Groupon Blows It Again, Restates Earnings As Customers Demand Refunds | Daily Ticker - Yahoo! Finance
After missing the bottom line in its first quarter as a public company, Groupon is now restating its Q4 earnings after a higher-than-expected number of customers demanded refunds.
The restatement does not affect cash flow, and the company is sticking with its outlook for the first quarter.
According to the company, what happened is this:
Groupon launched a bunch of new, higher-priced products late last year. At least in the fourth quarter, the return rate on these products was considerably higher than the return rate for Groupon's cheaper offerings.
When customers demand refunds within 60 days, Groupon's accounting treats the refund as a "contra-revenue" event, meaning that it reduces Groupon's revenue and earnings. After 60 days, refunds are treated as an expense, so they only hit earnings.
Going forward, Groupon will use higher refund assumptions for its higher-priced products. So this shouldn't happen again....
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