In its second-largest acquisition, Amazon buys the company for $970 million.
An Amazon filing also shows a $208 million investment in the daily deal operator.
Amazon.com Inc., which owns a 31% stake in LivingSocial, disclosed yesterday in its quarterly filing with the U.S. Securities and Exchange Commission that the daily deal operator had a $558 million net loss last year.
LivingSocial also generated $245 million in revenue last year. The filing did not make clear if that was net or gross revenue, that is, whether it referred to the total value of the deals or LivingSocial’s take from the vouchers. Daily deal companies like LivingSocial and Groupon typically retain up to 50% of the price of a voucher. LivingSocial could not be reached for immediate comment on the filing.
However, a source familiar with LivingSocial’s operations tells Internet Retailer that Amazon’s filing was not a full picture of the daily deal operator’s finances because the losses included significant charges for non-cash items, stock compensation and acquisition-related expenses. Moreover, he adds, LivingSocial, like Groupon Inc., saw its operating losses fall significantly throughout the course of the year as the two major players in online daily deals reduced their upfront spending to acquire new customers.
In a sign that investors aren’t scared off by LivingSocial’s financials, a December filing with the SEC showed that the daily deal operator has raised more than $176 million toward its goal of $400 million in a new funding round expected to close by the end of the first quarter.
Amazon’s filing yesterday shows that Amazon's investment in LivingSocial had a book value of $208 million at the end of 2011. The book value measures a company's current assets and liabilities. Amazon's stake is $16 million more than the world’s largest retailer had reported in a previous filing. Amazon, No. 1 in the Internet Retailer Top 500 Guide, initially invested $175 million in LivingSocial in December 2010.