0001490281-12-000035.txt : 20121108 0001490281-12-000035.hdr.sgml : 20121108 20121108160152 ACCESSION NUMBER: 0001490281-12-000035 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20121108 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20121108 DATE AS OF CHANGE: 20121108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Groupon, Inc. CENTRAL INDEX KEY: 0001490281 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] IRS NUMBER: 270903295 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-35335 FILM NUMBER: 121190046 BUSINESS ADDRESS: STREET 1: 600 WEST CHICAGO AVENUE, SUITE 830 CITY: CHICAGO STATE: IL ZIP: 60610 BUSINESS PHONE: (312) 604-5515 MAIL ADDRESS: STREET 1: 600 WEST CHICAGO AVENUE, SUITE 830 CITY: CHICAGO STATE: IL ZIP: 60610 8-K 1 a2012q38-k.htm 8-K 2012 Q3 8-K


 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): November 8, 2012
 
GROUPON, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
(State or other
jurisdiction
of incorporation)
 
001-35335
(Commission
File Number)
 
27-0903295
(I.R.S. Employer
Identification No.)
 
600 West Chicago Avenue
Suite 620
Chicago, Illinois
 (Address of principal executive offices)
 
60654
(Zip Code)
 
(312) 676-5773
(Registrant’s telephone number, including area code)
 
N/A
(Former name or former address, if changed since last report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02
 
Results of Operations and Financial Condition.*
 
On November 8, 2012, Groupon, Inc. issued a press release announcing its financial results for its fiscal quarter ended September 30, 2012. A copy of the press release is attached hereto as Exhibit 99.1.





 
Item 9.01
 
Financial Statements and Exhibits.
 
 
 
(d)
 
Exhibits:
 
 
 
 
 
Exhibit No.
 
Description
 
 
99.1*
 
Press Release dated November 8, 2012
 

*The information furnished under Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.






SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
GROUPON, INC.
 
 
 
 
 
 
November 8, 2012
By:
/s/ Jason E. Child
 
Name:
Jason E. Child
 
Title:
Chief Financial Officer




Exhibit Index
 
Exhibit No.
 
Description
99.1*
 
Press Release dated November 12, 2012.
 

*The information in Exhibit 99.1 is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.



 EX-99.1 2 earningsreleasedatednovemb.htm EARNINGS RELEASE DATED NOVEMBER 8, 2012 Earnings release dated November 8, 2012


Exhibit 99.1
 
GROUPON ANNOUNCES THIRD QUARTER 2012 RESULTS
 
• Consolidated revenue of $568.6 million, up 32% year-over-year
• Operating income of $25.4 million, versus operating loss of $0.2 million in third quarter 2011
• Net loss attributable to common stockholders of $3.0 million, or $0.00 per share, which included stock-based compensation and acquisition-related expenses of $25.1 million and a diluted share count of 653.2 million, versus a net loss of $54.2 million and a loss per share of $0.18 in third quarter 2011
 
CHICAGO - (BUSINESS WIRE) - November 8, 2012 - Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter ended September 30, 2012.
 
Revenue increased 32% year-over-year to $568.6 million in the third quarter 2012, compared with $430.2 million in the third quarter 2011. Excluding the $26.0 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, revenue growth was 38% compared with third quarter 2011.
 
Gross billings, which reflects the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds, increased 5% year-over-year to $1.22 billion in the third quarter 2012, compared with $1.16 billion in the third quarter 2011. Excluding the $61.7 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, gross billings growth was 11% compared with third quarter 2011.
 
Operating income was $25.4 million in the third quarter 2012, which included stock-based compensation and acquisition-related expenses of $25.1 million. This compares with a loss from operations of $0.2 million in the third quarter 2011, which included net positive stock-based compensation and acquisition-related expenses of $1.5 million. Year-over-year changes in foreign exchange rates throughout the quarter had a $2.8 million favorable impact on operating income. Revenue and operating income in the third quarter 2012 included a one-time increase of $18.5 million related to breakage, or income related to unredeemed Groupons internationally, resulting from the clarification of a tax ruling in Germany.
 
“Our solid performance in North America was offset by continued challenges in Europe,” said Andrew Mason, CEO of Groupon. “Groupon Goods has evolved into a second major category that our customers clearly love. With deals on everything from designer sunglasses to big-screen televisions to most-wanted toys, we think it will be a great gifting destination this holiday season.”
 
Operating cash flow decreased 35% year-over-year to $42.1 million, compared with $64.4 million in the third quarter 2011. For the trailing twelve months ended September 30, 2012, operating cash flow was $370.2 million. Free cash flow, a non-GAAP financial measure calculated as operating cash flow less capital expenditures, was $26.1 million for the third quarter 2012, bringing free cash flow for the trailing twelve months ended September 30, 2012 to $300.4 million. This reflects an increase of 123% year-over-year compared to free cash flow in the trailing twelve months ended September 30, 2011 of $134.9 million. At the end of the quarter, Groupon had $1.2 billion in cash and cash equivalents and no long-term debt.

Third quarter 2012 net loss attributable to common stockholders improved by $51.3 million year-over-year, to $3.0 million, or $0.00 per share, reflecting stock-based compensation and acquisition-related expenses of $25.1 million and a diluted share count of 653.2 million. Net loss attributable to common stockholders was $54.2 million, or a loss per share of $0.18 in the third quarter 2011, including net positive stock-based compensation and acquisition-related expenses of $1.5 million.








