Core Insights - Groupon's shares surged 37% following a better-than-expected earnings report and progress in its turnaround strategy [1] Financial Performance - Groupon reported a fourth-quarter net loss per share of $1.20 on total revenue of $130.4 million, exceeding analyst expectations [2] - Adjusted earnings were $18.7 million, which was $800,000 higher than estimates [2] - North America Local Billings grew by 8% in the fourth quarter, marking a recovery after a challenging third quarter [2] Future Outlook - Management anticipates full-year revenue for 2025 to be flat to 2% higher, surpassing estimates [3] - Expected adjusted earnings for 2025 are projected to be between $70 million and $75 million, with free cash flow of at least $41 million [3] Strategic Transformation - Under CEO Dusan Senkypl, Groupon has streamlined its operations and is focused on returning to growth after recent struggles [4] - The stock is trading at approximately 13 times forward earnings, indicating it is not overly expensive despite recent gains [4]

Financial Data and Key Metrics Changes - In Q4 2024, North America Local experienced an 8% growth in billings, recovering from a 19% decline in 2022, indicating a significant turnaround in marketplace health [10][12] - The company generated $69 million in adjusted EBITDA and $41 million in free cash flow for the full year, marking its first positive free cash flow since exiting the pandemic [11][12] - The cash position improved to $229 million compared to the previous year, providing a stronger foundation for growth [14] Business Line Data and Key Metrics Changes - North America Local saw a return to 8% billing growth, while International Local, excluding Italy, grew by 2%, with positive momentum across all major markets [13] - Key verticals such as Things to Do, enterprise brands, and gifting experienced double-digit growth [13] Market Data and Key Metrics Changes - The top five metro areas in North America achieved double-digit growth in Q4, reflecting the effectiveness of the targeted strategy [26][28] - Internationally, Spain showed strong performance, with some areas reaching 2019 levels, and positive trends were noted in the UK, France, and Germany [83] Company Strategy and Development Direction - The 2025 strategy focuses on winning in key markets through a city-by-city approach, prioritizing high-impact categories like Things to Do, beauty and wellness, and gifting [14] - The company aims to enhance customer retention through improved personalization and boost merchant success with enhanced tools [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to sustained growth in 2025, emphasizing the importance of platform stability and curated marketplace strategies [14][19] - The company anticipates slight improvements in customer acquisition and retention, with a focus on increasing transaction frequency [38][40] Other Important Information - The company is investing in platform modernization, including major migrations of its fraud detection platform and cloud infrastructure, which are expected to drive innovation and engagement [11] - Management noted that the impact of recent U.S. tariffs on the business would be minimal, as most revenue comes from local experiences rather than goods [92] Q&A Session Summary Question: What drove the local growth in the U.S.? - Management attributed the turnaround to improved platform stability and a strategic shift towards a curated marketplace focused on quality rather than quantity [19][20] Question: Were any lost loyal customers recovered? - Management indicated that improvements in platform stability led to better results across the board, including the recovery of some lost cohorts [22] Question: What drove the strength in the top five metro areas? - The growth was a result of targeted strategies and market management capabilities developed over the past two years [28][30] Question: Does the guidance include continued customer growth? - Management expects slight improvements in customer acquisition and retention, but does not anticipate significant changes [40] Question: What are the critical investments to drive purchase frequency? - Management highlighted the introduction of "wow deals" and improved communication with customers post-purchase as key strategies to increase purchase frequency [49][50] Question: How is the company attracting higher quality merchants? - The company focuses on a consultative sales approach, emphasizing value over deep discounts to attract quality merchants [66][68] Question: Will the company see counter-cyclical tailwinds if consumers