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Tag: Rich Williams

  • Groupon CEO: New Plan ‘Moving Us Away From Email Deals’

    Groupon CEO: New Plan ‘Moving Us Away From Email Deals’

    Groupon announced a business model transformation that moves them away from email and daily deals. Groupon wants their website to be a place for consumers to find great deals and information and also be a utility for merchants to use every day to grow their businesses, says Groupon CEO Rich Williams.

    Groupon is utilized by customers who receive email deals around four or five times a year and Williams sees a huge opportunity to transform Groupon by getting customers to view the site as a deal and lifestyle platform, potentially increasing usage to four or five times a week.

    Rich Williams, Groupon CEO, discussed Groupon’s transformation plans with Jim Cramer on CNBC:

    Groupon Announces a Business Model Transformation

    The core of our plan is based on our marketplace model and concept. That’s moving us away from email and daily deals really to being a utility for consumers and merchants to use every single day to grow their businesses, in the case of merchants. In the case of consumers, a place where they trust when they’re hungry, when they’re bored, when they just want something to do on the weekend with their kids, we’re where they’re going to find the best prices, the best deals, and also the best selection and inventory of those transactable offers local markets.

    I think people have a very narrow perspective of what a turnaround is. Most of that it’s like hey we need to cut some cost or we need to just tweak our product around the edges. When I say it’s a transformation, I think we have a good business today, we’re trying to build an amazing business. We have a good product today, we’re trying to build an amazing product. We’ve got to transform how we work the products we deliver to our customers, really fundamentally change how consumers think about us every day. That’s more than your typical turnaround has to attack and the good news is we’re well on our way.

    Still a Huge Opportunity in Local

    Local is a huge space and it’s a space that got a late start if you think about the online and mobile revolution that we’ve gone through over the last 15 or 20 years. Products started first with folks like Amazon in the late 90s. It wasn’t really until folks like Groupon and Yelp came into the mix late into the 2000s where you started to really get people to push. For sure locals late and it is a challenging space. I would say we’re producing billions of dollars of value coming out of the local space. We’ve grown our inventory and our relationships with small businesses by 60 percent over the last three years. We’re making headway and we see that as a massive prize that’s worth fighting for and we like our position in the market.

    People use us four or five times a year currently. Our opportunity in local where you shop most of the time is four or five times a week. That’s what we’re building toward and those are the metrics to look at long-term where we have a lot of customers buying more frequently in a profitable way. I think we’re we’re wildly undervalued. We have strong free cash flow and we produce a lot of adjusted EBITDA that’s not reflected in our share price today and just shows that we have a lot of opportunity to grow that for folks over time.

  • New Groupon CEO: Nobody Understands Us

    Earlier this month, Groupon reported its Q3 financials and announced that it has a new CEO. Rich Williams stepped into the role as Eric Lefkofsky stepped down to return to his role as Chairman of the Board.

    Wall Street was not impressed with the news as shares plummeted as much as 26% in after-hours trading that day. In addition to the leadership, Groupon had missed forecasts.

    Williams believes the company is greatly misunderstood by the media, by analysts, and by consumers. He says Groupon is still paying the price for pas mistakes such as scaling “too far” and “too fast”.

    He also says some “myths” about the company have been built up over the years, and he aims to dispel those in a new blog post.

    One myth, he says, is that nobody can win in the local space, and he says that Groupon is the “unquestioned leader”.

    “On more than one occasion, we’ve been overly enthusiastic about the potential impact of new products, and we’ve been wrong more than once with how critical it is for us to compete in certain areas,” Williams writes. “We shouldn’t run from those failures or apologize for them. None of them bet the future of the company. We are pioneering, we are growing, and we are the market leader, which means we know that not every test will come out beaming rainbows and unicorns. Sometimes we will fail, and sometimes we will win, and win big. Winning big is absolutely possible in local. It’s a massive space that remains largely underserved. Consumers and merchants ultimately want that to change, and that makes winning in local possible. We have sold nearly a billion Groupons life to date. Add to that our nearly 50 million active consumer and 1 million merchant customers to date and you have a lot of proof of the possibilities in local.”

    Another myth, he says, is that the company isn’t growing and that it’s going out of business. He calls this logic “lazy,” and notes that Groupon has grown billings and revenue by over 90% since going public with seven consecutive quarters of double-digit billings growth in North America. They’ve also doubled their customers in the past five years, he says, adding that the number of deals available has grown by 500x since the IPO.

    Back in the early days, there were a lot of reports in the media that people were finding Groupon to actually be bad for business. This is another of the myths he says, adding that they don’t hear about that one much anymore. Now, he says, the top complaint is that people just want to sell more Groupons.

    The biggest myth of all, however, according to Williams, is that Groupon is an email daily deal company, when the reality, he says, is that Groupon is a marketplace, and more people get deals from searching on its website than they do from email. More than half of purchases, he says, occur on mobile.

    “Second, the ‘deals are dead’ line of thinking is tired and not supported,” he says. “Deals are core to who we are as a company, and we’re not running away from them–not by a long shot. Deals have helped us build the largest transactional platform of its kind in dozens of countries around the globe and a loved brand. We also know that there’s more to our marketplace than deals, including an increasing number of market rate and low discount offers, and new ways to save time as well as money. They’re just in their early stages and we want to move faster to bring them to customers so that they can see clearly the changes for themselves. We’re going to do that, and fast.”

    After the myth-busting portion of the blog post, he gets into why he thinks Groupon has what it takes to win. He says it in many, many more words, but this basically boils down to Groupon’s team, customers, a strong business model, and experience.

    He also outlines some strategic companies the company is making including a shift in marketing geared toward driving people to the marketplace.

    The company will be adjusting its international strategy as well. It will shut down in some countries, partner in others, and increase investments in countries where it’s doing better.

    Groupon will also no longer emphasize the consumer electronics business.

    Image via Groupon

  • Groupon Gets New CEO, Releases Earnings

    Groupon Gets New CEO, Releases Earnings

    Groupon released its Q3 earnings and announced that it has named Rich Williams as its new CEO as Eric Lefkofsky steps down.

    Williams was appointed by the board, effective immediately as Lefkofsky returns to his role as Chairman of the Board.

    “Rich is the right and natural choice for Groupon’s future, and he has the unanimous support of the Board of Directors. We are fully confident we have identified the best leader for our employees, customers, partners and shareholders,” said Ted Leonsis, outgoing Chairman of the Board, who is now Lead Independent Director. “Over the last two years, Eric has worked tirelessly for the company and the business is much stronger today because of it.”

    “I am honored to be leading the company as Groupon evolves into a daily habit in our customers’ lives,” said Williams. “Under Eric, we made significant strides in establishing our marketplace. That work will continue with a greater focus than ever. As CEO, my top priority is to unlock the long-term growth potential in the business by demonstrating everything the new Groupon has to offer. We have a great team here and I look forward to the opportunities ahead of us.”

    “Cracking the code in local commerce is not easy. We’ve come a long way in building a leading local commerce marketplace in the last two years,” said Lefkofsky. “With his deep experience in e-commerce — both in and outside of Groupon — and expertise in marketing, operations and technology, Rich was the obvious choice to lead Groupon.”

    “I’m assuming the CEO role with three immediate priorities,” Williams said. “First, we will renew our investment in customer acquisition to introduce more new customers to our marketplace and accelerate growth. Second, we will increase our focus on streamlining our international operations to ensure we are operating as lean and efficiently as possible. Finally, we will shift our Shopping category away from lower margin ‘empty calorie’ products to grow a sustainable, healthy Goods business with stronger margins.”

    As for Groupon’s financials, the company announced gros billings of $1.47 billion, revenue of $713.6 million, GAAP loss per share of $0.04 and non-GAAP earnings per share of $0.05.

