Tag: Groupon

Groupon Enhances Deal Builder Tool

Earlier this year, Groupon launched Deal Builder, a self-serve platform for merchants to build their own deals. The company announced on Tuesday that it has added some new enhancements, and that the tool has passed the 25,000 deals milestone.

“Deal Builder has been very popular with merchants and has been used to build more than 25,000 deals across all 50 states and Canada,” a spokesperson for the company tells WebProNews. “In addition, more than 95 percent of the merchants who built deals are new to Groupon.”

“We’ve also made some new enhancements to Deal Builder such as expanding the platform to restaurants and giving merchants more control over the appearance and structure of their Groupon deal,” they said. “Businesses can now construct a promotion that best meets the needs of their business…”

Businesses can now choose a deal image from over 5,000 category-specific stock photos, and write a summary to tell potential customers the key things they need to know about the business.

It also includes the ability to conduct an interview.

“Fill out a brief question and answer interview that gets added to the live Groupon deal page, highlighting the unique aspects of the business and adding a personal touch to the promotion,” the spokesperson explains.

The company’s local commerce marketplace had over 240,000 active deals globally and over 105,000 in North America at the end of Q2.

Image via BusinessWire

September 23, 2014
Groupon Launches New Appointment Option

Groupon announced that it is giving local businesses a new time-based deals option that enables them to accept reservations or take appointments so they have more control over when customers actually show up.

The complaint about a lack of control is almost as old as Groupon itself. If too many people take advantage of a good deal at the same time, it can make for a chaotic period for a business ill prepared to handle the influx.

A Groupon spokesperson tells WebProNews, “Many business tell us that they’re interested in running a deal, but they don’t need us to bring them customers at certain times. This is why we’re launching a new time-based deals option for all local businesses that accept reservations or take appointments––enabling them to control exactly when customers come into their business.

Groupon’s Time-Based Deals for All Local Businesses from Groupon on Vimeo.

“In addition to providing our merchants with predictability and certainty by bringing them customers exactly when they want them, we’re streamlining the experience for our customers by letting them know when they can use a deal before they buy it,” the spokesperson adds.

“Groupon is making it easier for people to buy and book what they want, when they want it and also providing local businesses with an important yield management tool that drives additional revenue,” said Julie Szudarek, senior vice president, Local Deals for Groupon. “Our new booking technology provides merchants even greater control over their deals to match the needs of their business and offers a tremendous customer experience. And as more and more businesses list their reservation and appointment inventory with us, it gives our customers another reason to always check Groupon first.”

Customers can make a reservation or appointment from the Groupon mobile app or Groupon.com when they purchase the deal or afterwards. With the appointment or reservation booked ahead of time, they won’t have to present a voucher when they show up to the business.

The feature is starting in the restaurant category, but will be expanded to others, including spas, classes, and activities, soon.

Image via BusinessWire

September 3, 2014

Groupon Earnings Released, Revenue Up 23%

Groupon just released its earnings report for the second quarter with gross billings of $1.82 billion and revenue of $751.6 million. The company also reported adjusted EBITDA of $59.1 million, GAAP loss per share of $0.03, and non-GAAP earnings per share of $0.01.

Revenue was up 23% year-over-year. In North America, it was up 12%, and in the rest of the world it was up 40%. Gross profit was $389.9 million compared to $384.7 million in the same quarter last year.

CEO Eric Lefkofsky said, “We had another record quarter in terms of demand, with worldwide billings increasing 29% and reaching their highest level ever. Our marketplace continues to gain traction and add to our growth; we reached another all-time high in mobile, and with the launch of Gnome, we believe we’re making great strides in connecting local commerce.”

On Monday, the company named Parker Barrille Senior Vice President of Product.

Here’s the release in its entirety:

CHICAGO–(BUSINESS WIRE)– Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter ended June 30, 2014.

“We had another record quarter in terms of demand, with worldwide billings increasing 29% and reaching their highest level ever,” said Eric Lefkofsky, CEO of Groupon. “Our marketplace continues to gain traction and add to our growth; we reached another all-time high in mobile, and with the launch of Gnome, we believe we’re making great strides in connecting local commerce.”

Second Quarter 2014 Summary

Gross billings, which reflect the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds, increased 29% globally to $1.82 billion in the second quarter 2014, compared with $1.41 billion in the second quarter 2013. North Americabillings increased 12%, EMEA was approximately flat and Rest of World increased 145%, driven by the first-quarter acquisition of Ticket Monster.

Revenue increased 23%, to $751.6 million in the second quarter 2014, compared with $608.7 million in the second quarter 2013. North Americarevenue increased 12%, EMEA increased 42% and Rest of World increased 40%.

Gross profit was $389.9 million in the second quarter 2014, compared with $384.7 million in the second quarter 2013.

Adjusted EBITDA, a non-GAAP financial measure, was $59.1 million in the second quarter 2014, compared with $80.5 million in the second quarter 2013, reflecting SG&A expense related to the Ticket Monster and ideeli acquisitions, as well as an increase in overall marketing expense.

Second quarter 2014 net loss attributable to common stockholders was $22.9 million, or $0.03 per share. Earnings per share excluding stock compensation, amortization of acquired intangible assets, and acquisition-related costs of $43.8 million (or $28.5 million net of tax), a non-GAAP financial measure, was $0.01 per share.

Operating cash flow for the trailing twelve months ended June 30, 2014 was $122.9 million. Free cash flow, a non-GAAP financial measure, was negative $53.8 million in the second quarter 2014, bringing free cash flow for the trailing twelve months ended June 30, 2014 to $40.5 million.

At the end of the quarter, Groupon had $868.1 million 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.

Highlights

Units: Global units, defined as vouchers and products sold before cancellations and refunds, increased 79% year-over-year to 83 million in the second quarter 2014. North America units increased 8%, EMEA units increased 10% and Rest of World units increased 342%.

Active deals: At the end of the second quarter 2014, on average, active deals were over 240,000 globally, compared with more than 200,000 at the end of the first quarter 2014. North American active deals increased to over 105,000.

Active customers: Active customers, or customers that have purchased a voucher or product within the last twelve months, grew 25% year-over-year, to 53.2 million as of June 30, 2014, comprising 22.6 million in North America, 14.5 million in EMEA, and 16.1 million in Rest of World.

Customer spend: Second quarter 2014 trailing twelve month billings per average active customer was $137, compared with $132 in the first quarter 2014.

Mobile: Mobile mix, as measured by transactions completed on mobile devices, remains over half of the business, and reached another all-time high in June 2014. Nearly 92 million people have now downloaded Groupon mobile apps worldwide.

Marketplace: The rollout of Groupon’s marketplace (“Pull”) continued to gain traction. In June 2014, approximately 10% of total traffic in North America searched, with customers that searched spending significantly more than those that did not.

Rest of World: Rest of World billings grew 145% in the second quarter 2014. As a result of the growth and overall progress, Kal Raman is transitioning from COO to assume a new role as CEO of the Asia Pacific region, allowing him to focus on unlocking value for the Company’s high-growth Asian markets.

Share Repurchase Program

During the second quarter 2014, Groupon repurchased 17,228,792 shares of its Class A common stock at an average price of $6.15 per share, for an aggregate purchase price of $106.0 million. Under the existing authorization, Groupon has repurchased a total of 24,737,292 shares at an average price of$7.36 per share, for an aggregate purchase price of $182.0 million. Groupon is authorized to repurchase up to an additional $118.0 million of Class A common stock under the August 2013 share repurchase authorization. The program, which is intended to partially offset dilution from employee stock grants, terminates in August 2015.

Line of Credit

The Company has entered into a 3-year, $250 million revolving credit facility, which will provide additional balance sheet flexibility going forward. The Company has no immediate plans to draw on the facility.

Outlook

For the third quarter 2014, the Company expects revenue of between $720 million and $770 million, Adjusted EBITDA of between $50 million and $70 million, and non-GAAP earnings per share excluding stock compensation, amortization of acquired intangible assets, and acquisition-related expenses, net of tax, of between $0.00 and $0.02.

Groupon has revised its full year outlook, and now expects Adjusted EBITDA to exceed $270 million. Although the Company has the opportunity to reduce marketing spend over the remainder of the year to achieve a higher target, given recent returns on those investments, it believes it is important to maintain flexibility for investment in long-term growth.

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.

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.

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, Adjusted EBITDA, free cash flow and earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets, and acquisition-related expense (benefit), net. 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 is comprised of the change in the fair value of contingent consideration arrangements and, beginning in the fourth quarter of 2013, also includes external transaction costs related to business combinations, primarily consisting of legal and advisory fees. External transaction costs were not material for periods prior to the fourth quarter of 2013 presented in this release and the accompanying tables. 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 expenses because they are 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 prior-year period.

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. Our definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Adjusted EBITDA is a key measure used by our management and Board of Directors to evaluate operating performance, generate future plans and make strategic decisions regarding the allocation of capital. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

Earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets, 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, amortization of acquired intangible assets, and acquisition-related expense (benefit), net, and the income tax effect of those items. We believe that this non-GAAP financial measure provides useful supplemental information for evaluating our operating performance.

Beginning in the first quarter 2014, we have changed our non-GAAP earnings (loss) per share measure to exclude amortization of acquired intangible assets, net of tax, in addition to stock compensation and acquisition-related expenses, which we have excluded historically. Given the significant acquisition activity in January 2014 and potential acquisition activity in the future, we believe that excluding non-cash amortization of acquired intangible assets from our non-GAAP earnings per share measure enables more meaningful comparisons with our historical results.

Free cash flow is a non-GAAP financial measure that comprises net cash provided by (used in) 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, the full year 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; including our marketing strategy and spend; responding to changes in the market; effectively dealing with challenges arising from our international operations; retaining existing customers and adding new customers; retaining and adding new and high quality merchants; cyber security breaches; incurring expenses as we expand our business; competing against smaller competitors and competitors with more financial resources than us; maintaining favorable terms with our business partners; maintaining a strong brand; managing inventory and order fulfillment risks; 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; protecting our intellectual property; handling acquisitions, joint ventures and strategic investments effectively; seasonality; payment-related risks; customer and merchant 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 at http://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 5, 2014.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.

About Groupon

Groupon (NASDAQ: GRPN) is a global leader of local commerce and the place you start when you want to buy just about anything, anytime, anywhere. By leveraging the company’s global relationships and scale, Groupon offers consumers a vast marketplace of unbeatable deals all over the world. Shoppers discover the best a city has to offer on the web or on mobile with Groupon Local, enjoy vacations with Groupon Getaways, and find a curated selection of electronics, fashion, home furnishings and more with Groupon Goods.

Groupon is redefining how traditional small businesses attract, retain and interact with customers by providing merchants with a suite of products and services, including customizable deal campaigns, credit card payment processing capabilities, and point-of-sale solutions that help businesses grow and operate more effectively. To search for great deals or subscribe to Groupon emails, visit www.Groupon.com. To download Groupon’s five-star mobile apps, visit www.groupon.com/mobile. 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)

Three Months Ended Six Months Ended

June 30, June 30,

Y/Y % Y/Y %

Growth Growth

Y/Y % excluding Y/Y % excluding

2014 2013 Growth FX Effect ⁽²⁾ FX⁽²⁾ 2014 2013 Growth FX Effect ⁽²⁾ FX⁽²⁾

Gross Billings ⁽¹⁾:

North America $ 798,845 $ 712,205 12.2 % $ (650 ) 12.3 % $ 1,580,614 $ 1,393,524 13.4 % $ (1,501 ) 13.5 %

EMEA 483,255 482,250 0.2 % 21,215 (4.2 ) % 996,843 974,568 2.3 % 36,442 (1.5 ) %

Rest of World 536,946 219,351 144.8 % 9,424 140.5 % 1,058,800 453,483 133.5 % (15,222 ) 136.8 %

Consolidated billings $ 1,819,046 $ 1,413,806 28.7 % $ 29,989 26.5 % $ 3,636,257 $ 2,821,575 28.9 % $ 19,719 28.2 %

Revenue:

North America $ 423,931 $ 377,182 12.4 % $ (214 ) 12.5 % $ 854,993 $ 716,736 19.3 % $ (503 ) 19.4 %

EMEA 227,690 159,962 42.3 % 10,221 36.0 % 458,583 343,760 33.4 % 17,090 28.4 %

Rest of World 99,955 71,603 39.6 % (2,994 ) 43.8 % 195,637 149,653 30.7 % (12,442 ) 39.0 %

Consolidated revenue $ 751,576 $ 608,747 23.5 % $ 7,013 22.3 % $ 1,509,213 $ 1,210,149 24.7 % $ 4,145 24.4 %

(Loss) income from operations $ (7,854 ) $ 27,412 (128.7 ) % $ 1,209 (133.1 ) % $ (27,807 ) $ 48,590 (157.2 ) % $ 2,711 (162.8 ) %

Net loss attributable to Groupon, Inc. $ (22,875 ) $ (7,574 ) $ (60,670 ) $ (11,566 )

Net loss per share:

Basic $ (0.03 ) $ (0.01 ) $ (0.09 ) $ (0.02 )

Diluted $ (0.03 ) $ (0.01 ) $ (0.09 ) $ (0.02 )

Weighted average number of shares outstanding:

Basic 675,538,392 662,361,436 678,958,541 660,580,927

Diluted 675,538,392 662,361,436 678,958,541 660,580,927

(1) Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds.

(2) Represents the change in financial measures that would have resulted had average exchange rates in the reporting periods been the same as those in effect during the three and six months ended June 30, 2013.

Groupon, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended Six Months Ended

June 30, June 30,

2014 2013 2014 2013

Operating activities

Net loss $ (20,922 ) $ (5,551 ) $ (56,285 ) $ (8,793 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation and amortization of property, equipment and software 23,067 16,255 45,159 31,369

Amortization of acquired intangible assets 11,591 5,213 24,239 10,799

Stock-based compensation 31,655 32,446 55,384 62,353

Deferred income taxes (57 ) (308 ) 516 (566 )

Excess tax benefits on stock-based compensation (4,077 ) (2,936 ) (9,932 ) (3,768 )

Loss on equity method investments 420 14 368 33

Net gain from changes in fair value of contingent consideration – (815 ) (39 ) (747 )

Impairment of cost method investments 191 – 588 –

Change in assets and liabilities, net of acquisitions:

Restricted cash (2,029 ) 744 921 3,267

Accounts receivable (2,872 ) 4,743 (27,265 ) (2,941 )

Prepaid expenses and other current assets (748 ) 3,465 (5,898 ) 15,992

Accounts payable (12,468 ) (3,225 ) (5,153 ) (22,831 )

Accrued merchant and supplier payables (18,296 ) 1,442 (41,945 ) (37,975 )

Accrued expenses and other current liabilities (31,502 ) (20,539 ) (36,881 ) (7,237 )

Other, net 3,300 12,354 12,759 13,107

Net cash (used in) provided by operating activities (22,747 ) 43,302 (43,464 ) 52,062

Net cash used in investing activities (34,498 ) (15,862 ) (173,106 ) (46,541 )

Net cash used in financing activities (114,753 ) (7,941 ) (156,245 ) (17,283 )

Effect of exchange rate changes on cash and cash equivalents 1,262 (3,138 ) 431 (15,516 )

Net (decrease) increase in cash and cash equivalents (170,736 ) 16,361 (372,384 ) (27,278 )

Cash and cash equivalents, beginning of period 1,038,824 1,165,650 1,240,472 1,209,289

Cash and cash equivalents, end of period $ 868,088 $ 1,182,011 $ 868,088 $ 1,182,011

Groupon, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

Three Months Ended June 30, Six Months Ended June 30,

2014 2013 2014 2013

Revenue:

Third party and other $ 405,941 $ 418,871 $ 832,370 $ 857,979

Direct 345,635 189,876 676,843 352,170

Total revenue 751,576 608,747 1,509,213 1,210,149

Cost of revenue:

Third party and other 58,378 55,507 120,729 125,523

Direct 303,336 168,546 612,901 320,923

Total cost of revenue 361,714 224,053 733,630 446,446

Gross profit 389,862 384,694 775,583 763,703

Operating expenses:

Marketing 64,275 55,497 143,199 105,054

Selling, general and administrative 332,844 302,600 657,809 610,806

Acquisition-related expense (benefit), net 597 (815 ) 2,382 (747 )

Total operating expenses 397,716 357,282 803,390 715,113

(Loss) income from operations (7,854 ) 27,412 (27,807 ) 48,590

Other expense, net (1,023 ) (5,579 ) (1,863 ) (10,662 )

(Loss) income before provision for income taxes (8,877 ) 21,833 (29,670 ) 37,928

Provision for income taxes 12,045 27,384 26,615 46,721

Net loss (20,922 ) (5,551 ) (56,285 ) (8,793 )

Net income attributable to noncontrolling interests (1,953 ) (2,023 ) (4,385 ) (2,773 )

Net loss attributable to Groupon, Inc. $ (22,875 ) $ (7,574 ) $ (60,670 ) $ (11,566 )

Net loss per share

Basic $ (0.03 ) $ (0.01 ) $ (0.09 ) $ (0.02 )

Diluted $ (0.03 ) $ (0.01 ) $ (0.09 ) $ (0.02 )

Weighted average number of shares outstanding 675,538,392 662,361,436 678,958,541 660,580,927

Basic 675,538,392 662,361,436 678,958,541 660,580,927

Diluted

Groupon, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

June 30, 2014 December 31, 2013

(unaudited)

Assets

Current assets:

Cash and cash equivalents $ 868,088 $ 1,240,472

Accounts receivable, net 134,127 83,673

Deferred income taxes 30,033 27,938

Prepaid expenses and other current assets 237,092 210,415

Total current assets 1,269,340 1,562,498

Property, equipment and software, net 173,403 134,423

Goodwill 460,972 220,827

Intangible assets, net 136,182 28,443

Investments 23,588 20,652

Deferred income taxes, non-current 45,062 35,941

Other non-current assets 28,892 39,226

Total Assets $ 2,137,439 $ 2,042,010

Liabilities and Equity

Current liabilities:

Accounts payable $ 31,002 $ 27,573

Accrued merchant and supplier payables 803,374 752,943

Accrued expenses 234,355 226,986

Deferred income taxes 48,915 47,558

Other current liabilities 127,434 132,718

Total current liabilities 1,245,080 1,187,778

Deferred income taxes, non-current 12,871 10,853

Other non-current liabilities 148,552 131,697

Total Liabilities 1,406,503 1,330,328

Commitments and contingencies

Stockholders’ Equity

Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 690,335,467 shares issued and 665,598,175 shares outstanding at June 30, 2014 and 670,149,976 shares issued and 665,717,176 shares outstanding at December 31, 2013 69 67

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, 2014 and December 31, 2013 – –

Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, no shares issued and outstanding at June 30, 2014 and December 31, 2013 – –

Additional paid-in capital 1,791,896 1,584,211

Treasury stock, at cost, 24,737,292 shares at June 30, 2014 and 4,432,800 shares at December 31, 2013 (182,046 ) (46,587 )

Accumulated deficit (909,540 ) (848,870 )

Accumulated other comprehensive income 32,712 24,830

Total Groupon, Inc. Stockholders’ Equity 733,091 713,651

Noncontrolling interests (2,155 ) (1,969 )

Total Equity 730,936 711,682

Total Liabilities and Equity $ 2,137,439 $ 2,042,010

Groupon, Inc.

Segment Information

(in thousands)

(unaudited)

Three Months Ended June 30, Six Months Ended June 30,

2014 2013 2014 2013

North America

Gross billings⁽¹⁾ $ 798,845 $ 712,205 $ 1,580,614 $ 1,393,524

Revenue $ 423,931 $ 377,182 $ 854,993 $ 716,736

Segment cost of revenue and operating expenses⁽²⁾ 409,386 328,674 829,063 626,862

Segment operating income⁽²⁾ $ 14,545 $ 48,508 $ 25,930 $ 89,874

Segment operating income as a percent of segment gross billings 1.8 % 6.8 % 1.6 % 6.4 %

Segment operating income as a percent of segment revenue 3.4 % 12.9 % 3.0 % 12.5 %

EMEA

Gross billings ⁽¹⁾ $ 483,255 $ 482,250 $ 996,843 $ 974,568

Revenue $ 227,690 $ 159,962 $ 458,583 $ 343,760

Segment cost of revenue and operating expenses⁽²⁾ 199,981 135,254 411,951 284,876

Segment operating income⁽²⁾ $ 27,709 $ 24,708 $ 46,632 $ 58,884

Segment operating income as a percent of segment gross billings 5.7 % 5.1 % 4.7 % 6.0 %

Segment operating income as a percent of segment revenue 12.2 % 15.4 % 10.2 % 17.1 %

Rest of World

Gross billings ⁽¹⁾ $ 536,946 $ 219,351 $ 1,058,800 $ 453,483

Revenue $ 99,955 $ 71,603 $ 195,637 $ 149,653

Segment cost of revenue and operating expenses⁽²⁾ 117,811 85,776 238,240 188,215

Segment operating loss⁽²⁾ $ (17,856 ) $ (14,173 ) $ (42,603 ) $ (38,562 )

Segment operating loss as a percent of segment gross billings (3.3 ) % (6.5 ) % (4.0 ) % (8.5 ) %

Segment operating loss as a percent of segment revenue (17.9 ) % (19.8 ) % (21.8 ) % (25.8 ) %

(1) Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds.

(2) Segment cost of revenue and operating expenses and segment operating income (loss) exclude stock-based compensation and acquisition-related expense (benefit), net.

Groupon, Inc.

Non-GAAP Reconciliation Schedules

(in thousands, except share and per share amounts)

(unaudited)

Adjusted EBITDA and earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related (benefit) expense, net of tax, are non-GAAP financial measures. The Company reconciles Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net loss,” for the periods presented and the Company reconciles earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related (benefit) expense, net to the most comparable U.S. GAAP financial measure, “Diluted net earnings (loss) per share,” for the periods presented.

The following is a quarterly reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net loss.”

Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014

Net loss $ (5,551 ) $ (1,292 ) $ (78,861 ) $ (35,363 ) $ (20,922 )

Adjustments:

Stock-based compensation 32,446 26,870 32,239 23,729 31,655

Acquisition-related (benefit) expense, net (815 ) (1,529 ) 2,265 1,785 597

Depreciation and amortization 21,468 23,149 24,132 34,740 34,658

Other expense (income), net 5,579 (832 ) 84,833 840 1,023

Provision for income taxes 27,384 15,936 7,380 14,570 12,045

Total adjustments 86,062 63,594 150,849 75,664 79,978

Adjusted EBITDA $ 80,511 $ 62,302 $ 71,988 $ 40,301 $ 59,056

The following is a reconciliation of diluted net loss per share to diluted earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, net for the three and six months ended June 30, 2014:

Three Months Ended Six Months Ended

June 30, 2014 June 30, 2014

Net loss attributable to Groupon, Inc. $ (22,875 ) $ (60,670 )

Stock-based compensation 31,655 55,384

Amortization of acquired intangible assets 11,591 24,239

Acquisition-related expense, net 597 2,382

Income tax effect of adjustments (15,348 ) (23,726 )

Net earnings (loss) attributable to common stockholders excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, net $ 5,620 $ (2,391 )

Diluted shares 675,538,392 678,958,541

Incremental diluted shares ⁽¹⁾ 8,823,049 –

Adjusted diluted shares 684,361,441 678,958,541

Diluted net loss per share $ (0.03 ) $ (0.09 )

Impact of stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, net 0.04 0.09

Diluted earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, net $ 0.01 $ (0.00 )

(1) Outstanding equity awards are not reflected in the calculation for the six months ended June 30, 2014 because the effect would be antidilutive.

Foreign exchange rate neutral operating results are non-GAAP financial measures. The Company reconciles foreign exchange rate neutral operating results to the most comparable U.S. GAAP financial measures, “Gross billings,” “Revenue” and “(Loss) income from operations,” respectively, for the periods presented. The Company reconciles “foreign exchange rage 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 growth” and “Revenue growth,” respectively, for the periods presented.

The effect on the Company’s gross billings, revenue and (loss) income from operations from changes in exchange rates versus the U.S. Dollar for the three months ended June 30, 2014 was as follows:

Three Months Ended June 30, 2014 Three Months Ended June 30, 2014

At Avg. Exchange At Avg. Exchange

Q2 2013 Rate As Q1 2014 Rate As

Rates ⁽¹⁾ Effect ⁽²⁾ Reported Rates ⁽³⁾ Effect ⁽²⁾ Reported

Gross billings $ 1,789,057 $ 29,989 $ 1,819,046 $ 1,801,262 $ 17,784 $ 1,819,046

Revenue $ 744,563 $ 7,013 $ 751,576 $ 748,425 $ 3,151 $ 751,576

(Loss) income from operations $ (9,063 ) $ 1,209 $ (7,854 ) $ (7,216 ) $ (638 ) $ (7,854 )

The effect on the Company’s gross billings, revenue and (loss) income from operations from changes in exchange rates versus the U.S. Dollar for the six months ended June 30, 2014 was as follows:

Six Months Ended June 30, 2014 Six Months Ended June 30, 2014

At Avg. Exchange At Avg. Exchange

Q2 2013 YTD Rate As Q4’13 – Q1’14 Rate As

Rates ⁽¹⁾ Effect ⁽²⁾ Reported Rates ⁽³⁾ Effect ⁽²⁾ Reported

Gross billings $ 3,616,538 $ 19,719 $ 3,636,257 $ 3,627,234 $ 9,023 $ 3,636,257

Revenue $ 1,505,068 $ 4,145 $ 1,509,213 $ 1,508,271 $ 942 $ 1,509,213

(Loss) income from operations $ (30,518 ) $ 2,711 $ (27,807 ) $ (28,063 ) $ 256 $ (27,807 )

(1) Represents the financial statement balances 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, 2013.