face pressure? - Management believes that Groupon will be an attractive option for merchants with excess capacity and for consumers seeking value [72][73] Question: What metrics indicate improvement in gifting? - Gifting has gained importance, with double-digit shares of orders during peak holiday seasons, showing significant improvement compared to last year [77][78] Question: What are the drivers of growth within international markets? - Positive signals were noted in Spain, the UK, France, and Germany, with a focus on optimizing supply and marketing strategies [83][85] Question: How is the company managing employee turnover in sales? - Management acknowledged high turnover in sales but emphasized a strong performance-based compensation structure to retain top salespeople [88] Question: What is the expected impact of U.S. tariffs? - The impact is expected to be minimal, as the majority of the business is focused on local experiences rather than goods [92]

Core Insights - Groupon reported its financial results for Q4 and the fiscal year 2024, highlighting a flat local revenue in North America for Q4 and a modest growth in local billings by 8% [1][2] - The company achieved a positive operating cash flow of $55.9 million and free cash flow of $40.6 million for the trailing twelve months [1] - Groupon's CEO emphasized the successful execution of the transformation strategy, returning North America Local to growth and generating positive free cash flow for the first time since the pandemic [2] Financial Performance - North America Q4 Local Revenue remained flat, while Local Billings increased by 8% [1] - For the full year 2024, North America Local Revenue grew by 1% and Local Billings by 3% [1] - The company reported a positive operating cash flow of $55.9 million and free cash flow of $40.6 million for the trailing twelve months [1] Strategic Outlook - The CEO noted a rebound in Q4 following a challenging Q3, indicating a stronger foundation for growth entering 2025 [2] - The company aims to accelerate growth based on the momentum gained in the fourth quarter [2]

Revenue Performance - Full year 2024 revenue was $492.6 million, down 4% compared to $514.9 million in 2023[4] - Full year gross billings totaled $1.6 billion, down 5% from $1.65 billion in 2023[3] - Fourth quarter 2024 revenue was $130.4 million, down 5% compared to the prior year period[6] - Revenue for Q4 2024 was $130,379,000, a decrease of 5.4% from $137,716,000 in Q4 2023[36] - Total revenue for Q4 2024 was $137.7 million, reflecting a decline of 5.3% compared to the previous year[41] Customer Metrics - Active customers as of December 31, 2024, were 15.4 million, a decrease of 6% year-over-year[6] - Active customers in North America remained stable at 10.3 million in Q4 2024, while international active customers decreased to 5.1 million[42] Profitability and Loss - Fourth quarter 2024 net loss was $50.1 million, compared to net income of $28.5 million in the prior year period[6] - Net loss attributable to Groupon, Inc. for Q4 2024 was $50,649,000, compared to a net income of $27,702,000 in Q4 2023[36] - Net income for Q4 2024 was a loss of $50,118 thousand, compared to a profit of $28,489 thousand in Q4 2023[38] - The company reported a basic net loss per share of $1.20 for Q4 2024, compared to a net income per share of $0.87 in Q4 2023[36] Operating Performance - Fourth quarter 2024 adjusted EBITDA was $18.7 million, down from $26.9 million in the prior year period[6] - Contribution profit for Q4 2024 was $75.6 million, down 14.0% year-over-year[41] - Adjusted EBITDA for Q4 2023 was $26,938, decreasing to $18,661 in Q4 2024[46] Cash Flow and Liquidity - Operating cash flow for the full year 2024 was $55.9 million, with free cash flow of $40.6 million[4] - The company exited Q4 2024 with $228.8 million in cash and cash equivalents[6] - Cash and cash equivalents increased to $228,843,000 in Q4 2024, compared to $141,563,000 in Q4 2023, a significant increase of 61.5%[34] - Free cash flow for Q4 2024 was $63.2 million, representing a 23.6% increase year-over-year[41] - Total net cash provided by operating activities for Q4 2024 was $66,963 thousand, an increase from $54,500 thousand in Q4 2023[38] Expenses - Operating expenses increased to $115,535,000 in Q4 2024, up from $104,657,000 in Q4 2023, representing a rise of 10.4%[36] - Marketing expenses for Q4 2024 were $42,620,000, an increase of 23.5% from $34,492,000 in Q4 2023[36] - Total depreciation and amortization for the year ended December 31, 2024 was $27,889 thousand, down from $43,401 thousand in 2023[38] - Depreciation and amortization expenses decreased from $10,902 in Q4 2023 to $6,504 in Q4 2024[46] Assets and Liabilities - Total current assets rose to $315,361,000 as of December 31, 2024, compared to $255,583,000 at the end of 2023, an increase of 23.4%[34] - Total liabilities decreased to $571,639,000 as of December 31, 2024, down from $611,268,000 at the end of 2023, a reduction of 6.5%[34] - The company’s total assets increased to $612,690,000 as of December 31, 2024, compared to $570,956,000 at the end of 2023, an increase of 7.1%[34] Segment Performance - North America Local billings grew 8% in Q4 2024, indicating a rebound from previous quarters[2] - The North America segment reported gross billings of $300.3 million in Q4 2024, with a year-over-year growth of 1.8%[41] - International segment gross billings totaled $136.1 million in Q4 2024, reflecting a decline of 8.7% year-over-year[41] - International revenue in Q4 2024 was $33.7 million, down 11% year-over-year, primarily due to exiting the Local business in Italy[13] Other Financial Metrics - Stock-based compensation for Q4 2024 was $9,052 thousand, significantly higher than $710 thousand in Q4 2023[38] - The company recorded a foreign currency gain of $34,837 thousand in Q4 2024, compared to a loss of $14,633 thousand in Q4 2023[38] - Net cash used in investing activities for Q4 2024 was $(3,742) thousand, a decrease from net cash provided of $15,568 thousand in Q4 2023[38] - Net cash provided by financing activities for Q4 2024 was $14,861 thousand, compared to a net cash used of $(4,737) thousand in Q4 2023[38]

Cost Management and Financial Strategy - The company initiated a multi-phase cost savings plan in August 2022, with phases approved in January 2023 and July 2023, aimed at reducing expenses and aligning with financial objectives[79]. - The company may not realize the anticipated benefits of its restructuring plans within the expected timeframe, which could disrupt operations[79]. - The company’s financial condition may be adversely affected by increased refund rates or estimated liabilities related to unredeemed vouchers[73]. - The company estimates future refunds based on historical experiences, and an increase in refund rates could significantly reduce liquidity and profitability[94]. - The company may incur significant costs related to misclassification of workers, which could adversely impact its financial position and results of operations[152]. - The company’s ability to utilize its net operating losses (NOLs) and other tax attributes may be limited by ownership changes as defined by the U.S. Internal Revenue Code[161]. - The company is currently facing a proposed tax assessment of $122.3 million related to transfer pricing for transactions occurring in 2011[158]. - The company has outstanding debt of $53.7 million and $197.3 million in aggregate principal amount for its 2026 Notes and 2027 Notes respectively[163]. - The conditional conversion feature of the 2026 and 2027 Notes may adversely affect the company's liquidity if triggered, requiring cash or shares to settle conversion obligations[170]. - The aggregate principal amount of the 2026 and 2027 Notes is $53.7 million and $197.3 million, respectively, with fixed interest rates, limiting exposure to interest rate changes[298]. - The company does not intend to pay dividends for the foreseeable future, opting to retain earnings for business operations and expansion[174]. Market Strategy and Competition - The company’s strategy focuses on becoming a trusted marketplace for local services and experiences, emphasizing long-term relationships with local merchants to enhance inventory selection and customer experience[77]. - The company faces increased competition from e-commerce sites and traditional media companies, which could adversely impact market share and gross profit[90]. - The company competes against larger companies with more resources, which may allow them to respond more quickly to market changes[92]. - The company must continue to invest significant resources to retain existing customers and acquire new customers to grow profitability[89]. - The company believes that maintaining and enhancing its brand is essential for expanding its customer and merchant base, which may require significant investments[138]. - Unfavorable media coverage could adversely affect the company's reputation, impacting revenue and customer loyalty[139]. Operational Risks and Challenges - The company faces significant risks from macroeconomic challenges, including inflationary pressures, higher labor costs, and supply chain issues, which may hinder the execution of its strategy[78]. - The company’s operating results may vary significantly from quarter to quarter due to the rapidly evolving nature of its business and external factors[80]. - The company is dependent on attracting and retaining high-quality merchants to improve profitability and grow its marketplace, with a focus on enhancing the merchant experience[86]. - The company’s international operations are subject to diverse sociopolitical conditions and regulatory challenges, which may adversely affect its business[82]. - The company’s ability to maintain and improve its technology infrastructure is critical, as disruptions could lead to customer loss[73]. - The company faces challenges in maintaining and improving its technology infrastructure, which is critical for operational success[122]. - Disruptions in service on the company's platforms could result in loss of customers and merchants, adversely affecting financial results[122]. - The company operates in thirteen countries, maintaining significant proprietary and personal data, which poses a constant risk of cyber-attacks[114]. - Cybersecurity breaches could lead to significant reputational harm and customer attrition, impacting financial performance[116]. - The company continues to invest in cybersecurity measures, but there are no assurances that these will be sufficient to prevent breaches[119]. - The company is subject to payments-related risks, including potential increases in interchange fees and holdbacks from payment processors[104]. - The company relies on email and internet search engines for traffic, and a decline in these sources could adversely affect business operations[108]. - The company relies heavily on Internet search engines for traffic generation, with potential negative impacts from algorithm changes affecting search rankings[110]. Legal and Regulatory Risks - The company is currently subject to multiple lawsuits related to intellectual property, which could result in substantial financial and managerial resource expenditure[137]. - The company may face legal liabilities related to content published on its platforms, which could materially affect its business[153]. - The company is exposed to risks associated with compliance to new ESG regulations, which could harm its reputation and financial condition[162]. - The company may face increased compliance costs due to evolving privacy laws, which could impact its operational results[149]. - Noncompliance with privacy regulations could result in significant fines, potentially up to €20 million or 4% of annual global revenue under GDPR[149]. - The company may be subject to additional laws and regulations as it expands into new markets, which could increase operational costs and affect profitability[144]. - The company is subject to regular audits by tax authorities, which could result in significant liabilities and penalties[158]. - The company may face increased costs and operational challenges due to potential changes in tax laws affecting internet commerce[159]. Management and Governance - The company has experienced significant turnover in its senior management team, which could impede the execution of its business and growth strategy[97]. - The material weakness in internal control over financial reporting identified as of December 31, 2022, has not yet been fully remediated, potentially affecting financial accuracy[99]. - The company must provide a competitive compensation package to attract and retain key executives and employees in a competitive marketplace[98]. - Provisions in the company's charter documents may discourage favorable takeovers, limiting stockholder influence over management changes[175]. Financial Performance and Market Conditions - The company’s trading price is highly volatile, influenced by various operational and market risks[76]. - The trading price of the company's Common Stock has been highly volatile, influenced by operating results and external factors specific to technology and Internet commerce[171]. - The company expects continued volatility in its stock price and financial markets due to various factors, including macroeconomic conditions and analyst coverage[172]. - Approximately 23.6% of the company's revenue for the year ended December 31, 2024, was derived from international operations, exposing it to foreign currency exchange risks[295]. - As of December 31, 2024, the company's net working capital surplus from subsidiaries subject to foreign currency translation risk was $8.3 million, compared to a deficit of $21.7 million in 2023[297].

