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 4, 2019

Groupon, Inc.
(Exact name of registrant as specified in its charter)
1-35335
(Commission file number)
Delaware	27-0903295
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
600 W Chicago Avenue	60654
Suite 400	(Zip Code)
Chicago
Illinois	(312)	334-1579
(Address of principal executive offices)	(Registrant's telephone number, including area code)

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:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR

    240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR

240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	GRPN	NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 406 of the Securities Act of 1933 (230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (240.12b-2 of this chapter)

Emerging growth company     ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02.    Results of Operations and Financial Condition.

On November 4, 2019, Groupon, Inc. (the "Company") issued a press release and a letter to its stockholders announcing its financial results for its fiscal quarter ended September 30, 2019. A copy of the press release and the Company's letter to its stockholders are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and incorporated herein by reference.

Item 9.01.    Financial Statements and Exhibits.

(d)		Exhibits:
	Exhibit No.		Description
	99.1*		Earnings Press Release dated November 4, 2019
	99.2*		Letter to Stockholders dated November 4, 2019

*The information in Exhibit 99.1 and Exhibit 99.2 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, or incorporated by reference in any filing under the Securities Act 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.
Dated:	November 4, 2019	By:	/s/ Melissa Thomas
		Name:	Melissa Thomas
		Title:	Interim Chief Financial Officer

EX-99.1

Groupon Announces Third Quarter2019 Results

• Gross profit of $278 million

• Net loss from continuing operations of $15 million

• Adjusted EBITDA of $50 million

• GAAP net loss per diluted share of $0.03; non-GAAP net income per diluted share of $0.01

• Operating cash flow of $194 million for the trailing twelve month period

• Free cash flow of $126 million for the trailing twelve month period

• 2019 Adjusted EBITDA guidance of approximately $270 million reiterated

CHICAGO - November 4, 2019 - Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter ended September 30, 2019.

"In the third quarter, we continued to modernize our marketplace for our customers and focus on positioning Groupon as a leader in local commerce," said Groupon CEO Rich Williams. "We believe that the improvements we’re making to the customer experience together with new partnerships that expand the breadth and depth of our supply will encourage our customers to return to Groupon again and again to connect to the world around them. While we continue to face challenges from traffic and International macroeconomic conditions, we believe we have the right strategy in place to deliver on the promise of our marketplace. As we enter the holiday season, we look forward to bringing exciting experiences to our millions of customers around the world."

Rich Williams provided further commentary in a letter to stockholders located on our investor relations website (investor.groupon.com).

Third Quarter2019 Summary

North America

• North America gross profit in the third quarter2019decreased6% to $192.1 million, primarily due to fewer customers and lower traffic, partially offset by higher gross profit per customer. In Local, gross profit decreased3% to $155.0 million. Goods gross profit decreased15% to $26.3 million. Gross profit in Travel decreased22% to $10.7 million.

• North America active customers were 27.7 million as of September 30, 2019 and trailing twelve month gross profit per active customer increased6%.

International

• International gross profit in the third quarter2019decreased16% to $85.9 million (12% FX-neutral) driven by weak consumer sentiment in Europe, particularly in the United Kingdom, intense competition in our Goods category, and a customer shift toward lower price and lower margin Local offerings. Local gross profit decreased15% (11% FX-neutral). Goods gross profit decreased20% (16%FX-neutral). Gross profit in Traveldecreased15% (11% FX-neutral).

• International active customers were 17.5 million as of September 30, 2019, and trailing twelve month gross profit per active customer decreased10% (5% FX-neutral).

Consolidated

• Revenue was $495.6 million in the third quarter2019, down16% (15% FX-neutral).

• Gross profit was$277.9 million in the third quarter2019, down9% (8% FX-neutral).

• SG&A was $198.3 millionin thethird quarter2019compared with$160.2 million in the third quarter2018. SG&A in the third quarter 2018 included a $40.4 million benefit related to the settlement of patent litigation with IBM for an amount lower than our accrued liability and lower performance-based compensation. Excluding the benefit related to the IBM settlement, SG&A declined 1%.

• Marketing expense declined by 19% to$75.0 million in the third quarter2019as we continued to drive efficiency in our marketing spend and spent less in offline marketing.

• Other expense, net was $17.3 million in the third quarter2019, compared with $4.9 million in the third quarter2018 driven primarily by non-cash foreign currency losses related to intercompany balances.

• Netloss from continuing operations was $14.7 million in the third quarter2019 compared with net income from continuing operations of $47.2 million in the third quarter2018.

• Netloss attributable to common stockholders was $16.7 million, or $0.03 per diluted share, in the third quarter 2019, compared with net income attributable to common stockholders of $44.6 million, or $0.08 per diluted share, in the third quarter2018. Non-GAAP net income attributable to common stockholders plus assumed conversions was $7.8 million, or $0.01 per diluted share, in the third quarter 2019, compared with $22.2 million, or $0.04 per diluted share, in the third quarter2018.

• Adjusted EBITDA, a non-GAAP financial measure, was $50.0 million in the third quarter2019, down from $56.4 million in the third quarter2018.

• Global units sold were down9% to 35.8 million in the third quarter2019 largely driven by fewer customers and lower traffic. Units in North America were down14% and International units were down1%.

• Operating cash flow was $193.7 million for the trailing twelve month period, and free cash flow, a non-GAAP financial measure, was $125.8 million for the trailing twelve month period.

• Cash and cash equivalents as of September 30, 2019 were $567.3 million, and we had no outstanding borrowings under our $400 million revolving credit facility.

Definitions and reconciliations of all non-GAAP financial measures and additional information regarding operating measures are included below in the section titled "Non GAAP Financial Measures and Operating Metrics" and in the accompanying tables. All comparisons in this press release are year-over-year unless otherwise provided.

Outlook

For the full year 2019, Groupon continues to expect Adjusted EBITDA of approximately $270 million.

