EX-99.1 3 exhibit991-q12016.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1

Groupon Announces First Quarter 2016 Results
 
Adds nearly 1 million new customers, boosts AEBITDA Guidance

•
Gross billings of $1.47 billion
•
Revenue of $732.0 million
•
Adjusted EBITDA of $31.3 million
•
GAAP loss per share of $0.08; non-GAAP loss per share of $0.01
•
Operating Cash Flow of $179.4 million for the trailing twelve month period; Free Cash Flow of $93.8 million for the trailing twelve month period
•
Affirming fiscal year 2016 revenue guidance of $2.75 billion to $3.05 billion and increased 2016 expected Adjusted EBITDA range to $85 million to $135 million
 
CHICAGO - (BUSINESS WIRE) - April 28, 2016 - Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter ended March 31, 2016.

“We started the year making continued strides toward becoming a daily habit in local commerce,” said CEO Rich Williams. “We sold the billionth Groupon in the first quarter and gained momentum on each of our strategic priorities, with customer growth and gross profit margin improvements highlighting our progress. Our business fundamentals and operational efficiency keep improving as our marketplace matures to become the largest and most effective of its kind.”
 
First Quarter 2016 Summary
 
•
Gross Billings were $1.47 billion in the first quarter, down 5% from $1.55 billion in the first quarter of 2015, or 3% excluding the unfavorable impact of year-over-year changes in foreign exchange rates. The reduction in Gross Billings includes our continued restructuring efforts, country closures, and our initiative to de-emphasize low margin Shopping offerings. North America gross billings increased 5%, EMEA declined by 12%, and Rest of World declined by 17% on the same F/X neutral basis. Gross billings reflect the total dollar value of customer purchases of goods and services.

•
Revenue was $732.0 million in the first quarter 2016, compared with $750.4 million in the first quarter 2015. Revenue decreased 2% globally, or less than 1% 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 4%, EMEA declined 10% and Rest of World declined 8%.

•
Gross profit was $339.3 million in the first quarter 2016, compared with $347.4 million in the first quarter 2015. Gross profit declined 2% globally, but was flat excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter.

•
Adjusted EBITDA, a non-GAAP financial measure, was $31.3 million in the first quarter 2016, compared with $72.4 million in the first quarter 2015.



•
Net loss attributable to common stockholders was $49.1 million, or $0.08 per share. Non-GAAP net loss attributable to common stockholders was $4.6 million, or $0.01 per share.

•
Global units declined 3% year-over-year to 52 million consistent with restructuring efforts in international segments. Units in North America increased 6%, EMEA units declined 7%, and Rest of World units declined 25%. Units are defined as vouchers and products sold before cancellations and refunds.

•
Operating cash flow for the trailing twelve months ended March 31, 2016 was $179.4
•
million. Free cash flow, a non-GAAP financial measure, was negative $96.7 million in the first quarter 2016, bringing free cash flow for the trailing twelve months ended March 31, 2016 to $93.8 million.

•
Cash and cash equivalents as of March 31, 2016 was $688.5 million, and we had no outstanding borrowings under our revolving credit facility. On April 4, the company issued $250 million in aggregate principal amount of senior convertible notes, the proceeds of which are not reflected in our cash balance as of March 31.

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
 
•
Groupon sold its one billionth unit in Q1. Groupon crossed the one billion-sold milestone with units sold of 52 million in the quarter and 6% unit growth in North America.
•
North America Gross Profit grew 11% year-over-year. North America gross profit grew 11% year-over-year to $215.9 million and gross margin increased to 23% of gross billings, a two-year high.
•
Shopping Gross Margins increased year-over-year in all segments for a second consecutive quarter. Shopping gross margins of 13.7% increased 310 basis points year-over-year with increases of 390 basis points in North America, 200 basis points in EMEA and 320 basis points in Rest of World. All segments recorded a second consecutive quarter of year-over-year increases as we made progress on our initiatives to de-emphasize low margin Shopping offerings and drive more efficiency from our logistics network.
•
North America added nearly 1 million active customers in the quarter. Marketing investments in customer acquisition resulted in an incremental 955,000 active customers in North America, as compared to the prior quarter, which is the highest quarterly increase in two years. North America reported 26.9 million active customers at March 31. Active customers are customers that have purchased a voucher or product within the last twelve months.
•
North America more than doubled active deals year-over-year. At the end of the first quarter 2016, on average, active deals were more than 700,000 globally and more than 425,000 in North America, an increase of over two-fold.
•
Global SG&A declined by $9m year-over-year on solid execution on our operational streamlining initiatives. SG&A in International markets declined by $18 million year-


over-year as we exited 17 countries under our restructuring plan and consolidated key shared service functions into regional centers to improve customer service while gaining operating leverage.

Share Repurchase
During the first quarter 2016, Groupon repurchased 18,820,000 shares of its Class A common stock for an aggregate purchase price of $63.4 million. Up to $93.6 million of Class A common stock was available for repurchase under Groupon’s share repurchase program as of March 31, 2016. In connection with the Company’s $250 million senior convertible notes issuance in April 2016, the Board of Directors approved a $200 million increase to its share repurchase program and extended the program through April 2018. 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 2016 reflects current foreign exchange rates, as well as expected marketing investments, continued progress on increasing Shopping margins, and a reduction of our international footprint. We continue to expect revenue of between $2.75 and $3.05 billion for the full year, and we are increasing the company’s expected 2016 adjusted EBITDA range to between $85 million and $135 million.

Groupon Names Michael Randolfi as Chief Financial Officer
In a separate release today, Groupon announced that it has named Michael Randolfi as its new Chief Financial Officer, succeeding interim CFO Brian Kayman.

Conference Call
A conference call will be webcast live today at 4:00 p.m. CDT / 5:00 p.m. EDT, and will be available on Groupon’s investor relations website at http://investor.groupon.com. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.
 
Groupon encourages investors to use its investor relations website as a way of easily finding information about the company. Groupon promptly makes available on this website, free of charge, the reports that the company files or furnishes with the SEC, corporate governance information (including Groupon’s Global Code of Conduct), and select press releases and social media postings. Groupon uses its investor relations site (investor.groupon.com) and its blog (https://www.groupon.com/blog) as a means of disclosing material non-public information and for complying with its disclosure obligations under Reguation FD.

