EX-99.1 4 exhibit991-q22014.htm EXHIBIT Exhibit 99.1 - Q2 2014



Exhibit 99.1

Groupon Announces Second Quarter 2014 Results
 
•
Gross billings of $1.82 billion
•
Revenue of $751.6 million
•
Adjusted EBITDA of $59.1 million
•
GAAP loss per share of $0.03; non-GAAP earnings per share of $0.01
 
CHICAGO - (BUSINESS WIRE) - August 5, 2014 - Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter ended June 30, 2014.

“We had another record quarter in terms of demand, with worldwide billings increasing 29% and reaching their highest level ever,” said Eric Lefkofsky, CEO of Groupon.  “Our marketplace continues to gain traction and add to our growth; we reached another all-time high in mobile, and with the launch of Gnome, we believe we’re making great strides in connecting local commerce.”

Second Quarter 2014 Summary
 
•
Gross billings, which reflect the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds, increased 29% globally to $1.82 billion in the second quarter 2014, compared with $1.41 billion in the second quarter 2013. North America billings increased 12%, EMEA was approximately flat and Rest of World increased 145%, driven by the first-quarter acquisition of Ticket Monster.

•
Revenue increased 23%, to $751.6 million in the second quarter 2014, compared with $608.7 million in the second quarter 2013. North America revenue increased 12%, EMEA increased 42% and Rest of World increased 40%.

•
Gross profit was $389.9 million in the second quarter 2014, compared with $384.7 million in the second quarter 2013.

•
Adjusted EBITDA, a non-GAAP financial measure, was $59.1 million in the second quarter 2014, compared with $80.5 million in the second quarter 2013, reflecting SG&A expense related to the Ticket Monster and ideeli acquisitions, as well as an increase in overall marketing expense.

•
Second quarter 2014 net loss attributable to common stockholders was $22.9 million, or $0.03 per share. Earnings per share excluding stock compensation, amortization of acquired intangible assets, and acquisition-related costs of $43.8 million (or $28.5 million net of tax), a non-GAAP financial measure, was $0.01 per share.

•
Operating cash flow for the trailing twelve months ended June 30, 2014 was $122.9 million. Free cash flow, a non-GAAP financial measure, was negative $53.8 million in the second quarter 2014, bringing free cash flow for the trailing twelve months ended June 30, 2014 to $40.5 million.

•
At the end of the quarter, Groupon had $868.1 million in cash and cash equivalents.
 
Definitions and reconciliations of all non-GAAP financial measures are included below in the section titled “Non-GAAP Financial Measures” and in the accompanying tables.




 
Highlights
 
•
Units: Global units, defined as vouchers and products sold before cancellations and refunds, increased 79% year-over-year to 83 million in the second quarter 2014. North America units increased 8%, EMEA units increased 10% and Rest of World units increased 342%.
•
Active deals: At the end of the second quarter 2014, on average, active deals were over 240,000 globally, compared with more than 200,000 at the end of the first quarter 2014. North American active deals increased to over 105,000.
•
Active customers: Active customers, or customers that have purchased a voucher or product within the last twelve months, grew 25% year-over-year, to 53.2 million as of June 30, 2014, comprising 22.6 million in North America, 14.5 million in EMEA, and 16.1 million in Rest of World.
•
Customer spend: Second quarter 2014 trailing twelve month billings per average active customer was $137, compared with $132 in the first quarter 2014.
•
Mobile: Mobile mix, as measured by transactions completed on mobile devices, remains over half of the business, and reached another all-time high in June 2014. Nearly 92 million people have now downloaded Groupon mobile apps worldwide.
•
Marketplace: The rollout of Groupon’s marketplace (“Pull”) continued to gain traction. In June 2014, approximately 10% of total traffic in North America searched, with customers that searched spending significantly more than those that did not.
•
Rest of World: Rest of World billings grew 145% in the second quarter 2014. As a result of the growth and overall progress, Kal Raman is transitioning from COO to assume a new role as CEO of the Asia Pacific region, allowing him to focus on unlocking value for the Company's high-growth Asian markets.  
 
Share Repurchase Program
During the second quarter 2014, Groupon repurchased 17,228,792 shares of its Class A common stock at an average price of $6.15 per share, for an aggregate purchase price of $106.0 million.  Under the existing authorization, Groupon has repurchased a total of 24,737,292 shares at an average price of $7.36 per share, for an aggregate purchase price of $182.0 million.  Groupon is authorized to repurchase up to an additional $118.0 million of Class A common stock under the August 2013 share repurchase authorization.  The program, which is intended to partially offset dilution from employee stock grants, terminates in August 2015.

Line of Credit
The Company has entered into a 3-year, $250 million revolving credit facility, which will provide additional balance sheet flexibility going forward. The Company has no immediate plans to draw on the facility.

Outlook
For the third quarter 2014, the Company expects revenue of between $720 million and $770 million, Adjusted EBITDA of between $50 million and $70 million, and non-GAAP earnings per share excluding stock compensation, amortization of acquired intangible assets, and acquisition-related expenses, net of tax, of between $0.00 and $0.02.
 
Groupon has revised its full year outlook, and now expects Adjusted EBITDA to exceed $270 million. Although the Company has the opportunity to reduce marketing spend over the remainder of the year to achieve a higher target, given recent returns on those investments, it believes it is important to maintain flexibility for investment in long-term growth.





Conference Call
A conference call will be webcast live today at 4:00 p.m. CT / 5:00 p.m. ET, and will be available on Groupon’s investor relations website at http://investor.groupon.com. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.

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.

Non-GAAP Financial Measures
In addition to financial results reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP), we have provided the following non-GAAP financial measures in this release and the accompanying tables: foreign exchange rate neutral operating results, Adjusted EBITDA, free cash flow and earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets, and acquisition-related expense (benefit), net. These non-GAAP financial measures are presented to aid investors in better understanding Groupon's performance and to facilitate comparisons to many of our peers who present similar measures. However, these measures are not intended to be a substitute for those reported in accordance with U.S. GAAP. These measures may be different from non-GAAP financial measures used by other companies, even when similar terms are used to identify such measures. For reconciliations of these measures to the most applicable financial measures under U.S. GAAP, see "Non-GAAP Reconciliation Schedules" and "Supplemental Financial Information and Business Metrics" included in the tables accompanying this release.

We exclude the following items from one or more of our non-GAAP financial measures:

Stock-based compensation. We exclude stock-based compensation because it is primarily non-cash in nature and we believe that non-GAAP financial measures excluding this item provide meaningful supplemental information about our operating performance and liquidity.

