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Tag: CEOs

  • Groupon Appoints Shutterfly CEO Jeffrey Housenbold As New Director

    Groupon announced on Wednesday that it has appointed Shutterfly president and CEO Jeffrey Housenbold to its Board of Directors.

    He has led Shutterfly since January of 2005. Before that, he worked at eBay in various roles like Vice President of Business Development and Internet Marketing, Vice President & General Manager, Business-to-Consumer Group and Vice President, Mergers & Acquisitions. He is currently a director at Shutterfly and serves on the Boards of Caesars Entertainment Corporation and Chegg. He’s also on the Board of Trustees at Carnegie Mellon University.

    “We are thrilled to welcome Jeffrey to the Groupon board,” said Groupon Chairman Ted Leonsis. “He brings tremendous expertise and energy, as well as a demonstrated history of innovation and leadership. We look forward to his perspective as Groupon continues to grow and evolve.”

    “In just five years, Groupon has proven to be a disruptive force in how consumers discover the world around them,” Housenbold said. “As a company firmly established at the intersection of local and mobile, few others are as well positioned as Groupon to take advantage of this evolving marketplace. I look forward to working with this high caliber board and management team.”

    Earlier this month, Groupon appointed four new executives: Robbie Schwietzer as the new Senior Vice President of Operations; Lisa Kennedy as the new Vice President, General Manager, of Groupon Reserve; David Kerr as the new Vice President, General Manager, of Home Services; Hoke Horne as the new Vice President of Global Commercial Finance.

    More on their roles here.

    Image: Businesswire

  • Yahoo Microsoft ‘Search Alliance’ Encounters More Friction

    More friction between Microsoft and Yahoo regarding the two companies’ “Search Alliance” has been made public thanks to court documents obtained by Reuters.

    The two companies have been having a quiet legal battle about rolling out Microsoft’s Bing search technology on Yahoo in Taiwan and Hong Kong – the last two of sixteen markets – which are supposed to make the transition this month.

    Yahoo apparently is uncertain about the direction the alliance is going to go in under new leadership at Microsoft, and wants to hold off until it determines that the next CEO is dedicated to the partnership.

    Steve Ballmer’s retirement from the role was revealed in August, and Microsoft reportedly wants to have him replaced by the end of the year.

    The deal between the two companies was for a decade, but could end sooner, though Microsoft doesn’t intend to let Yahoo pull out without a fight, should it choose to try.

    The partnership was implemented before former Googler Marissa Mayer was running Yahoo, and she has been critical of the results since she took over.

    Either way, according to Reuters, a judge ruled on Monday that Yahoo has to go ahead and adopt Microsoft’s technology in the two remaining countries. The news organization shares a statement from Microsoft on the legal matter:

    “We had a narrow disagreement regarding the Search Alliance rollout in Hong Kong and Taiwan. We have unwavering plans to continue investing in the Search Alliance, now operating in more than 20 countries, and the Bing platform, which is central to our latest products.”

    Ahead of Yahoo’s earnings last week, Microsoft put out some numbers pertaining to the partnership.

    On a quarter-over-quarter basis, click-through-rates are up 6.8 percent, while cost-per-acquisition is down 13 percent, according to David Pann, general manager of the Microsoft Advertising Search Group, citing research from RKG.

    RKG also found thatt advertiser spend on the Yahoo Bing Network continues to grow compared to Google. It’s up 39% year-over-year, while Google is up 18%.

    Pann wrote in a blog post, “A lot of that is driven by non-brand click growth, which is up 45 percent on Bing Ads due to investments in our marketplace algorithms. In addition, CPCs fell 2 percent overall as Bing Ads continues to drive improvements that benefit our advertisers. The report says ‘advertiser ROI has improved on Bing Ads even as the platform has been able to deliver big traffic increases with better ad-matching technology.’”

    Image: Bing

  • Tim Cook Says New Hire Angela Ahrendts Is ‘Wicked Smart’

    Tim Cook Says New Hire Angela Ahrendts Is ‘Wicked Smart’

    Apple announced on Monday evening that it has hired Burberry CEO Angela Ahrendts to take on a new position at the company: Senior Vice President of Retail and Online Stores.

    Ahrendts will report directly to CEO Tim Cook, and will oversee the strategic direction and operations of Apple’s retail business, both online and off. She’ll join the company in the spring.

    “I am thrilled that Angela will be joining our team,” said Cook. “She shares our values and our focus on innovation, and she places the same strong emphasis as we do on the customer experience. She has shown herself to be an extraordinary leader throughout her career and has a proven track record.”

    Cook sent an email to staff about the hire, which 9to5Mac obtained. In that, he said, “She will lead both our retail and online teams. I have wanted one person to lead both of these teams for some time because I believe it will better serve our customers, but I had never met anyone whom I felt confident could lead both until I met Angela. We met for the first time last January, and I knew in that meeting that I wanted her to join Apple. We’ve gotten to know each other over the past several months and I’ve left each conversation even more impressed.”

    “She shares our values and our focus on innovation,” he continued. “She places the same strong emphasis as we do on the customer experience. She cares deeply about people and embraces our view that our most important resource and our soul is our people. She believes in enriching the lives of others and she is wicked smart. Angela has shown herself to be an extraordinary leader throughout her career and has a proven track record. She led Burberry through a period of phenomenal growth with a focus on brand, culture, core values and the power of positive energy.”

    “I am profoundly honored to join Apple in this newly created position next year, and very much look forward to working with the global teams to further enrich the consumer experience on and offline,” said Ahrendts. “I have always admired the innovation and impact Apple products and services have on people’s lives and hope in some small way I can help contribute to the company’s continued success and leadership in changing the world.”

    Ahrendts will spend the time leading up to her Apple role transitioning leadership over at Burberry.

    Image: Angela Ahrendts (Twitter)

  • Richard Rosenblatt Steps Down As CEO And Chairman of Demand Media

    Demand Media just announced that its board of directors has accepted the resignation of Richard Rosenblatt as CEO and chairman of the company. The resignation as CEO is effective as of October 31st, and resignation as chairman is effective immediately.

    The board has appointed Shawn Colo as interim President and CEO. James Quandt has been appointed Chairman, effective immediately.

    “I want to thank everyone that helped to make Demand Media a leading content creation and media company,” said Rosenblatt. “It has been a great honor to work with our investors, board and brilliant team over the past 7 years. I realize that all journeys must ultimately come to an end and want to wish Shawn and the entire team success as they continue to grow the business.”

    “I look forward to working closely with our board of directors, executive team, and all of our employees to achieve our strategic goals,” said Colo. “Since co-founding the company in 2006, I have been involved in all facets of the business and am more confident than ever in Demand Media’s potential.”

    Quandt added, “The board is excited to have Shawn expand his responsibilities at Demand Media. Shawn has played a major role in the company’s success and is ideally suited to assume these added responsibilities because of his integral knowledge of all aspects of the business and his strong relationships throughout the industry.”

    The board will begin a search for a new CEO “shortly.”

    The company will continue to pursue its previously announced spin-off plan. The timing is still being evaluated.

    Image: Richard Rosenblatt (Twitter)

  • Exclusive: StumbleUpon CEO Gives Us A Big Update About What We Can Soon Expect

    StumbleUpon has been around since 2001, providing a unique way for Internet users to find websites and pages related to topics they’re interested in. The company has long provided a method of content discovery that has for one, gone virtually unparalleled by competitors, and for two, been lauded for years by marketers and webmasters who have have seen tremendous amounts of traffic to their own sites.

    Are you seeing significant results from StumbleUpon these days? Let us know in the comments.

    While the company has seen ups, downs and a lot of changes over the years (like being bought and eventually spun off by eBay), the company is still going strong despite laying off 30% of its staff in January, and having an otherwise quiet year with few announcements.

    Rest assured, StumbleUpon is doing just fine. As a spokesperson for the company recently told us, they’ve been keeping their “heads down, working on product,” in 2013. And that’s paying off. The company has been hiring again, and this week, revealed that it has achieved profitability, and for the first time, shared some revenue numbers.

    We had a conversation with CEO Mark Bartels, who took over the role after founder Garrett Camp stepped down last year, but has been with the company since 2008 (he was previously CFO) about StumbleUpon’s growth and strategy moving forward. Don’t expect things to be as quiet as they’ve been so far this year.

    StumbleUpon expects to grow revenue to $35 – 40 million this year, and a significant portion of its revenue is already coming from mobile. In fact, nearly 40% of all stumbles are coming from mobile (up from 20% in 2012). Last year, the company launched some major updates to its mobile apps, which drastically improved the StumbleUpon experience. Expect even more expansion into mobile and other devices, opening up a lot more potential for stumbling (and ultimately opportunities for advertisers and web traffic).

    “We continue to invest in moving beyond desktop – and our mobile-first approach is focused on smartphones and tablets, but also interactive TVs and gaming consoles,” Bartels tells WebProNews. “As we invest in these platforms our revenue continues to increase and this year our mobile share of revenue is 20%, and we expect that number to climb.”

    The new mobile apps included a lot of new features. One of them lets users stumble through content much more quickly, by showing quick previews before the pages finish loading.

    When asked if he attributes the growth in mobile stumbles to any specific feature, and whether the preview feature has affected sponsored content, Bartels tells us, “We have enhanced our overall mobile experience for both iOS and Android operating systems so that the recommendations and textual input we serve up to users is a better experience on small screens, wearable devices or set-top box.”

    “Around one out of every twenty stumbles is sponsored content. Since our over 30 million users interact with paid and unpaid content the same way, we have seen an increase in engagement across the board.”

    The company has over 100,000 advertisers that have created native ads. These include Comedy Central, Relativity Media, Levi’s, Elle and Harper’s Bazaar. Advertisers are going to be seeing some new opportunities.

    “StumbleUpon is rolling out new publisher and partner tools that allow advertising on our platforms to be simple and seamless,” Bartels says.

    “Recently we worked with Elle and Harpaar’s Bazaar around New York Fashion Week to engage StumbleUpon users and expand fashion coverage beyond their traditional audiences,” he notes.

    Elle Stumble The Trends

    When asked about the layoffs and how that has affected StumbleUpon’s growth, Bartels says, “The vision remains the same which is to help users discover and explore the best content on the web. We streamlined the company to focus more resources on engineering and product development in order to prioritize internationalization, moving beyond the desktop experience and our advertising platform. We are growing; we are hiring and have expanded to open up a second office in New York.”

    On how the company’s strategy has changed since he took over as CEO, he says, “StumbleUpon’s goal has always been to be the number one discovery tool, and since I have become CEO I have been working on a vision to bring this mission to life across multiple platforms. We are building the next generation of mobile-first products, maximizing personalization technologies and expanding internationally.”

    “In the near future, we will be expanding our mobile reach by releasing our Android app in German, Spanish, French, Italian, Japanese, Korean, Portuguese and Chinese,” he adds. “iOS is next.”

    Bartels says the company also intends to “continue the migration beyond the website and onto multiple platforms including interactive TVs, gaming devices, publisher sites and APIs.”

    “We predict that online video traffic will be the majority of all consumption by 2016 and mobile will be the driving platform. StumbleUpon will be taking advantage of this trend with new products and ways to discover video content.”

    Like I said, things aren’t going to be quiet at StumbleUpon for much longer.

    While StumbleUpon has continued to drive traffic huge traffic to websites, it sounds like those who are able to capitalize on it might be able to see even greater amounts. Stay tuned.

    Are you still seeing significant traffic from StumbleUpon? Success from its ad platform? Let us know in the comments

    Image: StumbleUpon

  • Tim Cook Is Now On Twitter, And Is Gaining Thousands Of Followers By The Minute

    Tim Cook Is Now On Twitter, And Is Gaining Thousands Of Followers By The Minute

    Apple CEO Tim Cook just joined Twitter, and has gained about six thousand followers over the past five minutes or so. He’s up to 23K as of the writing of this sentence. I would imagine that by the time I’m done with this article it will be something like 70K. Let’s see what happens.

    So far, he has only tweeted once:

    The customers certainly came out in droves all over the country today for the iPhone 5s and 5c release. Here’s a line in central Florida:

    Right now, Cook is only following eleven other Twitter accounts: The Auburn Plainsman, Duke Basketball, Laurene Jobs, Thomas L. Friedman, Kings of Leon (who link to iTunes in their bio), Anderson Cooper, Philip Schiller, Eddy Cue, Jimmy Fallon, Kerry Kennedy and RFK Center.

    Cook’s bio simply says: “CEO Apple, Fan of Auburn football and Duke basketball Cupertino.”

    He wasn’t verified when I started writing this. Phil Schiller retweeting him was the verification of authenticity (via MacRumors).

    Now, he just became verified. Wow, Twitter is pretty quick with that.

    Okay, so here we are at the end, and I really haven’t spent a lot of time here. He’s now up to 30K followers and climbing.

  • Yahoo Users Up 20% Since Mayer Took Over

    Yahoo Users Up 20% Since Mayer Took Over

    Yahoo CEO Marissa Mayer appeared at TechCrunch Disrupt and talked about Yahoo’s growth since she took over last year.

    On stage, she announced that Yahoo surpassed 800 million monthly active users (globally). That doesn’t include Tumblr, she said, calling it “core growth”. That growth represents 20% since July of 2012, she said. That is, of course, when she took over as CEO.

    Mayer said Yahoo is seeing a lot of additional usage on mobile, adding that it now has 350 monthly active users on mobile. It’s also seeing “a lot” of usage on the Yahoo homepage, Yahoo Mail and Search.

    She also noted that Yahoo is happy with the new logo, but they’re really more focused on product. Interviewer Michael Arrington immediately asked how long it would be before they change it.

    “The products have to be good, otherwise users don’t come and actually use them,” said Mayer. “And then once you’ve got that usage, you can use that especially in [an] advertising business like what we run to actually attract more advertisers, and grow revenue. So we’ve had a modest year of growth in 2012. One percent growth, but all growth starts somewhere. And this year we’ve had a nice stable year so far. We’re ideally hoping to see some growth this year or next year, but on the people, we’re seeing really exciting things.”

    “We’ve obviously done a lot of acquisitions, and that’s brought a lot of great talent into the company, but even separate from the acquisition strategy, we now get 12,000 resumes a week, and the reason that that’s a fun number for us is that basically the company’s about 12,000 employees right now,” she said. “So basically for every job we have we get a resume each week, which is up dramatically, like by a factor of five or six from before I was there – before July 2012 – and our attrition is down markedly. We’re down to a factor of three or four. Less attrition.”

    Fourteen percent of Yahoo’s hires in Q1 were “boomerangs,” she says. This is the company’s internal nickname for former Yahoo employees that have returned. In Q2 it was ten percent. It’s about seven or eight percent this quarter to date.

    Yahoo surpassed Google in July to become the top web property in the U.S., based on data from comScore.

    Image: TechCrunch Disrupt (AOL)

  • Pandora’s New CEO Was Advertising Age’s First ‘Digital Executive Of The Year’

    Pandora’s New CEO Was Advertising Age’s First ‘Digital Executive Of The Year’

    Pandora announced on Wednesday that its Board of Directors has appointed Brian McAndrews as the company’s new CEO. He will replace outgoing CEO Joe Kennedy.

