Group 1: Brokerage Recommendations - Groupon has an average brokerage recommendation (ABR) of 2.00, indicating a Buy, based on recommendations from five brokerage firms, with three Strong Buy and one Buy, accounting for 60% and 20% respectively [2][5] - The ABR should not be the sole basis for investment decisions, as studies show brokerage recommendations often lack success in guiding investors towards stocks with high price appreciation potential [5][10] - Analysts from brokerage firms tend to exhibit a positive bias in their ratings due to vested interests, leading to a higher number of Strong Buy recommendations compared to Strong Sell [6][10] Group 2: Zacks Rank vs. ABR - Zacks Rank is a proprietary stock rating tool that categorizes stocks from Strong Buy to Strong Sell and is based on earnings estimate revisions, making it a more effective indicator of near-term stock price performance [8][11] - Unlike ABR, which is based solely on brokerage recommendations and may not be up-to-date, Zacks Rank reflects timely changes in earnings estimates, providing a more accurate indication of future price movements [9][12] - The Zacks Consensus Estimate for Groupon has increased by 48.4% over the past month to $0.59, indicating strong analyst optimism and contributing to a Zacks Rank 1 (Strong Buy) for the stock [13][14] Group 3: Investment Implications - The combination of a Buy-equivalent ABR and a Zacks Rank 1 suggests that Groupon may present a legitimate investment opportunity for investors [14]

Core Viewpoint - The Portnoy Law Firm has initiated an investigation into Groupon, Inc. for possible securities fraud, following allegations of questionable accounting practices and misleading investors about the company's turnaround success [1][3]. Group 1: Investigation and Legal Actions - The Portnoy Law Firm is encouraging Groupon investors who have incurred losses to contact them for a potential class action lawsuit [1][2]. - The firm offers a complimentary case evaluation to discuss options for recovering losses [2][4]. Group 2: Stock Performance and Allegations - On June 9, 2025, a report by short-seller Captain's Log claimed that Groupon engaged in questionable accounting practices, leading to a decline in the stock price by $1.61 per share, or approximately 4.89%, closing at $31.33 per share [3].

Core Viewpoint - Groupon (GRPN) has received an upgrade to a Zacks Rank 1 (Strong Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in stock price movements [4]. Business Outlook - The upgrade in Groupon's rating suggests an improvement in the company's underlying business, which could lead to an increase in stock price as investors respond positively [5][10]. - For the fiscal year ending December 2025, Groupon is expected to earn $0.30 per share, with a significant increase of 265.5% in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Groupon's upgrade places it in the top 5% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10].

Financial Data and Key Metrics Changes - Global billings grew 12% year over year, with North America local billings up 20% and international local billings, excluding Italy and GiftCloud, up 15% year over year [2][3] - Free cash flow of $25 million was generated, indicating profitable growth while investing in the platform [3] - Full year billings guidance was raised from 3-5% to 7-9% growth, reflecting strong business momentum [4] Business Line Data and Key Metrics Changes - The core local category, excluding Italy and GiftCloud, grew 19% and now represents nearly 90% of total billings [2] - North America "things to do" segment delivered strong double-digit growth for the sixth consecutive quarter, particularly in amusement parks and multi-attraction tour passes [4] Market Data and Key Metrics Changes - North America enterprise brands had 26 brands generating over $1 million in quarterly billings, representing 53% year-over-year growth [3] Company Strategy and Development Direction - The company is focused on building a hyper-local experience marketplace that combines trust, curation, quality, and value [5] - A proactive refinancing was announced to simplify the capital structure and eliminate constraints, positioning the company for growth [3] - The management is committed to developing leaders from within, with new appointments in key executive roles [4] Management's Comments on Operating Environment and Future Outlook - Management sees AI-generated traffic as a tailwind, with expectations of significant growth in this area [10] - The company is optimistic about the future, citing multiple levers for accelerating growth and building long-term value [4][5] - There is a focus on re-engaging lost cohorts and improving customer acquisition and retention [36] Other Important Information - The settlement with Italy is not yet binding and requires various approvals, but it may signal the end of past tax issues [38] - The company is exploring options for potentially reopening the local business in Italy [38] Q&A Session Summary Question: Can you elaborate on AI-generated traffic? - Management believes AI traffic is incremental and sees it as a positive trend with strong double-digit growth every month [10] Question: What efforts have been made to engage merchants? - The company is transforming its sales approach to be more performance-based and is focusing on understanding the economy for merchants [12][14] Question: How is the growth in AI traffic being achieved? - Growth is a mix of organic traffic and intentional enhancements to listings, with a focus on SEO and AI integration [21][26] Question: What is the dynamic between billings growth and revenue growth? - Billings are growing faster than revenue due to higher redemption rates and a mix of categories, which affects take rates [45]

Core Insights - Groupon reported Q2 2025 GAAP revenue of $125.7 million, exceeding Wall Street's expectation of $122.47 million, with diluted earnings per share of $0.46, a significant improvement from a loss of $0.25 per share in Q2 2024 [1][5] - Gross billings increased by 12% year-over-year to $416.7 million, indicating strong performance in North America, while international markets faced challenges [1][6][8] Financial Performance - GAAP revenue grew by 0.9% year-over-year, while gross billings rose by 11.5% [2][6] - Adjusted EBITDA decreased by 5.5% to $15.6 million, and free cash flow surged by 132.7% to $25.2 million [2][10] - The company achieved net income from continuing operations of $20.6 million, a turnaround from a net loss of $9.4 million in Q2 2024 [5] Business Model and Strategy - Groupon operates a digital marketplace connecting local businesses with consumers, focusing on curated local experiences [3][4] - The company is transitioning from a general daily deals platform to a destination for quality local experiences, emphasizing higher-value merchant partnerships and technology investments [4][12] Market Dynamics - North America remains the primary growth driver, with local billings increasing by 20% and active customers rising by 6% to 10.8 million [6][7] - International gross billings declined by 3%, with active international customers falling by 11% year-over-year [8][10] Operational Highlights - The company is investing in technology upgrades, including MobileNext rollouts and AI initiatives to enhance merchant deal design [12] - Marketing expenses increased by 13.4% year-over-year as Groupon aims to attract new users and merchants [10] Future Outlook - Management raised full-year billings growth guidance to 3% to 5%, but did not provide explicit revenue or profitability guidance [14] - Key areas to monitor include revenue growth relative to billings, customer and merchant retention, and performance in international markets [15]