Conference Call

A conference call will be webcast Tuesday, November 5, 2019 at 9:00 a.m. CT / 10:00 a.m. ET and will be available on Groupon’s investor relations website at https://investor.groupon.com. This call will contain forward-looking statements and other material information regarding our 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 website (investor.groupon.com) and the Groupon blog (www.groupon.com/blog) as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Non-GAAP Financial Measures and Operating Metrics

In addition to financial results reported in accordance with U.S. GAAP, we have provided the following non-GAAP financial measures: Foreign exchange rate neutral operating results, adjusted EBITDA, non-GAAP income (loss) from continuing operations before provision (benefit) for income taxes, non-GAAP net income (loss) attributable to common stockholders, non-GAAP income (loss) per share, non-GAAP provision (benefit) for income taxes 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 our current financial performance and 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, these 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 and Operating 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: gains and losses related to minority investments, foreign currency gains and losses, interest income and interest expense, including non-cash interest expense from our convertible senior notes. 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.

Special Charges and Credits. For the three months ended September 30, 2019 and 2018, special charges and credits included charges related to our restructuring plan. For the three months ended September 30, 2018, special charges and credits also included the $40.4 million credit related to patent litigation with IBM. We exclude special charges and credits from Adjusted EBITDA because we believe that excluding those items provides meaningful supplemental information about our core operating performance and facilitates comparisons with 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 current period operating results as if foreign currency exchange rates had remained the same as those in effect in the prior year period. These measures are intended to facilitate comparisons to our historical performance.

Adjusted EBITDA is a non-GAAP performance measure that we define as net income (loss) from continuing operations excluding income taxes, interest and other non-operating items, depreciation and amortization, stock-based compensation, acquisition-related expense (benefit), net and other special charges and credits, including 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 for 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. However, Adjusted EBITDA is not intended to be a substitute for income (loss) from continuing operations.

Non-GAAP income (loss) from continuing operations before provision (benefit) for income taxes, Non-GAAP net income (loss) attributable to common stockholders and non-GAAP income (loss) per diluted share are non-GAAP performance measures that adjust our net income attributable to common stockholders and earnings per share to exclude the impact of:

• stock-based compensation,

• amortization of acquired intangible assets,

• acquisition-related expense (benefit), net,

• special charges and credits, including restructuring charges,

• non-cash interest expense on convertible senior notes,

• 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,

• non-operating gains and losses from sales of minority investments, and

• income (loss) from discontinued operations.

We believe that excluding the above items from our measures of non-GAAP income from continuing operations before provision (benefit) from income taxes, non-GAAP net income attributable to common stockholders and non-GAAP earnings per diluted 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.

Non-GAAP provision (benefit) for income taxes reflects our current and deferred tax provision computed based on non-GAAP income from continuing operations before provision (benefit) for income taxes.

Free cash flow is a non-GAAP liquidity measure that comprises net cash provided by 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 continuing 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 our cash balance for the applicable period.

Descriptions of the operating metrics included in this release and the accompanying tables are as follows:

Gross Billings is the total dollar value of customer purchases of goods and services. Gross billings is presented net of customer refunds, order discounts and sales and related taxes. The substantial majority of our service revenue transactions are comprised of sales of vouchers and similar transactions in which we collect the transaction price from the customer and remit a portion of the transaction price to the third-party merchant who will provide the related goods or services. For these transactions, gross billings differs from revenue reported in our condensed consolidated statements of operations, which is presented net of the merchant's share of the transaction price. For product revenue transactions, gross billings are equivalent to product revenue reported in our condensed consolidated statements of operations. Gross billings is an indicator of our growth and business performance as it measures the dollar volume of transactions generated through our marketplaces. Tracking gross billings on service revenue transactions also allows us to monitor the percentage of gross billings that we are able to retain after payments to merchants. However, management is primarily focused on optimizing the business for long-term gross profit and Adjusted EBITDA growth.

Active customers are unique user accounts that have made a purchase during the trailing twelve months ("TTM") either through one of our online marketplaces or directly with a merchant for which we earned a commission. We consider this metric to be an important indicator of our business performance as it helps us to understand how the number of customers actively purchasing our offerings is trending. Some customers could establish and make purchases from more than one account, so it is possible that our active customer metric may count certain customers more than once in a given period. For entities that we have acquired in a business combination, this metric includes active customers of the acquired entity, including customers who made purchases prior to the acquisition. We do not include consumers who solely make purchases with retailers using digital coupons accessed through our websites and mobile applications in our active customer metric, nor do we include consumers who solely make purchases of our inventory through third-party marketplaces with which we partner.

Units is the number of purchases during the reporting period, before refunds and cancellations, made either through one of our online marketplaces, a third-party marketplace, or directly with a merchant for which we earn a commission. We do not include purchases with retailers using digital coupons accessed through our websites and mobile applications in our units metric. We consider unit growth to be an important indicator of the total volume of business conducted through our marketplaces.

Gross profit per active customer is the TTM gross profit generated per active customer. We use this metric to evaluate trends in the average contribution to gross profit on a per-customer basis.

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, including statements regarding our future results of operations and financial position, business strategy and plans and our objectives for future operations. The words "may," "will," "should," "could," "expect," "anticipate," "believe," "estimate," "intend," "continue" and other similar expressions are intended to identify forward-looking statements. We have based these forward looking statements largely on current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include, but are not limited to, risk related to volatility in our operating results; execution of our business and marketing strategies; retaining existing customers and adding new customers; challenges arising from our international operations, including fluctuations in currency exchange rates, legal and regulatory developments and any potential adverse impact from the United Kingdom's likely exit from the European Union; retaining and adding high quality merchants; our voucherless offerings; cybersecurity breaches; reliance on cloud-based computing platforms; competing successfully in our industry; changes to merchant payment terms; providing a strong mobile experience for our customers; maintaining our information technology infrastructure; delivery and routing of our emails; claims related to product and service offerings; managing inventory and order fulfillment risks; litigation; managing refund risks; retaining and attracting members of our executive team; completing and realizing the anticipated benefits from acquisitions, dispositions, joint ventures and strategic investments; lack of control over minority investments; tax liabilities; tax legislation; compliance with domestic and foreign laws and regulations, including the CARD Act, GDPR and regulation of the Internet and e-commerce; classification of our independent contractors; protecting our intellectual property; maintaining a strong brand; customer and merchant fraud; payment-related risks; our ability to raise capital if necessary and our outstanding indebtedness; global economic uncertainty; our common stock, including volatility in our stock price; our convertible senior notes; and our ability to 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, 2018, Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, subsequent Quarterly Reports on Form 10-Q, 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 atinvestor.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 Groupon nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements reflect our expectations as of November 4, 2019. We undertake 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 our 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, eat, see 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               