    The company announced that Kennedy would be stepping down after about a decade in the role back in March, and Kennedy has remained with the company throughout the transition process.

    McAndrews’s previous experience includes Madrona Venture Group, Microsoft and aQuantive (which he created after taking over Avenue A), as well as General Mills and ABC. He was Advertising Age’s first “Digital Executive of the Year”.

    “We had very specific criteria for our new CEO, and we were very strategic about finding the right person — Brian is that person,” said Pandora founder and chief strategy officer Tim Westergren. “No one better understands the intersection of technology and advertising, which he clearly demonstrated during aQuantive’s meteoric rise. He has a recognized ability to set strategy, lead large teams and drive growth and innovation at great scale. He is also a natural cultural fit with Pandora. This is a great development for our company.”

    “It is a great privilege to be asked to lead Pandora at this important moment in the company’s history,” said McAndrews. “By capturing the enthusiasm of more than 72 million monthly listeners, the management team, led by Joe and Tim, has made Pandora the clear internet radio leader and created a product that consumers love. I look forward to joining this great team to build on Pandora’s success for years to come.”

    “It has been an honor and pleasure to work with our management team and employees for the past nine years to reinvent radio and put Pandora on a clear path toward continued long-term growth,” said Mr. Kennedy. “With a proven record of growing businesses and managing complex organizations, Brian is uniquely qualified to lead Pandora to the next level in our business. I’m confident that under his leadership, Pandora will continue to expand its business and deliver tremendous value to listeners, artists and advertisers.”

    “The Board has been working closely with Joe and the management team to ensure we found a leader who could build on our success and take full advantage of the extraordinary opportunities that lie ahead for Pandora,” said Robert Kavner, Pandora’s Lead Independent Director. “On behalf of the entire board, we thank Joe for his tireless leadership. Joe is handing over a company that is strong and well-positioned for long-term growth.”

    McAndrews’ role as CEO at Pandora is effective immediately.

  • Yahoo Gets Former AOL Networks Chief Ned Brody As SVP Of The Americas

    Yahoo Gets Former AOL Networks Chief Ned Brody As SVP Of The Americas

    Yahoo announced today that Ned Brody, the former CEO of AOL Networks, has joined the company to take on the role of SVP of the Americas. He will oversee the company’s advertising business in North and South America.

    COO Henrique De Castro had this to say on the Yahoo blog:

    We’ve had great momentum at Yahoo as we continue to bring the best talent in the industry to our operational team, including the recent additions of Dawn Airey as SVP of EMEA, Andre Christensen as SVP of Strategy and Business Operations, and John DeVine SVP of Global Ad Operations.

    I have known Ned for some time and he is one of the industry’s strongest thought leaders, client partners, business drivers and people managers. He is known for his analytical insight, solutions-oriented approach to selling, problem solving, and above all, for being a team player. I’m personally excited to work with Ned as we continue to position Yahoo for growth around the world.

    Brody said, “Over the last year I’ve watched what an incredibly talented and passionate team can do with product at Yahoo. I’m excited about the opportunity to drive that kind of change in the advertising business, as well. With the largest set of premium inventory as a starting point, we’ve got a great opportunity to deliver the most effective scaled advertising solutions in the industry. I look forward to working with and learning from our partners as we enact this vision.”

    Brody ran AOL Networks most recently in his 25-year advertising career. This included the company’s global video, mobile and programmatic ad businesses. He has also served as the global chief revenue officer at that company.

    Image: Ned Brody (Twitter)

  • Businesses Continue To Bash Yelp As Investor Bets It’ll Be Dead In 2 Years

    It hasn’t been a great week of PR for Yelp. While the company made its own news by expanding into Brazil, much of the media coverage has been about businesses bashing the company and its alleged practices and even included an angel investor betting $5,000 that Yelp will be out of business in two years based on a “flawed” business model. And that made Fast Company. Ouch.

    Will Yelp survive? Are its opponents off base? Is Yelp being misrepresented in the media? Or are these concerns and complaints valid? Share your thoughts.

    For the duration of 2013, Yelp has been taking the Yelp Town Hall tour around to various cities around the nation. After a number of them, the company took to its blog to discuss what happens at them.

    In April, Darnell from Yelp’s Business Outreach team wrote, “In the last four months, we visited nine major metros, from Honolulu to Philadelphia, with hundreds of local businesses participating in our interactive workshops designed to answer the burning question, ‘What do I need to know to thrive in the world of online reviews?’ Each event includes a live discussion with business owners who successfully use Yelp to market themselves, Yelp Elites (who are some of the most prolific reviewers in their local community) and members of Yelp’s Business Outreach team. Our goal is to create an open forum in each city we visit where business owners can network and learn directly from their peers.”

    “According to attendees we surveyed, we’re achieving our goal with 72% of respondents saying they learned 1-3 new skills to manage their business listing and reputation on Yelp,” he added. “Beyond that, we asked what were the most useful takeaways from the events. 46% of attendees surveyed said that the tips on responding to negative reviews were useful, while 41% said that the discussion around Yelp’s automated review filter was useful.”

    But from the sound of it, the events haven’t all been quite so rosy.

    This week, Yelp held one of the events in Los Angeles, and according a report from the LA Times, business owners had a lot of outrage to share with the company. Here’s an excerpt:

    Many slammed the company for allowing reviewers to post inflammatory comments — one restaurant manager said she cried for three days after a Yelper wrote that her restaurant was filled with Nazis. Others said they had been subjected to aggressive advertising calls from Yelp.

    Vintage clothing shop owner Reiko Roberts said the advertising pressure amounted to extortion. She said that when she declined to buy ads, “the lower reviews go to the top and the higher reviews go to the bottom.”

    This “extortion” claim has been a recurring theme throughout media coverage of Yelp and business owner opinion. A few months back, it got so bad that the company had to take to its blog to refute such accusations, but it didn’t do a lot to make such talk go away. A lot of businesses don’t seem to be buying it. The subject even came up on a recent episode of The People’s Court.

    Judge Milian’s repsonse was, “Wow! I don’t know if what you’re saying is accurate or not, but if it is, it’s pretty outrageous,” later adding that she was “horrified.”

    The LA Times report even quotes one business owner, who said that advertising on Yelp had helped his business, but still said we was skeptical of Yelp’s stance that advertising has no affect on review placement. It’s interesting that even business owners finding success on Yelp are saying such things.

    CEO Jeremy Stoppelman actually talked about this briefly in an interview with AdWeek earlier this week. He brought it up when asked about his worst decision of the past decade.

    “Early on, we analyzed data and looked for suspicious review patterns in order to filter out [phony] reviews,” he said. “That just fueled a lot of conspiracy theories like, ‘Oh, you’re selling advertising and my reviews disappeared so therefore if I would have paid you, you would have [kept] my reviews up. But now they’re gone.’ We ultimately compromised by setting aside the filtered reviews in an area that’s visible on the site. In retrospect, we should’ve been more willing to compromise [earlier] on that with hopes that more people would understand what we are trying to do.”

    Stoppelman also defended Yelp on Charlie Rose, saying this about its rating system: “”I find it accurate. If you go and find, say, a four-and-a-half star business in New York [City] that has 70-plus reviews, you’re pretty much guaranteed a good experience.”

    Last week, the company expanded its consumer alerts, designed to let people know about fake user reviews, openly talking about users’ ability to trust the reviews they see on sites.

    Even since then, Yelp has launched the ability for users to leave reviews from their mobile devices, which is sure to greatly increase the frequency of reviews, as people (particularly those who have negative experiences) can easily whip out their phone while still at a business’ location, with their thoughts fresh in their minds, and leave a review.

    “We’ve had it out to [a limited number of] hard-core users for a couple weeks, and the data back so far has been pretty sweet,” Stoppelman told AdWeek, when asked about mobile reviews contributing to a spike in Yelp activity.

    Whatever your feeling of Yelp and its reviews, you can expect that a lot more of them will be pouring in.

    This week, Peter Shankman, a well-known angel investor put out a public Facebook post (which he also promoted) making a bet that Yelp will be out of business in two years. If he loses, he’ll put five grand towards charity.

    Post by Peter Shankman.

    He went on to tell Fast Company, “it’ll die very, very hard. If both Facebook and Google both let me type in ‘Italian Food’ and the first thing I see are three reviews from people I trust, why the f*** would I use Yelp?”

    Yelp certainly has some ideas beyond reviews from strangers. The company has been adding ecommerce and business transaction features, and we expect there are more to come.

    Despite all the negative publicity the company has had to deal with, it seems to be in pretty good shape, and Shankman might find himself paying up in a couple years. Yelp beat Wall Street expectations with its quarterly earnings, announcing that reviews were up 41% year-over-year, and average monthly visitors were up 38%. Active local business accounts grew 62%. Oh, and revenue was up 69%.

    Do you think Yelp is in any danger of not being around in two years? Let us know in the comments.

    Image: Yelp

  • AOL Reportedly Laying Off Hundreds From Patch, CEO Reportedly Fires Someone For Taking His Picture

    Layoffs are coming to AOL’s Patch hyperlocal news service over the next week or so, according to multiple reports. When the company reported its earnings earlier this week, CEO Tim Armstrong indicated that AOL would get rid of up to 300 Patch sites.

    The company is not commenting publicly about Patch currently, but plenty of rumors and bits of news are trickling out anyway.

    TechCrunch is reporting that it has confirmation from “a well-placed Patcher” that Armstrong confirmed hundreds would be laid off, with notifications expected throughout next week.

    According to Business Insider, who cites “a former Patch executive who remains in contract with people” there, Patch CEO Steve Kalin and Chief Content Officer Rachel Feddersen are out.

    And as if all of this wasn’t enough, Armstrong reportedly fired creative director Abel Lenz for taking his picture during a meeting (via Valleywag). Jim Romenesko shares a “tipster’s account”:

    “Abel, put that camera down. You’re fired. Out,” Armstrong said. After a pause of about five seconds, he then continued the call as though nothing had happened.

    Then after about five more minutes of talking about whatever, he threw in “and the reason I fired Abel before was I don’t want anyone taking pictures of this meeting.” He invoked some kind of comparison to a sports team’s locker room.

    But he seriously fired someone live on a conference call with the entire company … a call that informed us that no one would be laid off today but that instead the layoffs (sorry, “impacts”) would happen at different junctures next week depending on the success of finding “partners” for moribund Patch sites.

    Wow.

    I guess this story will continue to unfold over the next week or so. Stay tuned.

  • Groupon Gets A CEO (Eric Lefkofsky), Posts Earnings

    Groupon just released its earnings report for the second quarter, its second since former CEO Andrew Mason was fired. The company also took the opportunity to announce that it now has a permanent CEO – Eric Lefkofsky.

    Lefkofsky, one of Groupon’s co-founders, has been acting as chairman and co-CEO since Mason was let go, and the board apparently likes what it has seen from him. It also appointed Ted Leonsis Chairman of the Board.

    Last time, Groupon beat Wall Street expectations, and this time they did it again.

    The company reported gross billings of $1.41 billion and revenue of $608.7 million. GAAP operating income was $27.4 million.

    “We significantly exceeded our operating income expectations, and delivered our strongest quarter ever in North America, due in part to accelerated billings growth of 30%,” said Lefkofsky. “With two quarters on the job, I’m pleased with the progress we’ve made in such a short time. We continue to gain traction in mobile, with nearly 50% of our North American transactions coming from mobile in June. To date, more than 50 million people have downloaded Groupon apps worldwide.”

    Here’s the earnings release in its entirety:

    CHICAGO–(BUSINESS WIRE)– Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter ended June 30, 2013.

    “We significantly exceeded our operating income expectations, and delivered our strongest quarter ever in North America, due in part to accelerated billings growth of 30%,” said Eric Lefkofsky, CEO of Groupon. “With two quarters on the job, I’m pleased with the progress we’ve made in such a short time. We continue to gain traction in mobile, with nearly 50% of our North American transactions coming from mobile in June. To date, more than 50 million people have downloaded Groupon apps worldwide.”

    Groupon also announced today that its Board of Directors has appointed Eric Lefkofskyas CEO, and Ted Leonsis as Chairman of the Board. “The Board is encouraged by Groupon’s performance under Eric’s leadership, and we’re pleased that he has agreed to lead the company through this important stage of its evolution,” said Ted Leonsis, Chairman of Groupon.

    Second Quarter 2013 Summary

    Groupon changed its segment disclosures in the second quarter to separately report three segments: North America, EMEA and Rest of World, which provides a better sense of the financial profile of its regions.

    Gross billings, which reflect the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds, increased 10% globally to $1.41 billion in the second quarter 2013, compared with $1.29 billion in the second quarter 2012. North America growth of 30% and EMEA growth of 4% was offset by a 21% decline in Rest of World.

    Revenue increased 7% to $608.7 million in the second quarter 2013, compared with$568.3 million in the second quarter 2012. North America revenue growth of 45% was offset by a 24% decline in EMEA and a 26% decline in Rest of World.

    Gross profit was $384.7 million in the second quarter 2013, compared with $433.2 millionin the second quarter 2012.

    Operating income was $27.4 million in the second quarter 2013, compared with $46.5 million in the second quarter 2012. Operating income increased$6.2 million compared with the first quarter 2013.

    Operating income excluding stock compensation and acquisition-related costs, net, a non-GAAP financial measure, was $59.0 million in the second quarter 2013, compared with $71.9 million in the second quarter 2012. Operating income excluding stock compensation and acquisition-related costs, net, increased $7.9 million compared with first quarter 2013.

    Adjusted EBITDA was $80.5 million in the second quarter 2013, compared with $84.7 million in the second quarter 2012.

    Second quarter 2013 net loss attributable to common stockholders was $7.6 million, or $0.01 per share, including stock compensation and acquisition-related costs, net, of $31.6 million, or $21.8 million net of tax. Earnings per share excluding stock compensation and acquisition-related costs, net of tax, a non-GAAP financial measure, was $0.02 per share, including a $0.01 negative impact from foreign exchange.

    Operating cash flow for the trailing twelve months ended June 30, 2013 was $159.9 million. Free cash flow, a non-GAAP financial measure, was $29.3 million in the second quarter 2013, bringing free cash flow for the trailing twelve months ended June 30, 2013 to $75.3 million.

    At the end of the quarter, Groupon had $1.2 billion in cash and cash equivalents.

    Definitions and reconciliations of all non-GAAP financial measures are included below in the section titled “Non-GAAP Financial Measures” and in the accompanying tables.

    Second Quarter Operating Highlights

    • Global units: Consolidated units, defined as vouchers and products sold before cancellations and refunds, increased 15% year-over-year to 46 million. North America units increased 45%, EMEA units decreased 3%, and Rest of World units decreased 12%.
    • Active deals: At the end of the second quarter 2013, the number of active deals in North America increased to more than 54,000 on average, compared with nearly 40,000 as reported at the end of the first quarter 2013.
    • Active customers: Active customers, or customers that have purchased a Groupon within the last twelve months, grew 12% year-over-year, to 42.6 million as of June 30, 2013, comprising 19.1 million in North America, 13.9 million in EMEA, and 9.6 million in Rest of World.
    • Customer spend: Second quarter 2013 trailing twelve month billings per average active customer remained unchanged at $138, compared with the first quarter 2013. North America trailing twelve month billings per average active customer increased $5 compared with the first quarter 2013, from $151 to $156.
    • Mobile: In June 2013, nearly 50% of North American transactions were completed on mobile devices, compared with about 30% in June 2012. More than 50 million people have now downloaded Groupon mobile apps worldwide, with more than 7.5 million people downloading them in the second quarter alone.
    • Marketplace: Direct email accounted for less than 40% of North American transactions in the second quarter 2013, providing evidence that the rollout of Groupon’s marketplace (“Pull”) continues to gain momentum.