Core Viewpoint - Groupon reported quarterly earnings of $0.46 per share, significantly exceeding the Zacks Consensus Estimate of a loss of $0.02 per share, marking an earnings surprise of +2,400% [1] - The company has shown consistent performance, surpassing consensus EPS estimates three times over the last four quarters [2] Financial Performance - Groupon's revenues for the quarter ended June 2025 were $125.7 million, surpassing the Zacks Consensus Estimate by 2.32% and showing a slight increase from $124.61 million in the same quarter last year [2] - The current consensus EPS estimate for the upcoming quarter is breakeven on revenues of $121.43 million, while for the current fiscal year, it is $0.30 on revenues of $500.25 million [7] Stock Performance - Groupon shares have increased approximately 150.5% since the beginning of the year, outperforming the S&P 500's gain of 7.1% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations of outperforming the market in the near future [6] Industry Outlook - The Internet - Commerce industry, to which Groupon belongs, is currently ranked in the bottom 35% of over 250 Zacks industries, which may impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that investors should monitor these revisions closely [5]

Core Insights - Groupon reported a 1% increase in global revenue and a 12% increase in billings for Q2 2025 [1] - North America local revenue grew by 3% and local billings surged by 20% [1] - The company completed a financing transaction worth $244 million [1] Financial Performance - The financial results for Q2 2025 were filed with the Securities and Exchange Commission [1] - The earnings commentary is available on Groupon's investor relations website [1] Management Commentary - CEO Dusan Senkypl highlighted the momentum in Groupon's transformation, emphasizing the 20% growth in North America local billings and improved customer acquisition [2] - The company aims to establish itself as a trusted destination for quality local experiences at competitive prices [2] - There is a focus on marketplace health and platform velocity to ensure sustained growth [2]

Financial Performance - Global revenue for Q2 2025 was $125.7 million, up 1% year-over-year, while global billings increased by 12% to $416.7 million[5] - Net income from continuing operations was $20.6 million, a significant improvement from a net loss of $9.4 million in the prior year[6] - Revenue for Q2 2025 was $125.7 million, a slight increase from $124.6 million in Q2 2024, while revenue for the first half of 2025 was $242.9 million, down from $247.7 million in the same period last year[41] - Gross profit for Q2 2025 was $114.4 million, compared to $112.7 million in Q2 2024, indicating a growth in profitability despite a decrease in overall revenue for the first half of the year[41] - Operating expenses decreased to $101.4 million in Q2 2025 from $108.3 million in Q2 2024, contributing to improved income from operations of $13.1 million compared to $4.4 million in the prior year[41] - Basic net income per share for continuing operations was $0.51 in Q2 2025, compared to a loss of $0.25 per share in Q2 2024, showcasing improved earnings per share[41] - Net income for the three months ended June 30, 2025, was $20,593,000, compared to a loss of $9,412,000 in the same period of 2024, representing a significant turnaround[43] Customer Metrics - Active customers as of June 30, 2025, totaled 15.8 million, reflecting a 2% sequential increase and consistent with the prior year[6] - Active customers in North America increased to 10.8 million in Q2 2025, while international active customers remained stable at 5.0 million[47] - The total number of active customers for the trailing twelve months (TTM) was reported in thousands, indicating a focus on customer metrics[45] Revenue Breakdown - North America Local revenue reached $94.5 million, up 3% year-over-year, with Local billings growing by 20% to $292.4 million[10] - International revenue decreased by 2% to $25.7 million, primarily due to the divestiture of Giftcloud and withdrawal from the Italian market[10] - North America gross billings were $324.8 million, up 16% year-over-year, with unit sales increasing by 8% to 6.3 million[10] - Total gross billings for Q2 2025 amounted to $324,758 million, with a year-over-year growth of 16.4%[46] Cash Flow and Financing - The company reported net cash provided by operating activities from continuing operations of $28,419,000 for the three months ended June 30, 2025, up from $15,300,000 in the same period of 2024[43] - Cash, cash equivalents, and restricted cash at the end of the period on June 30, 2025, totaled $296,694,000, an increase from $206,454,000 on June 30, 2024[44] - The net cash provided by investing activities from continuing operations was $10,761,000 for the three months ended June 30, 2025, compared to $4,303,000 in the same period of 2024[43] - The net cash used in financing activities was $(2,684,000) for the three months ended June 30, 2025, compared to $(1,721,000) in the same period of 2024[43] Expenses and Adjustments - Marketing expenses were $41.4 million, representing 36% of gross profit, compared to 32% in the prior year[6] - The company recorded depreciation and amortization of $4,063,000 for the three months ended June 30, 2025, compared to $7,224,000 in the same period of 2024[43] - Stock-based compensation increased to $8,782,000 for the three months ended June 30, 2025, from $6,418,000 in the same period of 2024[43] - Total adjustments to income for Q2 2025 amounted to $7,299, contributing to the adjusted EBITDA calculation[51] Leadership Changes - The company announced leadership changes, with Jiri Ponrt becoming COO and Rana Kashyap stepping into the CFO role effective September 1, 2025[13] Risks and Strategic Focus - The company has ongoing risks related to international operations, currency fluctuations, and regulatory challenges that could impact future performance[34] - Groupon continues to focus on enhancing its marketplace and customer experience while navigating a competitive environment and potential economic uncertainties[34]

[Glossary of Defined Terms and Abbreviations](index=3&type=section&id=Glossary%20of%20Defined%20Terms%20and%20Abbreviations) This section defines key terms and abbreviations used in the report, covering financial instruments, restructuring plans, and accounting standards - Defines key terms and abbreviations, including **convertible senior notes (2026, 2027, 2030 Notes)**, **restructuring plans (2020, 2022, Italy)**, and **financial/accounting standards (GAAP, ASC, ASU)**[10](index=10&type=chunk)[11](index=11&type=chunk)[12](index=12&type=chunk) - Covers specific agreements and parties like the **Major Rocket Agreement** and **Backstop Party (Pale Fire Capital SICAV a.s.)**[11](index=11&type=chunk)[12](index=12&type=chunk) [PART I. Financial Information](index=5&type=section&id=PART%20I.%20Financial%20Information) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially - Forward-looking statements are based on current expectations and projections, subject to **risks and uncertainties** that could cause actual results to differ materially[14](index=14&type=chunk) - Key risks include strategy execution, operating result volatility, international operation challenges, global economic uncertainty, competition, customer retention, cybersecurity, and legal compliance[14](index=14&type=chunk) - The company operates in a competitive and rapidly changing environment, with new risks emerging, and undertakes no obligation to publicly update forward-looking statements[14](index=14&type=chunk) [Item 1. Financial Statements and Supplementary Data (unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20and%20Supplementary%20Data%20(unaudited)) This section presents Groupon's unaudited condensed consolidated financial statements, highlighting financial position, performance, and cash movements [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----------------------------------- | :-------------- | :---------------- | :----- | | **Assets** | | | | | Cash and cash equivalents | $262,575 | $228,843 | +$33,732 | | Total current assets | $343,782 | $315,361 | +$28,421 | | Total assets | $647,403 | $612,690 | +$34,713 | | **Liabilities** | | | | | Current portion of convertible senior notes, net | $33,473 | $— | +$33,473 | | Accrued merchant and supplier payables | $203,563 | $196,350 | +$7,213 | | Total current liabilities | $359,508 | $305,426 | +$54,082 | | Total liabilities | $596,082 | $571,639 | +$24,443 | | **Equity** | | | | | Total equity (deficit) | $51,321 | $41,051 | +$10,270 | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :------------------------------------------------- | :----------------------------- | :----------------------------- | :-------------- | :----------------------------- | :----------------------------- | :-------------- | | Revenue | $125,702 | $124,615 | 0.9% | $242,889 | $247,699 | (2.0)% | | Gross profit | $114,426 | $112,667 | 1.6% | $220,724 | $223,224 | (1.1)% | | Income (loss) from operations | $13,054 | $4,358 | 199.5% | $14,938 | $11,728 | 27.4% | | Other income (expense), net | $18,466 | $(4,483) | N/A | $26,037 | $(17,165) | N/A | | Net income (loss) attributable to Groupon, Inc. | $20,337 | $(10,035) | N/A | $27,512 | $(22,306) | N/A | | Basic net income (loss) per share | $0.51 | $(0.25) | N/A | $0.69 | $(0.58) | N/A | | Diluted net income (loss) per share | $0.46 | $(0.25) | N/A | $0.64 | $(0.58) | N/A | - A significant **gain on sale of business of $10.65 million** was recognized for both the three and six months ended June 30, 2025[18](index=18&type=chunk) - Foreign currency translation adjustments resulted in a net change in unrealized loss of **$(22.7) million** for the three months and **$(33.1) million** for the six months ended June 30, 2025, compared to gains in the prior year[18](index=18&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) Key Changes in Stockholders' Equity (in thousands) | Metric | December 31, 2024 | June 30, 2025 | Change | | :------------------------------------------ | :---------------- | :-------------- | :----- | | Total Groupon, Inc. Stockholders' Equity (Deficit) | $40,815 | $51,196 | +$10,381 | | Net income (loss) attributable to Groupon, Inc. (6 months) | N/A | $27,512 | N/A | | Stock-based compensation on equity-classified awards (6 months) | N/A | $18,804 | N/A | | Accumulated other comprehensive income (loss) | $30,734 | $(2,335) | $(33,069) | - The company issued **7,079,646 shares of Common Stock** through a Rights Offering in Q1 2024, generating **$79.6 million** in additional paid-in capital[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Activity (Six Months Ended June 30) | 2025 | 2024 | Change | | :---------------------------------- | :----- | :----- | :----- | | Net cash provided by (used in) operating activities | $28,397 | $5,189 | +$23,208 | | Net cash provided by (used in) investing activities | $7,024 | $372 | +$6,652 | | Net cash provided by (used in) financing activities | $(3,138) | $33,620 | $(36,758) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $34,125 | $38,816 | $(4,691) | | Cash, cash equivalents and restricted cash, end of period | $296,694 | $206,454 | +$90,240 | - The increase in operating cash flow in 2025 is primarily due to the timing of merchant payments and increased revenue/billings growth[229](index=229&type=chunk) - Investing cash flow increased due to proceeds from the sale of Giftcloud, partially offset by prior period intangible asset sales and decreased capital expenditures[230](index=230&type=chunk) - Financing activities shifted from providing cash in 2024 (due to Rights Offering proceeds) to using cash in 2025, reflecting the absence of similar large capital raises[231](index=231&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION](index=12&type=section&id=NOTE%201.%20DESCRIPTION%20OF%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) Groupon operates a global two-sided marketplace connecting consumers to merchants, offering discounted goods and services - Groupon operates a global two-sided marketplace connecting consumers to merchants, offering discounted goods and services via mobile applications and websites[28](index=28&type=chunk) - Operations are organized into two segments: **North America** and **International**[29](index=29&type=chunk) - Interim financial statements are unaudited and prepared in accordance with **GAAP** and **SEC rules**, including normal recurring adjustments[30](index=30&type=chunk) [NOTE 2. BUSINESS DISPOSITIONS](index=13&type=section&id=NOTE%202.%20BUSINESS%20DISPOSITIONS) The company completed the sale of Giftcloud, a non-core UK-based business, recognizing a pre-tax gain - Completed the sale of **Giftcloud** on April 10, 2025, a non-core UK-based business specializing in digitizing gift cards[38](index=38&type=chunk) Giftcloud Sale Financials (in millions) | Metric | Amount | | :-------------------- | :----- | | Cash consideration | $17.1 | | Net proceeds received | $14.0 | | Pre-tax gain on sale | $10.7 | - The financial results of Giftcloud were presented within the International segment and were not material for the three and six months ended June 30, 2025[40](index=40&type=chunk) [NOTE 3. GOODWILL AND LONG-LIVED ASSETS](index=13&type=section&id=NOTE%203.%20GOODWILL%20AND%20LONG-LIVED%20ASSETS) Goodwill remained stable, while intangible assets decreased due to amortization and a prior-year sale - Goodwill balance remained **$178.7 million** as of June 30, 2025, with no activity, and is entirely within the North America segment[41](index=41&type=chunk) Intangible Assets, Net (in thousands) | Asset Type | June 30, 2025 | December 31, 2024 | | :-------------------- | :-------------- | :---------------- | | Merchant relationships | $— | $— | | Trade names | $228 | $398 | | Patents | $150 | $242 | | Other intangible assets | $3,572 | $4,098 | | **Total Intangible Assets, net** | **$3,950** | **$4,738** | - Amortization expense for intangible assets was **$0.8 million** for the six months ended June 30, 2025, down from **$2.2 million** in the prior year[44](index=44&type=chunk) - In April 2024, the company completed the sale of rights to certain intangible assets in North America for **$10.0 million cash**, recognizing a pre-tax gain of **$5.044 million** (3 months) / **$5.160 million** (6 months)[42](index=42&type=chunk)[18](index=18&type=chunk) [NOTE 4. INVESTMENTS](index=14&type=section&id=NOTE%204.%20INVESTMENTS) The carrying value of other equity investments, primarily in SumUp, remained unchanged - Carrying value of other equity investments, primarily in **SumUp**, was **$74.8 million** as of June 30, 2025, unchanged from December 31, 2024[45](index=45&type=chunk) - No changes in fair value of investments were recorded for the three and six months ended June 30, 2025 and 2024[45](index=45&type=chunk) [NOTE 5. SUPPLEMENTAL CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS INFORMATION](index=15&type=section&id=NOTE%205.