How much does it cost to bulk up and compete with the likes of Groupon in the daily deals market? Amazon.com’s annual Form 10-K filing, made public this morning, reveals detailed financial information about LivingSocial, the privately-held Washington, D.C.-based company in which Amazon is an investor.
A footnote in Amazon’s filing gives this condensed statement of operations for LivingSocial in 2011.
- Revenue: $245 million
- Operating expense: $686 million
- Other expense: $117 million
- Net Loss: $558 million
We were able to track down some additional context: A person familiar with LivingSocial says the revenue would have been significantly higher had it included the company’s full international results for the year, which were boosted in part by a series of overseas acquisitions. In addition, the bottom line was impacted by heavy marketing expenses, as the company sought to grab market share, and those expenses were concentrated heavily at the beginning of last year.
The losses also reflect non-cash items such as stock compensation for employees, as the company grew from 600 employees to 5,000 over the course of the year, and expanded from three international markets to 20. Here’s the Living Social balance sheet as of Dec. 31, as shown in the Amazon filing.
- Current assets: $156 million
- Noncurrent assets: $285 million
- Current liabilities: $225 million
- Noncurrent liabilities: $21 million
- Mandatorily redeemable stock: $199 million
Amazon, which originally invested $175 million in LivingSocial in 2010, says the book value of its 31 percent interest in the company was $208 million as of Dec. 31. That was up from a $192 million book value as of Sept. 30, when Amazon put its stake at 32 percent.
Amazon was reportedly among the investors in a follow-on financing round in LivingSocial in December, allowing the daily deals company to hold off on an IPO for the time being.
Groupon, which went public last year, also continues to operate in the red.
Thanks to the reader who pointed this out in the comments on our previous post.