(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 reporting periods been the same as those in effect during the three and six months ended March 31, 2014.

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.

Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014

EMEA Gross billings growth, excluding FX 4 % 9 % 3 % 1 % (4 ) %

FX Effect – % 3 % 3 % 3 % 4 %

EMEA Gross billings growth 4 % 12 % 6 % 4 % – %

Rest of World Gross billings growth, excluding FX (16 ) % (4 ) % (2 ) % 133 % 141 %

FX Effect (5 ) % (9 ) % (9 ) % (10 ) % 4 %

Rest of World Gross billings growth (21 ) % (13 ) % (11 ) % 123 % 145 %

Consolidated Gross billings growth, excluding FX 11 % 11 % 5 % 30 % 27 %

FX Effect (1 ) % (1 ) % – % (1 ) % 2 %

Consolidated Gross billings growth 10 % 10 % 5 % 29 % 29 %

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.

Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014

EMEA Revenue growth, excluding FX (25 ) % (23 ) % 38 % 22 % 36 %

FX Effect 1 % 2 % 5 % 4 % 6 %

EMEA Revenue growth (24 ) % (21 ) % 43 % 26 % 42 %

Rest of World Revenue growth, excluding FX (21 ) % 7 % (6 ) % 35 % 44 %

FX Effect (5 ) % (11 ) % (9 ) % (12 ) % (4 ) %

Rest of World Revenue growth (26 ) % (4 ) % (15 ) % 23 % 40 %

Consolidated Revenue growth, excluding FX 8 % 6 % 20 % 26 % 22 %

FX Effect (1 ) % (1 ) % – % – % 2 %

Consolidated Revenue growth 7 % 5 % 20 % 26 % 24 %

Groupon, Inc.

Supplemental Financial Information and Business Metrics⁽⁹⁾

(financial data in thousands, except per share data; active customers in millions)

(unaudited)

Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014

Segments

North America Segment

Gross Billings ⁽¹⁾

Local ⁽²⁾ Gross Billings $ 453,030 $ 405,913 $ 439,131 $ 456,952 $ 461,366

Goods Gross Billings 196,878 194,565 286,039 242,896 247,618

Travel ⁽²⁾ Gross Billings 62,297 64,521 63,551 81,921 89,861

Total Gross Billings $ 712,205 $ 664,999 $ 788,721 $ 781,769 $ 798,845

Year-over-year growth 30 % 20 % 10 % 15 % 12 %

% Third Party and Other 74 % 72 % 67 % 70 % 70 %

% Direct 26 % 28 % 33 % 30 % 30 %

Gross Billings Trailing Twelve Months (TTM) $ 2,664,845 $ 2,777,475 $ 2,847,244 $ 2,947,694 $ 3,034,334

Revenue ⁽³⁾

Local Revenue $ 177,377 $ 162,346 $ 161,601 $ 177,247 $ 164,500

Goods Revenue 186,028 185,914 268,281 237,435 241,626

Travel Revenue 13,777 12,578 13,902 16,380 17,805

Total Revenue $ 377,182 $ 360,838 $ 443,784 $ 431,062 $ 423,931

Year-over-year growth 45 % 24 % 18 % 27 % 12 %

% Third Party and Other 52 % 49 % 41 % 45 % 43 %

% Direct 48 % 51 % 59 % 55 % 57 %

Revenue TTM $ 1,383,690 $ 1,452,925 $ 1,521,358 $ 1,612,866 $ 1,659,615

Gross Profit ⁽⁴⁾

Local Gross Profit $ 155,728 $ 138,890 $ 140,944 $ 152,622 $ 142,674

% of North America Total Local Gross Billings 34.4 % 34.2 % 32.1 % 33.4 % 30.9 %

Goods Gross Profit 26,977 21,609 21,030 12,604 22,961

% of North America Total Goods Gross Billings 13.7 % 11.1 % 7.4 % 5.2 % 9.3 %

Travel Gross Profit 11,881 11,070 12,352 14,442 14,365

% of North America Total Travel Gross Billings 19.1 % 17.2 % 19.4 % 17.6 % 16.0 %

Total Gross Profit $ 194,586 $ 171,569 $ 174,326 $ 179,668 $ 180,000

Year-over-year growth 12 % 7 % 15 % 4 % (7 ) %

% Third Party and Other 88 % 90 % 91 % 94 % 88 %

% Direct 12 % 10 % 9 % 6 % 12 %

% of North America Total Gross Billings 27.3 % 25.8 % 22.1 % 23.0 % 22.5 %

EMEA Segment

Gross Billings

Local Gross Billings $ 241,856 $ 207,803 $ 277,472 $ 262,141 $ 227,266

Goods Gross Billings 167,594 169,849 219,880 183,013 190,957

Travel Gross Billings 72,800 65,666 68,361 68,434 65,032

Total Gross Billings $ 482,250 $ 443,318 $ 565,713 $ 513,588 $ 483,255

Year-over-year growth 4 % 12 % 6 % 4 % – %

Year-over-year growth, excluding FX⁽⁵⁾ 4 % 9 % 3 % 1 % (4 ) %

% Third Party and Other 100 % 98 % 83 % 83 % 80 %

% Direct – % 2 % 17 % 17 % 20 %

Gross Billings TTM $ 1,903,136 $ 1,950,367 $ 1,983,599 $ 2,004,869 $ 2,005,874

Revenue

Local Revenue $ 110,229 $ 92,141 $ 116,061 $ 109,120 $ 96,485

Goods Revenue 35,119 41,279 119,274 106,889 115,413

Travel Revenue 14,614 14,530 15,870 14,884 15,792

Total Revenue $ 159,962 $ 147,950 $ 251,205 $ 230,893 $ 227,690

Year-over-year growth (24 ) % (21 ) % 43 % 26 % 42 %

Year-over-year growth, excluding FX (25 ) % (23 ) % 38 % 22 % 36 %

% Third Party and Other 99 % 94 % 61 % 61 % 57 %

% Direct 1 % 6 % 39 % 39 % 43 %

Revenue TTM $ 707,325 $ 667,988 $ 742,915 $ 790,010 $ 857,738

Gross Profit

Local Gross Profit $ 99,318 $ 81,808 $ 105,210 $ 100,066 $ 90,373

% of EMEA Total Local Gross Billings 41.1 % 39.4 % 37.9 % 38.2 % 39.8 %

Goods Gross Profit 27,108 28,943 33,526 27,302 35,432

% of EMEA Total Goods Gross Billings 16.2 % 17.0 % 15.2 % 14.9 % 18.6 %

Travel Gross Profit 13,105 12,930 14,457 13,669 14,894

% of EMEA Total Travel Gross Billings 18.0 % 19.7 % 21.1 % 20.0 % 22.9 %

Total Gross Profit $ 139,531 $ 123,681 $ 153,193 $ 141,037 $ 140,699

Year-over-year growth (24 ) % (24 ) % 7 % (8 ) % 1 %

% Third Party and Other 101 % 99 % 91 % 92 % 85 %

% Direct (1 ) % 1 % 9 % 8 % 15 %

% of EMEA Total Gross Billings 28.9 % 27.9 % 27.1 % 27.5 % 29.1 %

Rest of World Segment

Gross Billings

Local Gross Billings $ 115,156 $ 118,718 $ 116,824 $ 167,833 $ 170,237

Goods Gross Billings 72,399 78,973 89,451 283,091 281,300

Travel Gross Billings 31,796 36,640 32,398 70,930 85,409

Total Gross Billings $ 219,351 $ 234,331 $ 238,673 $ 521,854 $ 536,946

Year-over-year growth (21 ) % (13 ) % (11 ) % 123 % 145 %

Year-over-year growth, excluding FX (16 ) % (4 ) % (2 ) % 133 % 141 %

% Third Party and Other 97 % 97 % 97 % 99 % 99 %

% Direct 3 % 3 % 3 % 1 % 1 %

Gross Billings TTM $ 992,302 $ 956,833 $ 926,487 $ 1,214,209 $ 1,531,804

Revenue

Local Revenue $ 43,849 $ 51,900 $ 40,847 $ 43,814 $ 42,711

Goods Revenue 20,610 25,061 26,158 41,855 45,537

Travel Revenue 7,144 9,310 6,453 10,013 11,707

Total Revenue $ 71,603 $ 86,271 $ 73,458 $ 95,682 $ 99,955

Year-over-year growth (26 ) % (4 ) % (15 ) % 23 % 40 %

Year-over-year growth, excluding FX (21 ) % 7 % (6 ) % 35 % 44 %

% Third Party and Other 92 % 91 % 90 % 94 % 93 %

% Direct 8 % 9 % 10 % 6 % 7 %

Revenue TTM $ 325,988 $ 322,597 $ 309,382 $ 327,014 $ 355,366

Gross Profit

Local Gross Profit $ 35,885 $ 44,435 $ 33,596 $ 34,748 $ 35,618

% of Rest of World Total Local Gross Billings 31.2 % 37.4 % 28.8 % 20.7 % 20.9 %

Goods Gross Profit 8,966 12,016 11,781 22,135 24,623

% of Rest of World Total Goods Gross Billings 12.4 % 15.2 % 13.2 % 7.8 % 8.8 %

Travel Gross Profit 5,726 7,921 5,312 8,133 8,922

% of Rest of World Total Travel Gross Billings 18.0 % 21.6 % 16.4 % 11.5 % 10.4 %

Total Gross Profit $ 50,577 $ 64,372 $ 50,689 $ 65,016 $ 69,163

Year-over-year growth (33 ) % 1 % (16 ) % 23 % 37 %

% Third Party and Other 101 % 99 % 101 % 102 % 100 %

% Direct (1 ) % 1 % (1 ) % (2 ) % – %

% of Rest of World Total Gross Billings 23.1 % 27.5 % 21.2 % 12.5 % 12.9 %

Consolidated Results of Operations

Gross Billings

Local Gross Billings $ 810,042 $ 732,434 $ 833,427 $ 886,926 $ 858,869

Goods Gross Billings 436,871 443,387 595,370 709,000 719,875

Travel Gross Billings 166,893 166,827 164,310 221,285 240,302

Total Gross Billings $ 1,413,806 $ 1,342,648 $ 1,593,107 $ 1,817,211 $ 1,819,046

Year-over-year growth 10 % 10 % 5 % 29 % 29 %

Year-over-year growth, excluding FX 11 % 11 % 5 % 30 % 27 %

% Third Party and Other 87 % 85 % 77 % 82 % 81 %

% Direct 13 % 15 % 23 % 18 % 19 %

Gross Billings (TTM) $ 5,560,283 $ 5,684,675 $ 5,757,330 $ 6,166,772 $ 6,572,012

Year-over-year growth 11 % 12 % 7 % 14 % 18 %

Revenue

Local Revenue $ 331,455 $ 306,387 $ 318,509 $ 330,181 $ 303,696

Goods Revenue 241,757 252,254 413,713 386,179 402,576

Travel Revenue 35,535 36,418 36,225 41,277 45,304

Total Revenue $ 608,747 $ 595,059 $ 768,447 $ 757,637 $ 751,576

Year-over-year growth 7 % 5 % 20 % 26 % 23 %

Year-over-year growth, excluding FX 8 % 6 % 20 % 26 % 22 %

% Third Party and Other 69 % 66 % 52 % 56 % 54 %

% Direct 31 % 34 % 48 % 44 % 46 %

Total Consolidated Revenue TTM $ 2,417,003 $ 2,443,510 $ 2,573,655 $ 2,729,890 $ 2,872,719

Year-over-year growth 18 % 12 % 10 % 15 % 19 %

Gross Profit

Local Gross Profit $ 290,931 $ 265,133 $ 279,750 $ 287,436 $ 268,665

% of Total Consolidated Local Gross Billings 35.9 % 36.2 % 33.6 % 32.4 % 31.3 %

Goods Gross Profit 63,051 62,568 66,337 62,041 83,016

% of Total Consolidated Goods Gross Billings 14.4 % 14.1 % 11.1 % 8.8 % 11.5 %

Travel Gross Profit 30,712 31,921 32,121 36,244 38,181

% of Total Consolidated Travel Gross Billings 18.4 % 19.1 % 19.5 % 16.4 % 15.9 %

Total Gross Profit $ 384,694 $ 359,622 $ 378,208 $ 385,721 $ 389,862

Year-over-year growth (11 ) % (7 ) % 6 % 2 % 1 %

% Third Party and Other 94 % 95 % 92 % 94 % 89 %

% Direct 6 % 5 % 8 % 6 % 11 %

% of Total Consolidated Gross Billings 27.2 % 26.8 % 23.7 % 21.2 % 21.4 %

Adjusted EBITDA $ 80,511 $ 62,302 $ 71,988 $ 40,301 $ 59,056

% of Total Consolidated Gross Billings 5.7 % 4.6 % 4.5 % 2.2 % 3.2 %

% of Total Consolidated Revenue 13.2 % 10.5 % 9.4 % 5.3 % 7.9 %

Free cash flow is a non-GAAP financial measure. The following is a reconciliation of free cash flow to the most comparable U.S. GAAP financial measure, “Net cash provided by (used in) operating activities.”

Net cash provided by (used in) operating activities $ 43,302 $ (11,905 ) $ 178,275 $ (20,717 ) $ (22,747 )

Purchases of property and equipment and capitalized software (14,042 ) (15,064 ) (19,931 ) (16,355 ) (31,053 )

Free cash flow $ 29,260 $ (26,969 ) $ 158,344 $ (37,072 ) $ (53,800 )

Net cash provided by operating activities (TTM) $ 159,867 $ 105,874 $ 218,432 $ 188,955 $ 122,906

Purchases of property and equipment and capitalized software (TTM) (84,554 ) (83,608 ) (63,505 ) (65,392 ) (82,403 )

Free cash flow (TTM) $ 75,313 $ 22,266 $ 154,927 $ 123,563 $ 40,503

Net cash used in investing activities $ (15,862 ) $ (26,444 ) $ (23,330 ) $ (138,608 ) $ (34,498 )

Net cash used in financing activities $ (7,941 ) $ (8,970 ) $ (55,444 ) $ (41,492 ) $ (114,753 )

Net cash used in investing activities (TTM) $ (134,923 ) $ (125,738 ) $ (96,315 ) $ (204,244 ) $ (222,880 )

Net cash used in financing activities (TTM) $ (21,071 ) $ (32,748 ) $ (81,697 ) $ (113,847 ) $ (220,659 )

Other Metrics

Active Customers⁽⁶⁾

North America 19.1 19.9 20.8 21.8 22.6

EMEA 13.9 14.0 14.2 14.5 14.5

Rest of World 9.6 9.6 9.9 15.5 16.1

Total Active Customers 42.6 43.5 44.9 51.8 53.2

TTM Gross Billings / Average Active Customer ⁽⁷⁾

North America $ 156 $ 155 $ 150 $ 147 $ 145

EMEA $ 135 $ 137 $ 139 $ 141 $ 141

Rest of World $ 108 $ 102 $ 95 $ 97 $ 119

Consolidated $ 138 $ 137 $ 134 $ 132 $ 137

Headcount

Sales ⁽⁸⁾ 4,679 4,801 4,834 5,231 5,057

% North America 26 % 28 % 29 % 27 % 26 %

% EMEA 39 % 37 % 37 % 37 % 39 %

% Rest of World 35 % 35 % 34 % 36 % 35 %

Other 6,306 6,453 6,449 7,099 6,888

Total Headcount 10,985 11,254 11,283 12,330 11,945

(1) Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds.

(2) Local represents deals from local merchants, deals with national merchants, and deals through local events. Other revenue transactions, which include advertising, payment processing, point of sale, reservation and commission revenue, were previously aggregated with our Travel category. During the three months ended March 31, 2014, the Company updated its presentation of category information to include gross billings, revenue and gross profit from those other revenue sources within the Local category, and prior period category information has been retrospectively adjusted to conform to the current period presentation.

(3) Includes third party revenue, direct revenue and other revenue. 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. Other revenue primarily consists of advertising revenue, payment processing revenue, point of sale revenue, reservation revenue and commission revenue.

(4) Represents third party revenue, direct revenue and other revenue reduced by cost of revenue. Cost of revenue is comprised of direct and certain indirect costs incurred to generate revenue. Third party cost of revenue includes estimated refunds for which the merchant’s share is not recoverable. Direct cost of revenue includes the cost of inventory, shipping and fulfillment costs and inventory markdowns. 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) in proportion to gross billings during the period.

(5) Represents the change in financial measures that would have resulted had average exchange rates in the reporting periods been the same as those in effect in the prior year period.

(6) Reflects the total number of unique user accounts who have purchased a voucher or product from us during the trailing twelve months.

(7) Reflects the total gross billings generated in the trailing twelve months per average active customer over that period.

(8) Includes merchant sales representatives, as well as sales support.

(9) 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, Inc.

Image via Groupon

August 5, 2014

Andrew Mason Starts A New Company Called Detour, Gets Pooped On

It turns out that Groupon founder and former CEO Andrew Mason has been doing more than just sitting around eating ice cream by himself and recording motivational business albums. He’s also been creating a new company called Detour.

First of all, let’s get the poop thing out of the way. BloombergBusinessWeek ran an interview with Mason about Detour. The first paragraph ends with him getting pooped on by a Seagull. The entire article closes with him using his sweatshirt to wipe bird feces out of his hair. Here are the relevant snippets:

“People have an enormous hunger to have really compelling experiences in their cities,” Mason says. Then a seagull poops on his head.

…

If it seems a bit of a leap, Mason says Detour’s mission is similar to Groupon’s at its most basic level. “Groupon was a way to get people out of the house,” he says after wiping bird droppings out of his hair with his sweatshirt. “This is also a company where success is not measured by the time we get people to stare at a screen.”

Mason had this to say on the matter:

.@bradstone made a gross mischaracterization – the seagull pooped not merely on my head, but on my face. http://t.co/3fZQRfQv4M

— Andrew Mason (@andrewmason) July 30, 2014

Okay, now that we’ve gotten that out of the way, Detour is about giving people audio tours of places based on GPS coordinates. You can sync audio across phones for a “seamless” group experience if you like.

Mason co-founded the company with Yishai Lerner. On his blog, Mason writes:

I’ve wanted someone to build Detour since Apple created the App Store (I was preparing to launch Groupon at the time). I started thinking about the concept when my wife and I visited the Roman Ruins in 2006. We wanted to learn about the Ruins, but we’ve never really liked guided tours. Trapped for hours with a group of tourists and on someone else’s schedule, they make vacation feel like work.

So we downloaded an audio guide on our iPod and each put an earbud in one ear. It was a crude setup, but there was something special about being tuned into a different layer of reality than everyone around us. Since that experience, every time we went on vacation I’d look for a relevant app, but never found one with great content that really took advantage of the new technological possibilities. So after leaving Groupon, I thought I’d give it a try.

Interestingly, while travel is obviously a major part of this app, Mason says he sees potential for locals.

“Last November, Yishai and I visited New York to take an audio walk by artist Stephan Crasneanscki of Soundwalk, during which a Hasidic Jew guides you through his neighborhood in Brooklyn,” he writes. “You become cinematically immersed in the narrator’s world, as if a character in a film. The experience left us imagining possibilities for Detour much bigger than the trivia-laden audio tours you might find in museums. Rather, we came to see Detour as a way to walk the world in someone else’s shoes.”

Detour is starting in the Bay Area, and is releasing a new “detour” – the audio tracks – every couple weeks. Other cities will come later. The company is working with journalists, radio producers, tour guides, filmmakers, and artists to produce “detours”.

Mason may be on to something here. If it catches on, and interesting people create these “detours,” people could gain some compelling new travel experiences. It could be cool to tour a location using insight from a person (possibly even a famous person) who has first-hand knowledge or a unique perspective on it.

We're looking for a few more engineers and creatives to join @detour in SF: https://t.co/eQqKtFXsUu

— Andrew Mason (@andrewmason) July 30, 2014

Mason also took the opportunity to comment on what he’s learned from Groupon:

I remember being four years into Groupon – proud of what we’d built, with 12,000 employees, $5B in annual sales, and an IPO under our belt – but sometimes thinking back to when we were small, and wishing I knew at the beginning what I knew then. So I’ve relished the experience of beginning again.

Unfortunately, he didn’t have any updates on a second album.

Image via Detour

July 30, 2014
Groupon Finds ‘Direct’ Traffic Is Really Organic Search

Groupon ran an experiment to try and figure out where “direct” traffic that appears in analytics programs is really coming from. Gene McKenna, director of product management at Groupon, wrote a blog post about the findings for Search Engine Land.

McKenna leads Groupon’s organic search efforts. He says they completely de-indexed their site one day “for the sake of SEO science” for about six hours. During this time, they examined organic search and direct traffic by hour and by browser to any page with a “long” URL. He gives this one as an example:

www.groupon.com/local/san-francisco/restaurants

While traffic “attributable to SEO efforts” dropped to nearly zero, “direct” visits dropped by 60%. That 60%, he says, is really organic. It was on Groupon deal pages, which have long enough URLs to make it unlikely that people were actually putting them in manually and new enough that users were unlikely to have them bookmarked or remembered in auto-complete.

They also hypothesize that SEO isn’t the only channel losing traffic credit because of browsers hiding referrers. Link referral campaigns could be suffering too, according to McKenna.

He doesn’t recommend deindexing your site for your own testing. Check out the rest of Groupon’s finding in the original post. He shares some interesting graphs.

Image via Groupon

July 8, 2014
Former Groupon CEO Eats Ice Cream Alone In San Francisco

Groupon founder and former CEO Andrew Mason (arguably one of the most entertaining CEOs of our time) gave us an update about what he’s been up to on Twitter.

As you may know, after departing the company, he put out a motivational business album (pictured). Lately, he’s been eating ice cream alone in San Francisco.

Just had a thing happen involving a cat and spilling on myself that, had they seen it, would make any1 that was ever mean to me feel bad.

— Andrew Mason (@andrewmason) June 13, 2014

On that note, the one thing I don't like about living in SF is that sometimes I like to get ice cream by myself, and I imagine whenever I…

— Andrew Mason (@andrewmason) June 13, 2014

@andrewmason do, there is one tech guy who recognizes me and is like "man, ice cream by himself? Life has not been good to that guy," and…

— Andrew Mason (@andrewmason) June 13, 2014

@andrewmason then they end up feeling really bad, the way you feel bad whenever you see sadness on the street. So if you happen to see me…

— Andrew Mason (@andrewmason) June 13, 2014

@andrewmason eating ice cream in SF, don't worry, I'm doing great!!!

— Andrew Mason (@andrewmason) June 13, 2014

What a loser! -> RT @notigor: @andrewmason I was just having some ice cream by myself. That tweet series really made the day

— Andrew Mason (@andrewmason) June 13, 2014

Anyone else miss when this guy was running Groupon?

Image via iTunes

June 13, 2014
Groupon Adds Freebies To iOS App, Android Coming Later This Summer

Groupon launched the Freebies category in its ecommerce marketplace back in November. This gave users a way to get digital coupons, promotion codes, sales, giveaways and samples from participating brands like American Eagle, Best Buy, Macy’s, Nordstrom, and Sephora. Groupon added in-store coupons to Freebies in April.

The company announced on Wednesday that the feature is now part of its iOS app. This, according to the company, makes it the “most widely distributed mobile coupon destination in the United States.”

“This is an important announcement for our customers because it means they have even more ways to save money while shopping through Groupon––whether it’s online, in a mobile app or inside their favorite stores,” a Groupon spokesperson tells WebProNews. “In addition, they can now have less apps and clutter on their iOS devices because Groupon is their one-stop resource to save money.”

“This is also an important announcement for retailers because it means they can now promote their offerings and drive traffic to their online store, branded mobile app or physical location(s) through one of the top 25 most downloaded free apps of all time,” the spokesperson adds.

The company’s mobile apps have been downloaded over 80 million times. To put that in perspective, Groupon says competitors like RetailMeNot and Coupons.com have only 15 million and 7 million downloads respectively.

Freebies now includes over 30,000 digital coupons, codes, sales, giveaways, and samples from over 6,000 brands spanning 245,000 physical locations. In other words, there’s a good chance there are some good deals from stores you shop in.

Currently featured deals include: 20% off regular-priced small appliances at Best Buy; 20% off any in-store purchase from Aeropostale; $10 off select Father’s Day gifts of $30 or more at Kohl’s; additional 15% off any purchase at Banana Republic Factory Store; and $25 off first ride for new customers with Uber.

If you’re an Android user, Groupon will have you covered soon. The company says to expect the feature in its Android app later this summer.

Image via BusinessWire

June 11, 2014
Here’s A Look At Groupon’s Square Competitor Gnome

Groupon announced the launch of a point-of-sale hardware solution for local businesses called Gnome. It would compete with Square Stand/Register.

According to the company, the tablet stand will enable merchants to instantly recognize Groupon customers as they enter the store, and let them redeem Groupons. The solution will integrate with accounting programs like QuickBooks and Exero, and offer CRM tools, including the ability to customize marketing campaigns based on purchase history, and share customer feedback on social media. It will also let businesses respond to customer inquiries/comments.

CEO Eric Lefkofsky said, ‘“Gnome is an amazing piece of technology that plugs our merchants into the Web and helps them form relationships with every customer that walks in their front door. When it’s complete, Gnome will serve as an operating system for merchants to run their entire operation and enable them to create real-time promotions that bring customers into their business when they need them the most.”

“Gnome is an important step towards our long-term mission of creating a world where merchants are constantly connected to the Groupon local commerce platform,” he added.

Groupon redemption happens automatically using bluetooth, or customers can be searched for by name, barcode, or voucher number. Customers won’t need to have printed vouchers.