Financial Data and Key Metrics Changes - In Q3 2024, Groupon reported Global Billings of $373 million, a decrease of approximately 10.9% year-over-year, and revenue of $114 million, down 9.5% year-over-year, at the low end of guidance [45] - Adjusted EBITDA was positive $15 million, marking the sixth consecutive quarter of positive adjusted EBITDA, with trailing 12 months adjusted EBITDA at positive $78 million [47] - Operating cash flow was negative $16 million, and free cash flow was negative $20 million, slightly declining versus last year but in line with expectations [48] Business Line Data and Key Metrics Changes - Consolidated Local Billings were $326 million, down 8.1% year-over-year, with North America local billings at $249 million, down 4.5% year-over-year [50] - International Local Billings decreased by 18.0% year-over-year, primarily due to exiting the local business in Italy, but excluding Italy, the international local business showed recovery signs [51] - The Travel category saw consolidated billings of $23 million, down 21.9% year-over-year, while Goods category billings were $25 million, down 29.6% year-over-year, indicating struggles in both segments [52][53] Market Data and Key Metrics Changes - Active customers worldwide totaled approximately 15 million, down 0.3 million from the prior quarter, with North America active customer count remaining flat sequentially [49] - Excluding the Goods category, North America active customers grew sequentially for the third quarter in a row and year-over-year for the second quarter in a row [49] Company Strategy and Development Direction - The company is focused on transforming its platform and enhancing customer experience to lay the groundwork for sustainable growth, with a strong emphasis on rebuilding sales capacity and improving inventory selection [16][25] - Groupon is implementing a marketplace playbook to reinvigorate local experiences in several countries, with Spain showing strong double-digit growth as a case study [15] - The company plans to continue hiring sales resources and expects SG&A to increase quarter-over-quarter as it ramps up hiring [55] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in North America due to technical issues related to platform migrations, impacting retention rates of legacy customers [7][14] - Despite the setbacks, management remains optimistic about the potential for growth in North America Local and the positive trends in International Local [24][42] - The company expects Q4 2024 revenues to decline year-over-year between 10% and 5%, with positive adjusted EBITDA and free cash flow anticipated [59] Other Important Information - Groupon announced an agreement to raise $197 million in new secured convertible debt, providing additional financial flexibility for its transformation [13][64] - The company is exploring changes to payment methods, including offering PayPal to all US customers and returning it to several international markets [61] - Management continues to evaluate the monetization of noncore assets, potentially generating proceeds of approximately $90 million [69] Q&A Session Summary Question: Why don't you think the legacy retention rates would bounce back in North America? - Management indicated that multiple activities are in place to reactivate legacy cohorts, but they do not take it for granted this year due to previous technical changes causing friction for customers [71][72] Question: What is the timing for the tech stack upgrade internationally? - The plan is to implement the tech stack upgrade in the first half of the next year [73] Question: What needs to happen for you to hit the marketing payback? - Management noted that while there were periods of inefficiency in marketing systems, they are close to achieving their target ROI and do not foresee major blockers [75] Question: Why would an increase in local voucher redemption rates be a headwind to revenue? - Management explained that higher redemptions can impact revenue due to the relationship with variable consideration, where good deals lead to higher redemptions affecting breakage [78] Question: Can you provide an update on the SumUp stake? - Management reiterated that they are considering selling their stake in SumUp, but any sale would require coordination with SumUp and depend on market demand [81] Question: What progress has been made in rebuilding the sales force in North America? - Management confirmed that hiring has paused for efficiency reasons but ramped up significantly prior, with plans to continue hiring in January, focusing on major population centers [84]

Groupon 3rd Quarter Earnings November 12, 2024 GROUPON Agenda 2 | --- | --- | |---------|---------------------------------| | | | | | | | | Dusan Senkypl | | CEO CFO | Jiri Ponrt | | | Rana Kashyap SVP, Corp Dev & IR | ● CEO Commentary ● Financial Overview ● Guidance ● Q&A 2 Forward-looking statements and other information 3 The statements contained in this presentation that refer to plans and expectations for the next quarter, the full year or the future are forward-looking statements within the meaning of ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024 OR | --- | --- | --- | |---------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------| | ☐ TRANSITIO ...

Groupon Reports Third Quarter 2024 Results Third Quarter revenue at the low-end of guidance and EBITDA above the high-end of guidance International Local revenue declined 13%. Excluding Italy, International Local revenue declined 2% 100% of North America mobile web and desktop traffic on our new front-end platform Announces $197 million financing transaction • Global revenue of $114.5 million • Global billings of $373.4 million • Net income of $14.5 million • Adjusted EBITDA of $14.8 million • Exited Q3 wit ...

