EX-99.1 2 exhibit991-q32019.htm EXHIBIT 99.1 Exhibit



Groupon Announces Third Quarter 2019 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 Quarter 2019 Summary
North America
•
North America gross profit in the third quarter 2019 decreased 6% to $192.1 million, primarily due to fewer customers and lower traffic, partially offset by higher gross profit per customer. In Local, gross profit decreased 3% to $155.0 million. Goods gross profit decreased 15% to $26.3 million. Gross profit in Travel decreased 22% 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 increased 6%.
International
•
International gross profit in the third quarter 2019 decreased 16% 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 decreased 15% (11% FX-neutral). Goods gross profit decreased 20% (16% FX-neutral). Gross profit in Travel decreased 15% (11% FX-neutral).
•
International active customers were 17.5 million as of September 30, 2019, and trailing twelve month gross profit per active customer decreased 10% (5% FX-neutral).




Consolidated
•
Revenue was $495.6 million in the third quarter 2019, down 16% (15% FX-neutral).
•
Gross profit was $277.9 million in the third quarter 2019, down 9% (8% FX-neutral).
•
SG&A was $198.3 million in the third quarter 2019 compared with $160.2 million in the third quarter 2018. 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 quarter 2019 as 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 quarter 2019, compared with $4.9 million in the third quarter 2018 driven primarily by non-cash foreign currency losses related to intercompany balances.
•
Net loss from continuing operations was $14.7 million in the third quarter 2019 compared with net income from continuing operations of $47.2 million in the third quarter 2018.
•
Net loss 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 quarter 2018. 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 quarter 2018.
•
Adjusted EBITDA, a non-GAAP financial measure, was $50.0 million in the third quarter 2019, down from $56.4 million in the third quarter 2018.
•
Global units sold were down 9% to 35.8 million in the third quarter 2019 largely driven by fewer customers and lower traffic. Units in North America were down 14% and International units were down 1%.
•
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 at 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 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; 769,175,284 shares issued and 563,292,929 shares 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, 205,882,355 and 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.