%20SUPPLEMENTAL%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS%20AND%20STATEMENTS%20OF%20OPERATIONS%20INFORMATION) This section provides detailed breakdowns of prepaid expenses, other non-current assets, accrued liabilities, and other income/expense Prepaid expenses and other current assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Prepaid expenses | $9,082 | $11,319 | | Restricted cash | $34,119 | $33,726 | | Receivable for unwind of capped call transactions | $2,732 | $— | | **Total prepaid expenses and other current assets** | **$55,793** | **$52,365** | Other non-current assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Provisional tax payments | $9,143 | $2,402 | | **Total other non-current assets** | **$15,848** | **$9,144** | Accrued expenses and other current liabilities (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------------------------------------------- | :-------------- | :---------------- | | Customer credits | $24,240 | $22,349 | | Compensation and benefits | $14,745 | $11,436 | | Income taxes payable | $6,218 | $2,691 | | **Total accrued expenses and other current liabilities** | **$111,865** | **$97,765** | Other income (expense), net (in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Foreign currency gains (losses), net and other | $20,899 | $(3,855) | $31,076 | $(15,570) | | **Other income (expense), net** | **$18,466** | **$(4,483)** | **$26,037** | **$(17,165)** | [NOTE 6. FINANCING ARRANGEMENTS](index=17&type=section&id=NOTE%206.%20FINANCING%20ARRANGEMENTS) The company issued new 2030 Notes in exchange for existing 2026 and 2027 Notes, altering its debt structure - Issued **$244.1 million** aggregate principal amount of **4.875% Convertible Senior Notes due June 2030 (2030 Notes)** on July 2, 2025[52](index=52&type=chunk) - The 2030 Notes were issued in exchange for **$20.0 million of 2026 Notes** and **$150.0 million of 2027 Notes**[52](index=52&type=chunk) - A First Supplemental Indenture, dated July 2, 2025, released all liens on collateral securing the 2027 Notes[55](index=55&type=chunk) Convertible Senior Notes Outstanding (in thousands) | Note Type | Principal Amount (June 30, 2025) | Principal Amount (Post-July 2025 Exchange) | Interest Rate | Maturity | | :-------------------------- | :------------------------------- | :--------------------------------------- | :------------ | :--------- | | 2030 Notes | N/A (issued July 2025) | $244,100 | 4.875% | June 2030 | | 2027 Notes | $196,210 | $47,300 | 6.250% | March 2027 | | 2026 Notes | $53,740 | $33,700 | 1.125% | March 2026 | - In June 2025, the company unwound **196,200 capped call transactions** related to the 2026 Notes, reclassifying **$2.7 million** from Additional paid-in-capital and receiving cash proceeds in July 2025[69](index=69&type=chunk) - The revolving credit agreement was terminated in February 2024 by prepaying **$43.1 million** using proceeds from the Rights Offering[71](index=71&type=chunk) [NOTE 7. COMMITMENTS AND CONTINGENCIES](index=19&type=section&id=NOTE%207.%20COMMITMENTS%20AND%20CONTINGENCIES) This section details various tax assessments and indemnification liabilities, including a significant Italian tax settlement - Portugal VAT assessment for 2013-2015 of approximately **$4.5 million** (inclusive of penalties and interest) became final and due in Q4 2024, expected to be paid in 2025[76](index=76&type=chunk) - A contingent liability of **$4.6 million** is recorded for a Portugal VAT assessment for 2011-2012, with an appeal lodged to the second-level court[77](index=77&type=chunk) - Groupon S.r.l. is litigating a **$134.4 million Italy 2012 Assessment** and a **$35.1 million Italy 2017 Assessment**, with an agreement in principle reached in August 2025 to reduce the combined amount to **$24.9 million**, subject to approvals[78](index=78&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - Indemnification liabilities related to Latin America dispositions were **$2.8 million** as of June 30, 2025, with an additional **$0.5 million** accrual in Q2 2025[83](index=83&type=chunk)[84](index=84&type=chunk) [NOTE 8. STOCKHOLDERS' EQUITY (DEFICIT) AND COMPENSATION ARRANGEMENTS](index=22&type=section&id=NOTE%208.%20STOCKHOLDERS'%20EQUITY%20(DEFICIT)%20AND%20COMPENSATION%20ARRANGEMENTS) This section details equity changes, stock-based compensation, and performance share unit vesting - As of June 30, 2025, **4,540,891 shares of Common Stock** were available for future issuance under the 2011 Incentive Stock Plan[88](index=88&type=chunk) Unrecognized Compensation Costs (as of June 30, 2025) | Award Type | Unrecognized Compensation Costs (in millions) | Remaining Weighted-Average Period (years) | | :------------------------------------ | :------------------------------------------ | :---------------------------------------- | | RSUs | $9.5 | 1.5 | | 2025 PSUs | $37.4 | 1.85 | | Equity-classified 2024 Executive PSUs | $17.1 | 1.44 | - The first (**$14.86**) and second (**$20.14**) stock price hurdles for 2024 Executive PSUs were achieved in May and June 2025, respectively, leading to vesting of **556,980 equity-classified PSUs**; the third hurdle (**$31.01**) was achieved on August 5, 2025[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - A liability-classified 2024 Executive PSU award was modified to equity-classified in June 2025, resulting in **$1.9 million** of incremental stock-based compensation expense[109](index=109&type=chunk)[112](index=112&type=chunk) - Major Rocket LLC is eligible to receive up to **954,000 shares of Common Stock** (or cash equivalent) as incentive compensation for achieving certain financial benchmarks, with **$0.5 million** expense recognized as of June 30, 2025[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - The **$80.0 million** fully backstopped Rights Offering closed on January 22, 2024, resulting in the purchase of **7,079,646 shares of Common Stock** at **$11.30 per share**[119](index=119&type=chunk)[120](index=120&type=chunk) [NOTE 9. REVENUE RECOGNITION](index=28&type=section&id=NOTE%209.%20REVENUE%20RECOGNITION) This section details customer credit activity, deferred contract acquisition costs, and expected credit losses Customer Credits Activity (Six Months Ended June 30, 2025, in thousands) | Item | Amount | | :-------------------------- | :----- | | Balance as of December 31, 2024 | $22,349 | | Credits issued | $47,780 | | Credits redeemed | $(41,882) | | Breakage revenue recognized | $(4,318) | | Balance as of June 30, 2025 | $24,240 | - Deferred contract acquisition costs were **$4.8 million** as of June 30, 2025, with **$3.1 million** amortized for the six months ended June 30, 2025[124](index=124&type=chunk)[125](index=125&type=chunk) - Recognized **$4.5 million** in variable consideration from unredeemed vouchers for the six months ended June 30, 2025, down from **$10.1 million** in the prior year[128](index=128&type=chunk) Allowance for Expected Credit Losses on Accounts Receivable (Six Months Ended June 30, 2025, in thousands) | Item | Amount | | :-------------------------- | :----- | | Balance at December 31, 2024 | $2,673 | | Change in provision | $(581) | | Write-offs | $364 | | Balance as of June 30, 2025 | $2,460 | [NOTE 10. RESTRUCTURING AND RELATED CHARGES](index=29&type=section&id=NOTE%2010.%20RESTRUCTURING%20AND%20RELATED%20CHARGES) The Italy Restructuring Plan was completed, resulting in immaterial charges for the current period - The **Italy Restructuring Plan**, approved in July 2024, involved exiting the local business in Italy and a reduction of **33 positions**, completed by December 31, 2024[129](index=129&type=chunk) - Incurred **$2.2 million** in pre-tax charges since the inception of the Italy Restructuring Plan, mostly paid in cash by March 31, 2024[129](index=129&type=chunk) - Immaterial restructuring charges (credits) were recorded for the three and six months ended June 30, 2025, under the Italy, 2022, and 2020 Restructuring Plans[129](index=129&type=chunk)[130](index=130&type=chunk) [NOTE 11. INCOME TAXES](index=29&type=section&id=NOTE%2011.