Jennifer Beugelmans                    

312-662-7370                    

ir@groupon.com

Public Relations

Bill Roberts

312-459-5191

press@groupon.com

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

	September 30, 2019			December 31, 2018
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	567,285		$	841,021
Accounts receivable, net	56,094			69,493
Prepaid expenses and other current assets	81,667			88,115
Total current assets	705,046			998,629
Property, equipment and software, net	133,071			143,117
Right-of-use assets - operating leases, net (1)	112,133			—
Goodwill	319,557			325,491
Intangible assets, net	36,497			45,401
Investments	38,124			108,515
Other non-current assets	26,274			20,989
Total Assets	$	1,370,702		$	1,642,142
Liabilities and Equity
Current liabilities:
Accounts payable	$	21,485		$	38,359
Accrued merchant and supplier payables	428,177			651,781
Accrued expenses and other current liabilities	239,104			267,034
Total current liabilities	688,766			957,174
Convertible senior notes, net	211,441			201,669
Operating lease obligations (2)	118,408			—
Other non-current liabilities	50,961			100,688
Total Liabilities	1,069,576			1,259,531
Commitments and contingencies
Stockholders' Equity
Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized; 769,175,284shares issued and 563,292,929shares outstanding at September 30, 2019; 760,939,440 shares issued and 569,084,312 shares outstanding at December 31, 2018	76			76
Additional paid-in capital	2,294,000			2,234,560
Treasury stock, at cost, 205,882,355and 191,855,128 shares at September 30, 2019 and December 31, 2018	(922,666		)	(877,491		)
Accumulated deficit	(1,109,917		)	(1,010,499		)
Accumulated other comprehensive income (loss)	38,877			34,602
Total Groupon, Inc. Stockholders' Equity	300,370			381,248
Noncontrolling interests	756			1,363
Total Equity	301,126			382,611
Total Liabilities and Equity	$	1,370,702		$	1,642,142

(1) Represents operating lease assets recognized as a result of the adoption of Topic 842 on January 1, 2019 net of accumulated amortization. Refer to Item 1, Note 6, Leases, in our Quarterly Report on Form 10-Q for the period ended September 30, 2019 for additional information.

(2) Represents the non-current portion of operating lease liabilities as a result of the adoption of Topic 842 on January 1, 2019. Refer to Item 1, Note 6, Leases, in our Quarterly Report on Form 10-Q for the period ended September 30, 2019 for additional information.

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenue:
Service	$	268,080		$	289,214		$	831,510		$	886,663
Product	227,532			303,669			775,089			950,156
Total revenue	495,612			592,883			1,606,599			1,836,819
Cost of revenue:
Service	28,947			29,792			86,169			91,167
Product	188,725			257,102			644,342			791,120
Total cost of revenue	217,672			286,894			730,511			882,287
Gross profit	277,940			305,989			876,088			954,532
Operating expenses:
Marketing	74,976			92,717			257,296			286,051
Selling, general and administrative	198,327			160,249			619,099			676,318
Total operating expenses	273,303			252,966			876,395			962,369
Income (loss) from operations	4,637			53,023			(307		)	(7,837		)
Other income (expense), net	(17,253		)	(4,860		)	(92,602		)	(39,832		)
Income (loss) from continuing operations before provision (benefit) for income taxes	(12,616		)	48,163			(92,909		)	(47,669		)
Provision (benefit) for income taxes	2,069			988			591			205
Income (loss) from continuing operations	(14,685		)	47,175			(93,500		)	(47,874		)
Income (loss) from discontinued operations, net of tax	—			—			2,162			—
Net income (loss)	(14,685		)	47,175			(91,338		)	(47,874		)
Net income attributable to noncontrolling interests	(2,000		)	(2,560		)	(8,080		)	(9,433		)
Net income (loss) attributable to Groupon, Inc.	$	(16,685	)	$	44,615		$	(99,418	)	$	(57,307	)
Basic and diluted net income (loss) per share:
Continuing operations	$	(0.03	)	$	0.08		$	(0.18	)	$	(0.10	)
Discontinued operations	—			—			0.01			—
Basic and diluted net income (loss) per share	$	(0.03	)	$	0.08		$	(0.17	)	$	(0.10	)
Weighted average number of shares outstanding
Basic	566,971,238			568,634,988			568,339,335			565,227,625
Diluted	566,971,238			576,379,421			568,339,335			565,227,625

