When Groupon filed IPO documents with the Securities and Exchange Commission in June, its use of certain financial accounting metrics raised eyebrows. Now, regulators are prolonging the company’s pre-IPO review over concerns about the metrics, specifically “gross profit” and “consolidated segment operating income” (CSOI), according to CNBC. As a result, the company’s offering could be delayed, the network said. But a source familiar with the matter disputed the report, saying the company’s planned September IPO is on track.
Gross profit is the amount that Groupon keeps after paying its partner merchants, but that figure excludes certain marketing and administrative costs. CSOI is a measure of operating income, but like gross profit, it excludes marketing expenses as well as stock-based compensation. Because Groupon relies so heavily on marketing, some observers have suggested that the metrics don’t accurately reflect the company’s financial performance.
CNBC (NSDQ: CMCSA) said the company could ultimately remove CSOI as a metric from its IPO documents, citing sources familiar with the matter.
A Groupon spokesperson declined to comment.
The fast-growing daily deals site already has had to amend its IPO documents once, after co-founder and executive chairman Eric Lefkosky predicted the money-losing online coupon service would be “wildly profitable,” just one day after the company announced its intention to go public.
Here’s the CNBC report: