Amazon Led LivingSocial's Last Round With A $56M Investment; Daily Deals Site Had A Net Loss Of $50M This Past Quarter
Daily deals company LivingSocial continues to face challenges in the market. In the last quarter it posted sales of $135 million, up 23% on a year ago, but it also swung to a net loss of $50 million, from net income of $156 million in Q1 2012, according to a 10-Q filing from Amazon today, made after Amazon reported quarterly earnings yesterday. The report, spotted first by the Washington Business Journal, also reveals that Amazon was the majority investor in the $110 million round earlier this year, putting in $56 million of that sum.
“Additionally, in Q1 2013 we made a $56 million investment in LivingSocial that we have recorded as a cost method investment,” it notes.
LivingSocial’s operating loss, meanwhile, was down to about half the size of last year, at $44 million.
The e-commerce giant has a 29% equity stake in the company. It also noted in the 10-Q that the book value of its equity-method investment was $36 million at the end of March. The losses at LivingSocial had a $17 million negative impact on Amazon.
The market for daily deals sites less than healthy right now. Rival Groupon in February also reported a worse-than-expected loss and then lost its founder and CEO Andrew Mason in the wake of the news, and now it’s working on a pivot to become more of a multi-purpose. LivingSocial’s CEO Tim O’Shaughnessy noted in February that its $110 round was indeed a “down round”, valuing the company at $1.5 billion, lower than in its last fundraise. But it was not an emergency debt infusion: at least some of the investors took equity in the company as part of the deal.
