SecProbe.io

May 31, 2013

Via E -mail
Mr. Jason E. Child
Chief Financial Officer
Groupon, Inc.
600 West Chicago Avenue, Suite 400
Chicago, Illinois  60654

Re: Groupon, Inc.
Form 10-K for the Year Ended  December 31, 2012
Filed February 27 , 2013
Form 10 -Q for the Quarter Ended March 31, 2013
Filed May 9, 2013
  File No. 1-35335

Dear Mr. Child :

 We have reviewed your filing and have the following comments.  We have limited our
review to only your financial statements and related disclosures and do not intend to expand our
review to other portions of your documents.  Please comply with the following comments in
future filings.  Confirm in writing that you will  do so and explain to us how you intend to
comply.   In some of our comments, we may ask you to provide us with  information so we may
better understand your disclosure.

Please respond to this letter within ten business days by providing the requested
infor mation  or by advising us when you will provide the requested response.   If you do not
believe our comments apply to your facts and circumstances, please tell us why in your response.

After reviewing the information you provide in response to these  comme nts, we may
have  additional comments.

Mr. Jason Child
Groupon , Inc.
May 31, 2013
Page 2

 Form 10 -K for the Year Ended December 31, 2012

Overview, page 30

1. Please revise to provide investors with a more comprehensive analysis of the North
America and International segments as seen through management’s eyes. The discussion
and analysis should provide investors with sufficient information to understand the
material factors impacting the historical results along with the trends and uncertainties
that may impact your future operating results an d financial position. For example, we
note that during your 2012 fourth quarter earnings call, you cited the following: (1) your
results reflect the deliberate and aggressive focus on growth of your platform and
segment market share as well as your willing ness to trade off short -term profitability; (2)
your expectation that operating margins will improve in 2013 as you fine tune your take
rates and automate manual processes that will significantly improve your cost structure
going forward ; and (3) your reas ons for reducing local margins as  a means of marketing.

International, page 38

2. We note that although total revenue in 2012  increase d over 2011  in your I nternational
segment , the maj ority of the  growth was attributable to the first tw o quarters of 201 2,
which was followed by a significant decline in revenues in th e last two quarters of 2012,
continuing into  the first quarter of 2013.  You a ttribute the decline in revenue  in the last
quarter of 2012 to reductions in the percentage of gross billing that you retained from
sales  in your Local category.  You also refer, on page 53, to the challenging economic
conditions in Europe.  In addition, i n your March 31, 2013 Form 10-Q, you disclose that
the decrease was also due to decreased gross billings .  Please expand this discussion  to
provide a more detailed analysis of the factors  that contributed to the  decrease in revenue
during the last half of 2012 and first quarter of 2013  and whether you expect this trend to
continue in the future.

3. In your fourth qu arter 2012 earnings call and related earnings release, you cited several
factors that affected revenue growth, including the increase in global units (surpassing the
50 million unit mark in the fourth quarter of 2012), substantial growth in mobile
transact ion activity, the launch of new merchant services, and the increase in your virtual
deal inventory. Consistent with our previous comment, disclose and quantify each
material factor that contributed to the increase or decrease  in revenue and  whether they
are attributable to changes in prices , volume , amount of goods or services being sold , or
to the introduction of new products and services.

4. Explain how your virtual deal inventory  works, how it has transformed customer search
experience or engagement, and  how it has impacted revenue growth.  Tell us when the
revenue recognition threshold is met (i .e., if a minimum number of customers purchasing
a given deal is required to exceed a predetermined threshold)

Mr. Jason Child
Groupon , Inc.
May 31, 2013
Page 3

 Non-GAAP Financial Measures, page 46

5. We note y our statement that “When evaluating our performance, you should consider
operating income (loss) excluding stock -based compensation and acquisition -related
expense (benefit) net as a complement to other financial performance measures, including
various cas h flow metrics…”   Additionally, in your most recent earnings call, you
provided advice “to think about cash flow trending similarly with CSOI, or operating
income less stock -based compensation, and with any increase in capex offset largely by
working capi tal.”  Since you appear to use CSOI as a liquidity measure, please reconcile
this non -GAAP measure to the most comparable liquidity measure under GAAP or
advise.