It logs cash transactions, accepts credit and debit card payments, and prints or emails receipts. It also calculates multiple tax rates, manages menu items, lets you view transaction history, and enables you to issue refunds. It even comes with preloaded menus and inventory lists for popular types of businesses. Ir comes with 24/7 live support.

Gnome will roll out to “tens of thousands” of merchants in the coming months.

Image via BusinessWire

May 19, 2014

Groupon Earnings Released: ‘We Had A Record Quarter’

Groupon just released its earnings report for the first quarter with gross billings of $1.82 billion and revenue of $757.6 million.

Gross billings (the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds) were up 29% year-over-year. Those in North America increased 15%.

Revenue was up 26% year-over-year, and up 27% in North America.

CEO Eric Lefkofsky writes, “We had a record quarter in terms of demand, with worldwide billings increasing 29% and reaching their highest level ever. Our marketplace continued to gain traction and growth in our mobile business accelerated, with more than 10 million app downloads this quarter and mobile transactions reaching 54% in March.”

“We’re on track with our plans in 2014 to invest in the growth of Local, improve our Goods margins, and drive profitability in our International operations,” he added. “As a result, we have further confidence in our results for the back half of the year, and have increased our full year outlook.”

Here’s the release in its entirety:

CHICAGO–(BUSINESS WIRE)–Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter ended March 31, 2014.

“Net cash provided by (used in) operating activities.”

“We had a record quarter in terms of demand, with worldwide billings increasing 29% and reaching their highest level ever,” said Eric Lefkofsky, CEO of Groupon. “Our marketplace continued to gain traction and growth in our mobile business accelerated, with more than 10 million app downloads this quarter and mobile transactions reaching 54% in March.”

“We’re on track with our plans in 2014 to invest in the growth of Local, improve our Goods margins, and drive profitability in our International operations. As a result, we have further confidence in our results for the back half of the year, and have increased our full year outlook.”

First Quarter 2014 Summary

Gross billings, which reflect the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds, increased 29% globally to $1.82 billion in the first quarter 2014, compared with $1.41 billion in the first quarter 2013. North America billings increased 15%, EMEA increased 4% and Rest of World increased 123%, driven by the acquisition of Ticket Monster.

Revenue increased 26%, to $757.6 million in the first quarter 2014, compared with $601.4 million in the first quarter 2013. North America revenue increased 27%, EMEA increased 26% and Rest of World increased 23%.

Gross profit increased 2%, to $385.7 million in the first quarter 2014, compared with $379.0 million in the first quarter 2013.

Adjusted EBITDA, a non-GAAP financial measure, was $40.3 million in the first quarter 2014, compared with $71.9 million in the first quarter 2013, reflecting a $29.4 million increase in marketing expense.

First quarter 2014 net loss attributable to common stockholders was $37.8 million, or $0.06 per share, including stock compensation, amortization of acquired intangible assets, and acquisition-related costs, net, of $38.2 million ($29.8 million net of tax). Loss per share excluding stock compensation, amortization of acquired intangible assets, and acquisition-related costs, net of tax, a non-GAAP financial measure, was $0.01 per share.

Operating cash flow for the trailing twelve months ended March 31, 2014 was $189.0 million. Free cash flow, a non-GAAP financial measure, was negative $37.1 million in the first quarter 2014, bringing free cash flow for the trailing twelve months ended March 31, 2014 to $123.6 million.

At the end of the quarter, Groupon had $1.0 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.

Highlights

Units: Global units, defined as vouchers and products sold before cancellations and refunds, increased 85% year-over-year to 84 million in the first quarter 2014. North America units increased 14%, EMEA units increased 18% and Rest of World units increased 330%.

Active deals: At the end of the first quarter 2014, on average, active deals were over 200,000 globally, compared with more than 140,000 at the end of the fourth quarter 2013. North American active deals increased to over 95,000.

Active customers: Active customers, or customers that have purchased a voucher or product within the last twelve months, grew 24% year-over-year, to 51.8 million as of March 31, 2014, comprising 21.8 million in North America, 14.5 million in EMEA, and 15.5 million in Rest of World.

Customer spend: First quarter 2014 trailing twelve month billings per average active customer was $132, compared with $134 in the fourth quarter 2013.

Mobile: In March 2014, 54% of global transactions were completed on mobile devices. Over 80 million people have now downloaded Groupon mobile apps worldwide, with over 10 million people downloading them in the first quarter alone.

Marketplace: The rollout of Groupon’s marketplace (“Pull”) continued to gain traction. In March 2014, approximately 9% of total traffic in North America searched, with customers that searched spending significantly more than those that did not.

Share Repurchase Program

During the first quarter 2014, Groupon repurchased 3,075,700 shares of its Class A common stock under its share repurchase authorization at an average price of $9.58 per share, for an aggregate purchase price of $29.5 million. Under the existing authorization, Groupon has repurchased a total of 7,508,500 shares at an average price of $10.13 per share, for an aggregate purchase price of $76.0 million. Groupon is authorized to repurchase up to an additional $224.0 million of Class A common stock under the August 2013 share repurchase authorization. The program, which is intended to partially offset dilution from employee stock grants, terminates in August 2015.

Outlook

In the second quarter 2014, Groupon expects continued investment to accelerate long-term growth worldwide. As a result, for the second quarter 2014, the Company expects revenue of between $725 million and $775 million, Adjusted EBITDA of between $45 million and $65 million, and non-GAAP earnings per share excluding stock compensation, amortization of acquired intangible assets, and acquisition-related expenses, net of tax, of between $0.00 and $0.02.

Groupon is increasing its full year outlook, and now expects Adjusted EBITDA to exceed $300 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 at http://investor.groupon.com. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.

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.

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, Adjusted EBITDA, free cash flow and loss per share excluding stock-based compensation, amortization of acquired intangible assets, and acquisition-related expense (benefit), net. 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 is comprised of the change in the fair value of contingent consideration arrangements and, beginning in the fourth quarter of 2013, also includes external transaction costs related to business combinations, primarily consisting of legal and advisory fees. External transaction costs were not material for periods prior to the fourth quarter of 2013 presented in this release and the accompanying tables. 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 expenses because they are 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 prior-year period.

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. Our definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Adjusted EBITDA is a key measure used by our management and Board of Directors to evaluate operating performance, generate future plans and make strategic decisions regarding the allocation of capital. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

Earnings per share excluding stock-based compensation, amortization of acquired intangible assets, 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, amortization of acquired intangible assets, and acquisition-related expense (benefit), net, and the income tax effect of those items. We believe that this non-GAAP financial measure provides useful supplemental information for evaluating our operating performance.

Beginning in the first quarter 2014, we have changed our non-GAAP earnings (loss) per share measure to exclude amortization of acquired intangible assets, net of tax, in addition to stock compensation and acquisition-related expenses, which we have excluded historically. Given the significant acquisition activity in January 2014 and potential acquisition activity in the future, we believe that excluding non-cash amortization of acquired intangible assets from our non-GAAP earnings per share measure enables more meaningful comparisons with our historical results.

Free cash flow is a non-GAAP financial measure that comprises net cash provided by (used in) 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, the full year 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 and adding high quality merchants; cyber security breaches; incurring expenses as we expand our business; competing against smaller competitors and competitors with more financial resources than us; maintaining favorable terms with our business partners; maintaining a strong brand; managing inventory and order fulfillment risks; 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; protecting our intellectual property; handling acquisitions, joint ventures and strategic investments effectively; seasonality; payment-related risks; customer and merchant 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 at http://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 May 6, 2014. 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.

About Groupon

Groupon (NASDAQ: GRPN) is a global leader of local commerce and the place you start when you want to buy just about anything, anytime, anywhere. By leveraging the company’s global relationships and scale, Groupon offers consumers a vast marketplace of unbeatable deals all over the world. Shoppers discover the best a city has to offer on the web or on mobile with Groupon Local, enjoy vacations with Groupon Getaways, and find a curated selection of electronics, fashion, home furnishings and more with Groupon Goods.

Groupon is redefining how traditional small businesses attract, retain and interact with customers by providing merchants with a suite of products and services, including customizable deal campaigns, credit card payment processing capabilities, and point-of-sale solutions that help businesses grow and operate more effectively. To search for great deals or subscribe to Groupon emails, visitwww.Groupon.com. To download Groupon’s five-star mobile apps, visit www.groupon.com/mobile. 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)

Three Months Ended Y/Y %

March 31, Growth

Y/Y % excluding

2014 2013 Growth FX Effect(2) FX(2)

Gross Billings (1):

North America $ 781,769 $ 681,319 14.7 % $ (844 ) 14.9 %

EMEA 513,588 492,318 4.3 % 14,983 1.3 %

Rest of World 521,854 234,132 122.9 % (24,621 ) 133.4 %

Consolidated billings $ 1,817,211 $ 1,407,769 29.1 % $ (10,482 ) 29.8 %

Revenue:

North America $ 431,062 $ 339,554 26.9 % $ (288 ) 27.0 %

EMEA 230,893 183,798 25.6 % 6,841 21.9 %

Rest of World 95,682 78,050 22.6 % (9,417 ) 34.7 %

Consolidated revenue $ 757,637 $ 601,402 26.0 % $ (2,864 ) 26.5 %

(Loss) income from operations $ (19,953 ) $ 21,178 (194.2 ) % $ 1,685 (202.2 ) %

Net loss attributable to Groupon, Inc. $ (37,795 ) $ (3,992 )

Net loss per share:

Basic $ (0.06 ) $ (0.01 )

Diluted $ (0.06 ) $ (0.01 )

Weighted average number of shares outstanding:

Basic 682,378,690 658,800,417

Diluted 682,378,690 658,800,417

(1) Represents the total dollar value of customer purchases of goods and services, excluding 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 months ended March 31, 2013.

Groupon, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended

March 31,

2014 2013

Operating activities

Net loss $ (35,363 ) $ (3,242 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation and amortization of property, equipment and software 22,092 15,114

Amortization of acquired intangible assets 12,648 5,586

Stock-based compensation 23,729 29,907

Deferred income taxes 573 (258 )

Excess tax benefits on stock-based compensation (5,855 ) (832 )

(Gain) loss on equity method investments (52 ) 19

(Gain) loss, net from changes in fair value of contingent consideration (39 ) 68

Impairment of cost method investment 397 –

Change in assets and liabilities, net of acquisitions:

Restricted cash 2,950 2,523

Accounts receivable (24,393 ) (7,684 )

Prepaid expenses and other current assets (5,150 ) 12,527

Accounts payable 7,315 (19,606 )

Accrued merchant and supplier payables (23,649 ) (39,417 )

Accrued expenses and other current liabilities (5,379 ) 13,302

Other, net 9,459 753

Net cash (used in) provided by operating activities (20,717 ) 8,760

Net cash used in investing activities (138,608 ) (30,679 )

Net cash used in financing activities (41,492 ) (9,342 )

Effect of exchange rate changes on cash and cash equivalents (831 ) (12,378 )

Net decrease in cash and cash equivalents (201,648 ) (43,639 )

Cash and cash equivalents, beginning of period 1,240,472 1,209,289

Cash and cash equivalents, end of period $ 1,038,824 $ 1,165,650

Groupon, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

Three Months Ended March 31,

2014 2013

Revenue:

Third party and other $ 426,429 $ 439,108

Direct 331,208 162,294

Total revenue 757,637 601,402

Cost of revenue:

Third party and other 62,351 70,016

Direct 309,565 152,377

Total cost of revenue 371,916 222,393

Gross profit 385,721 379,009

Operating expenses:

Marketing 78,924 49,557

Selling, general and administrative 324,965 308,206

Acquisition-related expense, net 1,785 68

Total operating expenses 405,674 357,831

(Loss) income from operations (19,953 ) 21,178

Other expense, net (840 ) (5,083 )

(Loss) income before provision for income taxes (20,793 ) 16,095

Provision for income taxes 14,570 19,337

Net loss (35,363 ) (3,242 )

Net income attributable to noncontrolling interests (2,432 ) (750 )

Net loss attributable to Groupon, Inc. $ (37,795 ) $ (3,992 )

Net loss per share

Basic $ (0.06 ) $ (0.01 )

Diluted $ (0.06 ) $ (0.01 )

Weighted average number of shares outstanding

Basic 682,378,690 658,800,417

Diluted 682,378,690 658,800,417

Groupon, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

March 31, 2014 December 31, 2013

(unaudited)

Assets

Current assets:

Cash and cash equivalents $ 1,038,824 $ 1,240,472

Accounts receivable, net 125,527 83,673

Deferred income taxes 29,897 27,938

Prepaid expenses and other current assets 234,102 210,415

Total current assets 1,428,350 1,562,498

Property, equipment and software, net 159,649 134,423

Goodwill 447,370 220,827

Intangible assets, net 140,738 28,443

Investments 24,450 20,652

Deferred income taxes, non-current 44,559 35,941

Other non-current assets 35,490 39,226

Total Assets $ 2,280,606 $ 2,042,010

Liabilities and Equity

Current liabilities:

Accounts payable $ 45,524 $ 27,573

Accrued merchant and supplier payables 816,329 752,943

Accrued expenses 253,015 226,986

Deferred income taxes 48,368 47,558

Other current liabilities 134,315 132,718

Total current liabilities 1,297,551 1,187,778

Deferred income taxes, non-current 12,331 10,853

Other non-current liabilities 147,197 131,697

Total Liabilities 1,457,079 1,330,328

Commitments and contingencies

Stockholders’ Equity

Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 687,288,634

shares issued and 679,780,134 shares outstanding at March 31, 2014 and 670,149,976 shares issued and

665,717,176 shares outstanding at December 31, 2013 69 67

Class B common stock, par value $0.0001 per share, 10,000,000 shares authorized, 2,399,976 shares

issued and outstanding at March 31, 2014 and December 31, 2013 – –

Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, no shares issued and

outstanding at March 31, 2014 and December 31, 2013 – –

Additional paid-in capital 1,768,271 1,584,211

Treasury stock, at cost, 7,508,500 shares at March 31, 2014 and 4,432,800 shares at December 31, 2013 (76,048 ) (46,587 )

Accumulated deficit (886,665 ) (848,870 )

Accumulated other comprehensive income 20,020 24,830

Total Groupon, Inc. Stockholders’ Equity 825,647 713,651

Noncontrolling interests (2,120 ) (1,969 )

Total Equity 823,527 711,682

Total Liabilities and Equity $ 2,280,606 $ 2,042,010

Groupon, Inc.

Segment Information

(in thousands)

(unaudited)

Three Months Ended March 31,

2014 2013

North America

Gross billings (1) $ 781,769 $ 681,319

Revenue $ 431,062 $ 339,554

Segment cost of revenue and operating expenses(2) 419,677 298,188

Segment operating income(2) $ 11,385 $ 41,366

Segment operating income as a percent of segment revenue 2.6 % 12.2 %

EMEA

Gross billings (1) $ 513,588 $ 492,318

Revenue $ 230,893 $ 183,798

Segment cost of revenue and operating expenses(2) 211,970 149,622

Segment operating income(2) $ 18,923 $ 34,176

Segment operating income as a percent of segment revenue 8.2 % 18.6 %

Rest of World

Gross billings (1) $ 521,854 $ 234,132

Revenue $ 95,682 $ 78,050

Segment cost of revenue and operating expenses(2) 120,429 102,439

Segment operating loss(2) $ (24,747 ) $ (24,389 )

Segment operating loss as a percent of segment revenue (25.9 ) % (31.2 ) %

(1) Represents the total dollar value of customer purchases of goods and services, excluding 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 expense (benefit), net.

Groupon, Inc.

Non-GAAP Reconciliation Schedules

(in thousands, except share and per share amounts)

(unaudited)

Adjusted EBITDA and earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, net are non-GAAP financial measures. The Company reconciles Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net loss” for the periods presented, and the Company reconciles earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, net to the most comparable U.S. GAAP financial measure, “Diluted net earnings (loss) per share” for the period presented.

The following is a quarterly reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net loss.”

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

Net loss $ (3,242 ) $ (5,551 ) $ (1,292 ) $ (78,861 ) $ (35,363 )

Adjustments:

Stock-based compensation 29,907 32,446 26,870 32,239 23,729

Acquisition-related expense (benefit), net 68 (815 ) (1,529 ) 2,265 1,785

Depreciation and amortization 20,700 21,468 23,149 24,132 34,740

Other expense (income), net 5,083 5,579 (832 ) 84,833 840

Provision for income taxes 19,337 27,384 15,936 7,380 14,570

Total adjustments 75,095 86,062 63,594 150,849 75,664

Adjusted EBITDA $ 71,853 $ 80,511 $ 62,302 $ 71,988 $ 40,301

The following is a reconciliation of diluted net loss per share to diluted loss per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, net for the three months ended March 31, 2014:

Three Months Ended

March 31, 2014

Net loss attributable to Groupon, Inc. $ (37,795 )

Stock-based compensation 23,729

Amortization of acquired intangible assets 12,648

Acquisition-related expense, net 1,785

Income tax effect of adjustments (8,377 )

Net loss attributable to common stockholders excluding stock-based compensation,

amortization of acquired intangible assets and acquisition-related expense, net $ (8,010 )

Diluted shares 682,378,690

Incremental diluted shares (1) –

Adjusted diluted shares 682,378,690

Diluted net loss per share $ (0.06 )

Impact of stock-based compensation, amortization of acquired intangible assets

and acquisition-related expense, net 0.05

Diluted loss per share excluding stock-based compensation, amortization of acquired intangible assets

and acquisition-related expense, net $ (0.01 )

(1) Outstanding equity awards are not reflected in the calculation for the three months ended March 31, 2014 because the effect would be antidilutive.

Foreign exchange rate neutral operating results are non-GAAP financial measures. The Company reconciles foreign exchange rate neutral operating results to the most comparable U.S. GAAP financial measures, “Gross billings,” “Revenue” and “(Loss) income from operations,” respectively, for the periods presented. The Company reconciles “foreign exchange rage 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.

The effect of the Company’s gross billings, revenue and (loss) income from operations from changes in exchange rates versus the U.S. Dollar for the three months ended March 31, 2014 was as follows:

Three Months Ended March 31, 2014 Three Months Ended March 31, 2014

At Avg. Exchange At Avg. Exchange

Q1 2013 Rate As Q4 2013 Rate As

Rates (1) Effect (2) Reported Rates (3) Effect (2) Reported

Gross billings $ 1,827,693 $ (10,482 ) $ 1,817,211 $ 1,825,844 $ (8,633 ) $ 1,817,211

Revenue $ 760,501 $ (2,864 ) $ 757,637 $ 759,885 $ (2,248 ) $ 757,637

(Loss) income from operations $ (21,638 ) $ 1,685 $ (19,953 ) $ (20,777 ) $ 824 $ (19,953 )

(1) Represents the financial statement balances that would have resulted had average exchange rates in the reporting period been the same as those in effect during the three months ended March 31, 2013.

(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 reporting period been the same as those in effect during the three months ended December 31, 2013.

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.

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

EMEA Gross billings growth, excluding FX (9 ) % 4 % 9 % 3 % 1 %

FX Effect 1 % – % 3 % 3 % 3 %

EMEA Gross billings growth (8 ) % 4 % 12 % 6 % 4 %

Rest of World Gross billings growth, excluding FX (6 ) % (16 ) % (4 ) % (2 ) % 133 %

FX Effect (5 ) % (5 ) % (9 ) % (9 ) % (10 ) %

Rest of World Gross billings growth (11 ) % (21 ) % (13 ) % (11 ) % 123 %

Consolidated Gross billings growth, excluding FX 5 % 11 % 11 % 5 % 30 %

FX Effect (1 ) % (1 ) % (1 ) % – % (1 ) %

Consolidated Gross billings growth 4 % 10 % 10 % 5 % 29 %

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.

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

EMEA Revenue growth, excluding FX (20 ) % (25 ) % (23 ) % 38 % 22 %

FX Effect – % 1 % 2 % 5 % 4 %

EMEA Revenue growth (20 ) % (24 ) % (21 ) % 43 % 26 %

Rest of World Revenue growth, excluding FX (8 ) % (21 ) % 7 % (6 ) % 35 %

FX Effect (6 ) % (5 ) % (11 ) % (9 ) % (12 ) %

Rest of World Revenue growth (14 ) % (26 ) % (4 ) % (15 ) % 23 %

Consolidated Revenue growth, excluding FX 8 % 8 % 6 % 20 % 26 %

FX Effect – % (1 ) % (1 ) % – % – %

Consolidated Revenue growth 8 % 7 % 5 % 20 % 26 %

Groupon, Inc.

Supplemental Financial Information and Business Metrics(9)

(financial data in thousands, except per share data; active customers in millions)

(unaudited)

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014

Segments

North America Segment

Gross Billings (1)

Local (2) Gross Billings $ 450,841 $ 453,030 $ 405,913 $ 439,131 $ 456,952

Goods Gross Billings 165,359 196,878 194,565 286,039 242,896

Travel (2) Gross Billings 65,119 62,297 64,521 63,551 81,921

Total Gross Billings $ 681,319 $ 712,205 $ 664,999 $ 788,721 $ 781,769

Year-over-year growth 23 % 30 % 20 % 10 % 15 %

% Third Party and Other 78 % 74 % 72 % 67 % 70 %

% Direct 22 % 26 % 28 % 33 % 30 %

Gross Billings Trailing Twelve Months (TTM) $ 2,500,915 $ 2,664,845 $ 2,777,475 $ 2,847,244 $ 2,947,694

Revenue (3)

Local Revenue $ 172,294 $ 177,377 $ 162,346 $ 161,601 $ 177,247

Goods Revenue 151,209 186,028 185,914 268,281 237,435

Travel Revenue 16,051 13,777 12,578 13,902 16,380

Total Revenue $ 339,554 $ 377,182 $ 360,838 $ 443,784 $ 431,062

Year-over-year growth 42 % 45 % 24 % 18 % 27 %

% Third Party and Other 56 % 52 % 49 % 41 % 45 %

% Direct 44 % 48 % 51 % 59 % 55 %

Revenue TTM $ 1,266,689 $ 1,383,690 $ 1,452,925 $ 1,521,358 $ 1,612,866

Gross Profit (4)

Local Gross Profit $ 146,379 $ 155,728 $ 138,890 $ 140,944 $ 152,622

% of North America Total Local Gross Billings 32.5 % 34.4 % 34.2 % 32.1 % 33.4 %

Goods Gross Profit 12,456 26,977 21,609 21,030 12,604

% of North America Total Goods Gross Billings 7.5 % 13.7 % 11.1 % 7.4 % 5.2 %

Travel Gross Profit 13,521 11,881 11,070 12,352 14,442

% of North America Total Travel Gross Billings 20.8 % 19.1 % 17.2 % 19.4 % 17.6 %

Total Gross Profit $ 172,356 $ 194,586 $ 171,569 $ 174,326 $ 179,668

Year-over-year growth 2 % 12 % 7 % 15 % 4 %

% Third Party and Other 94 % 88 % 90 % 91 % 94 %

% Direct 6 % 12 % 10 % 9 % 6 %

% of North America Total Gross Billings 25.3 % 27.3 % 25.8 % 22.1 % 23.0 %

EMEA Segment

Gross Billings

Local Gross Billings $ 260,297 $ 241,856 $ 207,803 $ 277,472 $ 262,141

Goods Gross Billings 149,193 167,594 169,849 219,880 183,013

Travel Gross Billings 82,828 72,800 65,666 68,361 68,434

Total Gross Billings $ 492,318 $ 482,250 $ 443,318 $ 565,713 $ 513,588

Year-over-year growth (8 ) % 4 % 12 % 6 % 4 %

Year-over-year growth, excluding FX (5) (9 ) % 4 % 9 % 3 % 1 %

% Third Party and Other 98 % 100 % 98 % 83 % 83 %

% Direct 2 % – % 2 % 17 % 17 %

Gross Billings TTM $ 1,883,265 $ 1,903,136 $ 1,950,367 $ 1,983,599 $ 2,004,869

Revenue

Local Revenue $ 111,589 $ 110,229 $ 92,141 $ 116,061 $ 109,120

Goods Revenue 53,326 35,119 41,279 119,274 106,889

Travel Revenue 18,883 14,614 14,530 15,870 14,884

Total Revenue $ 183,798 $ 159,962 $ 147,950 $ 251,205 $ 230,893

Year-over-year growth (20 ) % (24 ) % (21 ) % 43 % 26 %

Year-over-year growth, excluding FX (20 ) % (25 ) % (23 ) % 38 % 22 %

% Third Party and Other 96 % 99 % 94 % 61 % 61 %

% Direct 4 % 1 % 6 % 39 % 39 %

Revenue TTM $ 758,918 $ 707,325 $ 667,988 $ 742,915 $ 790,010

Gross Profit

Local Gross Profit $ 97,389 $ 99,318 $ 81,808 $ 105,210 $ 100,066

% of EMEA Total Local Gross Billings 37.4 % 41.1 % 39.4 % 37.9 % 38.2 %

Goods Gross Profit 39,974 27,108 28,943 33,526 27,302

% of EMEA Total Goods Gross Billings 26.8 % 16.2 % 17.0 % 15.2 % 14.9 %

Travel Gross Profit 16,358 13,105 12,930 14,457 13,669

% of EMEA Total Travel Gross Billings 19.7 % 18.0 % 19.7 % 21.1 % 20.0 %

Total Gross Profit $ 153,721 $ 139,531 $ 123,681 $ 153,193 $ 141,037

Year-over-year growth (23 ) % (24 ) % (24 ) % 7 % (8 ) %

% Third Party and Other 100 % 101 % 99 % 91 % 92 %

% Direct – % (1 ) % 1 % 9 % 8 %

% of EMEA Total Gross Billings 31.2 % 28.9 % 27.9 % 27.1 % 27.5 %

Rest of World Segment

Gross Billings

Local Gross Billings $ 120,319 $ 115,156 $ 118,718 $ 116,824 $ 167,833

Goods Gross Billings 77,772 72,399 78,973 89,451 283,091

Travel Gross Billings 36,041 31,796 36,640 32,398 70,930

Total Gross Billings $ 234,132 $ 219,351 $ 234,331 $ 238,673 $ 521,854

Year-over-year growth (11 ) % (21 ) % (13 ) % (11 ) % 123 %

Year-over-year growth, excluding FX (6 ) % (16 ) % (4 ) % (2 ) % 133 %

% Third Party and Other 97 % 97 % 97 % 97 % 99 %

% Direct 3 % 3 % 3 % 3 % 1 %

Gross Billings TTM $ 1,048,973 $ 992,302 $ 956,833 $ 926,487 $ 1,214,209

Revenue

Local Revenue $ 45,414 $ 43,849 $ 51,900 $ 40,847 $ 43,814

Goods Revenue 24,840 20,610 25,061 26,158 41,855

Travel Revenue 7,796 7,144 9,310 6,453 10,013

Total Revenue $ 78,050 $ 71,603 $ 86,271 $ 73,458 $ 95,682

Year-over-year growth (14 ) % (26 ) % (4 ) % (15 ) % 23 %

Year-over-year growth, excluding FX (8 ) % (21 ) % 7 % (6 ) % 35 %

% Third Party and Other 91 % 92 % 91 % 90 % 94 %

% Direct 9 % 8 % 9 % 10 % 6 %

Revenue TTM $ 350,984 $ 325,988 $ 322,597 $ 309,382 $ 327,014

Gross Profit

Local Gross Profit $ 39,490 $ 35,885 $ 44,435 $ 33,596 $ 34,748

% of Rest of World Total Local Gross Billings 32.8 % 31.2 % 37.4 % 28.8 % 20.7 %

Goods Gross Profit 6,712 8,966 12,016 11,781 22,135

% of Rest of World Total Goods Gross Billings 8.6 % 12.4 % 15.2 % 13.2 % 7.8 %

Travel Gross Profit 6,730 5,726 7,921 5,312 8,133

% of Rest of World Total Travel Gross Billings 18.7 % 18.0 % 21.6 % 16.4 % 11.5 %