Groupon, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Operating activities
Net income (loss)	$	(14,685	)	$	47,175		$	(91,338	)	$	(47,874	)
Less: Income (loss) from discontinued operations, net of tax	—			—			2,162			—
Income (loss) from continuing operations	(14,685		)	47,175			(93,500		)	(47,874		)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of property, equipment and software	22,125			24,835			69,986			76,984
Amortization of acquired intangible assets	3,748			3,850			11,419			10,316
Stock-based compensation	19,543			15,026			62,517			50,670
Impairments of investments	—			112			—			10,156
Deferred income taxes	456			—			816			(6,575		)
(Gain) loss from changes in fair value of investments	(14		)	244			68,971			8,312
Amortization of debt discount on convertible senior notes	3,341			3,016			9,772			8,822
Change in assets and liabilities, net of acquisitions and dispositions:
Accounts receivable	17,892			(7,079		)	12,581			20,217
Prepaid expenses and other current assets	6,612			(4,184		)	2,591			(2,695		)
Accounts payable	(6,002		)	(6,694		)	(16,892		)	(16,034		)
Accrued merchant and supplier payables	(29,608		)	(41,766		)	(216,127		)	(214,748		)
Accrued expenses and other current liabilities	(18,032		)	(96,315		)	(62,728		)	(45,175		)
Other, net	13,208			4,391			20,476			14,663
Net cash provided by (used in) operating activities from continuing operations	18,584			(57,389		)	(130,118		)	(132,961		)
Net cash provided by (used in) operating activities from discontinued operations	—			—			—			—
Net cash provided by (used in) operating activities	18,584			(57,389		)	(130,118		)	(132,961		)
Investing activities
Purchases of property and equipment and capitalized software	(17,693		)	(16,094		)	(51,854		)	(53,611		)
Proceeds from sale of intangible assets	—			1,500			—			1,500
Proceeds from sales of investments	—			8,594			—			8,594
Acquisition of business, net of acquired cash	—			—			—			(57,821		)
Acquisitions of intangible assets and other investing activities	(1,848		)	(16,389		)	(3,037		)	(17,147		)
Net cash provided by (used in) investing activities from continuing operations	(19,541		)	(22,389		)	(54,891		)	(118,485		)
Net cash provided by (used in) investing activities from discontinued operations	—			—			—			—
Net cash provided by (used in) investing activities	(19,541		)	(22,389		)	(54,891		)	(118,485		)
Financing activities
Issuance costs for revolving credit agreement	(50		)	—			(2,384		)	—
Payments for repurchases of common stock	(14,593		)	—			(44,162		)	—
Taxes paid related to net share settlements of stock-based compensation awards	(3,744		)	(2,500		)	(13,975		)	(18,638		)
Proceeds from stock option exercises and employee stock purchase plan	2,085			3,206			4,123			5,710
Distributions to noncontrolling interest holders	(2,053		)	(2,376		)	(8,687		)	(9,316		)
Payments of finance lease obligations	(4,240		)	(8,050		)	(16,868		)	(25,289		)
Payments of contingent consideration related to acquisitions	—			—			—			(1,815		)
Net cash provided by (used in) financing activities	(22,595		)	(9,720		)	(81,953		)	(49,348		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash, including cash classified within current assets of discontinued operations	(7,398		)	(2,643		)	(9,153		)	(9,287		)
Net increase (decrease) in cash, cash equivalents and restricted cash, including cash classified within current assets of discontinued operations	(30,950		)	(92,141		)	(276,115		)	(310,081		)
Less: Net increase (decrease) in cash classified within current assets of discontinued operations	—			—			—			—
Net increase (decrease) in cash, cash equivalents and restricted cash	(30,950		)	(92,141		)	(276,115		)	(310,081		)
Cash, cash equivalents and restricted cash, beginning of period (1)	599,563			667,541			844,728			885,481
Cash, cash equivalents and restricted cash, end of period (1)	$	568,613		$	575,400		$	568,613		$	575,400

(1) The following table provides a reconciliation of cash, cash equivalents and restricted cash shown above to amounts reported within the condensed consolidated balance sheet as of September 30, 2019 and amounts previously reported within the condensed consolidated balance sheet in our Quarterly Report on Form 10-Q as of September 30, 2018 (in thousands):

	September 30, 2019		December 31, 2018		September 30, 2018		December 31, 2017
Cash and cash equivalents	$	567,285	$	841,021	$	572,358	$	880,129
Restricted cash included in prepaid expenses and other current assets	1,101		3,320		2,649		4,932
Restricted cash included in other non-current assets	227		387		393		420
Cash, cash equivalents and restricted cash	$	568,613	$	844,728	$	575,400	$	885,481

Groupon, Inc.
Supplemental Financial and Operating Metrics (dollars in thousands; active customers in millions)
(unaudited)