    Here’s the release in its entirety:

    CHICAGO–(BUSINESS WIRE)– Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter ended September 30, 2015.

    The company also announced that Chief Operating Officer Rich Williams will assume the role of Chief Executive Officer. Outgoing CEO Eric Lefkofsky will once again serve as Chairman of the Board of Directors. Outgoing Chairman Ted Leonsis will now serve as Lead Independent Director.

    “Over the past few years, we’ve repositioned the business for success and strengthened our foundation. On a trailing twelve-month basis, we generated $3.1 billion in revenue, $1.4 billion in gross profit, $283 million in adjusted EBITDA and $228 million in free cash flow,” Lefkofsky said.

    “We’ve successfully transformed Groupon to support our next stage of growth. The business is stable, the marketplace is scaling, and we are ready to take our next big step. Now is the right time for me to return to my role as Chairman, and let Rich, who has done a tremendous job over the past four years, lead Groupon during this next stage.”

    Third Quarter 2015 Summary

    • Gross billings, which reflect the total dollar value of customer purchases of goods and services, was $1.47 billion in the third quarter 2015, compared with $1.49 billion in the third quarter 2014. Gross billings declined 2% globally, but grew 6% excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter. On this F/X neutral basis, North America billings increased 12%, EMEA declined 1% and Rest of World was approximately flat.
    • Revenue was $713.6 million in the third quarter 2015, compared with $714.3 million in the third quarter 2014. Revenue was approximately flat, but grew 7% excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter. On this F/X neutral basis, North America revenue increased 11%, EMEA increased 2% and Rest of World declined 5%.
    • Gross profit was $328.9 million in the third quarter 2015, compared with $355.3 million in the third quarter 2014. Excluding the $26.4 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, gross profit would have been$355.4 million.
    • Adjusted EBITDA, a non-GAAP financial measure, was $56.3 million in the third quarter 2015, compared with $63.9 million in the third quarter 2014.
    • Net loss attributable to common stockholders was $27.6 million, or $0.04 per share. Non-GAAP earnings attributable to common stockholders was $32.5 million, or $0.05 per share.
    • Third quarter 2015 results include pre-tax charges of $24.1 million and $37.5 million related to the previously announced restructuring program and securities litigation, respectively, a $13.7 million pre-tax gain from the sale of a controlling stake in Groupon India and a$17.8 million income tax benefit from a reduction in liabilities for uncertain tax positions.
    • Operating cash flow for the trailing twelve months ended September 30, 2015 was $316.4 million. Free cash flow, a non-GAAP financial measure, was negative $35.3 million in the third quarter 2015, bringing free cash flow for the trailing twelve months ended September 30, 2015 to $227.8 million.
    • Cash and cash equivalents as of September 30, 2015 was $963.6 million and borrowings against our revolving credit facility were $195.0 million.

    “We delivered a solid third quarter and one that was largely in line with our expectations,” said Groupon interim CFO Brian Kayman. “Our fourth quarter guidance reflects increased investments in marketing, and a tighter focus on margin improvement, both domestically and abroad.”

    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 1% year-over-year to 52 million in the third quarter 2015. North America units increased 11%, EMEA units increased 1% and Rest of World units declined 23%.
    • Active deals: At the end of the third quarter 2015, on average, active deals were nearly 570,000 globally, with over 290,000 in North America. Both include the addition of approximately 80,000 Coupons.
    • Active customers: Active customers, or customers that have purchased a voucher or product within the last twelve months, grew 4% year-over-year, to 48.6 million as of September 30, 2015, comprising 25.2 million in North America, 15.4 million in EMEA, and 8.0 million in Rest of World.
    • Customer spend: Third quarter 2015 trailing twelve month billings per average active customer was $132, compared with $137 in the third quarter 2014.

    Share Repurchase

    During the third quarter 2015, Groupon repurchased 44,149,663 shares of its Class A common stock for an aggregate purchase price of $192.9 million. Up to $268.1 million of Class A common stock remains available for repurchase under Groupon’s share repurchase program throughAugust 2017. The timing and amount of any share repurchases are determined based on market conditions, share price and other factors, and the programs may be discontinued or suspended at any time.

    Outlook

    Groupon’s outlook for the fourth quarter reflects current foreign exchange rates, as well as expected marketing investments in customer acquisition.

    For the fourth quarter 2015, Groupon expects revenue of between $815 million and $865 million. This guidance anticipates nearly 400 basis points of unfavorable impact on the year-over-year growth rate from changes in foreign exchange rates. Groupon expects Adjusted EBITDA for the fourth quarter 2015 of between $40 million and $60 million, and non-GAAP earnings per share of between negative $0.01 and positive$0.01.

    Conference Call

    A conference call will be webcast live today at 4:00 p.m. CST / 5:00 p.m. EST, 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. Grouponpromptly 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, non-GAAP net income attributable to common stockholders, non-GAAP earnings per share and free cash flow. These non-GAAP financial measures, which are presented on a continuing operations basis, are intended to aid investors in better understanding Groupon’scurrent financial performance and its prospects for the future as seen through the eyes of management. We believe that these non-GAAP financial measures facilitate comparisons with our historical results and with the results of peer companies who present similar measures (although other companies may define non-GAAP measures differently than we define them, even when similar terms are used to identify such measures). However, non-GAAP financial measures are not intended to be a substitute for those reported in accordance with U.S. GAAP. 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 external transaction costs related to business combinations, primarily consisting of legal and advisory fees. 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.

    Interest and Other Non-Operating Items. Interest and other non-operating items include: interest income, interest expense, gains and losses related to minority investments, and foreign currency gains and losses. We exclude interest and other non-operating items from certain of our non-GAAP financial measures because we believe that excluding these items provides meaningful supplemental information about our core operating performance and facilitates comparisons to our historical operating results.

    Items That Are Unusual in Nature or Infrequently Occurring. For the three and nine months ended September 30, 2015, items that we believe to be unusual in nature or infrequently occurring were (a) charges related to our restructuring program, (b) the gain on our disposition of Groupon India, (c) the write-off of a prepaid asset related to a marketing program that was discontinued because the counterparty ceased operations and (d) the expense related to a significant increase in the contingent liability for our securities litigation matter. We exclude items that are unusual in nature or infrequently occurring because we believe that excluding those items provides meaningful supplemental information about our core operating performance and facilitates comparisons to our historical 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 prior-year period. We present foreign exchange rate neutral information to facilitate comparisons to our historical operating results.

    Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) from continuing operations excluding income taxes, interest and other non-operating items, depreciation and amortization, stock-based compensation, acquisition-related expense (benefit), net and other items that are unusual in nature or infrequently occurring. 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.

    Non-GAAP net income (loss) attributable to common stockholders and non-GAAP earnings (loss) per share adjust our net income (loss) attributable to common stockholders and earnings (loss) per share to exclude the impact of:

    • stock-based compensation,
    • amortization of acquired intangible assets,
    • acquisition-related expense (benefit), net,
    • items that are unusual in nature or infrequently occurring,
    • non-operating foreign currency gains and losses related to intercompany balances and reclassifications of cumulative translation adjustments to earnings as a result of business dispositions,
    • non-operating gains and losses from minority investments that we have elected to record at fair value with changes in fair value reported in earnings,
    • income (loss) from discontinued operations and
    • the income tax effect of those items.

    We believe that excluding these items from our measures of non-GAAP net income (loss) attributable to common stockholders and earnings (loss) per share provides useful supplemental information for evaluating our operating performance and facilitates comparisons to our historical results by eliminating items that are non-cash in nature, relate to discrete events or are otherwise not indicative of the core operating performance of our ongoing business.

