EX-99.1 2 exhibit991-q22017.htm EXHIBIT 99.1 Exhibit



Exhibit 99.1

Groupon Announces Second Quarter 2017 Results
Achieved Double Digit Unit and Gross Profit Growth in North America Local
•
Gross profit of $328.1 million
•
Net loss from continuing operations of $5.4 million
•
Adjusted EBITDA of $53.3 million
•
GAAP loss per share from continuing operations of $0.01; non-GAAP income per share of $0.02
•
Operating cash flow of $97.8 million for the trailing twelve month period; Free cash flow of $36.4 million for the trailing twelve month period
•
Maintains 2017 gross profit guidance of $1.30 billion to $1.35 billion and raises bottom end of 2017 Adjusted EBITDA guidance range to $215 million to $240 million
 
CHICAGO - (BUSINESS WIRE) - August 2, 2017 - Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter ended June 30, 2017.

“Local commerce continues to be a vast opportunity, and we made great progress as a leader in the space with double-digit unit and gross profit growth in North America Local,” said CEO Rich Williams. “As we continue to build an amazing and voucherless customer experience and invest in our customers and merchants, we are excited about the growing strength of our local marketplace.”

Second Quarter 2017 Summary

North America
•
North America gross profit in the second quarter 2017 increased 8% to $233.9 million from $217.2 million in the second quarter 2016 as strength in Local was partially offset by declines in Goods. In Local, gross profit increased 13% to $179.6 million driven by double digit growth in units. Health, Beauty & Wellness and Things To Do were among the top performing categories in Local. In Goods, gross profit declined 13% to $36.5 million as declines in revenue were partially offset by increases in margin.
•
Our focus is to maximize gross profit, which may come at the expense of revenue. This emphasis includes an increasing shift toward offerings in our higher margin, more differentiated Local category, from our Goods category. In the second quarter 2017, North America revenue decreased 13% driven by a 30% decline in Goods direct revenue transactions, which are presented on a gross basis.
•
North America active customers reached 31.9 million as of June 30, 2017, adding 300 thousand net new active customers during the second quarter 2017. Gross profit per active customer was $30, flat with the first quarter 2017. Active customers represent unique user accounts that have made a purchase through one of our online marketplaces during the trailing twelve months.
•
Customer experience investments continued to expand with voucherless and cashless beauty booking programs launching in key major markets and comprising thousands of available deals across restaurants, spas and salons.





International
•
International gross profit declined 4% (1% FX-neutral) in the second quarter 2017 to $94.2 million as we continue to work to turn around the business following short term disruption relating to our country exits. Gross profit increased 3% in Local on an FX-neutral basis, offset by a 3% decline in Travel and a 9% decline in Goods. We made progress across several supply, marketing, and product initiatives in the second quarter, and believe our current initiatives will enable us to turn around international in the coming quarters.
•
International active customers declined 300 thousand during the second quarter 2017 to 16.4 million as of June 30, 2017.

Consolidated
•
Gross billings were $1.36 billion in the second quarter 2017, down 2% (1% FX-neutral) from $1.39 billion in the second quarter 2016. Gross billings reflect the total dollar value of customer purchases of goods and services.
•
Revenue was $662.6 million in the second quarter 2017, down 8% from $723.8 million in the second quarter 2016.
•
Gross profit was $328.1 million in the second quarter 2017, up 4% (5% FX-neutral) from $315.4 million in the second quarter 2016.
•
SG&A declined 11% year-over-year to $230.2 million in the second quarter 2017 as we continued to drive operational efficiency through automation and our more streamlined organization, which we expect not only to improve our customer experience but also create greater operating leverage over time. We ended the second quarter 2017 with headcount of 6,661, down 615 year-over-year.
•
Marketing was $100.7 million in the second quarter 2017, up 13% year-over-year. We are seeing strong results from our offline campaign “Save Up to $100 a Week on What You Do Every Day,” and expect to increase investments in overall marketing in the third and fourth quarters of 2017.
•
Net loss from continuing operations was $5.4 million in the second quarter 2017. This compares to $48.8 million in the second quarter 2016, which included $15.7 million of restructuring charges. The improvement was also impacted by non-operating foreign currency gains of $10.8 million, as compared to losses of $1.6 million in the prior period.
•
Net loss attributable to common stockholders was $9.3 million, or $0.02 per share. Non-GAAP net income attributable to common stockholders was $12.0 million, or $0.02 per share.
•
Adjusted EBITDA, a non-GAAP financial measure, was $53.3 million in the second quarter 2017, up 50% from $35.6 million in the second quarter 2016.
•
Global units sold declined 4% year-over-year to 44.5 million in the second quarter 2017. Units in North America declined 2% as double digit growth in Local was offset by declines in Goods, while International declined 8%. Units are defined as purchases made through our online marketplaces, before refunds and cancellations.
•
Operating cash flow was $97.8 million for the trailing twelve month period as of the second quarter 2017. Free cash flow, a non-GAAP financial measure, was $36.4 million for the trailing twelve month period ending June 30, 2017.
•
Cash and cash equivalents as of June 30, 2017 were $618.6 million, and we had no outstanding borrowings under our $250.0 million revolving credit facility.