		Q3 2018			Q4 2018		Q1 2019			Q2 2019			Q3 2019
North America Segment:																Q3 2019
Gross Billings (1):																Y/Y Growth
	Local	$	534,246		$	535,869	$	502,309		$	503,830		$	511,173		(4.3)	%
	Travel	83,991			71,948		92,083			84,029			71,144			(15.3)
	Goods	184,357			319,922		174,638			147,354			133,076			(27.8)
	Total Gross Billings	$	802,594		$	927,739	$	769,030		$	735,213		$	715,393		(10.9)	%
Revenue:
	Local	$	180,059		$	199,523	$	180,377		$	177,082		$	175,140		(2.7)	%
	Travel	17,217			14,667		18,941			16,125			13,680			(20.5)
	Goods	163,875			290,534		157,847			131,453			114,776			(30.0)
	Total Revenue	$	361,151		$	504,724	$	357,165		$	324,660		$	303,596		(15.9)	%
Gross Profit:
	Local	$	159,379		$	179,932	$	161,082		$	157,673		$	155,032		(2.7)	%
	Travel	13,801			11,839		15,268			12,806			10,717			(22.3)
	Goods	30,868			55,814		33,452			28,105			26,326			(14.7)
	Total Gross Profit	$	204,048		$	247,585	$	209,802		$	198,584		$	192,075		(5.9)	%
Operating income (loss)		$	51,004		$	39,289	$	5,336		$	(372	)	$	15,691		(69.2)	%
International Segment:																Q3 2019
Gross Billings:																Y/Y Growth		FX Effect (2)	Y/Y Growth excluding FX(2)
	Local	$	209,623		$	235,093	$	207,396		$	203,450		$	204,823		(2.3)		4.3	2.0	%
	Travel	46,156			55,046		51,939			43,348			44,098			(4.5)		4.2	(0.3)
	Goods	157,856			211,180		147,643			138,934			129,064			(18.2)		3.8	(14.4)
	Total Gross Billings	$	413,635		$	501,319	$	406,978		$	385,732		$	377,985		(8.6)		4.1	(4.5)	%
Revenue:
	Local	$	75,946		$	84,751	$	73,190		$	69,995		$	65,440		(13.8)		3.8	(10.0)	%
	Travel	9,387			10,654		8,737			8,077			8,003			(14.7)		3.6	(11.1)
	Goods	146,399			199,798		139,318			129,845			118,573			(19.0)		3.7	(15.3)
	Total Revenue	$	231,732		$	295,203	$	221,245		$	207,917		$	192,016		(17.1)		3.7	(13.4)	%
Gross Profit:
	Local	$	71,639		$	80,213	$	68,978		$	65,780		$	61,183		(14.6)		3.9	(10.7)	%
	Travel	8,649			9,913		8,041			7,370			7,332			(15.2)		3.7	(11.5)
	Goods	21,653			28,358		19,195			20,398			17,350			(19.9)		3.8	(16.1)
	Total Gross Profit	$	101,941		$	118,484	$	96,214		$	93,548		$	85,865		(15.8)		3.9	(11.9)	%
Operating income (loss)		$	2,019		$	22,587	$	(3,141	)	$	(6,767	)	$	(11,054	)	(647.5)	%
Consolidated Results of Operations:
Gross Billings:
	Local	$	743,869		$	770,962	$	709,705		$	707,280		$	715,996		(3.7)		1.2	(2.5)	%
	Travel	130,147			126,994		144,022			127,377			115,242			(11.5)		1.5	(10.0)
	Goods	342,213			531,102		322,281			286,288			262,140			(23.4)		1.8	(21.6)
	Total Gross Billings	$	1,216,229		$	1,429,058	$	1,176,008		$	1,120,945		$	1,093,378		(10.1)		1.4	(8.7)	%
Revenue:
	Local	$	256,005		$	284,274	$	253,567		$	247,077		$	240,580		(6.0)		1.1	(4.9)	%
	Travel	26,604			25,321		27,678			24,202			21,683			(18.5)		1.3	(17.2)
	Goods	310,274			490,332		297,165			261,298			233,349			(24.8)		1.8	(23.0)
Total Revenue		$	592,883		$	799,927	$	578,410		$	532,577		$	495,612		(16.4)		1.5	(14.9)	%
Gross Profit:
	Local	$	231,018		$	260,145	$	230,060		$	223,453		$	216,215		(6.4)		1.2	(5.2)	%
	Travel	22,450			21,752		23,309			20,176			18,049			(19.6)		1.4	(18.2)
	Goods	52,521			84,172		52,647			48,503			43,676			(16.8)		1.5	(15.3)
	Total Gross Profit	$	305,989		$	366,069	$	306,016		$	292,132		$	277,940		(9.2)		1.3	(7.9)	%
Operating income (loss)		$	53,023		$	61,876	$	2,195		$	(7,139	)	$	4,637		(91.3)	%
Net cash provided by (used in) operating activities from continuing operations		$	(57,389	)	$	323,816	$	(147,483	)	$	(1,219	)	$	18,584		132.4	%
Free Cash Flow		$	(73,483	)	$	307,732	$	(164,960	)	$	(17,903	)	$	891		101.2	%

		Q3 2018				Q4 2018				Q1 2019				Q2 2019				Q3 2019
Active Customers (3)
	North America	31.4				30.6				29.6				28.6				27.7
	International	17.4				17.6				17.5				17.6				17.5
	Total Active Customers	48.8				48.2				47.2				46.2				45.3
TTM Gross Profit / Active Customer
North America		$	28.96			$	29.13			$	29.72			$	30.05			$	30.56
International		24.89				24.46				24.00				23.37				22.51
Consolidated		27.51				27.42				27.59				27.51				27.45
Consolidated Units		39.5				50.5				37.2				35.3				35.8
	Year-over-year unit growth:
	North America	(16.9		)	%	(12.9		)	%	(17.5		)	%	(17.8		)	%	(13.9		)	%
	International	3.4				3.0				(2.2		)		0.9				(1.2		)
	Consolidated	(10.6		)		(7.5		)		(12.3		)		(11.6		)		(9.4		)
Headcount
	Sales (4)	2,334				2,268				2,377				2,327				2,438
	Other	4,197				4,308				3,928				3,952				4,036
	Total Headcount	6,531				6,576				6,305				6,279				6,474

(1) Represents the total dollar value of customer purchases of goods and services.

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

(3) Reflects the total number of unique user accounts that have made a purchase during the TTM either through one of our online marketplaces or directly with a merchant for which we earned a commission.

(4) Includes merchant sales representatives, as well as sales support personnel.

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

The following is a quarterly reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP performance measure, Income (loss) from continuing operations.

	Q3 2018			Q4 2018			Q1 2019			Q2 2019			Q3 2019
Income (loss) from continuing operations	$	47,175		$	49,862		$	(41,170	)	$	(37,645	)	$	(14,685	)
Adjustments:
Stock-based compensation (1)	15,026			14,251			16,411			26,563			19,543
Depreciation and amortization	28,685			28,528			28,416			27,116			25,873
Acquisition-related expense (benefit), net	—			—			—			28			5
Restructuring charges	35			(55		)	(67		)	(47		)	(61		)
IBM patent litigation	(40,400		)	—			—			—			—
Other (income) expense, net	4,860			13,176			46,855			28,494			17,253
Provision (benefit) for income taxes	988			(1,162		)	(3,490		)	2,012			2,069
Total adjustments	9,194			54,738			88,125			84,166			64,682
Adjusted EBITDA	$	56,369		$	104,600		$	46,955		$	46,521		$	49,997

(1) Represents stock-based compensation expense recorded within Selling, general and administrative, Cost of revenue and Marketing.

The following is a reconciliation of the Company's annual outlook for Adjusted EBITDA to the Company's outlook for the most comparable U.S. GAAP performance measure, Income (loss) from continuing operations.

	Year Ending December 31, 2019
Expected income (loss) from continuing operations	$	(20,000	)
Expected adjustments:
Stock-based compensation		85,000
Depreciation and amortization		105,000
Other (income) expense, net		96,000
Provision (benefit) for income taxes		4,000
Total expected adjustments		290,000
Expected Adjusted EBITDA	$	270,000

The outlook provided above does not reflect the potential impact of any business or asset acquisitions or dispositions, changes in the fair values of investments, foreign currency gains or losses or unusual or infrequently occurring items that may occur during the remainder of 2019.