    Free cash flow is a non-GAAP financial measure that comprises net cash provided by (used in) operating activities from continuing operations less purchases of property and equipment and capitalized software from continuing operations. 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 within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve a number of risks and uncertainties, and actual results could differ materially from those discussed. The words “may,” will,” should,” “could,” “expect,” anticipate,” “believe,” “estimate,” intend,” “continue” and other similar expressions are intended to identify forward-looking statements. 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 and the productivity of those marketing investments; the impact of our shift away from lower-margin products in our Goods category; effectively dealing with challenges arising from our international operations including fluctuations in currency exchange rates; retaining existing customers and adding new customers, including as we increase our marketing spend and shift away from lower-margin products in our Goods category; retaining and adding new and high quality merchants; cyber security breaches; incurring expenses as we expand our business; competing successfully in our industry; maintaining favorable payment terms with our business partners; providing a strong mobile experience for our customers; delivery and routing of our emails; maintaining a strong brand; managing inventory and order fulfillment risks; integrating our technology platforms; managing refund risks; retaining, attracting and integrating members of our executive team; litigation; compliance with domestic and foreign laws and regulations, including the CARD Act and regulation of the Internet and e-commerce; tax liabilities; tax legislation; maintaining our information technology infrastructure; protecting our intellectual property; completing and realizing the anticipated benefits from acquisitions, dispositions, joint ventures and strategic investments; seasonality; payment-related risks; customer and merchant fraud; global economic uncertainty; our ability to raise capital if necessary; difficulties, delays or our inability to successfully complete all or part of the announced restructuring actions or to realize the operating efficiencies and other benefits of such restructuring actions; higher than anticipated restructuring charges or changes in the timing of such restructuring charges; and the impact of our ongoing strategic review and any potential strategic alternatives we may choose to pursue. For additional information regarding these and other risks and uncertainties, 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, Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 and our other filings with the Securities and Exchange Commission, copies of which may be obtained by visiting the company’s Investor Relations web site at http://investor.groupon.com or theSEC’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 November 3, 2015. 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 top-rated 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)
    The financial results of Ticket Monster, including the gain on disposition and related tax effects, are presented as discontinued operations in the accompanying condensed consolidated financial statements and tables for the nine months ended September 30, 2015. Additionally, the assets and liabilities for Ticket Monster are presented as held for sale in the accompanying condensed consolidated balance sheet as of December 31, 2014. All prior period financial information and operational metrics have been retrospectively adjusted to reflect this presentation.
     
    Three Months Ended September 30,     Nine Months Ended September 30,    
    2015 2014 Y/Y % Growth FX Effect(2) Y/Y % Growth
    excluding FX(2)    		 2015 2014 Y/Y % Growth FX Effect(2) Y/Y % Growth
    excluding FX(2)
    Gross Billings(1):
    North America $ 869,203 $ 774,286 12.3 % $ (1,649 ) 12.5 % $ 2,659,436 $ 2,354,900 12.9 % $ (3,904 ) 13.1 %
    EMEA 414,482 489,423 (15.3 ) (72,345 ) (0.5 ) 1,307,207 1,486,266 (12.0 ) (256,158 ) 5.2
    Rest of World 183,849 226,638 (18.9 ) (43,127 ) 0.1 581,905 671,997 (13.4 ) (101,105 ) 1.6
    Consolidated gross billings $ 1,467,534 $ 1,490,347 (1.5 ) % $ (117,121 ) 6.3 % $ 4,548,548 $ 4,513,163 0.8 % $ (361,167 ) 8.8 %
    Revenue:
    North America $ 463,931 $ 418,494 10.9 % $ (405 ) 11.0 % $ 1,425,095 $ 1,273,487 11.9 % $ (943 ) 12.0 %
    EMEA 199,287 230,072 (13.4 ) (35,863 ) 2.2 619,554 688,655 (10.0 ) (124,694 ) 8.1
    Rest of World 50,377 65,703 (23.3 ) (12,004 ) (5.1 ) 157,697 196,753 (19.9 ) (28,147 ) (5.5 )
    Consolidated revenue $ 713,595 $ 714,269 (0.1 ) % $ (48,272 ) 6.7 % $ 2,202,346 $ 2,158,895 2.0 % $ (153,784 ) 9.1 %
    Income (loss) from operations $ (70,423 ) $ 1,049 (6,813.3 ) % $ 633 (6,873.7 ) % $ (74,354 ) $ (2,939 ) (2,429.9 ) % $ 679 (2,453.0 ) %
    Income (loss) from continuing operations (24,613 ) (12,573 ) (56,619 ) (45,039 )
    Income (loss) from discontinued operations, net of tax — (6,445 ) 133,463 (30,264 )
    Net income (loss) attributable toGroupon, Inc. $ (27,615 ) $ (21,208 ) $ 67,196 $ (81,878 )
    Basic net income (loss) per share:
    Continuing operations $ (0.04 ) $ (0.02 ) $ (0.10 ) $ (0.08 )
    Discontinued operations — (0.01 ) 0.20 (0.04 )
    Basic net income (loss) per share $ (0.04 ) $ (0.03 ) $ 0.10 $ (0.12 )
    Diluted net income (loss) per share:
    Continuing operations $ (0.04 ) $ (0.02 ) $ (0.10 ) $ (0.08 )
    Discontinued operations — (0.01 ) 0.20 (0.04 )
    Diluted net income (loss) per share $ (0.04 ) $ (0.03 ) $ 0.10 $ (0.12 )
    Weighted average number of shares outstanding
    Basic 644,894,785 669,526,524 664,302,630 675,814,535
    Diluted 644,894,785 669,526,524 664,302,630 675,814,535
    (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 nine months ended September 30, 2014.
    Groupon, Inc.
    Condensed Consolidated Statements of Cash Flows
    (in thousands)
    (unaudited)
    Three Months Ended September 30, Nine Months Ended September 30,
    2015 2014 2015 2014
    Operating activities
    Net income (loss) $ (24,613 ) $ (19,018 ) $ 76,844 $ (75,303 )
    Less: Income (loss) from discontinued operations, net of tax — (6,445 ) 133,463 (30,264 )
    Income (loss) from continuing operations (24,613 ) (12,573 ) (56,619 ) (45,039 )
    Adjustments to reconcile net income (loss) to net cash provided by operating activities:
    Depreciation and amortization of property, equipment and software 30,475 25,355 84,241 68,731
    Amortization of acquired intangible assets 5,160 5,107 14,966 16,188
    Stock-based compensation 35,575 32,680 109,204 85,329
    Restructuring charges 24,146 — 24,146 —
    Gain on disposition of business (13,710 ) — (13,710 ) —
    Deferred income taxes (15,202 ) (2,472 ) (15,252 ) (1,956 )
    Excess tax benefits on stock-based compensation 28 (2,641 ) (6,198 ) (12,573 )
    Loss on equity method investments — 91 — 459
    Gain from changes in fair value of contingent consideration 435 (1,020 ) (268 ) (1,059 )
    Loss from changes in fair value of investments 2,564 — 2,114 —
    Impairments of investments — 1,448 — 2,036
    Change in assets and liabilities, net of acquisitions:
    Restricted cash 1,392 6,014 4,555 7,686
    Accounts receivable 16,635 (4,337 ) 6,353 (26,557 )
    Prepaid expenses and other current assets (33,366 ) (27,040 ) (39,813 ) (22,883 )
    Accounts payable 5,371 (5,505 ) (944 ) (12,973 )
    Accrued merchant and supplier payables (51,319 ) (32,586 ) (101,852 ) (101,070 )
    Accrued expenses and other current liabilities 27,368 7,853 33,413 (21,103 )
    Other, net (18,551 ) 31,950 (1,242 ) 44,009
    Net cash provided by (used in) operating activities from continuing operations (7,612 ) 22,324 43,094 (20,775 )
    Net cash provided by (used in) operating activities from discontinued operations (19,205 ) 23,142 (36,578 ) 22,777
    Net cash provided by (used in) operating activities (26,817 ) 45,466 6,516 2,002
    Net cash provided by (used in) investing activities from continuing operations (98,028 ) (22,492 ) (146,012 ) (117,643 )
    Net cash provided by (used in) investing activities from discontinued operations — (1,415 ) 244,470 (75,924 )
    Net cash provided by (used in) investing activities (98,028 ) (23,907 ) 98,458 (193,567 )
    Net cash provided by (used in) financing activities (14,821 ) (16,823 ) (185,990 ) (173,068 )
    Effect of exchange rate changes on cash and cash equivalents, including cash