Total Gross Profit $ 52,932 $ 50,577 $ 64,372 $ 50,689 $ 65,016

Year-over-year growth (26 ) % (33 ) % 1 % (16 ) % 23 %

% Third Party and Other 100 % 101 % 99 % 101 % 102 %

% Direct – % (1 ) % 1 % (1 ) % (2 ) %

% of Rest of World Total Gross Billings 22.6 % 23.1 % 27.5 % 21.2 % 12.5 %

Consolidated Results of Operations

Gross Billings

Local Gross Billings $ 831,457 $ 810,042 $ 732,434 $ 833,427 $ 886,926

Goods Gross Billings 392,324 436,871 443,387 595,370 709,000

Travel Gross Billings 183,988 166,893 166,827 164,310 221,285

Total Gross Billings $ 1,407,769 $ 1,413,806 $ 1,342,648 $ 1,593,107 $ 1,817,211

Year-over-year growth 4 % 10 % 10 % 5 % 29 %

Year-over-year growth, excluding FX 5 % 11 % 11 % 5 % 30 %

% Third Party and Other 88 % 87 % 85 % 77 % 82 %

% Direct 12 % 13 % 15 % 23 % 18 %

Gross Billings (TTM) $ 5,433,153 $ 5,560,283 $ 5,684,675 $ 5,757,330 $ 6,166,772

Year-over-year growth 16 % 11 % 12 % 7 % 14 %

Revenue

Local Revenue $ 329,297 $ 331,455 $ 306,387 $ 318,509 $ 330,181

Goods Revenue 229,375 241,757 252,254 413,713 386,179

Travel Revenue 42,730 35,535 36,418 36,225 41,277

Total Revenue $ 601,402 $ 608,747 $ 595,059 $ 768,447 $ 757,637

Year-over-year growth 8 % 7 % 5 % 20 % 26 %

Year-over-year growth, excluding FX 8 % 8 % 6 % 20 % 26 %

% Third Party and Other 73 % 69 % 66 % 52 % 56 %

% Direct 27 % 31 % 34 % 48 % 44 %

Total Consolidated Revenue TTM $ 2,376,591 $ 2,417,003 $ 2,443,510 $ 2,573,655 $ 2,729,890

Year-over-year growth 27 % 18 % 12 % 10 % 15 %

Gross Profit

Local Gross Profit $ 283,258 $ 290,931 $ 265,133 $ 279,750 $ 287,436

% of Total Consolidated Local Gross Billings 34.1 % 35.9 % 36.2 % 33.6 % 32.4 %

Goods Gross Profit 59,142 63,051 62,568 66,337 62,041

% of Total Consolidated Goods Gross Billings 15.1 % 14.4 % 14.1 % 11.1 % 8.8 %

Travel Gross Profit 36,609 30,712 31,921 32,121 36,244

% of Total Consolidated Travel Gross Billings 19.9 % 18.4 % 19.1 % 19.5 % 16.4 %

Total Gross Profit $ 379,009 $ 384,694 $ 359,622 $ 378,208 $ 385,721

Year-over-year growth (14 ) % (11 ) % (7 ) % 6 % 2 %

% Third Party and Other 97 % 94 % 95 % 92 % 94 %

% Direct 3 % 6 % 5 % 8 % 6 %

% of Total Consolidated Gross Billings 26.9 % 27.2 % 26.8 % 23.7 % 21.2 %

Adjusted EBITDA $ 71,853 $ 80,511 $ 62,302 $ 71,988 $ 40,301

% of Total Consolidated Gross Billings 5.1 % 5.7 % 4.6 % 4.5 % 2.2 %

% of Total Consolidated Revenue 11.9 % 13.2 % 10.5 % 9.4 % 5.3 %

Free cash flow is a non-GAAP financial measure. The following is a reconciliation of free cash flow to the most comparable U.S. GAAP financial measure, “Net cash provided by (used in) operating activities.”

Net cash provided by (used in) operating activities $ 8,760 $ 43,302 $ (11,905 ) $ 178,275 $ (20,717 )

Purchases of property and equipment and capitalized software (14,468 ) (14,042 ) (15,064 ) (19,931 ) (16,355 )

Free cash flow $ (5,708 ) $ 29,260 $ (26,969 ) $ 158,344 $ (37,072 )

Net cash provided by operating activities (TTM) $ 191,880 $ 159,867 $ 105,874 $ 218,432 $ 188,955

Purchases of property and equipment and capitalized software (TTM) (97,221 ) (84,554 ) (83,608 ) (63,505 ) (65,392 )

Free cash flow (TTM) $ 94,659 $ 75,313 $ 22,266 $ 154,927 $ 123,563

Net cash used in investing activities $ (30,679 ) $ (15,862 ) $ (26,444 ) $ (23,330 ) $ (138,608 )

Net cash used in financing activities $ (9,342 ) $ (7,941 ) $ (8,970 ) $ (55,444 ) $ (41,492 )

Net cash used in investing activities (TTM) $ (179,214 ) $ (134,923 ) $ (125,738 ) $ (96,315 ) $ (204,244 )

Net cash provided by (used in) financing activities (TTM) $ 11,028 $ (21,071 ) $ (32,748 ) $ (81,697 ) $ (113,847 )

Other Metrics

Active Customers (6)

North America 18.2 19.1 19.9 20.8 21.8

EMEA 14.0 13.9 14.0 14.2 14.5

Rest of World 9.5 9.6 9.6 9.9 15.5

Total Active Customers 41.7 42.6 43.5 44.9 51.8

TTM Gross Billings / Average Active Customer (7)

North America $ 151 $ 156 $ 155 $ 150 $ 147

EMEA $ 137 $ 135 $ 137 $ 139 $ 141

Rest of World $ 116 $ 108 $ 102 $ 95 $ 97

Consolidated $ 138 $ 138 $ 137 $ 134 $ 132

Headcount

Sales (8) 4,566 4,679 4,801 4,834 5,231

% North America 28 % 26 % 28 % 29 % 27 %

% EMEA 38 % 39 % 37 % 37 % 37 %

% Rest of World 34 % 35 % 35 % 34 % 36 %

Other 6,433 6,306 6,453 6,449 7,099

Total Headcount 10,999 10,985 11,254 11,283 12,330

(1) Represents the total dollar value of customer purchases of goods and services, excluding 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. Other revenue transactions, which include advertising, payment processing, point of sale, reservation and commission revenue, were previously aggregated with our Travel category. In the current period, the Company has updated its presentation of category information to include gross billings, revenue and gross profit from those other revenue sources within the Local category, and prior period category information has been retrospectively adjusted to conform to the current period presentation.

(3) Includes third party revenue, direct revenue and other revenue. 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. Other revenue primarily consists of advertising revenue, payment processing revenue, point of sale revenue, reservation revenue and commission revenue.

(4) Represents third party revenue, direct revenue and other revenue reduced by cost of revenue. Cost of revenue is comprised of direct and certain indirect costs incurred to generate revenue. Third party cost of revenue includes estimated refunds for which the merchant’s share is not recoverable. Direct cost of revenue includes the cost of inventory, shipping and fulfillment costs and inventory markdowns. 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) in proportion to 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) Reflects the total number of unique user accounts who have purchased a voucher or product from us during the trailing twelve months.

(7) Reflects the total gross billings generated in the trailing twelve months per average active customer over that period.

(8) Includes merchant sales representatives, as well as sales support.

(9) 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.

Image via Groupon

May 6, 2014

Groupon Launches ‘Basics’ Bulk Shopping Service

Groupon just launched an online bulk-shopping service called Groupon Basics. The company says this brings “warehouse scale to online shopping.”

“From vitamins to shaving supplies, Groupon shoppers can purchase their favorite products in large quantities and have them delivered right to their doorstep without a membership or monthly fee,” a spokesperson for the company tells WebProNews. “Basics includes many top household brands such as Gillette, Dove, Airborne, Pantene and Burt’s Bees.”

“Basics is an exciting expansion of our Groupon Goods online product business,” the spokesperson adds. “By adding this service to our marketplace, we’re providing shoppers with yet another reason to always check Groupon first.”

The product has been in beta for less than two months, and the company says it’s been pleased with the initial results.

“In the coming months, we will continue to aggressively build out the existing categories as well as expand into packaged and canned grocery items,” the spokesperson says.

You can browse the Groupon Basics shopping experience here. It’s available via the Groupon mobile app as well, under the Goods tab.

The company will release its quarterly earnings next week.

Image via Groupon

May 1, 2014
Groupon Adds In-Store Coupons To ‘Freebies’ Category

Groupon is now providing in-store coupons in its Freebies offering, giving retailers another way to drive traffic to their stores.

The company says it’s “providing national retailers with a programmatic way to reach millions of potential customers with targeted promotions that drive traffic into their business.”

“With the addition of in-store coupons, national retailers can now use Groupon’s Freebies category to generate sales across multiple channels––whether it’s in store or online,” it adds.

Freebies now includes in-store coupons for over 250 national retailers and 245,000 locations. Staples, Macy’s, Toys ‘R’ Us, Sephora, JCPenney, and PetSmart are among the brands already taking advantage.

The new coupons are available for national retailers right now, but the company says it will extend the offering to small businesses later this year.

The Freebies category was launched late last year. It includes about 30,000 digital coupons, promotion codes, sales, giveaways, and samples from about 6,000 brands.

Image via BusinessWire

April 11, 2014
Groupon Celebrates Women’s History Month

Groupon has partnered with Barbara Corcora – a businesswoman, investor, speaker, consultant, syndicated columnist, author and TV personality – to celebrate women-led businesses in the U.S. for Women’s History Month.

For the first time, Groupon will feature a set of deals from women-led businesses, which customers can support by purchasing.

“Women are a powerful force behind the success of one of the top e-commerce companies in the world,” said Corcoran, “And as a self-made entrepreneur myself, I’m happy to partner with Groupon to help make even more local businesses a success.”

Groupon is also holding a contest through March 19, in which women business owners and leaders can submit their best business advice for fellow entrepreneurs. Corcoran will pick one person to win a trip for two to New York City for two days and a private consultation with her.

Groupon is also encouraging people to share their advice on social media using the hashtag #grpnwomen. This is for a chance to win an autographed copy of Barbara Corcoran’s latest book, “Shark Tales: How I Turned $1,000 into a Billion Dollar Business.”

Groupon CEO Eric Lefkofsky said, “Not only are 70 percent of Groupon customers women, but a majority of the merchants on the website are women-led businesses. There is no better way to celebrate those merchants and Women’s History Month than to partner with one of the top female entrepreneurs today, Barbara Corcoran.”

More details about the contest here.

Image via Groupon

March 7, 2014

Groupon Earnings Released, Revenue Up 20%

Groupon just released its earnings report for the fourth quarter and full year 2013. Revenue was up 20% for the quarter at $768.4 million with revenue up 18% in North America, but down 15% in the rest of the world. Gross profit increased 6%, to $378.2 million in the quarter.

“Our record performance in the quarter was led by strength in Goods, as shoppers increasingly looked to Groupon to fill their holiday needs,” said CEO Eric Lefkofsky. “Our mobile business continued to gain momentum as our worldwide mobile transaction mix increased more than 10% in the quarter, to nearly 50% in December. With another 9 million downloads this quarter, we now have nearly 70 million app downloads to date.”

Last quarter, the company said that changes to Gmail’s inbox (you know the ones) had a negative impact on people viewing Groupon’s email marketing messages. It will be interesting to see if that’s changed at all over the last few months. It will likely come up on the earnings call.

Here’s the release in its entirety:

CHICAGO–(BUSINESS WIRE)–Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter and fiscal year ended December 31, 2013.

“Our mobile business continued to gain momentum as our worldwide mobile transaction mix increased more than 10% in the quarter, to nearly 50% in December. With another 9 million downloads this quarter, we now have nearly 70 million app downloads to date.”

“Our record performance in the quarter was led by strength in Goods, as shoppers increasingly looked to Groupon to fill their holiday needs,” said Eric Lefkofsky, CEO of Groupon. “Our mobile business continued to gain momentum as our worldwide mobile transaction mix increased more than 10% in the quarter, to nearly 50% in December. With another 9 million downloads this quarter, we now have nearly 70 million app downloads to date.”

“We’re also excited to welcome Ticket Monster and ideeli to the Groupon family. The acquisitions bring scale, relationships, and category expertise, making Groupon an even better place to start when you want to do or buy just about anything, anytime, anywhere.”

Fourth Quarter 2013 Summary

Gross billings, which reflect the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds, increased 5% globally to $1.6 billion in the fourth quarter 2013, compared with $1.5 billion in the fourth quarter 2012. North America growth of 10% and EMEA growth of 6% was offset by an 11% decline in Rest of World.

Revenue increased 20% to $768.4 million in the fourth quarter 2013, compared with $638.3 million in the fourth quarter 2012. North America revenue growth of 18% and EMEA growth of 43% was offset by a 15% decline in Rest of World.

Gross profit increased 6%, to $378.2 million in the fourth quarter 2013, compared with $355.8 million in the fourth quarter 2012.

Adjusted EBITDA, a non-GAAP financial measure, was $72.0 million in the fourth quarter 2013, compared with $29.7 million in the fourth quarter 2012.

Operating income was $13.4 million in the fourth quarter 2013, compared with an operating loss of $12.9 million in the fourth quarter 2012.

Operating income excluding stock compensation and acquisition-related costs, net, a non-GAAP financial measure, was $47.9 million in the fourth quarter 2013, compared with $13.7 million in the fourth quarter 2012.

Fourth quarter 2013 net loss attributable to common stockholders was $81.2 million, or $0.12 per share, including stock compensation and acquisition-related costs, net, of $34.5 million ($31.0 million net of tax). Fourth quarter 2013 results include a pre-tax non-operating loss of $85.5 million ($77.8 million net of tax) related to the impairment of a minority investment in China. Earnings per share excluding this impairment charge, stock compensation and acquisition-related costs, net of tax, a non-GAAP financial measure, was $0.04 per share.

Operating cash flow for the trailing twelve months ended December 31, 2013 was $218.4 million. Free cash flow, a non-GAAP financial measure, was $158.3 million in the fourth quarter 2013, bringing free cash flow for the trailing twelve months ended December 31, 2013 to $154.9 million.

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

Full Year 2013 Summary

Gross billings increased 7% globally to $5.8 billion in 2013, compared with $5.4 billion in 2012. North America growth of 20% and EMEA growth of 3% was offset by a 14% decline in Rest of World.

Revenue increased 10% to $2.6 billion in 2013, compared with $2.3 billion in 2012. North America revenue growth of 31% was offset by an 8% decline in EMEA and a 15% decline in Rest of World.

Gross profit decreased 7%, to $1.5 billion in 2013, compared with $1.6 billion in 2012.

Adjusted EBITDA, a non-GAAP financial measure, was $286.7 million in 2013, compared with $259.5 million in 2012.

Operating income was $75.8 million in 2013, compared with $98.7 million in 2012.

Operating income excluding stock compensation and acquisition-related costs, net, a non-GAAP financial measure, was $197.2 million in 2013, compared with $203.7 million in 2012.

Full year 2013 net loss attributable to common stockholders was $95.4 million, or $0.14 per share, including stock compensation and acquisition-related costs, net, of $121.5 million ($90.7 million net of tax). 2013 results include a pre-tax non-operating loss of $85.5 million ($77.8 million net of tax) related to the impairment of a minority investment in China in the fourth quarter. Earnings per share excluding this impairment charge, stock compensation and acquisition-related costs, net of tax, a non-GAAP financial measure, was $0.11 per share.

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.

Operating Highlights

Units: Global units, defined as vouchers and products sold before cancellations and refunds, increased 11% year-over-year to 56 million in the fourth quarter 2013. North America units increased 17%, EMEA units increased 9%, and Rest of World units decreased 1% year-over-year.

Active deals: At the end of the fourth quarter 2013, on average, active deals in North America were approximately 80,000, compared with more than 65,000 at the end of the third quarter 2013. Globally, active deals exceeded 140,000 at the end of the fourth quarter 2013.

Active customers: Active customers, or customers that have purchased a voucher or product within the last twelve months, grew 9% year-over-year, to 44.9 million as of December 31, 2013, comprising 20.8 million in North America, 14.2 million in EMEA, and 9.9 million in Rest of World.

Customer spend: Fourth quarter 2013 trailing twelve month billings per average active customer was $134, compared with $137 in the third quarter 2013.

Mobile: In December 2013, nearly 50% of global transactions were completed on mobile devices. Nearly 70 million people have now downloaded Groupon mobile apps worldwide, with approximately 9 million people downloading them in the fourth quarter alone.

Marketplace: The rollout of Groupon’s marketplace (“Pull”) continued to gain traction. In December 2013, approximately 8% of total traffic in North America searched, with customers that searched spending over 50% more than those that did not.

Share Repurchase Program

During the fourth quarter 2013, Groupon repurchased 3,661,900 shares of Class A common stock under its share repurchase authorization at an average price of $10.26 per share, for an aggregate purchase price of $37.6 million. During the full year 2013, Groupon repurchased 4,432,800 shares at an average price of $10.51 per share, for an aggregate purchase price of $46.6 million. Groupon is authorized to repurchase up to approximately $253.4 million of Class A common stock under the August 2013 share repurchase authorization. The program, which is intended to partially offset dilution from employee stock grants, terminates in August 2015.

Subsequent Events

On January 2, 2014, Groupon completed the acquisition of LivingSocial Korea, Inc., the holding company that owns Ticket Monster, for $100 million in cash and $163 million in Groupon Class A common stock. Ticket Monster is a leading Korean ecommerce company, with a broad range of local, travel, and product offers, and is one of the fastest growing ecommerce companies in the region.

On January 13, 2014, Groupon completed the acquisition of Ideeli, Inc. for $43 million in cash. Ideeli is a leading online flash fashion retailer, further extending Groupon’s presence in fashion apparel.

Outlook

In the first quarter 2014, Groupon expects one-time costs related to the integration of its recent acquisitions, specifically as it consolidates Ticket Monster with its Korean business, and makes investments to drive ideeli growth and profitability. Together, in the first quarter, they are expected to contribute approximately $50 million to revenue, and have an approximately $20 million negative impact on Adjusted EBITDA. In addition, Groupon anticipates approximately $25 million of additional investment in marketing and other growth initiatives to drive adoption of the marketplace. As a result, for the first quarter 2014, the Company expects revenue of between $710 million and $760 million, Adjusted EBITDA of between $20 million and $40 million, and earnings per share excluding stock compensation, amortization of acquired intangibles, and acquisition-related expenses, net of tax, of between negative $0.04 and negative $0.02.

As a result of growth investments anticipated in 2014, Groupon expects Adjusted EBITDA for the full year to be slightly above 2013 levels.

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.

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.

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, free cash flow and earnings per share excluding stock-based compensation, acquisition-related expense (benefit), net, and the impairment of a minority investment in China. 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 is comprised of the change in the fair value of contingent consideration arrangements and, beginning in 2013, also includes external transaction costs related to business combinations, primarily consisting of legal and advisory fees. External transaction costs were not material for the prior periods presented in this release and the accompanying tables. 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.

Impairment of a minority investment in China. For the three months ended December 31, 2013, we recognized an $85.5 million other-than-temporary impairment of our minority investment in Life Media Limited (“F-tuan”), an entity with operations in China. This impairment reduced the carrying value of the investment to zero as of December 31, 2013. We have excluded this impairment from our non-GAAP earnings per share measure, described below, because we believe that excluding this item provides meaningful supplemental information about our core operating performance on a per share basis and facilitates comparisons to our historical operating results.

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 have used consolidated operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net to allocate resources and evaluate performance internally. However, in recent periods, our management and Board of Directors have increasingly focused on Adjusted EBITDA, described below, as the primary non-GAAP measure for evaluating our consolidated operating results. Accordingly, we do not expect to continue to report Operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net on a consolidated basis in future periods.

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. Adjusted EBITDA is a key measure used by our management and Board of Directors to evaluate operating performance, generate future plans and make strategic decisions regarding the allocation of capital. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

Earnings per share excluding stock-based compensation, acquisition-related expense (benefit), net and the impairment of a minority investment in China 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 impairment of a minority investment in China, and the income tax effect of those items. We believe that this non-GAAP financial measure provides useful supplemental information for evaluating our operating performance.

Beginning in the first quarter 2014, we will be changing our non-GAAP earnings per share measure to exclude amortization of acquired intangible assets, net of tax, in addition to stock compensation and acquisition-related expenses, which we have excluded historically. Given the significant acquisition activity in January 2014 and potential acquisition activity in the future, we believe that excluding non-cash amortization of acquired intangible assets from our non-GAAP earnings per share measure in future periods will enable more meaningful comparisons with our historical results.

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 most recent 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 at http://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 February 20, 2014. 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.

About Groupon

Groupon (NASDAQ: GRPN) is a global leader of local commerce and the place you start when you want to buy just about anything, anytime, anywhere. By leveraging the company’s global relationships and scale, Groupon offers consumers a vast marketplace of unbeatable deals all over the world. Shoppers discover the best a city has to offer on the web or on mobile with Groupon Local, enjoy vacations with Groupon Getaways, and find a curated selection of electronics, fashion, home furnishings and more with Groupon Goods.

Groupon is redefining how traditional small businesses attract, retain and interact with customers by providing merchants with a suite of products and services, including customizable deal campaigns, credit card payment processing capabilities, and point-of-sale solutions that help businesses grow and operate more effectively. To search for great deals or subscribe to Groupon emails, visit www.Groupon.com. To download Groupon’s five-star mobile apps, visit www.groupon.com/mobile. 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)

Three Months Ended Y/Y % Year Ended Y/Y %

December 31, Growth December 31, Growth

Y/Y % excluding Y/Y % excluding

2013 2012 Growth FX Effect (2) FX(2) 2013 2012 Growth FX Effect (2) FX(2)

Gross Billings (1):

North America $ 788,721 $ 718,952 9.7 % $ (564 ) 9.8 % $ 2,847,244 $ 2,373,153 20.0 % $ (1,115 ) 20.0 %

EMEA 565,713 532,481 6.2 % 18,424 2.8 % 1,983,599 1,928,508 2.9 % 37,588 0.9 %

Rest of World 238,673 269,019 (11.3 ) % (25,873 ) (1.7 ) % 926,487 1,078,523 (14.1 ) % (76,742 ) (7.0 ) %

Consolidated gross billings $ 1,593,107 $ 1,520,452 4.8 % $ (8,013 ) 5.3 % $ 5,757,330 $ 5,380,184 7.0 % $ (40,269 ) 7.8 %

Revenue:

North America $ 443,784 $ 375,351 18.2 % $ (189 ) 18.3 % $ 1,521,358 $ 1,165,700 30.5 % $ (380 ) 30.5 %

EMEA 251,205 176,278 42.5 % 8,839 37.5 % 742,915 805,476 (7.8 ) % 16,114 (9.8 ) %

Rest of World 73,458 86,673 (15.2 ) % (8,059 ) (5.9 ) % 309,382 363,296 (14.8 ) % (27,455 ) (7.3 ) %

Consolidated revenue $ 768,447 $ 638,302 20.4 % $ 591 20.3 % $ 2,573,655 $ 2,334,472 10.2 % $ (11,721 ) 10.7 %

Income (loss) from operations $ 13,352 $ (12,861 ) 203.8 % $ 3,306 178.1 % $ 75,754 $ 98,701 (23.2 ) % $ 4,042 (27.3 ) %

Net loss attributable to common stockholders $ (81,247 ) $ (81,089 ) $ (95,393 ) $ (67,377 )

Net loss per share:

Basic $ (0.12 ) $ (0.12 ) $ (0.14 ) $ (0.10 )

Diluted $ (0.12 ) $ (0.12 ) $ (0.14 ) $ (0.10 )

Weighted average number of shares outstanding:

Basic 668,046,073 665,678,123 663,910,194 650,214,119

Diluted 668,046,073 665,678,123 663,910,194 650,214,119

(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 months and year ended December 31, 2012.

