Groupon, helping to blow more air into the growing tech bubble, filed today for an initial public offering with the Securities and Exchange Commission.
The daily-deals company says it wants to raise $750 million and has hired Morgan Stanley, Credit Suisse, and Goldman Sachs as its bankers. That number can, and often does, change from the first IPO filing papers. And Groupon did not include information about the number of shares it intends to sell, which would give a valuation for the company itself. Some reports say Groupon could be valued at between $20 billion and $25 billion.
By comparison, the professional-networking site, LinkedIn, which went public two weeks ago, raised $352 million in its IPO, and has a current market capitalization of $7.4 billion.
Those sorts of numbers are leading other emerging tech companies to consider going public. A week ago, rumors swirled that online gaming company Zynga will file for an IPO.
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The filing noted how quickly Groupon has grown. The company blossomed from five North American markets in June 2009 to 175 North American markets as well as markets in 42 other countries as of March. In the same period, the subscriber base soared from 152,000 to 83.1 million. Those customers helped generate $3.3 million in revenue in the second quarter of 2009, a figure that jumped to $644.7 million in the first quarter of 2011. And Groupon had 37 employees in June 2009, and now employs more than 7,100 workers.
That said, it's an astonishing valuation for a company that lost $146.5 million in the quarter that ended March 31, compared to a profit of $8 million in the same period a year earlier. In 2010, the company lost $456.3 million, compared to a loss of $6.9 million in 2009.
What's more, Groupon faces new competition from Internet giant Google, which just launched its rival Google Offers service. The company acknowledged in its filing it could face new competition from the likes of Microsoft and Facebook.
Groupon Chief Executive Andrew Mason wrote a letter to potential investors, explaining the company's business strategy and warning that he intends to continue to focus on long-term goals.
"We spend a lot of money acquiring new subscribers because we can measure the return and believe in the long-term value of the marketplace we're creating," Mason wrote. "In the past, we've made investments in growth that turned a healthy forecasted quarterly profit into a sizable loss. When we see opportunities to invest in long-term growth, expect that we will pursue them regardless of certain short-term consequences."
In the filing, Groupon said it intends to use the proceeds for general corporate purposes, including acquisitions, though the company added that it does not have any acquisition commitments currently. The filing does disclose that Groupon paid $204.2 million for the German daily deal site CityDeal last month.
In his letter, Mason wrote that shareholders should "Expect us to make ambitious bets on our future that distract us from our current business. Some bets we'll get right, and others we'll get wrong, but we think it's the only way to continuously build disruptive products."
The filing offers some other details about the company, including executive compensation. Mason received a $180,000 salary last year with no bonus. He opted to reduce his base salary this year to $575 and has eliminated the opportunity to get a bonus. That said, Mason also purchased 1.8 million shares in 2009, though he forfeited 150,000 of them this April for undisclosed reasons. The filing notes that Mason holds nearly 23 million shares of Groupon's Class A stock, a 7.7 percent stake, and nearly 500,000 shares of its Class B stock, a 41.7 percent stake.
Eric Lefkofsky, a founder of the company, holds 64.1 million shares of the Class A stock, a 21.6 percent stake, and nearly 500,000 shares of the Class B stock, a 41.7 percent stake. Mason, Lefkofsky, and a third founder, Bradley Keywell, will continue to hold 100 percent of the Class B shares after the initial public offering.
Groupon's venture backers, New Enterprise Associates and Accel Partners, own 14.7 percent and 5.6 percent of the Class A shares, respectively.
At one point in his letter, Mason took a light-hearted approach, noting that Groupon was an offshoot of The Point, a business designed to help users raise money for social action. Mason, though, shifted his focus to Groupon, which offered far more potential.
"After selling out on our original mission of saving the world to start hawking coupons, in order to live with ourselves, we vowed to make Groupon a service that people love using," Mason wrote.
Updated at 1:20 p.m. PT with details from the filing.
Updated at 2:35 p.m. PT with more details and the embedded SEC filing below (uploaded to Scribd by All Things Digital's Kara Swisher).Groupon IPO