    classified within current assets held for sale

    		 (6,923 ) (21,102 ) (27,338 ) (20,671 )
    Net increase (decrease) in cash and cash equivalents, including cash classified

    within current assets held for sale

    		 (146,589 ) (16,366 ) (108,354 ) (385,304 )
    Less: Net increase (decrease) in cash classified within current assets held for sale — 20,649 (55,279 ) 43,324
    Net increase (decrease) in cash and cash equivalents (146,589 ) (37,015 ) (53,075 ) (428,628 )
    Cash and cash equivalents, beginning of period 1,110,148 845,413 1,016,634 1,240,472
    Cash and cash equivalents, end of period $ 963,559 $ 808,398 $ 963,559 $ 811,844
    Groupon, Inc.
    Condensed Consolidated Statements of Operations
    (in thousands, except share and per share amounts)
    (unaudited)
    Three Months Ended September 30, Nine Months Ended September 30,
    2015 2014 2015 2014
    Revenue:
    Third party and other $ 326,306 $ 362,903 $ 1,027,273 $ 1,133,109
    Direct 387,289 351,366 1,175,073 1,025,786
    Total revenue 713,595 714,269 2,202,346 2,158,895
    Cost of revenue:
    Third party and other 46,050 50,774 145,292 153,333
    Direct 338,633 308,217 1,043,729 918,362
    Total cost of revenue 384,683 358,991 1,189,021 1,071,695
    Gross profit 328,912 355,278 1,013,325 1,087,200
    Operating expenses:
    Marketing 61,587 55,258 171,127 182,142
    Selling, general and administrative 326,248 299,275 904,816 905,919
    Restructuring charges 24,146 — 24,146 —
    Gain on disposition of business (13,710 ) — (13,710 ) —
    Acquisition-related expense (benefit), net 1,064 (304 ) 1,300 2,078
    Total operating expenses 399,335 354,229 1,087,679 1,090,139
    Income (loss) from operations (70,423 ) 1,049 (74,354 ) (2,939 )
    Other income (expense), net (1) (8,160 ) (20,056 ) (25,146 ) (21,919 )
    Income (loss) from continuing operations before provision

    (benefit) for income taxes

    		 (78,583 ) (19,007 ) (99,500 ) (24,858 )
    Provision (benefit) for income taxes (53,970 ) (6,434 ) (42,881 ) 20,181
    Income (loss) from continuing operations (24,613 ) (12,573 ) (56,619 ) (45,039 )
    Income (loss) from discontinued operations, net of tax — (6,445 ) 133,463 (30,264 )
    Net income (loss) (24,613 ) (19,018 ) 76,844 (75,303 )
    Net income (loss) attributable to noncontrolling interests (3,002 ) (2,190 ) (9,648 ) (6,575 )
    Net income (loss) attributable to Groupon, Inc. $ (27,615 ) $ (21,208 ) $ 67,196 $ (81,878 )
    Basic net income (loss) per share:
    Continuing operations $ (0.04 ) $ (0.02 ) $ (0.10 ) $ (0.08 )
    Discontinued operations — (0.01 ) 0.20 (0.04 )
    Basic net income (loss) per share $ (0.04 ) $ (0.03 ) $ 0.10 $ (0.12 )
    Diluted net income (loss) per share:
    Continuing operations $ (0.04 ) $ (0.02 ) $ (0.10 ) $ (0.08 )
    Discontinued operations — (0.01 ) 0.20 (0.04 )
    Diluted net income (loss) per share $ (0.04 ) $ (0.03 ) $ 0.10 $ (0.12 )
    Weighted average number of shares outstanding
    Basic 644,894,785 669,526,524 664,302,630 675,814,535
    Diluted 644,894,785 669,526,524 664,302,630 675,814,535
    (1) Other income (expense), net includes foreign currency losses of $5.2 million and $18.6 million for the three months ended September 30, 2015 and 2014, respectively, and foreign currency losses of $22.1 million and $20.1 million for the nine months ended September 30, 2015 and 2014, respectively.
    Groupon, Inc.
    Condensed Consolidated Balance Sheets
    (in thousands, except share and per share amounts)
    September 30, 2015 December 31, 2014
    (unaudited)
    Assets
    Current assets:
    Cash and cash equivalents $ 963,559 $ 1,016,634
    Accounts receivable, net 76,121 90,597
    Deferred income taxes 19,349 16,271
    Prepaid expenses and other current assets 223,986 192,382
    Current assets held for sale — 85,445
    Total current assets 1,283,015 1,401,329
    Property, equipment and software, net 202,714 176,004
    Goodwill 291,084 236,756
    Intangible assets, net 40,841 30,609
    Investments (including $149.2 million and $7.4 million at September 30, 2015 and December 31,

    2014, respectively, at fair value)

    		 163,789 24,298
    Deferred income taxes, non-current 28,791 41,323
    Other non-current assets 20,407 16,173
    Non-current assets held for sale — 301,105
    Total Assets $ 2,030,641 $ 2,227,597
    Liabilities and Equity
    Current liabilities:
    Short-term borrowings $ 195,000 $ —
    Accounts payable 15,503 13,822
    Accrued merchant and supplier payables 640,044 772,156
    Accrued expenses 260,883 214,260
    Deferred income taxes 28,573 31,998
    Other current liabilities 142,925 127,121
    Current liabilities held for sale — 166,239
    Total current liabilities 1,282,928 1,325,596
    Deferred income taxes, non-current 4,756 773
    Other non-current liabilities 142,005 129,531
    Non-current liabilities held for sale — 6,753
    Total Liabilities 1,429,689 1,462,653
    Commitments and contingencies
    Stockholders’ Equity
    Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized,

    714,074,671 shares issued and 620,933,460 shares outstanding at September 30, 2015 and

    699,008,084 shares issued and 671,768,980 shares outstanding at December 31, 2014

    		 71 70
    Class B common stock, par value $0.0001 per share, 10,000,000 shares authorized, 2,399,976

    shares issued and outstanding at September 30, 2015 and December 31, 2014

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

    and outstanding at September 30, 2015 and December 31, 2014

    		 — —
    Additional paid-in capital 1,933,994 1,847,420
    Treasury stock, at cost, 93,141,211 shares at September 30, 2015 and 27,239,104 shares at

    December 31, 2014

     

