Groupon Screenshot
Groupon, which is nearing an IPO, amended an SEC filing on Wednesday with new accounting procedures that reveal the daily coupon company is unprofitable. REUTERS

Groupon succumbed to critics and updated its initial public offering filing with standard accounting procedures to reveal -- SURPRISE! -- the daily social coupon company isn't profitable.

In its June IPO filing, Groupon faced a barrage of criticism for its use of an unorthodox accounting practice that masked some of the company's losses. Groupon used a nonstandard accounting metric called "adjusted consolidated segment operating income."

The metric stripped out Groupon's high costs for marketing and acquiring new customers -- a significant necessity of its fast-growing business. The company on Wednesday amended its SEC filing, which now uses standard accounting and made a big difference in its numbers.

Like LivingSocial, Groupon is close to launching its IPO.

In Groupon's original IPO filing, its accounting method showed operating income of $60.6 million for 2010 and $81.6 million for the first quarter of 2011.

But in amended numbers now colored by standard accounting procedures, Groupon actually incurred a $420 million operating loss in 2010 and a $117.1 million loss for the first quarter of 2011.

Groupon CEO Andrew Mason had staunchly defended the original practice, and even in amending accounting procedures and subsequently results in the IPO filing, he refused to apologize for how the company tabulated its earnings.

"We exclude those costs because, unlike our other marketing expenses, they are an up-front investment to acquire new subscribers that we expect to end when this period of rapid expansion in our subscriber base concludes," Mason wrote.

"While we track this management metric internally to gauge our performance, we encourage you to base your investment decision on whatever metrics make you comfortable."

Groupon's filing on Wednesday also provided the company's financial results for period ended June 30. Groupon said its sales totaled about $878 million, but the company also said it lost $102.7 million.

Groupon reported its subscriber base has reached 116 million, up from 83 million at the end of last quarter. The company said that among those subscribers, at least 23 million have at least once purchased a Groupon coupon.

Groupon has been marching toward its IPO as companies like LinkedIn and Pandora have soared on the market at launch.

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