Groupon, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended Year Ended

December 31, December 31,

2013 2012 2013 2012

Operating activities

Net loss $ (78,861 ) $ (80,047 ) $ (88,946 ) $ (51,031 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 24,132 15,965 89,449 55,801

Stock-based compensation 32,239 26,411 121,462 104,117

Deferred income taxes (16,830 ) (17,259 ) (18,055 ) (7,651 )

Excess tax benefits on stock-based compensation (8,338 ) (2,403 ) (20,454 ) (27,023 )

(Income) loss on equity method investments (14 ) 1,231 44 9,925

(Gain) loss, net from changes in fair value of contingent consideration (895 ) 153 (3,171 ) 897

Gain on E-Commerce transaction – – – (56,032 )

Impairment of investments 85,925 50,553 85,925 50,553

Change in assets and liabilities, net of acquisitions:

Restricted cash 2,264 (2,517 ) 2,183 (4,372 )

Accounts receivable 1,990 12,723 10,989 10,534

Prepaid expenses and other current assets (76,052 ) (45,922 ) (62,906 ) (70,859 )

Accounts payable (5,421 ) 5,537 (31,288 ) 18,711

Accrued merchant and supplier payables 160,758 96,029 88,468 149,918

Accrued expenses and other current liabilities 31,843 (20,268 ) 4,053 47,742

Other, net 25,535 25,531 40,679 35,604

Net cash provided by operating activities 178,275 65,717 218,432 266,834

Net cash used in investing activities (23,330 ) (52,753 ) (96,315 ) (194,979 )

Net cash (used in) provided by financing activities (55,444 ) (6,495 ) (81,697 ) 12,095

Effect of exchange rate changes on cash and cash equivalents 1,114 1,809 (9,237 ) 2,404

Net increase in cash and cash equivalents 100,615 8,278 31,183 86,354

Cash and cash equivalents, beginning of period 1,139,857 1,201,011 1,209,289 1,122,935

Cash and cash equivalents, end of period $ 1,240,472 $ 1,209,289 $ 1,240,472 $ 1,209,289

Groupon, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

Three Months Ended December 31, Year Ended December 31,

2013 2012 2013 2012

Revenue:

Third party and other $ 401,688 $ 413,127 $ 1,654,654 $ 1,879,729

Direct 366,759 225,175 919,001 454,743

Total revenue 768,447 638,302 2,573,655 2,334,472

Cost of revenue:

Third party and other 52,538 63,905 232,062 297,739

Direct 337,701 218,567 840,060 421,201

Total cost of revenue 390,239 282,472 1,072,122 718,940

Gross profit 378,208 355,830 1,501,533 1,615,532

Operating expenses:

Marketing 56,505 60,913 214,824 336,854

Selling, general and administrative 306,086 307,625 1,210,966 1,179,080

Acquisition-related expense (benefit), net 2,265 153 (11 ) 897

Total operating expenses 364,856 368,691 1,425,779 1,516,831

Income (loss) from operations 13,352 (12,861 ) 75,754 98,701

Income (loss) on equity method investments 14 (1,231 ) (44 ) (9,925 )

Other (expense) income, net (84,847 ) (48,279 ) (94,619 ) 6,166

(Loss) income before provision for income taxes (71,481 ) (62,371 ) (18,909 ) 94,942

Provision for income taxes 7,380 17,676 70,037 145,973

Net loss (78,861 ) (80,047 ) (88,946 ) (51,031 )

Net income attributable to noncontrolling interests (2,386 ) (936 ) (6,447 ) (3,742 )

Net loss attributable to Groupon, Inc. (81,247 ) (80,983 ) (95,393 ) (54,773 )

Adjustment of redeemable noncontrolling interests to redemption value – (106 ) – (12,604 )

Net loss attributable to common stockholders $ (81,247 ) $ (81,089 ) $ (95,393 ) $ (67,377 )

Net loss per share

Basic $ (0.12 ) $ (0.12 ) $ (0.14 ) $ (0.10 )

Diluted $ (0.12 ) $ (0.12 ) $ (0.14 ) $ (0.10 )

Weighted average number of shares outstanding

Basic 668,046,073 665,678,123 663,910,194 650,214,119

Diluted 668,046,073 665,678,123 663,910,194 650,214,119

Groupon, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

December 31, 2013 December 31, 2012

(unaudited)

Assets

Current assets:

Cash and cash equivalents $ 1,240,472 $ 1,209,289

Accounts receivable, net 83,673 96,713

Deferred income taxes 27,938 31,211

Prepaid expenses and other current assets 210,415 150,573

Total current assets 1,562,498 1,487,786

Property, equipment and software, net 134,423 121,072

Goodwill 220,827 206,684

Intangible assets, net 28,443 42,597

Investments 20,652 84,209

Deferred income taxes, non-current 35,941 29,916

Other non-current assets 39,226 59,210

Total Assets $ 2,042,010 $ 2,031,474

Liabilities and Equity

Current liabilities:

Accounts payable $ 27,573 $ 59,865

Accrued merchant and supplier payables 752,943 671,305

Accrued expenses 226,986 246,924

Deferred income taxes 47,558 53,700

Other current liabilities 132,718 136,647

Total current liabilities 1,187,778 1,168,441

Deferred income taxes, non-current 10,853 20,860

Other non-current liabilities 131,697 100,072

Total Liabilities 1,330,328 1,289,373

Commitments and contingencies

Stockholders’ Equity

Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 670,149,976 shares issued and 665,717,176 shares outstanding at December 31, 2013 and 654,523,706 shares issued and outstanding at December 31, 2012 67 65

Class B common stock, par value $0.0001 per share, 10,000,000 shares authorized, 2,399,976 shares issued and outstanding at December 31, 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 December 31, 2013 and December 31, 2012 – –

Additional paid-in capital 1,584,211 1,485,006

Treasury stock, at cost, 4,432,800 shares at December 31, 2013 and no shares at December 31, 2012 (46,587 ) –

Accumulated deficit (848,870 ) (753,477 )

Accumulated other comprehensive income 24,830 12,446

Total Groupon, Inc. Stockholders’ Equity 713,651 744,040

Noncontrolling interests (1,969 ) (1,939 )

Total Equity 711,682 742,101

Total Liabilities and Equity $ 2,042,010 $ 2,031,474

Groupon, Inc.

Segment Information

(in thousands)

(unaudited)

Three Months Ended December 31, Year Ended December 31,

2013 2012 2013 2012

North America

Gross Billings (1) $ 788,721 $ 718,952 $ 2,847,244 $ 2,373,153

Revenue $ 443,784 $ 375,351 $ 1,521,358 $ 1,165,700

Segment cost of revenue and operating expenses(2)(3) 418,214 358,319 1,380,746 1,025,974

Segment operating income(2)(3) $ 25,570 $ 17,032 $ 140,612 $ 139,726

Segment operating income as a percent of segment revenue 5.8 % 4.5 % 9.2 % 12.0 %

EMEA

Gross Billings (1) $ 565,713 $ 532,481 $ 1,983,599 $ 1,928,508

Revenue $ 251,205 $ 176,278 $ 742,915 $ 805,476

Segment cost of revenue and operating expenses(2)(3) 214,187 167,502 631,409 699,470

Segment operating income(2)(3) $ 37,018 $ 8,776 $ 111,506 $ 106,006

Segment operating income as a percent of segment revenue 14.7 % 5.0 % 15.0 % 13.2 %

Rest of World

Gross Billings (1) $ 238,673 $ 269,019 $ 926,487 $ 1,078,523

Revenue $ 73,458 $ 86,673 $ 309,382 $ 363,296

Segment cost of revenue and operating expenses(2) 88,190 98,778 364,295 405,313

Segment operating loss(2) $ (14,732 ) $ (12,105 ) $ (54,913 ) $ (42,017 )

Segment operating loss as a percent of segment revenue (20.1 ) % (14.0 ) % (17.7 ) % (11.6 ) %

Consolidated

Gross Billings (1) $ 1,593,107 $ 1,520,452 $ 5,757,330 $ 5,380,184

Revenue $ 768,447 $ 638,302 $ 2,573,655 $ 2,334,472

Segment cost of revenue and operating expenses(2) 720,591 624,599 2,376,450 2,130,757

Segment operating income(2) $ 47,856 $ 13,703 $ 197,205 $ 203,715

Segment operating income as a percent of segment revenue 6.2 % 2.1 % 7.7 % 8.7 %

Stock-based compensation 32,239 26,411 121,462 104,117

Acquisition-related expense (benefit), net 2,265 153 (11 ) 897

Income (loss) from operations 13,352 (12,861 ) 75,754 98,701

(Income) loss on equity method investments (14 ) 1,231 44 9,925

Other expense (income), net 84,847 48,279 94,619 (6,166 )

(Loss) income before provision for income taxes (71,481 ) (62,371 ) (18,909 ) 94,942

Provision for income taxes 7,380 17,676 70,037 145,973

Net loss $ (78,861 ) $ (80,047 ) $ (88,946 ) $ (51,031 )

(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 expense (benefit), net.

(3) We record intercompany cross-charges every period for services provided by the United States to our international subsidiaries. We updated our intercompany allocations for those charges during the fourth quarter of 2012, which resulted in a one-time $8.5 million decrease to EMEA Segment operating expenses (increase to EMEA Segment operating income) and a corresponding increase to North America Segment operating expenses (reduction to North America Segment operating income).

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, acquisition-related expense (benefit), net and the impairment of a minority investment in China 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 (expense) 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, acquisition-related expense (benefit), net and the impairment of Life Media Limited (F-tuan), a minority investment in China, for the three months and year ended December 31, 2013:

Three Months Ended Year Ended

December 31, 2013 December 31, 2013

Net loss attributable to common stockholders $ (81,247 ) $ (95,393 )

Stock-based compensation 32,239 121,462

Acquisition-related expense (benefit), net 2,265 (11 )

Impairment of investment in F-tuan 85,521 85,521

Income tax effect of adjustments (11,301 ) (38,504 )

Net income attributable to common stockholders excluding stock-based compensation,

acquisition-related expense (benefit), net and impairment of investment in F-tuan $ 27,477 $ 73,075

Diluted shares 668,046,073 663,910,194

Incremental diluted shares (1) 16,685,634 15,501,759

Adjusted diluted shares 684,731,707 679,411,953

Diluted net loss per share $ (0.12 ) $ (0.14 )

Impact of stock-based compensation, acquisition-related expense

(benefit), net and impairment of investment in F-tuan and the related income tax effects 0.16 0.25

Diluted earnings per share excluding stock-based compensation,

acquisition-related expense (benefit), net and impairment of investment in F-tuan $ 0.04 $ 0.11

(1) Outstanding equity awards are not reflected in the diluted net loss per share calculation for the three months and year ended December 31, 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, acquisition-related expense (benefit), net and the impairment of a minority investment in China for the three months and year ended December 31, 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 months and year ended December 31, 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 December 31, 2013 was as follows:

Three Months Ended December 31, 2013 Three Months Ended December 31, 2013

At Avg. Exchange At Avg. Exchange

Q4 2012 Rate As Q3 2013 Rate As

Rates (1) Effect (2) Reported Rates (3) Effect (2) Reported

Gross billings $ 1,601,120 $ (8,013 ) $ 1,593,107 $ 1,578,913 $ 14,194 $ 1,593,107

Revenue $ 767,856 $ 591 $ 768,447 $ 762,153 $ 6,294 $ 768,447

Income from operations $ 10,046 $ 3,306 $ 13,352 $ 12,184 $ 1,168 $ 13,352

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 year ended December 31, 2013 was as follows:

Year Ended December 31, 2013 Year Ended December 31, 2013

At Avg. Exchange At Avg. Exchange

2012 Rate As Q4’12 – Q3’13 Rate As

Rates (1) Effect (2) Reported Rates (3) Effect (2) Reported

Gross billings $ 5,797,599 $ (40,269 ) $ 5,757,330 $ 5,765,679 $ (8,349 ) $ 5,757,330

Revenue $ 2,585,376 $ (11,721 ) $ 2,573,655 $ 2,574,687 $ (1,032 ) $ 2,573,655

Income from operations $ 71,712 $ 4,042 $ 75,754 $ 75,009 $ 745 $ 75,754

(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 months and year ended December 31, 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 twelve months ended September 30, 2013.

Groupon, Inc.

Supplemental Financial Information and Business Metrics(14)

(financial data in thousands, except per share data; active customers in millions)

(unaudited)

Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013

Segments

North America Segment

Gross Billings (1)

Local (2) Gross Billings

Third Party $ 430,255 $ 450,140 $ 449,770 $ 401,756 $ 436,705

Direct – – 693 1,040 39

Total Local Gross Billings $ 430,255 $ 450,140 $ 450,463 $ 402,796 $ 436,744

Goods Gross Billings

Third Party $ 31,270 $ 17,294 $ 15,501 $ 12,650 $ 23,373

Direct 209,575 148,065 181,377 181,915 262,666

Total Goods Gross Billings $ 240,845 $ 165,359 $ 196,878 $ 194,565 $ 286,039

Travel and Other Gross Billings

Third Party and Other $ 47,852 $ 65,820 $ 64,864 $ 67,638 $ 65,938

Direct – – – – –

Total Travel and Other Gross Billings $ 47,852 $ 65,820 $ 64,864 $ 67,638 $ 65,938

Total Gross Billings

Third Party and Other $ 509,377 $ 533,254 $ 530,135 $ 482,044 $ 526,016

Direct 209,575 148,065 182,070 182,955 262,705

Total Gross Billings $ 718,952 $ 681,319 $ 712,205 $ 664,999 $ 788,721

Year-over-year growth 51 % 23 % 30 % 20 % 10 %

% of Consolidated Gross Billings 47 % 48 % 50 % 50 % 50 %

Gross Billings Trailing Twelve Months (TTM) $ 2,373,153 $ 2,500,915 $ 2,664,845 $ 2,777,475 $ 2,847,244

Revenue (3)

Local Revenue

Third Party $ 142,454 $ 171,593 $ 174,117 $ 158,189 $ 159,175

Direct – – 693 1,040 39

Total Local Revenue $ 142,454 $ 171,593 $ 174,810 $ 159,229 $ 159,214

Goods Revenue

Third Party $ 11,877 $ 3,144 $ 4,651 $ 3,999 $ 5,615

Direct 209,575 148,065 181,377 181,915 262,666

Total Goods Revenue $ 221,452 $ 151,209 $ 186,028 $ 185,914 $ 268,281

Travel and Other Revenue

Third Party and Other $ 11,445 $ 16,752 $ 16,344 $ 15,695 $ 16,289

Direct – – – – –

Total Travel and Other Revenue $ 11,445 $ 16,752 $ 16,344 $ 15,695 $ 16,289

Total Revenue

Third Party and Other Revenue $ 165,776 $ 191,489 $ 195,112 $ 177,883 $ 181,079

Direct Revenue 209,575 148,065 182,070 182,955 262,705

Total Revenue $ 375,351 $ 339,554 $ 377,182 $ 360,838 $ 443,784

Year-over-year growth 109 % 42 % 45 % 24 % 18 %

% of Consolidated Revenue 59 % 56 % 62 % 61 % 58 %

Revenue TTM $ 1,165,700 $ 1,266,689 $ 1,383,690 $ 1,452,925 $ 1,521,358

Cost of Revenue (4)

Local Cost of Revenue

Third Party $ 23,203 $ 25,915 $ 19,818 $ 18,985 $ 17,918

Direct – – 636 1,887 31

Total Local Cost of Revenue $ 23,203 $ 25,915 $ 20,454 $ 20,872 $ 17,949

Goods Cost of Revenue

Third Party $ 1,935 $ 475 $ 522 $ 480 $ 613

Direct 196,789 138,278 158,529 163,825 246,638

Total Goods Cost of Revenue $ 198,724 $ 138,753 $ 159,051 $ 164,305 $ 247,251

Travel and Other Cost of Revenue

Third Party and Other $ 1,864 $ 2,530 $ 3,091 $ 4,092 $ 4,258

Direct – – – – –

Total Travel and Other Cost of Revenue $ 1,864 $ 2,530 $ 3,091 $ 4,092 $ 4,258

Total Cost of Revenue

Third Party and Other Cost of Revenue $ 27,002 $ 28,920 $ 23,431 $ 23,557 $ 22,789

Direct Cost of Revenue 196,789 138,278 159,165 165,712 246,669

Total Cost of Revenue $ 223,791 $ 167,198 $ 182,596 $ 189,269 $ 269,458

% of North America Total Revenue 60 % 49 % 48 % 52 % 61 %

Gross Profit

Local Gross Profit

Third Party $ 119,251 $ 145,678 $ 154,299 $ 139,204 $ 141,257

Direct – – 57 (847 ) 8

Total Local Gross Profit $ 119,251 $ 145,678 $ 154,356 $ 138,357 $ 141,265

% of North America Total Local Revenue 83.7 % 84.9 % 88.3 % 86.9 % 88.7 %

% of North America Total Local Gross Billings 27.7 % 32.4 % 34.3 % 34.3 % 32.3 %

Goods Gross Profit

Third Party $ 9,942 $ 2,669 $ 4,129 $ 3,519 $ 5,002

Direct 12,786 9,787 22,848 18,090 16,028

Total Goods Gross Profit $ 22,728 $ 12,456 $ 26,977 $ 21,609 $ 21,030

% of North America Total Goods Revenue 10.3 % 8.2 % 14.5 % 11.6 % 7.8 %

% of North America Total Goods Gross Billings 9.4 % 7.5 % 13.7 % 11.1 % 7.4 %

Travel and Other Gross Profit

Third Party and Other $ 9,581 $ 14,222 $ 13,253 $ 11,603 $ 12,031

Direct – – – – –

Total Travel and Other Gross Profit $ 9,581 $ 14,222 $ 13,253 $ 11,603 $ 12,031

% of North America Total Travel and Other Revenue 83.7 % 84.9 % 81.1 % 73.9 % 73.9 %

% of North America Total Travel and Other Gross Billings 20.0 % 21.6 % 20.4 % 17.2 % 18.2 %

Total Gross Profit

Third Party and Other $ 138,774 $ 162,569 $ 171,681 $ 154,326 $ 158,290

Direct 12,786 9,787 22,905 17,243 16,036

Total Gross Profit $ 151,560 $ 172,356 $ 194,586 $ 171,569 $ 174,326

% of North America Total Revenue 40.4 % 50.8 % 51.6 % 47.5 % 39.3 %

% of North America Total Gross Billings 21.1 % 25.3 % 27.3 % 25.8 % 22.1 %

Operating Income Excl Stock-Based Compensation (SBC), Acquisition-Related Expense (Benefit), net $ 17,032 $ 41,366 $ 48,508 $ 25,168 $ 25,570

Year-over-year growth (7 ) % 3 % 12 % (36 ) % 50 %

% of Consolidated Operating Income Excl SBC, Acq-Related 124 % 81 % 82 % 64 % 53 %

Operating Margin Excl SBC, Acq-Related (% of North America Total revenue) 4.5 % 12.2 % 12.9 % 7.0 % 5.8 %

Year-over-year growth (bps) (570 ) (460 ) (380 ) (640 ) 130

Operating Income TTM Excl SBC, Acq-Related $ 139,726 $ 140,920 $ 145,999 $ 132,074 $ 140,612

Operating Margin TTM Excl SBC, Acq-Related (% of North America Total TTM revenue) 12.0 % 11.1 % 10.6 % 9.1 % 9.2 %

Year-over-year growth (bps) 1,120 200 (380 ) (540 ) (280 )

EMEA Segment

Gross Billings

Local Gross Billings

Third Party $ 239,944 $ 259,423 $ 241,108 $ 207,110 $ 276,670

Direct – – – – –

Total Local Gross Billings $ 239,944 $ 259,423 $ 241,108 $ 207,110 $ 276,670

Goods Gross Billings

Third Party $ 195,582 $ 141,742 $ 165,413 $ 160,578 $ 122,902

Direct 9,020 7,451 2,181 9,271 96,978

Total Goods Gross Billings $ 204,602 $ 149,193 $ 167,594 $ 169,849 $ 219,880

Travel and Other Gross Billings

Third Party and Other $ 87,935 $ 83,702 $ 73,548 $ 66,359 $ 69,163

Direct – – – – –

Total Travel and Other Gross Billings $ 87,935 $ 83,702 $ 73,548 $ 66,359 $ 69,163

Total Gross Billings

Third Party and Other $ 523,461 $ 484,867 $ 480,069 $ 434,047 $ 468,735

Direct 9,020 7,451 2,181 9,271 96,978

Total Gross Billings $ 532,481 $ 492,318 $ 482,250 $ 443,318 $ 565,713

Year-over-year growth 2 % (8 ) % 4 % 12 % 6 %

Year-over-year growth, excluding FX (5) 4 % (9 ) % 4 % 9 % 3 %

% of Consolidated Gross Billings 35 % 35 % 34 % 33 % 36 %

Gross Billings TTM $ 1,928,507 $ 1,883,265 $ 1,903,136 $ 1,950,367 $ 1,983,599

Revenue

Local Revenue

Third Party $ 98,668 $ 110,715 $ 109,481 $ 91,448 $ 115,259

Direct – – – – –

Total Local Revenue $ 98,668 $ 110,715 $ 109,481 $ 91,448 $ 115,259

Goods Revenue

Third Party $ 49,173 $ 45,875 $ 32,938 $ 32,008 $ 22,296

Direct 9,020 7,451 2,181 9,271 96,978

Total Goods Revenue $ 58,193 $ 53,326 $ 35,119 $ 41,279 $ 119,274

Travel and Other Revenue

Third Party and Other $ 19,417 $ 19,757 $ 15,362 $ 15,223 $ 16,672

Direct – – – – –

Total Travel and Other Revenue $ 19,417 $ 19,757 $ 15,362 $ 15,223 $ 16,672

Total Revenue

Third Party and Other Revenue $ 167,258 $ 176,347 $ 157,781 $ 138,679 $ 154,227

Direct Revenue 9,020 7,451 2,181 9,271 96,978

Total Revenue $ 176,278 $ 183,798 $ 159,962 $ 147,950 $ 251,205

Year-over-year growth (27 ) % (20 ) % (24 ) % (21 ) % 43 %

Year-over-year growth, excluding FX(5) (25 ) % (20 ) % (25 ) % (23 ) % 38 %

% of Consolidated Revenue 28 % 31 % 26 % 25 % 33 %

Revenue TTM $ 805,476 $ 758,918 $ 707,325 $ 667,988 $ 742,915

Cost of Revenue

Local Cost of Revenue

Third Party $ 10,622 $ 14,192 $ 10,898 $ 10,254 $ 10,374

Direct – – – – –

Total Local Cost of Revenue $ 10,622 $ 14,192 $ 10,898 $ 10,254 $ 10,374

Goods Cost of Revenue

Third Party $ 5,294 $ 5,880 $ 4,705 $ 3,972 $ 2,203

Direct 14,550 7,472 3,306 8,364 83,545

Total Goods Cost of Revenue $ 19,844 $ 13,352 $ 8,011 $ 12,336 $ 85,748

Travel and Other Cost of Revenue

Third Party and Other $ 2,090 $ 2,533 $ 1,522 $ 1,679 $ 1,890

Direct – – – – –

Total Travel and Other Cost of Revenue $ 2,090 $ 2,533 $ 1,522 $ 1,679 $ 1,890

Total Cost of Revenue

Third Party and Other Cost of Revenue $ 18,006 $ 22,605 $ 17,125 $ 15,905 $ 14,467

Direct Cost of Revenue 14,550 7,472 3,306 8,364 83,545

Total Cost of Revenue $ 32,556 $ 30,077 $ 20,431 $ 24,269 $ 98,012

% of EMEA Total Revenue 18 % 16 % 13 % 16 % 39 %

Gross Profit

Local Gross Profit

Third Party $ 88,046 $ 96,523 $ 98,583 $ 81,194 $ 104,885

Direct – – – – –

Total Local Gross Profit $ 88,046 $ 96,523 $ 98,583 $ 81,194 $ 104,885

% of EMEA Total Local Revenue 89.2 % 87.2 % 90.0 % 88.8 % 91.0 %

% of EMEA Total Local Gross Billings 36.7 % 37.2 % 40.9 % 39.2 % 37.9 %

Goods Gross Profit

Third Party $ 43,879 $ 39,995 $ 28,233 $ 28,036 $ 20,093

Direct (5,530 ) (21 ) (1,125 ) 907 13,433

Total Goods Gross Profit $ 38,349 $ 39,974 $ 27,108 $ 28,943 $ 33,526

% of EMEA Total Goods Revenue 65.9 % 75.0 % 77.2 % 70.1 % 28.1 %

% of EMEA Total Goods Gross Billings 18.7 % 26.8 % 16.2 % 17.0 % 15.2 %

Travel and Other Gross Profit

Third Party and Other $ 17,327 $ 17,224 $ 13,840 $ 13,544 $ 14,782

Direct – – – – –

Total Travel and Other Gross Profit $ 17,327 $ 17,224 $ 13,840 $ 13,544 $ 14,782

% of EMEA Total Travel and Other Revenue 89.2 % 87.2 % 90.1 % 89.0 % 88.7 %

% of EMEA Total Travel and Other Gross Billings 19.7 % 20.6 % 18.8 % 20.4 % 21.4 %