Groupon, Inc.
Summary Consolidated and Segment Results
(dollars in thousands, except share and per share data)
(unaudited) 
 
 
Three Months Ended September 30,
 
 
 
 
Y/Y %
Growth
 
Nine Months Ended September 30,
 
 
 
 
Y/Y %
Growth
 
 
2011
 
2012
 
Y/Y % Growth
 
excluding FX(1)
 
2011
 
2012
 
Y/Y % Growth
 
excluding FX(1)
Revenue:
 
 

 
 

 
 

 
 
 

 
 
 
 
 
 
 
 
 
 
 
North America
 
$
161,525

 
$
291,603

 
80.5

%
 
80.7

%
 
$
455,342

 
$
790,349

 
73.6

%
 
73.8

%
International
 
268,636

 
276,949

 
3.1

%
 
12.7

%
 
662,924

 
905,821

 
36.6

%
 
46.9

%
Consolidated revenue
 
$
430,161

 
$
568,552

 
32.2

%
 
38.2

%
 
$
1,118,266

 
$
1,696,170

 
51.7

%
 
57.9

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating (loss) income
 
$
(239
)
 
$
25,438

 
 N/A

 
 
 N/A

 
 
$
(218,414
)
 
$
111,562

 
 N/A

 
 
 N/A

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income attributable to common stockholders
 
$
(54,229
)
 
$
(2,979
)
 
94.5

%
 
87.1

%
 
$
(308,115
)
 
$
13,712

 
 N/A

 
 
 N/A

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) earnings per share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$(0.18)
 
$(0.00)
 
 
 
 
 
 
 
$(1.01)
 
$0.02
 
 
 
 
 
 
Diluted
 
$(0.18)
 
$(0.00)
 
 
 
 
 
 
 
$(1.01)
 
$0.02
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average basic shares outstanding
 
307,605,060

 
653,223,610

 
 
 
 
 
 
 
305,288,502

 
648,021,943

 
 
 
 
 
 
Weighted average diluted shares outstanding
 
307,605,060

 
653,223,610

 
 
 
 
 
 
 
305,288,502

 
663,557,250

 
 
 
 
 
 
 
(1)
Represents change in financial measures that would have resulted had average exchange rates in the reported period been the same as those in effect in the three and nine months ended September 30, 2011.

Highlights
 
•
Continued strength in North American revenue growth. North American revenues grew 81% year-over-year, driven by growth in direct revenue, or the amount earned from the sale of products for which Groupon is the merchant of record.
•
Rapid growth in Groupon Goods. Groupon Goods reached an annual run rate of nearly $1.5 billion in global billings and nearly $500 million in revenues shortly after its one-year anniversary.
•
Improved marketing efficiencies. Customer acquisition costs improved 55% year-over-year, enabling the reduction of marketing spend by 58% compared with the third quarter 2011.
•
Subscriber milestone. In the third quarter 2012, the Company surpassed the 200 million subscriber mark.
•
Solid growth in active customers. As of September 30, 2012, Groupon had 39.5 million active customers, an increase of 37% year-over-year.
•
Growing merchant selection and quality. For the third straight quarter, Groupon featured more than 100,000 unique merchants, with the number of active deals increasing by nearly thirteen times year-over-year to more than 27,000 as of the end of the third quarter.
•
Mobile transaction activity remains high. In October 2012, about one third of North American transactions were completed on mobile devices, an increase of nearly 30% compared with October 2011.
•
Further expansion of merchant tool suite. In the third quarter 2012, the Company expanded its suite of merchant tools, with the launch of Groupon Payments, as well as Breadcrumb, an iPad-based point-of-sale system for restaurants.
 
Fourth Quarter 2012 Outlook
Revenue for the fourth quarter 2012 is expected to be between $625 million and $675 million, an increase of between 27% and 37% compared with the fourth quarter 2011.
 
Income from operations for the fourth quarter 2012 is expected to be between $0 million and $20 million, compared with a loss from operations of $15.0 million in the fourth quarter 2011. This outlook includes approximately $30 million of stock-based compensation. The outlook further assumes no acquisitions or investments, or material changes in foreign exchange rates.
 



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.
 
Non-GAAP Financial Measure
In addition to financial results reported in accordance with generally accepted accounting principles (GAAP), we have provided free cash flow, which is a non-GAAP financial measure, to aid investors in better understanding Groupon's performance. We have provided free cash flow because, although it is similar to cash flow from operations, we believe it typically will present a measure of cash flows more aligned with an analysis of ongoing business operations as purchases of fixed assets, software developed for internal use and website development costs are a necessary component of ongoing operations. However, free cash flow is not intended to be a substitute for cash flows from operations and is not intended to represent the total increase or decrease in Groupon's cash balance for the applicable period. For a reconciliation of free cash flow to cash flow from operations, see “Non-GAAP Reconciliation Schedule” included in this release.
Note on Forward Looking Statements
The statements 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 results to differ materially from those included in the forward-looking statements include, but are not limited to, Groupon's ability to continue to expand the business and continue revenue growth; risks related to Groupon's business strategy; Groupon's ability to manage the growth of the organization; responding to changes in the markets in which Groupon competes for business; retaining existing merchant partners and adding new merchant partners; competing against smaller competitors and competitors with more financial resources; developing new product and service offerings that are appealing to customers; maintaining a strong brand; effectively dealing with challenges arising from Groupon's international operations; integrating Groupon's technology platforms; managing refund risks; retaining the executive team; litigation; regulations, including the CARD Act and regulation of the Internet; tax liabilities; tax legislation; maintaining Groupon's information technology infrastructure; security breaches; protecting Groupon's 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 Groupon's ability to raise capital if necessary. Groupon urges 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, 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 November 8, 2012. Groupon undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this earnings release to conform these statements to actual results or to changes in its expectations.
 
