- Q3 2011
Revenue: $430.2 million
Accrued expenses and merchant payables: $622 million
- Q2 2011 Revenue: $392.6 million Accrued expenses and merchant payables: $557 million
- Q1 2011 Revenue: $295.5 million Accrued expenses and merchant payables: $421 million
In the short-term, Groupon hopes to make up for its cash shortfalls by selling $11.4 billion of stock in an IPO. It is selling only a tiny minority of its stock in that sale -- suggesting that management believes it may need to go back to the trough of the equity markets again and again before it is finally able to stand on its own two feet.
Push will come to shove if Groupon ever sees a period of revenue decline. The company is dependent for its day-to-day operating cash on receiving credit-card transactions immediately from subscribers and then delaying payment of the share it must give to its merchants. It keeps the "float," in other words, much like the operator of a Ponzi scheme. That type of scheme, in which the company will always need a greater amount of "new" subscriber money coming in than the "old" payments it owes merchants, will quickly become unviable if Groupon ever experiences a period of revenue decline, when there is less "new" money coming in.
Lo and behold, the company's sales grew only 9.6 percent sequentially, after a year-on-year period of 426 percent growth. That ought to make Mason very, very nervous. No wonder he wants that IPO to take place on Nov. 4, before the end of the fourth quarter: He needs the cash now, just in case sequential revenue turns negative.
*Correction: This item originally included some erroneous numbers describing operating expenses. Apologies for the error.
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