Total Gross Profit

Third Party and Other $ 149,252 $ 153,742 $ 140,656 $ 122,774 $ 139,760

Direct (5,530 ) (21 ) (1,125 ) 907 13,433

Total Gross Profit $ 143,722 $ 153,721 $ 139,531 $ 123,681 $ 153,193

% of EMEA Total Revenue 81.5 % 83.6 % 87.2 % 83.6 % 61.0 %

% of EMEA Total Gross Billings 27.0 % 31.2 % 28.9 % 27.9 % 27.1 %

Operating Income Excl SBC, Acq-Related $ 8,776 $ 34,176 $ 24,708 $ 15,604 $ 37,018

Year-over-year growth (77 ) % (6 ) % (22 ) % (46 ) % 322 %

% of Consolidated Operating Income Excl SBC, Acq-Related 64 % 67 % 42 % 40 % 77 %

Operating Margin Excl SBC, Acq-Related (% of EMEA Total revenue) 5.0 % 18.6 % 15.4 % 10.5 % 14.7 %

Year-over-year growth (bps) (1,073 ) 282 40 (500 ) 970

Operating Income TTM Excl SBC, Acq-Related $ 106,005 $ 103,853 $ 96,767 $ 83,264 $ 111,506

Operating Margin TTM Excl SBC, Acq-Related (% of EMEA Total TTM revenue) 13.2 % 13.7 % 13.7 % 12.5 % 15.0 %

Year-over-year growth (bps)(6) N/A (13 ) (132 ) (300 ) 180

Rest of World Segment

Gross Billings

Local Gross Billings

Third Party $ 128,954 $ 119,990 $ 114,630 $ 118,325 $ 116,291

Direct – – – – –

Total Local Gross Billings $ 128,954 $ 119,990 $ 114,630 $ 118,325 $ 116,291

Goods Gross Billings

Third Party $ 89,475 $ 70,994 $ 66,774 $ 71,127 $ 82,375

Direct 6,581 6,778 5,625 7,846 7,076

Total Goods Gross Billings $ 96,056 $ 77,772 $ 72,399 $ 78,973 $ 89,451

Travel and Other Gross Billings

Third Party and Other $ 44,009 $ 36,370 $ 32,322 $ 37,033 $ 32,931

Direct – – – – –

Total Travel and Other Gross Billings $ 44,009 $ 36,370 $ 32,322 $ 37,033 $ 32,931

Total Gross Billings

Third Party and Other $ 262,438 $ 227,354 $ 213,726 $ 226,485 $ 231,597

Direct 6,581 6,778 5,625 7,846 7,076

Total Gross Billings $ 269,019 $ 234,132 $ 219,351 $ 234,331 $ 238,673

Year-over-year growth 17 % (11 ) % (21 ) % (13 ) % (11 ) %

Year-over-year growth, excluding FX 20 % (6 ) % (16 ) % (4 ) % (2 ) %

% of Consolidated Gross Billings 18 % 17 % 16 % 17 % 15 %

Gross Billings TTM $ 1,078,524 $ 1,048,973 $ 992,302 $ 956,833 $ 926,487

Revenue

Local Revenue

Third Party $ 46,166 $ 45,085 $ 43,323 $ 51,507 $ 40,314

Direct – – – – –

Total Local Revenue $ 46,166 $ 45,085 $ 43,323 $ 51,507 $ 40,314

Goods Revenue

Third Party $ 25,529 $ 18,062 $ 14,985 $ 17,215 $ 19,082

Direct 6,580 6,778 5,625 7,846 7,076

Total Goods Revenue $ 32,109 $ 24,840 $ 20,610 $ 25,061 $ 26,158

Travel and Other Revenue

Third Party and Other $ 8,398 $ 8,125 $ 7,670 $ 9,703 $ 6,986

Direct – – – – –

Total Travel and Other Revenue $ 8,398 $ 8,125 $ 7,670 $ 9,703 $ 6,986

Total Revenue

Third Party and Other Revenue $ 80,093 $ 71,272 $ 65,978 $ 78,425 $ 66,382

Direct Revenue 6,580 6,778 5,625 7,846 7,076

Total Revenue $ 86,673 $ 78,050 $ 71,603 $ 86,271 $ 73,458

Year-over-year growth 20 % (14 ) % (26 ) % (4 ) % (15 ) %

Year-over-year growth, excluding FX 23 % (8 ) % (21 ) % 7 % (6 ) %

% of Consolidated Revenue 14 % 13 % 12 % 14 % 10 %

Revenue TTM $ 363,296 $ 350,984 $ 325,988 $ 322,597 $ 309,382

Cost of Revenue

Local Cost of Revenue

Third Party $ 9,801 $ 5,923 $ 7,962 $ 7,403 $ 7,158

Direct – – – – –

Total Local Cost of Revenue $ 9,801 $ 5,923 $ 7,962 $ 7,403 $ 7,158

Goods Cost of Revenue

Third Party $ 7,264 $ 11,501 $ 5,569 $ 5,685 $ 6,890

Direct 7,228 6,627 6,075 7,360 7,487

Total Goods Cost of Revenue $ 14,492 $ 18,128 $ 11,644 $ 13,045 $ 14,377

Travel and Other Cost of Revenue

Third Party and Other $ 1,832 $ 1,067 $ 1,420 $ 1,451 $ 1,234

Direct – – – – –

Total Travel and Other Cost of Revenue $ 1,832 $ 1,067 $ 1,420 $ 1,451 $ 1,234

Total Cost of Revenue

Third Party and Other Cost of Revenue $ 18,897 $ 18,491 $ 14,951 $ 14,539 $ 15,282

Direct Cost of Revenue 7,228 6,627 6,075 7,360 7,487

Total Cost of Revenue $ 26,125 $ 25,118 $ 21,026 $ 21,899 $ 22,769

% of Rest of World Total Revenue 30 % 32 % 29 % 25 % 31 %

Gross Profit

Local Gross Profit

Third Party $ 36,365 $ 39,162 $ 35,361 $ 44,104 $ 33,156

Direct – – – – –

Total Local Gross Profit $ 36,365 $ 39,162 $ 35,361 $ 44,104 $ 33,156

% of Rest of World Total Local Revenue 78.8 % 86.9 % 81.6 % 85.6 % 82.2 %

% of Rest of World Total Local Gross Billings 28.2 % 32.6 % 30.8 % 37.3 % 28.5 %

Goods Gross Profit

Third Party $ 18,265 $ 6,561 $ 9,416 $ 11,530 $ 12,192

Direct (648 ) 151 (450 ) 486 (411 )

Total Goods Gross Profit $ 17,617 $ 6,712 $ 8,966 $ 12,016 $ 11,781

% of Rest of World Total Goods Revenue 54.9 % 27.0 % 43.5 % 47.9 % 45.0 %

% of Rest of World Total Goods Gross Billings 18.3 % 8.6 % 12.4 % 15.2 % 13.2 %

Travel and Other Gross Profit

Third Party and Other $ 6,566 $ 7,058 $ 6,250 $ 8,252 $ 5,752

Direct – – – – –

Total Travel and Other Gross Profit $ 6,566 $ 7,058 $ 6,250 $ 8,252 $ 5,752

% of Rest of World Total Travel and Other Revenue 78.2 % 86.9 % 81.5 % 85.0 % 82.3 %

% of Rest of World Total Travel and Other Gross Billings 14.9 % 19.4 % 19.3 % 22.3 % 17.5 %

Total Gross Profit

Third Party and Other $ 61,196 $ 52,781 $ 51,027 $ 63,886 $ 51,100

Direct (648 ) 151 (450 ) 486 (411 )

Total Gross Profit $ 60,548 $ 52,932 $ 50,577 $ 64,372 $ 50,689

% of Rest of World Total Revenue 69.9 % 67.8 % 70.6 % 74.6 % 69.0 %

% of Rest of World Total Gross Billings 22.5 % 22.6 % 23.1 % 27.5 % 21.2 %

Operating Loss Excl SBC, Acq-Related $ (12,105 ) $ (24,389 ) $ (14,173 ) $ (1,619 ) $ (14,732 )

Year-over-year growth (68 ) % 174 % (331 ) % 91 % (22 ) %

% of Consolidated Operating Income Excl SBC, Acq-Related (88 ) % (48 ) % (24 ) % (4 ) % (31 ) %

Operating Margin Excl SBC, Acq-Related (% of Rest of World Total revenue) (14.0 ) % (31.2 ) % (19.8 ) % (1.9 ) % (20.1 ) %

Year-over-year growth (bps) 3,848 (2,139 ) (1,640 ) 1,790 (610 )

Operating Loss TTM Excl SBC, Acq-Related $ (42,016 ) $ (57,495 ) $ (68,379 ) $ (52,286 ) $ (54,913 )

Operating Margin TTM Excl SBC, Acq-Related (% of Rest of World Total TTM revenue) (11.6 ) % (16.4 ) % (21.0 ) % (16.2 ) % (17.7 ) %

Year-over-year growth (bps)(6) N/A 3,590 788 330 (610 )

Consolidated Results of Operations

Gross Billings

Local Gross Billings

Third Party $ 799,153 $ 829,553 $ 805,508 $ 727,191 $ 829,666

Direct – – 693 1,040 39

Total Local Gross Billings $ 799,153 $ 829,553 $ 806,201 $ 728,231 $ 829,705

Goods Gross Billings

Third Party $ 316,327 $ 230,030 $ 247,688 $ 244,355 $ 228,650

Direct 225,176 162,294 189,183 199,032 366,720

Total Goods Gross Billings $ 541,503 $ 392,324 $ 436,871 $ 443,387 $ 595,370

Travel and Other Gross Billings

Third Party and Other $ 179,796 $ 185,892 $ 170,734 $ 171,030 $ 168,032

Direct – – – – –

Total Travel and Other Gross Billings $ 179,796 $ 185,892 $ 170,734 $ 171,030 $ 168,032

Total Gross Billings

Third Party and Other $ 1,295,276 $ 1,245,475 $ 1,223,930 $ 1,142,576 $ 1,226,348

Direct 225,176 162,294 189,876 200,072 366,759

Total Gross Billings $ 1,520,452 $ 1,407,769 $ 1,413,806 $ 1,342,648 $ 1,593,107

Year-over-year growth 24 % 4 % 10 % 10 % 5 %

Year-over-year growth, excluding FX 25 % 5 % 11 % 11 % 5 %

Gross Billings (TTM) $ 5,380,184 $ 5,433,153 $ 5,560,283 $ 5,684,675 $ 5,757,330

Year-over-year growth 35 % 16 % 11 % 12 % 7 %

Revenue

Local Revenue

Third Party $ 287,288 $ 327,393 $ 326,921 $ 301,144 $ 314,748

Direct – – 693 1,040 39

Total Local Revenue $ 287,288 $ 327,393 $ 327,614 $ 302,184 $ 314,787

Goods Revenue

Third Party $ 86,579 $ 67,081 $ 52,574 $ 53,222 $ 46,993

Direct 225,175 162,294 189,183 199,032 366,720

Total Goods Revenue $ 311,754 $ 229,375 $ 241,757 $ 252,254 $ 413,713

Travel and Other Revenue

Third Party and Other $ 39,260 $ 44,634 $ 39,376 $ 40,621 $ 39,947

Direct – – – – –

Total Travel and Other Revenue $ 39,260 $ 44,634 $ 39,376 $ 40,621 $ 39,947

Total Revenue

Third Party and Other Revenue $ 413,127 $ 439,108 $ 418,871 $ 394,987 $ 401,688

Direct Revenue 225,175 162,294 189,876 200,072 366,759

Total Revenue $ 638,302 $ 601,402 $ 608,747 $ 595,059 $ 768,447

Year-over-year growth 30 % 8 % 7 % 5 % 20 %

Year-over-year growth, excluding FX 31 % 8 % 8 % 6 % 20 %

Total Consolidated Revenue TTM $ 2,334,472 $ 2,376,591 $ 2,417,003 $ 2,443,510 $ 2,573,655

Year-over-year growth 45 % 27 % 18 % 12 % 10 %

Cost of Revenue

Local Cost of Revenue

Third Party $ 43,626 $ 46,030 $ 38,678 $ 36,642 $ 35,450

Direct – – 636 1,887 31

Total Local Cost of Revenue $ 43,626 $ 46,030 $ 39,314 $ 38,529 $ 35,481

Goods Cost of Revenue

Third Party $ 14,493 $ 17,856 $ 10,796 $ 10,137 $ 9,706

Direct 218,567 152,377 167,910 179,549 337,670

Total Goods Cost of Revenue $ 233,060 $ 170,233 $ 178,706 $ 189,686 $ 347,376

Travel and Other Cost of Revenue

Third Party and Other $ 5,786 $ 6,130 $ 6,033 $ 7,222 $ 7,382

Direct – – – – –

Total Travel and Other Cost of Revenue $ 5,786 $ 6,130 $ 6,033 $ 7,222 $ 7,382

Total Cost of Revenue

Third Party and Other Cost of Revenue $ 63,905 $ 70,016 $ 55,507 $ 54,001 $ 52,538

Direct Cost of Revenue 218,567 152,377 168,546 181,436 337,701

Total Cost of Revenue $ 282,472 $ 222,393 $ 224,053 $ 235,437 $ 390,239

% of Total Consolidated Revenue 44 % 37 % 37 % 40 % 51 %

Gross Profit

Local Gross Profit

Third Party $ 243,662 $ 281,363 $ 288,243 $ 264,502 $ 279,298

Direct – – 57 (847 ) 8

Total Local Gross Profit $ 243,662 $ 281,363 $ 288,300 $ 263,655 $ 279,306

% of Total Consolidated Local Revenue 84.8 % 85.9 % 88.0 % 87.2 % 88.7 %

% of Total Consolidated Local Gross Billings 30.5 % 33.9 % 35.8 % 36.2 % 33.7 %

Goods Gross Profit

Third Party $ 72,086 $ 49,225 $ 41,778 $ 43,085 $ 37,287

Direct 6,608 9,917 21,273 19,483 29,050

Total Goods Gross Profit $ 78,694 $ 59,142 $ 63,051 $ 62,568 $ 66,337

% of Total Consolidated Goods Revenue 25.2 % 25.8 % 26.1 % 24.8 % 16.0 %

% of Total Consolidated Goods Gross Billings 14.5 % 15.1 % 14.4 % 14.1 % 11.1 %

Travel and Other Gross Profit

Third Party and Other $ 33,474 $ 38,504 $ 33,343 $ 33,399 $ 32,565

Direct – – – – –

Total Travel and Other Gross Profit $ 33,474 $ 38,504 $ 33,343 $ 33,399 $ 32,565

% of Total Consolidated Travel and Other Revenue 85.3 % 86.3 % 84.7 % 82.2 % 81.5 %

% of Total Consolidated Travel and Other Gross Billings 18.6 % 20.7 % 19.5 % 19.5 % 19.4 %

Total Gross Profit

Third Party and Other $ 349,222 $ 369,092 $ 363,364 $ 340,986 $ 349,150

Direct 6,608 9,917 21,330 18,636 29,058

Total Gross Profit $ 355,830 $ 379,009 $ 384,694 $ 359,622 $ 378,208

% of Total Consolidated Revenue 55.7 % 63.0 % 63.2 % 60.4 % 49.2 %

% of Total Consolidated Gross Billings 23.4 % 26.9 % 27.2 % 26.8 % 23.7 %

Operating Income Excl SBC, Acq-Related $ 13,703 $ 51,153 $ 59,043 $ 39,153 $ 47,856

Year-over-year growth (24 ) % (24 ) % (18 ) % (22 ) % 249 %

Operating Margin Excl SBC, Acq-Related (% of Total Consolidated revenue) 2.1 % 8.5 % 9.7 % 6.6 % 6.2 %

Year-over-year growth (bps) (150 ) (360 ) (300 ) (230 ) 410

Operating Income TTM Excl SBC, Acq-Related $ 203,715 $ 187,278 $ 174,387 $ 163,052 $ 197,205

Operating Margin TTM Excl SBC, Acq-Related (% of Total Consolidated TTM revenue) 8.7 % 7.9 % 7.2 % 6.7 % 7.7 %

Year-over-year growth (bps) 1,770 680 (40 ) (280 ) (100 )

Operating (Loss) Income $ (12,861 ) $ 21,178 $ 27,412 $ 13,812 $ 13,352

Year-over-year growth 14 % (47 ) % (41 ) % (46 ) % 204 %

Operating Margin (% of Total Consolidated revenue) (2.0 ) % 3.5 % 4.5 % 2.3 % 1.7 %

Year-over-year growth (bps) 100 (360 ) (370 ) (220 ) 370

Operating Income TTM $ 98,701 $ 80,240 $ 61,167 $ 49,541 $ 75,754

Operating Margin TTM (% of Total Consolidated TTM revenue) 4.2 % 3.4 % 2.5 % 2.0 % 2.9 %

Year-over-year growth (bps) 1,870 750 (100 ) (240 ) (130 )

Net Loss Attributable to Common Stockholders (81,089 ) (3,992 ) (7,574 ) (2,580 ) (81,247 )

Weighted Average Basic Shares Outstanding 655,678 658,800 662,361 666,433 668,046

Weighted Average Diluted Shares Outstanding (7) 655,678 658,800 662,361 666,433 668,046

Net Loss per Share:

Basic $ (0.12 ) $ (0.01 ) $ (0.01 ) $ (0.00 ) $ (0.12 )

Diluted $ (0.12 ) $ (0.01 ) $ (0.01 ) $ (0.00 ) $ (0.12 )

The following is a quarterly reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net loss.” (8)

Net loss $ (80,047 ) $ (3,242 ) $ (5,551 ) $ (1,292 ) $ (78,861 )

Adjustments:

Stock-based compensation 26,411 29,907 32,446 26,870 32,239

Acquisition-related expense (benefit), net 153 68 (815 ) (1,529 ) 2,265

Depreciation and amortization 15,965 20,700 21,468 23,149 24,132

Non-operating items:

Loss (income) on equity method investments 1,231 19 14 25 (14 )

Other expense (income), net 48,279 5,064 5,565 (857 ) 84,847

Provision for income taxes 17,676 19,337 27,384 15,936 7,380

Total adjustments 109,715 75,095 86,062 63,594 150,849

Adjusted EBITDA $ 29,668 $ 71,853 $ 80,511 $ 62,302 $ 71,988

The following is a quarterly reconciliation of Operating income, excluding stock-based compensation and acquisition-related (expense) benefit, net, to the most comparable U.S. GAAP financial measure, “Operating (loss) income.” (8)

Operating income, excluding stock-based compensation and acquisition-related (expense) benefit, net $ 13,703 $ 51,153 $ 59,043 $ 39,153 $ 47,856

Stock-based compensation (26,411 ) (29,907 ) (32,446 ) (26,870 ) (32,239 )

Acquisition-related (expense) benefit, net (153 ) (68 ) 815 1,529 (2,265 )

Operating (loss) income $ (12,861 ) $ 21,178 $ 27,412 $ 13,812 $ 13,352

The following is a trailing twelve months reconciliation of Operating income, excluding stock-based compensation and acquisition-related (expense) benefit, net, to the most comparable U.S. GAAP financial measure, “Operating Income.” (8)

Operating income, excluding stock-based compensation and acquisition-related (expense) benefit, net TTM $ 203,715 $ 187,278 $ 174,387 $ 163,052 $ 197,205

Stock-based compensation (104,117 ) (106,021 ) (111,383 ) (115,634 ) (121,462 )

Acquisition-related (expense) benefit, net (897 ) (1,017 ) (1,837 ) 2,123 11

Operating income TTM $ 98,701 $ 80,240 $ 61,167 $ 49,541 $ 75,754

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 4 % (9 ) % 4 % 9 % 3 %

FX Effect (2 ) % 1 % – % 3 % 3 %

EMEA Gross Billings growth 2 % (8 ) % 4 % 12 % 6 %

Rest of World Gross Billings growth, excluding FX 20 % (6 ) % (16 ) % (4 ) % (2 ) %

FX Effect (3 ) % (5 ) % (5 ) % (9 ) % (9 ) %

Rest of World Gross Billings growth 17 % (11 ) % (21 ) % (13 ) % (11 ) %

Consolidated Gross Billings growth, excluding FX 25 % 5 % 11 % 11 % 5 %

FX Effect (1 ) % (1 ) % (1 ) % (1 ) % – %

Consolidated Gross Billings growth 24 % 4 % 10 % 10 % 5 %

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 (25 ) % (20 ) % (25 ) % (23 ) % 38 %

FX Effect (2 ) % – % 1 % 2 % 5 %

EMEA Revenue growth (27 ) % (20 ) % (24 ) % (21 ) % 43 %

Rest of World Revenue growth, excluding FX 23 % (8 ) % (21 ) % 7 % (6 ) %

FX Effect (3 ) % (6 ) % (5 ) % (11 ) % (9 ) %

Rest of World Revenue growth 20 % (14 ) % (26 ) % (4 ) % (15 ) %

Consolidated Revenue growth, excluding FX 31 % 8 % 8 % 6 % 20 %

FX Effect (1 ) % – % (1 ) % (1 ) % – %

Consolidated Revenue growth 30 % 8 % 7 % 5 % 20 %

The following is a reconciliation of free cash flow to the most comparable U.S. GAAP financial measure, “Net cash provided by (used in) operating activities.”

Net cash provided by (used in) operating activities $ 65,717 $ 8,760 $ 43,302 $ (11,905 ) $ 178,275

Purchases of property and equipment and capitalized software (40,034 ) (14,468 ) (14,042 ) (15,064 ) (19,931 )

Free cash flow (10) $ 25,683 $ (5,708 ) $ 29,260 $ (26,969 ) $ 158,344

Net cash provided by operating activities (TTM) $ 266,834 $ 191,880 $ 159,867 $ 105,874 $ 218,432

Purchases of property and equipment and capitalized software (TTM) (95,836 ) (97,221 ) (84,554 ) (83,608 ) (63,505 )

Free cash flow (TTM) $ 170,998 $ 94,659 $ 75,313 $ 22,266 $ 154,927

Net cash used in investing activities $ (52,753 ) $ (30,679 ) $ (15,862 ) $ (26,444 ) $ (23,330 )

Net cash used in financing activities $ (6,495 ) $ (9,342 ) $ (7,941 ) $ (8,970 ) $ (55,444 )

Net cash used in investing activities (TTM) $ (194,979 ) $ (179,214 ) $ (134,923 ) $ (125,738 ) $ (96,315 )

Net cash provided by (used in) financing activities (TTM) $ 12,095 $ 11,028 $ (21,071 ) $ (32,748 ) $ (81,697 )

Other Metrics

Active Customers (11)

North America 17.2 18.2 19.1 19.9 20.8

EMEA 14.3 14.0 13.9 14.0 14.2

Rest of World 9.5 9.5 9.6 9.6 9.9

Total Active Customers 41.0 41.7 42.6 43.5 44.9

TTM Gross Billings / Average Active Customer (12)

North America $ 152 $ 151 $ 156 $ 155 $ 150

EMEA $ 146 $ 137 $ 135 $ 137 $ 139

Rest of World $ 126 $ 116 $ 108 $ 102 $ 95

Consolidated $ 144 $ 138 $ 138 $ 137 $ 134

Headcount

Sales (13) 4,677 4,566 4,679 4,801 4,834

% North America 25 % 28 % 26 % 28 % 29 %

% EMEA 42 % 38 % 39 % 37 % 37 %

% Rest of World 33 % 34 % 35 % 35 % 34 %

Other 6,717 6,433 6,306 6,453 6,449

Total Headcount 11,394 10,999 10,985 11,254 11,283

(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.

(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 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) 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.

(7) 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.

(8) Adjusted EBITDA and Operating income excluding stock-based compensation and acquisition-related (expense) benefit, net are non-GAAP financial measures. The Company reconciles Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net loss” for the periods presented, and the Company reconciles Operating income excluding stock-based compensation and acquisition-related (expense) benefit, net to the most comparable U.S. GAAP financial measure, “Operating (loss) income,” 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 (used in) operating activities,” for the periods presented.

(11) Reflects the total number of unique user accounts who have purchased a voucher or product from us 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 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.

Image via Groupon

February 20, 2014

Groupon Calls Alexander Hamilton “President”

Never learn U.S. history from Groupon. That’s the lesson everyone learned when the day-of-the-deal website declared Alexander Hamilton a U.S. president.

February 17 marks Presidents Day and the birthday of the first president, George Washington. Groupon celebrated the day with a promotion that takes $10 off from purchases above $40, but that’s not all. They also said that they are doing the promotion to honor President Alexander Hamilton.

What got people talking is that Alexander Hamilton appears on the $10 bill, but was never elected as president of the U.S. He is considered one of the founding fathers of the country, and was the first Secretary of Treasury. Hamilton also contributed to the establishment of a national bank and the economic policies during Washington’s time in the White House.

The Groupon promotion garnered a flurry of reactions from the Twitter world, with most tweets saying that Groupon must be joking. Others assumed that it was just a publicity stunt. Aside from the news articles about Groupon, there were thousands of tweets about Groupon and their promotion. However, not all the tweets had a positive note.

Oops! #Groupon mistakes Alexander Hamilton as president http://t.co/6tzX3DTwfW #abc15

— ABC15 Arizona (@abc15) February 18, 2014

Groupon honors ‘President’ Alexander Hamilton? Oh @Groupon, you obviously don’t know your presidents. #PresidentsDay http://t.co/6Z1hpYzn51

— Kristen Keys (@Siriusnerd007) February 17, 2014

Someone needs to give Groupon a lesson in American History. http://t.co/MMoZSUGt9h

— Gene Wojciechowski (@GenoEspn) February 16, 2014

A spokesperson for Groupon then stated that it is their goal for customers to save cash, and saving $10 from their promotion was no laughing matter. He also said that the “mistake” was intentional and that they wanted to create a humorous promotional post for Presidents Day. A lot of businesses also have promotional posts, but they wanted to be set apart from those and get the attention of customers everywhere. The spokesperson also said that the promotion was a big success, since it got a lot of exposure.