Goodwill and Other Intangible Assets, page 80

6. We note that in connection with your acquisit ion of CityDeal Europe GmbH , you
allocated $94.9 million of the total purchase price to goodwill.  It also appears that the
majority of the goodwill in the EMEA reporting unit relates to this acquisition.  Please
tell us the reasons why liabilities exceede d assets for the EMEA reporting unit. Provide
us with the following information at the October 1, 2012 impairment test date: (1) the
carrying value and fair value of the reporting unit ; and  (2) the allocation of  the fair value
to assets and liabilities (in cluding previously unrecognized intangible assets) to arrive at
the implied fair value of goodwill.

If you believe that you are at risk of goodwill impairment for the EMEA reporting unit,
please expand your critical accounting policies and estimates sec tion of MD&A to
provide the following information:

 The a mount of goodwill allocated to the unit ;
 A description of the methodolo gy used to determine fair value;
 A description of key assumptions used and how the key assumptions were
determined ; and
 A discussion of the uncertainty associated with the key assumptions and any potential
events and/or circumstances that could have a negative effect on the key assumptions.

Supplemental Consolidated Balance Sheet and Statement of Operations Information, page 89

7. We note that inventory cost is a significant component of the cost of direct revenue.  Tell
us how you considered providing a separate caption for Inventories on the Balance Sheet
and a related footnote.  Refer to Rule 5 -02(6) of Regulation S -X.

Mr. Jason Child
Groupon , Inc.
May 31, 2013
Page 4

 Form 10 -Q for the Quarter Ended March 31, 2013

How We Measure Our Business, page 28

8. We note your discussion of gross billings. This metric combines two different financial
metrics (i.e., gross transaction volume for deal sales that are reported net an d revenues
from products sold) and goes beyond what is described as useful to users of financial
statements in ASC 605 -45-50-1. Since you act as an agent for sales that are reported net
and as a principal for sales generated from products sold, the present ation of this
combined financial metric appears confusing and potentially misleading.  In addition,
regarding your presentation of gross billings per average active customer, your actual
customer is the merchant on third -party revenue deals while your calc ulation reflects the
merchant’s customer as your customer.   Please explain to us why you believe that your
presentation is appropriate in light of these concerns.

Revenue by Segment, page 37

9. Please ex pand to discuss  the reasons why you have lower ed your margins on third party
revenue deals  in your Local category.

Cost of Revenue, page 38

10. With regard to other costs incurred to generate revenue,  tell us why you believe that it is
appropriate to allocate such costs to cost of third party revenue, direct revenue, and other
revenue in proportion to relative gro ss billings during the period.  Tell us what you mean
by “relative gross billings.”

11. Per your disclosure, in the North America segment, the increase in cost of revenue was
primarily driven by the cost of merchandise and freight related to direct revenue deals.
However, during your earnings call, you cited other factors such as order discounts, free
shipping, and take rate reductions.  You also referred to a sales volume level that does not
provide enough leverage for you to negotiate favorable terms for fulfillment, shipping
and infrastructure which are all outsourced.  Please quantify how certain customer and/or
merchant incentives, infrastructure, and outsourcing costs negatively impacted co st of
revenue.  In this regard, we note that  pure product margin was in the low 30’s (defined
and quantified by Mr. Jason Child in the earnings call as sales price less the price you pay
your direct suppliers) but the gross profit on sales of goods as re flected in the statements
of operations was only approximately 7 %.

12. Please tell us what “take rate reductions” means in relation to the sale of Groupon goods.

Mr. Jason Child
Groupon , Inc.
May 31, 2013
Page 5

 We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require.   Since the company and its management are
in possession of all facts relating to a company’s disclosure, the y are responsible for the accuracy
and adequacy of the disclosures they have made.

In responding to our comments, please provide  a written statement from the company
acknowledging that:

 the company is responsible for the adequacy and accuracy of the di sclosure in the filing;

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

 the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

You may contact Kathryn Jacobson , Senior Staff Accountant, at (202) 551 -3365 or
Robert S.  Littlepage , Accountant Branch Chief,  at (202) 551 -3361 if you have questions
regarding comments on the financial statements and related matters.  Please contact me at (202)
551-3810 with any other questions.

Sincerely,

/s/ Robert S. Littlepage  for

Larry Spir gel
Assistant Director