The fast-growing Internet business firm Groupon, which went public just in November 2011, yesterday was reportedly still struggling with its first quarter performance reporting, admitting that it is revising upward its earlier report on operations covering its first three months of operation.
In a report from Portland, Oregon, the Associated Press said Groupon was adding $22.6 million to its first-quarter loss figure announced in February, which was just $42.7 million from gross revenue for the same period of $506.5 million.
AP said the new and higher loss figure was due to the company’s need to increase the money it sets aside for refunds.
Groupon, one of the newest and most talked about online business locations, makes money by sending out emails to subscribers, offering to purchase discount deals for just about anything, large or small. It takes its cut from subsequent payments made by customers, and sends the rest of the money to the sellers.
Among its problems were growing complaints from merchants who said subscribers often overwhelmed them by using the company’s online discount offers.
Groupon is also facing fierce competition from other new, equally hungry online companies eager to cash in on the same one-cent and up and one-dollar-and-up daily deal offerings.
In yesterday’s report, company officials were trying to figure out its weaknesses while admitting that it has incurred more expenses to hire financial experts to help the company out of its start-up problems.
In a regulatory filing earlier this week, Groupon’s financial advisers formally noted a failing in the company’s internal controls over its financial statement.
Following its reported admission of bigger losses than earlier announced, industry observers noted that the discount company’s financial reporting problems, high marketing expenses and a huge employee base may be putting it on a precarious par with online companies in the 1990s which went boom—and bust.