Groupon Unleashes President Alexander Hamilton, Accomplishes Obvious Goal – http://t.co/Zkdvud9i8U

— WPN (@WebProNews) February 17, 2014

Groupon wanted to be talked about and that’s what they got based on the exposure they received on Twitter – negative or positive – due to a deliberate “mistake”.

Image via Wikipedia Commons

February 17, 2014
Was This A Wise Marketing Strategy By Groupon?

Groupon is doing what it does best – attracting attention for being just a little bit “off the wall.” The company has been doing this for as long as I can remember, and apparently not much has changed in that department since CEO Andrew Mason was ousted. Well, except that they killed the Groupon Kidz Club, and are pretending it never existed.

It did:

Last Friday, the company put out a press release for Presidents’ Day Weekend with a “President Alexander Hamilton” campaign.

What did you think of Groupon’s “President” Hamilton stunt? Smart PR or bad for Groupon’s reputation? Let us know what you think.

A spokesperson said in an email, “The $10 bill, as everyone knows, features President Alexander Hamilton — undeniably one of our greatest presidents and most widely recognized for establishing the country’s financial system.”

The full text of the press release says:

Starting tomorrow, Groupon (www.groupon.com) (NASDAQ: GRPN) will be kicking off Presidents Day weekend by giving customers 10 dollars off 40 dollars when they purchase a deal for any local business. The $10 bill, as everyone knows, features President Alexander Hamilton — undeniably one of our greatest presidents and most widely recognized for establishing the country’s financial system.

Beginning Saturday, Feb. 15 at 9 am CST, shoppers will be able to redeem this offer by using the promo code “10OFF40LOCAL”, which isn’t very catchy, but neither was President Hamilton’s famous saying, “nobody expects to trust his body overmuch after the age of fifty.”

President Hamilton is best known for the fiscal sensibilities that led him to author economic policies, establish a national bank and control taxes. Customers can honor our money-minded commander-in-chief and find deals by searching Groupon.com for local deals all through President’s Day weekend. Promo codes are limited, and more information can be found at: https://www.groupon.com/faq#faqs:content-269.

That’s the whole thing other than the about section and contact info. Oh, and a picture of a ten dollar bill.

Of course, Hamilton was never president, as MANY were quick (and not so quick) to point out. People couldn’t wait to talk about how dumb Groupon is, and how they messed up. To some familiar with Groupon’s history of quirky antics, the joke was pretty obvious, but most people (including bloggers and reporters) seem to have thought it was just a “gaffe” as Politico put it. The Twitter reaction seemed to be the same. USA Today said, “Oops! Groupon discounts U.S. history and pays tribute to “President Hamilton.”

#Groupon has #PresidentsDay specials, w/ a tribute to President Hamilton http://t.co/vn9Zep8Ts2. Isn't American education great?

— Jim Rickards (@JamesGRickards) February 17, 2014

Groupon honors 'President' Alexander Hamilton? Oh @Groupon, you obviously don't know your presidents. #PresidentsDay http://t.co/6Z1hpYzn51

— Kristen Keys (@Siriusnerd007) February 17, 2014

Someone should tell Groupon that Alexander Hamilton was a brilliant man, but he wasn't a President. http://t.co/6xlQtVj99c

— Nicholas A. Ferroni (@NicholasFerroni) February 17, 2014

The quirky antics continued on Twitter where Groupon told users arguing that Hamilton was never president that they simply had a different “opinion.”

It should have been clear that it was a joke at that point, not to mention when Groupon was retweeting tweets from this Twitter account, which links to Groupon in its bio):

Tweets by @PrezHamilton

But it wasn’t. Still, headlines like this made the rounds: “Derp! Groupon Spox Respects ‘Opinion’ That Alexander Hamilton Was Never President”

Groupon was just being Groupon, but clearly that didn’t exactly resonate with the world at large. Ultimately, Groupon undoubtedly got want it wanted above all else: attention. But was it worth getting this kind of attention? You have to wonder how many of those who thought it was a mistake ever saw the follow-ups about it being intentional. You also have to wonder if Groupon expected that many people to not get it. Especially the media. With its stunt, it got plenty of coverage in the news, but more basically suggesting Groupon is dumb as opposed to being funny.

They did manage to grab a great deal of attention, and even spark trends on the search engines. “Alexander Hamilton President?” was trending on Bing. If nothing else, perhaps some people learned a little history from the stunt.

@petershankman @Groupon dumbasses that made http://t.co/jMRDJrWCb6, though.

— Tyler Hurst (@tdhurst) February 17, 2014

@EWErickson George Washington couldn't tell a lie. Washington didn't realize how easy it is to lie, apparently.

— Prez Alex Hamilton (@PrezHamilton) February 14, 2014

Ultimately, the whole thing will probably fade from most people’s memory, and have little effect (positive or negative) on general perception of Gropuon.

What do you think? Was this a smart PR move or as dumb as some people made Groupon out to be? Share your thoughts in the comments.

Image via Twitter

February 17, 2014
Groupon Deal Builder Does Exactly What You Would Think

Groupon announced the launch of Deal Builder, a new self-service platform for merchants to (yep, you guessed it) build their own deals.

As a Groupon spokesman explains, Deal Builder “guides merchants through a simple process and enables them to choose from a series of popular deal templates to construct a promotion that best meets the needs of their business.”

“Deal Builder was piloted to more than 10,000 merchants and is now available to almost every local small business in the United States,” he adds. “The platform enables us to work with the thousands of merchants that contact us directly every month wanting to run a deal – increasing the number of offers in our marketplace.”

Groupon Deal Builder, A Build-Your-Own-Deal Tool for Merchants from Groupon on Vimeo.

The platform is now available to “almost all” local businesses. This includes those in health and beauty and service-oriented and activities-based businesses. It will expand to food and beverage merchants later this year.

By its last count (Q3), Groupon had over 65,000 active deals on average. Groupon will reveal its latest stats on February 20th when it reveals its Q4 earnings.

Image via BusinessWire

February 11, 2014
Groupon Expands ‘Getaways’ With 20,000 New Hotels

Groupon announced a major expansion of its Groupon Getaways offering today with the addition of 20 thousand new hotels around the world.

Groupon Getaways first launched in 2011 as a partnership with Expedia, but recently launched this expansion in pilot. Availability has now come to all of the U.S. and Canada.

Groupon Getaaways includes up-to-60% off flash deals for travelers, and customers who make reservations at one of the newly added properties will get 5% back in Groupon Bucks.

“Searching for a hotel can be a very time-consuming process, with most travel sites showing hundreds of listings for each destination. We’re providing travelers with only the best options at the best prices, so they have no reason to go anywhere other than Groupon,” said Simon Goodall, VP and GM of Groupon Getaways. “By expanding our selection, we’re giving travelers literally tens of thousands of reasons to check Groupon first.”

“Searching for a hotel on Groupon is also ideal for mobile, which is becoming one of the most popular ways for consumers to book travel,” said Goodall. “When paired with Groupon’s outstanding mobile experience, travelers can now book the perfect trip and get the best deals nearby – all at the same time.”

Last year, Groupon acquired Blink, the “last-minute” travel app, and further integration of that into Groupon’s services is reportedly next on the agenda for Groupon’s travel-related efforts.

Image via BusinessWire

January 22, 2014
Groupon Buys Fashion Retailer Ideeli For $43 Million

Groupon announced on Monday that it has acquired fashion retailer ideeli for $43 million in cash. The purchase, Groupon says, will extend its presence in fashion and apparel.

“These types of offers have been very popular with Groupon customers, and ideeli brings a significant presence within the industry as well as great relationships with top brands,” a Groupon spokesperson tells WebProNews. “Some research estimates that the off-price fashion market is around $40 billion today, including both online and offline retailers. By adding ideeli to our family, we’re better suited to grab a bigger slice of this market as we continue to position Groupon as the place you start when you want to do or buy just about anything, anytime, anywhere.”

“Groupon’s brand, reach and vision as an ecommerce destination make it a tremendous place to continue to grow our company,” said ideeli CEO Stefan Pepe. “We look forward to bringing the great deals we offer to Groupon customers.”

Ideeli will maintain its New York headquarters, and its site will continue to operate independently of Groupon. In fact, they’re giving customers 20% off of their next purchase through Tuesday to celebrate the news.

Groupon’s getting off to a fast start with the acquisitions in 2014. Earlier this month, the company completed its previously announced acquisition of Ticket Monster from rival LivingSocial (whose CEO just announced his resignation last week).

Image via ideeli

January 13, 2014
Groupon Now Officially Owns Ticket Monster (Formerly Of LivingSocial)

Groupon announced an agreement to acquire LivingSocial’s Ticket Monster when it reported its Q3 earnings in November. On Friday, Groupon announced that it has closed the acquisition.

Groupon paid $260 million in cash and stock for the Korean ticketing company. More specifically, that’s $100 million in cash and $160 million in Groupon Class A common stock for Groupon rival LivingSocial.

Ticket Monster will retain its brand and leadership team, including CEO Daniel Shin. Ticket Monster will also keep its headquarters in Seoul, where it employs about 1,000 people.

The acquisition is part of Groupon’s acquisition of LivingSocial Korea, the holding company that owns Ticket Monster, though LivingSocial Korea’s Malaysian subsidiary was divested, and isn’t included in the transaction.

“Ticket Monster has been successful building a mobile commerce business in one of the largest markets in the world,” Groupon CEO Eric Lefkofsky said upon the acquisition’s announcement. “It will serve as the cornerstone of our Asian business, bringing scale and ecommerce expertise to that region.”

Post by Ticket Monster.

Image: Ticket Monster

January 3, 2014
Groupon Now Provides ‘Grouponvelope’ For Holiday Gifts

Groupon announced the launch of two new holiday gifting features for local businesses: the Grouponvelope and the digital gift voucher.

“We’re giving local merchants who do not have a gift card program the ability to reach millions of customers looking for last-minute but thoughtful holiday gift ideas,” a spokesperson for the company tells WebProNews.

When the customer starts the purchasing process on Groupon, and clicks “Give as a gift,” they can choose “Electronic Style” or “Print Style”. The former will let them choose from four different electronic envelope themes and select a delivery date for an animated e-card. The latter will let the customer print out a “Grouponvenlope” that can be cut and folded into a holiday-themed envelope and card.

The features are available for “virtually” every deal on Groupon.com, including Groupon Getaways and Groupon Goods deals.

“Many merchants don’t have the resources to invest in the same digital gifting solutions provided by national retailers, and they miss out on sales that are important to their bottom line,” said Groupon CEO Eric Lefkofsky. “Our new gifting solutions create a level playing field for local merchants and effortless last-minute holiday shopping for consumers.”

Seaworld is hoping customers will take advantage.

Image: Groupon

December 19, 2013
Engulfed in Controversy, SeaWorld Turns to Groupon

It’s been a rough year for SeaWorld – at least in terms of press. Back in January, a documentary called Blackfish premiered at Sundance and caught fire. That documentary focused on Tilikum, an orca residing at SeaWorld, Orlando, and condemned the treatment of orcas in captivity.

The film centers around the death of Dawn Brancheau, a SeaWorld trainer, who was killed by the 6-ton whale in 2010. Tilikum has been involved in the deaths of two trainers and one SeaWorld guest.

Amid the controversy, SeaWorld has faced a slew of recent cancellations, with many musical acts backing out of the park’s “Bands, Brew and BBQ” concert series. Just today, a California school announced that they would be canceling their long-standing SeaWorld trip due to concerns unearthed in the Blackfish documentary.

Now, the company is turning to Groupon.

SeaWorld Orlando is currently running a 40% deal with groupon – offering tickets for $59 each (down from nearly $100). The deal is running until the end of 2013, and tickets purchased will be valid until March 31st, 2014.

They’re also running sponsored posts for the deal on Facebook.

Apparently, SeaWorld is looking to expand the deals but isn’t banking on Groupon to play a huge role in future revenue. From the Orlando Sentinel:

A SeaWorld spokesman said Wednesday that the company is “testing” Groupon at SeaWorld Orlando with some “limited-time offers.” The company has also used Groupon at several of its 10 other parks around the country, including SeaWorld San Antonio and Busch Gardens theme parks in Tampa and Williamsburg, Va.

“We don’t see it playing a meaningful role in our current or future distribution strategy,” SeaWorld spokesman Nick Gollattscheck said.

SeaWorld has faced immense backlash following the release of Blackfish. In a public response a couple of months ago, the company called the film “inaccurate and misleading.”

“Blackfish is billed as a documentary, but instead of a fair and balanced treatment of a complex subject, the film is inaccurate and misleading and, regrettably, exploits a tragedy that remains a source of deep pain for Dawn Brancheau’s family, friends and colleagues.

To promote its bias that killer whales should not be maintained in a zoological setting, the film paints a distorted picture that withholds from viewers key facts about SeaWorld — among them, that SeaWorld is one of the world’s most respected zoological institutions, that SeaWorld rescues, rehabilitates and returns to the wild hundreds of wild animals every year, and that SeaWorld commits millions of dollars annually to conservation and scientific research.

Perhaps most important, the film fails to mention SeaWorld’s commitment to the safety of its team members and guests and to the care and welfare of its animals, as demonstrated by the company’s continual refinement and improvement to its killer whale facilities, equipment and procedures both before and after the death of Dawn Brancheau,” said a SeaWorld spokesperson.

The Groupon deal will be valid for tickets during the Bands, Brew & BBQ festival – assuming there are any musical acts left. SeaWorld says that they are continuing to book replacements.

Images via Groupon, Wikimedia Commons

December 19, 2013

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Groupon, Inc.
Summary Consolidated and Segment Results
(in thousands, except share and per share amounts)
(unaudited)

	Three Months Ended															Six Months Ended
	June 30,															June 30,
													Y/Y %															Y/Y %
													Growth															Growth
							Y/Y %						excluding									Y/Y %						excluding
	2014			2013			Growth			FX Effect ⁽²⁾			FX⁽²⁾			2014			2013			Growth			FX Effect ⁽²⁾			FX⁽²⁾
Gross Billings ⁽¹⁾:
North America	$	798,845		$	712,205		12.2		%	$	(650	)	12.3		%	$	1,580,614		$	1,393,524		13.4		%	$	(1,501	)	13.5		%
EMEA		483,255			482,250		0.2		%		21,215		(4.2	)	%		996,843			974,568		2.3		%		36,442		(1.5	)	%
Rest of World		536,946			219,351		144.8		%		9,424		140.5		%		1,058,800			453,483		133.5		%		(15,222	)	136.8		%
Consolidated billings	$	1,819,046		$	1,413,806		28.7		%	$	29,989		26.5		%	$	3,636,257		$	2,821,575		28.9		%	$	19,719		28.2		%

Revenue:
North America	$	423,931		$	377,182		12.4		%	$	(214	)	12.5		%	$	854,993		$	716,736		19.3		%	$	(503	)	19.4		%
EMEA		227,690			159,962		42.3		%		10,221		36.0		%		458,583			343,760		33.4		%		17,090		28.4		%
Rest of World		99,955			71,603		39.6		%		(2,994	)	43.8		%		195,637			149,653		30.7		%		(12,442	)	39.0		%
Consolidated revenue	$	751,576		$	608,747		23.5		%	$	7,013		22.3		%	$	1,509,213		$	1,210,149		24.7		%	$	4,145		24.4		%

(Loss) income from operations	$	(7,854	)	$	27,412		(128.7	)	%	$	1,209		(133.1	)	%	$	(27,807	)	$	48,590		(157.2	)	%	$	2,711		(162.8	)	%

Net loss attributable to Groupon, Inc.	$	(22,875	)	$	(7,574	)										$	(60,670	)	$	(11,566	)

Net loss per share:
Basic	$	(0.03	)	$	(0.01	)										$	(0.09	)	$	(0.02	)
Diluted	$	(0.03	)	$	(0.01	)										$	(0.09	)	$	(0.02	)

Weighted average number of shares outstanding:
Basic		675,538,392			662,361,436												678,958,541			660,580,927
Diluted		675,538,392			662,361,436												678,958,541			660,580,927

(1) Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds.
(2) Represents the change in financial measures that would have resulted had average exchange rates in the reporting periods been the same as those in effect during the three and six months ended June 30, 2013.

Groupon, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Operating activities
Net loss	$	(20,922	)	$	(5,551	)	$	(56,285	)	$	(8,793	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization of property, equipment and software		23,067			16,255			45,159			31,369
Amortization of acquired intangible assets		11,591			5,213			24,239			10,799
Stock-based compensation		31,655			32,446			55,384			62,353
Deferred income taxes		(57	)		(308	)		516			(566	)
Excess tax benefits on stock-based compensation		(4,077	)		(2,936	)		(9,932	)		(3,768	)
Loss on equity method investments		420			14			368			33
Net gain from changes in fair value of contingent consideration		–			(815	)		(39	)		(747	)
Impairment of cost method investments		191			–			588			–
Change in assets and liabilities, net of acquisitions:
Restricted cash		(2,029	)		744			921			3,267
Accounts receivable		(2,872	)		4,743			(27,265	)		(2,941	)
Prepaid expenses and other current assets		(748	)		3,465			(5,898	)		15,992
Accounts payable		(12,468	)		(3,225	)		(5,153	)		(22,831	)
Accrued merchant and supplier payables		(18,296	)		1,442			(41,945	)		(37,975	)
Accrued expenses and other current liabilities		(31,502	)		(20,539	)		(36,881	)		(7,237	)
Other, net		3,300			12,354			12,759			13,107
Net cash (used in) provided by operating activities		(22,747	)		43,302			(43,464	)		52,062

Net cash used in investing activities		(34,498	)		(15,862	)		(173,106	)		(46,541	)

Net cash used in financing activities		(114,753	)		(7,941	)		(156,245	)		(17,283	)

Effect of exchange rate changes on cash and cash equivalents		1,262			(3,138	)		431			(15,516	)
Net (decrease) increase in cash and cash equivalents		(170,736	)		16,361			(372,384	)		(27,278	)
Cash and cash equivalents, beginning of period		1,038,824			1,165,650			1,240,472			1,209,289
Cash and cash equivalents, end of period	$	868,088		$	1,182,011		$	868,088		$	1,182,011

Groupon, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Revenue:
Third party and other	$	405,941		$	418,871		$	832,370		$	857,979
Direct		345,635			189,876			676,843			352,170
Total revenue		751,576			608,747			1,509,213			1,210,149
Cost of revenue:
Third party and other		58,378			55,507			120,729			125,523
Direct		303,336			168,546			612,901			320,923
Total cost of revenue		361,714			224,053			733,630			446,446
Gross profit		389,862			384,694			775,583			763,703
Operating expenses:
Marketing		64,275			55,497			143,199			105,054
Selling, general and administrative		332,844			302,600			657,809			610,806
Acquisition-related expense (benefit), net		597			(815	)		2,382			(747	)
Total operating expenses		397,716			357,282			803,390			715,113
(Loss) income from operations		(7,854	)		27,412			(27,807	)		48,590
Other expense, net		(1,023	)		(5,579	)		(1,863	)		(10,662	)
(Loss) income before provision for income taxes		(8,877	)		21,833			(29,670	)		37,928
Provision for income taxes		12,045			27,384			26,615			46,721
Net loss		(20,922	)		(5,551	)		(56,285	)		(8,793	)
Net income attributable to noncontrolling interests		(1,953	)		(2,023	)		(4,385	)		(2,773	)
Net loss attributable to Groupon, Inc.	$	(22,875	)	$	(7,574	)	$	(60,670	)	$	(11,566	)

Net loss per share
Basic	$	(0.03	)	$	(0.01	)	$	(0.09	)	$	(0.02	)
Diluted	$	(0.03	)	$	(0.01	)	$	(0.09	)	$	(0.02	)

Weighted average number of shares outstanding		675,538,392			662,361,436			678,958,541			660,580,927
Basic		675,538,392			662,361,436			678,958,541			660,580,927
Diluted

Groupon, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)

	June 30, 2014			December 31, 2013
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	868,088		$	1,240,472
Accounts receivable, net		134,127			83,673
Deferred income taxes		30,033			27,938
Prepaid expenses and other current assets		237,092			210,415
Total current assets		1,269,340			1,562,498
Property, equipment and software, net		173,403			134,423
Goodwill		460,972			220,827
Intangible assets, net		136,182			28,443
Investments		23,588			20,652
Deferred income taxes, non-current		45,062			35,941
Other non-current assets		28,892			39,226
Total Assets	$	2,137,439		$	2,042,010
Liabilities and Equity
Current liabilities:
Accounts payable	$	31,002		$	27,573
Accrued merchant and supplier payables		803,374			752,943
Accrued expenses		234,355			226,986
Deferred income taxes		48,915			47,558
Other current liabilities		127,434			132,718
Total current liabilities		1,245,080			1,187,778
Deferred income taxes, non-current		12,871			10,853
Other non-current liabilities		148,552			131,697
Total Liabilities		1,406,503			1,330,328
Commitments and contingencies
Stockholders’ Equity
Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 690,335,467 shares issued and 665,598,175 shares outstanding at June 30, 2014 and 670,149,976 shares issued and 665,717,176 shares outstanding at December 31, 2013		69			67
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, 2014 and December 31, 2013		–			–
Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, no shares issued and outstanding at June 30, 2014 and December 31, 2013		–			–
Additional paid-in capital		1,791,896			1,584,211
Treasury stock, at cost, 24,737,292 shares at June 30, 2014 and 4,432,800 shares at December 31, 2013		(182,046	)		(46,587	)
Accumulated deficit		(909,540	)		(848,870	)
Accumulated other comprehensive income		32,712			24,830
Total Groupon, Inc. Stockholders’ Equity		733,091			713,651
Noncontrolling interests		(2,155	)		(1,969	)
Total Equity		730,936			711,682
Total Liabilities and Equity	$	2,137,439		$	2,042,010

Groupon, Inc.
Segment Information
(in thousands)
(unaudited)

	Three Months Ended June 30,								Six Months Ended June 30,
	2014				2013				2014				2013
North America
Gross billings⁽¹⁾	$	798,845			$	712,205			$	1,580,614			$	1,393,524
Revenue	$	423,931			$	377,182			$	854,993			$	716,736
Segment cost of revenue and operating expenses⁽²⁾		409,386				328,674				829,063				626,862
Segment operating income⁽²⁾	$	14,545			$	48,508			$	25,930			$	89,874
Segment operating income as a percent of segment gross billings		1.8		%		6.8		%		1.6		%		6.4		%
Segment operating income as a percent of segment revenue		3.4		%		12.9		%		3.0		%		12.5		%

EMEA
Gross billings ⁽¹⁾	$	483,255			$	482,250			$	996,843			$	974,568
Revenue	$	227,690			$	159,962			$	458,583			$	343,760
Segment cost of revenue and operating expenses⁽²⁾		199,981				135,254				411,951				284,876
Segment operating income⁽²⁾	$	27,709			$	24,708			$	46,632			$	58,884
Segment operating income as a percent of segment gross billings		5.7		%		5.1		%		4.7		%		6.0		%
Segment operating income as a percent of segment revenue		12.2		%		15.4		%		10.2		%		17.1		%

Rest of World
Gross billings ⁽¹⁾	$	536,946			$	219,351			$	1,058,800			$	453,483
Revenue	$	99,955			$	71,603			$	195,637			$	149,653
Segment cost of revenue and operating expenses⁽²⁾		117,811				85,776				238,240				188,215
Segment operating loss⁽²⁾	$	(17,856	)		$	(14,173	)		$	(42,603	)		$	(38,562	)
Segment operating loss as a percent of segment gross billings		(3.3	)	%		(6.5	)	%		(4.0	)	%		(8.5	)	%
Segment operating loss as a percent of segment revenue		(17.9	)	%		(19.8	)	%		(21.8	)	%		(25.8	)	%

(1) Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds.
(2) Segment cost of revenue and operating expenses and segment operating income (loss) exclude stock-based compensation and acquisition-related expense (benefit), net.

Groupon, Inc.
Non-GAAP Reconciliation Schedules
(in thousands, except share and per share amounts)
(unaudited)

Adjusted EBITDA and earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related (benefit) expense, net of tax, are non-GAAP financial measures. The Company reconciles Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net loss,” for the periods presented and the Company reconciles earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related (benefit) expense, net to the most comparable U.S. GAAP financial measure, “Diluted net earnings (loss) per share,” for the periods presented.


The following is a quarterly reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net loss.”
	Q2 2013				Q3 2013				Q4 2013				Q1 2014				Q2 2014
Net loss	$	(5,551	)		$	(1,292	)		$	(78,861	)		$	(35,363	)		$	(20,922	)
Adjustments:
Stock-based compensation		32,446				26,870				32,239				23,729				31,655
Acquisition-related (benefit) expense, net		(815	)			(1,529	)			2,265				1,785				597
Depreciation and amortization		21,468				23,149				24,132				34,740				34,658
Other expense (income), net		5,579				(832	)			84,833				840				1,023
Provision for income taxes		27,384				15,936				7,380				14,570				12,045
Total adjustments		86,062				63,594				150,849				75,664				79,978
Adjusted EBITDA	$	80,511			$	62,302			$	71,988			$	40,301			$	59,056


The following is a reconciliation of diluted net loss per share to diluted earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, net for the three and six months ended June 30, 2014:
									Three Months Ended				Six Months Ended
									June 30, 2014				June 30, 2014
Net loss attributable to Groupon, Inc.									$	(22,875	)		$	(60,670	)
Stock-based compensation										31,655				55,384
Amortization of acquired intangible assets										11,591				24,239
Acquisition-related expense, net										597				2,382
Income tax effect of adjustments										(15,348	)			(23,726	)
Net earnings (loss) attributable to common stockholders excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, net									$	5,620			$	(2,391	)

Diluted shares										675,538,392				678,958,541
Incremental diluted shares ⁽¹⁾										8,823,049				–
Adjusted diluted shares										684,361,441				678,958,541

Diluted net loss per share									$	(0.03	)		$	(0.09	)
Impact of stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, net										0.04				0.09
Diluted earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, net									$	0.01			$	(0.00	)

(1) Outstanding equity awards are not reflected in the calculation for the six months ended June 30, 2014 because the effect would be antidilutive.