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's current 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. During the three months ended March 31, 2016, items that we believe to be unusual in nature or infrequently occurring were charges related to our restructuring program. 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 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 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 operating 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 or country exits,
•
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 non-GAAP 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 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 strategy to grow our local marketplaces, marketing strategy and spend and the productivity of those marketing investments and 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 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; product liability claims; managing inventory and order fulfillment risks; integrating our technology platforms; litigation; managing refund risks; retaining, attracting and integrating members of our executive team; 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; completing and realizing the anticipated benefits from acquisitions, dispositions, joint ventures and strategic investments; tax liabilities; tax legislation; compliance with domestic and foreign laws and regulations, including the CARD Act and regulation of the Internet and e-commerce; classification of our independent contractors; maintaining our information technology infrastructure; protecting our intellectual property; maintaining a strong brand; seasonality; customer and merchant fraud; payment-related risks; our ability to raise capital if necessary and our outstanding indebtedness; global economic uncertainty; the impact of our ongoing strategic review and any potential strategic alternatives we may choose to pursue; our senior convertible notes; and our ability to complete and realize the anticipated benefits from the hedge and warrant transactions. 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 for the year ended December 31, 2015, Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 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 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 April 28, 2016. 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 building the daily habit in local commerce, offering a vast mobile and online marketplace where people discover and save on amazing things to do, see, eat and buy. By enabling real-time commerce across local businesses, travel destinations, consumer products and live events, shoppers can find the best a city has to offer.

Groupon is redefining how small businesses attract and retain customers by providing them with customizable and scalable marketing tools and services to profitably grow their businesses.

To download Groupon's top-rated mobile apps, visit www.groupon.com/mobile. To search for great deals or subscribe to Groupon emails, visit www.groupon.com. To learn more about the company’s merchant solutions and how to work with Groupon, visit www.groupon.com/merchant.

Contacts:
Investor Relations                    Public Relations
Tom Grant                        Bill Roberts
312-999-3098                312-459-5191
ir@groupon




Groupon, Inc..
Summary Consolidated and Segment Results
(in thousands, except share and per share amounts)
(unaudited)

The financial results of Ticket Monster are presented as discontinued operations in the accompanying condensed consolidated financial statements and tables for the three months ended March 31, 2015. All prior period financial information and operational metrics have been retrospectively adjusted to reflect this presentation.
 
 
Three Months Ended March 31,
 
Y/Y % Growth
 
FX Effect(2)
 
Y/Y % Growth excluding 
FX(2)
 
 
2016
 
2015
 
 
 
Gross Billings(1):
 
 
 
 
 
 
 
 
 
 
 
 
North America
 
$
937,074

 
$
893,977

 
4.8

%
 
$
(708
)
 
4.9

%
EMEA
 
392,227

 
459,189

 
(14.6
)
%
 
(13,120
)
 
(11.7
)
%
Rest of World
 
142,709

 
198,835

 
(28.2
)
%
 
(21,873
)
 
(17.2
)
%
Consolidated gross billings
 
$
1,472,010

 
$
1,552,001

 
(5.2
)
%
 
$
(35,701
)
 
(2.9
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
North America
 
$
500,813

 
$
479,882

 
4.4

%
 
$
(154
)
 
4.4

%
EMEA
 
188,970

 
216,220

 
(12.6
)
%
 
(6,268
)
 
(9.7
)
%
Rest of World
 
42,188

 
54,254

 
(22.2
)
%
 
(7,702
)
 
(8.0
)
%
Consolidated revenue
 
$
731,971

 
$
750,356

 
(2.5
)
%
 
$
(14,124
)
 
(0.6
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
$
(47,333
)
 
$
5,295

 
(993.9
)
%
 
$
(229
)
 
(989.6
)
%
Income (loss) from continuing operations
 
$
(45,596
)
 
$
(16,739
)
 
 
 
 
 
 
 
 
Income (loss) from discontinued operations, net of tax
 
$
—

 
$
6,284

 
 
 
 
 
 
 
 
Net income (loss) attributable to Groupon, Inc.
 
$
(49,119
)
 
$
(14,273
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net income (loss) per share:
 
 
 
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
(0.08
)
 
$
(0.03
)
 
 
 
 
 
 
 
 
Discontinued operations
 
—

 
0.01

 
 
 
 
 
 
 
 
Basic net income (loss) per share
 
$
(0.08
)
 
$
(0.02
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted net income (loss) per share:
 
 
 
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
(0.08
)
 
$
(0.03
)
 
 
 
 
 
 
 
 
Discontinued operations
 
—

 
0.01

 
 
 
 
 
 
 
 
Diluted net income (loss) per share
 
$
(0.08
)
 
$
(0.02
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
582,751,678

 
676,382,937

 
 
 
 
 
 
 
 
Diluted
 
582,571,678

 
676,382,937

 
 
 
 
 
 
 
 

(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 period been the same as those in effect during the three months ended March 31, 2015.


Groupon, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 
Three Months Ended March 31,
 
2016
 
2015 (1)
Operating activities
 
 
 
Net income (loss)
$
(45,596
)
 
$
(10,455
)
Less: Income (loss) from discontinued operations, net of tax
—

 
6,284

Income (loss) from continuing operations
(45,596
)
 
(16,739
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation and amortization of property, equipment and software
30,143

 
26,266

Amortization of acquired intangible assets
4,654

 
5,934

Stock-based compensation
30,756

 
35,144

Restructuring-related long-lived asset impairments
45

 
—

Deferred income taxes
(2,310
)
 
22

(Gain) loss, net from changes in fair value of contingent consideration
3,442

 
(279
)
Loss from changes in fair value of investments
1,100

 
—

Change in assets and liabilities, net of acquisitions:
 
 
 
Restricted cash
505

 
3,245

Accounts receivable
(3,223
)
 
(8,901
)
Prepaid expenses and other current assets
20,940

 
(2,513
)
Accounts payable
(2,850
)
 
2,244

Accrued merchant and supplier payables
(112,425
)
 
(17,034
)
Accrued expenses and other current liabilities
10,848

 
(2,470
)
Other, net
(12,754
)
 
18,688

Net cash provided by (used in) operating activities from continuing operations
(76,725
)
 
43,607

Net cash provided by (used in) operating activities from discontinued operations
—

 
(24,355
)
Net cash provided by (used in) operating activities
(76,725
)
 
19,252

 
 
 
 
Net cash provided by (used in) investing activities from continuing operations
(20,778
)
 
(19,443
)
Net cash provided by (used in) investing activities from discontinued operations
—

 
(624
)
Net cash provided by (used in) investing activities
(20,778
)
 
(20,067
)
 
 
 
 
Net cash provided by (used in) financing activities
(78,015
)
 
(35,838
)
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents, including cash classified within current assets held for sale
10,668

 
(30,199
)
Net increase (decrease) in cash and cash equivalents, including cash classified within current assets held for sale
(164,850
)
 
(66,852
)
Less: Net increase (decrease) in cash classified within current assets held for sale
—

 
(25,722
)
Net increase (decrease) in cash and cash equivalents
(164,850
)
 
(41,130
)
Cash and cash equivalents, beginning of period
853,362

 
1,016,634

Cash and cash equivalents, end of period
$
688,512

 
$
975,504


(1)
The Company adopted the guidance in Accounting Standards Update ("ASU") 2016-09, Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting, on January 1, 2016. ASU 2016-09 requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. Previously, income tax benefits at settlement of an award were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award's vesting period. The Company has elected to apply that change in cash flow classification on a retrospective basis, which has resulted in a $2.9 million increase to net cash provided by operating activities and a corresponding increase to net cash used in financing activities in the condensed consolidated statement of cash flows for the period ended March 31, 2015, as compared to the amounts previously reported.
 