%20INCOME%20TAXES) This section details income tax provisions, effective tax rates, and the resolution of significant Italian tax assessments Income Tax Provision (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Provision (benefit) for income taxes | $10,927 | $9,287 | $12,355 | $15,481 | | Income (loss) from continuing operations before provision (benefit) for income taxes | $31,520 | $(125) | $40,975 | $(5,437) | | Effective tax rate | 34.7% | (7,429.6)% | 30.2% | (284.7)% | - The effective tax rate is significantly impacted by pretax losses in jurisdictions with valuation allowances against net deferred tax assets, with a **full valuation allowance** maintained against all U.S. federal and state deferred tax assets[131](index=131&type=chunk)[132](index=132&type=chunk) - Groupon S.r.l. is litigating a **$134.4 million Italy 2012 Assessment** and a **$35.1 million Italy 2017 Assessment**[135](index=135&type=chunk)[137](index=137&type=chunk) - An agreement in principle was reached on August 5, 2025, to resolve both Italian tax assessments, reducing the combined total owed to **$24.9 million (€21.3 million)**, with **$10.1 million** already paid, leaving an additional **$14.9 million (€12.7 million)** to be paid, subject to approvals[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) - The 'One Big Beautiful Bill Act' was enacted on July 4, 2025, introducing significant changes to federal income tax code, which the company is currently evaluating for impact[144](index=144&type=chunk) [NOTE 12. FAIR VALUE MEASUREMENTS](index=31&type=section&id=NOTE%2012.%20FAIR%20VALUE%20MEASUREMENTS) Fair value option investments are classified as Level 3 due to unobservable market data, with no material activity reported - Fair value option investments and available-for-sale securities are classified as **Level 3 measurements** due to the lack of observable market data for inputs like cash flow projections and discount rates[146](index=146&type=chunk) - No material activity in recurring Level 3 fair value measurements or significant nonrecurring fair value remeasurements occurred for the three and six months ended June 30, 2025 and 2024[147](index=147&type=chunk)[148](index=148&type=chunk) - Carrying values of short-term financial instruments (accounts receivable, restricted cash, accounts payable, etc.) approximate their fair values[149](index=149&type=chunk) [NOTE 13. INCOME (LOSS) PER SHARE](index=32&type=section&id=NOTE%2013.%20INCOME%20(LOSS)%20PER%20SHARE) This section presents basic and diluted net income (loss) per share, along with weighted average shares outstanding Basic and Diluted Net Income (Loss) Per Share (Six Months Ended June 30, in thousands, except per share amounts) | Metric | 2025 | 2024 | | :------------------------------------------------- | :----- | :----- | | Basic net income (loss) attributable to common stockholders | $27,512 | $(22,306) | | Diluted net income (loss) attributable to common stockholders - continuing operations | $28,350 | $(22,306) | | Basic net income (loss) per share (Continuing operations) | $0.70 | $(0.58) | | Diluted net income (loss) per share (Continuing operations) | $0.65 | $(0.58) | | Weighted average basic shares outstanding | 39,922,318 | 38,570,401 | | Weighted average diluted shares outstanding | 43,357,429 | 38,570,401 | - Potentially dilutive instruments excluded from diluted EPS calculations due to their antidilutive effect for the six months ended June 30, 2025, included **7,371,079 shares** (e.g., 2027 Notes, RSUs, PSUs)[152](index=152&type=chunk) - As of June 30, 2025, **1,853,066 shares from 2024 Executive PSUs**, **1,647,841 shares from 2025 PSUs**, and **954,000 shares from Major Rocket incentive shares** were excluded from diluted EPS as performance conditions were not yet satisfied[154](index=154&type=chunk) [NOTE 14. SEGMENT INFORMATION](index=35&type=section&id=NOTE%2014.%20SEGMENT%20INFORMATION) Operations are disaggregated into North America and International segments, with performance assessed by contribution profit - Operations are disaggregated into two reportable segments: **North America** and **International**, based on geographically distinct market dynamics[156](index=156&type=chunk) - The Chief Operating Decision Maker (CODM), the CEO, assesses segment performance and allocates resources based on **contribution profit**[156](index=156&type=chunk) Revenue by Segment and Category (Six Months Ended June 30, in thousands) | Category | North America 2025 | North America 2024 | International 2025 | International 2024 | Total 2025 | Total 2024 | | :------- | :----------------- | :----------------- | :----------------- | :----------------- | :--------- | :--------- | | Local | $180,428 | $178,167 | $44,614 | $47,151 | $225,042 | $225,318 | | Goods | $2,680 | $5,870 | $4,525 | $4,714 | $7,205 | $10,584 | | Travel | $8,001 | $8,454 | $2,641 | $3,343 | $10,642 | $11,797 | | **Total Revenue** | **$191,109** | **$192,491** | **$51,780** | **$55,208** | **$242,889** | **$247,699** | Contribution Profit by Segment (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | % Change (YoY) | | :-------------- | :----- | :----- | :------------- | | North America | $114,669 | $121,748 | (5.8)% | | International | $30,219 | $36,147 | (16.4)% | | **Total Contribution Profit** | **$144,888** | **$157,895** | **(8.3)%** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Groupon's financial condition, operations, strategy, and key performance drivers [Overview](index=37&type=section&id=Overview) Groupon aims to be the trusted marketplace for local services and experiences, focusing on merchant relationships and customer experience - Groupon's strategy is to be the trusted marketplace for local services and experiences, focusing on building long-term merchant relationships and enhancing customer experience[162](index=162&type=chunk) - Revenue is primarily net commissions from selling goods or services on behalf of third-party merchants, reported as the purchase price collected less the portion payable to the merchant[163](index=163&type=chunk) - Significant resources are being invested in platform efficiency, stability, and agility to innovate faster, serve merchants better, and create more engaging customer experiences[164](index=164&type=chunk) [How We Measure Our Business](index=38&type=section&id=How%20We%20Measure%20Our%20Business) The company uses a combination of operating and financial metrics to assess business performance and liquidity - The company uses operating metrics (gross billings, units, active customers) and financial metrics (revenue, gross profit, contribution profit, Adjusted EBITDA, free cash flow) to measure business performance[165](index=165&type=chunk)[166](index=166&type=chunk)[169](index=169&type=chunk) Operating Metrics (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | TTM June 30, 2025 | TTM June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :---------------- | :---------------- | | Gross billings | $416,697 | $373,607 | $803,173 | $754,753 | N/A | N/A | | Units | 9,117 | 8,561 | 17,655 | 17,687 | N/A | N/A | | Active customers | N/A | N/A | N/A | N/A | 15,829 | 15,825 | Financial Metrics (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Revenue | $125,702 | $124,615 | $242,889 | $247,699 | | Gross profit | $114,426 | $112,667 | $220,724 | $223,224 | | Contribution profit | $73,027 | $76,147 | $144,888 | $157,895 | | Adjusted EBITDA | $15,563 | $16,479 | $30,889 | $35,996 | | Free cash flow | $25,189 | $10,826 | $21,430 | $(2,994) | [Operating Expenses](index=39&type=section&id=Operating%20Expenses) Operating expenses include marketing, selling, general and administrative, and restructuring charges - Marketing expense includes online marketing (search engine, social media, affiliate programs), offline marketing (television), and compensation for marketing employees[173](index=173&type=chunk) - SG&A expenses cover sales commissions, compensation for customer service, operations, technology, product development, and general corporate functions, along with