Groupon encourages investors to use its investor relations website as a way of easily finding information about the company. Groupon promptly makes available on this website, free of charge, the reports that the company files or furnishes with the SEC, corporate governance information (including Groupon's Global Code of Conduct), and select press releases and social media postings.
 
Contacts:
Groupon Investor Relations           Groupon Public Relations
Genny Konz         Julie Mossler
312-999-3098     312-242-2033
ir@groupon.com



Groupon, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2011
 
2012
 
2011
 
2012
Operating activities
 
 
 
 
 
 
 
Net (loss) income
$
(14,416
)
 
$
(940
)
 
$
(238,083
)
 
$
29,016

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

 
 
 
 

 
 
Depreciation and amortization
7,058

 
15,310

 
22,754

 
39,836

Stock-based compensation
3,340

 
22,619

 
60,922

 
77,706

Deferred income taxes
2,839

 
(3,389
)
 
602

 
9,608

Excess tax benefits on stock-based compensation
(7,791
)
 
(2,870
)
 
(11,323
)
 
(24,620
)
Loss on equity method investees
11,211

 
138

 
19,974

 
8,694

Acquisition-related (benefit) expense, net
(4,793
)
 
2,431

 
(4,793
)
 
744

Gain on redemption of common stock
(4,916
)
 
—

 
(4,916
)
 
—

Gain on E-Commerce transaction
—

 
—

 
—

 
(56,032
)
Change in assets and liabilities, net of acquisitions:
 
 
 
 
 
 
 
Restricted cash
(7,116
)
 
973

 
(8,141
)
 
(1,855
)
Accounts receivable
(16,618
)
 
(10,274
)
 
(69,690
)
 
(2,189
)
Prepaid expenses and other current assets
(23,802
)
 
(3,192
)
 
(41,023
)
 
(24,937
)
Accounts payable
(7,550
)
 
(5,094
)
 
(21,924
)
 
13,174

Accrued merchant payables
98,002

 
21,868

 
314,872

 
53,889

Accrued expenses and other current liabilities
34,207

 
4,933

 
108,963

 
68,010

Other, net
(5,244
)
 
(425
)
 
(6,824
)
 
10,073

Net cash provided by operating activities
64,411

 
42,088

 
121,370

 
201,117

 
 
 
 
 
 
 
 
Net cash used in investing activities
(43,048
)
 
(35,629
)
 
(112,526
)
 
(142,226
)
 
 
 
 
 
 
 
 
Net cash provided by financing activities
8,608

 
2,707

 
120,292

 
18,590

 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
(11,129
)
 
6,047

 
(4,034
)
 
595

Net increase in cash and cash equivalents
18,842

 
15,213

 
125,102

 
78,076

Cash and cash equivalents, beginning of period
225,093

 
1,185,798

 
118,833

 
1,122,935

Cash and cash equivalents, end of the period
$
243,935

 
$
1,201,011

 
$
243,935

 
$
1,201,011







Groupon, Inc.
Consolidated Statements of Operations 
(in thousands, except share and per share data)
(unaudited)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2011
 
2012
 
2011
 
2012
Revenue:
 
 
 
 
 
 
 
 
Third party and other revenue
 
$
422,989

 
$
423,564

 
$
1,111,094

 
$
1,466,602

Direct revenue
 
7,172

 
144,988

 
7,172

 
229,568

Total revenue
 
430,161

 
568,552

 
1,118,266

 
1,696,170

Cost of revenue:
 
 
 
 
 
 
 
 
Third party and other revenue
 
62,339

 
54,173

 
156,907

 
233,834

Direct revenue
 
5,707

 
127,613

 
5,707

 
202,634

Total cost of revenue
 
68,046

 
181,786

 
162,614

 
436,468

Operating expenses:
 
 
 
 
 
 
 
 
Marketing
 
170,349

 
70,919

 
613,173

 
275,941

Selling, general and administrative
 
196,798

 
287,978

 
565,686

 
871,455

Acquisition-related (benefit) expense, net
 
(4,793
)
 
2,431

 
(4,793
)
 
744

  Total operating expenses
 
362,354

 
361,328

 
1,174,066

 
1,148,140

(Loss) income from operations
 
(239
)
 
25,438


(218,414
)

111,562

Interest and other income, net
 
8,269

 
617

 
9,808

 
54,445

Loss on equity method investees
 
(11,211
)
 
(138
)
 
(19,974
)
 
(8,694
)
(Loss) income before provision for income taxes
 
(3,181
)
 
25,917

 
(228,580
)
 
157,313

Provision for income taxes
 
11,235

 
26,857

 
9,503

 
128,297

Net (loss) income
 
(14,416
)
 
(940
)
 
(238,083
)
 
29,016

Less: Net loss (income) attributable to noncontrolling interests
 
3,843

 
(706
)
 
23,602

 
(2,806
)
Net (loss) income attributable to Groupon, Inc.
 
