boards are choosing to wait for things to stabilize unless they need to go now or they want to get the process over and done with,” one said. International losses were higher because of additional investments in less mature markets in South Korea, Australia and Japan.īankers close to the deal noted that most issuers were choosing to defer in this market, despite the strong October rebound in US stocks. Groupon said the improvement it saw in operating performance in North America was the result of its ability to lower marketing expenses while still driving customer growth. The company, which has 142.9m subscribers and now makes most of its revenue overseas, also made a US$239,000 loss from operations in the latest quarter, down from US$101m in the June quarter. The latest S-1 also includes September quarter results, showing a 496% year-on-year improvement in gross billings to US$1.16bn and a 426% gain in reported revenue to US$430.2m. Groupon has copped criticism that the bulk of the US$1.11bn it has raised from venture capital, some US$942m has been used to cash out insiders, including Lefkovsky. No existing shareholders are selling into the offer, though this was part of the initial plan. Management and the deal team will conduct teach-ins with major banks involved in the transaction on Monday before the roadshow travels to the Mid-Atlantic then Boston, New York (for two days), San Francisco, Denver, Los Angeles, the Midwest and Chicago.Ī key disclosure in the updated filing is that each of the 2.4m Class B shares outstanding will have 150 votes, leaving Groupon tightly controlled by executive chairman Eric Lefkovsky, chief executive Andrew Mason and co-founder Bradley Keywell. “It doesn’t make a lot of sense to go to Europe given the lack of participation in new issues.” “The focus really is to get in and out of the market as quickly as possible,” said one syndicate source of the decision to market exclusively in the United States. The deal is expected to price on November 3 after a US-only roadshow. Morgan Stanley, Goldman Sachs and Credit Suisse are lead underwriters. The company is being pitched on a valuation that is comparable with Amazon based on a 2012 revenue multiple, but a significant discount to Amazon’s 2013 multiple. At the upper end, the deal would raise US$540m in fresh capital, less than the US$750m amount nominated in its IPO registration document first filed with the Securities and Exchange Commission in June. Groupon plans to sell 30m shares at a price range of US$16-$18 a share for a valuation of US11.4bn or less, well south of earlier estimates of more than US$20bn. NEW YORK, Oct 21 (IFR) - Groupon is finally ready to launch its IPO with a scaled-back offering that seeks to win over the daily discount deal company’s legion of critics.Īfter an IPO build-up marred by persistent criticism of the three-year-old company’s business model, accounting and leadership, the underwriting team of 14 banks remains confident that perceptions of the company can be changed when management actually gets a chance to tell the story on the roadshow due to formally start next week.
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