Groupon 2011 Letter to Stockholders
Dear Stockholders,
2011 was an exceptional year for Groupon. I will start by listing a few of our achievements:
●
●
●
●

By year-end, we sold more than 170 million Groupons to more than 33 million active customers on behalf of more than 250,000 merchants in 48 countries around the world.
We drove well over $2 billion to the small businesses of Main Street, helping them to overcome challenging global economic conditions.
We launched 11 new products and services, including Groupon Goods, Getaways, Rewards,
Now!, and Scheduler.
We completed 11 acquisitions, which both expanded our geographic footprint and accelerated our product roadmap. Additionally, these acquisitions brought dozens of talented entrepreneurs to our team. Along the way, we delivered strong growth and improved our operating leverage. Revenues grew 415% year-over-year to $1.6 billion, and we improved our operating margin from negative 134% to negative
14% for the full year. We improved our GAAP EPS during the year from a loss of $0.48 per share in the first quarter of 2011 to a loss of $0.12 per share in the fourth quarter of 2011. And so, though the six months since our IPO have been rocky to say the least, the fundamentals of our business have continued to improve.
As much as this letter is intended to catalog our achievements in 2011, I would also like to use it as an opportunity to share our vision for Groupon and the tangible progress we are making. We are more excited than ever for our future.
Our Mission: To Become the Operating System for Local Commerce
Entertainment, media, politics, and the way we buy products, connect with each other, and consume information—nearly every aspect of life has been fundamentally changed by the Internet. But there’s a huge exception—the way we shop locally.
Groupon’s chief accomplishment to date has been discovering a business model that brings the power of the Internet to local commerce. During the past three-and-a-half years, that business model has allowed us to connect with millions of consumers and hundreds of thousands of merchants and build a brand that they deeply trust.
Upon the shoulders of this business model, Groupon is setting out to reinvent the multi-trillion-dollar local commerce ecosystem. We are building an integrated suite of tools and services that we believe will profoundly change the way we shop locally. Today, Groupon is a marketing tool that connects consumers and merchants. Tomorrow, we aim to move upstream and serve as the entry point for local transactions.
Why Groupon? Aren’t we a daily deals company? A glorified mailing list? What our competitors have learned is that success in local commerce requires an unusual combination of skills—a proficiency in both technology and people-driven operations. With a world-class engineering team—built quietly over the last several years in Chicago, Silicon Valley, and Berlin—and with thousands of salespeople who have cultivated relationships with hundreds of thousands of small-business owners, we believe that we are

1

uniquely in possession of both sides of the equation. That makeup is why we remain the clear leader in local commerce, despite the efforts of hundreds of competitors—from start-ups to the world’s largest technology companies—who have validated the consumer and merchant value created by our business model through their attempts to replicate it.
Many of the seeds we’ve planted in pursuit of our mission are beginning to bear fruit:
●

●

●

●

Site and Email Personalization
In the past year, we doubled the efficacy of SmartDeals, our deal personalization algorithm. For example, in markets with high deal density such as Chicago, emails sent using SmartDeals have a
50% higher purchase rate. It has taken time to get deal relevance right, but progress has begun to accelerate, and we believe that we’re still in the early stages. We’re excited to