    		 (532,530 ) (198,467 )
    Accumulated deficit (854,764 ) (921,960 )
    Accumulated other comprehensive income 53,369 35,763
    Total Groupon, Inc. Stockholders’ Equity 600,140 762,826
    Noncontrolling interests 812 2,118
    Total Equity 600,952 764,944
    Total Liabilities and Equity $ 2,030,641 $ 2,227,597
    Groupon, Inc.
    Segment Information
    (in thousands)
    (unaudited)
    Three Months Ended September 30, Nine Months Ended September 30,
    2015 2014 2015 2014
    North America
    Gross billings (1) $ 869,203 $ 774,286 $ 2,659,436 $ 2,354,900
    Revenue 463,931 418,494 1,425,095 1,273,487
    Segment cost of revenue and operating expenses (2)(3)(4) 494,843 405,910 1,404,472 1,234,973
    Segment operating income (loss) (2) $ (30,912 ) $ 12,584 $ 20,623 $ 38,514
    Segment operating income (loss) as a percent of segment gross billings (3.6 )% 1.6 % 0.8 % 1.6 %
    Segment operating income (loss) as a percent of segment revenue (6.7 )% 3.0 % 1.4 % 3.0 %
    EMEA
    Gross billings (1) $ 414,482 $ 489,423 $ 1,307,207 $ 1,486,266
    Revenue 199,287 230,072 619,554 688,655
    Segment cost of revenue and operating expenses (2)(4)(5) 195,397 207,643 586,343 619,594
    Segment operating income (loss) (2) $ 3,890 $ 22,429 $ 33,211 $ 69,061
    Segment operating income (loss) as a percent of segment gross billings 0.9 % 4.6 % 2.5 % 4.6 %
    Segment operating income (loss) as a percent of segment revenue 2.0 % 9.7 % 5.4 % 10.0 %
    Rest of World
    Gross billings (1) $ 183,849 $ 226,638 $ 581,905 $ 671,997
    Revenue 50,377 65,703 157,697 196,753
    Segment cost of revenue and operating expenses (2)(4) 57,282 67,291 175,542 219,860
    Segment operating income (loss) (2) $ (6,905 ) $ (1,588 ) $ (17,845 ) $ (23,107 )
    Segment operating income (loss) as a percent of segment gross billings (3.8 )% (0.7 )% (3.1 )% (3.4 )%
    Segment operating income (loss) as a percent of segment revenue (13.7 )% (2.4 )% (11.3 )% (11.7 )%
    (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.
    (3) Segment cost of revenue and operating expenses for North America for the three and nine months ended September 30, 2015 includes a$37.5 million expense related to an increase in the Company’s contingent liability for its securities litigation matter.
    (4) Segment cost of revenue and operating expenses for the three and nine months ended September 30, 2015 includes restructuring charges of $1.4 million in North America, $19.7 million in EMEA and $3.0 million in Rest of World.
    (5) Segment cost of revenue and operating expenses for EMEA for the three and nine months ended September 30, 2015 includes a $6.7 million expense for the write-off of a prepaid asset related to a marketing program that was discontinued because the counterparty ceased operations.
    Groupon, Inc.
    Non-GAAP Reconciliation Schedules
    (in thousands, except share and per share amounts)
    (unaudited)
    Adjusted EBITDA, non-GAAP earnings attributable to common stockholders and non-GAAP earnings per share are non-GAAP financial measures. The Company reconciles Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net income (loss) from continuing operations” for the periods presented and the Company reconciles non-GAAP earnings per share to the most comparable U.S. GAAP financial measure, “Diluted net income (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 income (loss) from continuing operations.”
    Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015
    Income (loss) from continuing operations $ (12,573 ) $ 26,566 $ (16,739 ) $ (15,267 ) $ (24,613 )
    Adjustments:
    Stock-based compensation (1) 32,680 29,961 35,144 38,467 35,432
    Depreciation and amortization 30,462 30,122 32,200 31,372 35,635
    Acquisition-related expense (benefit), net (304 ) (809 ) (269 ) 505 1,064
    Restructuring charges — — — — 24,146
    Gain on disposition of business — — — — (13,710 )
    Prepaid marketing write-off — — — — 6,690
    Securities litigation expense — — — — 37,500
    Other expense (income), net 20,056 11,531 19,927 (2,941 ) 8,160
    Provision (benefit) for income taxes (6,434 ) (4,457 ) 2,107 8,982 (53,970 )
    Total adjustments 76,460 66,348 89,109 76,385 80,947
    Adjusted EBITDA $ 63,887 $ 92,914 $ 72,370 $ 61,118 # $ 56,334
    (1) Includes stock-based compensation classified within cost of revenue, marketing expense, and selling, general and administrative expense. Other expense (income), net, includes $0.02 million and $0.1 million of additional stock-based compensation for the three months endedJune 30, 2015 and the three months ended September 30, 2015, respectively.
    The following is a reconciliation of net income (loss) attributable to common stockholders to non-GAAP net income (loss) attributable to common stockholders and a reconciliation of diluted net income (loss) per share to non-GAAP net income (loss) per share for the three and nine months ended September 30, 2015:
    Three Months Ended

    September 30, 2015

    		 Nine Months Ended

    September 30, 2015
    Net income (loss) attributable to common stockholders $ (27,615 ) $ 67,196
    Stock-based compensation 35,575 109,204
    Amortization of acquired intangible assets 5,160 14,966
    Acquisition-related expense (benefit), net 1,064 1,300
    Restructuring charges 24,146 24,146
    Gain on disposition of business (13,710 ) (13,710 )
    Prepaid marketing write-off 6,690 6,690
    Securities litigation expense 37,500 37,500
    Intercompany foreign losses (gains) and

    reclassfication of translation adjustment to

    earnings (1)

    		 4,708   20,666
    Loss from changes in fair value of investments 2,564 2,114
    Income tax effect of above adjustments (43,541 ) (68,932 )
    Income from discontinued operations, net of tax — (133,463 )
    Non-GAAP net income (loss) attributable to common stockholders $ 32,541 $ 67,677
    Diluted shares 644,894,785 644,302,630
    Incremental diluted shares 5,385,857 7,017,448
    Adjusted diluted shares 650,280,642 651,320,078
    Diluted net income (loss) per share $ (0.04 ) $ 0.10
    Impact of stock-based compensation,

    amortization of acquired intangible assets,

    acquisition-related expense (benefit), net,

    intercompany foreign currency losses (gains),

    items that are unusual in nature and infrequently

    occurring, income (loss) from discontinued

    operations and related tax effects

    		 0.09 —
    Non-GAAP net income (loss) per share $ 0.05 $ 0.10
    (1) For the nine months ended September 30, 2015, a $4.4 million loss related to the cumulative translation adjustment from the Company’s legacy business in the Republic of Korea was reclassified to earnings as a result of the Ticket Monster disposition.
    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 “Income (loss) from continuing operations,” respectively, for the periods presented. 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 growth” and “Revenue growth,” respectively, for the periods presented.
    The effect on the Company’s gross billings, revenue and income (loss) from changes in exchange rates versus the U.S. Dollar for the three months ended September 30, 2015 was as follows:
    Three Months Ended September 30, 2015 Three Months Ended September 30, 2015
    At Avg. Q3 2014

    Rates(1)

    		 Exchange Rate

    Effect(2)

    		 As

    Reported

    		 At Avg. Q2 2015

    Rates(3)

    		 Exchange Rate

    Effect(2)

    		 As

    Reported
    Gross billings $ 1,584,655 $ (117,121 ) $ 1,467,534 $ 1,478,528 $ (10,994 ) $ 1,467,534
    Revenue 761,867 (48,272 ) 713,595 716,702 (3,107 ) 713,595
    Income (loss) from operations $ (71,056 ) $ 633 $ (70,423 ) $ (71,189 ) $ 766 $ (70,423 )
    The effect on the Company’s gross billings, revenue and income (loss) from operations from changes in exchange rates versus the U.S. Dollar for the nine months ended September 30, 2015 was as follows:
    Nine Months Ended September 30, 2015 Nine Months Ended September 30, 2015
    At Avg. Q3 2014

    YTD Rates(1)

    		 Exchange Rate

    Effect(2)

    		 As

    Reported

    		 At Avg. Q4’14-Q2’15

    Rates(3)

    		 Exchange Rate

    Effect(2)