(10,573
)
 
(1,646
)
 
(214,481
)
 
26,210

Redemption of preferred stock in excess of carrying value
 
—

 
—

 
(34,327
)
 
—

Adjustment of redeemable noncontrolling interests to redemption value
 
(43,656
)
 
(1,333
)
 
(59,307
)
 
(12,498
)
Net (loss) income attributable to common stockholders
 
$
(54,229
)
 
$
(2,979
)
 
$
(308,115
)
 
$
13,712

 
 
 
 
 
 
 
 
 
Net (loss) earnings per share
 
 
 
 
 
 
 
 
Basic
 
$(0.18)
 
$(0.00)
 
$(1.01)
 
$0.02
Diluted
 
$(0.18)
 
$(0.00)
 
$(1.01)
 
$0.02
 
 
 
 
 
 
 
 
 
Weighted average number of shares outstanding
 
 
 
 
 
 
 
 
Basic
 
307,605,060

 
653,223,610

 
305,288,502

 
648,021,943

Diluted
 
307,605,060

 
653,223,610

 
305,288,502

 
663,557,250











Groupon, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)

 
 
December 31, 2011
 
September 30, 2012
 
 
 
 
(unaudited)
Assets
 
 

 
 
Current assets:
 
 

 
 
Cash and cash equivalents
 
$
1,122,935

 
$
1,201,011

Accounts receivable, net
 
108,747

 
110,058

Prepaid expenses and other current assets
 
91,645

 
121,338

Total current assets
 
1,323,327

 
1,432,407

Property and equipment, net of accumulated depreciation of $14,627 and $37,564, respectively
 
51,800

 
103,876

Goodwill
 
166,903

 
196,978

Intangible assets, net
 
45,667

 
51,447

Investments in equity interests
 
50,604

 
131,039

Deferred income taxes, non-current
 
46,104

 
48,753

Other non-current assets
 
90,071

 
68,314

Total Assets
 
$
1,774,476

 
$
2,032,814

Liabilities and Stockholders' Equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
40,918

 
$
60,016

Accrued merchant payables
 
520,723

 
573,477

Accrued expenses
 
212,007

 
245,083

Deferred income taxes, current
 
76,841

 
75,203

Other current liabilities
 
144,673

 
171,422

Total current liabilities
 
995,162

 
1,125,201

Deferred income taxes, non-current
 
7,428

 
28,585

Other non-current liabilities
 
70,766

 
74,643

Total Liabilities
 
1,073,356

 
1,228,429

Commitments and contingencies
 
 
 
 
Redeemable noncontrolling interests
 
1,653

 
7,190

Stockholders' Equity
 
 
 
 
Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 641,745,225 shares issued and outstanding at December 31, 2011; 2,000,000,000 shares authorized, 652,501,880 shares issued and outstanding at September 30, 2012
 
64

 
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, 2011 and September 30, 2012
 
—

 
—

Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, no shares issued and outstanding at December 31, 2011 and September 30, 2012
 
—

 
—

Additional paid-in capital
 
1,388,253

 
1,459,485

Accumulated deficit
 
(698,704
)
 
(672,494
)
Accumulated other comprehensive income
 
12,928

 
11,956

Total Groupon, Inc. Stockholders' Equity
 
702,541

 
799,012

Noncontrolling interests
 
(3,074
)
 
(1,817
)
Total Equity
 
699,467

 
797,195

Total Liabilities and Equity
 
$
1,774,476

 
$
2,032,814








Groupon, Inc.
Segment Information
(in thousands)
(unaudited)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2011
 
2012
 
2011
 
2012
North America
 

 
 
 
 
 
 

 
 
 

 
Gross Billings (1)
$
400,978

 
 
$
552,369

 
 
$
1,086,119

 
 
$
1,654,201

 
Revenue
$
161,525

 
 
$
291,603

 
 
$
455,342

 
 
$
790,349

 
Segment operating expenses(2)
142,689

 
 
252,510

 
 
468,785

 
 
667,655

 
Segment operating income (loss)
$
18,836

 
 
$
39,093

 
 
$
(13,443
)
 
 
$
122,694

 
Segment income (loss) as a percent of segment revenue
11.7

%
 
13.4

%
 
(3.0
)
%
 
15.5

%
 
 
 
 
 
 
 
 
 
 
 
 
International
 

 
 
 
 
 
 

 
 
 
 
Gross Billings (1)
$
756,232

 
 
$
665,887

 
 
$
1,668,514

 
 
$
2,205,531

 
Revenue
$
268,636

 
 
$
276,949

 
 
$
662,924

 
 
$
905,821

 
Segment operating expenses(2)
289,164

 
 
265,554

 
 
811,766

 
 
838,503

 
Segment operating (loss) income
$
(20,528
)
 
 
$
11,395

 
 
$
(148,842
)
 
 
$
67,318

 
Segment (loss) income as a percent of segment revenue
(7.6
)
%
 
4.1

%
 
(22.5
)
%
 
7.4

%
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 

 
 
 
 
 
 

 
 
 
 
Gross Billings (1)
$
1,157,210

 
 
$
1,218,256

 
 
$
2,754,633

 
 
$
3,859,732

 
Revenue
$
430,161

 
 
$
568,552

 
 
$
1,118,266

 
 
