Skip to main content
Advertising

Originally published Friday, March 30, 2012 at 5:20 PM

  • Share:
             
  • Comments (0)
  • Print

Groupon revises results to boost refund reserves

Groupon said that it was selling online deals at higher prices during the fourth quarter and that put it on the hook for larger refunds. Its stock fell on the news.

Most Popular Comments
Hide / Show comments
No comments have been posted to this article.
Start the conversation >

advertising

Groupon revised its fourth-quarter results on Friday after the online-deal company found it needed to increase the amount of money it sets aside for refunds.

It wasn't a good sign for Groupon as this was its first quarterly report since it went public in November. The company's shares plunged in after-hours trading on the news.

The company refunds money to any user who is unhappy with his or her deal, an important part of its business model that has made it so popular. The need to revise its reports, though, indicates it might not have the controls in place to adequately keep up with its own phenomenal growth.

Groupon said that it was selling online deals at higher prices during the period and that put it on the hook for larger refunds. The adjustment lowered the company's revenue for the period by $14.3 million and lowered its net income by $22.6 million, or 4 cents per share.

In February, the company reported a surprise loss for the quarter of $42.7 million, or 8 cents per share. It also said its revenue nearly tripled to $506.5 million.

The company's auditor Ernst & Young also flagged a weakness in Groupon's internal controls over its financial statement for the period in a regulatory document on Friday.

Groupon said it is working to identify and address the underlying causes and said it may have added expenses to solve the issue, including the cost of hiring more financial staff for the quickly growing company.

"We remain confident in the fundamentals of our business, as our performance continues to highlight the value that we provide to customers and merchants," Groupon's Chief Financial Officer Jason Child said in a statement.

The Chicago-based company affirmed its guidance for the first quarter.

Shares of Groupon dropped $1.13, more than 6 percent, in after-hours trading. Its stock rose 68 cents to close the day at $18.38.

News where, when and how you want it

Email Icon

Career Center Blog

Career Center Blog

Looking for joy on the job


Advertising