depreciation, rent, professional fees, and litigation costs[173](index=173&type=chunk) - Restructuring and related charges primarily represent severance and benefit costs for workforce reductions, impairments, and other facilities-related costs[174](index=174&type=chunk) [Factors Affecting Our Performance](index=41&type=section&id=Factors%20Affecting%20Our%20Performance) Performance is influenced by the ability to attract and retain merchants and customers, alongside macroeconomic conditions - Performance is affected by the ability to attract and retain local merchants, requiring improved marketplace offerings and merchant value propositions[175](index=175&type=chunk) - Acquiring and retaining customers is crucial, driven by strengthening product offerings, improving attractiveness, and enhancing marketing campaigns[176](index=176&type=chunk) - Macroeconomic conditions (inflation, labor costs, supply chain) impact the business, with the company focusing on long-term merchant relationships and customer experience to mitigate these effects[177](index=177&type=chunk) [Results of Operations](index=42&type=section&id=Results%20of%20Operations) [North America](index=42&type=section&id=North%20America) North America saw growth in local gross billings, partially offset by declines in other categories and increased marketing spend North America Operating Metrics (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :-------------------- | :----------------------------- | :----------------------------- | :-------------- | :----------------------------- | :----------------------------- | :-------------- | | Total gross billings | $324,758 | $278,969 | 16.4% | $611,277 | $551,901 | 10.8% | | Local gross billings | $292,381 | $243,587 | 20.0% | $548,037 | $474,640 | 15.5% | | Total units | 6,346 | 5,882 | 7.9% | 12,060 | 11,667 | 3.4% | | TTM active customers | 10,782 (2025) | 10,235 (2024) | 5.3% | N/A | N/A | N/A | North America Financial Metrics (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :-------------------- | :----------------------------- | :----------------------------- | :-------------- | :----------------------------- | :----------------------------- | :-------------- | | Total revenue | $99,996 | $98,357 | 1.7% | $191,109 | $192,491 | (0.7)% | | Total cost of revenue | $8,564 | $9,478 | (9.6)% | $16,805 | $19,484 | (13.7)% | | Total gross profit | $91,432 | $88,879 | 2.9% | $174,304 | $173,007 | 0.7% | | Marketing | $33,160 | $29,477 | 12.5% | $59,635 | $51,259 | 16.3% | | Contribution profit | $58,272 | $59,402 | (1.9)% | $114,669 | $121,748 | (5.8)% | - Local category growth in gross billings was driven by transformation efforts, while the Goods category saw declines due to de-emphasis[179](index=179&type=chunk)[180](index=180&type=chunk) - The decrease in cost of revenue was primarily due to a decrease in amortization of internally-developed software[182](index=182&type=chunk)[183](index=183&type=chunk) [International](index=44&type=section&id=International) International gross billings and revenue declined, primarily due to divestitures, partially offset by favorable foreign currency impacts International Operating Metrics (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :-------------------- | :----------------------------- | :----------------------------- | :-------------- | :----------------------------- | :----------------------------- | :-------------- | | Total gross billings | $91,939 | $94,638 | (2.9)% | $191,896 | $202,852 | (5.4)% | | Local gross billings | $72,997 | $72,932 | 0.1% | $153,475 | $157,965 | (2.8)% | | Total units | 2,771 | 2,679 | 3.4% | 5,595 | 6,020 | (7.1)% | | TTM active customers | 5,047 (2025) | 5,590 (2024) | (9.7)% | N/A | N/A | N/A | International Financial Metrics (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :-------------------- | :----------------------------- | :----------------------------- | :-------------- | :----------------------------- | :----------------------------- | :-------------- | | Total revenue | $25,706 | $26,258 | (2.1)% | $51,780 | $55,208 | (6.2)% | | Total cost of revenue | $2,712 | $2,470 | 9.8% | $5,360 | $4,991 | 7.4% | | Total gross profit | $22,994 | $23,788 | (3.3)% | $46,420 | $50,217 | (7.6)% | | Marketing | $8,239 | $7,043 | 17.0% | $16,201 | $14,070 | 15.1% | | Contribution profit | $14,755 | $16,745 | (11.9)% | $30,219 | $36,147 | (16.4)% | - Decline in Local category gross billings and revenue was mainly due to the divestiture of Giftcloud and withdrawal from the Italian market; excluding these, International Local gross billings increased **15%** (3 months) and **9%** (6 months)[188](index=188&type=chunk)[189](index=189&type=chunk)[191](index=191&type=chunk)[193](index=193&type=chunk) - Foreign currency exchange rates had a favorable impact of **$4.2 million** on gross billings (3 months) and **$1.8 million** (6 months), partially offsetting declines[188](index=188&type=chunk)[189](index=189&type=chunk) [Consolidated Operating Expenses](index=47&type=section&id=Consolidated%20Operating%20Expenses) Consolidated operating expenses decreased due to lower SG&A, despite increased marketing investment and a gain on business sale Consolidated Operating Expenses (in thousands) | Expense | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :------------------------------------ | :----------------------------- | :----------------------------- | :-------------- | :----------------------------- | :----------------------------- | :-------------- | | Marketing | $41,399 | $36,520 | 13.4% | $75,836 | $65,329 | 16.1% | | Selling, general and administrative | $70,669 | $77,212 | (8.5)% | $140,509 | $151,610 | (7.3)% | | (Gain) on sale of business | $(10,650) | $— | 100.0% | $(10,650) | $— | 100.0% | | Total operating expenses | $101,372 | $108,309 | (6.4)% | $205,786 | $211,496 | (2.7)% | - Marketing expense increased due to higher investment in performance marketing campaigns[200](index=200&type=chunk)[202](index=202&type=chunk) - SG&A decreased due to lower technology expenses from revised cloud migration timing, partially offset by higher payroll costs[201](index=201&type=chunk)[203](index=203&type=chunk) [Consolidated Other Income (Expense), Net](index=47&type=section&id=Consolidated%20Other%20Income%20(Expense),%20Net) Other income (expense), net, significantly improved due to foreign currency gains, partially offset by increased interest expense Other Income (Expense), Net (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Other income (expense), net | $18,466 | $(4,483) | $26,037 | $(17,165) | - The favorable change was primarily due to a **$24.8 million** (3 months) and **$46.6 million** (6 months) increase in net foreign currency gains, driven by Euro appreciation against the U.S. dollar[205](index=205&type=chunk)[206](index=206&type=chunk) - This favorable impact was partially offset by an increase in interest expense due to the issuance of the 2027 Notes[205](index=205&type=chunk)[206](index=206&type=chunk) [Consolidated Provision (Benefit) for Income Taxes](index=48&type=section&id=Consolidated%20Provision%20(Benefit)%20for%20Income%20Taxes) Effective tax rates are significantly impacted by pretax losses in jurisdictions with valuation allowances against deferred tax assets Provision (Benefit) for Income Taxes (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Provision (benefit) for income taxes | $10,927 | $9,287 | $12,355 | $15,481 | | Effective tax rate | 34.7% | (7,429.6)% | 30.2% | (284.7)% | - Effective tax rates are significantly impacted by pretax losses in jurisdictions with valuation allowances against net deferred tax assets, with a **full valuation allowance** maintained against all U.S. federal and state deferred tax assets[208](index=208&type=chunk) [Non-GAAP Financial