$
1,696,170

 
Segment operating expenses(2)
431,853

 
 
518,064

 
 
1,280,551

 
 
1,506,158

 
Segment operating (loss) income
$
(1,692
)
 
 
$
50,488

 
 
$
(162,285
)
 
 
$
190,012

 
Segment (loss) income as a percent of segment revenue
(0.4
)
%
 
8.9

%
 
(14.5
)
%
 
11.2

%
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation
3,340

 
 
22,619

 
 
60,922

 
 
77,706

 
Acquisition-related (benefit) expense, net
(4,793
)
 
 
2,431

 
 
(4,793
)
 
 
744

 
Operating (loss) income
(239
)
 
 
25,438

 
 
(218,414
)
 
 
111,562

 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and other income, net
(8,269
)
 
 
(617
)
 
 
(9,808
)
 
 
(54,445
)
 
Loss on equity method investees
11,211

 
 
138

 
 
19,974

 
 
8,694

 
(Loss) income before provision for income taxes
(3,181
)
 
 
25,917

 
 
(228,580
)
 
 
157,313

 
Provision for income taxes
11,235

 
 
26,857

 
 
9,503

 
 
128,297

 
Net (loss) income
$
(14,416
)
 
 
$
(940
)
 
 
$
(238,083
)
 
 
$
29,016

 
 
(1)
Represents the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds.
(2)
Represents cost of revenue and operating expenses, excluding stock-based compensation and acquisition-related (benefit) expense, net, which are not allocated to segments.




Foreign Exchange Rate Neutral Operating Results
(in thousands)
(unaudited)
 
The effect on the Company’s consolidated statements of operations from changes in exchange rates versus the U.S. Dollar for the three months ended September 30, 2012 are as follows: 
 
 
Three Months Ended September 30, 2012
 
Three Months Ended September 30, 2012
 
 
At Avg.
 
Exchange
 
 
 
At Avg.
 
Exchange
 
 
 
 
Q3 2011
Rates (1)
 
Rate
Effect (2)
 
As
Reported
 
Q2 2012
Rates (3)
 
Rate
Effect (2)
 
As
Reported
Revenue
 
$
594,551

 
$
(25,999
)
 
$
568,552

 
$
571,154

 
$
(2,602
)
 
$
568,552

Income from operations
 
$
22,589

 
$
2,849

 
$
25,438

 
$
25,030

 
$
408

 
$
25,438



The effect on the Company’s consolidated statements of operations from changes in exchange rates versus the U.S. Dollar for the nine months ended September 30, 2012 are as follows:
 
 
Nine Months Ended September 30, 2012
 
Nine Months Ended September 30, 2012
 
 
At Avg.
 
Exchange
 
 
 
At Avg.
 
Exchange
 
 
 
 
YTD  Q3 2011
Rates (1)
 
Rate
Effect (2)
 
As
Reported
 
Q4'11 - Q2'12
Rates (3)
 
Rate
Effect (2)
 
As
Reported
Revenue
 
$
1,765,476

 
$
(69,306
)
 
$
1,696,170

 
$
1,719,681

 
$
(23,511
)
 
$
1,696,170

Income from operations
 
$
110,767

 
$
795

 
$
111,562

 
$
110,526

 
$
1,036

 
$
111,562


(1)
Represents the outcome that would have resulted had average exchange rates in the reported period been the same as those in effect during the three and nine months ended September 30, 2011.
(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 outcome that would have resulted had average exchange rates in the reported period been the same as those in effect during the three and nine months ended June 30, 2012.





Reconciliation of Non-GAAP Financial Measures
(in thousands)
(unaudited)

Free Cash Flow
 
The following is a reconciliation of free cash flow to the most comparable U.S. GAAP measure, “Net cash provided by operating activities,” for the three and nine months ended September 30, 2011 and 2012: 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2011
 
2012
 
2011
 
2012
Net cash provided by operating activities
 
$
64,411

 
$
42,088

 
$
121,370

 
$
201,117

Purchases of property and equipment and software capitalization
 
(8,623
)
 
(16,010
)
 
(29,825
)
 
(55,802
)
Free cash flow
 
$
55,788

 
$
26,078

 
$
91,545

 
$
145,315

 
 
 
 
 
 
 
 
 
Net cash used in investing activities
 
$
(43,048
)
 
$
(35,629
)
 
$
(112,526
)
 
$
(142,226
)
Net cash provided by financing activities
 
$
8,608

 
$
2,707

 
$
120,292

 
$
18,590





Supplemental Financial Information and Business Metrics
(in thousands, except per share and headcount data and TTM
Gross Billings / Average Active Customer)
(unaudited)
 
 
Q1 2011 (6)
 
Q2 2011
 
Q3 2011
 
Q4 2011
 
Q1 2012
 
Q2 2012
 
Q3 2012
 
 
 


 
 

 
 

 
 

 
 

 
 

 
 
 
Segments
 
 
 
 
 
 
 
 
 
 
 
 
 
North America Segment:
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Billings (1)
$
315,152

 
$
369,990

 
$
400,978

 
$
475,807

 
$
553,557

 
$
548,275

 
$
552,369

 
 