Groupon, Inc.
Condensed Consolidated Statements of Operations  
(in thousands, except share and per share amounts)
(unaudited)

 
 
Three Months Ended March 31,
 
 
2016
 
2015
Revenue:
 
 
 
 
Third party and other
 
$
334,568

 
$
360,121

Direct
 
397,403

 
390,235

Total revenue
 
731,971

 
750,356

Cost of revenue:
 
 
 
 
Third party and other
 
46,781

 
51,697

Direct
 
345,862

 
351,253

Total cost of revenue
 
392,643

 
402,950

Gross profit
 
339,328

 
347,406

Operating expenses:
 
 
 
 
Marketing
 
89,765

 
52,533

Selling, general and administrative
 
280,988

 
289,847

Restructuring charges
 
12,444

 
—

Acquisition-related expense (benefit), net
 
3,464

 
(269
)
  Total operating expenses
 
386,661

 
342,111

Income (loss) from operations
 
(47,333
)
 
5,295

Other income (expense), net (1) 
 
3,486

 
(19,927
)
Income (loss) from continuing operations before provision (benefit) for income taxes
 
(43,847
)
 
(14,632
)
Provision (benefit) for income taxes
 
1,749

 
2,107

Income (loss) from continuing operations
 
(45,596
)
 
(16,739
)
Income (loss) from discontinued operations, net of tax
 
—

 
6,284

Net income (loss)
 
(45,596
)
 
(10,455
)
Net income attributable to noncontrolling interests
 
(3,523
)
 
(3,818
)
Net income (loss) attributable to Groupon, Inc.
 
$
(49,119
)
 
$
(14,273
)
 
 
 
 
 
Basic net income (loss) per share:
 
 
 
 
Continuing operations
 
$
(0.08
)
 
$
(0.03
)
Discontinued operations
 
—

 
0.01

Basic net income (loss) per share
 
$
(0.08
)
 
$
(0.02
)
 
 
 
 
 
Diluted net income (loss) per share:
 
 
 
 
Continuing operations
 
$
(0.08
)
 
$
(0.03
)
Discontinued operations
 
—

 
0.01

Diluted net income (loss) per share
 
$
(0.08
)
 
$
(0.02
)
 
 
 
 
 
Weighted average number of shares outstanding
 
 
 
 
Basic
 
582,751,678

 
676,382,937

Diluted
 
582,571,678

 
676,382,937


(1)
Other income (expense), net includes foreign currency gains (losses) of $6.5 million and $(19.5) million for the three months ended March 31, 2016 and 2015, respectively.



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

 
 
March 31, 2016
 
December 31, 2015
 
 
(unaudited)
 
 
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
688,512

 
$
853,362

Accounts receivable, net
 
73,471

 
68,175

Prepaid expenses and other current assets
 
134,831

 
153,705

Total current assets
 
896,814

 
1,075,242

Property, equipment and software, net
 
193,036

 
198,897

Goodwill
 
291,747

 
287,332

Intangible assets, net
 
32,769

 
36,483

Investments (including $162.5 million and $163.7 million at March 31, 2016 and December 31, 2015, respectively, at fair value)
 
177,553

 
178,236

Deferred income taxes
 
4,254

 
3,454

Other non-current assets
 
22,507

 
16,620

Total Assets
 
$
1,618,680

 
$
1,796,264

Liabilities and Equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
21,970

 
$
24,590

Accrued merchant and supplier payables
 
674,153

 
776,211

Accrued expenses and other current liabilities
 
406,578

 
402,724

Total current liabilities
 
1,102,701

 
1,203,525

Deferred income taxes
 
6,937

 
8,612

Other non-current liabilities
 
123,371

 
113,540

Total Liabilities
 
1,233,009

 
1,325,677

Commitments and contingencies
 
 
 
 
Stockholders' Equity
 
 
 
 
Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 720,766,970 shares issued and 573,478,805 shares outstanding at March 31, 2016 and 717,387,446 shares issued and 588,919,281 shares outstanding at December 31, 2015
 
72

 
72

Class B common stock, par value $0.0001 per share, 10,000,000 shares authorized, 2,399,976 shares issued and outstanding at March 31, 2016 and December 31, 2015
 
—

 
—

Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, no shares issued and outstanding at March 31, 2016 and December 31, 2015
 
—

 
—

Additional paid-in capital
 
1,997,930

 
1,964,453

Treasury stock, at cost, 147,288,165 shares at March 31, 2016 and 128,468,165 shares at December 31, 2015
 
(708,490
)
 
(645,041
)
Accumulated deficit
 
(953,542
)
 
(901,292
)
Accumulated other comprehensive income (loss)
 
48,354

 
51,206

Total Groupon, Inc. Stockholders' Equity
 
384,324

 
469,398

Noncontrolling interests
 
1,347

 
1,189

Total Equity
 
385,671

 
470,587

Total Liabilities and Equity
 
$
1,618,680

 
$
1,796,264




Groupon, Inc.
Segment Information
(in thousands)
(unaudited)
 
 
Three Months Ended March 31,
 
 
 
2016
 
2015
 
North America
 
 

 
 
 
Gross billings (1)
 
$
937,074

 
$
893,977

 
Revenue
 
$
500,813

 
$
479,882

 
Segment cost of revenue and operating expenses (2)(3)
 
512,261

 
455,216

 
Segment operating income (loss) (2)
 
$
(11,448
)
 
$
24,666

 
Segment operating income (loss) as a percent of segment gross billings
 
(1.2
)
 
2.8

%
Segment operating income (loss) as a percent of segment revenue
 
(2.3
)
 
5.1

%
 
 
 
 
 
 
EMEA
 
 
 
 
 
Gross billings (1)
 
$
392,227

 
$
459,189

 
Revenue
 
$
188,970

 
$
216,220

 
Segment cost of revenue and operating expenses (2)(3)
 
183,054

 
196,568

 
Segment operating income (loss) (2)
 
$
5,916

 
$
19,652

 
Segment operating income (loss) as a percent of segment gross billings
 
1.5

 
4.3

%
Segment operating income (loss) as a percent of segment revenue
 
3.1

 
9.1

%
 
 
 
 
 
 
Rest of World
 
 
 
 
 
Gross billings (1)
 
$
142,709

 
$
198,835

 
Revenue
 
$
42,188

 
$
54,254

 
Segment cost of revenue and operating expenses (2)(3)
 
49,974

 
58,402

 
Segment operating income (loss) (2)
 
$
(7,786
)
 
$
(4,148
)
 
Segment operating income (loss) as a percent of segment gross billings
 
(5.5
)
 
(2.1
)
%
Segment operating income (loss) as a percent of segment revenue
 
(18.5
)
 
(7.6
)
%

(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 the three months ended March 31, 2016 includes restructuring charges of $2.9 million in North America (which excludes $2.6 million of stock-based compensation), $3.5 million in EMEA and $3.4 million in Rest of World.