    		 As

    Reported
    Gross billings $ 4,909,715 $ (361,167 ) $ 4,548,548 $ 4,624,647 $ (76,099 ) $ 4,548,548
    Revenue 2,356,130 (153,784 ) 2,202,346 2,234,382 (32,036 ) 2,202,346
    (Loss) income from operations $ (75,033 ) $ 679 $ (74,354 ) $ (74,074 ) $ (280 ) $ (74,354 )
    (1) 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 nine months ended September 30, 2014.
    (2) Represents the increase or decrease in reported amounts resulting from changes in exchange rates from those in effect in the comparable prior periods.
    (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 nine months ended June 30, 2015.
    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.
    Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015
    EMEA Gross billings growth, excluding FX 10 % 8 % 7 % 9 % (1 ) %
    FX Effect — (9 ) (18 ) (19 ) (14 )
    EMEA Gross billings growth 10 % (1 ) % (11 ) % (10 ) % (15 ) %
    Rest of World Gross billings growth, excluding FX 1 % — % (1 ) % 6 % —   %
    FX Effect (4 ) (10 ) (11 ) (15 ) (19 )
    Rest of World Gross billings growth (3 ) % (10 ) % (12 ) % (9 ) % (19 ) %
    Consolidated Gross billings growth, excluding FX 12 % 13 % 10 % 10 % 6   %
    FX Effect (1 ) (5 ) (8 ) (8 ) (8 )
    Consolidated Gross billings growth 11 % 8 % 2 % 2 % (2 ) %
    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.
    Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015
    EMEA Revenue growth, excluding FX 55 % 18 % 13 % 9 % 2   %
    FX Effect 1 (10 ) (19 ) (19 ) (15 )
    EMEA Revenue growth 56 % 8 % (6 ) % (10 ) % (13 ) %
    Rest of World Revenue growth, excluding FX (20 ) % (9 ) % (8 ) % (4 ) % (5 ) %
    FX Effect (4 ) (10 ) (10 ) (14 ) (18 )
    Rest of World Revenue growth (24 ) % (19 ) % (18 ) % (18 ) % (23 ) %
    Consolidated Revenue growth, excluding FX 21 % 19 % 10 % 11 % 7   %
    FX Effect (1 ) (4 ) (7 ) (8 ) (7 )
    Consolidated Revenue growth 20 % 15 % 3 % 3 % —   %
    The effect on North America’s gross billings by category from changes in foreign exchange rates versus the U.S. Dollar for the three months ended September 30, 2015 was as follows:
    At Avg. Q3

    2014 Rates (1)

    		 Exchange

    Rate

    Effect (2)

    		 September 30, 2015

    As Reported

    		 September 30, 2014

    As Reported

    		 Y/Y %

    Growth

    		 Y/Y%

    Growth

    excluding

    FX
    Local:
    Third party and other $ 482,498 $ (890 ) $ 481,608 $ 446,573 7.8 % 8.0 %
    Travel:
    Third party 102,065 (264 ) 101,801 84,820 20.0 % 20.3 %
    Total services 584,563 (1,154 ) 583,409 531,393 9.8 % 10.0 %
    Goods:
    Third party 9,181 (495 ) 8,686 5,077 71.1 % 80.8 %
    Direct 277,108 — 277,108 237,816 16.5 16.5
    Total 286,289 (495 ) 285,794 242,893 17.7 % 17.9
    Travel:
    Third party 102,065 (264 ) 101,801 84,820 20.0 % 20.3 %
    Total gross billings $ 870,852 $ (1,649 ) $ 869,203 $ 774,286 12.3 % 12.5 %
    The effect on EMEA’s gross billings by category from changes in foreign exchange rates versus the U.S. Dollar for the three months endedSeptember 30, 2015 was as follows:
    At Avg. Q3

    2014 Rates (1)

    		 Exchange

    Rate

    Effect (2)

    		 September 30, 2015

    As Reported

    		 September 30, 2014

    As Reported

    		 Y/Y %

    Growth

    		 Y/Y%

    Growth

    excluding

    FX
    Local:
    Third party and other $ 211,548 $ (29,008 ) $ 182,540 $ 218,615 (16.5 ) % (3.2 ) %
    Travel:
    Third party 77,825 (12,909 ) 64,916 79,802 (18.7 ) % (2.5 ) %
    Total services 289,373 (41,917 ) 247,456 298,417 (17.1 ) % (3.0 ) %
    Goods:
    Third party 74,621 (10,703 ) 63,918 82,646 (22.7 ) % (9.7 ) %
    Direct 122,833 (19,725 ) 103,108 108,360 (4.8 ) 13.4
    Total 197,454 (30,428 ) 167,026 191,006 (12.6 ) % 3.4 %
    Travel:
    Third party 77,825 (12,909 ) 64,916 79,802 (18.7 ) % (2.5 ) %
    Total gross billings $ 486,827 $ (72,345 ) $ 414,482 $ 489,423 (15.3 ) % (0.5 ) %
    The effect on Rest of World’s gross billings by category from changes in foreign exchange rates versus the U.S. Dollar for the three months ended September 30, 2015 was as follows:
    At Avg. Q3

    2014 Rates (1)

    		 Exchange

    Rate

    Effect (2)

    		 September 30, 2015

    As Reported

    		 September 30, 2014

    As Reported

    		 Y/Y %

    Growth

    		 Y/Y%

    Growth

    excluding

    FX
    Local:
    Third party and other $ 115,909 $ (22,937 ) $ 92,972 $ 120,269 (22.7 ) % (3.6 ) %
    Travel:
    Third party 38,890 (8,181 ) 30,709 35,754 (14.1 ) % 8.8 %
    Total services 154,799 (31,118 ) 123,681 156,023 (20.7 ) % (0.8 ) %
    Goods:
    Third party 63,749 (10,654 ) 53,095 65,425 (18.8 ) % (2.6 ) %
    Direct 8,428 (1,355 ) 7,073 5,190 36.3 62.4
    Total 72,177 (12,009 ) 60,168 70,615 (14.8 ) % 2.2 %
    Travel:
    Third party 38,890 (8,181 ) 30,709 35,754 (14.1 ) % 8.8 %
    Total gross billings $ 226,976 $ (43,127 ) $ 183,849 $ 226,638 (18.9 ) % 0.1 %
    The effect on consolidated gross billings by category from changes in foreign exchange rates versus the U.S. Dollar for the three months endedSeptember 30, 2015 was as follows:
    At Avg. Q3

    2014 Rates (1)

    		 Exchange

    Rate

    Effect (2)