Financial Data and Key Metrics - Global Billings for Q2 2024 were $374 million, a 5% YoY decrease, while revenue was $125 million, a 3% YoY decrease, above the high-end of guidance [23] - Gross profit as a percentage of revenue remained at 90%, consistent with the prior quarter, and is expected to stay in the 88% to 90% range going forward [24] - Adjusted EBITDA was positive $16 million, marking the fifth straight quarter of positive adjusted EBITDA, with trailing 12-month adjusted EBITDA at $81 million [24] - Free cash flow for Q2 was positive $11 million, a $55 million improvement compared to Q2 2023, bringing trailing 12-month free cash flow to positive $30 million [25][29] Business Line Performance - North America Local revenues grew YoY, with active customers growing sequentially for the second straight quarter [6] - Consolidated Local Billings were $317 million, down 1% YoY, with North America Local Billings up 5% YoY to $244 million [26] - International Local Billings declined 17% YoY, primarily due to the pause in local voucher sales in Italy, which accounted for an 8% decline excluding Italy [26] - Travel Billings were $29 million, down 8% YoY, with North America Travel Billings growing 1% YoY, while International Travel Billings declined 27% YoY [27] - Goods Billings were $28 million, down 34% YoY, representing only 4% of Q2 revenues, with no near-term improvement expected [27] Market Performance - North America Local showed strong performance, driven by improved supply quality, enterprise merchant growth, and regionalization efforts [9][11] - International markets, particularly Italy, faced challenges, leading to the decision to exit the local business in Italy, incurring up to $7 million in pre-tax restructuring charges [34][35] Strategy and Industry Competition - The company is focusing on supply quality over quantity, curating high-quality deals, and enhancing deal presentation to improve performance per unique visitor [10] - Investments in marketing and sales are being ramped up, with marketing spend increasing to 32% of gross profit in Q2, achieving satisfactory ROI targets [16] - The company is modernizing its technology infrastructure, including cloud migration and a new front-end platform, to improve efficiency, stability, and agility [17][20] Management Commentary on Operating Environment and Future Outlook - Management acknowledged setbacks in July due to site stability issues related to cloud migration, impacting Q3 performance and leading to revised guidance [8][18] - Despite challenges, the company remains committed to its transformation plan, aiming to become the ultimate destination for local experiences and services [8] - Q3 2024 guidance includes revenues between $114 million and $120 million, a YoY decline of 5% to 10%, and positive adjusted EBITDA between $6 million and $11 million [31] Other Important Information - The company ended Q2 with $178 million in cash and cash equivalents, excluding $28 million of restricted cash [25] - Active customers worldwide were 16 million, down 0.3 million from the prior quarter, with North America active customers flat sequentially [26] - The company is exploring potential changes to payment methods and evaluating the monetization of non-core assets, which could generate proceeds of approximately $90 million [32][33] Q&A Session Summary Question: How was the company able to maintain high-end guidance despite the Q3 setback? [38] - The company cited a strong Q1 performance and ongoing investments in the SaaS organization in North America as reasons for maintaining guidance [39] Question: What drove the strong performance in June? [46] - The company attributed the strong June performance to improved conversion rates and the ability to scale marketing efforts effectively [47] Question: What is the current state of conversion rates and their potential for improvement? [48] - Conversion rates are estimated to be at 3 out of 10, with significant room for improvement, particularly in the checkout process [49] Question: What is the strategy for rolling out the new web and application platform? [50] - The focus is on ramping up the new platform in North America by Q4 2024, with international rollouts to follow [51] Question: What is the go-to-market strategy for new merchants? [52] - The company has separate teams for local and enterprise merchants, with a focus on regionalized market managers to curate high-quality deals [55] Question: What enabled the company to increase marketing investments? [62] - Improved supply quality, better deal curation, and enhanced conversion rates have allowed the company to ramp up marketing spend while maintaining ROI targets [63]