LivingSocial slowing its losses, back in hiring mode

By |
Local,DC,Eric P. Newcomer

As the mayor hopes to make D.C. a hub for tech companies, a company that's a core component of that effort has begun to slow its losses.

LivingSocial, a website with daily discount deals headquartered in the District, improved its revenues and cut its operating expenses compared with the same three-month period last year.

Still, its $135 million in revenue in the first three months of 2013 lagged behind its expenses, which totaled $179 million. That puts it at a $44 million loss for the quarter -- an improvement over the $91 million lost in the same quarter last year.

But it still means that company is shedding money faster than it can bring it in. And if the company cannot start making money, that would be bad news for the District.

LivingSocial's website was hacked, possibly affecting the personal information of more than 50 million customers.

The D.C. company said customers' names, email addresses, dates of birth and passwords may have been compromised. But it said the database that stores customer credit-card information was not affected.

An email to customers and a banner on its website warned customers to update their passwords.

Website hacked

Mayor Vincent Gray has pushed for new tech companies in the city, and LivingSocial has been a centerpiece of the District's success recruiting tech companies, which bring with them high-paying jobs.

Government officials have estimated that about 1,100 new residents flock to the District every month, which has allowed the city to reap new revenues without raising taxes.

But LivingSocial slashed more than 150 positions in the District in the past year as part of its effort to cut about 400 jobs within the company.

A spokeswoman for LivingSocial emphasized its continued ties to D.C.

"Washington, D.C. is at the heart of who LivingSocial is and what LivingSocial does. It is home to LivingSocial's global headquarters and employs more than 600 area residents, the company's largest employee base in the country," wrote spokeswoman Elizabeth Hebda. "And the company is hiring, in D.C. and around the country, with more than 140 open positions."

Amazon, which released the limited snapshot of LivingSocial's earnings in its own quarterly report, has a 29 percent stake in the company and has continued to pour money in. Even as LivingSocial, a privately owned company, has struggled to turn a profit, it has purchased competitors and other tech companies to improve its position.

It is not uncommon for tech startups to lose money for years, as Facebook did, making it difficult to separate failing firms from companies that are merely establishing themselves.

Gray, who has proposed $1.38 billion in capital spending for building projects and other big spending in the District, has hoped to attract companies like Microsoft to the city.

For its part, LivingSocial says the District is not only its headquarters but one of its strongest markets.

"It serves as the testing ground for most of our new products and innovations, including our brick-and-mortar 918 F Street location and our entertainment tours like BeerFest and Sushi+Sumo that are now rolling out nationwide," Hebda wrote.

enewcomer@washingtonexaminer.com

View article comments Leave a comment