SecProbe.io

June 29, 2011
 Via Email

Andrew D. Mason Chief Executive Officer Groupon, Inc.
600 West Chicago Avenue, Suite 620
Chicago, Illinois 60654
Re: Groupon, Inc.
Registration Statement on Form S-1 Filed June 2, 2011
  File No. 333-174661

Dear Mr. Mason:

We have reviewed your registration statem ent and have the following comments.  In
some of our comments, we may ask you to provi de us with information so we may better
understand your disclosure.
 Please respond to this letter by amending your registration statement and providing the
requested information.  If you do not believe  our comments apply to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.
 After reviewing any amendment to your re gistration statement and the information you
provide in response to these comments, we may have additional comments.
 General

 1. We note numerous blank spaces throughout the pr ospectus.  Please be advised that you
should include the price, use of proceeds,  dilution, capitalizati on, underwriting, and all
other required information in an amendment to  your Form S-1 prior to any distribution of
preliminary prospectuses so that we may comp lete our review.  Note that we may have
additional comments once you have  provided this disclosure.  Therefore, please allow us
sufficient time to review your complete disclosu re prior to any distri bution of preliminary
prospectuses.
 2. As soon as practicable, please furnish us with  a statement as to whether the amount of
compensation to be allowed or paid to the underwriters has been cl eared with FINRA.
Prior to the effectiveness of this registration statement, pl ease provide us with a copy of
the letter or a call from FINRA informing us  that FINRA has no a dditional concerns.

Andrew D. Mason Groupon, Inc. June 29, 2011 Page 2

 3. Please provide us with copies of your ar twork prior to circulating preliminary
prospectuses.  Since we may have comments th at could result in material revisions to
your artwork, we suggest that you provide us  with enough time to finish commenting on
your artwork prior to circulat ing preliminary prospectuses.  See Item VIII of the March
31, 2001 quarterly update to the Division of Co rporation Finance’s “C urrent Issues and
Rulemaking Projects Outline.”
 4. We note that Mr. Eric Lefkofsky, your co-founder and Executive Chairman, has been
reported to have stated in an interview on June 3, 2011 that your company is going to be
wildly profitable.  See http://www.bloo mberg.com/news/2011-06-05/groupon-chairman-
lefkofsky-says-coupon-company-w ill-be-wildly-p rofitable-.html .  Please provide your
analysis of how this statement is consistent with the disclosure in your prospectus about
the company’s financial condition and prospects.

Prospectus Cover Page
 5. Please disclose that there will be two classes of authorized common stock outstanding,
Class A common stock and Class B common st ock, and briefly describe the different
rights between the two classes.
 Letter from Andrew D. Mason

 6. Please move Mr. Mason’s letter to a section of the prospectus that follows the Risk
Factors.  The description of the developm ent of your company a nd business philosophy
and your company’s growth and relevant fina ncial metrics appear more appropriate for
the body of the filing.
 We aggressively invest in growth.

 7. Please clarify the reference to “long-term.”  Fo r instance, does it refer to a period of five,
ten, or 20 years?
 8. Also, please clarify the quarters in which your  investment in grow th turned a putative
profit into a sizable lo ss.  And, clarify your reference to “short-term consequences.”  For
instance, explain whether this phrase refers to  financial losses, nega tive press coverage,
or other matters.
 We are always reinventing ourselves.

 9. We note the reference to merchant dema nd and merchants stru ggling with too many
customers.  Please balance these statements w ith disclosure of the percentage of deals
offered that are not fully s ubscribed and the company’s e xperience with a drop off of
customers and lack of repeat business at merchants following the expiration of the
Groupon.

Andrew D. Mason Groupon, Inc. June 29, 2011 Page 3

 10. We note the references to the mushroomi ng of Groupon clones and the statement that
your investment in technology and deal targetin g diminished a reason for clones to exist.
Please reconcile these statements with your di sclosure in the first paragraph on page 82
where you state your competitors offer subs tantially the same or similar product
offerings.
 11. Please also clarify the ambitious bets you inte nd to make that may di stract you from your
current business.  Explain whether this refe rs to developing differe nt technology, further
acquisitions, or partnering with companies in other industries.   Further, explain
“disruptive products.”
 We are unusual and we like it that way.

 12. Please clarify “short time horizons.”
 Our customers and merchants are all we care about.

 13. Please balance the statements regarding the premise that your customers and merchants
are all you care about with a discussion of  your fiduciary duty to shareholders.