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, "Income (loss) from continuing operations."
    
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
 
Q1 2016
Income (loss) from continuing operations
$
(16,739
)
 
$
(15,267
)
 
$
(24,613
)
 
$
(32,552
)
 
(45,596
)
Adjustments:
 
 
 
 
 
 
 
 
 
  Stock-based compensation (1)
35,144

 
38,467

 
35,432

 
32,691

 
27,976

  Depreciation and amortization
32,200

 
31,372

 
35,635

 
33,763

 
34,797

  Acquisition-related expense (benefit), net
(269
)
 
505

 
1,064

 
557

 
3,464

  Restructuring charges (1)
—

 
—

 
24,146

 
5,422

 
12,444

  Gain on disposition of business
—

 
—

 
(13,710
)
 
—

 
—

  Prepaid marketing write-off
—

 
—

 
6,690

 
—

 
—

  Securities litigation expense
—

 
—

 
37,500

 
—

 
—

  Non-operating expense (income), net (1)
19,927

 
(2,941
)
 
8,160

 
3,393

 
(3,486
)
  Provision (benefit) for income taxes
2,107

 
8,982

 
(53,970
)
 
23,736

 
1,749

Total adjustments
89,109

 
76,385

 
80,947

 
99,562

 
76,944

Adjusted EBITDA
$
72,370

 
$
61,118

 
$
56,334

 
$
67,010

 
$
31,348


(1)
Includes stock-based compensation classified within cost of revenue, marketing expense, and selling, general and administrative expense. Non-operating expense (income), net, includes $0.02 million, $0.1 million, $0.2 million and $0.2 million of additional stock-based compensation for the three months ended June 30, 2015, September 30, 2015, December 31, 2015 and March 31, 2016, respectively. Restructuring charges includes $2.6 million of additional stock-based compensation for the three months ended March 31, 2016.

    


























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 months ended March 31, 2016:
 
 
Three Months Ended March 31, 2016
Net income (loss) attributable to common stockholders
$
(49,119
)
Stock-based compensation (1)
28,208

Amortization of acquired intangible assets
4,654

Acquisition-related expense (benefit), net
3,464

Restructuring charges
12,444

Intercompany foreign currency losses (gains) and reclassifications of translation adjustments to earnings (2)
(5,470
)
Loss from changes in fair value of investments
1,100

Income tax effect of above adjustments
88

Non-GAAP net income (loss) attributable to common stockholders
$
(4,631
)
 
 
Diluted shares
582,751,678

Incremental diluted shares
—

Adjusted diluted shares
582,751,678

 
 
Diluted net income (loss) per share
$
(0.08
)
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 and related tax effects
0.07

Non-GAAP net income (loss) per share
$
(0.01
)

(1)
Excludes $2.6 million of stock-based compensation classified within restructuring charges.

(2)
For the three months ended March 31, 2016, a $1.5 million cumulative translation loss was reclassified to earnings as a result of the Company's exit from certain countries as part of its restructuring plan.


Groupon, Inc.
Non-GAAP Reconciliation Schedules
(in thousands, except share and per share amounts)
(unaudited) 

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 operations from changes in exchange rates versus the U.S. Dollar for the three months ended March 31, 2016 was as follows: 
 
 
Three Months Ended March 31, 2016
 
Three Months Ended March 31, 2016
 
 
At Avg. Q1 2015
Rates (1)
 
Exchange Rate
Effect (2)
 
As
Reported
 
At Avg. Q4 2015
Rates (3)
 
Exchange Rate
Effect (2)
 
As
Reported
Gross billings
 
$
1,507,711

 
$
(35,701
)
 
$
1,472,010

 
$
1,478,984

 
$
(6,974
)
 
$
1,472,010

Revenue
 
746,095

 
(14,124
)
 
731,971

 
734,872

 
(2,901
)
 
731,971

Income (loss) from operations
 
$
(47,104
)
 
$
(229
)
 
$
(47,333
)
 
$
(46,447
)
 
$
(886
)
 
$
(47,333
)

(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 months ended March 31, 2015.
(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 months ended December 31, 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.
    
 
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
 
Q1 2016
 
EMEA Gross billings growth, excluding FX
7

%
9

%
(1
)
%
(2
)
%
(12
)
%
FX Effect
(18
)
 
(19
)
 
(14
)
 
(11
)
 
(3
)
 
EMEA Gross billings growth
(11
)
%
(10
)
%
(15
)
%
(13
)
%
(15
)
%
 
 
 
 
 
 
 
 
 
 
 
 
Rest of World Gross billings growth, excluding FX
(1
)
%
6

%
—

%
(7
)
%
(17
)
%
FX Effect
(11
)
 
(15
)
 
(19
)
 
(14
)
 
(11
)
 
Rest of World Gross billings growth
(12
)
%
(9
)
%
(19
)
%
(21
)
%
(28
)
%
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Gross billings growth, excluding FX
10

%
10

%
6

%
4

%
(3
)
%
FX Effect
(8
)
 
(8
)
 
(8
)
 
(5
)
 
(2
)
 
Consolidated Gross billings growth
2

%
2

%
(2
)
%
(1
)
%
(5
)
%




    

The following is a quarterly reconciliation of foreign exchange rate neutral Revenue growth from the comparable quarterly periods of the prior year to reported Revenue growth from the comparable quarterly periods of the prior year.
    