    Share Repurchase Authorization

    Groupon also announced today that its Board of Directors has authorized a share repurchase program. Under the program, Groupon is authorized to repurchase up to $300 million of its outstanding Class A common stock over the next 24 months. The timing and amount of any share repurchases will be determined based on market conditions, share price and other factors, and the program may be discontinued or suspended at any time. Repurchases will be made in compliance with SEC rules and other legal requirements, and may be made in part under a Rule 10b5-1 plan, which permits stock repurchases when Groupon might otherwise be precluded from doing so. The program is intended to offset the annual dilution from employee stock grants.

    Outlook

    In the third quarter 2013, Groupon expects seasonality to impact the Local business, as people travel more frequently in the summer months. In addition, the Company anticipates continued investment in marketing initiatives to drive long-term growth. As a result, for the third quarter 2013, the Company expects revenue of between $585 million and $635 million, operating income excluding stock compensation and acquisition-related expenses of between$20 million and $40 million, and EPS excluding stock-compensation and acquisition related expenses, net of tax, of between negative $0.01 and positive$0.01. Stock compensation is expected to be approximately $30 million, or approximately $20 million net of tax. This outlook assumes no acquisitions or investments, or material changes in foreign exchange rates.

    Groupon reaffirms its guidance that full year 2013 GAAP operating income will exceed $100 million.

    Conference Call

    A conference call will be webcast live today at 4:00 p.m. CT / 5:00 p.m. ET, and will be available on Groupon’s investor relations website athttp://investor.groupon.com. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.

    Non-GAAP Financial Measures

    In addition to financial results reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP), we have provided the following non-GAAP financial measures in this release and the accompanying tables: foreign exchange rate neutral operating results, operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net, Adjusted EBITDA, earnings per share excluding stock-based compensation and acquisition-related expense (benefit), net, and free cash flow. These non-GAAP financial measures are presented to aid investors in better understanding Groupon’s performance and to facilitate comparisons to many of our peers who present similar measures. However, these measures are not intended to be a substitute for those reported in accordance with U.S. GAAP. These measures may be different from non-GAAP financial measures used by other companies, even when similar terms are used to identify such measures. For reconciliations of these measures to the most applicable financial measures under U.S. GAAP, see “Non-GAAP Reconciliation Schedules” and “Supplemental Financial Information and Business Metrics” included in the tables accompanying this release.

    We exclude the following items from one or more of our non-GAAP financial measures:

    Stock-based compensation. We exclude stock-based compensation because it is primarily non-cash in nature and we believe that non-GAAP financial measures excluding this item provide meaningful supplemental information about our operating performance and liquidity.

    Acquisition-related expense (benefit), net. Acquisition-related expense (benefit), net represents the change in the fair value of contingent consideration arrangements related to business combinations. The composition of our contingent consideration arrangements and the impact of those arrangements on our operating results vary over time based on a number of factors, including the terms of our business combinations and the timing of those transactions. We exclude acquisition-related expense (benefit), net because we believe that non-GAAP financial measures excluding this item provide meaningful supplemental information about our operating performance and facilitate comparisons to our historical operating results.

    Depreciation and amortization. We exclude depreciation and amortization because it is non-cash in nature and we believe that non-GAAP financial measures excluding these items provide meaningful supplemental information about our operating performance and liquidity.

    Descriptions of the non-GAAP financial measures included in this release and the accompanying tables are as follows:

    Foreign exchange rate neutral operating results show our current period operating results as if foreign currency exchange rates had remained the same as those in effect in the comparable period.

    Operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net is a non-GAAP financial measure that comprises the consolidated total of the segment operating income (loss) of our three segments, North America, EMEA, and Rest of World. We use consolidated operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net to allocate resources and evaluate performance internally.

    Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) excluding income taxes, interest and other non-operating items, depreciation and amortization, stock-based compensation, and acquisition-related expense (benefit), net. Adjusted EBITDA is similar to Operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net, except Adjusted EBITDA also excludes depreciation and amortization. Our definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. We believe that Adjusted EBITDA is a meaningful measure for evaluating our operating performance and liquidity.

    Earnings per share excluding stock-based compensation and acquisition-related expense (benefit), net is a non-GAAP financial measure that adjusts our earnings (loss) per share to exclude the impact of stock-based compensation expense, acquisition-related expense (benefit), net and the income tax effect of those items. We believe that this non-GAAP financial measure provides meaningful supplemental information for evaluating our operating performance.

    Free cash flow is a non-GAAP financial measure that comprises net cash provided by operating activities less purchases of property and equipment and capitalized software. We use free cash flow, and ratios based on it, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe that it typically represents a more useful measure of cash flows because purchases of fixed assets, software developed for internal use and website development costs are necessary components of our ongoing operations. Free cash flow is not intended to represent the total increase or decrease in Groupon’s cash balance for the applicable period.

    Note on Forward-Looking Statements

    The statements contained in this release that refer to plans and expectations for the next quarter or the future are forward-looking statements that involve a number of risks and uncertainties, and actual results could differ materially from those discussed. The risks and uncertainties that could cause our results to differ materially from those included in the forward-looking statements include, but are not limited to, volatility in our revenue and operating results; risks related to our business strategy; responding to changes in the market; effectively dealing with challenges arising from our international operations; retaining existing customers and adding new customers; retaining existing merchant partners and adding new merchant partners; incurring expenses as we expand our business; competing against competitors with more financial resources than us; maintaining favorable terms with our business partners; maintaining a strong brand; managing inventory and order fulfillment; integrating our technology platforms; managing refund risks; retaining our executive team; litigation; regulations, including the CARD Act and regulation of the Internet; tax liabilities; tax legislation; maintaining our information technology infrastructure; security breaches; protecting our intellectual property; handling acquisitions, joint ventures and strategic investments effectively; seasonality; payment-related risks; customer and merchant partner fraud; global economic uncertainty; compliance with rules and regulations associated with being a public company; and our ability to raise capital if necessary. We urge you to refer to the factors included under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, copies of which may be obtained by visiting the company’s Investor Relations web site athttp://investor.groupon.com or the SEC’s web site at www.sec.gov. Groupon’s actual results could differ materially from those predicted or implied and reported results should not be considered an indication of future performance.

    You should not rely upon forward-looking statements as predictions of future events. Although Groupon believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither the company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements reflect Groupon’s expectations as of August 7, 2013.Groupon undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in its expectations.

    Groupon encourages investors to use its investor relations website as a way of easily finding information about the company. Groupon promptly makes available on this website, free of charge, the reports that the company files or furnishes with the SEC, corporate governance information (including Groupon’s Global Code of Conduct), and select press releases and social media postings.

    About Groupon

    Groupon (NASDAQ: GRPN) is a global leader in local commerce, making it easy for people around the world to search and discover great businesses at unbeatable prices. Groupon is reinventing the traditional small business world by providing merchants with a suite of products and services, including customizable deals, payments processing capabilities and point-of-sale solutions to help them attract more customers and run their operations more effectively. By leveraging the company’s global relationships and scale, Groupon offers consumers incredible deals on the best stuff to eat, see, do, and buy in 48 countries. With Groupon, shoppers discover the best a city has to offer with Groupon Local, enjoy vacations with GrouponGetaways, and find a curated selection of electronics, fashion, home furnishings and more with Groupon Goods. To subscribe to Groupon emails, visit www.Groupon.com. To learn more about the company’s merchant solutions and how to work with Groupon, visit www.GrouponWorks.com.

