The leading Deal of The Day site with discounts on things to do, eat, see and buy. Currently providing subscribers in over 550 cities world wide with unique local discounts based on group buying and promising businesses a minimum number of customers.
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Reality is such a harsh mistress. GRPN reported a healthy spike in revenue YOY (+44%), and even beat EPS expectations for Q2, but it's questionable accounting practices and weakness in it's core business make the most of us fairly nervous.
GRPN has two main units from which it draws revenue: 1) the core coupon business, and 2) it's "Goods" discount retail business.
It's this distinction that has me concerned. The "Goods" business is where Groupon saw it's growth in Q2. This is where GRPN buys up merchandise in bulk, and then sells it at a higher price to customers. What's concerning is that GRPN doesn't report it's actual net income from this business. If it generates $100M from "Goods", and it spent $80M on buying the goods (their bulk cost), they only report the $100M. Sketchy.
Their core business was weak, and that's led some to question whether consumers have become "fatigued" with daily deals. Do you still anxiously check your email every day for the latest Groupon? I still get Living Social deals, because they offer some cool travel offers, but I axed GRPN a while ago since the offers were rarely relevant.
GRPN managed to post a profit in Q2, something it did not do last year. This was due, in part, to a 58% drop in marketing costs. They warned, however, that these costs may go back up in the future.
Until GRPN can post "Goods" numbers with more transparency, and until their core business firms up, I'm continuing to keep my downthumb on it.