Acquisition-related expense (benefit), net. Acquisition-related expense (benefit), net is comprised of the change in the fair value of contingent consideration arrangements and, beginning in the fourth quarter of 2013, also includes external transaction costs related to business combinations, primarily consisting of legal and advisory fees. External transaction costs were not material for periods prior to the fourth quarter of 2013 presented in this release and the accompanying tables. 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.








Descriptions of the non-GAAP financial measures included in this release and the accompanying tables are as follows:

Foreign exchange rate neutral operating results show our current period operating results as if foreign currency exchange rates had remained the same as those in effect in the comparable prior-year period.

Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) excluding income taxes, interest and other non-operating items, depreciation and amortization, stock-based compensation, and acquisition-related expense (benefit), net. Our definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Adjusted EBITDA is a key measure used by our management and Board of Directors to evaluate operating performance, generate future plans and make strategic decisions regarding the allocation of capital. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.
Earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets, and acquisition-related expense (benefit), net is a non-GAAP financial measure that adjusts our earnings (loss) per share to exclude the impact of stock-based compensation expense, amortization of acquired intangible assets, and acquisition-related expense (benefit), net, and the income tax effect of those items. We believe that this non-GAAP financial measure provides useful supplemental information for evaluating our operating performance.
Beginning in the first quarter 2014, we have changed our non-GAAP earnings (loss) per share measure to exclude amortization of acquired intangible assets, net of tax, in addition to stock compensation and acquisition-related expenses, which we have excluded historically. Given the significant acquisition activity in January 2014 and potential acquisition activity in the future, we believe that excluding non-cash amortization of acquired intangible assets from our non-GAAP earnings per share measure enables more meaningful comparisons with our historical results.
Free cash flow is a non-GAAP financial measure that comprises net cash provided by (used in) operating activities less purchases of property and equipment and capitalized software. We use free cash flow, and ratios based on it, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe that it typically represents a more useful measure of cash flows because purchases of fixed assets, software developed for internal use and website development costs are necessary components of our ongoing operations. Free cash flow is not intended to represent the total increase or decrease in Groupon's cash balance for the applicable period.

Note on Forward-Looking Statements
The statements contained in this release that refer to plans and expectations for the next quarter, the full year or the future are forward-looking statements that involve a number of risks and uncertainties, and actual results could differ materially from those discussed. The risks and uncertainties that could cause our results to differ materially from those included in the forward-looking statements include, but are not limited to, volatility in our revenue and operating results; risks related to our business strategy; responding to changes in the market; effectively dealing with challenges arising from our international operations; retaining existing customers and adding new customers; retaining and adding high quality merchants; cyber security breaches; incurring expenses as we expand our business; competing against smaller competitors and competitors with more financial resources than us; maintaining favorable terms with our business partners; maintaining a strong brand; managing inventory and order fulfillment risks; integrating our technology platforms; managing refund risks; retaining our executive team; litigation; regulations, including the CARD Act and regulation




of the Internet; tax liabilities; tax legislation; maintaining our information technology infrastructure; protecting our intellectual property; handling acquisitions, joint ventures and strategic investments effectively; seasonality; payment-related risks; customer and merchant fraud; global economic uncertainty; compliance with rules and regulations associated with being a public company; and our ability to raise capital if necessary. 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 and subsequent Quarterly Reports on Form 10-Q, copies of which may be obtained by visiting the company's Investor Relations web site at http://investor.groupon.com or the SEC's web site at www.sec.gov. Groupon's actual results could differ materially from those predicted or implied and reported results should not be considered an indication of future performance.
 
You should not rely upon forward-looking statements as predictions of future events. Although Groupon believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither the company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements reflect Groupon’s expectations as of August 5, 2014. Groupon undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in its expectations. 

About Groupon
Groupon (NASDAQ: GRPN) is a global leader of local commerce and the place you start when you want to buy just about anything, anytime, anywhere.  By leveraging the company’s global relationships and scale, Groupon offers consumers a vast marketplace of unbeatable deals all over the world. Shoppers discover the best a city has to offer on the web or on mobile with Groupon Local, enjoy vacations with Groupon Getaways, and find a curated selection of electronics, fashion, home furnishings and more with Groupon Goods.

Groupon is redefining how traditional small businesses attract, retain and interact with customers by providing merchants with a suite of products and services, including customizable deal campaigns, credit card payment processing capabilities, and point-of-sale solutions that help businesses grow and operate more effectively. To search for great deals or subscribe to Groupon emails, visit www.Groupon.com. To download Groupon's five-star mobile apps, visit www.groupon.com/mobile. To learn more about the company’s merchant solutions and how to work with Groupon, visit www.GrouponWorks.com


Contacts:
 
Investor Relations
Public Relations
Genny Konz
Paul Taaffe
312-999-3098
312-999-3964
ir@groupon.com
 





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

 
 
Three Months Ended 
 June 30,
 
Y/Y % Growth
 
 
 
Y/Y % Growth excluding FX(2)
 
Six Months Ended 
 June 30,
 
Y/Y % Growth
 
 
 
Y/Y % Growth excluding FX(2)
 
 
2014
 
2013
 
 
FX Effect(2)
 
 
2014
 
2013
 
 
FX Effect(2)
 
Gross Billings(1):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North America
 
$
798,845

 
$
712,205

 
12.2

%
 
$
(650
)
 
12.3

%
 
$
1,580,614

 
$
1,393,524

 
13.4

%
 
$
(1,501
)
 
13.5

%
EMEA
 
483,255

 
482,250

 
0.2

%
 
21,215

 
(4.2
)
%
 
996,843

 
974,568

 
2.3

%
 
36,442

 
(1.5
)
%
Rest of World
 
536,946

 
219,351

 
144.8

%
 
9,424

 
140.5

%
 
1,058,800

 
453,483

 
133.5

%
 
(15,222
)
 
136.8

%
Consolidated billings
 
$
1,819,046

 
$
1,413,806

 
28.7

%
 
$
29,989

 
26.5

%
 
$
3,636,257

 
$
2,821,575

 
28.9

%
 
$
19,719

 
28.2

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North America
 
$
423,931

 
$
377,182

 
12.4

%
 
$
(214
)
 
12.5

%
 
$
854,993

 
$
716,736

 
19.3

%
 
$
(503
)
 
19.4

%
EMEA
 
227,690

 
159,962

 
42.3

%
 
10,221

 
36.0

%
 
458,583

 
343,760

 
33.4

%
 
17,090

 
28.4

%
Rest of World
 
99,955

 
71,603

 
39.6

%
 
(2,994
)
 
43.8

%
 
195,637

 
149,653

 
30.7

%
 
(12,442
)
 
39.0

%
Consolidated revenue
 
$
751,576

 
$
608,747

 
23.5

%
 
$
7,013

 
22.3

%
 
$
1,509,213

 
$
1,210,149

 
24.7

%
 
$
4,145

 
24.4

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) income from operations
 
$
(7,854
)
 
$
27,412

 
(128.7
)
%
 
$
1,209

 
(133.1
)
%
 
$
(27,807
)
 
$
48,590

 
(157.2
)
%
 
$
2,711

 
(162.8
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss attributable to Groupon, Inc.
 
