Groupon (NASDAQ:GRPN), an e-commerce site used by merchants to offer customers daily discounts, announced terms for its highly anticipated IPO on Friday. The Chicago, IL-based company plans to raise $510 million by offering 30 million shares at a price range of $16.00 to $18.00. At the mid-point of the proposed range, Groupon will command a diluted market value of $11.2 billion and an enterprise value of $10.5 billion (or 6.4x annualized most recent quarter sales). Recent market volatility, a slowdown in IPO issuance and heightened media scrutiny have apparently taken a toll on the valuation; the company had originally been rumored to be seeking a valuation as high as $25-$30 billion, while estimates of several months ago had the company targeting a market cap in the $15-$20 billion range.
The company also reported its September financials in the updated filing. Revenue growth slowed down noticeably from the prior quarter; the 3Q revenue of $430 million was up only 10% sequentially (vs. 33% sequential growth in the 2Q). Subscriber growth also slowed somewhat; the company's 143 million subscribers were up 23% from the prior quarter vs. 39% growth in the 2Q. Groupon's sold were surprisingly nearly flat (up only 1% sequentially). However, the company made a significant improvement on the bottom line, with operating income coming in close to breakeven at -$5 million vs. a $101 million loss in the prior quarter. Additionally, operating income from North America (excluding stock comp) turned positive at $19 million (up from a loss of $11 million in the June quarter).
Groupon originally filed with the SEC to raise up to $750 million in an initial public offering this past June.Morgan Stanley, Goldman Sachs and Credit Suisse are the lead underwriters on the deal, which is expected to price November 3.