    Groupon, Inc.
    Summary Consolidated and Segment Results
    (in thousands, except share and per share amounts)
    (unaudited)
    Y/Y % Y/Y %
    Three Months Ended Growth Six Months Ended Growth
    June 30, excluding June 30, excluding
    2013 2012 Y/Y % Growth FX Effect (2) FX(2) 2013 2012 Y/Y % Growth FX Effect (2) FX(2)
    Gross Billings (1)
    North America $ 712,205 $ 548,275 29.9 % $ (130 ) 29.9 % $ 1,393,524 $ 1,101,832 26.5 % $ (201 ) 26.5 %
    EMEA 482,250 462,379 4.3 % 3,019 3.6 % 974,568 999,940 (2.5 ) % 4,584 (3.0 ) %
    Rest of World 219,351 276,022 (20.5 ) % (12,497 ) (16.0 ) % 453,483 539,704 (16.0 ) % (25,869 ) (11.2 ) %
    Consolidated gross billings $ 1,413,806 $ 1,286,676 9.9 % $ (9,608 ) 10.6 % $ 2,821,575 $ 2,641,476 6.8 % $ (21,486 ) 7.6 %
    Revenue
    North America $ 377,182 $ 260,181 45.0 % $ (42 ) 45.0 % $ 716,736 $ 498,746 43.7 % $ (74 ) 43.7 %
    EMEA 159,962 211,555 (24.4 ) % 981 (24.9 ) % 343,760 441,911 (22.2 ) % 1,661 (22.6 ) %
    Rest of World 71,603 96,599 (25.9 ) % (4,364 ) (21.4 ) % 149,653 186,961 (20.0 ) % (9,237 ) (15.0 ) %
    Consolidated revenue $ 608,747 $ 568,335 7.1 % $ (3,425 ) 7.7 % $ 1,210,149 $ 1,127,618 7.3 % $ (7,650 ) 8.0 %
    Income from operations $ 27,412 $ 46,485 (41.0 ) % $ (2,971 ) (34.6 ) % $ 48,590 $ 86,124 (43.6 ) % $ (1,352 ) (42.0 ) %
    Net (loss) income attributable to common stockholders $ (7,574 ) $ 28,386       $ (11,566 ) $ 16,691      
    Net (loss) earnings per share
    Basic $ (0.01 ) $ 0.04 $ (0.02 ) $ 0.03
    Diluted $ (0.01 ) $ 0.04 $ (0.02 ) $ 0.03
    Weighted average basic shares outstanding 662,361,436 647,149,537 660,580,927 645,073,582
    Weighted average diluted shares outstanding 662,361,436 663,122,709 660,580,927 663,230,558
    (1) Represents the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds. Includes direct billings and third party and other billings.
    (2) Represents the change in financial measures that would have resulted had average exchange rates in the reporting period been the same as those in effect during the three and six months ended June 30, 2012.
    Groupon, Inc.
    Condensed Consolidated Statements of Cash Flows
    (in thousands)
    (unaudited)
    Three Months EndedJune 30, Six Months EndedJune 30,
    2013 2012 2013 2012
    Operating activities
    Net (loss) income $ (5,551 ) $ 33,549 $ (8,793 ) $ 29,956
    Adjustments to reconcile net (loss) income to net cash provided by operating activities:
    Depreciation and amortization 21,468 12,810 42,168 24,526
    Stock-based compensation 32,446 27,084 62,353 55,087
    Deferred income taxes (308 ) 13,873 (566 ) 12,997
    Excess tax benefits on stock-based compensation (2,936 ) (18,869 ) (3,768 ) (21,750 )
    Loss on equity method investments 14 3,428 33 8,556
    Acquisition-related benefit, net (815 ) (1,635 ) (747 ) (1,687 )
    Gain on E-Commerce transaction – (56,032 ) – (56,032 )
    Change in assets and liabilities, net of acquisitions:
    Restricted cash 744 (1,471 ) 3,267 (2,828 )
    Accounts receivable 4,743 19,963 (2,941 ) 8,085
    Prepaid expenses and other current assets 3,465 (17,624 ) 15,992 (21,745 )
    Accounts payable (3,225 ) 20,089 (22,831 ) 18,268
    Accrued merchant and supplier payables 1,442 (13,979 ) (37,975 ) 32,021
    Accrued expenses and other current liabilities (20,539 ) 49,657 (7,237 ) 63,077
    Other, net 12,354 4,472 13,107 10,498
    Net cash provided by operating activities 43,302 75,315 52,062 159,029
    Net cash used in investing activities (15,862 ) (60,153 ) (46,541 ) (106,597 )
    Net cash (used in) provided by financing activities (7,941 ) 24,158 (17,283 ) 15,883
    Effect of exchange rate changes on cash and cash equivalents (3,138 ) (14,511 ) (15,516 ) (5,452 )
    Net increase (decrease) in cash and cash equivalents 16,361 24,809 (27,278 ) 62,863
    Cash and cash equivalents, beginning of period 1,165,650 1,160,989 1,209,289 1,122,935
    Cash and cash equivalents, end of period $ 1,182,011 $ 1,185,798 $ 1,182,011 $ 1,185,798
    Groupon, Inc.
    Consolidated Statements of Operations
    (in thousands, except share and per share amounts)
    (unaudited)
    Three Months Ended June 30, Six Months Ended June 30,
    2013 2012 2013 2012
    Revenue:
    Third party and other $ 418,871 $ 502,985 $ 857,979 $ 1,043,038
    Direct 189,876 65,350 352,170 84,580
    Total revenue 608,747 568,335 1,210,149 1,127,618
    Cost of revenue:
    Third party and other 55,507 77,032 125,523 179,661
    Direct 168,546 58,152 320,923 75,021
    Total cost of revenue 224,053 135,184 446,446 254,682
    Gross Profit 384,694 433,151 763,703 872,936
    Operating expenses:
    Marketing 55,497 88,407 105,054 205,022
    Selling, general and administrative 302,600 299,894 610,806 583,477
    Acquisition-related benefit, net (815 ) (1,635 ) (747 ) (1,687 )
    Total operating expenses 357,282 386,666 715,113 786,812
    Income from operations 27,412 46,485 48,590 86,124
    Loss on equity method investments (14 ) (3,428 ) (33 ) (8,556 )
    Other (expense) income, net (5,565 ) 57,367 (10,629 ) 53,828
    Income before provision for income taxes 21,833 100,424 37,928 131,396
    Provision for income taxes 27,384 66,875 46,721 101,440
    Net (loss) income (5,551 ) 33,549 (8,793 ) 29,956
    Net income attributable to noncontrolling interests (2,023 ) (1,220 ) (2,773 ) (2,100 )
    Net (loss) income attributable to Groupon, Inc. (7,574 ) 32,329 (11,566 ) 27,856
    Adjustment of redeemable noncontrolling interests to redemption value – (3,943 ) – (11,165 )
    Net (loss) income attributable to common stockholders $ (7,574 ) $ 28,386 $ (11,566 ) $ 16,691
    Net (loss) earnings per share
    Basic $ (0.01 ) $ 0.04 $ (0.02 ) $ 0.03
    Diluted $ (0.01 ) $ 0.04 $ (0.02 ) $ 0.03
    Weighted average number of shares outstanding
    Basic 662,361,436 647,149,537 660,580,927 645,073,582
    Diluted 662,361,436 663,122,709 660,580,927 663,230,558
    Groupon, Inc.
    Consolidated Balance Sheets
    (in thousands, except share and per share amounts)
    June 30, 2013 December 31, 2012
    (unaudited)
    Assets
    Current assets:
    Cash and cash equivalents $ 1,182,011 $ 1,209,289
    Accounts receivable, net 96,808 96,713
    Deferred income taxes 30,636 31,211
    Prepaid expenses and other current assets 127,496 150,573
    Total current assets 1,436,951 1,487,786
    Property, equipment and software, net of accumulated depreciation and amortization of $75,210
    and $46,236, respectively    		 125,860 121,072
    Goodwill 206,683 206,684
    Intangible assets, net 33,186 42,597
    Investments 97,321 84,209
    Deferred income taxes, non-current 28,837 29,916
    Other non-current assets 47,830 59,210
    Total Assets $ 1,976,668 $ 2,031,474
    Liabilities and Equity
    Current liabilities:
    Accounts payable $ 35,499 $ 59,865
    Accrued merchant and supplier payables 616,605 671,305
    Accrued expenses 226,846 246,924
    Deferred income taxes 51,191 53,700
    Other current liabilities 134,805 136,647
    Total current liabilities 1,064,946 1,168,441
    Deferred income taxes, non-current 20,387 20,860
    Other non-current liabilities 100,907 100,072
    Total Liabilities 1,186,240 1,289,373
    Commitments and contingencies
    Stockholders’ Equity
    Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 661,630,188 and
    654,523,706 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively    		 66 65
    Class B common stock, par value $0.0001 per share, 10,000,000 shares authorized, 2,399,976 shares
    issued and outstanding at June 30, 2013 and December 31, 2012    		 – –
    Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, no shares issued and
    outstanding at June 30, 2013, and December 31, 2012    		 – –
    Additional paid-in capital 1,532,699 1,485,006
    Accumulated deficit (765,043 ) (753,477 )
    Accumulated other comprehensive income 24,774 12,446
    Total Groupon, Inc. Stockholders’ Equity 792,496 744,040
    Noncontrolling interests (2,068 ) (1,939 )
    Total Equity 790,428 742,101
    Total Liabilities and Equity $ 1,976,668 $ 2,031,474
    Groupon, Inc.
    Segment Information
    (in thousands)
    (unaudited)
    Three Months Ended June 30, Six Months Ended June 30,
    2013 2012 2013 2012
    North America
    Gross Billings (1) $ 712,205 $ 548,275 $ 1,393,524 $ 1,101,832
    Revenue $ 377,182 $ 260,181 $ 716,736 $ 498,746
    Segment cost of revenue and operating expenses(2) 328,674 216,752 626,862 415,145
    Segment operating income(2) $ 48,508 $ 43,429 $ 89,874 $ 83,601
    Segment operating income as a percent of segment revenue 12.9 % 16.7 % 12.5 % 16.8 %
    EMEA
    Gross Billings (1) $ 482,250 $ 462,379 $ 974,568 $ 999,940
    Revenue $ 159,962 $ 211,555 $ 343,760 $ 441,911
    Segment cost of revenue and operating expenses(2) 135,254 179,761 284,876 373,789
    Segment operating income(2) $ 24,708 $ 31,794 $ 58,884 $ 68,122
    Segment operating income as a percent of segment revenue 15.4 % 15.0 % 17.1 % 15.4 %
    Rest of World
    Gross Billings (1) $ 219,351 $ 276,022 $ 453,483 $ 539,704
    Revenue $ 71,603 $ 96,599 $ 149,653 $ 186,961
    Segment cost of revenue and operating expenses(2) 85,776 99,888 188,215 199,160
    Segment operating loss(2) $ (14,173 ) $ (3,289 ) $ (38,562 ) $ (12,199 )
    Segment operating loss as a percent of segment revenue (19.8 ) % (3.4 ) % (25.8 ) % (6.5 ) %
    Consolidated
    Gross Billings (1) $ 1,413,806 $ 1,286,676 $ 2,821,575 $ 2,641,476
    Revenue $ 608,747 $ 568,335 $ 1,210,149 $ 1,127,618
    Segment cost of revenue and operating expenses(2) 549,704 496,401 1,099,953 988,094
    Segment operating income(2) $ 59,043 $ 71,934 $ 110,196 $ 139,524
    Segment operating income as a percent of segment revenue 9.7 % 12.7 % 9.1 % 12.4 %
    Stock-based compensation 32,446 27,084 62,353 55,087
    Acquisition-related benefit, net (815 ) (1,635 ) (747 ) (1,687 )
    Income from operations 27,412 46,485 48,590 86,124
    Loss on equity method investments 14 3,428 33 8,556
    Other expense (income), net 5,565 (57,367 ) 10,629 (53,828 )
    Income before provision for income taxes 21,833 100,424 37,928 131,396
    Provision for income taxes 27,384 66,875 46,721 101,440
    Net (loss) income $ (5,551 ) $ 33,549 $ (8,793 ) $ 29,956
    (1) Represents the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds. Includes direct billings and third party and other billings.
    (2) Segment cost of revenue and operating expenses and segment operating income (loss) exclude stock-based compensation and acquisition-related benefit, net.
    Groupon, Inc.
    Non-GAAP Reconciliation Schedules
    (in thousands, except share and per share amounts)
    (unaudited)
    The following are reconciliations of diluted earnings per share excluding stock-based compensation and acquisition-related benefit, net and foreign exchange rate neutral operating results to the most comparable U.S. GAAP financial measures. See “Supplemental Financial Information and Business Metrics” for reconciliations of Adjusted EBITDA, operating income, excluding stock-based compensation and acquisition-related benefit, net and free cash flow to the most comparable U.S. GAAP financial measures.
    The following is a reconciliation of diluted net loss per share to diluted earnings per share excluding stock-based compensation and acquisition-related benefit, net for the three and six months ended June 30, 2013:
    Three Months Ended Six Months Ended
    June 30, 2013 June 30, 2013
    Net loss attributable to common stockholders $ (7,574 ) $ (11,566 )
    Stock-based compensation 32,446 62,353
    Acquisition-related benefit, net (815 ) (747 )
    Income tax effect of adjustments (9,797 ) (18,910 )
    Net income attributable to common stockholders excluding stock-based
    compensation and acquisition-related benefit, net $ 14,260 $ 31,130
    Diluted shares 662,361,436 660,580,927
    Incremental diluted shares (1) 14,644,615 13,410,174
    Adjusted diluted shares 677,006,051 673,991,101
    Diluted net loss per share $ (0.01 ) $ (0.02 )
    Impact of stock-based compensation and acquisition-related
    benefit, net and the related income tax effects 0.03 0.07
    Diluted earnings per share excluding stock-based compensation and
    acquisition-related benefit, net $ 0.02 $ 0.05
    (1) Outstanding equity awards are not reflected in the diluted net loss per share calculation for the three and six months ended June 30, 2013 because the effect would be antidilutive. However, those awards have been reflected in the calculation of diluted earnings per share excluding stock-based compensation and acquisition-related benefit, net for the three and six months ended June 30, 2013 because they have a dilutive effect on that calculation.
    The following are reconciliations of foreign exchange rate neutral operating results to the most comparable U.S. GAAP financial measures, “Gross Billings,” “Revenue” and “Income from operations,” for the three and six months ended June 30, 2013.
    The effect on the Company’s gross billings, revenue and income from operations from changes in exchange rates versus the U.S. Dollar for the three months ended June 30, 2013 was as follows:
    Three Months Ended June 30, 2013 Three Months Ended June 30, 2013
    At Avg. Exchange At Avg. Exchange
    Q2 2012Rates (1) RateEffect (2) AsReported Q1 2013Rates (3) RateEffect (2) AsReported
    Gross billings $ 1,423,414 $ (9,608 ) $ 1,413,806 $ 1,427,060 $ (13,254 ) $ 1,413,806
    Revenue $ 612,172 $ (3,425 ) $ 608,747 $ 613,123 $ (4,376 ) $ 608,747
    Income from operations $ 30,383 $ (2,971 ) $ 27,412 $ 30,817 $ (3,405 ) $ 27,412
    The effect on the Company’s gross billings, revenue and income from operations from changes in exchange rates versus the U.S. Dollar for the six months ended June 30, 2013 was as follows:
    Six Months Ended June 30, 2013 Six Months Ended June 30, 2013
    At Avg. Exchange At Avg. Exchange
    Q2 2012 YTDRates (1) RateEffect (2) AsReported Q4’12 – Q1’13Rates (3) RateEffect (2) AsReported
    Gross billings $ 2,843,061 $ (21,486 ) $ 2,821,575 $ 2,836,022 $ (14,447 ) $ 2,821,575
    Revenue $ 1,217,799 $ (7,650 ) $ 1,210,149 $ 1,214,833 $ (4,684 ) $ 1,210,149
    Income from operations $ 49,942 $ (1,352 ) $ 48,590 $ 52,189 $ (3,599 ) $ 48,590
    (1) Represents the financial statement balances that would have resulted had average exchange rates in the reported period been the same as those in effect during the three and six months ended June 30, 2012.
    (2) Represents the increase or decrease in reported amounts resulting from changes in exchange rates from those in effect in the comparable period.
    (3) Represents the financial statement balances that would have resulted had average exchange rates in the reported period been the same as those in effect during the three and six months ended March 31, 2013.
    Groupon, Inc.
    Supplemental Financial Information and Business Metrics(14)
    (financial data in thousands, except per share data; active customers in millions)
    (unaudited)
    Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
    Segments
    North America Segment
    Gross Billings (1)
    Local (2) Gross Billings
    Third Party $ 412,348 $ 349,293 $ 430,255 $ 450,140 $ 449,770
    Direct 288 6,450 – – 693
    Total Local Gross Billings $ 412,636 $ 355,743 $ 430,255 $ 450,140 $ 450,463
    Goods Gross Billings