    		 September 30, 2015

    As Reported

    		 September 30, 2014

    As Reported

    		 Y/Y %

    Growth

    		 Y/Y%

    Growth

    excluding

    FX
    Local:
    Third party and other $ 809,955 $ (52,835 ) $ 757,120 $ 785,457 (3.6 ) % 3.1 %
    Travel:
    Third party 218,780 (21,354 ) 197,426 200,376 (1.5 ) % 9.2 %
    Total services 1,028,735 (74,189 ) 954,546 985,833 (3.2 ) % 4.4 %
    Goods:
    Third party 147,551 (21,852 ) 125,699 153,148 (17.9 ) % (3.7 ) %
    Direct 408,369 (21,080 ) 387,289 351,366 10.2 16.2
    Total 555,920 (42,932 ) 512,988 504,514 1.7 % 10.2 %
    Total gross billings $ 1,584,655 $ (117,121 ) $ 1,467,534 $ 1,490,347 (1.5 ) % 6.3 %
    (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 September 30, 2014.
    (2) Represents the increase or decrease in reported amounts resulting from changes in exchange rates from those in effect in the comparable prior year period.
    Groupon, Inc.
    Supplemental Financial Information and Business Metrics (9)(10)
    (financial data in thousands; active customers in millions)
    (unaudited)
    Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015
    Segments
    North America Segment:
    Gross Billings (1):
    Local (2) Gross Billings $ 446,573 $ 499,250 $ 512,558 $ 499,378 $ 481,608
    Travel Gross Billings 84,820 80,296 96,678 102,908 101,801
    Gross Billings – Services 531,393 579,546 609,236 602,286 583,409
    Gross Billings – Goods 242,893 369,033 284,741 293,970 285,794
    Total Gross Billings $ 774,286 $ 948,579 $ 893,977 $ 896,256 $ 869,203
    Year-over-year growth 16 % 20 % 14 % 12 % 12 %
    % Third Party and Other 69 % 62 % 69 % 68 % 68 %
    % Direct 31 % 38 % 31 % 32 % 32 %
    Gross Billings Trailing Twelve Months (TTM) $ 3,143,621 $ 3,303,479 $ 3,415,687 $ 3,513,098 $ 3,608,015
    Revenue (3):
    Local Revenue $ 161,912 $ 170,946 $ 180,864 $ 172,461 $ 163,786
    Travel Revenue 17,627 17,165 19,989 21,958 21,394
    Revenue – Services 179,539 188,111 200,853 194,419 185,180
    Revenue – Goods 238,955 362,863 279,029 286,863 278,751
    Total Revenue $ 418,494 $ 550,974 $ 479,882 $ 481,282 $ 463,931
    Year-over-year growth 16 % 24 % 11 % 14 % 11 %
    % Third Party and Other 43 % 35 % 42 % 41 % 40 %
    % Direct 57 % 65 % 58 % 59 % 60 %
    Revenue TTM $ 1,717,271 $ 1,824,461 $ 1,873,281 $ 1,930,632 $ 1,976,069
    Gross Profit (4):
    Local Gross Profit $ 138,189 $ 147,582 $ 154,776 $ 147,574 $ 138,798
    % of North America Local Gross Billings 30.9 % 29.6 % 30.2 % 29.6 % 28.8 %
    Travel Gross Profit 14,000 14,187 15,791 18,385 17,644
    % of North America Travel Gross Billings 16.5 % 17.7 % 16.3 % 17.9 % 17.3 % %
    Gross Profit – Services 152,189 161,769 170,567 165,959 156,442
    % of North America Services Gross Billings 28.6 % 27.9 % 28.0 % 27.6 % 26.8 %
    Gross Profit – Goods 23,953 34,404 23,923 30,598 34,801
    % of North America Goods Gross Billings 9.9 % 9.3 % 8.4 % 10.4 % 12.2 %
    Total Gross Profit $ 176,142 $ 196,173 $ 194,490 $ 196,557 $ 191,243
    Year-over-year growth 3 % 13 % 8 % 9 % 9 %
    % Third Party and Other 87 % 83 % 88 % 85 % 83 %
    % Direct 13 % 17 % 12 % 15 % 17 %
    % of North America Total Gross Billings 22.7 % 20.7 % 21.8 % 21.9 % 22.0 %
    EMEA Segment:
    Gross Billings:
    Local Gross Billings $ 218,615 $ 242,119 $ 217,598 $ 198,553 $ 182,540
    Travel Gross Billings 79,802 72,710 65,065 59,544 64,916
    Gross Billings – Services 298,417 314,829 282,663 258,097 247,456
    Gross Billings – Goods 191,006 245,712 176,526 175,439 167,026
    Total Gross Billings $ 489,423 $ 560,541 $ 459,189 $ 433,536 $ 414,482
    Year-over-year growth 10 % (1 ) % (11 ) % (10 ) % (15 ) %
    Year-over-year growth, excluding FX 10 % 8 % 7 % 9 % (1 ) %
    % Third Party and Other 78 % 74 % 77 % 76 % 75 %
    % Direct 22 % 26 % 23 % 24 % 25 %
    Gross Billings TTM $ 2,051,979 $ 2,046,807 $ 1,992,408 $ 1,942,689 $ 1,867,748
    Revenue:
    Local Revenue $ 90,002 $ 95,572 $ 82,536 $ 75,543 $ 70,781
    Travel Revenue 16,960 16,321 14,717 13,100 13,561
    Revenue – Services 106,962 111,893 97,253 88,643 84,342
    Revenue – Goods 123,110 160,582 118,967 115,404 114,945
    Total Revenue $ 230,072 $ 272,475 $ 216,220 $ 204,047 $ 199,287
    Year-over-year growth 56 % 8 % (6 ) % (10 ) % (13 ) %
    Year-over-year growth, excluding FX 55 % 18 % 13 % 9 % 2 %
    % Third Party and Other 53 % 46 % 51 % 48 % 48 %
    % Direct 47 % 54 % 49 % 52 % 52 %
    Revenue TTM $ 939,860 $ 961,130 $ 946,457 $ 922,814 $ 892,029
    Gross Profit:
    Local Gross Profit $ 83,956 $ 90,150 $ 77,356 $ 70,270 $ 66,288
    % of EMEA Local Gross Billings 38.4 % 37.2 % 35.5 % 35.4 % 36.3 %
    Travel Gross Profit 15,440 15,226 12,400 11,939 12,323
    % of EMEA Travel Gross Billings 19.3 % 20.9 % 19.1 % 20.1 % 19.0 % %
    Gross Profit – Services 99,396 105,376 89,756 82,209 78,611
    % of EMEA Services Gross Billings 33.3 % 33.5 % 31.8 % 31.9 % 31.8 %
    Gross Profit – Goods 32,252 38,154 25,481 21,878 24,905
    % of EMEA Goods Gross Billings 16.9 % 15.5 % 14.4 % 12.5 % 14.9 %
    Total Gross Profit $ 131,648 $ 143,530 $ 115,237 $ 104,087 $ 103,516
    Year-over-year growth 6 % (6 ) % (18 ) % (26 ) % (21 ) %
    % Third Party and Other 85 % 82 % 87 % 86 % 86 %
    % Direct 15 % 18 % 13 % 14 % 14 %
    % of EMEA Total Gross Billings 26.9 % 25.6 % 25.1 % 24.0 % 25.0 %
    Rest of World Segment:
    Gross Billings:
    Local Gross Billings $ 120,269 $ 105,420 $ 99,735 $ 100,403 $ 92,972
    Travel Gross Billings 35,754 32,313 32,946 31,263 30,709
    Gross Billings – Services 156,023 137,733 132,681 131,666 123,681
    Gross Billings – Goods 70,615 77,816 66,154 67,555 60,168
    Total Gross Billings $ 226,638 $ 215,549 $ 198,835 $ 199,221 $ 183,849
    Year-over-year growth (3 ) % (10 ) % (12 ) % (9 ) % (19 ) %
    Year-over-year growth, excluding FX 1 % — % (1 ) % 6 % — %
    % Third Party and Other 98 % 96 % 98 % 97 % 96 %
    % Direct 2 % 4 % 2 % 3 % 4 %
    Gross Billings TTM $ 910,670 $ 887,546 $ 861,032 $ 840,243 $ 797,454
    Revenue:
    Local Revenue $ 39,034 $ 32,264 $ 30,281 $ 28,499 $ 26,372
    Travel Revenue 7,243 5,757 6,495 6,363 6,135
    Revenue – Services 46,277 38,021 36,776 34,862 32,507
    Revenue – Goods 19,426 21,758 17,478 18,204 17,870
    Total Revenue $ 65,703 $ 59,779 $ 54,254 $ 53,066 $ 50,377
    Year-over-year growth (24 ) % (19 ) % (18 ) % (18 ) % (23 ) %
    Year-over-year growth, excluding FX (20 ) % (9 ) % (8 ) % (4 ) % (5 ) %
    % Third Party and Other 92 % 86 % 91 % 87 % 86 %