Measures](index=49&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures like Adjusted EBITDA and free cash flow are provided to supplement GAAP results and aid investor understanding - Non-GAAP measures (Adjusted EBITDA, free cash flow, foreign currency exchange rate neutral operating results) are provided to help investors understand financial performance and liquidity, complementing GAAP results[211](index=211&type=chunk) - Adjusted EBITDA excludes income taxes, interest, depreciation, amortization, stock-based compensation, and special charges/credits (e.g., restructuring, asset/business sales, foreign VAT assessments)[212](index=212&type=chunk)[213](index=213&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Income (loss) from continuing operations | $20,593 | $(9,412) | $28,620 | $(20,918) | | Total adjustments | $(5,030) | $25,891 | $2,269 | $56,914 | | **Adjusted EBITDA** | **$15,563** | **$16,479** | **$30,889** | **$35,996** | - Free cash flow is defined as net cash provided by (used in) operating activities from continuing operations less purchases of property and equipment and capitalized software[216](index=216&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity, primarily from cash balances, to meet operational needs and debt obligations - Principal source of liquidity is cash balance of **$262.6 million** as of June 30, 2025[220](index=220&type=chunk) - Believes it has sufficient liquidity for ongoing operational needs and repayment of remaining **$33.7 million of 2026 Notes** due March 2026[220](index=220&type=chunk) Cash Flows from Continuing Operations (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | Change | | :-------------------- | :----- | :----- | :----- | | Operating activities | $28,397 | $5,189 | +$23,208 | | Investing activities | $7,024 | $372 | +$6,652 | | Financing activities | $(3,138) | $33,620 | $(36,758) | Free Cash Flow (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities from continuing operations | $28,419 | $15,300 | $28,397 | $5,189 | | Purchases of property and equipment and capitalized software | $(3,230) | $(4,474) | $(6,967) | $(8,183) | | **Free cash flow** | **$25,189** | **$10,826** | **$21,430** | **$(2,994)** | - The increase in operating cash flow in 2025 is primarily attributed to the timing of merchant payments and increased revenue/billings growth[229](index=229&type=chunk) - International subsidiaries hold **$83.1 million** in cash, generally intended for reinvestment or tax-efficient remittance, with no current plans to repatriate funds to the U.S. for domestic liquidity needs[240](index=240&type=chunk) [Contractual Obligations and Commitments](index=54&type=section&id=Contractual%20Obligations%20and%20Commitments) Contractual obligations and commitments did not materially change from the prior annual report - Contractual obligations and commitments as of June 30, 2025, did not materially change from the 2024 Annual Report on Form 10-K[242](index=242&type=chunk) [Off-Balance Sheet Arrangements](index=54&type=section&id=Off-Balance%20Sheet%20Arrangements) No off-balance sheet arrangements existed as of June 30, 2025 - No off-balance sheet arrangements existed as of June 30, 2025[243](index=243&type=chunk) [Significant Accounting Policies and Critical Accounting Estimates](index=54&type=section&id=Significant%20Accounting%20Policies%20and%20Critical%20Accounting%20Estimates) Financial statements rely on management estimates and assumptions, which may differ from actual results - Financial statements require management estimates and assumptions for asset/liability amounts, revenue, expenses, and contingent liabilities[244](index=244&type=chunk) - Estimates are based on historical experience and reasonable assumptions, but actual results may differ materially[244](index=244&type=chunk) - Significant accounting policies and critical accounting estimates are detailed in the 2024 Annual Report on Form 10-K[245](index=245&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section discusses Groupon's exposure to foreign currency, interest rate, and inflation risks [Foreign Currency Exchange Risk](index=55&type=section&id=Foreign%20Currency%20Exchange%20Risk) Groupon is exposed to foreign currency risk from international operations, primarily in Europe and Canada - Exposed to foreign currency risk from international operations, primarily in Euro, British Pound Sterling, Canadian dollar, Indian Rupee, Polish Zloty, and Czech Koruna[247](index=247&type=chunk) - International segment generated **20.4%** and **21.3%** of revenue for the three and six months ended June 30, 2025, respectively[247](index=247&type=chunk) - A hypothetical **10% adverse change** in foreign currency exchange rates would have a de minimis impact on net working capital deficit as of June 30, 2025, compared to an **$0.8 million** potential increase in working capital surplus as of December 31, 2024[249](index=249&type=chunk) [Interest Rate Risk](index=55&type=section&id=Interest%20Rate%20Risk) The company has limited exposure to interest rate risk due to fixed-rate debt and bank deposits - Limited exposure to interest rate risk due to cash balance consisting of bank deposits[250](index=250&type=chunk) - **2026 Notes ($53.7 million principal)** and **2027 Notes ($196.2 million principal)** bear fixed interest rates, so changes in market interest rates do not directly impact financial statements[250](index=250&type=chunk) [Inflation Risk](index=55&type=section&id=Inflation%20Risk) Inflation could negatively impact operating costs and discretionary spending, affecting business performance - Business is affected by changes in merchants' and customers' discretionary spend[251](index=251&type=chunk) - Increased inflation could negatively impact operating costs, and the inability to offset these costs through price increases or efficiency measures could harm the business[251](index=251&type=chunk) [Item 4. Controls and Procedures](index=56&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of disclosure controls and internal control over financial reporting, including remediation efforts [Evaluation of Disclosure Controls and Procedures](index=56&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Disclosure controls were not effective due to previously identified material weaknesses in internal control over financial reporting - Disclosure controls and procedures were **not effective** as of June 30, 2025, due to previously reported material weaknesses in internal control over financial reporting[253](index=253&type=chunk) - Despite material weaknesses, the CEO and CFO concluded that the Condensed Consolidated Financial Statements fairly present the financial position, results of operations, and cash flows in accordance with GAAP[254](index=254&type=chunk) [Remediation Plan and Status](index=56&type=section&id=Remediation%20Plan%20and%20Status) Management is actively implementing a remediation plan to address material weaknesses in internal controls - Management is dedicating resources to improve internal controls over financial reporting to remediate material weakness related to complex manual calculations[255](index=255&type=chunk) - Remediation actions include new/enhanced controls for manual processes, automated reporting for complex calculations, formalized process for new initiatives' accounting implications, and added detective analytic management review controls[259](index=259&type=chunk) - Material weakness will be remediated only after controls are tested and concluded to be designed and operating effectively for a sufficient period[256](index=256&type=chunk) [Changes in Internal Control over Financial Reporting](index=56&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes in internal control over financial reporting were identified, other