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.
 
Share Repurchase
During the second quarter 2017, Groupon repurchased 7,185,453 shares of its common stock for an aggregate purchase price of $24.8 million. Groupon repurchased 14,522,134 shares for an aggregate purchase price of $50.9 million for the year-to-date period as of June 30, 2017. Up to $144.3 million of common stock was available for repurchase under Groupon’s share repurchase program as of June 30, 2017. The timing and amount of any share repurchases are determined based on market conditions, limitations under our Amended and Restated Credit Agreement, share price and other factors, and the program may be discontinued or suspended at any time.

Outlook
Groupon is updating its outlook for 2017, which reflects current foreign exchange rates, as well as expected marketing investments and cost benefits associated with our streamlining initiatives. The basis for our full year 2017 guidance is continuing operations.
 
•
For the full year 2017, Groupon expects gross profit to be in the range of $1.30 billion to $1.35 billion, which is unchanged.
•
Groupon is raising the bottom end of its expected Adjusted EBITDA guidance range to $215 million to $240 million in 2017.
 
Conference Call
A conference call will be webcast live today at 9:00 a.m. CDT / 10:00 a.m. EDT and will be available on Groupon’s investor relations website at http://investor.groupon.com. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.
 
Groupon encourages investors to use its investor relations website as a way of easily finding information about the company. Groupon promptly makes available on this website, free of charge, the reports that the company files or furnishes with the SEC, corporate governance information (including Groupon’s Global Code of Conduct), and select press releases and social media postings. Groupon uses its investor relations site (investor.groupon.com) and its blog (https://www.groupon.com/blog) as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.
 
Non-GAAP Financial Measures
In addition to financial results reported in accordance with U.S. GAAP, we have provided the following non-GAAP financial measures: Adjusted EBITDA, non-GAAP net income (loss) attributable to common stockholders, non-GAAP earnings (loss) per share, free cash flow and foreign currency exchange rate neutral operating results. 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 Information and Business Metrics" included in the tables accompanying this release.
 
We exclude the following items from one or more of our non-GAAP financial measures:
 
Stock-based compensation. We exclude stock-based compensation because it is primarily non-cash in nature and we believe that non-GAAP financial measures excluding this item provide meaningful supplemental information about our operating performance and liquidity.
 
Acquisition-related expense (benefit), net. Acquisition-related expense (benefit), net is comprised of the change in the fair value of contingent consideration arrangements and external transaction costs related to business combinations, primarily consisting of legal and advisory fees. The composition of our contingent consideration arrangements and the impact of those arrangements on our operating results vary over time based on a number of factors, including the terms of our business combinations and the timing of those transactions. We exclude acquisition-related expense (benefit), net because we believe that non-GAAP financial measures excluding this item provide meaningful supplemental information about our operating performance and facilitate comparisons to our historical operating results.
 
Depreciation and amortization. We exclude depreciation and amortization expenses because they are non-cash in nature and we believe that non-GAAP financial measures excluding these items provide meaningful supplemental information about our operating performance and liquidity.
 
Interest and Other Non-Operating Items. Interest and other non-operating items include: 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 March 31, 2017 and 2016, special charges and credits included charges related to our restructuring plan. For the three months ended March 31, 2016, special charges and credits also included gains from business dispositions. 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.
 