$
(22,875
)
 
$
(7,574
)
 
 
 
 
 
 
 
 
 
$
(60,670
)
 
$
(11,566
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss per share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
(0.03
)
 
$
(0.01
)
 
 
 
 
 
 
 
 
 
$
(0.09
)
 
$
(0.02
)
 
 
 
 
 
 
 
 
Diluted
 
$
(0.03
)
 
$
(0.01
)
 
 
 
 
 
 
 
 
 
$
(0.09
)
 
$
(0.02
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
675,538,392

 
662,361,436

 
 
 
 
 
 
 
 
 
678,958,541

 
660,580,927

 
 
 
 
 
 
 
 
Diluted
 
675,538,392

 
662,361,436

 
 
 
 
 
 
 
 
 
678,958,541

 
660,580,927

 
 
 
 
 
 
 
 

(1)
Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds.
(2)
Represents the change in financial measures that would have resulted had average exchange rates in the reporting periods been the same as those in effect during the three and six months ended June 30, 2013.






Groupon, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Operating activities
 
 
 
 
 
 
 
Net loss
$
(20,922
)
 
$
(5,551
)
 
$
(56,285
)
 
$
(8,793
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization of property, equipment and software
23,067

 
16,255

 
45,159

 
31,369

Amortization of acquired intangible assets
11,591

 
5,213

 
24,239

 
10,799

Stock-based compensation
31,655

 
32,446

 
55,384

 
62,353

Deferred income taxes
(57
)
 
(308
)
 
516

 
(566
)
Excess tax benefits on stock-based compensation
(4,077
)
 
(2,936
)
 
(9,932
)
 
(3,768
)
Loss on equity method investments
420

 
14

 
368

 
33

Net gain from changes in fair value of contingent consideration
—

 
(815
)
 
(39
)
 
(747
)
Impairment of cost method investments
191

 
—

 
588

 
—

Change in assets and liabilities, net of acquisitions:
 
 
 
 
 
 
 
Restricted cash
(2,029
)
 
744

 
921

 
3,267

Accounts receivable
(2,872
)
 
4,743

 
(27,265
)
 
(2,941
)
Prepaid expenses and other current assets
(748
)
 
3,465

 
(5,898
)
 
15,992

Accounts payable
(12,468
)
 
(3,225
)
 
(5,153
)
 
(22,831
)
Accrued merchant and supplier payables
(18,296
)
 
1,442

 
(41,945
)
 
(37,975
)
Accrued expenses and other current liabilities
(31,502
)
 
(20,539
)
 
(36,881
)
 
(7,237
)
Other, net
3,300

 
12,354

 
12,759

 
13,107

Net cash (used in) provided by operating activities
(22,747
)
 
43,302

 
(43,464
)
 
52,062

 
 
 
 
 
 
 
 
Net cash used in investing activities
(34,498
)
 
(15,862
)
 
(173,106
)
 
(46,541
)
 
 
 
 
 
 
 
 
Net cash used in financing activities
(114,753
)
 
(7,941
)
 
(156,245
)
 
(17,283
)
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
1,262

 
(3,138
)
 
431

 
(15,516
)
Net (decrease) increase in cash and cash equivalents
(170,736
)
 
16,361

 
(372,384
)
 
(27,278
)
Cash and cash equivalents, beginning of period
1,038,824

 
1,165,650

 
1,240,472

 
1,209,289

Cash and cash equivalents, end of period
$
868,088

 
$
1,182,011

 
$
868,088

 
$
1,182,011






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

 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2014
 
2013
 
2014
 
2013
Revenue:
 
 
 
 
 
 
 
 
Third party and other
 
$
405,941

 
$
418,871

 
$
832,370

 
$
857,979

Direct
 
345,635

 
189,876

 
676,843

 
352,170

Total revenue
 
751,576

 
608,747

 
1,509,213

 
1,210,149

Cost of revenue:
 
 
 
 
 
 
 
 
Third party and other
 
58,378

 
55,507

 
120,729

 
125,523

Direct
 
303,336

 
168,546

 
612,901

 
320,923

Total cost of revenue
 
361,714

 
224,053

 
733,630

 
446,446

Gross profit
 
389,862

 
384,694

 
775,583

 
763,703

Operating expenses:
 
 
 
 
 
 
 
 
Marketing
 
64,275

 
55,497

 
143,199

 
105,054

Selling, general and administrative
 
332,844

 
302,600

 
657,809

 
610,806

Acquisition-related expense (benefit), net
 
597

 
(815
)
 
2,382

 
(747
)
  Total operating expenses
 
397,716

 
357,282

 
803,390

 
715,113

(Loss) income from operations
 
(7,854
)
 
27,412

 
(27,807
)
 
48,590

Other expense, net
 
(1,023
)
 
(5,579
)
 
(1,863
)
 
(10,662
)
(Loss) income before provision for income taxes
 
(8,877
)
 
21,833

 
(29,670
)
 
37,928

Provision for income taxes
 
12,045

 
27,384

 
26,615

 
46,721

Net loss
 
(20,922
)
 
(5,551
)
 
(56,285
)
 
(8,793
)
Net income attributable to noncontrolling interests
 
(1,953
)
 
(2,023
)
 
(4,385
)
 
(2,773
)
Net loss attributable to Groupon, Inc.
 
