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Groupon Case

In: Business and Management

Submitted By pinkktg
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Groupon Case
25 points

This case is to be completed individually by each student in the class. No collaboration or discussion of the case with any other student in the class is permitted.

The due date for the case is at the beginning of class on Monday, April 29, 2013 (the last day of class). Only hard copies of the case should be turned in. If you will be absent for class on that day, have somebody else in class turn it in or put it in the professor’s mailbox on the 5th floor of the RCB building. No email submissions of the case will be accepted.

The two accounting standards pertaining to the case, SAB 101(SEC) and EITF 99-19 (FASB) have been posted on Desire2Learn in the same folder as the case.

Students will receive an extra credit of 5 points for filling out a questionnaire about the case at the end of the semester.
The Case of Groupon’s Revenue Recognition: The Bottom Line on Top Line Revenues

Groupon is the extraordinary company that has revolutionized the world of coupon marketing. In November 2008, at the age of 27, Andrew Mason, a music major from Northwestern University, launched Groupon – a name that is a blend of “group” and “coupon”. Gross billings increased from $30 million in 2009 to $713 million in 2010 (Pepitone 2011). In 2010, Forbes declared Groupon as the “fastest growing company ever (Steiner 2010). By 2011, the company had a subscriber base of over 150 million, gross billings of $1.2 Billion, and went public, raising $750 million in its IPO in November.

Behind the skyrocketing success lies a simple business model: deliver daily discounted deals to potential buyers looking for a bargain on products and services. Discounts are steep and average 50%. For example, a deal might offer a $100 voucher to a local restaurant at the groupon rate of $50. The catch is that a minimum number of buyers have to purchase the deal for it...

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