    Third Party $ 40,173 $ 25,508 $ 31,270 $ 17,294 $ 15,501
    Direct 52,773 126,608 209,575 148,065 181,377
    Total Goods Gross Billings $ 92,946 $ 152,116 $ 240,845 $ 165,359 $ 196,878
    Travel and Other Gross Billings
    Third Party and Other $ 42,693 $ 44,510 $ 47,852 $ 65,820 $ 64,864
    Direct – – – – –
    Total Travel and Other Gross Billings $ 42,693 $ 44,510 $ 47,852 $ 65,820 $ 64,864
    Total Gross Billings
    Third Party and Other $ 495,214 $ 419,311 $ 509,377 $ 533,254 $ 530,135
    Direct 53,061 133,058 209,575 148,065 182,070
    Total Gross Billings $ 548,275 $ 552,369 $ 718,952 $ 681,319 $ 712,205
    Year-over-year growth 48 % 38 % 51 % 23 % 30 %
    % of Consolidated Gross Billings 43 % 45 % 47 % 48 % 50 %
    Gross Billings Trailing Twelve Months (TTM) $ 1,978,617 $ 2,130,008 $ 2,373,153 $ 2,500,915 $ 2,664,845
    Revenue (3)
    Local Revenue
    Third Party $ 184,189 $ 134,993 $ 142,454 $ 171,593 $ 174,117
    Direct 288 6,450 – – 693
    Total Local Revenue $ 184,477 $ 141,443 $ 142,454 $ 171,593 $ 174,810
    Goods Revenue
    Third Party $ 10,387 $ 13,064 $ 11,877 $ 3,144 $ 4,651
    Direct 52,774 126,608 209,575 148,065 181,377
    Total Goods Revenue $ 63,161 $ 139,672 $ 221,452 $ 151,209 $ 186,028
    Travel and Other Revenue
    Third Party and Other $ 12,543 $ 10,488 $ 11,445 $ 16,752 $ 16,344
    Direct – – – – –
    Total Travel and Other Revenue $ 12,543 $ 10,488 $ 11,445 $ 16,752 $ 16,344
    Total Revenue
    Third Party and Other Revenue $ 207,119 $ 158,545 $ 165,776 $ 191,489 $ 195,112
    Direct Revenue 53,062 133,058 209,575 148,065 182,070
    Total Revenue $ 260,181 $ 291,603 $ 375,351 $ 339,554 $ 377,182
    Year-over-year growth 66 % 81 % 109 % 42 % 45 %
    % of Consolidated Revenue 46 % 51 % 59 % 56 % 62 %
    Revenue TTM $ 839,909 $ 969,987 $ 1,165,700 $ 1,266,689 $ 1,383,690
    Cost of Revenue (4)
    Local Cost of Revenue
    Third Party $ 35,710 $ 13,176 $ 23,203 $ 25,915 $ 19,818
    Direct 234 5,231 – – 636
    Total Local Cost of Revenue $ 35,944 $ 18,407 $ 23,203 $ 25,915 $ 20,454
    Goods Cost of Revenue
    Third Party $ 2,014 $ 1,275 $ 1,935 $ 475 $ 522
    Direct 45,925 110,329 196,789 138,278 158,529
    Total Goods Cost of Revenue $ 47,939 $ 111,604 $ 198,724 $ 138,753 $ 159,051
    Travel and Other Cost of Revenue
    Third Party and Other $ 2,431 $ 1,024 $ 1,864 $ 2,530 $ 3,091
    Direct – – – – –
    Total Travel and Other Cost of Revenue $ 2,431 $ 1,024 $ 1,864 $ 2,530 $ 3,091
    Total Cost of Revenue
    Third Party and Other Cost of Revenue $ 40,155 $ 15,475 $ 27,002 $ 28,920 $ 23,431
    Direct Cost of Revenue 46,159 115,560 196,789 138,278 159,165
    Total Cost of Revenue $ 86,314 $ 131,035 $ 223,791 $ 167,198 $ 182,596
    % of North America Total Revenue 33 % 45 % 60 % 49 % 48 %
    Gross Profit
    Local Gross Profit
    Third Party $ 148,479 $ 121,817 $ 119,251 $ 145,678 $ 154,299
    Direct 54 1,219 – – 57
    Total Local Gross Profit $ 148,533 $ 123,036 $ 119,251 $ 145,678 $ 154,356
    % of North America Total Local Revenue 80.5 % 87.0 % 83.7 % 84.9 % 88.3 %
    % of North America Total Local Gross Billings 36.0 % 34.6 % 27.7 % 32.4 % 34.3 %
    Goods Gross Profit
    Third Party $ 8,373 $ 11,789 $ 9,942 $ 2,669 $ 4,129
    Direct 6,849 16,279 12,786 9,787 22,848
    Total Goods Gross Profit $ 15,222 $ 28,068 $ 22,728 $ 12,456 $ 26,977
    % of North America Total Goods Revenue 24.1 % 20.1 % 10.3 % 8.2 % 14.5 %
    % of North America Total Goods Gross Billings 16.4 % 18.5 % 9.4 % 7.5 % 13.7 %
    Travel and Other Gross Profit
    Third Party and Other $ 10,112 $ 9,464 $ 9,581 $ 14,222 $ 13,253
    Direct – – – – –
    Total Travel and Other Gross Profit $ 10,112 $ 9,464 $ 9,581 $ 14,222 $ 13,253
    % of North America Total Travel and Other Revenue 80.6 % 90.2 % 83.7 % 84.9 % 81.1 %
    % of North America Total Travel and Other Gross Billings 23.7 % 21.3 % 20.0 % 21.6 % 20.4 %
    Total Gross Profit
    Third Party and Other $ 166,964 $ 143,070 $ 138,774 $ 162,569 $ 171,681
    Direct 6,903 17,498 12,786 9,787 22,905
    Total Gross Profit $ 173,867 $ 160,568 $ 151,560 $ 172,356 $ 194,586
    % of North America Total Revenue 66.8 % 55.1 % 40.4 % 50.8 % 51.6 %
    % of North America Total Gross Billings 31.7 % 29.1 % 21.1 % 25.3 % 27.3 %
    Operating Income Excl Stock-Based Compensation (SBC), Acquisition-Related (Benefit) Expense, net $ 43,429 $ 39,093 $ 17,032 $ 41,366 $ 48,508
    Year-over-year growth N/A 108 % (7 ) % 3 % 12 %
    % of Consolidated Operating Income Excl SBC, Acq-Related 60 % 77 % 124 % 81 % 82 %
    Operating Margin Excl SBC, Acq-Related (% of North America Total revenue) 16.7 % 13.4 % 4.5 % 12.2 % 12.9 %
    Year-over-year growth (bps) 2,337 170 (570 ) (460 ) (380 )
    Operating Income TTM Excl SBC, Acq-Related $ 120,676 $ 140,933 $ 139,726 $ 140,920 $ 145,999
    Operating Margin TTM Excl SBC, Acq-Related (% of North America Total TTM revenue) 14.4 % 14.5 % 12.0 % 11.1 % 10.6 %
    Year-over-year growth (bps) 2,601 2,100 1,120 200 (380 )
    Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
    EMEA Segment
    Gross Billings
    Local Gross Billings
    Third Party $ 270,954 $ 182,983 $ 239,944 $ 259,423 $ 241,108
    Direct – – – – –
    Total Local Gross Billings $ 270,954 $ 182,983 $ 239,944 $ 259,423 $ 241,108
    Goods Gross Billings
    Third Party $ 113,254 $ 136,960 $ 195,582 $ 141,742 $ 165,413
    Direct 10,589 9,880 9,020 7,451 2,181
    Total Goods Gross Billings $ 123,843 $ 146,840 $ 204,602 $ 149,193 $ 167,594
    Travel and Other Gross Billings
    Third Party and Other $ 67,582 $ 66,264 $ 87,935 $ 83,702 $ 73,548
    Direct – – – – –
    Total Travel and Other Gross Billings $ 67,582 $ 66,264 $ 87,935 $ 83,702 $ 73,548
    Total Gross Billings
    Third Party and Other $ 451,790 $ 386,207 $ 523,461 $ 484,867 $ 480,069
    Direct 10,589 9,880 9,020 7,451 2,181
    Total Gross Billings $ 462,379 $ 396,087 $ 532,481 $ 492,318 $ 482,250
    Year-over-year growth 27 % (21 ) % 2 % (8 ) % 4 %
    Year-over-year growth, excluding FX (5) 41 % (13 ) % 4 % (9 ) % 4 %
    % of Consolidated Gross Billings 36 % 33 % 35 % 35 % 34 %
    Gross Billings TTM $ 2,026,403 $ 1,920,215 $ 1,928,507 $ 1,883,265 $ 1,903,136
    Revenue
    Local Revenue
    Third Party $ 134,069 $ 109,552 $ 98,668 $ 110,715 $ 109,481
    Direct – – – – –
    Total Local Revenue $ 134,069 $ 109,552 $ 98,668 $ 110,715 $ 109,481
    Goods Revenue
    Third Party $ 46,092 $ 49,649 $ 49,173 $ 45,875 $ 32,938
    Direct 10,589 9,880 9,020 7,451 2,181
    Total Goods Revenue $ 56,681 $ 59,529 $ 58,193 $ 53,326 $ 35,119
    Travel and Other Revenue
    Third Party and Other $ 20,805 $ 18,206 $ 19,417 $ 19,757 $ 15,362
    Direct – – – – –
    Total Travel and Other Revenue $ 20,805 $ 18,206 $ 19,417 $ 19,757 $ 15,362
    Total Revenue
    Third Party and Other Revenue $ 200,966 $ 177,407 $ 167,258 $ 176,347 $ 157,781
    Direct Revenue 10,589 9,880 9,020 7,451 2,181
    Total Revenue $ 211,555 $ 187,287 $ 176,278 $ 183,798 $ 159,962
    Year-over-year growth 27 % (4 ) % (27 ) % (20 ) % (24 ) %
    Year-over-year growth, excluding FX(5) 41 % 6 % (25 ) % (20 ) % (25 ) %
    % of Consolidated Revenue 37 % 33 % 28 % 31 % 26 %
    Revenue TTM $ 876,202 $ 869,268 $ 805,476 $ 758,918 $ 707,325
    Cost of Revenue
    Local Cost of Revenue
    Third Party $ 11,668 $ 10,416 $ 10,622 $ 14,192 $ 10,898
    Direct – – – – –
    Total Local Cost of Revenue $ 11,668 $ 10,416 $ 10,622 $ 14,192 $ 10,898
    Goods Cost of Revenue
    Third Party $ 4,012 $ 4,721 $ 5,294 $ 5,880 $ 4,705
    Direct 10,594 7,845 14,550 7,472 3,306
    Total Goods Cost of Revenue $ 14,606 $ 12,566 $ 19,844 $ 13,352 $ 8,011
    Travel and Other Cost of Revenue
    Third Party and Other $ 1,810 $ 1,731 $ 2,090 $ 2,533 $ 1,522
    Direct – – – – –
    Total Travel and Other Cost of Revenue $ 1,810 $ 1,731 $ 2,090 $ 2,533 $ 1,522
    Total Cost of Revenue
    Third Party and Other Cost of Revenue $ 17,490 $ 16,868 $ 18,006 $ 22,605 $ 17,125
    Direct Cost of Revenue 10,594 7,845 14,550 7,472 3,306
    Total Cost of Revenue $ 28,084 $ 24,713 $ 32,556 $ 30,077 $ 20,431
    % of EMEA Total Revenue 13 % 13 % 18 % 16 % 13 %
    Gross Profit
    Local Gross Profit
    Third Party $ 122,401 $ 99,136 $ 88,046 $ 96,523 $ 98,583
    Direct – – – – –
    Total Local Gross Profit $ 122,401 $ 99,136 $ 88,046 $ 96,523 $ 98,583
    % of EMEA Total Local Revenue 91.3 % 90.5 % 89.2 % 87.2 % 90.0 %
    % of EMEA Total Local Gross Billings 45.2 % 54.2 % 36.7 % 37.2 % 40.9 %
    Goods Gross Profit
    Third Party $ 42,080 $ 44,928 $ 43,879 $ 39,995 $ 28,233
    Direct (5 ) 2,035 (5,530 ) (21 ) (1,125 )
    Total Goods Gross Profit $ 42,075 $ 46,963 $ 38,349 $ 39,974 $ 27,108
    % of EMEA Total Goods Revenue 74.2 % 78.9 % 65.9 % 75.0 % 77.2 %
    % of EMEA Total Goods Gross Billings 34.0 % 32.0 % 18.7 % 26.8 % 16.2 %
    Travel and Other Gross Profit
    Third Party and Other $ 18,995 $ 16,475 $ 17,327 $ 17,224 $ 13,840
    Direct – – – – –
    Total Travel and Other Gross Profit $ 18,995 $ 16,475 $ 17,327 $ 17,224 $ 13,840
    % of EMEA Total Travel and Other Revenue 91.3 % 90.5 % 89.2 % 87.2 % 90.1 %
    % of EMEA Total Travel and Other Gross Billings 28.1 % 24.9 % 19.7 % 20.6 % 18.8 %
    Total Gross Profit
    Third Party and Other $ 183,476 $ 160,539 $ 149,252 $ 153,742 $ 140,656
    Direct (5 ) 2,035 (5,530 ) (21 ) (1,125 )
    Total Gross Profit $ 183,471 $ 162,574 $ 143,722 $ 153,721 $ 139,531
    % of EMEA Total Revenue 86.7 % 86.8 % 81.5 % 83.6 % 87.2 %
    % of EMEA Total Gross Billings 39.7 % 41.0 % 27.0 % 31.2 % 28.9 %
    Operating Income Excl SBC, Acq-Related $ 31,794 $ 29,107 $ 8,776 $ 34,176 $ 24,708
    Year-over-year growth 110 % 14 % (77 ) % (6 ) % (22 ) %
    % of Consolidated Operating Income Excl SBC, Acq-Related 44 % 58 % 64 % 67 % 42 %
    Operating Margin Excl SBC, Acq-Related (% of EMEA Total revenue) 15.0 % 15.5 % 5.0 % 18.6 % 15.4 %
    Year-over-year growth (bps) 592 237 (1,073 ) 282 40
    Operating Income TTM Excl SBC, Acq-Related $ 131,426 $ 134,945 $ 106,005 $ 103,853 $ 96,767
    Operating Margin TTM Excl SBC, Acq-Related (% of EMEA Total TTM revenue) 15.0 % 15.5 % 13.2 % 13.7 % 13.7 %
    Year-over-year growth (bps)(7) N/A N/A N/A (13 ) (132 )
    Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
    Rest of World Segment
    Gross Billings
    Local Gross Billings
    Third Party $ 152,359 $ 145,061 $ 128,954 $ 119,990 $ 114,630
    Direct – – – – –
    Total Local Gross Billings $ 152,359 $ 145,061 $ 128,954 $ 119,990 $ 114,630
    Goods Gross Billings
    Third Party $ 73,645 $ 74,504 $ 89,475 $ 70,994 $ 66,774
    Direct 1,699 2,050 6,581 6,778 5,625
    Total Goods Gross Billings $ 75,344 $ 76,554 $ 96,056 $ 77,772 $ 72,399
    Travel and Other Gross Billings
    Third Party and Other $ 48,319 $ 48,185 $ 44,009 $ 36,370 $ 32,322
    Direct – – – – –
    Total Travel and Other Gross Billings $ 48,319 $ 48,185 $ 44,009 $ 36,370 $ 32,322
    Total Gross Billings
    Third Party and Other $ 274,323 $ 267,750 $ 262,438 $ 227,354 $ 213,726
    Direct 1,699 2,050 6,581 6,778 5,625
    Total Gross Billings $ 276,022 $ 269,800 $ 269,019 $ 234,132 $ 219,351
    Year-over-year growth 41 % 6 % 17 % (11 ) % (21 ) %
    Year-over-year growth, excluding FX(5) 53 % 15 % 20 % (6 ) % (16 ) %
    % of Consolidated Gross Billings 21 % 22 % 18 % 17 % 16 %
    Gross Billings TTM $ 1,024,534 $ 1,040,377 $ 1,078,524 $ 1,048,973 $ 992,302
    Revenue
    Local Revenue
    Third Party $ 59,792 $ 54,632 $ 46,166 $ 45,085 $ 43,323
    Direct – – – – –
    Total Local Revenue $ 59,792 $ 54,632 $ 46,166 $ 45,085 $ 43,323
    Goods Revenue
    Third Party $ 21,772 $ 21,661 $ 25,529 $ 18,062 $ 14,985
    Direct 1,699 2,050 6,580 6,778 5,625
    Total Goods Revenue $ 23,471 $ 23,711 $ 32,109 $ 24,840 $ 20,610
    Travel and Other Revenue
    Third Party and Other $ 13,336 $ 11,319 $ 8,398 $ 8,125 $ 7,670
    Direct – – – – –
    Total Travel and Other Revenue $ 13,336 $ 11,319 $ 8,398 $ 8,125 $ 7,670
    Total Revenue
    Third Party and Other Revenue $ 94,900 $ 87,612 $ 80,093 $ 71,272 $ 65,978
    Direct Revenue 1,699 2,050 6,580 6,778 5,625
    Total Revenue $ 96,599 $ 89,662 $ 86,673 $ 78,050 $ 71,603
    Year-over-year growth 40 % 20 % 20 % (14 ) % (26 ) %
    Year-over-year growth, excluding FX 52 % 30 % 23 % (8 ) % (21 ) %
    % of Consolidated Revenue 17 % 16 % 14 % 13 % 12 %
    Revenue TTM $ 333,832 $ 349,079 $ 363,296 $ 350,984 $ 325,988
    Cost of Revenue
    Local Cost of Revenue
    Third Party $ 12,494 $ 13,313 $ 9,801 $ 5,923 $ 7,962
    Direct – – – – –
    Total Local Cost of Revenue $ 12,494 $ 13,313 $ 9,801 $ 5,923 $ 7,962
    Goods Cost of Revenue
    Third Party $ 4,447 $ 5,981 $ 7,264 $ 11,501 $ 5,569
    Direct 1,399 4,208 7,228 6,627 6,075
    Total Goods Cost of Revenue $ 5,846 $ 10,189 $ 14,492 $ 18,128 $ 11,644
    Travel and Other Cost of Revenue
    Third Party and Other $ 2,446 $ 2,536 $ 1,832 $ 1,067 $ 1,420
    Direct – – – – –
    Total Travel and Other Cost of Revenue $ 2,446 $ 2,536 $ 1,832 $ 1,067 $ 1,420
    Total Cost of Revenue
    Third Party and Other Cost of Revenue $ 19,387 $ 21,830 $ 18,897 $ 18,491 $ 14,951
    Direct Cost of Revenue 1,399 4,208 7,228 6,627 6,075
    Total Cost of Revenue $ 20,786 $ 26,038 $ 26,125 $ 25,118 $ 21,026
    % of Rest of World Total Revenue 22 % 29 % 30 % 32 % 29 %
    Gross Profit
    Local Gross Profit
    Third Party $ 47,298 $ 41,319 $ 36,365 $ 39,162 $ 35,361
    Direct – – – – –
    Total Local Gross Profit $ 47,298 $ 41,319 $ 36,365 $ 39,162 $ 35,361
    % of Rest of World Total Local Revenue 79.1 % 75.6 % 78.8 % 86.9 % 81.6 %
    % of Rest of World Total Local Gross Billings 31.0 % 28.5 % 28.2 % 32.6 % 30.8 %
    Goods Gross Profit
    Third Party $ 17,325 $ 15,680 $ 18,265 $ 6,561 $ 9,416
    Direct 300 (2,158 ) (648 ) 151 (450 )
    Total Goods Gross Profit $ 17,625 $ 13,522 $ 17,617 $ 6,712 $ 8,966
    % of Rest of World Total Goods Revenue 75.1 % 57.0 % 54.9 % 27.0 % 43.5 %
    % of Rest of World Total Goods Gross Billings 23.4 % 17.7 % 18.3 % 8.6 % 12.4 %
    Travel and Other Gross Profit
    Third Party and Other $ 10,890 $ 8,783 $ 6,566 $ 7,058 $ 6,250
    Direct – – – – –
    Total Travel and Other Gross Profit $ 10,890 $ 8,783 $ 6,566 $ 7,058 $ 6,250
    % of Rest of World Total Travel and Other Revenue 81.7 % 77.6 % 78.2 % 86.9 % 81.5 %
    % of Rest of World Total Travel and Other Gross Billings 22.5 % 18.2 % 14.9 % 19.4 % 19.3 %
    Total Gross Profit
    Third Party and Other $ 75,513 $ 65,782 $ 61,196 $ 52,781 $ 51,027
    Direct 300 (2,158 ) (648 ) 151 (450 )
    Total Gross Profit $ 75,813 $ 63,624 $ 60,548 $ 52,932 $ 50,577
    % of Rest of World Total Revenue 78.5 % 71.0 % 69.9 % 67.8 % 70.6 %
    % of Rest of World Total Gross Billings 27.5 % 23.6 % 22.5 % 22.6 % 23.1 %
    Operating Loss Excl SBC, Acq-Related $ (3,289 ) $ (17,712 ) $ (12,105 ) $ (24,389 ) $ (14,173 )
    Year-over-year growth (95 ) % (62 ) % (68 ) % 174 % (331 ) %
    % of Consolidated Operating Income Excl SBC, Acq-Related (5 ) % (35 ) % (88 ) % (48 ) % (24 ) %
    Operating Margin Excl SBC, Acq-Related (% of Rest of World Total revenue) (3.4 ) % (19.8 ) % (14.0 ) % (31.2 ) % (19.8 ) %
    Year-over-year growth (bps) 9,391 4,222 3,848 (2,139 ) (1,640 )
    Operating Loss TTM Excl SBC, Acq-Related $ (96,318 ) $ (67,914 ) $ (42,016 ) $ (57,495 ) $ (68,379 )