$
(22,875
)
 
$
(7,574
)
 
$
(60,670
)
 
$
(11,566
)
 
 
 
 
 
 
 
 
 
Net loss per share
 
 
 
 
 
 
 
 
Basic
 
$
(0.03
)
 
$
(0.01
)
 
$
(0.09
)
 
$
(0.02
)
Diluted
 
$
(0.03
)
 
$
(0.01
)
 
$
(0.09
)
 
$
(0.02
)
 
 
 
 
 
 
 
 
 
Weighted average number of shares outstanding
 
 
 
 
 
 
 
 
Basic
 
675,538,392

 
662,361,436

 
678,958,541

 
660,580,927

Diluted
 
675,538,392

 
662,361,436

 
678,958,541

 
660,580,927






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

 
 
June 30, 2014
 
December 31, 2013
 
 
(unaudited)
 
 
Assets
 
 
 
 

Current assets:
 
 

 
 

Cash and cash equivalents
 
$
868,088

 
$
1,240,472

Accounts receivable, net
 
134,127

 
83,673

Deferred income taxes
 
30,033

 
27,938

Prepaid expenses and other current assets
 
237,092

 
210,415

Total current assets
 
1,269,340

 
1,562,498

Property, equipment and software, net
 
173,403

 
134,423

Goodwill
 
460,972

 
220,827

Intangible assets, net
 
136,182

 
28,443

Investments
 
23,588

 
20,652

Deferred income taxes, non-current
 
45,062

 
35,941

Other non-current assets
 
28,892

 
39,226

Total Assets
 
$
2,137,439

 
$
2,042,010

Liabilities and Equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
31,002

 
$
27,573

Accrued merchant and supplier payables
 
803,374

 
752,943

Accrued expenses
 
234,355

 
226,986

Deferred income taxes
 
48,915

 
47,558

Other current liabilities
 
127,434

 
132,718

Total current liabilities
 
1,245,080

 
1,187,778

Deferred income taxes, non-current
 
12,871

 
10,853

Other non-current liabilities
 
148,552

 
131,697

Total Liabilities
 
1,406,503

 
1,330,328

Commitments and contingencies
 
 
 
 
Stockholders' Equity
 
 
 
 
Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 690,335,467 shares issued and 665,598,175 shares outstanding at June 30, 2014 and 670,149,976 shares issued and 665,717,176 shares outstanding at December 31, 2013
 
69

 
67

Class B common stock, par value $0.0001 per share, 10,000,000 shares authorized, 2,399,976 shares issued and outstanding at June 30, 2014 and December 31, 2013
 
—

 
—

Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, no shares issued and outstanding at June 30, 2014 and December 31, 2013
 
—

 
—

Additional paid-in capital
 
1,791,896

 
1,584,211

Treasury stock, at cost, 24,737,292 shares at June 30, 2014 and 4,432,800 shares at December 31, 2013
 
(182,046
)
 
(46,587
)
Accumulated deficit
 
(909,540
)
 
(848,870
)
Accumulated other comprehensive income
 
32,712

 
24,830

Total Groupon, Inc. Stockholders' Equity
 
733,091

 
713,651

Noncontrolling interests
 
(2,155
)
 
(1,969
)
Total Equity
 
730,936

 
711,682

Total Liabilities and Equity
 
$
2,137,439

 
$
2,042,010






Groupon, Inc.
Segment Information
(in thousands)
(unaudited)
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
 
 
2014
 
2013
 
2014
 
2013
 
North America
 
 
 
 
 
 

 
 
 
Gross billings (1)
 
$
798,845

 
$
712,205

 
$
1,580,614

 
$
1,393,524

 
Revenue
 
$
423,931

 
$
377,182

 
$
854,993

 
$
716,736

 
Segment cost of revenue and operating expenses (2)
 
409,386

 
328,674

 
829,063

 
626,862

 
Segment operating income (2)
 
$
14,545

 
$
48,508

 
$
25,930

 
$
89,874

 
Segment operating income as a percent of segment gross billings
 
1.8

%
6.8

%
1.6

%
6.4

%
Segment operating income as a percent of segment revenue
 
3.4

%
12.9

%
3.0

%
12.5

%
 
 
 
 
 
 
 
 
 
 
EMEA
 
 
 
 
 
 
 
 
 
Gross billings (1)
 
$
483,255

 
$
482,250

 
$
996,843

 
$
974,568

 
Revenue
 
$
227,690

 
$
159,962

 
$
458,583

 
$
343,760

 
Segment cost of revenue and operating expenses (2)
 
199,981

 
135,254

 
411,951

 
284,876

 
Segment operating income (2)
 
$
27,709

 
$
24,708

 
$
46,632

 
$
58,884

 
Segment operating income as a percent of segment gross billings
 
5.7

%
5.1

%
4.7

%
6.0

%
Segment operating income as a percent of segment revenue
 
12.2

%
15.4

%
10.2

%
17.1

%
 
 
 
 
 
 
 
 
 
 
Rest of World
 
 
 
 
 
 
 
 
 
Gross billings (1)
 
$
536,946

 
$
219,351

 
$
1,058,800

 
$
453,483

 
Revenue
 
$
99,955

 
$
71,603

 
$
195,637

 
$
149,653

 
Segment cost of revenue and operating expenses (2)
 
117,811

 
85,776

 
238,240

 
188,215

 
Segment operating loss (2)
 
$
(17,856
)
 
$
(14,173
)
 
$
(42,603
)
 
$
(38,562
)
 
Segment operating loss as a percent of segment gross billings
 
(3.3
)
%
(6.5
)
%
(4.0
)
%
(8.5
)
%
Segment operating loss as a percent of segment revenue
 
(17.9
)
%
(19.8
)
%
(21.8
)
%
(25.8
)
%
 
(1)
Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds.
(2)
Segment cost of revenue and operating expenses and segment operating income (loss) exclude stock-based compensation and acquisition-related expense (benefit), net.




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

Adjusted EBITDA and earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related (benefit) expense, net of tax, are non-GAAP financial measures. The Company reconciles Adjusted EBITDA to the most comparable U.S. GAAP financial measure, "Net loss," for the periods presented and the Company reconciles earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related (benefit) expense, net to the most comparable U.S. GAAP financial measure, "Diluted net earnings (loss) per share," for the periods presented.

The following is a quarterly reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, "Net loss."
    
 
Q2 2013
 
Q3 2013
 
Q4 2013
 
Q1 2014
 
Q2 2014
Net loss
$
(5,551
)
 
$
(1,292
)
 
$
(78,861
)
 
$
(35,363
)
 
$
(20,922
)
Adjustments:
 
 
 
 
 
 
 
 
 
  Stock-based compensation
32,446

 
26,870

 
32,239

 
23,729

 
31,655

  Acquisition related (benefit) expense, net
(815
)
 
(1,529
)
 
2,265

 
1,785

 
597

  Depreciation and amortization
21,468

 
23,149

 
24,132

 
34,740

 
34,658

  Other expense (income), net
5,579

 
(832
)
 
84,833

 
840

 
1,023

  Provision for income taxes
27,384

 
15,936

 
7,380

 
14,570

 
12,045

Total adjustments
86,062

 
63,594

 
150,849

 
75,664

 
79,978

Adjusted EBITDA
$
80,511

 
$
62,302

 
$
71,988

 
$
40,301

 
$
59,056


The following is a reconciliation of diluted net loss per share to diluted earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, net for the three and six months ended June 30, 2014:
    
 
 
Three Months Ended 
 June 30, 2014
 
Six Months Ended 
 June 30, 2014
Net loss attributable to Groupon, Inc.
 