Income Tax Effect of Items Excluded from Non-GAAP Financial Measures. We determine the income tax effect of items excluded from our measures of non-GAAP net income (loss) attributable to common stockholders and non-GAAP earnings (loss) per share by performing a tax provision calculation using pre-tax income (loss) amounts that have been adjusted to exclude those items in




the respective jurisdictions to which they relate. The difference between the income tax expense (benefit) determined on that basis and our reported income tax expense (benefit) represents the income tax effect of the excluded items.
 
Descriptions of the non-GAAP financial measures included in this release and the accompanying tables are as follows:
 
Foreign exchange rate neutral operating results show our current period operating results as if foreign currency exchange rates had remained the same as those in effect in the prior-year period. We present foreign exchange rate neutral information to facilitate comparisons to our historical operating results.
 
Adjusted EBITDA is a non-GAAP 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. Our definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Adjusted EBITDA is a key measure used by our management and Board of Directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating performance 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 net income (loss) attributable to common stockholders and non-GAAP earnings (loss) per share are non-GAAP performance measures that adjust our net income (loss) attributable to common stockholders and earnings (loss) per share to exclude the impact of:
•
stock-based compensation,
•
amortization of acquired intangible assets,
•
acquisition-related expense (benefit), net,
•
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,
•
income (loss) from discontinued operations, and
•
the income tax effect of those items.
 
We believe that excluding the above items from our measures of non-GAAP net income (loss) attributable to common stockholders and non-GAAP earnings (loss) per share provides useful supplemental information for evaluating our operating performance and facilitates comparisons to our historical results by eliminating items that are non-cash in nature, relate to discrete events, or are otherwise not indicative of the core operating performance of our ongoing business.




Free cash flow is a non-GAAP liquidity measure that comprises net cash provided by (used in) operating activities from continuing operations less purchases of property and equipment and capitalized software from continuing operations. We use free cash flow to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe that it typically represents a more useful measure of cash flows because purchases of fixed assets, software developed for internal-use and website development costs are necessary components of our ongoing operations. Free cash flow is not intended to represent the total increase or decrease in Groupon's cash balance for the applicable period.
 
Note on Forward-Looking Statements
The statements contained in this release that refer to plans and expectations for the next quarter, the full year or the future are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve a number of risks and uncertainties, and actual results could differ materially from those discussed. The words "may," will," should," "could," "expect," anticipate," "believe," "estimate," intend," "continue" and other similar expressions are intended to identify forward-looking statements. 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, volatility in our revenue and operating results; risks related to our business strategy, including our strategy to grow our local marketplaces, marketing strategy and spend and the productivity of those marketing investments; effectively dealing with challenges arising from our international operations, including fluctuations in currency exchange rates and any potential adverse impact from the United Kingdom’s likely exit from the European Union; retaining existing customers and adding new customers; retaining and adding high quality merchants; cyber security breaches; incurring expenses as we expand our business; competing successfully in our industry; maintaining favorable payment terms with our business partners; providing a strong mobile experience for our customers; delivery and routing of our emails; product liability claims; managing inventory and order fulfillment risks; integrating our technology platforms; litigation; managing refund risks; retaining, attracting and integrating members of our executive team; difficulties, delays or our inability to successfully complete all or part of the announced restructuring actions or to realize the operating efficiencies and other benefits of such restructuring actions; higher than anticipated restructuring charges or changes in the timing of such restructuring charges; completing and realizing the anticipated benefits from acquisitions, dispositions, joint ventures and strategic investments; tax liabilities; tax legislation; compliance with domestic and foreign laws and regulations, including the CARD Act and regulation of the Internet and e-commerce; classification of our independent contractors; maintaining our information technology infrastructure; protecting our intellectual property; maintaining a strong brand; seasonality; customer and merchant fraud; payment-related risks; our ability to raise capital if necessary and our outstanding indebtedness; global economic uncertainty; the impact of our ongoing strategic review and any potential strategic alternatives we may choose to pursue; our senior convertible notes; and our ability to 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, 2016, and our other filings with the Securities and Exchange Commission, copies of which may be obtained by visiting the company's Investor Relations web site at http://investor.groupon.com or the SEC's web site at www.sec.gov. Groupon's actual results could differ materially from those predicted or implied and reported results should not be considered an indication of future performance.
You should not rely upon forward-looking statements as predictions of future events. Although Groupon believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither the company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements reflect Groupon’s expectations as of August 2, 2017. Groupon undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in its expectations.
 