    % Direct 8 % 14 % 9 % 13 % 14 %
    Revenue TTM $ 270,211 $ 256,532 $ 244,326 $ 232,802 $ 217,476
    Gross Profit:
    Local Gross Profit $ 34,373 $ 27,175 $ 26,161 $ 24,567 $ 22,568
    % of Rest of World Local Gross Billings 28.6 % 25.8 % 26.2 % 24.5 % 24.3 %
    Travel Gross Profit 5,544 3,815 4,906 5,012 4,859
    % of Rest of World Travel Gross Billings 15.5 % 11.8 % 14.9 % 16.0 % 15.8 %
    Gross Profit – Services 39,917 30,990 31,067 29,579 27,427
    % of Rest of World Services Gross Billings 25.6 % 22.5 % 23.4 % 22.5 % 22.2 %
    Gross Profit – Goods 7,571 7,416 6,612 6,784 6,726
    % of Rest of World Goods Gross Billings 10.7 % 9.5 % 10.0 % 10.0 % 11.2 %
    Total Gross Profit $ 47,488 $ 38,406 $ 37,679 $ 36,363 $ 34,153
    Year-over-year growth (26 ) % (24 ) % (16 ) % (20 ) % (28 ) %
    % Third Party and Other 100 % 96 % 99 % 99 % 99 %
    % Direct — % 4 % 1 % 1 % 1 %
    % of Rest of World Total Gross Billings 21.0 % 17.8 % 18.9 % 18.3 % 18.6 %
    Consolidated Results of Operations:
    Gross Billings:
    Local Gross Billings $ 785,457 $ 846,789 $ 829,891 $ 798,334 $ 757,120
    Travel Gross Billings 200,376 185,319 194,689 193,715 197,426
    Gross Billings – Services 985,833 1,032,108 1,024,580 992,049 954,546
    Gross Billings – Goods 504,514 692,561 527,421 536,964 512,988
    Total Gross Billings $ 1,490,347 $ 1,724,669 $ 1,552,001 $ 1,529,013 $ 1,467,534
    Year-over-year growth 11 % 8 % 2 % 2 % (2 ) %
    Year-over-year growth, excluding FX 12 % 13 % 10 % 10 % 6 %
    % Third Party and Other 76 % 70 % 75 % 74 % 74 %
    % Direct 24 % 30 % 25 % 26 % 26 %
    Gross Billings TTM $ 6,106,270 $ 6,237,832 $ 6,269,127 $ 6,296,030 $ 6,273,217
    Year-over-year growth 7 % 8 % 7 % 6 % 3 % %
    Revenue:
    Local Revenue $ 290,948 $ 298,782 $ 293,681 $ 276,503 $ 260,939
    Travel Revenue 41,830 39,243 41,201 41,421 41,090
    Revenue – Services 332,778 338,025 334,882 317,924 302,029
    Revenue – Goods 381,491 545,203 415,474 420,471 411,566
    Total Revenue $ 714,269 $ 883,228 $ 750,356 $ 738,395 $ 713,595
    Year-over-year growth 20 % 15 % 3 % 3 % (0 ) %
    Year-over-year growth, excluding FX 21 % 19 % 10 % 11 % 7 %
    % Third Party and Other 51 % 42 % 48 % 46 % 46 %
    % Direct 49 % 58 % 52 % 54 % 54 %
    Revenue TTM $ 2,927,342 $ 3,042,123 $ 3,064,064 $ 3,086,248 $ 3,085,574
    Year-over-year growth 20 % 18 % 13 % 10 % 5 %
    Gross Profit:
    Local Gross Profit $ 256,518 $ 264,907 $ 258,293 $ 242,411 $ 227,654
    % of Consolidated Local Gross Billings 32.7 % 31.3 % 31.1 % 30.4 % 30.1 %
    Travel Gross Profit 34,984 33,228 33,097 35,336 34,826
    % of Consolidated Travel Gross Billings 17.5 % 17.9 % 17.0 % 18.2 % 17.6 %
    Gross Profit – Services 291,502 298,135 291,390 277,747 262,480
    % of Consolidated Services Gross Billings 29.6 % 28.9 % 28.4 % 28.0 % 27.5 %
    Gross Profit – Goods 63,776 79,974 56,016 59,260 66,432
    % of Consolidated Goods Gross Billings 12.6 % 11.5 % 10.6 % 11.0 % 13.0 %
    Total Gross Profit $ 355,278 $ 378,109 $ 347,406 $ 337,007 $ 328,912
    Year-over-year growth (1 ) % — % (5 ) % (8 ) % (7 ) %
    % Third Party and Other 88 % 84 % 89 % 87 % 85 %
    % Direct 12 % 16 % 11 % 13 % 15 %
    % of Total Consolidated Gross Billings 23.8 % 21.9 % 22.4 % 22.0 % 22.4 %
    Marketing $ 55,258 $ 59,812 $ 52,533 $ 57,007 $ 61,587
    Selling, general and administrative $ 299,275 $ 285,472 $ 289,847 $ 288,721 $ 326,248
    Adjusted EBITDA $ 63,887 $ 92,914 $ 72,370 $ 61,118 $ 56,334
    % of Total Consolidated Gross Billings 4.3 % 5.4 % 4.7 % 4.0 % 3.8 %
    % of Total Consolidated Revenue 8.9 % 10.5 % 9.6 % 8.3 % 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 from continuing operations.”
    Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015
    Net cash provided by (used in) operating activities from continuing operations $ 22,324 $ 273,272 $ 40,711 $ 9,995 $ (7,612 )
    Purchases of property and equipment and capitalized software from continuing operations (18,638 ) (20,117 ) (18,294 ) (22,452 ) (27,735 )
    Free cash flow $ 3,686 $ 253,155 $ 22,417 $ (12,457 ) $ (35,347 )
    Net cash provided by (used in) operating activities from continuing operations (TTM) $ 157,500 $ 252,497 $ 307,782 $ 346,302 $ 316,366
    Purchases of property and equipment and capitalized software from continuing operations (TTM) (83,374 ) (83,560 ) (85,761 ) (79,501 ) (88,598 )
    Free cash flow (TTM) $ 74,126 $ 168,937 $ 222,021 $ 266,801 $ 227,768
    Net cash provided by (used in) investing activities from continuing operations $ (19,046 ) $ (35,175 ) $ (19,443 ) $ (28,541 ) $ (98,028 )
    Net cash provided by (used in) financing activities $ (16,823 ) $ (21,088 ) $ (32,942 ) $ (138,227 ) $ (14,821 )
    Net cash provided by (used in) investing activities from continuing operations (TTM) $ (137,527 ) $ (149,372 ) $ (105,821 ) $ (102,205 ) $ (181,187 )
    Net cash provided by (used in) financing activities (TTM) $ (228,512 ) $ (194,156 ) $ (185,606 ) $ (209,080 ) $ (207,078 )
    Other Metrics:
    Active Customers (6)
    North America 23.5 24.1 24.6 24.9 25.2
    EMEA 14.9 15.2 15.3 15.5 15.4
    Rest of World 8.2 8.1 8.2 8.2 8.0
    Total Active Customers 46.6 47.4 48.1 48.6 48.6
    TTM Gross Billings / Average Active Customer(7)
    North America $ 145 $ 147 $ 147 $ 148 $ 148
    EMEA 142 139 134 130 123
    Rest of World 108 105 101 98 99
    Consolidated 137 137 135 133 132
    Global headcount as of September 30, 2015 and 2014 was as follows:
    Q3 2014 Q3 2015
    Sales (8) 4,420 4,168
    % North America 29 % 33 %
    % EMEA 43 % 42 %
    % Rest of World 28 % 25 %
    Other 6,228 6,301
    Total Headcount 10,648 10,469
    (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 include advertising, payment processing, point of sale and commission revenue.
    (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 and commission revenue.
    (4) Represents third party revenue, direct revenue and other revenue reduced by cost of revenue.
    (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 periods.
    (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 from continuing operations.
    (9) Financial information and other metrics have been retrospectively adjusted to exclude Ticket Monster, which has been classified as discontinued operations.
    (10) 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
    Investor Relations
    Genny Konz
    Tom Grant
    312-999-3098
    [email protected]
    or
    Public Relations
    Bill Roberts
    312-459-5191

    Source: Groupon