 
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
 
Q1 2016
 
EMEA Revenue growth, excluding FX
13

%
9

%
2

%
3

%
(10
)
%
FX Effect
(19
)
 
(19
)
 
(15
)
 
(12
)
 
(3
)
 
EMEA Revenue growth
(6
)
%
(10
)
%
(13
)
%
(9
)
%
(13
)
%
 
 
 
 
 
 
 
 
 
 
 
 
Rest of World Revenue growth, excluding FX
(8
)
%
(4
)
%
(5
)
%
(8
)
%
(8
)
%
FX Effect
(10
)
 
(14
)
 
(18
)
 
(15
)
 
(14
)
 
Rest of World Revenue growth
(18
)
%
(18
)
%
(23
)
%
(23
)
%
(22
)
%
 
 
 
 
 
 
 
 
 
 
 
Consolidated Revenue growth, excluding FX
10

%
11

%
7

%
9

%
(1
)
%
FX Effect
(7
)
 
(8
)
 
(7
)
 
(5
)
 
(1
)
 
Consolidated Revenue growth
3

%
3

%
—

%
4

%
(2
)
%
    
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 March 31, 2016 was as follows: 
 
At Avg. Q1
2015 Rates (1)
 
Exchange
Rate
Effect (2)
 

March 31, 2016
As Reported
 

March 31, 2015
As Reported
 
Y/Y %
Growth
 
Y/Y% Growth excluding FX
 
 
Local:
 
 
 
 
 
 
 
 
 
 
 
 
Third party and other
$
540,038

 
$
(415
)
 
$
539,623

 
$
512,558

 
5.3

%
5.4

%
 
 
 
 
 
 
 
 
 
 
 
 
 
Travel:
 
 
 
 
 
 
 
 
 
 
 
 
Third party
103,473

 
(83
)
 
103,390

 
96,678

 
6.9

%
7.0

%
Total services
643,511

 
(498
)
 
643,013

 
609,236

 
5.5

%
5.6

%
 
 
 
 
 
 
 
 
 
 
 
 
 
Goods:
 
 
 
 
 
 
 
 
 
 
 
 
Third party
8,515

 
(210
)
 
8,305

 
6,360

 
30.6

%
33.9

%
Direct
285,756

 
—

 
285,756

 
278,381

 
2.6

%
2.6

%
Total
294,271

 
(210
)
 
294,061

 
284,741

 
3.3

%
3.3

%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total gross billings
$
937,782

 
$
(708
)
 
$
937,074

 
$
893,977

 
4.8

%
4.9

%























The effect on EMEA's gross billings by category from changes in foreign exchange rates versus the U.S. Dollar for the three months ended March 31, 2016 was as follows: 
 
At Avg. Q1
2015 Rates (1)
 
Exchange
Rate
Effect (2)
 

March 31, 2016
As Reported
 

March 31, 2015
As Reported
 
Y/Y %
Growth
 
Y/Y% Growth excluding FX
 
 
 
Local:
 
 
 
 
 
 
 
 
 
 
 
 
Third party and other
$
180,262

 
$
(6,229
)
 
$
174,033

 
$
217,598

 
(20.0
)
%
(17.2
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Travel:
 
 
 
 
 
 
 
 
 
 
 
 
Third party
59,189

 
(1,988
)
 
57,201

 
65,065

 
(12.1
)
%
(9.0
)
%
Total services
239,451

 
(8,217
)
 
231,234

 
282,663

 
(18.2
)
%
(15.3
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Goods:
 
 
 
 
 
 
 
 
 
 
 
 
Third party
57,626

 
(1,853
)
 
55,773

 
69,537

 
(19.8
)
%
(17.1
)
%
Direct
108,270

 
(3,050
)
 
105,220

 
106,989

 
(1.7
)
%
1.2

%
Total
165,896

 
(4,903
)
 
160,993

 
176,526

 
(8.8
)
%
(6.0
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total gross billings
$
405,347

 
$
(13,120
)
 
$
392,227

 
$
459,189

 
(14.6
)
%
(11.7
)
%

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 March 31, 2016 was as follows:
 
At Avg. Q1
2015 Rates (1)
 
Exchange
Rate
Effect (2)
 

March 31, 2016
As Reported
 

March 31, 2015
As Reported
 
Y/Y %
Growth
 
Y/Y% Growth excluding FX
 
 
Local:
 
 
 
 
 
 
 
 
 
 
 
 
Third party and other
$
86,569

 
$
(11,275
)
 
$
75,294

 
$
99,735

 
(24.5
)
%
(13.2
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Travel:
 
 
 
 
 
 
 
 
 
 
 
 
Third party
28,918

 
(4,990
)
 
23,928

 
32,946

 
(27.4
)
%
(12.2
)
%
Total services
115,487

 
(16,265
)
 
99,222

 
132,681

 
(25.2
)
%
(13.0
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Goods:
 
 
 
 
 
 
 
 
 
 
 
 
Third party
40,658

 
(3,598
)
 
37,060

 
61,289

 
(39.5
)
%
(33.7
)
%
Direct
8,437

 
(2,010
)
 
6,427

 
4,865

 
32.1

%
73.4

%
Total
49,095

 
(5,608
)
 
43,487

 
66,154

 
(34.3
)
%
(25.8
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total gross billings
$
164,582

 
$
(21,873
)
 
$
142,709

 
$
198,835

 
(28.2
)
%
(17.2
)
%

    












The effect on consolidated gross billings by category from changes in foreign exchange rates versus the U.S. Dollar for the three months ended March 31, 2016 was as follows: 
 
At Avg. Q1
2015 Rates (1)
 
Exchange
Rate
Effect (2)
 

March 31, 2016
As Reported
 

March 31, 2015
As Reported
 
Y/Y %
Growth
 
Y/Y% Growth excluding FX
 
 
Local:
 
 
 
 
 
 
 
 
 
 
 
 
Third party and other
$
806,869

 
$
(17,919
)
 
$
788,950

 
$
829,891

 
(4.9
)
%
(2.8
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Travel:
 
 
 
 
 
 
 
 
 
 
 
 
Third party
191,580

 
(7,061
)
 
184,519

 
194,689

 
(5.2
)
%
(1.6
)
%
Total services
998,449

 
(24,980
)
 
973,469

 
1,024,580

 
(5.0
)
%
(2.6
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Goods:
 
 
 
 
 
 
 
 
 
 
 
 
Third party
106,799

 
(5,661
)
 
101,138

 
137,186

 
(26.3
)
%
(22.2
)
%
Direct
402,463

 
(5,060
)
 
397,403

 
390,235

 
1.8

%
3.1

%
Total
509,262

 
(10,721
)
 
498,541

 
527,421

 
(5.5
)
%
(3.4
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total gross billings
$
1,507,711

 
$
(35,701
)
 
$
1,472,010

 
$
1,552,001

 
(5.2
)
%
(2.9
)
%


(1)
Represents the financial statement balances that would have resulted had average exchange rates in the reporting period been the same as those in effect during the three months ended March 31, 2016.
(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)(11)  
(financial data in thousands; active customers in millions)
(unaudited)
 