The following is a reconciliation of non-GAAP net income (loss) attributable to common stockholders to net income (loss) attributable to common stockholders and a reconciliation of non-GAAP net income (loss) per share to diluted net income (loss) per share for the three and nine months ended September 30, 2019 and 2018.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income (loss) attributable to common stockholders	$	(16,685	)	$	44,615		$	(99,418	)	$	(57,307	)
Less: Net income (loss) attributable to noncontrolling interest	(2,000		)	(2,560		)	(8,080		)	(9,433		)
Net income (loss)	(14,685		)	47,175			(91,338		)	(47,874		)
Less: Income (loss) from discontinued operations, net of tax	—			—			2,162			—
Income (loss) from continuing operations	(14,685		)	47,175			(93,500		)	(47,874		)
Less: Provision (benefit) for income taxes	2,069			988			591			205
Income (loss) from continuing operations before provision (benefit) for income taxes	(12,616		)	48,163			(92,909		)	(47,669		)
Stock-based compensation	19,543			15,026			62,517			50,670
Amortization expense of acquired intangibles	3,748			3,850			11,419			10,316
Acquisition-related expense (benefit), net	5			—			33			655
Restructuring charges	(61		)	35			(175		)	(81		)
IBM patent litigation	—			(40,400		)	—			34,600
(Gain) loss from changes in fair value of investments	(14		)	244			68,971			8,312
(Gain) loss from sale of investment	412			—			412			—
Intercompany foreign currency losses (gains) and reclassifications of translation adjustments to earnings	10,326			1,826			11,198			9,446
Non-cash interest expense on convertible senior notes	3,341			3,016			9,772			8,822
Non-GAAP income (loss) from continuing operations before provision (benefit) for income taxes	24,684			31,760			71,238			75,071
Less: Non-GAAP provision for income taxes	14,920			8,370			31,857			17,856
Non-GAAP net income (loss)	9,764			23,390			39,381			57,215
Net income attributable to noncontrolling interest	(2,000		)	(2,560		)	(8,080		)	(9,433		)
Non-GAAP net income (loss) attributable to common stockholders	7,764			20,830			31,301			47,782
Plus: Cash interest expense from assumed conversion of convertible senior notes (1)	—			1,383			—			—
Non-GAAP Net Income (loss) attributable to common stockholders plus assumed conversions	$	7,764		$	22,213		$	31,301		$	47,782
Weighted-average shares of common stock - diluted	566,971,238			576,379,421			568,339,335			565,227,625
Incremental dilutive securities	4,258,105			46,296,300			4,958,762			8,933,570
Weighted-average shares of common stock - non-GAAP	571,229,343			622,675,721			573,298,097			574,161,195
Diluted net loss per share	$	(0.03	)	$	0.08		$	(0.17	)	$	(0.10	)
Impact of non-GAAP adjustments and related tax effects	0.04			(0.04		)	0.22			0.18
Non-GAAP net income per share	$	0.01		$	0.04		$	0.05		$	0.08

(1) Adjustment to interest expense for assumed conversion of convertible senior notes excludes non-cash interest expense that has been added back above in calculating non-GAAP net income (loss) attributable to common stockholders.

Free cash flow is a non-GAAP liquidity measure. The following is a reconciliation of free cash flow and free cash flow excluding the IBM settlement to the most comparable U.S. GAAP liquidity measure, Net cash provided by (used in) operating activities from continuing operations.

	Q3 2018			Q4 2018			Q1 2019			Q2 2019			Q3 2019
Net cash provided by (used in) operating activities from continuing operations	$	(57,389	)	$	323,816		$	(147,483	)	$	(1,219	)	$	18,584
Purchases of property and equipment and capitalized software from continuing operations	(16,094		)	(16,084		)	(17,477		)	(16,684		)	(17,693		)
Free cash flow	$	(73,483	)	$	307,732		$	(164,960	)	$	(17,903	)	$	891
Operating cash outflow related to the IBM settlement (1)	42,100			—			—			—			—
Free cash flow, excluding the impact of the IBM settlement	$	(31,383	)	$	307,732		$	(164,960	)	$	(17,903	)	$	891
Net cash provided by (used in) investing activities from continuing operations	$	(22,389	)	$	(17,497	)	$	(18,115	)	$	(17,235	)	$	(19,541	)
Net cash provided by (used in) financing activities	$	(9,720	)	$	(35,069	)	$	(27,777	)	$	(31,581	)	$	(22,595	)

(1) This amount represents the portion of the $57.5 million IBM settlement that was classified as an operating cash outflow. The remaining $15.4 million was capitalized for the license to use the patented technology in future periods under the terms of the settlement and license agreements and has been classified as an investing cash outflow. For additional information about the IBM settlement, refer to Item 8, Note 10, Commitments and Contingencies, in our Annual Report on Form 10-K for the year ended December 31, 2018.

Our International and consolidated gross profit per active customer for the TTM ended September 30, 2019 and 2018 were as follows:

	Q3 2018	Q3 2019	Y/Y Growth		FX Effect		Y/Y Growth excluding FX (1)
International TTM Gross Profit / Active Customer	$24.89	$22.51	(9.6	)%	4.9	%	(4.7	)%
Consolidated TTM Gross Profit / Active Customer	$27.51	$27.45	(0.2	)%	1.7	%	1.5	%

(1) 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.