Year-over-year growth
610

%
359

%
204

%
118

%
76

%
48

%
38

%
 
% of Consolidated Gross Billings
47

%
40

%
35

%
39

%
41

%
43

%
45

%
Gross Billings (1) Trailing Twelve Months (TTM)
$
745,772

 
$
1,035,183

 
$
1,304,128

 
$
1,561,927

 
$
1,800,332

 
$
1,978,617

 
$
2,130,008

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third Party and Other Revenue (2)
$
136,612

 
$
157,205

 
$
161,525

 
$
179,638

 
$
230,984

 
$
207,119

 
$
158,545

 
 
Direct Revenue (2)
—

 
—

 
—

 
—

 
7,581

 
53,062

 
133,058

 
Total Revenue
$
136,612

 
$
157,205

 
$
161,525

 
$
179,638

 
$
238,565

 
$
260,181

 
$
291,603

 
 
Year-over-year growth
574

%
341

%
188

%
103

%
75

%
66

%
81

%
 
% of Consolidated Revenue
46

%
40

%
38

%
36

%
43

%
46

%
51

%
Revenue TTM
$
316,752

 
$
438,305

 
$
543,705

 
$
634,980

 
$
736,933

 
$
839,909

 
$
969,987

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third Party and Other Cost of Revenue (3)
$
25,050

 
$
32,169

 
$
31,316

 
$
51,419

 
$
62,580

 
$
40,155

 
$
15,475

 
 
Direct Cost of Revenue (3)
—

 
—

 
—

 
—

 
6,671

 
46,159

 
115,560

 
Total Cost of Revenue
$
25,050

 
$
32,169

 
$
31,316

 
$
51,419

 
$
69,251

 
$
86,314

 
$
131,035

 
 
% of North America Total Revenue
18

%
20

%
19

%
29

%
29

%
33

%
45

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating (Loss) Income Excl Stock-Based Compensation (SBC), Acquisition-Related Expenses
$
(21,778
)
 
$
(10,501
)
 
$
18,836

 
$
18,239

 
$
40,172

 
$
43,429

 
$
39,093

 
 
Year-over-year growth
 N/A

 
(2,678
)
%
496

%
 N/A

 
 N/A

 
 N/A

 
108

%
 
% of Consolidated Operating (Loss) Income Excl SBC, Acq-Related
22

%
17

%
1,113

%
102

%
59

%
60

%
77

%
Operating Margin Excl SBC, Acq-Related (% of North America Total revenue)
(15.9
)
%
(6.7
)
%
11.7

%
10.2

%
16.8

%
16.7

%
13.4

%
 
Year-over-year growth (bps)
(5,879
)
 
(562
)
 
603

 
3,494

 
3,278

 
2,337

 
170

 
Operating (Loss) Income TTM Excl SBC, Acq-Related
$
(40,901
)
 
$
(51,024
)
 
$
(35,348
)
 
$
4,796

 
$
66,746

 
$
120,676

 
$
140,933

 
Operating Margin TTM Excl SBC, Acq-Related (% of North America Total TTM revenue)
(12.9
)
%
(11.6
)
%
(6.5
)
%
0.8

%
9.1

%
14.4

%
14.5

%
 
Year-over-year growth (bps)
(3,604
)
 
(2,266
)
 
(1,467
)
 
596

 
2,197

 
2,601

 
2,100

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Segment:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Billings (1)
$
353,022

 
$
559,259

 
$
756,232

 
$
755,061

 
$
801,243

 
$
738,401

 
$
665,887

 
 
Year-over-year growth
 N/A

 
5,057

%
1,115

%
283

%
127

%
32

%
(12
)
%
 
Year-over-year growth, excluding FX (4)
 N/A

 
4,587

%
1,021

%
287

%
138

%
45

%
(4
)
%
 
% of Consolidated Gross Billings
53

%
60

%
65

%
61

%
59

%
57

%
55

%
Gross Billings (1) TTM
$
623,367

 
$
1,171,781

 
$
1,865,774

 
$
2,423,574

 
$
2,871,795

 
$
3,050,937

 
$
2,960,592

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third Party and Other Revenue (2)
$
158,911

 
$
235,377

 
$
261,464

 
$
298,872

 
$
309,069

 
$
295,866

 
$
265,019

 
 
Direct Revenue (2)
—

 
—

 
7,172

 
13,654

 
11,649

 
12,288

 
11,930

 
Total Revenue
$
158,911

 
$
235,377

 
$
268,636

 
$
312,526

 
$
320,718

 
$
308,154

 
$
276,949

 
 
Year-over-year growth
 N/A

 
7,709

%
947

%
273

%
102

%
31

%
3

%
 
Year-over-year growth, excluding FX (4)
 N/A

 
7,013

%
868

%
276

%
112

%
44

%
13

%
 
% of Consolidated Revenue
54

%
60

%
62

%
64

%
57

%
54

%
49

%
Revenue TTM
$
271,440

 
$
503,803

 
$
746,785

 
$
975,450

 
$
1,137,257

 
$
1,210,034

 
$
1,218,347

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third Party and Other Cost of Revenue (3)
$
14,715

 
$
22,634

 
$
31,023

 
$
35,463

 
$
40,049

 
$
36,877

 
$
38,698

 
 
Direct Cost of Revenue (3)
—

 
—

 
5,707

 
9,383

 
10,198

 
11,993

 
12,053

 
Total Cost of Revenue
$
14,715

 
$
22,634

 
$
36,730

 
$
44,846

 
$
50,247

 
$
48,870

 
$
50,751

 
 