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
 
Q1 2016
 
Segments
 
 
 
 
 
 
 
 
 
 
North America Segment:
 
 
 
 
 
 
 
 
 
 
Gross Billings (1):
 
 
 
 
 
 
 
 
 
 
 
Local (2) Gross Billings
$
512,558

 
$
499,378

 
$
481,608

 
$
531,154

 
$
539,623

 
 
Travel Gross Billings
96,678

 
102,908

 
101,801

 
89,389

 
103,390

 
 
Gross Billings - Services
609,236

 
602,286

 
583,409

 
620,543

 
643,013

 
 
Gross Billings - Goods
284,741

 
293,970

 
285,794

 
429,818

 
294,061

 
 
Total Gross Billings
$
893,977

 
$
896,256

 
$
869,203

 
$
1,050,361

 
$
937,074

 
 
Year-over-year growth
14

%
12

%
12

%
11

%
5

%
 
% Third Party and Other
69

%
68

%
68

%
60

%
70

%
 
% Direct
31

%
32

%
32

%
40

%
30

%
Gross Billings Trailing Twelve Months (TTM)
$
3,415,687

 
$
3,513,098

 
$
3,608,015

 
$
3,709,797

 
$
3,752,894

 
 
 
 
 
 
 
 
 
 
 
 
Revenue (3):
 
 
 
 
 
 
 
 
 
 
 
Local Revenue
$
180,864

 
$
172,461

 
$
163,786

 
$
184,201

 
$
192,153

 
 
Travel Revenue
19,989

 
21,958

 
21,394

 
18,390

 
20,914

 
 
Revenue - Services
200,853

 
194,419

 
185,180

 
202,591

 
213,067

 
 
Revenue - Goods
279,029

 
286,863

 
278,751

 
420,056

 
287,746

 
 
Total Revenue
$
479,882

 
$
481,282

 
$
463,931

 
$
622,647

 
$
500,813

 
 
Year-over-year growth
11

%
14

%
11

%
13

%
4

%
 
% Third Party and Other
42

%
41

%
40

%
33

%
43

%
 
% Direct
58

%
59

%
60

%
67

%
57

%
Revenue TTM
$
1,873,281

 
$
1,930,632

 
$
1,976,069

 
$
2,047,742

 
$
2,068,673

 
 
 
 
 
 
 
 
 
 
 
 
Gross Profit (4):
 
 
 
 
 
 
 
 
 
 
 
Local Gross Profit
$
154,776

 
$
147,574

 
$
138,798

 
$
159,745

 
$
164,018

 
 
% of North America Local Gross Billings
30.2

%
29.6

%
28.8

%
30.1

%
30.4

%
 
Travel Gross Profit
15,791

 
18,385

 
17,644

 
15,207

 
15,712

 
 
% of North America Travel Gross Billings
16.3

%
17.9

%
17.3

%
17.0

%
15.2

%
 
Gross Profit - Services
170,567

 
165,959

 
156,442

 
174,952

 
179,730

 
 
% of North America Services Gross Billings
28.0

%
27.6

%
26.8

%
28.2

%
28.0

%
 
Gross Profit - Goods
23,923

 
30,598

 
34,801

 
44,329

 
36,213

 
 
% of North America Goods Gross Billings
8.4

%
10.4

%
12.2

%
10.3

%
12.3

%
 
Total Gross Profit
$
194,490

 
$
196,557

 
$
191,243

 
$
219,281

 
$
215,943

 
 
Year-over-year growth
8

%
9

%
9

%
12

%
11

%
 
% Third Party and Other
88

%
85

%
83

%
81

%
84

%
 
% Direct
12

%
15

%
17

%
19

%
16

%
 
% of North America Total Gross Billings
21.8

%
21.9

%
22.0

%
20.9

%
23.0

%
 
 
 
 
 
 
 
 
 
 
 
EMEA Segment:
 
 
 
 
 
 
 
 
 
 
Gross Billings:
 
 
 
 
 
 
 
 
 
 
 
Local Gross Billings
$
217,598

 
$
198,553

 
$
182,540

 
$
197,445

 
$
174,033

 
 
Travel Gross Billings
65,065

 
59,544

 
64,916

 
59,836

 
57,201

 
 
Gross Billings - Services
282,663

 
258,097

 
247,456

 
257,281

 
231,234

 
 
Gross Billings - Goods
176,526

 
175,439

 
167,026

 
229,866

 
160,993

 
 
Total Gross Billings
$
459,189

 
$
433,536

 
$
414,482

 
$
487,147

 
$
392,227

 
 
Year-over-year growth
(11
)
%
(10
)
%
(15
)
%
(13
)
%
(15
)
%
 
Year-over-year growth, excluding FX
7

%
9

%
(1
)
%
(2
)
%
(12
)
%
 
% Third Party and Other
77

%
76

%
75

%
70

%
73

%
 
% Direct
23

%
24

%
25

%
30

%
27

%
Gross Billings TTM
$
1,992,408

 
$
1,942,689

 
$
1,867,748

 
$
1,794,354

 
$
1,727,392

 
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
Local Revenue
$
82,536

 
$
75,543

 
$
70,781

 
$
73,225

 
$
61,886

 
 
Travel Revenue
14,717

 
13,100

 
13,561

 
11,681

 
11,178

 
 
Revenue - Services
97,253

 
88,643

 
84,342

 
84,906

 
73,064

 
 
Revenue - Goods
118,967

 
115,404

 
114,945

 
163,420

 
115,906

 
 
Total Revenue
$
216,220

 
$
204,047

 
$
199,287

 
$
248,326

 
$
188,970

 
 
Year-over-year growth
(6
)
%
(10
)
%
(13
)
%
(9
)
%
(13
)
%
 
Year-over-year growth, excluding FX
13

%
9

%
2

%
3

%
(10
)
%
 
% Third Party and Other
51

%
48

%
48

%
41

%
44

%
 
% Direct
49

%
52

%
52

%
59

%
56

%
Revenue TTM
$
946,457

 
$
922,814

 
$
892,029

 
$
867,880

 
$
840,630

 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
 
Q1 2016
 
Gross Profit:
 
 
 
 
 
 
 
 
 
 
 
Local Gross Profit
$
77,356

 
$
70,270

 
$
66,288

 
$
68,966

 
$
58,263

 
 
% of EMEA Local Gross Billings
35.5

%
35.4

%
36.3

%
34.9

%
33.5

%
 
Travel Gross Profit
12,400

 
11,939

 
12,323

 
10,732

 
10,215

 
 
% of EMEA Travel Gross Billings
19.1

%
20.1

%
19.0

%
17.9

%
17.9

%
 
Gross Profit - Services
89,756

 
82,209

 
78,611

 
79,698

 
68,478

 
 