than enhancements to address existing weaknesses - No material changes in internal control over financial reporting were identified during the six months ended June 30, 2025, other than enhancements to address the material weakness[257](index=257&type=chunk) [Limitations on Effectiveness of Controls and Procedures](index=56&type=section&id=Limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) Controls and procedures provide reasonable, not absolute, assurance, considering resource constraints and management judgment - Controls and procedures provide only reasonable assurance of achieving control objectives, not absolute assurance[258](index=258&type=chunk) - Design of controls must consider resource constraints and the need for management judgment in evaluating benefits versus costs[258](index=258&type=chunk) [PART II. Other Information](index=57&type=section&id=PART%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) Material pending legal proceedings are detailed in Note 7, Commitments and Contingencies, within the financial statements - Material pending legal proceedings are described in **Item 1, Note 7, Commitments and Contingencies**[261](index=261&type=chunk) [Item 1A. Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) This section highlights new or updated risks related to capital access, outstanding indebtedness, and potential impacts on liquidity - No material changes to risk factors were reported, except for supplements related to capital access and outstanding indebtedness[262](index=262&type=chunk) - Risks include limited access to capital, potential failure to manage/raise capital, and the inability to settle conversions of **2026, 2027, and 2030 Notes** in cash or repurchase them upon fundamental change[263](index=263&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk) - The terms of the convertible notes could delay or prevent a company takeover, and conditional conversion features, if triggered, could adversely affect financial condition and operating results by requiring cash settlement or reclassification of debt to current liability[270](index=270&type=chunk)[271](index=271&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=60&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered equity security sales and details issuer purchases for tax withholding obligations [Recent Sales of Unregistered Securities](index=60&type=section&id=Recent%20Sales%20of%20Unregistered%20Securities) No unregistered equity securities were issued during the three months ended June 30, 2025 - No unregistered equity securities were issued during the three months ended June 30, 2025[272](index=272&type=chunk) [Issuer Purchases of Equity Securities](index=60&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) The company purchased shares to satisfy tax withholding requirements for stock-based compensation awards - No changes to the Board-authorized share repurchase program as of June 30, 2025[273](index=273&type=chunk) Issuer Purchases of Equity Securities (Three Months Ended June 30, 2025) | Date | Total Number of Shares Purchased | Average Price Paid Per Share | | :---------------- | :----------------------------- | :--------------------------- | | April 1-30, 2025 | 2,054 | $18.90 | | May 1-31, 2025 | 122,156 | $26.31 | | June 1-30, 2025 | 46,514 | $36.90 | | **Total** | **170,724** | **$29.11** | - Shares were purchased to satisfy mandatory tax withholding requirements upon vesting of stock-based compensation awards[274](index=274&type=chunk) [Item 5. Other Information](index=60&type=section&id=Item%205.%20Other%20Information) This section provides updates on executive appointments, Italian tax assessment agreements, and PSU hurdle achievements [Appointment of Chief Operating Officer & Chief Financial Officer](index=60&type=section&id=Appointment%20of%20Chief%20Operating%20Officer%20%26%20Chief%20Financial%20Officer) Jiri Ponrt will transition to Chief Operating Officer, and Rana Kashyap will become the new Chief Financial Officer - **Jiri Ponrt** appointed Chief Operating Officer, effective September 1, 2025, transitioning from his role as CFO[276](index=276&type=chunk) - **Rana Kashyap** appointed Chief Financial Officer, effective September 1, 2025, previously serving as Senior Vice President of Finance[278](index=278&type=chunk)[279](index=279&type=chunk) [Italy Tax Assessment Agreements](index=61&type=section&id=Italy%20Tax%20Assessment%20Agreements) An agreement in principle was reached to significantly reduce Italian tax liabilities, subject to regulatory approvals - Agreement in principle reached on August 5, 2025, to resolve **Italy 2012 Assessment ($134.4 million)** and **Italy 2017 Assessment ($35.1 million)**[282](index=282&type=chunk)[283](index=283&type=chunk) - Combined total owed reduced to **$24.9 million (€21.3 million)**, with **$10.1 million** already paid, leaving an additional **$14.9 million (€12.7 million)** to be paid[283](index=283&type=chunk)[284](index=284&type=chunk) - The agreement is non-binding and subject to approvals from the Administrative Review Committee and the Central Directorate on Tax Audit for the Italian Internal Revenue Service[285](index=285&type=chunk) [Third PSU Hurdle Achievement](index=61&type=section&id=Third%20PSU%20Hurdle%20Achievement) The third stock price hurdle for 2024 Executive PSUs was achieved, making additional shares eligible to vest - The third stock price hurdle (**$31.01**) for 2024 Executive PSUs was achieved on August 5, 2025[287](index=287&type=chunk) - Up to **299,335 equity-classified 2024 Executive PSUs** are now eligible to vest, pending Compensation Committee determinations[287](index=287&type=chunk) [Item 6. Exhibits](index=62&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including indentures, exchange agreements, and certifications - Lists exhibits such as Indenture for 2030 Notes, First Supplemental Indenture, Form of Exchange Agreement, CEO/CFO Grant and Performance Share Agreements, and various certifications[290](index=290&type=chunk) [Signatures](index=63&type=section&id=Signatures) The report was officially signed by Jiri Ponrt, Chief Financial Officer, on August 6, 2025 - Report signed by **Jiri Ponrt, Chief Financial Officer**, on August 6, 2025[294](index=294&type=chunk)

Company Performance - Groupon's stock closed at $30.87, reflecting a -2.7% change from the previous day's closing price, underperforming compared to the S&P 500's loss of 0.37% [1] - Over the last month, Groupon's shares have decreased by 9.53%, while the Retail-Wholesale sector gained 2.03% and the S&P 500 gained 2.68% [1] Upcoming Financial Results - Groupon is set to announce its earnings on August 6, 2025, with an expected EPS of -$0.02, indicating stability compared to the same quarter last year [2] - The consensus estimate for revenue is projected at $122.86 million, representing a 1.41% decrease from the same quarter of the previous year [2] Full Year Estimates - Analysts expect Groupon to achieve earnings of $0.3 per share and revenue of $500.25 million for the full year, marking changes of +119.87% and +1.56% respectively from the previous year [3] - Recent revisions to analyst estimates are seen as a positive indicator for the business outlook [3] Valuation and Ranking - Groupon currently holds a Zacks Rank of 1 (Strong Buy), with a Forward P/E ratio of 104.57, which is significantly higher than the industry average of 22.16 [5] - The Zacks Rank system has a historical track record of outperformance, with 1 stocks returning an average of +25% annually since 1988 [5] Industry Context - The Internet - Commerce industry, part of the Retail-Wholesale sector, has a Zacks Industry Rank of 151, placing it in the bottom 39% of over 250 industries [6] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [6]