    Operating Margin TTM Excl SBC, Acq-Related (% of Rest of World Total TTM revenue) (28.9 ) % (19.5 ) % (11.6 ) % (16.4 ) % (21.0 ) %
    Year-over-year growth (bps)(7) N/A N/A N/A 3,590 788
    Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
    Consolidated Results of Operations
    Gross Billings
    Local Gross Billings
    Third Party $ 835,661 $ 677,337 $ 799,153 $ 829,553 $ 805,508
    Direct 288 6,450 – – 693
    Total Local Gross Billings $ 835,949 $ 683,787 $ 799,153 $ 829,553 $ 806,201
    Goods Gross Billings
    Third Party $ 227,072 $ 236,972 $ 316,327 $ 230,030 $ 247,688
    Direct 65,061 138,538 225,176 162,294 189,183
    Total Goods Gross Billings $ 292,133 $ 375,510 $ 541,503 $ 392,324 $ 436,871
    Travel and Other Gross Billings
    Third Party and Other $ 158,594 $ 158,959 $ 179,796 $ 185,892 $ 170,734
    Direct – – – – –
    Total Travel and Other Gross Billings $ 158,594 $ 158,959 $ 179,796 $ 185,892 $ 170,734
    Total Gross Billings
    Third Party and Other $ 1,221,327 $ 1,073,268 $ 1,295,276 $ 1,245,475 $ 1,223,930
    Direct 65,349 144,988 225,176 162,294 189,876
    Total Gross Billings $ 1,286,676 $ 1,218,256 $ 1,520,452 $ 1,407,769 $ 1,413,806
    Year-over-year growth 38 % 5 % 24 % 4 % 10 %
    Year-over-year growth, excluding FX 47 % 11 % 25 % 5 % 11 %
    Gross Billings (TTM) $ 5,029,554 $ 5,090,600 $ 5,380,184 $ 5,433,153 $ 5,560,283
    Year-over-year growth 128 % 61 % 35 % 16 % 11 %
    Revenue
    Local Revenue
    Third Party $ 378,050 $ 299,177 $ 287,288 $ 327,393 $ 326,921
    Direct 288 6,450 – – 693
    Total Local Revenue $ 378,338 $ 305,627 $ 287,288 $ 327,393 $ 327,614
    Goods Revenue
    Third Party $ 78,251 $ 84,374 $ 86,579 $ 67,081 $ 52,574
    Direct 65,062 138,538 225,175 162,294 189,183
    Total Goods Revenue $ 143,313 $ 222,912 $ 311,754 $ 229,375 $ 241,757
    Travel and Other Revenue
    Third Party and Other $ 46,684 $ 40,013 $ 39,260 $ 44,634 $ 39,376
    Direct – – – – –
    Total Travel and Other Revenue $ 46,684 $ 40,013 $ 39,260 $ 44,634 $ 39,376
    Total Revenue
    Third Party and Other Revenue $ 502,985 $ 423,564 $ 413,127 $ 439,108 $ 418,871
    Direct Revenue 65,350 144,988 225,175 162,294 189,876
    Total Revenue $ 568,335 $ 568,552 $ 638,302 $ 601,402 $ 608,747
    Year-over-year growth 45 % 32 % 30 % 8 % 7 %
    Year-over-year growth, excluding FX 53 % 38 % 31 % 8 % 8 %
    Total Consolidated Revenue TTMYear-over-year growth, excluding FX (1) $ 2,049,943 $ 2,188,334 $ 2,334,472 $ 2,376,591 $ 2,417,003
    Year-over-year growth 118 % 70 % 45 % 27 % 18 %
    Cost of Revenue
    Local Cost of Revenue
    Third Party $ 59,872 $ 36,905 $ 43,626 $ 46,030 $ 38,678
    Direct 234 5,231 – – 636
    Total Local Cost of Revenue $ 60,106 $ 42,136 $ 43,626 $ 46,030 $ 39,314
    Goods Cost of Revenue
    Third Party $ 10,473 $ 11,977 $ 14,493 $ 17,856 $ 10,796
    Direct 57,918 122,382 218,567 152,377 167,910
    Total Goods Cost of Revenue $ 68,391 $ 134,359 $ 233,060 $ 170,233 $ 178,706
    Travel and Other Cost of Revenue
    Third Party and Other $ 6,687 $ 5,291 $ 5,786 $ 6,130 $ 6,033
    Direct – – – – –
    Total Travel and Other Cost of Revenue $ 6,687 $ 5,291 $ 5,786 $ 6,130 $ 6,033
    Total Cost of Revenue
    Third Party and Other Cost of Revenue $ 77,032 $ 54,173 $ 63,905 $ 70,016 $ 55,507
    Direct Cost of Revenue 58,152 127,613 218,567 152,377 168,546
    Total Cost of Revenue $ 135,184 $ 181,786 $ 282,472 $ 222,393 $ 224,053
    % of Total Consolidated Revenue 24 % 32 % 44 % 37 % 37 %
    Gross Profit
    Local Gross Profit
    Third Party $ 318,178 $ 262,272 $ 243,662 $ 281,363 $ 288,243
    Direct 54 1,219 – – 57
    Total Local Gross Profit $ 318,232 $ 263,491 $ 243,662 $ 281,363 $ 288,300
    % of Total Consolidated Local Revenue 84.1 % 86.2 % 84.8 % 85.9 % 88.0 %
    % of Total Consolidated Local Gross Billings 38.1 % 38.5 % 30.5 % 33.9 % 35.8 %
    Goods Gross Profit
    Third Party $ 67,778 $ 72,397 $ 72,086 $ 49,225 $ 41,778
    Direct 7,144 16,156 6,608 9,917 21,273
    Total Goods Gross Profit $ 74,922 $ 88,553 $ 78,694 $ 59,142 $ 63,051
    % of Total Consolidated Goods Revenue 52.3 % 39.7 % 25.2 % 25.8 % 26.1 %
    % of Total Consolidated Goods Gross Billings 25.6 % 23.6 % 14.5 % 15.1 % 14.4 %
    Travel and Other Gross Profit
    Third Party and Other $ 39,997 $ 34,722 $ 33,474 $ 38,504 $ 33,343
    Direct – – – – –
    Total Travel and Other Gross Profit $ 39,997 $ 34,722 $ 33,474 $ 38,504 $ 33,343
    % of Total Consolidated Travel and Other Revenue 85.7 % 86.8 % 85.3 % 86.3 % 84.7 %
    % of Total Consolidated Travel and Other Gross Billings 25.2 % 21.8 % 18.6 % 20.7 % 19.5 %
    Total Gross Profit
    Third Party and Other $ 425,953 $ 369,391 $ 349,222 $ 369,092 $ 363,364
    Direct 7,198 17,375 6,608 9,917 21,330
    Total Gross Profit $ 433,151 $ 386,766 $ 355,830 $ 379,009 $ 384,694
    % of Total Consolidated Revenue 76.2 % 68.0 % 55.7 % 63.0 % 63.2 %
    % of Total Consolidated Gross Billings 33.7 % 31.7 % 23.4 % 26.9 % 27.2 %
    Operating Income Excl SBC, Acq-Related $ 71,934 $ 50,488 $ 13,703 $ 51,153 $ 59,043
    Year-over-year growth N/A N/A (24 ) % (24 ) % (18 ) %
    Operating Margin Excl SBC, Acq-Related (% of Total Consolidated revenue) 12.7 % 8.9 % 2.1 % 8.5 % 9.7 %
    Year-over-year growth (bps) 2,853 930 (150 ) (360 ) (300 )
    Operating Income TTM Excl SBC, Acq-Related $ 155,784 $ 207,964 $ 203,715 $ 187,278 $ 174,387
    Operating Margin TTM Excl SBC, Acq-Related (% of Total Consolidated TTM revenue) 7.6 % 9.5 % 8.7 % 7.9 % 7.2 %
    Year-over-year growth (bps) 4,229 3,320 1,770 680 (40 )
    Operating Income (Loss) $ 46,485 $ 25,438 $ (12,861 ) $ 21,178 $ 27,412
    Year-over-year growth N/A N/A 14 % (47 ) % (41 ) %
    Operating Margin (% of Total Consolidated revenue) 8.2 % 4.5 % (2.0 ) % 3.5 % 4.5 %
    Year-over-year growth (bps) 3,391 457 100 (360 ) (370 )
    Operating Income TTM $ 70,913 $ 96,590 $ 98,701 $ 80,240 $ 61,167
    Operating Margin TTM (% of Total Consolidated TTM revenue) 3.5 % 4.4 % 4.2 % 3.4 % 2.5 %
    Year-over-year growth (bps) 6,824 4,740 1,870 750 (100 )
    Net Income (Loss) Attributable to Common Stockholders 28,386 (2,979 ) (81,089 ) (3,992 ) (7,574 )
    Weighted Average Basic Shares Outstanding 647,150 653,224 655,678 658,800 662,361
    Weighted Average Diluted Shares Outstanding (6) 663,123 653,224 655,678 658,800 662,361
    Net Earnings (Loss) per Share
    Basic $ 0.04 $ (0.00 ) $ (0.12 ) $ (0.01 ) $ (0.01 )
    Diluted $ 0.04 $ (0.00 ) $ (0.12 ) $ (0.01 ) $ (0.01 )
    Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
    The following is a quarterly reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net income (loss)” and a quarterly reconciliation of operating income, excluding stock-based compensation and acquisition-related benefit (expense), net, to the most comparable U.S. GAAP financial measure, “Operating income (loss).” (8)
    Adjusted EBITDA $ 84,744 $ 65,798 $ 29,668 $ 71,853 $ 80,511
    Depreciation and amortization (12,810 ) (15,310 ) (15,965 ) (20,700 ) (21,468 )
    Operating income, excluding stock-based compensation and acquisition-related benefit (expense), net 71,934 50,488 13,703 51,153 59,043
    Stock-based compensation (27,084 ) (22,619 ) (26,411 ) (29,907 ) (32,446 )
    Acquisition-related benefit (expense), net 1,635 (2,431 ) (153 ) (68 ) 815
    Operating income (loss) 46,485 25,438 (12,861 ) 21,178 27,412
    Non Operating Items
    Loss on equity method investments (3,428 ) (138 ) (1,231 ) (19 ) (14 )
    Other income (expense), net 57,367 617 (48,279 ) (5,064 ) (5,565 )
    Provision for income taxes (66,875 ) (26,857 ) (17,676 ) (19,337 ) (27,384 )
    Net income (loss) $ 33,549 $ (940 ) $ (80,047 ) $ (3,242 ) $ (5,551 )
    The following is a trailing twelve months reconciliation of Operating income, excluding stock-based compensation and acquisition-related benefit (expense), net, to the most comparable U.S. GAAP financial measure, “Operating Income.” (8)
    Operating income, excluding stock-based compensation and acquisition-related benefit (expense), net TTM $ 155,784 $ 207,964 $ 203,715 $ 187,278 $ 174,387
    Stock-based compensation (91,095 ) (110,374 ) (104,117 ) (106,021 ) (111,383 )
    Acquisition-related benefit (expense), net 6,224 (1,000 ) (897 ) (1,017 ) (1,837 )
    Operating income TTM $ 70,913 $ 96,590 $ 98,701 $ 80,240 $ 61,167
    The following is a quarterly reconciliation of foreign exchange rate neutral Gross Billings growth from the comparable quarterly periods of the prior year to reported Gross Billings growth from the comparable quarterly periods of the prior year.(9)
    EMEA Gross Billings growth, excluding FX 41 % (13 ) % 4 % (9 ) % 4 %
    FX Effect (14 ) % (8 ) % (2 ) % 1 % – %
    EMEA Gross Billings growth 27 % (21 ) % 2 % (8 ) % 4 %
    Rest of World Gross Billings growth, excluding FX 53 % 15 % 20 % (6 ) % (16 ) %
    FX Effect (12 ) % (9 ) % (3 ) % (5 ) % (5 ) %
    Rest of World Gross Billings growth 41 % 6 % 17 % (11 ) % (21 ) %
    Consolidated Gross Billings growth, excluding FX 47 % 11 % 25 % 5 % 11 %
    FX Effect (9 ) % (6 ) % (1 ) % (1 ) % (1 ) %
    Consolidated Gross Billings growth 38 % 5 % 24 % 4 % 10 %
    The following is a quarterly reconciliation of foreign exchange rate neutral Revenue growth from the comparable quarterly periods of the prior year to reported Revenue growth from the comparable quarterly periods of the prior year.(9)
    EMEA Revenue growth, excluding FX 41 % 6 % (25 ) % (20 ) % (25 ) %
    FX Effect (14 ) % (10 ) % (2 ) % – % 1 %
    EMEA Revenue growth 27 % (4 ) % (27 ) % (20 ) % (24 ) %
    Rest of World Revenue growth, excluding FX 52 % 30 % 23 % (8 ) % (21 ) %
    FX Effect (12 ) % (10 ) % (3 ) % (6 ) % (5 ) %
    Rest of World Revenue growth 40 % 20 % 20 % (14 ) % (26 ) %
    Consolidated Revenue growth, excluding FX 53 % 38 % 31 % 8 % 8 %
    FX Effect (8 ) % (6 ) % (1 ) % – % (1 ) %
    Consolidated Revenue growth 45 % 32 % 30 % 8 % 7 %
    The following is a reconciliation of free cash flow to the most comparable U.S. GAAP financial measure, “Net cash provided by operating activities.”
    Net cash provided by operating activities $ 75,315 $ 42,088 $ 65,717 $ 8,760 $ 43,302
    Purchases of property and equipment and capitalized software (26,709 ) (16,010 ) (40,034 ) (14,468 ) (14,042 )
    Free cash flow (10) $ 48,606 $ 26,078 $ 25,683 $ (5,708 ) $ 29,260
    Net cash provided by operating activities (TTM) $ 392,517 $ 370,194 $ 266,834 $ 191,880 $ 159,867
    Purchases of property and equipment and capitalized software (TTM) (62,401 ) (69,788 ) (95,836 ) (97,221 ) (84,554 )
    Free cash flow (TTM) $ 330,116 $ 300,406 $ 170,998 $ 94,659 $ 75,313
    Net cash used in investing activities $ (60,153 ) $ (35,629 ) $ (52,753 ) $ (30,679 ) $ (15,862 )
    Net cash provided by (used in) financing activities $ 24,158 $ 2,707 $ (6,495 ) $ (9,342 ) $ (7,941 )
    Net cash used in investing activities (TTM) $ (184,552 ) $ (177,133 ) $ (194,979 ) $ (179,214 ) $ (134,923 )
    Net cash provided by (used in) financing activities (TTM) $ 771,404 $ 765,503 $ 12,095 $ 11,028 $ (21,071 )
    Other Metrics
    Active Customers (11)
    North America 15.1 16.0 17.2 18.2 19.1
    EMEA 14.2 14.4 14.3 14.0 13.9
    Rest of World 8.7 9.1 9.5 9.5 9.6
    Total Active Customers 38.0 39.5 41.0 41.7 42.6
    TTM Gross Billings / Average Active Customer (12)
    North America $ 151 $ 148 $ 152 $ 151 $ 156
    EMEA $ 189 $ 160 $ 146 $ 137 $ 135
    Rest of World $ 152 $ 133 $ 126 $ 116 $ 108
    Consolidated $ 165 $ 149 $ 144 $ 138 $ 138
    Headcount
    Sales (13) 5,587 5,087 4,677 4,566 4,679
    % North America 20 % 24 % 25 % 28 % 26 %
    % EMEA 45 % 43 % 42 % 38 % 39 %
    % Rest of World 35 % 33 % 33 % 34 % 35 %
    Other 7,233 6,779 6,717 6,433 6,306
    Total Headcount 12,820 11,866 11,394 10,999 10,985
    (1) Represents the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds. Includes direct billings and third party and other billings.
    (2) Local represents deals from local merchants, deals with national merchants, and deals through local events (i.e., GrouponLive deals).
    (3) Third party revenue is related to sales for which the Company acts as a marketing agent for the merchant. This revenue is recorded on a net basis. Direct revenue is primarily related to the sale of products for which the Company is the merchant of record. These revenues are accounted for on a gross basis, with the cost of inventory included in cost of revenue.
    (4) Cost of revenue is comprised of direct and certain indirect costs incurred to generate revenue. Direct cost of revenue includes the cost of inventory, shipping and fulfillment costs and inventory markdowns. Third party cost of revenue includes estimated refunds for which the merchant’s share is not recoverable. Other costs incurred to generate revenue are allocated to cost of third party and other revenue and direct revenue for each of our categories (Local, Goods, and Travel and Other) in proportion to relative gross billings during the period.
    (5) Represents the change in financial measures that would have resulted had average exchange rates in the reporting period been the same as those in effect in the prior year period.
    (6) The weighted-average diluted shares outstanding is calculated using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and vesting of restricted stock units and restricted shares, as calculated using the treasury stock method.
    (7) International operating margin information broken out between EMEA and Rest of World is not readily available for quarterly periods during the year ended December 31, 2010. Therefore, the Company is presenting year-over-year basis point (bps) growth for operating margin TTM excluding stock-based compensation and acquisition-related expense (benefit), net beginning in the first quarter of 2013.
    (8) Adjusted EBITDA and Operating income excluding stock-based compensation and acquisition-related benefit (expense), net are non-GAAP financial measures. The Company reconciles Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net income (loss)” for the periods presented, and the Company reconciles Operating income excluding stock-based compensation and acquisition-related benefit (expense), net to the most comparable U.S. GAAP financial measure, “Operating income (loss),” for the periods presented.
    (9) Foreign Exchange Rate neutral operating results are non-GAAP financial measures. The Company reconciles “foreign exchange rate neutral Gross Billings growth” and “foreign exchange rate neutral Revenue growth” to year-over-year growth rates for the most comparable U.S. GAAP financial measures, ‘‘Gross Billings” and “Revenue,” respectively for the periods presented.
    (10) Free cash flow is a non-GAAP financial measure. The Company reconciles this measure to the most comparable U.S. GAAP financial measure, ‘‘Net cash provided by operating activities,” for the periods presented.
    (11) Reflects the total number of unique user accounts who have purchased a Groupon during the trailing twelve months.
    (12) Reflects the total gross billings generated in the trailing twelve months per average active customer over that period.
    (13) Includes inside and outside merchant sales representatives, as well as sales support.
    (14) The definition, methodology, and appropriateness of each of our supplemental metrics is reviewed periodically. As a result, metrics are subject to removal and/or change.

