SecProbe.io

July 22, 2011
  Via Email

Andrew D. Mason
Chief Executive Officer
Groupon, Inc. 600 West Chicago Avenue, Suite 620 Chicago, Illinois 60654
Re: Groupon, Inc.
Amendment No. 1 to Form S-1 Filed July 14, 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.
 Prospectus Summary, page 1

 1. We have considered your response to comme nt 16 from our letter dated June 29, 2011.
Given your limited operating history, it is un clear why investors would not consider
additional information about your subscrib ers, customers and merchants to be
meaningful.  Please provide addi tional context to your disclosu re in the third and fourth
bullet points on page 1 by disclosing the numbe r of repeat purchasers and merchants for
the periods presented and explain yo ur definition of these terms.

Andrew D. Mason Groupon, Inc. July 22, 2011 Page 2

 Our Strategy, page 2

 2. We note your response to comment 17 from our letter dated June 29, 2011 and your
supplemental explanation of on line marketing expense to acquire the Q2 2010 cohort.  In
light of the fact that the s econd quarter 2010 cohort information needs lengthy disclosure
to put it into context, includi ng the risks highlighted in the second bullet point of the first
risk factor on page 12, please remove this example from the prospectus summary.
 Key Operating Metrics, pages 8 and 43

3. We note your response to comment 18 from our  letter dated June 29, 2011.  Please revise
your disclosure on pages 8, 43, 48, and 58 to state as explained on page 24 that
“subscribers” reflects the total number of s ubscribers who have completed registrations
as of the last day of the a pplicable period, regardless of pur chase activity, less individuals
who have unsubscribed, and could include individuals with multiple registrations.
 4. Furthermore, it appears that, upon initia lly visiting your website at www.groupon.com
,
visitors are asked to enter their location and then their e-mail and are not permitted to proceed without providing this information.  Upon entering this information, a visitor
becomes a subscriber.  Your website does not  appear to clearly state how to view
information on the website without entering this information and becoming a subscriber.
Please discuss this aspect of your website ’s operation, including that some of your
subscribers may be people who did not know how to visit your website without
registering as subscribers and did not intend to become subscribers.
 5. We note your response to comment 19 from our  letter dated June 29, 2011.  It is unclear
to us how you are able to isolate “unique cu stomers” in your measurement of cumulative
customers to include only new customers.  Additionally, please qualify your count of
cumulative customers to state, if true, that  it may include the same individuals with
multiple registrations.

Non-GAAP Financial Meas ures, pages 9 and 43

6. We note your response to comment 20.  Howeve r, we reiterate our belief that the
exclusion of online marketing expenses fr om your results of operations in your non-
GAAP measure is potentially misleading.  Pleas e remove this item from your calculation
of your non-GAAP measure.
 Letter from Andrew D. Mason, page 32

 Our customers and merchants are what we care about, page 33

 7. We note your completely open return policy.  Pl ease explain whether th is applies to your
international operations as well as your North American operations.

Andrew D. Mason Groupon, Inc. July 22, 2011 Page 3

Special Note Regarding Forward-Looking Statements and Industry Data, page 34

 8. We note your response to comment 21 from our letter dated June 29, 2011 and
acknowledgement of your responsibility fo r the accuracy and completeness of the
information in the prospectus.  Nevertheless,  the first paragraph on page 35 states that
information in the prospectus is based on in formation from other sources whose accuracy
you cannot assure .  Revise to remove this qualification.
 Use of Proceeds, page 36

 9. We note your response to comment 23 from our letter dated June 29, 2010.  Considering
your substantial investment in growth such as your online market ing expenses, please
clarify whether the net proceeds of this offe ring will be used to fund these expenses and
growth initiatives.
 Management’s Discussion and Analysis of Financ ial Condition and Results of Operations, page
46
 How We Measure Our Business, page 46

10. We note your response to comment 25 from our  letter dated June 29, 2011.  Please revise
your disclosure to incorporat e your response that city size,  maturity of markets, and
changes in mix of category of deals have not had a meaningful impact on gross margin or
profit.
 11. We note your response to comment 26 from our letter dated June 29, 2011.  Please
include calculations of average revenue pe r subscriber and Groupon sold and average
Groupons per customer.
 Results of Operations, page 50

 Comparison of the Years Ended December 31, 2008, 2009, and 2010, page 53

 12. We note your response to comment 28 from our letter dated June 29, 2011.  Please
include in your disclosure  your statement that the refund rate of Groupons did not
influence the cost of revenue or gros s profits during the period in question.
 13. We note from page 55 that you had higher marg ins on your International segment.  Please
further explain whether this result was due to your redemption payment model because, in that model, revenue is not shared w ith merchants until the customer redeems the
Groupon.