$
(22,875
)
 
$
(60,670
)
Stock-based compensation
 
31,655

 
55,384

Amortization of acquired intangible assets
 
11,591

 
24,239

Acquisition-related expense, net
 
597

 
2,382

Income tax effect of adjustments
 
(15,348
)
 
(23,726
)
Net earnings (loss) attributable to common stockholders excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, net
 
$
5,620

 
$
(2,391
)
 
 
 
 
 
Diluted shares
 
675,538,392

 
678,958,541

Incremental diluted shares (1)
 
8,823,049

 
—

Adjusted diluted shares
 
684,361,441

 
678,958,541

 
 
 
 
 
Diluted net loss per share
 
$
(0.03
)
 
$
(0.09
)
Impact of stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, net
 
0.04

 
0.09

Diluted earnings (loss) per share excluding stock-based compensation, amortization of acquired intangible assets and acquisition-related expense, net
 
$
0.01

 
$ (0.00)


(1)
Outstanding equity awards are not reflected in the calculation for the six months ended June 30, 2014 because the effect would be antidilutive.

    





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

Foreign exchange rate neutral operating results are non-GAAP financial measures. The Company reconciles foreign exchange rate neutral operating results to the most comparable U.S. GAAP financial measures, "Gross billings," "Revenue" and "(Loss) income from operations," respectively, for the periods presented. The Company reconciles "foreign exchange rate neutral Gross billings growth" and "foreign exchange rate neutral Revenue growth" to year-over-year growth rates for the most comparable U.S. GAAP financial measures, "Gross billings growth" and "Revenue growth," respectively, for the periods presented.
The effect on the Company's gross billings, revenue and (loss) income from operations from changes in exchange rates versus the U.S. Dollar for the three months ended June 30, 2014 was as follows: 
 
 
Three Months Ended June 30, 2014
 
Three Months Ended June 30, 2014
 
 
At Avg. Q2 2013
Rates(1)
 
Exchange Rate
Effect(2)
 
As
Reported
 
At Avg. Q1 2014
Rates(3)
 
Exchange Rate
Effect(2)
 
As
Reported
Gross billings
 
$
1,789,057

 
$
29,989

 
$
1,819,046

 
$
1,801,262

 
$
17,784

 
$
1,819,046

Revenue
 
$
744,563

 
$
7,013

 
$
751,576

 
$
748,425

 
$
3,151

 
$
751,576

(Loss) income from operations
 
$
(9,063
)
 
$
1,209

 
$
(7,854
)
 
$
(7,216
)
 
$
(638
)
 
$
(7,854
)

The effect on the Company's gross billings, revenue and (loss) income from operations from changes in exchange rates versus the U.S. Dollar for the six months ended June 30, 2014 was as follows: 
 
 
Six Months Ended June 30, 2014
 
Six Months Ended June 30, 2014
 
 
At Avg. Q2 2013 YTD
Rates(1)
 
Exchange Rate
Effect(2)
 
As
Reported
 
At Avg. Q4'13 - Q1'14
Rates(3)
 
Exchange Rate
Effect(2)
 
As
Reported
Gross billings
 
$
3,616,538

 
$
19,719

 
$
3,636,257

 
$
3,627,234

 
$
9,023

 
$
3,636,257

Revenue
 
$
1,505,068

 
$
4,145

 
$
1,509,213

 
$
1,508,271

 
$
942

 
$
1,509,213

(Loss) income from operations
 
$
(30,518
)
 
$
2,711

 
$
(27,807
)
 
$
(28,063
)
 
$
256

 
$
(27,807
)

(1)
Represents the financial statement balances that would have resulted had average exchange rates in the reporting period been the same as those in effect during the three and six months ended June 30, 2013.
(2)
Represents the increase or decrease in reported amounts resulting from changes in exchange rates from those in effect in the comparable period.
(3)
Represents the financial statement balances that would have resulted had average exchange rates in the reporting periods been the same as those in effect during the three and six months ended March 31, 2014.

The following is a quarterly reconciliation of foreign exchange rate neutral Gross billings growth from the comparable quarterly periods of the prior year to reported Gross billings growth from the comparable quarterly periods of the prior year.
    
 
 
Q2 2013
 
Q3 2013
 
Q4 2013
 
Q1 2014
 
Q2 2014
 
EMEA Gross billings growth, excluding FX
4

%
9

%
3

%
1

%
(4
)
%
FX Effect
—

%
3

%
3

%
3

%
4

%
EMEA Gross billings growth
4

%
12

%
6

%
4

%
—

%
 
 
 
 
 
 
 
 
 
 
 
 
Rest of World Gross billings growth, excluding FX
(16
)
%
(4
)
%
(2
)
%
133

%
141

%
FX Effect
(5
)
%
(9
)
%
(9
)
%
(10
)
%
4

%
Rest of World Gross billings growth
(21
)
%
(13
)
%
(11
)
%
123

%
145

%
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Gross billings growth, excluding FX
11

%
11

%
5

%
30

%
27

%
FX Effect
(1
)
%
(1
)
%
—

%
(1
)
%
2

%
Consolidated Gross billings growth
10

%
10

%
5

%
29

%
29

%




    
The following is a quarterly reconciliation of foreign exchange rate neutral Revenue growth from the comparable quarterly periods of the prior year to reported Revenue growth from the comparable quarterly periods of the prior year.
    
