Groupon
almost broke even for the quarter, a huge change compared to the last year and
a half. Operating income benefitted from a couple of one-time gains,
 |
| The reason revenue grew faster than the number of Groupons sold,
meanwhile, is that revenue per Groupon increased |
 |
The
number of coupons Groupon sold flattened in Q3. This contributed to the revenue
slowdown.
|
 |
| The reason Groupon Revenue grew
more slowly than "Gross Billings" is that Groupon's "take
rate" fell. (The "take rate" is the percentage of coupon sales
that Groupon keeps.) Groupon says the take-rate fell because its product mix
changed |
 |
Revenue,"
the portion of coupon sales that Groupon keeps, also grew, but much more
slowly: Revenue increased 10% to $430 million.
|
 |
Groupon's
North American business is now nicely profitable, earning $19 million in
adjusted operating income in Q3, a 12% margin
|
 |
Market
Opportunity For Daily Deal Sites
|
Only
a few months ago, Groupon was the Internet's next great thing. Business media
christened it the fastest growing company ever. Copycats proliferated. And
investors salivated over the prospect of Groupon going public.
However Today The Groupon Story has turned
upside down.. showing once again how fast
Internet Economy can change and
how little time it takes for a “ product life cycles across the Internet to go
bust …
The start up
Daily Deal’s Pioneer’s expectations for the IPO that in June was
valued as high as $25 billion has now sunk to
a valuation of that is less than
half that at between $10.1 billion and $11.4 billion
Now
Groupon faces concerns about the viability of its daily deals business model.
The novelty of online coupons is wearing off. Some merchants are complaining
that they are losing money — and customers— on the deals. And competitors are
swarming the marketplace with offers and deals that makes very
little economic sense
"Groupon
is a disaster," says Sucharita Mulpuru, a Forrester Research analyst.
"It's a shill that's going to be exposed pretty soon."
Groupon
shows what can happen when a startup experiences steroidal growth in an
unproven industry. Coupled with that is
; hordes of venture funds” who suddenly saw the next Big Amazon “ or the
next “Ebay in Groupon .. In one way Groupon is an emblematic of a business in infancy. According
to Investors who tracks Daily Deals, “Groupon is facing
are symptomatic of something more troubling: questionable accounting, an
overvalued business model and an industry that is turning into the digital
equivalent of junk mail”
The
reason Groupon reached break-even is that it cut back sharply on marketing
costs. Although the company's marketing efficiency improved
(cost-per-new-customer dropped), Groupon also added fewer customers than it has
in prior quarters. This, in turn, led to a slowdown in the company's revenue
growth rate, especially in the North American business.
