It appears Groupon has come up with an infrequently-used – or newly created – accounting term to makes its numbers appear more impressive as it heads into an IPO, according to media reports.
The Financial Times reported that Groupon has called its way to measure profit “adjusted consolidated segment operating income” or “adjusted CSOI” in a recent filing with the U.S. Securities and Exchange Commission.
“The measurement reports the company’s operating income excluding several major expenses, including marketing and acquisition-related costs,” a Bloomberg (News - Alert) report appearing in The New York Times explained.
Looking at the numbers in more detail, The New York Times reported adjusted CSOI was shy of $60.6 million in 2010, compared to $3.5 million it reported in 2009.
But the new term ignores the $263.2 million Groupon spent on marketing during 2010, compared to the $4.5 million it spent in 2009, according to The New York Times. In addition, Groupon spent $203.2 million on acquisitions during 2010. And The Financial Times (News - Alert) notes that Groupon failed to include another category in its numbers – stock-based compensation.
Adding in diverted costs, Groupon “reported a $456.3 million loss for last year on a basis of generally accepted accounting principles,” according to The New York Times.
Another version was presented by All Things D which said Groupon using GAAP, “lost $413.4 million” in 2010.
“Groupon is growing like crazy in terms of number of users and offers, while losing money at an eye-watering rate,” added The Financial Times. “To make up for the latter, it has come up with an ingenious way of smartening up its figures.”
But Groupon claims “adjusted CSOI” is “an important measure of the performance of our business as it excludes expenses that are non-cash or otherwise not indicative of future operating expenses,” quoted All Things D.
Groupon is planning an IPO of up to $750 million, according to TMCnet.
The online service lets subscribers buy discounts or coupons related to where they live and their preferences, TMCnet added.
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Ed Silverstein is a TMCnet contributor. To read more of his articles, please visit his columnist page.
Edited by Jennifer Russell