 
 
Q2 2013
 
Q3 2013
 
Q4 2013
 
Q1 2014
 
Q2 2014
 
EMEA Revenue growth, excluding FX
(25
)
%
(23
)
%
38

%
22

%
36

%
FX Effect
1

%
2

%
5

%
4

%
6

%
EMEA Revenue growth
(24
)
%
(21
)
%
43

%
26

%
42

%
 
 
 
 
 
 
 
 
 
 
 
 
Rest of World Revenue growth, excluding FX
(21
)
%
7

%
(6
)
%
35

%
44

%
FX Effect
(5
)
%
(11
)
%
(9
)
%
(12
)
%
(4
)
%
Rest of World Revenue growth
(26
)
%
(4
)
%
(15
)
%
23

%
40

%
 
 
 
 
 
 
 
 
 
 
 
Consolidated Revenue growth, excluding FX
8

%
6

%
20

%
26

%
22

%
FX Effect
(1
)
%
(1
)
%
—

%
—

%
2

%
Consolidated Revenue growth
7

%
5

%
20

%
26

%
24

%





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

 
 
Q2 2013
 
Q3 2013
 
Q4 2013
 
Q1 2014
 
Q2 2014
 
Segments
 
 
 
 
 
 
 
 
 
 
North America Segment:
 
 
 
 
 
 
 
 
Gross Billings (1):
 
 
 
 
 
 
 
 
 
 
 
Local(2) Gross Billings
$
453,030

 
$
405,913

 
$
439,131

 
$
456,952

 
$
461,366

 
 
Goods Gross Billings
196,878

 
194,565

 
286,039

 
242,896

 
247,618

 
 
Travel(2) Gross Billings
62,297

 
64,521

 
63,551

 
81,921

 
89,861

 
 
Total Gross Billings
$
712,205

 
$
664,999

 
$
788,721

 
$
781,769

 
$
798,845

 
 
Year-over-year growth
30

%
20

%
10

%
15

%
12

%
 
% Third Party and Other
74

%
72

%
67

%
70

%
70

%
 
% Direct
26

%
28

%
33

%
30

%
30

%
Gross Billings Trailing Twelve Months (TTM)
$
2,664,845

 
$
2,777,475

 
$
2,847,244

 
$
2,947,694

 
$
3,034,334

 
 
 
 
 
 
 
 
 
 
 
 
Revenue (3):
 
 
 
 
 
 
 
 
 
 
 
Local Revenue
$
177,377

 
$
162,346

 
$
161,601

 
$
177,247

 
$
164,500

 
 
Goods Revenue
186,028

 
185,914

 
268,281

 
237,435

 
241,626

 
 
Travel Revenue
13,777

 
12,578

 
13,902

 
16,380

 
17,805

 
 
Total Revenue
$
377,182

 
$
360,838

 
$
443,784

 
$
431,062

 
$
423,931

 
 
Year-over-year growth
45

%
24

%
18

%
27

%
12

%
 
% Third Party and Other
52

%
49

%
41

%
45

%
43

%
 
% Direct
48

%
51

%
59

%
55

%
57

%
Revenue TTM
$
1,383,690

 
$
1,452,925

 
$
1,521,358

 
$
1,612,866

 
$
1,659,615

 
 
 
 
 
 
 
 
 
 
 
 
Gross Profit (4):
 
 
 
 
 
 
 
 
 
 
 
Local Gross Profit
$
155,728

 
$
138,890

 
$
140,944

 
$
152,622

 
$
142,674

 
 
% of North America Total Local Gross Billings
34.4

%
34.2

%
32.1

%
33.4

%
30.9

%
 
Goods Gross Profit
26,977

 
21,609

 
21,030

 
12,604

 
22,961

 
 
% of North America Total Goods Gross Billings
13.7

%
11.1

%
7.4

%
5.2

%
9.3

%
 
Travel Gross Profit
11,881

 
11,070

 
12,352

 
14,442

 
14,365

 
 
% of North America Total Travel Gross Billings
19.1

%
17.2

%
19.4

%
17.6

%
16.0

%
 
Total Gross Profit
$
194,586

 
$
171,569

 
$
174,326

 
$
179,668

 
$
180,000

 
 
Year-over-year growth
12

%
7

%
15

%
4

%
(7
)
%
 
% Third Party and Other
88

%
90

%
91

%
94

%
88

%
 
% Direct
12

%
10

%
9

%
6

%
12

%
 
% of North America Total Gross Billings
27.3

%
25.8

%
22.1

%
23.0

%
22.5

%
 
 
 
 
 
 
 
 
 
 
 
EMEA Segment:
 
 
 
 
 
 
 
 
 
 
Gross Billings:
 
 
 
 
 
 
 
 
 
 
 
Local Gross Billings
$
241,856

 
$
207,803

 
$
277,472

 
$
262,141

 
$
227,266

 
 
Goods Gross Billings
167,594

 
169,849

 
219,880

 
183,013

 
190,957

 
 
Travel Gross Billings
72,800

 
65,666

 
68,361

 
68,434

 
65,032

 
 
Total Gross Billings
$
482,250

 
$
443,318

 
$
565,713

 
$
513,588

 
$
483,255

 
 
Year-over-year growth
4

%
12

%
6

%
4

%
—

%
 
Year-over-year growth, excluding FX (5)
4

%
9

%
3

%
1

%
(4
)
%
 
% Third Party and Other
100

%
98

%
83

%
83

%
80

%
 
% Direct
—

%
2

%
17

%
17

%
20

%
Gross Billings TTM
$
1,903,136

 
$
1,950,367

 
$
1,983,599

 
$
2,004,869

 
$
2,005,874

 
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
Local Revenue
$
110,229

 
$
92,141

 
$
116,061

 
$
109,120

 
$
96,485

 
 
Goods Revenue
35,119

 
41,279

 
119,274

 
106,889

 
115,413

 
 
Travel Revenue
14,614

 
14,530

 
15,870

 
14,884

 
15,792

 
 
Total Revenue
$
159,962

 
$
147,950

 
$
251,205

 
$
230,893

 
$
227,690

 
 
Year-over-year growth
(24
)
%
(21
)
%
43

%
26

%
42

%
 
Year-over-year growth, excluding FX
(25
)
%
(23
)
%
38

%
22

%
36

%
 
% Third Party and Other
99

%
94

%
61

%
61

%
57

%
 
% Direct
1

%
6

%
39

%
39

%
43

%
Revenue TTM
$
707,325

 
$
667,988

 
$
742,915

 
$
790,010

 
$
857,738

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




 
 
Q2 2013
 
Q3 2013
 
Q4 2013
 
Q1 2014
 
Q2 2014
 
Gross Profit:
 
 
 
 
 
 
 
 
 
 
 
Local Gross Profit
$
99,318

 
$
81,808

 
$
105,210

 
$
100,066

 
$
90,373

 
 
% of EMEA Total Local Gross Billings
41.1

%
39.4

%
37.9

%
38.2

%
39.8

%
 
Goods Gross Profit
27,108

 
28,943

 
33,526

 
27,302

 
35,432

 
 
% of EMEA Total Goods Gross Billings
16.2

%
17.0

%
15.2

%
14.9

%
18.6

%
 
Travel Gross Profit
13,105

 
12,930

 
14,457

 
13,669

 
14,894

 
 
% of EMEA Total Travel Gross Billings
18.0

%
19.7

%
21.1

%
20.0

%
22.9

%
 
Total Gross Profit
$
139,531

 
$
123,681

 
$
153,193

 
$
141,037

 
$
140,699

 
 
