Is Coupons.com really worth $1bn?

It may have never posted a profit in its 15 year history, but that fact isn't stopping Coupons.com from filing a $100m IPO.

Describing itself in the SEC filing as “a leading digital promotion platform that connects great brands and retailers with consumers”, the coupons company that Steven Boal founded in 1998 plans to use the funds it raises from the IPO for working capital and for potential acquisitions.

In the past year it bought Yub, “the world's first offline affiliate network”, and KitchMe, a meal planning app with integrated discounts on recipe ingredients.

Goldman Sachs, Allen & Company, RBC Capital Markets and Bank of America Merrill Lynch are jointly managing the initial public offering, with a planned listing on the NYSE under the symbol COUP.

Coupons.com makes money when a user redeems one of their coupons at a supermarket or retailer. However, although revenues have been growing steadily and the company is now valued at more than $1bn, the SEC filing reveals Coupons.com has never made a profit.

Interestingly, they may never make a profit; in their own words: “We have incurred net losses since inception and we may not be able to generate sufficient revenues to achieve or subsequently maintain profitability.”

Still, it is unlikely the history of quarterly losses will deter investors; rival coupon company RetailMeNot raised $191 million in its own IPO on the NASDAQ in 2013, and its stock price has since risen by about 58%.

The move from printed coupons to mobile coupons is transforming the coupons market, with a 2011 Juniper Research report suggesting mobile coupons would exceed $43bn in redemption value globally by 2016.

Coupons.com is well placed to take advantage of that market growth, but it remains to be seen whether the company can actually begin turning a profit and justify it's $1bn valuation.

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