EX-99.2

1 Q3 2019 LETTER TO STOCKHOLDERS Deja Hue Owner, Kathryn Jackson Groupon Merchant Since 2016 DEAR FELLOW STOCKHOLDERS, Q3 2019 NOVEMBER 4, 2019 As I enter my fifth year as CEO, I remain amazed at the unique position Groupon occupies. Some things have not changed since Groupon launched 11 years ago. Local commerce remains a vast opportunity with one of the largest addressable markets anywhere. Local merchants still need simple, effective tools to profitably promote their businesses. Customers retain their appetite for surprise, delight and value. Some things are vastly different. Customers are increasingly sophisticated and demand you meet Of the thousands of them wherever they are with your best offer, rather than combing the internet for a great deal. companies that have Merchants have more choices than ever for how to spend their marketing dollars. And, while attempted to crack the no one company dominates Local, the space is noisier than ever, requiring true differentiation Local code in our market, to cut through the clutter. I believe Groupon remains best positioned ... [to] take Of the thousands of companies that have attempted to crack the Local code in our market, I advantage of the emerging believe Groupon remains best positioned with our huge customer and merchant scale, our deep opportunities in Local. knowledge of what it takes to succeed as a small business, a motivated and committed team and an evolving brand and product to help us take advantage of the emerging opportunities in Local. With more than 45 million customers and hundreds of thousands of merchants, we believe our growing inventory of experiences and products that connects our customers to the world around them will allow us to earn a meaningful share of our addressable market, which we estimate to be north of a trillion dollars. Even as a market leader with $5 billion in billings in 2018, that market remains largely untapped with a significant opportunity for growth. In addition, we believe that our ability to capitalize on our competitive position will allow us to continue to create sustainable long-term stockholder value. For example, during the third quarter, we delivered solid Adjusted EBITDA and free cash flow, while also executing on our key priorities.

2 Q3 2019 LETTER TO STOCKHOLDERS At the same time, we failed to meet our gross profit expectations, and our International business continued to struggle with uncertainty over Brexit, a generally cautious consumer in Europe and the resulting competitive landscape in Goods. Traffic continues to be a headwind -- one we’re combatting with product enhancements and a focus on purchase frequency. Our product and engineering teams are delivering enhancements at a pace beyond any I’ve seen during my time at Groupon -- with an ambitious future roadmap -- but we are not yet moving fast enough to offset our traffic challenge. While we continue to believe we have significant opportunity to grow our active customer base over the long term, customer count declines in the quarter reflect our traffic headwind and our focus on increasing customer quality. That said, increasing purchase frequency and total unit volume are more important to us at this point than our customer counts, as they unlock the leverage in our model and an ability to profitably invest in growth as our marketplace evolves. With a reinvigorated effort to update and reposition the Groupon brand, coupled with more advanced customer segmentation and analytics, we believe we will be better able to attract and retain the best customers, improve our overall brand health and align with our evolving marketplace. While this is a challenging time, we believe that our four strategic priorities for 2019 -- improving the customer experience, developing our open platform, investing in International and continuing our operational rigor -- are the right areas of focus, ones that will help us deliver on the promise of our scaled two-sided marketplace. In the third quarter, we made progress in all areas, strengthening our foundation for long-term profitable growth. We believe that our four strategic priorities for Improving the Customer Experience 2019... are the right areas of focus, ones that will help Our customer experience efforts are focused on modernizing our marketplace through things us deliver on the promise like intelligent design, voucherless technologies like booking and card-linked redemption and of our scaled two-sided partnerships to make customers’ lives simpler, improve customer selection and improve an marketplace. experience that -- frankly -- was founded with friction as a feature, rather than a bug. Our newly launched mobile web experience is a window to our future direction, one which moves us toward marketplace standards that consumers expect: a broad mix of discounts, more personalization and proven e-commerce features like guest checkout and a universal shopping cart that makes it easier to buy. We know that removing friction from the marketplace encourages conversion, and we believe this will ultimately drive purchase frequency. We will continue to iterate in mobile web given how much faster we can move there, and expect us to quickly roll out proven winning experiences and features to our desktop and app. Booking has been a particular high note throughout 2019 -- 65 percent of all Food & Drink deals in our International business are bookable through Groupon. Even more exciting is the consumer and merchant response to these tools: merchant feedback has been excellent, and consumers who buy a bookable deal go on to purchase more frequently. Expect us to accelerate our multi-pronged rollout of booking options in the coming quarters, including the third quarter introduction of our proprietary booking software in North America. Finally, I want to provide an update on Groupon Select -- our new membership program in North America that we announced last quarter. Groupon has always had membership-like behavior among our customers, and Select seeks to monetize that behavior so that Select customers get the very best deal on Groupon -- and in many cases -- anywhere.

3 Q3 2019 LETTER TO STOCKHOLDERS It’s still very early, but we’re pleased with the results to date. We now have more than 260,000 paying Select members, up by over 100,000 in the quarter and nearly 200,000 since the beginning of the year. Membership gains are encouraging, and we love how Select members [Groupon Select] continue to behave. Currently, we’re seeing a 60 percent increase in purchase frequency and a membership gains 20 percent jump in average order value. Though encouraging, we are still analyzing these early are encouraging, and results -- our first small cohorts are barely through their first year with the program -- and we we love how Select still have work to do to fully build out the infrastructure necessary for Select to run at scale. members continue to behave. Open Platform Our open platform work centers on creating what we believe is the largest catalog of buyable local service and experience offers in our markets, and making that catalog available for sale both on and off our site and apps. With hundreds of thousands of businesses, this local catalog has grown nearly 40 percent over the past three years. Much of our open platform energy to date has been focused on bringing offers to Groupon. For visitors to Groupon, this means more selection that’s easier to buy from a trusted brand. Along these lines, we finalized partnerships with MINDBODY, DerbySoft and Great Value Vacations that, once scaled, will not only add more compelling sources of bookable inventory, but also remove friction because our customers won’t have to leave Groupon to buy. Moving forward, we see opportunity in accelerating the distribution of our offer catalog to other platforms. As a solid first step, we have partnerships with rewards platforms like Augeo, Prodege and Gas Buddy where the work to launch is underway. In addition, we see relevant fits with a number of other market segments, including banks and credit card issuers. We expect to launch our first card issuer program before the end of the year. Investing in International Our International business has struggled over recent quarters with macroeconomic issues far larger than Groupon. Nonetheless, our thesis for International is unchanged, and we see our International business as a prime candidate for long-term investment and growth. It has twice the addressable population, half the customer penetration, high mobile commerce adoption and a love of marketplaces. We have also seen consistent growth in our core Local unit sales in spite of recent challenges in Goods. Though we’re experiencing some turbulence in Europe, we continue to believe our International macro challenges are transitory. September was the worst month for U.K. retail in 25 years. We do not expect that to be a permanent condition. In addition, we see strong performance outside of Europe, with growth in line with our teams’ focus on the fundamentals. Operational Rigor Over the past four years we have woven operational rigor, continuous improvement and cost discipline into the fabric of our culture. We have a strong track record of delivering results in this area -- we reduced SG&A by over $250 million over the past four years. The goal here, however, isn’t to blindly reduce cost, it’s to improve our speed, efficiency and customer experience. The more meaningful point for Groupon is that we’ve been able to reduce our costs so dramatically while launching experience enhancements like trade-in, 24/7 chat and streamlined refund policies that make it easier and more satisfying to shop with Groupon. In looking at our history of managing cost and effectively deploying our capital, I am confident that we can continue streamlining our operations and taking advantage of global centers of