Year-over-year growth
(24
)
%
(24
)
%
7

%
(8
)
%
1

%
 
% Third Party and Other
101

%
99

%
91

%
92

%
85

%
 
% Direct
(1
)
%
1

%
9

%
8

%
15

%
 
% of EMEA Total Gross Billings
28.9

%
27.9

%
27.1

%
27.5

%
29.1

%
 
 
 
 
 
 
 
 
 
 
 
Rest of World Segment:
 
 
 
 
 
 
 
 
 
 
Gross Billings:
 
 
 
 
 
 
 
 
 
 
 
Local Gross Billings
$
115,156

 
$
118,718

 
$
116,824

 
$
167,833

 
$
170,237

 
 
Goods Gross Billings
72,399

 
78,973

 
89,451

 
283,091

 
281,300

 
 
Travel Gross Billings
31,796

 
36,640

 
32,398

 
70,930

 
85,409

 
 
Total Gross Billings
$
219,351

 
$
234,331

 
$
238,673

 
$
521,854

 
$
536,946

 
 
Year-over-year growth
(21
)
%
(13
)
%
(11
)
%
123

%
145

%
 
Year-over-year growth, excluding FX
(16
)
%
(4
)
%
(2
)
%
133

%
141

%
 
% Third Party and Other
97

%
97

%
97

%
99

%
99

%
 
% Direct
3

%
3

%
3

%
1

%
1

%
Gross Billings TTM
$
992,302

 
$
956,833

 
$
926,487

 
$
1,214,209

 
$
1,531,804

 
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
Local Revenue
$
43,849

 
$
51,900

 
$
40,847

 
$
43,814

 
$
42,711

 
 
Goods Revenue
20,610

 
25,061

 
26,158

 
41,855

 
45,537

 
 
Travel Revenue
7,144

 
9,310

 
6,453

 
10,013

 
11,707

 
 
Total Revenue
$
71,603

 
$
86,271

 
$
73,458

 
$
95,682

 
$
99,955

 
 
Year-over-year growth
(26
)
%
(4
)
%
(15
)
%
23

%
40

%
 
Year-over-year growth, excluding FX
(21
)
%
7

%
(6
)
%
35

%
44

%
 
% Third Party and Other
92

%
91

%
90

%
94

%
93

%
 
% Direct
8

%
9

%
10

%
6

%
7

%
Revenue TTM
$
325,988

 
$
322,597

 
$
309,382

 
$
327,014

 
$
355,366

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Profit:
 
 
 
 
 
 
 
 
 
 
 
Local Gross Profit
$
35,885

 
$
44,435

 
$
33,596

 
$
34,748

 
$
35,618

 
 
% of Rest of World Total Local Gross Billings
31.2

%
37.4

%
28.8

%
20.7

%
20.9

%
 
Goods Gross Profit
8,966

 
12,016

 
11,781

 
22,135

 
24,623

 
 
% of Rest of World Total Goods Gross Billings
12.4

%
15.2

%
13.2

%
7.8

%
8.8

%
 
Travel Gross Profit
5,726

 
7,921

 
5,312

 
8,133

 
8,922

 
 
% of Rest of World Total Travel Gross Billings
18.0

%
21.6

%
16.4

%
11.5

%
10.4

%
 
Total Gross Profit
$
50,577

 
$
64,372

 
$
50,689

 
$
65,016

 
$
69,163

 
 
Year-over-year growth
(33
)
%
1

%
(16
)
%
23

%
37

%
 
% Third Party and Other
101

%
99

%
101

%
102

%
100

%
 
% Direct
(1
)
%
1

%
(1
)
%
(2
)
%
—

%
 
% of Rest of World Total Gross Billings
23.1

%
27.5

%
21.2

%
12.5

%
12.9

%
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Results of Operations:
 
 
 
 
 
 
 
 
 
 
Gross Billings:
 
 
 
 
 
 
 
 
 
 
 
Local Gross Billings
$
810,042

 
$
732,434

 
$
833,427

 
$
886,926

 
$
858,869

 
 
Goods Gross Billings
436,871

 
443,387

 
595,370

 
709,000

 
719,875

 
 
Travel Gross Billings
166,893

 
166,827

 
164,310

 
221,285

 
240,302

 
 
Total Gross Billings
$
1,413,806

 
$
1,342,648

 
$
1,593,107

 
$
1,817,211

 
$
1,819,046

 
 
Year-over-year growth
10

%
10

%
5

%
29

%
29

%
 
Year-over-year growth, excluding FX
11

%
11

%
5

%
30

%
27

%
 
% Third Party and Other
87

%
85

%
77

%
82

%
81

%
 
% Direct
13

%
15

%
23

%
18

%
19

%
Gross Billings (TTM)
$
5,560,283

 
$
5,684,675

 
$
5,757,330

 
$
6,166,772

 
$
6,572,012

 
 
Year-over-year growth
11

%
12

%
7

%
14

%
18

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




 
 
Q2 2013
 
Q3 2013
 
Q4 2013
 
Q1 2014
 
Q2 2014
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
Local Revenue
$
331,455

 
$
306,387

 
$
318,509

 
$
330,181

 
$
303,696

 
 
Goods Revenue
241,757

 
252,254

 
413,713

 
386,179

 
402,576

 
 
Travel Revenue
35,535

 
36,418

 
36,225

 
41,277

 
45,304

 
  Total Revenue
$
608,747

 
$
595,059

 
$
768,447

 
$
757,637

 
$
751,576

 
 
Year-over-year growth
7

%
5

%
20

%
26

%
23

%
 
Year-over-year growth, excluding FX
8

%
6

%
20

%
26

%
22

%
 
% Third Party and Other
69

%
66

%
52

%
56

%
54

%
 
% Direct
31

%
34

%
48

%
44

%
46

%
Total Consolidated Revenue TTM
$
2,417,003

 
$
2,443,510

 
$
2,573,655

 
$
2,729,890

 
$
2,872,719

 
 
Year-over-year growth
18

%
12

%
10

%
15

%
19

%
 
 
 
 
 
 
 
 
 
 
 
 
Gross Profit:
 
 
 
 
 
 
 
 
 
 
 
Local Gross Profit
$
290,931

 
$
265,133

 
$
279,750

 
$
287,436

 
$
268,665

 
 
% of Total Consolidated Local Gross Billings
35.9

%
36.2

%
33.6

%
32.4

%
31.3

%
 
Goods Gross Profit
63,051

 
62,568

 
66,337

 
62,041

 
83,016

 
 