     

    Groupon

     

  • Reddit CEO Talks About Site Being ‘In The Red’

    Reddit CEO Talks About Site Being ‘In The Red’

    On Wednesday, reddit announced some changes to its list of default subreddits. These are the ones the site shows on its front page to new and logged out users, and those who haven’t bothered to personalize their own homepages.

    As part of the change, reddit decided to eliminate popular subreddits r/atheism and r/politics from the list because they were deemed not to be “up to snuff”.

    As the conversation unfolded on reddit, CEO Yishan Wong made some comments on the site about its own monetization.

    “I guess I’ll make a statement about our revenue plans vs our community activity,” began Wong. “1/ We didn’t make the frontpage changes for any revenue-related or mainstreaming reason. We made them because (as has actually been discussed in this very subreddit quite often) the default subreddits all evolve in different ways and the community itself begins to find one or more of those subreddits more or less valuable/desirable. (I think you all know what I’m talking about; this will be the only paragraph where I talk a bit sideways, because I don’t want to shit on people) Similarly, other emerging subreddits begin to show a lot of promise so in the interests of adding more fresh material, we’ve added them to the defaults.”

    He continued, “1a/ There is a minor point that sometimes taking a subreddit out of the defaults and removing the pressures of the limelight can allow it to incubate and improve, but that wasn’t a reason in our decisions; it’s just something that occurred to me today.”

    Wong then proceeded to outline reddit’s revnue channels, which consist of advertising, reddit gold and the redditgifts Marketplace, which he said is “actually turning out to be promising.”

    “It’s still nascent, but gift exchanges are quite popular and (again in reddit fashion) we heavily curate the merchants who are allowed in the marketplace,” Wong said. “We’ll see how it develops.”

    He went on to note that none of these require the modification or editorialization of the front page or reddit, and that any changes made are with the interests of users in mind.

    “A note about short-term vs long-term money,” said Wong. “It turns out that you have to plan for BOTH the short-term and the long-term. If you don’t eat in the short-term, you die and never make it to the long-term. If you do everything short-term, you have no long-term future. So we need to make enough money this year to pay the bills and fund next year’s growth, and we also need to put into place the cornerstones of future growth at the same time. It’s a balancing act.”

    He concluded that set of comments by directing conspiracy theorists to an Amazon affiliate link for tinfoil.

    Hours later, Wong left another comment on the subject saying that reddit is “still in the red,” and is “trying to finish the year at break-even (or slightly above, to have a margin of error) though.”

    Wong said they’re thinking about posting a public graph that would be updated regularly showing revenue vs. expenses on a quarterly/monthly basis so people can see how far/close reddit is to be profitable.

    “There is a common misconception that we are ‘part of a billion-dollar conglomerate’ and/or ‘already very profitable, so why keep giving them money’ that is kind of frustrating for us: reddit was given its freedom when we were spun out, so the price of freedom is paying our own way and no one else is paying the bills – a graph like that might help make things more clear,” Wong said.

    He went on to note that AdBlock hasn’t been much an issue in monetizing reddit, as only a small number of people run it and block reddit ads.

    You can see all of Wong’s comments here.

    [via: Business Insider, Image: Yishan Wong]

  • Here’s What Yelp Said About Future E-Commerce Products

    Here’s What Yelp Said About Future E-Commerce Products

    This week, Yelp CEO Jeremy Stoppelman spoke at the LeWeb conference in London. SocialTimes initially reported on some comments he made, indicating that Yelp is considering going into e-commerce, which we covered here.

    Le Web has since released the entire interview on YouTube:

    After discussing business growth, fake reviews, and saying that Yelp is “disrupting the Yellow Pages,” Stoppelman got into the e-commerce stuff.

    Yelp goes “far beyond restaurants,” he noted. “I think the number one category right now is shopping, so boutiques, places to buy different things…and so it covers the full range…the Yellow Pages traditionally didn’t cover things like shopping and didn’t really cover things like restaurants, but Yelp obviously cover those pretty well, but goes into the traditional Yellow Pages categories too, like doctors and hair salons, and plumbers.”

    Interviewer Loic Le Meur noted that the next logical step for the company could be to start actually selling products.

    After saying, “mmm hmm” and nodding his head, Stoppelman added, “I think that is an interesting direction, and it’s one we’ve got a toe in the water, but I see a lot of potential, and that is, we have all these people that are essentially shopping online for something offline, and so why not offer those consumers a way to close the transaction? We already do that with OpenTable Top Tables, so you can book your reservation from your iPhone or your Android device.”

    “This is an area that we’re interested in,” he added. The way to think about it is “Yelp as a platform,” he said.

    “We’re aggregating all these consumers,” Stoppelman continued. “They’re doing their shopping today, and the problem is that they’re just not closing their transaction. And so you can imagine that you might be able to plug in services like OpenTable for all sorts of verticals, and that could be a really interesting business for us.”

    Sounds like this is really on the horizon, but Stoppelman refused to get into any specific product announcements, something he noted that he has to be careful about now that Yelp is a public company.

    He did say that Yelp has some upcoming products in the pipeline, but did not make it clear whether any of them are related to e-commerce. He did say that mobile is still a focus, and that international expansion is “top of mind.”

    If and when Yelp does decide to get more into e-commerce, it will be interesting to see how businesses react, particularly in light of all the criticism businesses have directed at the company regarding reviews.

  • Yelp: Consumers, On Average, Can Rely On Our Content

    At the LeWeb conference in London this week, Yelp CEO Jeremy Stoppelman took to the stage to discuss his business with host Loic Le Meur. Inevitably, the topic of fake reviews and the Review Filter came up. This has been a bit of a controversial feature for businesses with some accusing Yelp of hiding positive reviews with the filter as a move to get the businesses to advertise. Though Yelp addressed such accusations in a recent blog post, Stoppelman didn’t get into that aspect of it here, and surprisingly nobody asked about it in the Q&A.

    Are Yelp reviews a reliable source of information for consumers in your opinion? Tell us what you think.

    “Fake reviews [are] a constant battle,” said Stoppelman. “It’s something that we’ve faced from literally day one. Within a couple weeks of launching the site, we saw our first fake reviews. My co-founder and I knew immediately that we were going to have to solve this. So we set about finding an algorithmic solution, much like Google, and we call it the Review Filter. What it does is it looks at patterns of behavior on the site, and tries to decide as accurately as possible which reviews really can be relied on by consumers in the community and which we’re unsure about, we should set aside. And so on every business page, at the bottom, there’s a little link that says how many reviews have been filtered, and you can go follow that link, and see what we’ve taken off of that page. I think that’s been one of our, frankly, keys to success is that consumers, on average, can rely on the content they see on Yelp.”

    Stoppelman continued, “We’re going to do our best to identify those strange patterns, and pull that content down, and so it does…it’s a new thing, and it’s caught businesses off guard because you know, frankly, the world prior to that, you know, sites like CitySearch and so forth, really didn’t spend a lot of time trying to protect against that, and so businesses got into the habit of just ‘Hey, if I want to be five stars, I just need to get enough friends to review me or I need to write enough fake reviews,’ and we’ve made sure that Yelp…you can’t do that. It’s not gonna work.”

    Stoppelman told Le Meur that Yelp is ‘disrupting the Yellow Pages”.

    “The Yellow Pages world was one of completely pay-to-play,” he said. “So if you had a local business, and you really wanted to be seen, you had to just pay an enormous amount of money, and that was it. Yelp turns that on its head, and actually puts consumers first. And so in our world now, if you’re a great local business, you actually get some exposure for free because your reviews speak for themselves. That’s going to get you some additional eyeballs, so that’s going to turn into some customers. If you want to go beyond that, and actually get some additional traffic, that’s where the advertising model comes in.”

    It’s that advertising model that has led some businesses to go so far as to accuse Yelp of extortion, an accusation that the company takes a great deal of offense to.

    Businesses have been throwing around such allegations for quite some time, but last month, the discussion came into a greater focus – so much that Yelp felt it needed to take to its corporate blog to defend itself. The post, titled, “No, Yelp Doesn’t ‘Extort’ Small Businesses. See For Yourself,” pointed specifically to a story run by The Washington Post full of businesses alleging wrongdoing on Yelp’s part.

    The basic story, according to the report, is that a business gets a bunch of new customers because of reviews on Yelp, then Yelp reaches out to the business to advertise. If it doesn’t advertise, then the positive reviews start disappearing, and only negative or indifferent reviews stay, while the positive ones get buried in the filtered section, which is accessed when a user clicks and enteres a CAPTCHA.

    Yelp maintains that advertiser data is not taken into account with the filtered section, but one business in the Washington Post’s story went so far as to say that a Yelp salesperson said they would unfilter filtered reviews if they advertised. The business owner claimed they did some “small scale” advertising, and “magically,” five or six of the filtered reviews became unfiltered.

    But nobody has been able to prove any of this, and Yelp says this is all simply false.

    But the complaints don’t stop with a few “sensational” (as Yelp calls them) reports. On our own coverage of the story, we’ve seen numerous readers express anger with Yelp.

    Either way, users continue to flock to Yelp, and Yelp maintains that it’s generally reliable. Earlier this year, Yelp topped 100 million unique monthly visitors for the first time ,and in May, it revealed that its average uniques grew 43% year-over-year to 102 million, while revenue was up 68% year-over-year.

    As a business, do you feel Yelp is presenting consumers with a reliable representation of your business? As a consumer, do think it has been reliable? Let us know in the comments.

  • Larry Page Opens Up On Voice Condition, Funds Voice Health Research

    Last year, there began to be concerns about Google co-founder and CEO Larry Page’s health, after he did not appear at a company shareholders’ meeting, and then would not appear at Google I/O the following week or on an upcoming earnings call.

    Google had indicated that Page had lost his voice, and eventually, news came out that Page had sent an email to Google staff letting them know there was “nothing seriously wrong” with him, and that he would “continue to run the company.”

    Page has made a number of public speaking appearances since then, but his voice has never really recovered. It’s something others have commented on, but Page hasn’t really addressed. Until Now.

    Today, Page took to Google+ to explain the situation, which actually extends back fourteen years. It still sounds like there is nothing “seriously wrong” with him, meaning it doesn’t sound like he’s dying or anything, but it does sound like his voice may not recover. In his post, we also learn that he is funding some research related to the condition that he has. Here’s the post in its entirety:

    Larry Page

    Larry Page43 minutes ago

    About 14 years ago, I got a bad cold, and my voice became hoarse.  At the time I didn’t think much about it.  But my voice never fully recovered.  So I went to a doctor and was diagnosed with left vocal cord paralysis.  This is a nerve problem that causes your left vocal cord to not move properly.  Despite extensive examination, the doctors never identified a cause — though there was speculation of virus-based damage from my cold.  It is quite common in cases like these that a definitive cause is not found.