About Groupon
Groupon (NASDAQ: GRPN) is building the daily habit in local commerce, offering a vast mobile and online marketplace where people discover and save on amazing things to do, 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     Public Relations
Deb Schwartz    Bill Roberts
312-999-3098    312-459-5191
ir@groupon.com




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

 
June 30, 2017
 
December 31, 2016
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
618,550

 
$
862,977

Accounts receivable, net
60,785

 
71,272

Prepaid expenses and other current assets
107,527

 
94,441

Current assets of discontinued operations
—

 
63,246

Total current assets
786,862

 
1,091,936

Property, equipment and software, net
162,577

 
169,452

Goodwill
282,011

 
274,551

Intangible assets, net
32,256

 
42,915

Investments (including $108,230 and $110,066 at June 30, 2017 and December 31, 2016, respectively, at fair value)
141,436

 
141,882

Deferred income taxes
4,838

 
5,151

Other non-current assets
17,457

 
23,484

Non-current assets of discontinued operations
—

 
12,006

Total Assets
$
1,427,437

 
$
1,761,377

Liabilities and Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
18,389

 
$
28,551

Accrued merchant and supplier payables
606,020

 
770,992

Accrued expenses and other current liabilities
328,998

 
366,456

Current liabilities of discontinued operations
—

 
47,052

Total current liabilities
953,407

 
1,213,051

Convertible senior notes, net
184,237

 
178,995

Deferred income taxes
1,833

 
1,714

Other non-current liabilities
101,978

 
99,628

Non-current liabilities of discontinued operations
—

 
2,927

Total Liabilities
1,241,455

 
1,496,315

Commitments and contingencies
 
 
 
Stockholders' Equity
 
 
 
Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, 743,577,187 shares issued and 557,359,145 shares outstanding at June 30, 2017 and 736,531,771 shares issued and 564,835,863 shares outstanding at December 31, 2016
74

 
74

Additional paid-in capital
2,145,030

 
2,112,728

Treasury stock, at cost, 186,218,042 shares at June 30, 2017 and 171,695,908 shares at December 31, 2016
(858,291
)
 
(807,424
)
Accumulated deficit
(1,135,984
)
 
(1,099,010
)
Accumulated other comprehensive income (loss)
34,358

 
58,052

Total Groupon, Inc. Stockholders' Equity
185,187

 
264,420

Noncontrolling interests
795

 
642

Total Equity
185,982

 
265,062

Total Liabilities and Equity
$
1,427,437

 
$
1,761,377






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,
 
 
2017
 
2016
 
2017
 
2016
Revenue:
 
 
 
 
 
 
 
 
Third-party and other
 
$
315,854

 
$
294,576

 
$
617,426

 
$
604,205

Direct
 
346,765

 
429,184

 
718,819

 
817,990

Total revenue
 
662,619

 
723,760

 
1,336,245

 
1,422,195

Cost of revenue:
 
 
 
 
 
 
 
 
Third-party and other
 
38,478

 
38,109

 
81,351

 
79,169

Direct
 
296,074

 
370,274

 
617,376

 
707,547

Total cost of revenue
 
334,552

 
408,383

 
698,727

 
786,716

Gross profit
 
328,067

 
315,377

 
637,518

 
635,479

Operating expenses:
 
 
 
 
 
 
 
 
Marketing
 
100,658

 
89,180

 
187,000

 
176,475

Selling, general and administrative
 
230,187

 
258,737

 
462,233

 
521,715

Restructuring charges
 
4,584

 
15,702

 
7,315

 
27,215

Gains on business dispositions
 
—

 
(9,339
)
 
—

 
(9,339
)
Acquisition-related expense (benefit), net
 
36

 
850

 
48

 
4,314

  Total operating expenses
 
335,465

 
355,130

 
656,596

 
720,380

Income (loss) from operations
 
(7,398
)
 
(39,753
)
 
(19,078
)
 
(84,901
)
Other income (expense), net
 
5,878

 
(11,253
)
 
1,276

 
(8,635
)
Income (loss) from continuing operations before provision (benefit) for income taxes
 
(1,520
)
 
(51,006
)
 
(17,802
)
 
(93,536
)
Provision (benefit) for income taxes
 
3,883

 
(2,238
)
 
8,470

 
(1,229
)
Income (loss) from continuing operations
 
(5,403
)
 
(48,768
)
 
(26,272
)
 
(92,307
)
Income (loss) from discontinued operations, net of tax
 
(1,376
)
 
(2,963
)
 
(889
)
 
(5,020
)
Net income (loss)
 
(6,779
)
 
(51,731
)
 
(27,161
)
 
(97,327
)
Net income attributable to noncontrolling interests
 
(2,547
)
 
(3,173
)
 
(6,579
)
 
(6,696
)
Net income (loss) attributable to Groupon, Inc.
 
