Daily deals site Groupon today issued a pretty significant revision of the financial results it previously reported for the fourth quarter and the full year of 2011.
According to the company, it actually made $14.3 million less in revenue during the fourth quarter of 2011 than it previously reported — $492.2 million, compared to the previously stated $506.5 million. It also spent more in operating expenses than it previously said it did — resulting in its Q4 operating income and net income being $30 million and $22.6 million less, respectively, than the company initially said it was.
How did this mixup occur? Groupon said in a filing with the Securities and Exchange Commission that the revisions “are primarily related to an increase to the Company’s refund reserve accrual to reflect a shift in the Company’s fourth quarter deal mix and higher price point offers, which have higher refund rates.” (Full disclosure: I’m not sure what that means.)
Not surprisingly, Wall Street was none too happy about the news. Groupon issued the revision on Friday afternoon after trading stopped for the week, but at the moment (2:45 PM Pacific Time) the company’s stock price is down 6.4 percent in after-hours trading. The company’s stock price as of market close today was $18.38, which was already well below the $20 share price of its initial public offering back in October.
Groupon’s accounting practices have raised many eyebrows in the tech and business worlds, particularly in the run-up to its stock market debut last fall, so this is not a completely unexpected situation. Going forward, though, the company vows that it has its financial house in order. Groupon’s CFO Jason Child said in a press release today: “We remain confident in the fundamentals of our business, as our performance continues to highlight the value that we provide to customers and merchants.”