Foreign exchange rate neutral operating results are non-GAAP financial measures. The Company reconciles foreign exchange rate neutral operating results to the most comparable U.S. GAAP financial measures, “Gross billings,” “Revenue” and “(Loss) income from operations,” respectively, for the periods presented. The Company reconciles “foreign exchange rage 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 growth” and “Revenue growth,” respectively, for the periods presented.

The effect on the Company’s gross billings, revenue and (loss) income from operations from changes in exchange rates versus the U.S. Dollar for the three months ended June 30, 2014 was as follows:
	Three Months Ended June 30, 2014												Three Months Ended June 30, 2014
	At Avg.				Exchange								At Avg.				Exchange
	Q2 2013				Rate				As				Q1 2014				Rate				As
	Rates ⁽¹⁾				Effect ⁽²⁾				Reported				Rates ⁽³⁾				Effect ⁽²⁾				Reported
Gross billings	$	1,789,057			$	29,989			$	1,819,046			$	1,801,262			$	17,784			$	1,819,046
Revenue	$	744,563			$	7,013			$	751,576			$	748,425			$	3,151			$	751,576
(Loss) income from operations	$	(9,063	)		$	1,209			$	(7,854	)		$	(7,216	)		$	(638	)		$	(7,854	)

The effect on the Company’s gross billings, revenue and (loss) income from operations from changes in exchange rates versus the U.S. Dollar for the six months ended June 30, 2014 was as follows:

	Six Months Ended June 30, 2014												Six Months Ended June 30, 2014
	At Avg.				Exchange								At Avg.				Exchange
	Q2 2013 YTD				Rate				As				Q4’13 – Q1’14				Rate				As
	Rates ⁽¹⁾				Effect ⁽²⁾				Reported				Rates ⁽³⁾				Effect ⁽²⁾				Reported
Gross billings	$	3,616,538			$	19,719			$	3,636,257			$	3,627,234			$	9,023			$	3,636,257
Revenue	$	1,505,068			$	4,145			$	1,509,213			$	1,508,271			$	942			$	1,509,213
(Loss) income from operations	$	(30,518	)		$	2,711			$	(27,807	)		$	(28,063	)		$	256			$	(27,807	)

(1) Represents the financial statement balances 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, 2013.
(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 reporting periods been the same as those in effect during the three and six months ended March 31, 2014.


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.
	Q2 2013				Q3 2013				Q4 2013				Q1 2014				Q2 2014
EMEA Gross billings growth, excluding FX		4		%		9		%		3		%		1		%		(4	)	%
FX Effect		–		%		3		%		3		%		3		%		4		%
EMEA Gross billings growth		4		%		12		%		6		%		4		%		–		%

Rest of World Gross billings growth, excluding FX		(16	)	%		(4	)	%		(2	)	%		133		%		141		%
FX Effect		(5	)	%		(9	)	%		(9	)	%		(10	)	%		4		%
Rest of World Gross billings growth		(21	)	%		(13	)	%		(11	)	%		123		%		145		%

Consolidated Gross billings growth, excluding FX		11		%		11		%		5		%		30		%		27		%
FX Effect		(1	)	%		(1	)	%		–		%		(1	)	%		2		%
Consolidated Gross billings growth		10		%		10		%		5		%		29		%		29		%


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.
	Q2 2013				Q3 2013				Q4 2013				Q1 2014				Q2 2014
EMEA Revenue growth, excluding FX		(25	)	%		(23	)	%		38		%		22		%		36		%
FX Effect		1		%		2		%		5		%		4		%		6		%
EMEA Revenue growth		(24	)	%		(21	)	%		43		%		26		%		42		%

Rest of World Revenue growth, excluding FX		(21	)	%		7		%		(6	)	%		35		%		44		%
FX Effect		(5	)	%		(11	)	%		(9	)	%		(12	)	%		(4	)	%
Rest of World Revenue growth		(26	)	%		(4	)	%		(15	)	%		23		%		40		%

Consolidated Revenue growth, excluding FX		8		%		6		%		20		%		26		%		22		%
FX Effect		(1	)	%		(1	)	%		–		%		–		%		2		%
Consolidated Revenue growth		7		%		5		%		20		%		26		%		24		%

Groupon, Inc.
Supplemental Financial Information and Business Metrics⁽⁹⁾
(financial data in thousands, except per share data; active customers in millions)
(unaudited)

		Q2 2013				Q3 2013				Q4 2013				Q1 2014				Q2 2014
Segments
North America Segment
Gross Billings ⁽¹⁾
	Local ⁽²⁾ Gross Billings	$	453,030			$	405,913			$	439,131			$	456,952			$	461,366
	Goods Gross Billings		196,878				194,565				286,039				242,896				247,618
	Travel ⁽²⁾ Gross Billings		62,297				64,521				63,551				81,921				89,861
	Total Gross Billings	$	712,205			$	664,999			$	788,721			$	781,769			$	798,845
	Year-over-year growth		30		%		20		%		10		%		15		%		12		%
	% Third Party and Other		74		%		72		%		67		%		70		%		70		%
	% Direct		26		%		28		%		33		%		30		%		30		%
Gross Billings Trailing Twelve Months (TTM)		$	2,664,845			$	2,777,475			$	2,847,244			$	2,947,694			$	3,034,334

Revenue ⁽³⁾
	Local Revenue	$	177,377			$	162,346			$	161,601			$	177,247			$	164,500
	Goods Revenue		186,028				185,914				268,281				237,435				241,626
	Travel Revenue		13,777				12,578				13,902				16,380				17,805
	Total Revenue	$	377,182			$	360,838			$	443,784			$	431,062			$	423,931
	Year-over-year growth		45		%		24		%		18		%		27		%		12		%
	% Third Party and Other		52		%		49		%		41		%		45		%		43		%
	% Direct		48		%		51		%		59		%		55		%		57		%
Revenue TTM		$	1,383,690			$	1,452,925			$	1,521,358			$	1,612,866			$	1,659,615

Gross Profit ⁽⁴⁾
	Local Gross Profit	$	155,728			$	138,890			$	140,944			$	152,622			$	142,674
	% of North America Total Local Gross Billings		34.4		%		34.2		%		32.1		%		33.4		%		30.9		%
	Goods Gross Profit		26,977				21,609				21,030				12,604				22,961
	% of North America Total Goods Gross Billings		13.7		%		11.1		%		7.4		%		5.2		%		9.3		%
	Travel Gross Profit		11,881				11,070				12,352				14,442				14,365
	% of North America Total Travel Gross Billings		19.1		%		17.2		%		19.4		%		17.6		%		16.0		%
	Total Gross Profit	$	194,586			$	171,569			$	174,326			$	179,668			$	180,000
	Year-over-year growth		12		%		7		%		15		%		4		%		(7	)	%
	% Third Party and Other		88		%		90		%		91		%		94		%		88		%
	% Direct		12		%		10		%		9		%		6		%		12		%
	% of North America Total Gross Billings		27.3		%		25.8		%		22.1		%		23.0		%		22.5		%

EMEA Segment
Gross Billings
	Local Gross Billings	$	241,856			$	207,803			$	277,472			$	262,141			$	227,266
	Goods Gross Billings		167,594				169,849				219,880				183,013				190,957
	Travel Gross Billings		72,800				65,666				68,361				68,434				65,032
	Total Gross Billings	$	482,250			$	443,318			$	565,713			$	513,588			$	483,255
	Year-over-year growth		4		%		12		%		6		%		4		%		–		%
	Year-over-year growth, excluding FX⁽⁵⁾		4		%		9		%		3		%		1		%		(4	)	%
	% Third Party and Other		100		%		98		%		83		%		83		%		80		%
	% Direct		–		%		2		%		17		%		17		%		20		%
Gross Billings TTM		$	1,903,136			$	1,950,367			$	1,983,599			$	2,004,869			$	2,005,874

Revenue
	Local Revenue	$	110,229			$	92,141			$	116,061			$	109,120			$	96,485
	Goods Revenue		35,119				41,279				119,274				106,889				115,413
	Travel Revenue		14,614				14,530				15,870				14,884				15,792
	Total Revenue	$	159,962			$	147,950			$	251,205			$	230,893			$	227,690
	Year-over-year growth		(24	)	%		(21	)	%		43		%		26		%		42		%
	Year-over-year growth, excluding FX		(25	)	%		(23	)	%		38		%		22		%		36		%
	% Third Party and Other		99		%		94		%		61		%		61		%		57		%
	% Direct		1		%		6		%		39		%		39		%		43		%
Revenue TTM		$	707,325			$	667,988			$	742,915			$	790,010			$	857,738

Gross Profit
	Local Gross Profit	$	99,318			$	81,808			$	105,210			$	100,066			$	90,373
	% of EMEA Total Local Gross Billings		41.1		%		39.4		%		37.9		%		38.2		%		39.8		%
	Goods Gross Profit		27,108				28,943				33,526				27,302				35,432
	% of EMEA Total Goods Gross Billings		16.2		%		17.0		%		15.2		%		14.9		%		18.6		%
	Travel Gross Profit		13,105				12,930				14,457				13,669				14,894
	% of EMEA Total Travel Gross Billings		18.0		%		19.7		%		21.1		%		20.0		%		22.9		%
	Total Gross Profit	$	139,531			$	123,681			$	153,193			$	141,037			$	140,699
	Year-over-year growth		(24	)	%		(24	)	%		7		%		(8	)	%		1		%
	% Third Party and Other		101		%		99		%		91		%		92		%		85		%
	% Direct		(1	)	%		1		%		9		%		8		%		15		%
	% of EMEA Total Gross Billings		28.9		%		27.9		%		27.1		%		27.5		%		29.1		%

Rest of World Segment
Gross Billings
	Local Gross Billings	$	115,156			$	118,718			$	116,824			$	167,833			$	170,237
	Goods Gross Billings		72,399				78,973				89,451				283,091				281,300
	Travel Gross Billings		31,796				36,640				32,398				70,930				85,409
	Total Gross Billings	$	219,351			$	234,331			$	238,673			$	521,854			$	536,946
	Year-over-year growth		(21	)	%		(13	)	%		(11	)	%		123		%		145		%
	Year-over-year growth, excluding FX		(16	)	%		(4	)	%		(2	)	%		133		%		141		%
	% Third Party and Other		97		%		97		%		97		%		99		%		99		%
	% Direct		3		%		3		%		3		%		1		%		1		%
Gross Billings TTM		$	992,302			$	956,833			$	926,487			$	1,214,209			$	1,531,804

Revenue
	Local Revenue	$	43,849			$	51,900			$	40,847			$	43,814			$	42,711
	Goods Revenue		20,610				25,061				26,158				41,855				45,537
	Travel Revenue		7,144				9,310				6,453				10,013				11,707
	Total Revenue	$	71,603			$	86,271			$	73,458			$	95,682			$	99,955
	Year-over-year growth		(26	)	%		(4	)	%		(15	)	%		23		%		40		%
	Year-over-year growth, excluding FX		(21	)	%		7		%		(6	)	%		35		%		44		%
	% Third Party and Other		92		%		91		%		90		%		94		%		93		%
	% Direct		8		%		9		%		10		%		6		%		7		%
Revenue TTM		$	325,988			$	322,597			$	309,382			$	327,014			$	355,366

Gross Profit
	Local Gross Profit	$	35,885			$	44,435			$	33,596			$	34,748			$	35,618
	% of Rest of World Total Local Gross Billings		31.2		%		37.4		%		28.8		%		20.7		%		20.9		%
	Goods Gross Profit		8,966				12,016				11,781				22,135				24,623
	% of Rest of World Total Goods Gross Billings		12.4		%		15.2		%		13.2		%		7.8		%		8.8		%
	Travel Gross Profit		5,726				7,921				5,312				8,133				8,922
	% of Rest of World Total Travel Gross Billings		18.0		%		21.6		%		16.4		%		11.5		%		10.4		%
	Total Gross Profit	$	50,577			$	64,372			$	50,689			$	65,016			$	69,163
	Year-over-year growth		(33	)	%		1		%		(16	)	%		23		%		37		%
	% Third Party and Other		101		%		99		%		101		%		102		%		100		%
	% Direct		(1	)	%		1		%		(1	)	%		(2	)	%		–		%
	% of Rest of World Total Gross Billings		23.1		%		27.5		%		21.2		%		12.5		%		12.9		%

Consolidated Results of Operations
Gross Billings
	Local Gross Billings	$	810,042			$	732,434			$	833,427			$	886,926			$	858,869
	Goods Gross Billings		436,871				443,387				595,370				709,000				719,875
	Travel Gross Billings		166,893				166,827				164,310				221,285				240,302
	Total Gross Billings	$	1,413,806			$	1,342,648			$	1,593,107			$	1,817,211			$	1,819,046
	Year-over-year growth		10		%		10		%		5		%		29		%		29		%
	Year-over-year growth, excluding FX		11		%		11		%		5		%		30		%		27		%
	% Third Party and Other		87		%		85		%		77		%		82		%		81		%
	% Direct		13		%		15		%		23		%		18		%		19		%
Gross Billings (TTM)		$	5,560,283			$	5,684,675			$	5,757,330			$	6,166,772			$	6,572,012
	Year-over-year growth		11		%		12		%		7		%		14		%		18		%

Revenue
	Local Revenue	$	331,455			$	306,387			$	318,509			$	330,181			$	303,696
	Goods Revenue		241,757				252,254				413,713				386,179				402,576
	Travel Revenue		35,535				36,418				36,225				41,277				45,304
	Total Revenue	$	608,747			$	595,059			$	768,447			$	757,637			$	751,576
	Year-over-year growth		7		%		5		%		20		%		26		%		23		%
	Year-over-year growth, excluding FX		8		%		6		%		20		%		26		%		22		%
	% Third Party and Other		69		%		66		%		52		%		56		%		54		%
	% Direct		31		%		34		%		48		%		44		%		46		%
Total Consolidated Revenue TTM		$	2,417,003			$	2,443,510			$	2,573,655			$	2,729,890			$	2,872,719
	Year-over-year growth		18		%		12		%		10		%		15		%		19		%

Gross Profit
	Local Gross Profit	$	290,931			$	265,133			$	279,750			$	287,436			$	268,665
	% of Total Consolidated Local Gross Billings		35.9		%		36.2		%		33.6		%		32.4		%		31.3		%
	Goods Gross Profit		63,051				62,568				66,337				62,041				83,016
	% of Total Consolidated Goods Gross Billings		14.4		%		14.1		%		11.1		%		8.8		%		11.5		%
	Travel Gross Profit		30,712				31,921				32,121				36,244				38,181
	% of Total Consolidated Travel Gross Billings		18.4		%		19.1		%		19.5		%		16.4		%		15.9		%
	Total Gross Profit	$	384,694			$	359,622			$	378,208			$	385,721			$	389,862
	Year-over-year growth		(11	)	%		(7	)	%		6		%		2		%		1		%
	% Third Party and Other		94		%		95		%		92		%		94		%		89		%
	% Direct		6		%		5		%		8		%		6		%		11		%
	% of Total Consolidated Gross Billings		27.2		%		26.8		%		23.7		%		21.2		%		21.4		%

Adjusted EBITDA		$	80,511			$	62,302			$	71,988			$	40,301			$	59,056
	% of Total Consolidated Gross Billings		5.7		%		4.6		%		4.5		%		2.2		%		3.2		%
	% of Total Consolidated Revenue		13.2		%		10.5		%		9.4		%		5.3		%		7.9		%

	Free cash flow is a non-GAAP financial measure. The following is a reconciliation of free cash flow to the most comparable U.S. GAAP financial measure, “Net cash provided by (used in) operating activities.”
Net cash provided by (used in) operating activities		$	43,302			$	(11,905	)		$	178,275			$	(20,717	)		$	(22,747	)
Purchases of property and equipment and capitalized software			(14,042	)			(15,064	)			(19,931	)			(16,355	)			(31,053	)
Free cash flow		$	29,260			$	(26,969	)		$	158,344			$	(37,072	)		$	(53,800	)

Net cash provided by operating activities (TTM)		$	159,867			$	105,874			$	218,432			$	188,955			$	122,906
Purchases of property and equipment and capitalized software (TTM)			(84,554	)			(83,608	)			(63,505	)			(65,392	)			(82,403	)
Free cash flow (TTM)		$	75,313			$	22,266			$	154,927			$	123,563			$	40,503

Net cash used in investing activities		$	(15,862	)		$	(26,444	)		$	(23,330	)		$	(138,608	)		$	(34,498	)
Net cash used in financing activities		$	(7,941	)		$	(8,970	)		$	(55,444	)		$	(41,492	)		$	(114,753	)

Net cash used in investing activities (TTM)		$	(134,923	)		$	(125,738	)		$	(96,315	)		$	(204,244	)		$	(222,880	)
Net cash used in financing activities (TTM)		$	(21,071	)		$	(32,748	)		$	(81,697	)		$	(113,847	)		$	(220,659	)

Other Metrics
Active Customers⁽⁶⁾
	North America		19.1				19.9				20.8				21.8				22.6
	EMEA		13.9				14.0				14.2				14.5				14.5
	Rest of World		9.6				9.6				9.9				15.5				16.1
	Total Active Customers		42.6				43.5				44.9				51.8				53.2

TTM Gross Billings / Average Active Customer ⁽⁷⁾
	North America	$	156			$	155			$	150			$	147			$	145
	EMEA	$	135			$	137			$	139			$	141			$	141
	Rest of World	$	108			$	102			$	95			$	97			$	119
	Consolidated	$	138			$	137			$	134			$	132			$	137

Headcount
	Sales ⁽⁸⁾		4,679				4,801				4,834				5,231				5,057
	% North America		26		%		28		%		29		%		27		%		26		%
	% EMEA		39		%		37		%		37		%		37		%		39		%
	% Rest of World		35		%		35		%		34		%		36		%		35		%
	Other		6,306				6,453				6,449				7,099				6,888
	Total Headcount		10,985				11,254				11,283				12,330				11,945

(1) Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds.
(2) Local represents deals from local merchants, deals with national merchants, and deals through local events. Other revenue transactions, which include advertising, payment processing, point of sale, reservation and commission revenue, were previously aggregated with our Travel category. During the three months ended March 31, 2014, the Company updated its presentation of category information to include gross billings, revenue and gross profit from those other revenue sources within the Local category, and prior period category information has been retrospectively adjusted to conform to the current period presentation.
(3) Includes third party revenue, direct revenue and other revenue. 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. Other revenue primarily consists of advertising revenue, payment processing revenue, point of sale revenue, reservation revenue and commission revenue.
(4) Represents third party revenue, direct revenue and other revenue reduced by cost of revenue. Cost of revenue is comprised of direct and certain indirect costs incurred to generate revenue. Third party cost of revenue includes estimated refunds for which the merchant’s share is not recoverable. Direct cost of revenue includes the cost of inventory, shipping and fulfillment costs and inventory markdowns. 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) in proportion to gross billings during the period.
(5) Represents the change in financial measures that would have resulted had average exchange rates in the reporting periods been the same as those in effect in the prior year period.
(6) Reflects the total number of unique user accounts who have purchased a voucher or product from us during the trailing twelve months.
(7) Reflects the total gross billings generated in the trailing twelve months per average active customer over that period.
(8) Includes merchant sales representatives, as well as sales support.
(9) 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, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)

	Three Months Ended March 31,
	2014			2013
Revenue:
Third party and other	$	426,429		$	439,108
Direct		331,208			162,294
Total revenue		757,637			601,402
Cost of revenue:
Third party and other		62,351			70,016
Direct		309,565			152,377
Total cost of revenue		371,916			222,393
Gross profit		385,721			379,009
Operating expenses:
Marketing		78,924			49,557
Selling, general and administrative		324,965			308,206
Acquisition-related expense, net		1,785			68
Total operating expenses		405,674			357,831
(Loss) income from operations		(19,953	)		21,178
Other expense, net		(840	)		(5,083	)
(Loss) income before provision for income taxes		(20,793	)		16,095
Provision for income taxes		14,570			19,337
Net loss		(35,363	)		(3,242	)
Net income attributable to noncontrolling interests		(2,432	)		(750	)
Net loss attributable to Groupon, Inc.	$	(37,795	)	$	(3,992	)

Net loss per share
Basic	$	(0.06	)	$	(0.01	)
Diluted	$	(0.06	)	$	(0.01	)

Weighted average number of shares outstanding
Basic		682,378,690			658,800,417
Diluted		682,378,690			658,800,417


Groupon, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)

	March 31, 2014			December 31, 2013
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	1,038,824		$	1,240,472
Accounts receivable, net		125,527			83,673
Deferred income taxes		29,897			27,938
Prepaid expenses and other current assets		234,102			210,415
Total current assets		1,428,350			1,562,498
Property, equipment and software, net		159,649			134,423
Goodwill		447,370			220,827
Intangible assets, net		140,738			28,443
Investments		24,450			20,652
Deferred income taxes, non-current		44,559			35,941
Other non-current assets		35,490			39,226
Total Assets	$	2,280,606		$	2,042,010
Liabilities and Equity
Current liabilities:
Accounts payable	$	45,524		$	27,573
Accrued merchant and supplier payables		816,329			752,943
Accrued expenses		253,015			226,986
Deferred income taxes		48,368			47,558
Other current liabilities		134,315			132,718
Total current liabilities		1,297,551			1,187,778
Deferred income taxes, non-current		12,331			10,853
Other non-current liabilities		147,197			131,697
Total Liabilities		1,457,079			1,330,328
Commitments and contingencies
Stockholders’ Equity
Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 687,288,634
shares issued and 679,780,134 shares outstanding at March 31, 2014 and 670,149,976 shares issued and
665,717,176 shares outstanding at December 31, 2013		69			67
Class B common stock, par value $0.0001 per share, 10,000,000 shares authorized, 2,399,976 shares
issued and outstanding at March 31, 2014 and December 31, 2013		–			–
Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, no shares issued and
outstanding at March 31, 2014 and December 31, 2013		–			–
Additional paid-in capital		1,768,271			1,584,211
Treasury stock, at cost, 7,508,500 shares at March 31, 2014 and 4,432,800 shares at December 31, 2013		(76,048	)		(46,587	)
Accumulated deficit		(886,665	)		(848,870	)
Accumulated other comprehensive income		20,020			24,830
Total Groupon, Inc. Stockholders’ Equity		825,647			713,651
Noncontrolling interests		(2,120	)		(1,969	)
Total Equity		823,527			711,682
Total Liabilities and Equity	$	2,280,606		$	2,042,010

	Three Months Ended			Year Ended
	December 31, 2013			December 31, 2013
Net loss attributable to common stockholders	$	(81,247	)	$	(95,393	)
Stock-based compensation		32,239			121,462
Acquisition-related expense (benefit), net		2,265			(11	)
Impairment of investment in F-tuan		85,521			85,521
Income tax effect of adjustments		(11,301	)		(38,504	)
Net income attributable to common stockholders excluding stock-based compensation,
acquisition-related expense (benefit), net and impairment of investment in F-tuan	$	27,477		$	73,075

Diluted shares		668,046,073			663,910,194
Incremental diluted shares (1)		16,685,634			15,501,759
Adjusted diluted shares		684,731,707			679,411,953

Diluted net loss per share	$	(0.12	)	$	(0.14	)
Impact of stock-based compensation, acquisition-related expense
(benefit), net and impairment of investment in F-tuan and the related income tax effects		0.16			0.25
Diluted earnings per share excluding stock-based compensation,
acquisition-related expense (benefit), net and impairment of investment in F-tuan	$	0.04		$	0.11

	Three Months Ended December 31, 2013							Three Months Ended December 31, 2013
	At Avg.		Exchange					At Avg.		Exchange
	Q4 2012		Rate			As		Q3 2013		Rate			As
	Rates (1)		Effect (2)			Reported		Rates (3)		Effect (2)			Reported
Gross billings	$	1,601,120	$	(8,013	)	$	1,593,107	$	1,578,913	$	14,194		$	1,593,107
Revenue	$	767,856	$	591		$	768,447	$	762,153	$	6,294		$	768,447
Income from operations	$	10,046	$	3,306		$	13,352	$	12,184	$	1,168		$	13,352

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 year ended December 31, 2013 was as follows:

	Year Ended December 31, 2013							Year Ended December 31, 2013
	At Avg.		Exchange					At Avg.		Exchange
	2012		Rate			As		Q4’12 – Q3’13		Rate			As
	Rates (1)		Effect (2)			Reported		Rates (3)		Effect (2)			Reported
Gross billings	$	5,797,599	$	(40,269	)	$	5,757,330	$	5,765,679	$	(8,349	)	$	5,757,330
Revenue	$	2,585,376	$	(11,721	)	$	2,573,655	$	2,574,687	$	(1,032	)	$	2,573,655
Income from operations	$	71,712	$	4,042		$	75,754	$	75,009	$	745		$	75,754

(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.
(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 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) 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.
(7) 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.
(8) Adjusted EBITDA and Operating income excluding stock-based compensation and acquisition-related (expense) benefit, net are non-GAAP financial measures. The Company reconciles Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net loss” for the periods presented, and the Company reconciles Operating income excluding stock-based compensation and acquisition-related (expense) benefit, net to the most comparable U.S. GAAP financial measure, “Operating (loss) income,” 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 (used in) operating activities,” for the periods presented.
(11) Reflects the total number of unique user accounts who have purchased a voucher or product from us 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 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.