$
(9,326
)
 
$
(54,904
)
 
$
(33,740
)
 
$
(104,023
)
 
 
 
 
 
 
 
 
 
Basic and diluted net income (loss) per share (1):
 
 
 
 
 
 
 
 
Continuing operations
 
$
(0.01
)
 
$
(0.09
)
 
$
(0.06
)
 
$
(0.17
)
Discontinued operations
 
(0.01
)
 
(0.01
)
 
—

 
(0.01
)
Basic and diluted net income (loss) per share
 
$
(0.02
)
 
$
(0.10
)
 
$
(0.06
)
 
$
(0.18
)
 
 
 
 
 
 
 
 
 
Weighted average number of shares outstanding (1)
 
 
 
 
 
 
 
 
Basic
 
559,762,180

 
576,903,004

 
560,978,712

 
579,827,341

Diluted
 
559,762,180

 
576,903,004

 
560,978,712

 
579,827,341


(1)
The structure of the Company's common stock changed during the year ended December 31, 2016. For additional information, refer to Note 8, Stockholders' Equity and Compensation Arrangements, and Note 12, Income (Loss) per Share, in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017.





Groupon, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)  
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Operating activities
 
 
 
 
 
 
 
Net income (loss)
$
(6,779
)
 
$
(51,731
)
 
$
(27,161
)
 
$
(97,327
)
Less: Income (loss) from discontinued operations, net of tax
(1,376
)
 
(2,963
)
 
(889
)
 
(5,020
)
Income (loss) from continuing operations
(5,403
)
 
(48,768
)
 
(26,272
)
 
(92,307
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization of property, equipment and software
28,496

 
29,335

 
57,163

 
59,096

Amortization of acquired intangible assets
6,183

 
4,581

 
11,583

 
9,235

Stock-based compensation
21,440

 
36,510

 
41,141

 
66,603

Restructuring-related long-lived asset impairments
—

 
—

 
—

 
45

Gains on business dispositions
—

 
(9,339
)
 
—

 
(9,339
)
Deferred income taxes
833

 
(2,838
)
 
759

 
(5,148
)
(Gain) loss, net from changes in fair value of contingent consideration
36

 
850

 
48

 
4,292

(Gain) loss from changes in fair value of investments
1,448

 
4,607

 
1,145

 
5,707

Amortization of debt discount on convertible senior notes
2,655

 
2,396

 
5,242

 
2,396

Change in assets and liabilities, net of acquisitions and dispositions:
 
 
 
 
 
 
 
Restricted cash
(1,305
)
 
(1,197
)
 
548

 
(695
)
Accounts receivable
5,635

 
5,263

 
16,229

 
(500
)
Prepaid expenses and other current assets
(16,519
)
 
(55,839
)
 
(11,139
)
 
(36,900
)
Accounts payable
2,461

 
(4,194
)
 
(10,723
)
 
(5,693
)
Accrued merchant and supplier payables
(44,716
)
 
(11,365
)
 
(182,954
)
 
(120,629
)
Accrued expenses and other current liabilities
(5,451
)
 
(7,012
)
 
(41,491
)
 
4,955

Other, net
(16,488
)
 
6,001

 
(18,207
)
 
(6,904
)
Net cash provided by (used in) operating activities from continuing operations
(20,695
)
 
(51,009
)
 
(156,928
)
 
(125,786
)
Net cash provided by (used in) operating activities from discontinued operations
(1,097
)
 
(3,001
)
 
(2,195
)
 
(4,949
)
Net cash provided by (used in) operating activities
(21,792
)
 
(54,010
)
 
(159,123
)
 
(130,735
)
Investing activities
 
 
 
 
 