Andrew D. Mason Groupon, Inc. July 22, 2011 Page 4

 Liquidity and Capital Resources, page 59

14. We note your response to comment 30 from our letter dated June 29, 2011.  Please
incorporate your explanation for using a s ubstantial portion of the net proceeds of $1.1
billion from recent stock sales to redeem sh ares instead of funding your growth strategy
into Liquidity and Capital Re sources section.  Also clarif y whether you have funded your
working capital requirements and expansion primarily through private sales of common
and preferred stock or whether you have relie d primarily on cash flows from operations.
In this regard, it appears th at the $1.1 billion in common and preferred stock sales are
largely unrelated to the company’s liqui dity and capital resource requirements.
 Cash Provided By (Used In) Operating Activities, page 60

 15. We note your response to comment 33 from our letter dated June 29, 2011 and that you
use the redemption model in your internati onal operation in part because of the
challenges in assessing creditworthiness.  Pl ease explain these challenges in more detail;
explain whether you are referring to the creditw orthiness of the merchants or customers.
 16. We note your response to comment 34 from our letter dated June 29, 2011.  The second
paragraph on page 60 states that growth in international operations accelerated cash flow
due to more favorable payment terms.  Please explain more specifically your reference to
“more favorable payment terms.”  Explain wh ether this refers to the redemption model
which allows you to retain cash from your customers without paying merchants when
customers do not redeem Groupons.
 Critical Accounting Policies and Estimates, page 64

 Acquisitions and the Recoverability of Goodw ill and Long-Lived Intangible Assets, page 64

 17. We note your response to comment 35 from  our letter dated June 29, 2011, including
your statement that collectively, the key ope rating metrics and financial information
included in the internal reports enable Mr. Mason to assess the performance of the
Company and allocate resources .  Based on all internal re ports provided to the CODM,
tell us your consideration of whether each business component  included therein is an
operating segment.  Please provide us your analysis based on the criteria set forth in
paragraphs 50-1 throug h 50-19 of ASC 280-10.
 Common Stock Valuations, page 66

 Fiscal Year 2011, page 68

18. We note your Chinese joint ventures on page F-45 and several refe rences elsewhere in
the filing.  Please revise to add China to th e list of countries in which you expanded your
presence or tell why it  is not applicable.

Andrew D. Mason Groupon, Inc. July 22, 2011 Page 5

Business, page 71

 19. We note your response to comment 38 from our  letter dated June 29, 2011.  Please revise
your disclosure to incorporat e your response that explains your belief regarding local
expenditures on leisure, recrea tion, foodservice, and retail.
 20. We note your response to comment 39 from our letter dated June 29, 2011.  We partly
reissue this comment.  You st ate in your response that a bout 40% of subscribers are
unpaid or are acquired via word-of-mouth.  Plea se incorporate this information into your
disclosure.  Further, revise to explain the basis for your statement that your brand is
trusted and detail your investme nt in customer satisfaction by objective standards such as
return customers, merchants, or th ird party reports and analyses.
 21. We note your disclosure in the last paragr aph on page 74 and fourth paragraph on page
75 regarding your relationships with mercha nts and your focus on providing them with
positive experiences.  Your disclosure here or elsewhere does not seem to address when merchants generally make money on their promotions with Gr oupon or consider the
promotions to be effective.  Please revi se to address this aspect of the Groupon
experience.  In this regard, we note your re sponse to comment 16 which states that you
have a backlog of merchants so that your a pproach is limiting, instead of encouraging,
deals with merchants.  Merchant profitabili ty and satisfaction nevertheless seem to be
important to your business.
 Subscriber Economics, page 76

 22. We note the disclosure on page 77 provide d in response to comment 42.  Please expand
your disclosure to discuss the reasons for the trend of declinin g average revenue per
Groupon sold.  Also, please balance your disclo sure concerning the trend in gross profit
with a discussion of the tre nds in gross profit percentage s in the case study markets.
 23. We note your response to comment 44 from our letter dated June 29, 2011.
Notwithstanding whether management consid ers revenue per Groupon sold to be a key
metric, we continue to believe disclosure  of average revenue earned per Groupon sold
would provide readers additional insight and clarity about the economic trends in your operations in the case study markets.  For each  of the case studies, disclose within the
tables the average amount of revenue earned per Groupon sold in each of the quarterly
periods.
 Competition, page 84

 24. We note your response to comment 46 from our letter dated June 29, 2011.  Please
incorporate into your disclosure your res ponse that, based on your experience, you do not
compete on merchant payment terms.