% of Total Consolidated Goods Gross Billings
14.4

%
14.1

%
11.1

%
8.8

%
11.5

%
 
Travel Gross Profit
30,712

 
31,921

 
32,121

 
36,244

 
38,181

 
 
% of Total Consolidated Travel Gross Billings
18.4

%
19.1

%
19.5

%
16.4

%
15.9

%
 
Total Gross Profit
$
384,694

 
$
359,622

 
$
378,208

 
$
385,721

 
$
389,862

 
 
Year-over-year growth
(11
)
%
(7
)
%
6

%
2

%
1

%
 
% Third Party and Other
94

%
95

%
92

%
94

%
89

%
 
% Direct
6

%
5

%
8

%
6

%
11

%
 
% of Total Consolidated Gross Billings
27.2

%
26.8

%
23.7

%
21.2

%
21.4

%
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
$
80,511

 
$
62,302

 
$
71,988

 
$
40,301

 
$
59,056

 
 
% of Total Consolidated Gross Billings
5.7

%
4.6

%
4.5

%
2.2

%
3.2

%
 
% of Total Consolidated Revenue
13.2

%
10.5

%
9.4

%
5.3

%
7.9

%





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

Free cash flow is a non-GAAP financial measure. The following is a reconciliation of free cash flow to the most comparable U.S. GAAP financial measure, "Net cash provided by (used in) operating activities."
    
 
 
Q2 2013
 
Q3 2013
 
Q4 2013
 
Q1 2014
 
Q2 2014
 
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
$
43,302

 
$
(11,905
)
 
$
178,275

 
$
(20,717
)
 
$
(22,747
)
Purchases of property and equipment and capitalized software
(14,042
)
 
(15,064
)
 
(19,931
)
 
(16,355
)
 
(31,053
)
Free cash flow
$
29,260

 
$
(26,969
)
 
$
158,344

 
$
(37,072
)
 
$
(53,800
)
 
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities (TTM)
$
159,867

 
$
105,874

 
$
218,432

 
$
188,955

 
$
122,906

Purchases of property and equipment and capitalized software (TTM)
(84,554
)
 
(83,608
)
 
(63,505
)
 
(65,392
)
 
(82,403
)
Free cash flow (TTM)
$
75,313

 
$
22,266

 
$
154,927

 
$
123,563

 
$
40,503

 
 
 
 
 
 
 
 
 
 
 
Net cash used in investing activities
$
(15,862
)
 
$
(26,444
)
 
$
(23,330
)
 
$
(138,608
)
 
$
(34,498
)
Net cash used in financing activities
$
(7,941
)
 
$
(8,970
)
 
$
(55,444
)
 
$
(41,492
)
 
$
(114,753
)
 
 
 
 
 
 
 
 
 
 
 
Net cash used in investing activities (TTM)
$
(134,923
)
 
$
(125,738
)
 
$
(96,315
)
 
$
(204,244
)
 
$
(222,880
)
Net cash used in financing activities (TTM)
$
(21,071
)
 
$
(32,748
)
 
$
(81,697
)
 
$
(113,847
)
 
$
(220,659
)
 
 
 
 
 
 
 
 
 
 
 
Other Metrics:
 
 
 
 
 
 
 
 
 
Active Customers (6)
 
 
 
 
 
 
 
 
 
 
North America
19.1

 
19.9

 
20.8

 
21.8

 
22.6

 
EMEA
13.9

 
14.0

 
14.2

 
14.5

 
14.5

 
Rest of World
9.6

 
9.6

 
9.9

 
15.5

 
16.1

 
Total Active Customers
42.6

 
43.5

 
44.9

 
51.8

 
53.2

 
 
 
 
 
 
 
 
 
 
 
TTM Gross Billings / Average Active Customer (7)
 
 
 
 
 
 
 
 
 
North America
$
156

 
$
155

 
$
150

 
$
147

 
$
145

EMEA
$
135

 
$
137

 
$
139

 
$
141

 
$
141

Rest of World
$
108

 
$
102

 
$
95

 
$
97

 
$
119

Consolidated
$
138

 
$
137

 
$
134

 
$
132

 
$
137

 
 
 
 
 
 
 
 
 
 
Headcount
 
 
 
 
 
 
 
 
 
 
Sales (8)
4,679

 
4,801

 
4,834

 
5,231

 
5,057

 
% North America
26
%
 
28
%
 
29
%
 
27
%
 
26
%
 
% EMEA
39
%
 
37
%
 
37
%
 
37
%
 
39
%
 
% Rest of World
35
%
 
35
%
 
34
%
 
36
%
 
35
%
 
Other
6,306

 
6,453

 
6,449

 
7,099

 
6,888

 
Total Headcount
10,985

 
11,254

 
11,283

 
12,330

 
11,945


(1)
Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds.
(2)
Local represents deals from local merchants, deals with national merchants, and deals through local events. Other revenue transactions, which include advertising, payment processing, point of sale, reservation and commission revenue, were previously aggregated with our Travel category. During the three months ended March 31, 2014, the Company updated its presentation of category information to include gross billings, revenue and gross profit from those other revenue sources within the Local category, and prior period category information has been retrospectively adjusted to conform to the current period presentation.
(3)
Includes third party revenue, direct revenue and other revenue. Third party revenue is related to sales for which the Company acts as a marketing agent for the merchant. This revenue is recorded on a net basis. Direct revenue is primarily related to the sale of products for which the Company is the merchant of record. These revenues are accounted for on a gross basis, with the cost of inventory included in cost of revenue. Other revenue primarily consists of advertising revenue, payment processing revenue, point of sale revenue, reservation revenue and commission revenue.
(4)
Represents third party revenue, direct revenue and other revenue reduced by cost of revenue. Cost of revenue is comprised of direct and certain indirect costs incurred to generate revenue. Third party cost of revenue includes estimated refunds for which the merchant's share is not recoverable. Direct cost of revenue includes the cost of inventory, shipping and fulfillment costs and inventory markdowns. Other costs incurred to generate revenue are allocated to cost of third party and other revenue and direct revenue for each of our categories (Local, Goods, and Travel) in proportion to gross billings during the period.
(5)
Represents the change in financial measures that would have resulted had average exchange rates in the reporting periods been the same as those in effect in the prior year period.
(6)
Reflects the total number of unique user accounts who have purchased a voucher or product from us during the trailing twelve months.
(7)
Reflects the total gross billings generated in the trailing twelve months per average active customer over that period.
(8)
Includes merchant sales representatives, as well as sales support.
(9)
The definition, methodology and appropriateness of each of our supplemental metrics is reviewed periodically. As a result, metrics are subject to removal and/or change.