% of EMEA Services Gross Billings
31.8

%
31.9

%
31.8

%
31.0

%
29.6

%
 
Gross Profit - Goods
25,481

 
21,878

 
24,905

 
43,026

 
26,412

 
 
% of EMEA Goods Gross Billings
14.4

%
12.5

%
14.9

%
18.7

%
16.4

%
 
Total Gross Profit
$
115,237

 
$
104,087

 
$
103,516

 
$
122,724

 
$
94,890

 
 
Year-over-year growth
(18
)
%
(26
)
%
(21
)
%
(14
)
%
(18
)
%
 
% Third Party and Other
87

%
86

%
86

%
77

%
82

%
 
% Direct
13

%
14

%
14

%
23

%
18

%
 
% of EMEA Total Gross Billings
25.1

%
24.0

%
25.0

%
25.2

%
24.2

%
 
 
 
 
 
 
 
 
 
 
 
Rest of World Segment:
 
 
 
 
 
 
 
 
 
 
Gross Billings:
 
 
 
 
 
 
 
 
 
 
 
Local Gross Billings
$
99,735

 
$
100,403

 
$
92,972

 
$
83,430

 
$
75,294

 
 
Travel Gross Billings
32,946

 
31,263

 
30,709

 
25,369

 
23,928

 
 
Gross Billings - Services
132,681

 
131,666

 
123,681

 
108,799

 
99,222

 
 
Gross Billings - Goods
66,154

 
67,555

 
60,168

 
60,685

 
43,487

 
 
Total Gross Billings
$
198,835

 
$
199,221

 
$
183,849

 
$
169,484

 
$
142,709

 
 
Year-over-year growth
(12
)
%
(9
)
%
(19
)
%
(21
)
%
(28
)
%
 
Year-over-year growth, excluding FX
(1
)
%
6

%
—

%
(7
)
%
(17
)
%
 
% Third Party and Other
98

%
97

%
96

%
95

%
95

%
 
% Direct
2

%
3

%
4

%
5

%
5

%
Gross Billings TTM
$
861,032

 
$
840,243

 
$
797,454

 
$
751,389

 
$
695,263

 
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
Local Revenue
$
30,281

 
$
28,499

 
$
26,372

 
$
22,229

 
$
22,082

 
 
Travel Revenue
6,495

 
6,363

 
6,135

 
5,098

 
5,049

 
 
Revenue - Services
36,776

 
34,862

 
32,507

 
27,327

 
27,131

 
 
Revenue - Goods
17,478

 
18,204

 
17,870

 
18,870

 
15,057

 
 
Total Revenue
$
54,254

 
$
53,066

 
$
50,377

 
$
46,197

 
$
42,188

 
 
Year-over-year growth
(18
)
%
(18
)
%
(23
)
%
(23
)
%
(22
)
%
 
Year-over-year growth, excluding FX
(8
)
%
(4
)
%
(5
)
%
(8
)
%
(8
)
%
 
% Third Party and Other
91

%
87

%
86

%
82

%
85

%
 
% Direct
9

%
13

%
14

%
18

%
15

%
Revenue TTM
$
244,326

 
$
232,802

 
$
217,476

 
$
203,894

 
$
191,828

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Profit:
 
 
 
 
 
 
 
 
 
 
 
Local Gross Profit
$
26,161

 
$
24,567

 
$
22,568

 
$
18,889

 
$
18,771

 
 
% of Rest of World Local Gross Billings
26.2

%
24.5

%
24.3

%
22.6

%
24.9

%
 
Travel Gross Profit
4,906

 
5,012

 
4,859

 
4,040

 
3,997

 
 
% of Rest of World Travel Gross Billings
14.9

%
16.0

%
15.8

%
15.9

%
16.7

%
 
Gross Profit - Services
31,067

 
29,579

 
27,427

 
22,929

 
22,768

 
 
% of Rest of World Services Gross Billings
23.4

%
22.5

%
22.2

%
21.1

%
22.9

%
 
Gross Profit - Goods
6,612

 
6,784

 
6,726

 
6,806

 
5,727

 
 
% of Rest of World Goods Gross Billings
10.0

%
10.0

%
11.2

%
11.2

%
13.2

%
 
Total Gross Profit
$
37,679

 
$
36,363

 
$
34,153

 
$
29,735

 
$
28,495

 
 
Year-over-year growth
(16
)
%
(20
)
%
(28
)
%
(23
)
%
(24
)
%
 
% Third Party and Other
99

%
99

%
99

%
99

%
100

%
 
% Direct
1

%
1

%
1

%
1

%
—

%
 
% of Rest of World Total Gross Billings
18.9

%
18.3

%
18.6

%
17.5

%
20.0

%
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Results of Operations:
 
 
 
 
 
 
 
 
 
 
Gross Billings:
 
 
 
 
 
 
 
 
 
 
 
Local Gross Billings
$
829,891

 
$
798,334

 
$
757,120

 
$
812,029

 
$
788,950

 
 
Travel Gross Billings
194,689

 
193,715

 
197,426

 
174,594

 
184,519

 
 
Gross Billings - Services
1,024,580

 
992,049

 
954,546

 
986,623

 
973,469

 
 
Gross Billings - Goods
527,421

 
536,964

 
512,988

 
720,369

 
498,541

 
 
Total Gross Billings
$
1,552,001

 
$
1,529,013

 
$
1,467,534

 
$
1,706,992

 
$
1,472,010

 
 
Year-over-year growth
2

%
2

%
(2
)
%
(1
)
%
(5
)
%
 
Year-over-year growth, excluding FX
10

%
10

%
6

%
4

%
(3
)
%
 
% Third Party and Other
75

%
74

%
74

%
66

%
73

%
 
% Direct
25

%
26

%
26

%
34

%
27

%
Gross Billings TTM
$
6,269,127

 
$
6,296,030

 
$
6,273,217

 
$
6,255,540

 
$
6,175,549

 
 
Year-over-year growth
7

%
6

%
3

%
—

%
(1
)
%


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1 2015
 
Q2 2015
 
Q3 2015
 
Q4 2015
 
Q1 2016
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
Local Revenue
$
293,681

 
$
276,503

 
$
260,939

 
$
279,655

 
$
276,121

 
 
Travel Revenue
41,201

 
41,421

 
41,090

 
35,169

 
37,141

 
 
Revenue - Services
334,882

 
317,924

 
302,029

 
314,824

 
313,262

 
 
Revenue - Goods
415,474

 
420,471

 
411,566

 
602,346

 
418,709

 
  Total Revenue
$
750,356

 
$
738,395

 
$
713,595

 
$
917,170

 
$
731,971

 
 