4 Q3 2019 LETTER TO STOCKHOLDERS excellence to help us operate more efficiently while still providing round-the-clock service to our customers and merchants. Moving Forward We are making consistent progress. I understand, however, that the improvements we are making are not always easy to see in our quarterly results and as such may not be as immediately meaningful to stockholders as they are to the teams driving them forward every day. Nevertheless, every day we see that these initiatives help us offset what amounts to over $100 million of annual traffic headwinds. We know we can continue to help everyone understand and see We know we can our progress for what it is: an intentional series of changes, creating a long-term path to brand continue to help transformation and profitable growth. everyone understand and see our progress As always, the Groupon team continues to rise to both challenges and opportunities and, with for what it is: an the holiday season and our historically biggest quarter ahead of us, I’m excited about what we’ll intentional series of accomplish. Thank you for being a part of this journey. changes, creating a long-term path to brand transformation and profitable growth. Rich Williams CEO

Ziba5 Q3 Lennox 2019 andLETTER Marisol TO STOCKHOLDERS Sarabia Owners, Mazi Dance Studio Groupon Merchant Since 2011 APPENDIX Webcast Conference Call Details Tuesday, November 5, 2019 10:00 a.m. EST Groupon will hold a conference call to discuss its third quarter 2019 financial results on Tuesday, November 5, 2019, at 10:00 a.m. EST. The webcast can be accessed live at investor.groupon.com. A replay of the webcast will be available through the same link following the conference call, along with the earnings press release, financial tables and slides. Non-GAAP Financial Measures and Operating Metrics This letter contains references to non-GA AP financial measures Adjusted EBITDA and free cash flow. These non-GA AP financial measures, which are presented on a continuing operations basis, are intended to aid investors in better understanding our current financial performance and 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 their non-GAAP measures differently than us, even when similar term are used to identify such measures). However, these non-GAAP financial measures are not intended to be a substitute for those reported in accordance with U.S. GAAP. For additional information regarding these non-GAAP financial measures, reconciliation of these measures to the most applicable financial measures under U.S. GAAP, see “Non-GAAP Reconciliation Schedules” and “Supplemental Financial and Operating Metrics” included in the tables accompanying the earnings press release announcing our financial results for the quarter ended September 30, 2019, posted to our Investor Relations website, investor.groupon.com. Note on Forward-Looking Statements The statements contained in this letter 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, including statements regarding our future results of operations and financial position, business strategy and plans and our objectives for future operations. The words “may,” “will,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “continue” and other similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include, but are not limited to, risks related to volatility in our operating results; execution of our business and marketing strategies; retaining existing customers and adding new customers; challenges arising from our international operations, including fluctuations in currency exchange rates, legal and regulatory developments and any potential adverse impact from the United Kingdom’s likely exit from the European Union; retaining and adding high quality merchants; our voucherless offerings; cybersecurity breaches; reliance on cloud-based computing platforms; competing successfully in our industry; changes to merchant payment terms; providing a strong mobile experience for our customers; maintaining and improving our information technology infrastructure; delivery and routing of our emails; claims related to product and service offerings; managing inventory and order fulfillment risks; litigation; managing refund risks; retaining and attracting members of our executive team; completing and realizing the anticipated benefits from acquisitions, dispositions, joint ventures and strategic investments; lack of control over minority investments; compliance with domestic and foreign laws and regulations, including the CARD Act, GDPR and regulation of the Internet and e-commerce; classification of our independent contractors or employees; tax liabilities; tax legislation; protecting our intellectual property; maintaining a strong brand; customer and merchant fraud; payment-related risks; our ability to raise capital if necessary and our outstanding indebtedness; global economic uncertainty; our common stock, including volatility in our stock price; our convertible senior notes; our ability to realize the anticipated benefits from the hedge and warrant transactions; and those risks and other factors discussed in Part I, Item 1A, Risk Factors of our Annual Report on Form 10-K for the year ended March 31, 2019, our subsequent Quaterly Reports on Form 10-Q and our other filings with the Securities and Exchange Commission (“SEC”). Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. We do not intend, and undertake no obligation, to update any of our forward-looking statements after the date of this letter to reflect actual results or future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. As used herein, “Groupon,” the “Company,” “we,” “our,” “us” and similar terms include Groupon, Inc. and its subsidiaries, unless the context indicates otherwise. 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, eat, see 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.

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Cover Page	Nov. 04, 2019
Cover page.
Document Type	8-K
Document Period End Date	Nov. 04, 2019
Entity Registrant Name	Groupon, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	27-0903295
Entity Address, Address Line One	600 W Chicago Avenue
Entity Address, Address Line Two	Suite 400
Entity Address, City or Town	Chicago
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60654
City Area Code	(312)
Local Phone Number	334-1579
Entity File Number	1-35335
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	GRPN
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0001490281
Amendment Flag	false