We don’t measure ourselve s in conventional ways.

 14. Please discuss that there are measures other than free cash flow to measure long-term
financial stability and that free cash fl ow may be calculated differently from the
company’s measure of free cash flow.
 Concluding paragraph

 15. Please balance the discussion of  Mr. Mason’s belief that “Groupon is better positioned
that any company in histor y to reshape local commerce”  by noting the company’s net
losses and competitive landscape.  Provide th e basis for Mr. Mason’s belief.  Also
disclose that Mr. Mason’s belief may not tran slate into investment returns for potential
purchasers in the offering.
 Prospectus Summary, page 1

 Groupon, Inc., page 1

 16. Please balance the disclosure on page one  regarding your growth by providing the
following context:

 In the first bullet point, disclose your  net loss for the periods presented;

Andrew D. Mason Groupon, Inc. June 29, 2011 Page 4

  In the third bullet point, disclose the nu mber of subscribers who purchased Groupons
during the periods presented and the number  of those subscribers who were repeat
purchasers; and
 Disclose the number of merchants who have offered deals through Groupons during
the periods presented and the number of repeat merchants.

Our Strategy, page 2

 17. You disclose in the second paragraph of th is subsection that, “we spent $18.0 million in
online marketing expense to acquire North Amer ican subscribers in the second quarter of
2010 and generated $61.7 million in gross profit from this group of subscribers in the
four quarters ended March 31, 2011.”  Please di sclose how you arrived at these numbers
from your financial statements.
 Key Operating Metrics, pages 8 and 41

 18. It appears that a significant number of your subscribers have  not participated in Groupon
deals and are not counted as customers. With a view towards expanded disclosure,
explain to us how you determine whethe r your subscribers are still active.
 19. We note that “cumulative customers” reflects the total number of unique  customers that
have purchased Groupons from January 1, 2009 through the last day of the applicable
period.  With a view towards expanded di sclosure, tell us why you do not also report
repeat  customers that have purchased Groupons for the respective periods, or why you
exclude Groupons sold to repeat  customers in the applicable period.
 Non-GAAP Financial Meas ures, pages 9 and 41

 20. We note your use of the non-GAAP measure Ad justed Consolidated Segment Operating
Income, which excludes, among other items, online marketing expense.  It appears that online marketing expense is a normal, recu rring operating cash expenditure of the
company.  Your removal of this item from your results of operations creates a non-GAAP
measure that is potentially mi sleading to readers.  Pleas e revise your non-GAAP measure
accordingly.  Refer to Rule 100(b) of Regulation G.
 Special Note Regarding Forward-Looking Statements and Industry Data, page 32

 21. You disclose in the sole paragraph on page 33 that “[w]e have not independently verified
any third-party information and cannot assure you of its accuracy and completeness.”  Please revise this statement.  You are res ponsible for the accuracy  and completeness of
the information in your prospectus.

Andrew D. Mason Groupon, Inc. June 29, 2011 Page 5

 Risk Factors, page 11

 There are many risks associated with our intern ational operations and in ternational expansion,
page 16
 22. As suggested by your subheading, you discuss many risks in this risk factor.  Please
discuss each discrete risk under its own risk factor s ubheading to highlight the risk.
 Use of Proceeds, page 34

 23. Please provide more specific and quantified information regarding your intended use of
the offering proceeds.  In this regard, we  note disclosure throughout your prospectus
regarding your growth strategies, but that  you have had net losses since inception, a
current working capital defic it and a significant accumulated de ficit.  We also note your
disclosure at the top of page 57 that you may use proceeds from the offering to fund the
$65 million in planned capital expenditures intended to support your overall global
business expansion during fiscal year 2011.
 Management’s Discussion and Analysis of Financ ial Condition and Results of Operations, page
44

Overview, page 44
 24. We note from the segment revenue table on page 53 that a substantial part of your
revenue growth is through your international operations which started primarily in May
2010.  Although we note your disclosure in the third paragraph on page 44 which
discusses your international revenue and its future growt h, to provide more balanced
disclosure, please revise the revenue comparis ons in the second paragraph on page 44 to
detail the role international expansion, es pecially the CityDeal acquisition, has had on
revenue growth.  Provide similar context to your disclosure in the prospectus summary.
 How We Measure Our Business, page 44

 25. We note your statement in the last paragraph on page 44 that gross pr ofit is influenced by
the mix of deals you offer.  Please explain to readers how the amount of gross profit
earned differs among the types of deals offere d (including category of product or service,
purpose of the deal, national versus local, intern ational versus domestic , large city versus
small city,  and established markets versus new ma rkets), specifically discussing the
impact on the size of the deal a nd the fees paid to merchants.   Also explain on page 50, in
quantified detail, how and why the mix of d eals changed from period to period, resulting
in the decline in gross margi n, and any trends in this rega rd.  As one example, please
explain why the national deals you offered dur ing the first quarter of 2011 reduced your
gross margin.