    While this condition never really affected me — other than having a slightly weaker voice than normal which some people think sounded a little funny — it naturally raised questions in my mind about my second vocal cord.  But I was told that sequential paralysis of one vocal cord following another is extremely rare.  

    Fast forward to last summer, when the same pattern repeated itself — a cold followed by a hoarse voice. Once again things didn’t fully improve, so I went in for a check-up and was told that my second vocal cord now had limited movement as well. Again, after a thorough examination, the doctors weren’t able to identify a cause.  

    Thankfully, after some initial recovery I’m fully able to do all I need to at home and at work, though my voice is softer than before. And giving long monologues is more tedious for me and probably the audience.  But overall over the last year there has been some improvement with people telling me they think I sound better.  Vocal cord nerve issues can also affect your breathing, so my ability to exercise at peak aerobic capacity is somewhat reduced.  That said, my friends still think I have way more stamina than them when we go kitesurfing!  And Sergey says I’m probably a better CEO because I choose my words more carefully.  So surprisingly, overall I am feeling very lucky.

    Interestingly, while the nerves for your vocal cords take quite different routes through your body, they both pass your thyroid.  So in searching for a cause for both nerves that was an obvious place to look. I was diagnosed with Hashimoto's thyroiditis in 2003.  This is a fairly common benign inflammatory condition of the thyroid which causes me no problems.  It is unclear if this is a factor in the vocal cord condition, or whether both conditions were triggered by a virus.

    In this journey I have learned a lot more about voice issues.  Though my condition seems to be very rare, there are a significant number of people who develop issues with one vocal nerve.  In seeing different specialists, I met one doctor — Dr. Steven Zeitels from the Harvard Medical School and the Massachusetts General Hospital Voice Center — who is really excited about the potential to improve vocal cord nerve function.  So I’ve arranged to fund a significant research program through the Voice Health Institute, which he will lead.  Thanks a bunch to my amazing wife Lucy, for her companionship through this journey and for helping oversee this project and get it off the ground.  Also, thanks to the many people who have helped with advice and information many of whom I have not had a chance to thank yet.

    Finally, we’ve put together a patient survey to gather information about other people with similar conditions.  As it’s fairly rare, there’s little data available today — and the team hopes that with more information they can make faster progress.  If you have similar symptoms you can fill it out here: voicehealth.org/ip

    VHI – Vocal Cord Paralysis/Paresis Survey
    VHI 374    40 Powered by socialditto

  • Google Glass Will ‘Definitely’ Get Someone Punched In The Face By This CEO

    Meetup CEO Scott Heiferman wants to punch someone in the face wearing Google Glass. It’s not entirely clear whether that means he wants to punch someone wearing Google Glass in the face or if he wants to punch someone in the face while wearing Google Glass.

    Business Insider put out this video of him talking about the device:

    Heiferman says, “Google Glass? Well, I’m definitely going to punch someone in the face wearing a Google Glasses. I’ve never punched anyone in the face in my life. I’m generally a peaceful guy. If you’ve ever seen a three-year-old using an iPad, you’ll know why I smashed an iPad with a sledgehammer. It’s so damn compelling, and that has implications.”

    He continues, “We’re going from ten to fifteen seconds to get my phone, you know, turn it on, open Facebook, and see something interesting…well now, with Google Glass, and the watch, we’ve gone from like ten to fifteen seconds to interestingness down to like three to five seconds to interestingness, and now once it’s on my wrist, and like you know, plastered on my eyeballs, that’s like down to one second to interestingness.”

    “It basically means that you’re gonna be an asshole,” he says. “it’s easier and easier for you to ignore real people around you, and sometimes that’s totally fine, but on this relentless pursuit – the train is barreling down, and saying, distraction is just a fact of life. We have to consider what it means.”

    He concludes, “And I’m not saying like, ‘Let’s sit back and ponder the nature of culture, and the future of society,’ in that way. I’m just saying, you gotta punch someone in the face wearing Google Glasses.”

    Business Insider itself says he wants “to punch anyone wearing Google Glass in the face.” That would certainly be in line with his “assholes” comment. Still, whenever he says it in the interview, the wording sounds more like he wants to punch someone in the face while wearing Google Glass.

    “Compelling…Interestingness…”

    “I’m definitely going to punch someone in the face wearing a Google Glasses…I’m just saying, you gotta punch someone in the face wearing Google Glasses.”

    Either way, he’s definitely going to punch someone in the face, and Google Glass will be involved.

  • This May Or May Not Be Mark Zuckerberg’s Old Angelfire Site (But It’s Funny Either Way)

    This May Or May Not Be Mark Zuckerberg’s Old Angelfire Site (But It’s Funny Either Way)

    The authenticity of this doesn’t appear to have been confirmed by anyone so far, but a link to an old school Angelfire site was posted at Hacker News (via Gizmodo), and it was allegedly created by Facebook CEO Mark Zuckerberg when he was a kid.

    Again, it’s unconfirmed, and could be a fake, but either way, it’s pretty funny.

    The site has links for: Java Drawing Tool, The Web, GPA, The Vader Fader, Pong Game, Magnetic Poetry, Molecule Viewer, The Best…, About Me, Cow-a-Bungee, Monkey Theory and Base Converter. It links to the email address: [email protected].

    The about page says:

    Hi, my name is…Slim Shady. No, really, my name is Slim Shady. Just kidding, my name is Mark (for those of you that don’t know me) and I live in a small town near the massive city of New York. I am currently 15 years old and I just finished freshman year in high school. I have remodeled this website in an attempt that perhaps some search engine will recognize it. I am trying to promote my new AOL Program, The Vader Fader, which you can download elsewhere on this site. It is a decent fader. If you have any comments about this website, the java applets on it, or the Vader Fader which I am trying to promote, please contact me. My E-Mail address is at the bottom of this page.

    Zuckerberg’s hometown (as listed on his real Facebook Timeline) is Dobbs Ferry, New York. Born in 1984, he would have indeed been fifteen when Eminem’s “My Name Is” came out in 1999.

    Here’s his description of the Vader Fader:

    This is a fader that I made when I was a little bored and somewhat inspired on a long weekend in between finals. I am not sure what versions of AOL it works with but it has worked for myself and for all of my friends who have AOL 4.0. I am not sure if it works with AOL 3.0 though. This fader is a small download and it features a great AOL-Style Interface with many options. Its options are mainly limited to fading but the program can manipulate AOL in such a way that it can fade Chat Text, Instant Messages, and E-Mails. I first saw a chat fader and I thought that it was cool. However, it is very rare that one can find a program that fades Instant Messages as well. It is veritably impossible to find a program that fades E-Mails. So take advantage of this fader and tell your friends to download it as well!

    Of his “The Web” app, he says:

    As of now, the web is pretty small. Hopefully, it will grow into a larger web. This is one of the few applets that require your participation to work well. If your name is already on The Web because someone else has chosen to be linked to you, then you may choose two additional people to be linked with. Otherwise, if you see someone who you know and would like to be linked with but your name is not already on The Web, then you can contact me and I will link that person to you and put you on The Web. If you do not know anyone on The Web, contact me anyway and I will put you on it. In order for this applet to work, you must E-Mail me your name and the names of the two people that you would like to be linked with. Thank you!

    Sounds like something a 15-year-old Mark Zuckerberg might create. Hopefully Aaron Sorkin’s already planning the prequel.

    According to this version of Zuckerberg, the saying of the year at the time was “Suck it!”

    You can check out the site here.

    We’ve reached out to Zuck for comment, and will update if we hear back (which we almost certainly won’t).

    Image: Zuckerberg launching “The Wall” in 2004

  • Apple CEO Apologizes To Chinese Consumers

    Apple CEO Apologizes To Chinese Consumers

    Apple CEO Tim Cook apologized to China this week in a letter posted to the company’s Chinese site. The apology is for the company’s lack of communication with regards to its warranty policies for the iPhone 4 and 4S.

    The apology comes after customers in the country complained of not getting the same treatment as those in the U.S. who get full replacements from the company when they get a defective device. Chinese customers were only getting their devices repaired with replacement parts.

    This is the second apology Apple’s CEO has had to issue in recent memory. Cook also apologized for the lackluster Apple Maps product that accompanied iOS 6. This was the subject of numerous complaints from users who were used to Apple’s previous Google Maps-based offering.

    Here’s the full text of the new letter as translated by Google Translate (obviously it’s not perfect):

    To our Chinese consumers:

    In the past two weeks, we have received a lot of feedback about Apple in China repair and warranty policy. We are not only a profound reflection on these views, together with relevant departments to carefully study the “Three Guarantees”, and also look at our maintenance policy communication and combing our management specifications of Apple Authorized Service Provider. We are aware that, due to the lack of external communication in this process and lead to the speculation that Apple arrogance, do not care or do not attach importance to consumer feedback. We express our sincere apologies for any concerns or misunderstandings this gives consumers.

    In order to further improve the level of service, we are implementing the following four major adjustment:

    Improved iPhone 4 and iPhone 4S repair policy
    Provide a concise and clear on the website of the official Apple repair and warranty policy statement
    Increase the intensity of the supervision and training of Apple Authorized Service Provider
    Related issues to ensure that consumers can easily contact Apple Feedback Service
    At the same time, we also realize that operating in China, and communicate much we need to learn the place. Here, we assure you, Apple for the commitment and enthusiasm indistinguishable from other countries. Bring the best user experience for consumers and satisfactory service is our ideals, our commitment, and it has been deeply rooted in Apple’s corporate culture. We will make unremitting efforts to achieve this goal.

    iPhone 4 and iPhone 4S repair policy improvements are as follows:
    So far, iPhone 4 and iPhone 4S repair this in one of three ways: as from the purchase date of 15 days found the problem, we will be entitled to a refund or replacement for consumers recalculated 1 year warranty period iPhone; 15 days after discovery problem, Apple will replace the part depending, such as camera modules or batteries; replacement parts also can not quickly repaired the iPhone, Apple will provide consumers with a part reassembled new parts, retaining only the consumers existing iPhone 4 or iPhone 4S back cover.

    Nearly 90% of customers expressed satisfaction with our repair services, and consumer satisfaction is the most important criterion for Apple to measure its own success.

    But others suggested that part of the re-assembly of repair almost replace the machine, so the direct replacement of a device will be more beneficial to consumers. Therefore, since April 2013, Apple iPhone 4 and iPhone 4S service pack upgrade for all 1-year warranty on new equipment replacement parts and replacement date recalculated.

    Consumer iPhone 4 or iPhone 4S Apple or an Apple Authorized Service Provider has been part of the re-assembly kit maintenance, we will replace them as whole and for maintenance after the iPhone recalculated from the date of repair year warranty. Apple’s warranty system has been updated for the information and, therefore, affected consumers do not need to take any additional action.

    Now, all consumers can see on our site clear and comprehensive maintenance and warranty policy terms and conditions.
    We are pleased to provide consumers with information who wish to learn more about the after-sales service. For example, we have been to provide 2 year warranty for the MacBook Air and Mac computer motherboards and other major components. Likewise, the the iPad main components has been entitled to a 2-year warranty period, and other components for 1 year warranty.

    We realize that our site before this is not clearly stated policy. Hope the following will answer all the questions about Apple provides services.

    Apple is to make greater efforts to ensure that Apple Authorized Service Provider to follow our policies, and make every effort to provide consumers with the highest quality service.
    Week since March 18, 2013, we made a new training materials for all Apple Authorized Service Provider to ensure that each staff provide services for Apple products is not only familiar with our policies, but also to grasp three guarantees “provisions and related policies. The same time, we have taken the initiative through face-to-face meetings and other forms of verification and to ensure that each Apple Authorized Service Provider have opened training courses to update the knowledge of the staff for the maintenance and warranty policies. We will make unremitting efforts and continuous monitoring of the performance of the Apple Authorized Service Provider to ensure that consumers can get the highest quality service.

    Now, the feedback service-related issues is also very convenient.
    As the consumers of the services provided by any Apple Store retail store or an Apple authorized service provider doubt, to Welcome www.apple.com.cn/support/service/feedback/ directly get in touch with us. Our goal is to consumers where to buy Apple products or receive services, users can enjoy world-class experience.

    Heartfelt thank you to give us valuable feedback, we always harbor immense respect to China, the Chinese consumer is always the top priority of our hearts.

    Tim Cook
    Apple CEO

    [Hat tip: AppleInsider]

  • Groupon Stock Rises On Andrew Mason Departure

    As you may know, Groupon fired its CEO on Thursday, a day after another disappointing earnings release, which sent stock tumbling. Since the news broke, the stock has taken a turn for the better.

    In after hours trading on Thursday, the shares rose as high as 12% from the $4.53 closing price. Things have calmed down a bit in pre-market trading on Friday, with shares up to $4.65, up 2.65%.

    Meanwhile, seemingly everyone on the Internet is throwing around their opinion of Mason and speculating on his and Groupon’s next move. Mason has been relatively quiet since just after the news broke, when he shared a letter he sent to Groupon employees, which included some of his characteristic sense of humor, and a comparison of Groupon to a game of Battletoads:

    For those who are concerned about me, please don’t be – I love Groupon, and I’m terribly proud of what we’ve created. I’m OK with having failed at this part of the journey. If Groupon was Battletoads, it would be like I made it all the way to the Terra Tubes without dying on my first ever play through. I am so lucky to have had the opportunity to take the company this far with all of you. I’ll now take some time to decompress (FYI I’m looking for a good fat camp to lose my Groupon 40, if anyone has a suggestion), and then maybe I’ll figure out how to channel this experience into something productive.

    He followed that up with this:

    He also retweeted this:

    That was 15 hours ago, and he’s been quiet (at least on Twitter) since.

    According to CNN, Mason is getting a severance package of $378.36 due to his $756.72 per year salary (as some tech CEOs famously take low salaries because of their fortunes in stock). The report says Mason’s Groupon’s shares are worth $213 million at Thursday’s closing price.

  • John Battelle Going Back To CEO Role At Federated Media

    Federated Media Publishing announced today that Deanna Brown is stepping down as CEO. Founder John Battelle ,who has been in an Executive Chairman role since handing over the CEO reins to Brown in early 2011, is reprising his role as chief executive.

    Battelle wrote about the decision on his blog. Following is just a snippet:

    So when Deanna told me earlier this year that she wanted – in a thoughtful and appropriate manner – to move on and do something smaller and more directly related to content creation, I immediately understood. As I said above – it’s alright to step away when the time feels right. We spent a month or more thinking about who might be best to replace her. FMP is a unique company – straddling the two fastest-growing sectors of the digital marketing world: Native content marketing, and programmatic platforms. There aren’t many executives who are fluent in both, and who also might be a cultural fit for a company as storied as this one.

    And then it hit me – quite literally in mid-sentence while on a Board call. Why the hell don’t I simply step back in? I love this company, I am passionate about the Independent Web, and to be honest, I see a huge opportunity in front of us. What am I, nuts? Why didn’t I think of it the moment Deanna told me of her decision?

    Under Brown, Federated Media grew its network to outrank Yahoo, AOL and Microsoft in audience reach, the company says, citing comScore data.

    Battelle founded Federated Media in 2005.