% of International Total Revenue
9

%
10

%
14

%
14

%
16

%
16

%
18

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating (Loss) Income Excl SBC, Acq-Related
$
(76,506
)
 
$
(51,808
)
 
$
(20,528
)
 
$
(287
)
 
$
27,418

 
$
28,505

 
$
11,395

 
 
Year-over-year growth
 N/A

 
(125
)
%
21

%
100

%
 N/A

 
155

%
N/A

 

% of Consolidated Operating (Loss) Income Excl SBC, Acq-Related
78

%
83

%
(1,213
)
%
(2
)
%
41

%
40

%
23

%
Operating Margin Excl SBC, Acq-Related (% of International Total revenue)
(48.1
)
%
(22.0
)
%
(7.6
)
%
(0.1
)
%
8.5

%
9.3

%
4.1

%
 
Year-over-year growth (bps)
 N/A

 
74,265

 
9,392

 
14,474

 
5,669

 
3,126

 
1,170

 
Operating (Loss) Income TTM Excl SBC, Acq-Related
$
(247,063
)
 
$
(275,824
)
 
$
(270,298
)
 
$
(149,129
)
 
$
(45,205
)
 
$
35,108

 
$
67,031

 
Operating Margin TTM Excl SBC, Acq-Related (% of International Total TTM revenue)
(91.0
)
%
(54.7
)
%
(36.2
)
%
(15.3
)
%
(4.0
)
%
2.9

%
5.5

%
 
Year-over-year growth (bps)
 N/A

 
70,992

 
13,508

 
13,628

 
8,704

 
5,765

 
4,170

 



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Supplemental Financial Information and Business Metrics
(in thousands, except per share and headcount data and TTM
Gross Billings / Average Active Customer)
(unaudited)
 
 
Q1 2011 (6)
 
Q2 2011
 
Q3 2011
 
Q4 2011
 
Q1 2012
 
Q2 2012
 
Q3 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Results of Operations
 

 
 

 
 

 
 

 
 

 
 

 
 
 
Gross Billings (1)
$
668,174

 
$
929,249

 
$
1,157,210

 
$
1,230,868

 
$
1,354,800

 
$
1,286,676

 
$
1,218,256

 
 
Year-over-year growth
1,405

%
916

%
496

%
196

%
103

%
38

%
5

%
 
Year-over-year growth, excluding FX (4)
1,378

%
859

%
465

%
198

%
108

%
47

%
11

%
Gross Billings (1) (TTM)
$
1,369,139

 
$
2,206,964

 
$
3,169,902

 
$
3,985,501

 
$
4,672,127

 
$
5,029,554

 
$
5,090,600

 
 
Year-over-year growth
1,651

%
1,227

%
804

%
435

%
241

%
128

%
61

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third Party and Other Revenue (2)
$
295,523

 
$
392,582

 
$
422,989

 
$
478,510

 
$
540,053

 
$
502,985

 
$
423,564

 
 
Direct Revenue (2)
—

 
—

 
7,172

 
13,654

 
19,230

 
65,350

 
144,988

 
 
Total Consolidated Revenue
$
295,523

 
$
392,582

 
$
430,161

 
$
492,164

 
$
559,283

 
$
568,335

 
$
568,552

 
 
Year-over-year growth
1,358

%
915

%
426

%
186

%
89

%
45

%
32

%
 
Year-over-year growth, excluding FX (4)
1,332

%
858

%
401

%
188

%
95

%
53

%
38

%
Total Consolidated Revenue TTM
$
588,192

 
$
942,108

 
$
1,290,490

 
$
1,610,430

 
$
1,874,190

 
$
2,049,943

 
$
2,188,334

 
 
Year-over-year growth
1,594

%
1,205

%
761

%
415

%
219

%
118

%
70

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third Party and Other Cost of Revenue (3)
$
39,765

 
$
54,803

 
$
62,339

 
$
86,882

 
$
102,629

 
$
77,032

 
$
54,173

 
 
Direct Cost of Revenue (3)
—

 
—

 
5,707

 
9,383

 
16,869

 
58,152

 
127,613

 
 
Total Consolidated Cost of Revenue
$
39,765

 
$
54,803

 
$
68,046

 
$
96,265

 
$
119,498

 
$
135,184

 
$
181,786

 
 
% of Total Consolidated Revenue
13

%
14

%
16

%
20

%
21

%
24

%
32

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating (Loss) Income Excl SBC, Acq-Related
$
(98,284
)
 
$
(62,309
)
 
$
(1,692
)
 
$
17,952

 
$
67,590

 
$
71,934

 
$
50,488

 
 
Year-over-year growth
 N/A

 
(166
)
%
93

%
 N/A

 
 N/A

 
 N/A

 
N/A

 
Operating Margin Excl SBC, Acq-Related (% of Total Consolidated revenue)
(33.3
)
%
(15.9
)
%
(0.4
)
%
3.6

%
12.1

%
12.7

%
8.9

%
 
Year-over-year growth (bps)
(7,611
)
 
4,471

 
2,760

 
8,689

 
4,534

 
2,853

 
930

 
Operating (Loss) Income TTM Excl SBC, Acq-Related
$
(287,964
)
 
$
(326,848
)
 
$
(305,646
)
 
$
(144,333
)
 
