Groupon cuts marketing costs, hiring costs jump

SAN FRANCISCO ― Groupon Inc’s second-quarter loss more than doubled as it hired more than 1,000 new employees, even though the Internet daily deals company trimmed back its marketing costs.

Revenue rose to $878 million in the second quarter compared with $644.7 million in the first quarter, and rose more than 900 percent from $87.3 million in the second quarter of 2010, the company said in the S-1 filing, an update of its original filing for its initial public offering.

The numbers show that Groupon’s growth slowed from the first quarter. Revenue was up 36 percent in the second quarter, below growth of 63 percent in the first quarter.

The second-quarter net loss attributable to Groupon was $102.7 million, in line with the first quarter and more than double the $36.8 million loss from the second quarter of 2010.

In June, Groupon filed to raise $750 million in an IPO. The move revealed a company growing quickly, but losing money. Some analysts have questioned a business model vulnerable to competition from companies like Google Inc, and which relies on a huge, costly sales staff to enlist merchants and handle customer service.

Some analysts worry that the company will keep having to spend large amounts of money to attract and retain customers.

Marketing costs fell to $170.5 million in the second quarter, according to the filing. Groupon spent $208 million on marketing during the first quarter, up from $4 million in the same period a year earlier.

xThat spending is bringing more users to the site. Subscribers jumped to 115.7 million from 83.1 million at the end of the first quarter, the company said in its filing, confirming a Reuters report last week.

But Groupon said about 40 percent of its subscribers in North America came through word of mouth, a new disclosure. That suggests Groupon did not have to spend as much on marketing to attract subscribers.