Groupon Inc said it plans to raise as much as $540 million in an initial public offering, less than previously planned, as the largest daily deals company grapples with a weak equity market, executive departures and questions about its accounting and business model.

Groupon plans to sell 30 million shares at between $16 and $18 each, it said in a regulatory filing on Friday. That means the company aims to raise $480 million to $540 million from the IPO, depending on investor demand.

At the midpoint, the IPO would value Groupon at $10.8 billion.

Groupon is set to launch a roadshow next week to persuade potential investors to buy stock in the offering. Chief Executive Andrew Mason, Chief Financial Officer Jason Child and Jeff Holden, head of product at Groupon, will be speaking during the roadshow.

Groupon in June filed to raise $750 million in its IPO, but equity markets have fallen and become a lot more volatile since then.

The company changed its accounting twice under pressure from investors and regulators. It also lost two chief operating officers this year, and some analysts have questioned the long-term viability of its business.

These challenges have made the Groupon share sale the most closely watched IPO in recent years. If the offering succeeds, it bodes well for other companies that are also considering going public, such as social gaming giant Zynga and Facebook, the largest social network. If Groupon struggles out of the gate, other IPOs may be delayed or pulled.

SMALLER LOSSES

One of the main question marks over Groupon has been whether the company can become profitable any time soon. Friday's IPO filing disclosed the company's third-quarter results and some progress toward profitability.

On a pro forma operating basis, which excludes stock-based compensation, Groupon said it lost $2 million in the third quarter, down from $62 million in the second quarter.

Groupon's North American business generated a pro forma operating profit of $19 million in the third quarter.

Groupon's International segment lost $21 million in the third quarter, compared with a pro forma operating loss of $52 million in the second quarter.

Groupon reduced its losses partly by keeping a lid on marketing spending. Earlier this year, the company hired Richard Williams from Amazon.com as its new head of marketing to help make its marketing more efficient.

NET REVENUE RISES

Groupon reported gross billings of $1.16 billion in the third quarter, up 25 percent from the previous quarter and 496 percent from the same period last year.

Gross billings represent the money Groupon collects from selling online discount coupons. The company pays a lot of this money later to the merchants participating in the deals. What is left over is reported as net revenue.

Groupon said in its Friday filing that third-quarter net revenue was $430 million, up 10 percent from the second quarter and 426 percent from a year earlier.

CUSTOMERS HIT 30 MILLION

Groupon also reported 143 million subscribers at the end of the third quarter, up from 116 million subscribers three months earlier.

The company said it had 30 million customers at the end of September, up from 23 million three months earlier. Customers are subscribers who have bought one of Groupon's coupons.

Repeat customers, people who have purchased more than one Groupon, climbed to 16 million in the third quarter from 12 million at the end of the second quarter, the company also said in its filing.

Average revenue per Groupon sold was $13 in the third quarter, up from $12 in the previous quarter. The average number of Groupons sold per customer was 4.2, up about 5 percent from the previous three-month period, according to the filing.

Morgan Stanley, Goldman Sachs & Co and Credit Suisse are leading the underwriters on the offering. The shares are expected to trade on Nasdaq under the symbol GRPN.

(Reporting by Alistair Barr in San Francisco, additional reporting by Clare Baldwin in New York, editing by Bernard Orr and Lisa Von Ahn)

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