Incredibly impressive revenue, but really, $389.6MM loss on $713MM revenue? Perhaps I'm missing something, but I don't get why it's being hyped up so highly.

Presumably because, like many a previous startup, revenue growth is fantastic. I agree with the HN consensus though-they have no real way of differentiating themselves from LivingSocial et all, so they will continue to have to pump lots of money into marketing ($208m in Q1!!), sales teams, etc and watch their margins go down over time.

Some startups (notably Amazon) use the money they raise to outrun competitors by subsidizing the product. Then, when they have the network tied up, they start making a large profit.

That's some pretty insane expenses. What are they wasting money on?

EDIT:

1) Ad spend: $200+ million

2) 7000+ employees (at $40K average per employee, that's $280M/year)

Salary, to convince businesses to work with them on their extreme terms.

> "And they still aren't turning a profit."

That part just boggles my mind. How can you go from revenue of 30M to 713M in a single year and not have wound up with any profit? Their revenue has grown so fast that I simply cannot imagine being able to greenlight enough spending [1] to get rid of it all in such a short amount of time.

[1] intelligent spends that is; frivolous waste notwithstanding.

I'd imagine it has something to do with the 7,000+ employees and incredible amount of advertising spend.

The employee growth is definitely a part of it. They went from, what was it? 120 in 2009 to 4000 in 2010?

My boggling is more at the challenge of intelligently doing that spending than simply tabulating it. e.g. how do you intelligently hire 20 people a workday, every workday for an entire year, when you were a 100-person company?

Just mind-boggling. In Canada at least the advertising budget is just monstrous. Their ads are everywhere!

I'm not a pro at reading these, but it seems like you can see for yourself at: http://sec.gov/Archives/edgar/data/1490281/00010474691100561...

That 713M "costed" 433M (seems to be that what goes to the companies advertising via groupon). Then theres 263M on "marketing", 233M on "selling, general, and administrative", and 203M on "acquisition related". The link has more detail on what each of these means.

I assume there revenue numbers refer to the amount of money collected BEFORE paying merchants. Is that correct?

Yes. I'm assuming that it reported as the cost of revenue (~58% in Q1 2011).

This is always someone's reaction when someone calls bubble. I don't think it's justified you have to short the stock to be skeptical.