$
21,541

 
$
155,784

 
$
207,964

 
Operating Margin TTM Excl SBC, Acq-Related (% of Total Consolidated TTM revenue)
(49.0
)
%
(34.7
)
%
(23.7
)
%
(9.0
)
%
1.1

%
7.6

%
9.5

%
 
Year-over-year growth (bps)
(7,208
)
 
(1,333
)
 
245

 
4,887

 
5,011

 
4,229

 
3,320

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating (Loss) Income
$
(117,148
)
 
$
(101,027
)
 
$
(239
)
 
$
(14,972
)
 
$
39,639

 
$
46,485

 
$
25,438

 
 
Year-over-year growth
 N/A


(174
)
%
100

%
96

%
 N/A


 N/A


N/A


Operating Margin (% of Total Consolidated revenue)
(39.6
)
%
(25.7
)
%
(0.1
)
%
(3.0
)
%
7.1

%
8.2

%
4.5

%
 
Year-over-year growth (bps)
(8,192
)
 
6,949

 
6,838

 
19,213

 
4,673

 
3,391

 
457

 
Operating (Loss) Income TTM
$
(546,064
)
 
$
(610,272
)
 
$
(554,543
)
 
$
(233,386
)
 
$
(76,599
)
 
$
70,913

 
$
96,590

 
Operating Margin TTM (% of Total Consolidated TTM revenue)
(92.8
)
%
(64.8
)
%
(43.0
)
%
(14.5
)
%
(4.1
)
%
3.5

%
4.4

%
 
Year-over-year growth (bps)
(11,533
)
 
(2,457
)
 
1,427

 
11,983

 
8,875

 
6,824

 
4,740

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (Loss) Income Attributable to Common Stockholders
$
(146,480
)
 
$
(107,406
)
 
$
(54,229
)
 
$
(65,379
)
 
$
(11,695
)
 
$
28,386

 
$
(2,979
)
 
Weighted Average Basic Shares Outstanding
307,849

 
303,415

 
307,605

 
528,422

 
644,097

 
647,150

 
653,224

 
Weighted Average Diluted Shares Outstanding (5)
307,849

 
303,415

 
307,605

 
528,422

 
644,097

 
663,123

 
653,224

 
Net (Loss) Earnings per Share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$(0.48)
 
$(0.35)
 
$(0.18)
 
$(0.12)
 
$(0.02)
 
$0.04
 
$(0.00)
 
 
Diluted
$(0.48)
 
$(0.35)
 
$(0.18)
 
$(0.12)
 
$(0.02)
 
$0.04
 
$(0.00)
 



Supplemental Financial Information and Business Metrics
(in thousands, except per share and headcount data and TTM
Gross Billings / Average Active Customer)
(unaudited)
 
 
Q1 2011 (6)
 
Q2 2011
 
Q3 2011
 
Q4 2011
 
Q1 2012
 
Q2 2012
 
Q3 2012
 
 

 
 
 
 
 
 
 
 
 
 
 
 
Cash Flow
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating cash flow (TTM)
$
91,928

 
$
128,316

 
$
173,291

 
$
290,447

 
$
356,221

 
$
392,517

 
$
370,194

Purchases of Property and Equipment and Software Capitalization (TTM)
(24,780
)
 
(31,949
)
 
(38,414
)
 
(43,811
)
 
(45,932
)
 
(62,401
)
 
(69,788
)
Free cash flow (TTM) (7)
$
67,148

 
$
96,367

 
$
134,877

 
$
246,636

 
$
310,289

 
$
330,116

 
$
300,406

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Metrics:
 
 
 
 
 
 
 
 
 
 
 
 
 
Active Customers (8)
15,376

 
23,037

 
28,906

 
33,742

 
36,850

 
38,046

 
39,525

TTM Gross Billings / Average Active Customer (9)
$
169

 
$
174

 
$
189

 
$
187

 
$
179

 
$
165

 
$
149

Headcount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales (10)
3,556

 
4,850

 
4,853

 
5,196

 
5,735

 
5,587

 
5,087

 
% North America
19
%
 
20
%
 
21
%
 
20
%
 
21
%
 
20
%
 
24
%
 
% International
81
%
 
80
%
 
79
%
 
80
%
 
79
%
 
80
%
 
76
%
 
Other
3,551

 
4,775

 
5,565

 
6,275

 
6,813

 
7,233

 
6,779

 
Total Headcount
7,107

 
9,625

 
10,418

 
11,471

 
12,548

 
12,820

 
11,866


(1)
Represents the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds.
(2)
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 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.
(3)
The third quarter 2012 marked the first time the Company disclosed direct cost of revenue which reflects the allocation of all variable costs related to the Direct business. As a result, third party and other cost of revenue and direct cost of revenue are presented separately.
(4)
Represents change in financial measures that would have resulted had average exchange rates in the reported period been the same as those in effect in the prior year period.
(5)
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.
(6)
Year-over-year growth is unavailable for select international growth measures as Groupon did not commence international operations until the second quarter of 2010.
(7)
Free cash flow is a non-GAAP financial measure. The Company reconciles this measure to the most comparable U.S. GAAP measure, ‘‘Net cash provided by operating activities,” for the periods presented.
(8)
Reflects the total number of unique accounts who have purchased Groupons during the trailing twelve months.
(9)
Reflects the total gross billings generated in the trailing twelve months per average active customer over that period.
(10)
Includes inside and outside merchant sales representatives, as well as sales support.