Andrew D. Mason Groupon, Inc. June 29, 2011 Page 6

 26. We note the four operating metrics disclosed on page 45.  We also note your risk factor
on the bottom of page 23 that explains you are unsure of the number of actual
subscribers.  To provide inve stors with more insight into your business, please consider
discussing other metrics such as active subscr ibers, average revenue per subscriber or
Groupon sold, or average Groupons per customer.
 Results of Operations, page 48

 Comparison of the Years Ended December 31, 2008, 2009, and 2010, page 51

 27. Please revise to include a discussion of segment operating results.  Expand your
disclosure to include your assessment as to why the International segment’s operating
loss is significantly higher than  that of the North American segment, and whether there is
any concentration of that loss.
 Cost of Revenue, page 53

 28. As you disclose, cost of revenue was lower as a percentage of revenue between 2010 and
2009 because you were more selective in merc hant deals while maintaining or improving
merchant terms.  Please explain whether th is means you retained more of the gross
amounts paid by your customers and remitted less to merchants, as well as whether fewer
Groupons were refunded.  Please also present th is analysis in your discussion of gross
profit.
 Marketing, page 54

 29. You disclose that your marketing expense as a percentage of revenue for 2010 was
significantly greater in the International segmen t.  Please discuss whether this trend will
continue and its unde rlying reasons.
 Liquidity and Capital Resources, page 56

 30. You disclose on page 56 that you raised net proceeds of $1.1 billion through the sale of
common and preferred stock and that you used $941.7 million of these proceeds to
redeem shares of your common and preferred stock, with the remainder being used to
fund acquisitions and for working capital and general corporate purpos es.  Please explain
why you used most of the proceeds of these st ock sales to redeem stock rather than to
fund your aggressive growth strategy.
 Anticipated Uses of Cash, page 56

 31. Please clarify your disclosure to explai n how you could improve your gross profit
“through organic growth of your overall marketplace.”

Andrew D. Mason Groupon, Inc. June 29, 2011 Page 7

 Cash Provided by (Used In) Op erating Activities, page 57

 32. Refer to the penultimate paragraph of this page .  Please define “absolu te level of cost of
revenue” as the term is used.
 33. You disclose on page 57 that the redempti on payment model is used in most of your
international operations and th at, under this model, you do not pay merchants until the
customer redeems the Groupon that has been pur chased.  Please explain what happens if
the customer does not redeem the Groupon w ith the merchant under both the redemption
payment model as well as under the traditiona l merchant payment m odel.  Also explain
why the redemption payment model is used in most of your international operations.
 34. Please highlight the extent to which the cash provided by operating activities for each
period is attributable to merchant payables.  Discuss any trends in merchant payables
based upon the payment models and grow th in international operations.
 Acquisitions and the Recoverability of Goodw ill and Long-lived Intangible Assets, page 61

  35. Per your disclosure on page 61, there are many risks associated with  your international
operations and international expansion that require you to  localize your services to
conform with a wide variety of  local cultures, business practices, laws and policies, and
different commercial and internet infrastructure in other countries.  In light of these significant differences, tell us how you determ ined the operating segments and reporting
units in your internationa l operations. We note on page F-41 that you only have one
reportable segment to represent the rest of your global operations outside the United
States and Canada.
 Common Stock Valuations, pages 63-64

 36. Per your statement, all options granted were ex ercisable at a price pe r share not less than
the per share fair value of your common st ock underlying those options on the date of
grant.  We note that these prices ranged  between $2.42 as of March 31, 2010 and $6.95 as
of December 31, 2010.  However, we also no te on page F-29 that you repurchased 46.6
million shares of common stock for $503.2 milli on, with an average purchase price of
$10.78 per share between April and December, 2010.  Please tell us why your average
repurchase price of your stock is significantly higher than  your stock option exercise
price, which you stated was not le ss than fair value.  We also  note an adjusted fair value
of $13.48 per share for the restricted stock issued in connection with the CityDeal
Acquisition as of December 31, 2010.
 Business, page 68

 37.