Now look at the SECs letter to Groupon, dated June 29, 2011. See paragraphs 62 to 67 regarding Groupons revenue recognition policy. a) What does the SEC question about Groupons revenue recognition policy? b) What is the relevance of point 63 vis--vis point 62?

Sec letter : Revenue Recognition, page F-11 62 to 67. We note it is the companys policy to record the gross amount received for a Groupon as revenue. Since from the perspective of a customer, a Groupon is a means for the customer to purchase a product or service from a merchant at a discounted price, it is unclear to us why you believe the company is the primary obligor in the arrangement. Please advise us, in detail, and provide us managements comprehensive analysis of its revenue generating arrangements and explain the consideration given to each of the indicators of gross reporting and each of the indicators of net reporting found in ASC 605-45-45. Additionally, it is also unclear to us why you do not separately present revenues from (i) products, and (ii) services pursuant to Rule 5-03(b) of Regulation S-X if you are deemed as the primary obligor. 63. We note you recognize revenue when a certain number of customers who purchase the daily deal exceed the predetermined threshold. If, in fact, the company is the primary obligor, then explain to us why it is appropriate for the company to recognize revenue prior to delivery of the underlying product or service by the merchant to the customer. 64. Tell us how you considered the risk of merchant closures and bankruptcies or similar contingencies that would prevent your customers from redeeming their Groupons. We note your disclosure on page 13. 65. It appears that the Groupon Promise is unconditional. In light of your rapid growth and entry into new markets, explain to us why you believe the amount of future refunds is reasonably estimable. Tell us the variance between your estimates and actual refund claims. We note your disclosure on page 17. 66. Please disclose how you account for the cost of a Groupon purchased and redeemed through the Apple iPhone, iPod touch, and other mobile application. Please discuss in your Managements Discussion and Analysis how the related cost impacts gross profit. We note your disclosures on pages 64 and 80. 67. Please disclose how you account for your partners share of the revenue generated from Groupon deals that they promote. In this regard, we note your partnership agreements with eBay, Microsoft, Yahoo, and Zynga on page 72.