Andrew D. Mason Groupon, Inc. July 22, 2011 Page 6

Regulation, page 85

 25.  We note your response to comment 50 from  our letter dated June 29, 2011.  Please
clarify your basis of accounting for your International Segment’ s merchant cost under the
redemption payment model, initially, at point  of sale and at the expiration of the
promotion period if customers do not re deem their Groupons.  Additionally, please
expand your disclosure to discuss the impact of unredeemed Groupons on the
international segment’s gross profit duri ng each period presented.  We note your
disclosure on page 60.
 Code of Ethics, page 93

 26. If you intend to put information on your webs ite for investors, please confirm that an
investor will not have to beco me a subscriber and that it will be clear how to access the
information without becoming a subscriber.
 Related Party Transactions, page 114

 27. Please provide a separate table that disclose s the total amount each officer, director and
five percent stockholder has received thr ough dividend payments and stock redemptions
to date and the total amount paid for the related shares.  Please list each officer and
director by name (e.g., Eric P. Lefkofsky and a ffiliates) and include a ll shares attributable
to their affiliates.  You may identify the affiliates in a footnote.
 Sales of Our Securities, page 114

 28. We note your response to comment 59 from our letter dated June 29, 2011.  Please
incorporate your response into your filing.
 Principal and Selling Stockholders, page 121

 29. Tell us whether the shares over which Me ssrs. Mason, Keywell and Lefkofsky share
voting power in connection with  the CityDeal acquisition are included in their beneficial
ownership amounts.  If not, please include th ese shares in their beneficial ownership
amounts and in the column to the table that  discloses the percentage of total voting
power.
 Financial Statements

 Revenue Recognition, page F-11

  30. In order to help us further evaluate your responses to comments 62 and 63, please address
the following:

Andrew D. Mason Groupon, Inc. July 22, 2011 Page 7

 Summarize for us and provide proposed disclo sure (for inclusion in the appropriate
sections of your registration statement) , that clearly delineates the rights and
obligations of the parties in both the ag reement between the purchaser of a Groupon
and Groupon and the agreement between Groupon and the merchant that provides the
discounted service to which the owner of a Groupon is entitled.  If the rights and
obligations differ between your U.S. and international operations, please highlight
those differences and explain how they  impact the timing, measurement, and
recognition of revenue and cost of revenue.
 Analyze, with reference to the rights and obligations of the parties, whether Groupon
is responsible for the accepta bility of the product or serv ice provided by the merchant
to the owner of a Groupon.
 31. Further, without limiting your response, please clarify the rights and obligations of the
three parties involved in th e following circumstances:

 When a Groupon is sold and the customer redeems it during the promotion period,
 When a Groupon is sold and the customer attempts to redeem it following the
expiration of a promotion period,
 When a Groupon is sold and redeemed but the customer requests a refund because of
an unsatisfactory experience with the merchant,
 When a Groupon is sold but the customer  requests a refund of an unused Groupon
during the promotion period (such as when a customer changes his mind),
 When a Groupon is sold but the customer  requests a refund after the promotion
period,
 When a Groupon is sold but the merchant  does not honor the Groupon (such as when
the merchant is in bankruptcy),
 When Groupons are sold but redemptions are less than the number of customers
committed to a merchant, and
 When a Groupon is fraudulently redeemed.

As appropriate, please ensure that your disclo sures are sufficiently robust to address the
above situations and circumstances.
 32. We note in your response to comment 59 that the company determined  the fair value of
its common stock to be $3.1783 per share as  of April 2010 while in your response to
comment 68 you indicate shares were repurchased  in April 2010 at $5.353 per share.  It is
unclear to what extent the shares redeemed  in April were held by employees and why you
did not recognize any of the excess of the repur chase price over the fair value of