Year-over-year growth
3

%
3

%
—

%
4

%
(2
)
%
 
Year-over-year growth, excluding FX
10

%
11

%
7

%
9

%
(1
)
%
 
% Third Party and Other
48

%
46

%
46

%
38

%
46

%
 
% Direct
52

%
54

%
54

%
62

%
54

%
Revenue TTM
$
3,064,064

 
$
3,086,248

 
$
3,085,574

 
$
3,119,516

 
$
3,101,131

 
 
Year-over-year growth
13

%
10

%
5

%
3

%
1

%
 
 
 
 
 
 
 
 
 
 
 
 
Gross Profit:
 
 
 
 
 
 
 
 
 
 
 
Local Gross Profit
$
258,293

 
$
242,411

 
$
227,654

 
$
247,600

 
$
241,052

 
 
% of Consolidated Local Gross Billings
31.1

%
30.4

%
30.1

%
30.5

%
30.6

%
 
Travel Gross Profit
33,097

 
35,336

 
34,826

 
29,979

 
29,924

 
 
% of Consolidated Travel Gross Billings
17.0

%
18.2

%
17.6

%
17.2

%
16.2

%
 
Gross Profit - Services
291,390

 
277,747

 
262,480

 
277,579

 
270,976

 
 
% of Consolidated Services Gross Billings
28.4

%
28.0

%
27.5

%
28.1

%
27.8

%
 
Gross Profit - Goods
56,016

 
59,260

 
66,432

 
94,161

 
68,352

 
 
% of Consolidated Goods Gross Billings
10.6

%
11.0

%
13.0

%
13.1

%
13.7

%
 
Total Gross Profit
$
347,406

 
$
337,007

 
$
328,912

 
$
371,740

 
$
339,328

 
 
Year-over-year growth
(5
)
%
(8
)
%
(7
)
%
(2
)
%
(2
)
%
 
% Third Party and Other
89

%
87

%
85

%
81

%
85

%
 
% Direct
11

%
13

%
15

%
19

%
15

%
 
% of Total Consolidated Gross Billings
22.4

%
22.0

%
22.4

%
21.8

%
23.1

%
 
 
 
 
 
 
 
 
 
 
 
 
Marketing
$
52,533

 
$
57,007

 
$
61,587

 
$
83,208

 
$
89,765

 
Selling, general and administrative
$
289,847

 
$
288,721

 
$
326,248

 
$
287,976

 
$
280,988

 
Adjusted EBITDA
$
72,370

 
$
61,118

 
$
56,334

 
$
67,010

 
$
33,923

 
 
% of Total Consolidated Gross Billings
4.7

%
4.0

%
3.8

%
3.9

%
2.3

%
 
% of Total Consolidated Revenue
9.6

%
8.3

%
7.9

%
7.3

%
4.6

%



Groupon, Inc.
Supplemental Financial Information and Business Metrics (9)(11)  
(financial data in thousands; active customers in millions)
(unaudited)

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."
    
 
 
Q1 2015 (10)
 
Q2 2015 (10)
 
Q3 2015 (10)
 
Q4 2015 (10)
 
Q1 2016
 
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities from continuing operations
$
43,607

 
$
13,325

 
$
(7,640
)
 
$
250,455

 
$
(76,725
)
Purchases of property and equipment and capitalized software from continuing operations
(18,294
)
 
(22,452
)
 
(27,735
)
 
(15,507
)
 
(19,952
)
Free cash flow
$
25,313

 
$
(9,127
)
 
$
(35,375
)
 
$
234,948

 
$
(96,677
)
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities from continuing operations (TTM)
$
320,803

 
$
358,576

 
$
325,971

 
$
299,747

 
$
179,415

Purchases of property and equipment and capitalized software from continuing operations (TTM)
(85,761
)
 
(79,501
)
 
(88,598
)
 
(83,988
)
 
(85,646
)
Free cash flow (TTM)
$
235,042

 
$
279,075

 
$
237,373

 
$
215,759

 
$
93,769

 
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) investing activities from continuing operations
$
(19,443
)
 
$
(28,541
)
 
$
(98,028
)
 
$
(31,238
)
 
$
(20,778
)
Net cash provided by (used in) financing activities
$
(35,838
)
 
$
(141,557
)
 
$
(14,793
)
 
$
(323,597
)
 
$
(78,015
)
 
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) investing activities from continuing operations (TTM)
$
(105,821
)
 
$
(102,205
)
 
$
(181,187
)
 
$
(177,250
)
 
$
(178,585
)
Net cash provided by (used in) financing activities (TTM)
$
(198,627
)
 
$
(221,354
)
 
$
(216,683
)
 
$
(515,785
)
 
$
(557,962
)
 
 
 
 
 
 
 
 
 
 
 
Other Metrics:
 
 
 
 
 
 
 
 
 
Active Customers (6)
 
 
 
 
 
 
 
 
 
 
North America
24.6

 
24.9

 
25.2

 
25.9

 
26.9

 
EMEA
15.3

 
15.5

 
15.4

 
15.4

 
15.3

 
Rest of World
8.2

 
8.2

 
8.0

 
7.6

 
7.2

 
Total Active Customers
48.1

 
48.6

 
48.6

 
48.9

 
49.4

 
 
 
 
 
 
 
 
 
 
 
TTM Gross Billings / Average Active Customer (7)
 
 
 
 
 
 
 
 
 
North America
$
147

 
$
148

 
$
148

 
$
149

 
$
146

EMEA
134

 
130

 
123

 
117

 
113

Rest of World
101

 
98

 
99

 
96

 
90

Consolidated
135

 
133

 
132

 
130

 
127


Global headcount as of March 31, 2016 and 2015 was as follows:
    
 
Q1 2015
 
Q1 2016
Sales (8)
4,429
 
3,711
% North America
30%
 
34%
% EMEA
42%
 
42%
% Rest of World
28%
 
24%
Other
6,386
 
5,551
Total Headcount
10,815
 
9,262

(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 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 commission revenue, payment processing revenue and advertising 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 exclude Ticket Monster, which has been classified as discontinued operations. The Company sold a controlling stake in Ticket Monster in May 2015.


(10)
The Company adopted the guidance in ASU 2016-09 on January 1, 2016. ASU 2016-09 requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. Previously, income tax benefits at settlement of an award were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award's vesting period. The Company has elected to apply that change in cash flow classification on a retrospective basis, which has resulted in adjustments to net cash provided by (used in) operating activities, net cash used in financing activities, and free cash flow for the three-month and trailing twelve-month periods ended March 31, 2015, June 30, 2015, September 30, 2015 and December 31, 2015.
(11)
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.