 
 
Purchases of property and equipment and capitalized software
(15,385
)
 
(16,499
)
 
(29,461
)
 
(36,351
)
Cash derecognized upon dispositions of subsidiaries
—

 
(352
)
 
—

 
(352
)
Proceeds from maturity of investment
1,843

 
—

 
1,843

 
—

Acquisitions of businesses, net of acquired cash
—

 
(900
)
 
—

 
(940
)
Acquisitions of intangible assets and other investing activities
(240
)
 
(1,206
)
 
(184
)
 
(1,992
)
Net cash provided by (used in) investing activities from continuing operations
(13,782
)
 
(18,957
)
 
(27,802
)
 
(39,635
)
Net cash provided by (used in) investing activities from discontinued operations
(2,001
)
 
104

 
(9,548
)
 
4

Net cash provided by (used in) investing activities
(15,783
)
 
(18,853
)
 
(37,350
)
 
(39,631
)
Financing activities
 
 
 
 
 
 
 
Proceeds from issuance of convertible senior notes
—

 
250,000

 
—

 
250,000

Issuance costs for convertible senior notes and revolving credit agreement
—

 
(8,097
)
 
—

 
(8,097
)
Purchase of convertible note hedges
—

 
(59,163
)
 
—

 
(59,163
)
Proceeds from issuance of warrants
—

 
35,495

 
—

 
35,495

Payments for purchases of treasury stock
(24,279
)
 
(25,784
)
 
(51,513
)
 
(90,449
)
Taxes paid related to net share settlements of stock-based compensation awards
(6,386
)
 
(11,571
)
 
(15,356
)
 
(16,535
)
Proceeds from stock option exercises and employee stock purchase plan
9

 
114

 
2,477

 
2,047

Distributions to noncontrolling interest holders
(2,976
)
 
(3,762
)
 
(6,426
)
 
(7,127
)
Payment of contingent consideration related to acquisitions
(5,689
)
 
(285
)
 
(5,689
)
 
(285
)
Payments of capital lease obligations
(8,603
)
 
(7,722
)
 
(16,670
)
 
(14,676
)
Other financing activities
—

 
—

 
(473
)
 
—

Net cash provided by (used in) financing activities
(47,924
)
 
169,225

 
(93,650
)
 
91,210

Effect of exchange rate changes on cash and cash equivalents, including cash classified within current assets of discontinued operations
13,074

 
(4,742
)
 
16,830

 
5,926

Net increase (decrease) in cash and cash equivalents, including cash classified within current assets of discontinued operations
(72,425
)
 
91,620

 
(273,293
)
 
(73,230
)
Less: Net increase (decrease) in cash classified within current assets of discontinued operations
—

 
(2,591
)
 
(28,866
)
 
1,402

Net increase (decrease) in cash and cash equivalents
(72,425
)
 
94,211

 
(244,427
)
 
(74,632
)
Cash and cash equivalents, beginning of period
690,975

 
655,464

 
862,977

 
824,307

Cash and cash equivalents, end of period
$
618,550

 
$
749,675

 
$
618,550

 
$
749,675





Groupon, Inc.
Supplemental Financial Information and Business Metrics (1)
(financial data in thousands; active customers in millions)
(unaudited)
 
 
Q2 2016
 
Q3 2016
 
Q4 2016
 
Q1 2017
 
Q2 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North America Segment:
 
 
 
 
 
 
 
 
 
 
Q2 2017
 
 
 
 
 
Gross Billings (2):
 
 
 
 
 
 
 
 
 
 
Y/Y Growth
 
 
 
 
 
 
Local
$
542,439

 
$
530,768

 
$
590,684

 
$
587,766

 
$
615,833

 
13.5
%
 
 
 
 
 
Travel
105,388

 
93,564

 
90,059

 
114,163

 
112,670

 
6.9
 
 
 
 
 
 
Goods
318,427

 
296,630

 
431,388

 
262,588

 
245,924

 
(22.8)
 
 
 
 
 
 
Total Gross Billings
$
966,254

 
$
920,962

 
$
1,112,131

 
$
964,517

 
$
974,427

 
0.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Local
$
184,139

 
$
176,223

 
$
209,799

 
$
200,545

 
$
207,534

 
12.7
%
 
 
 
 
 
Travel
21,401

 
21,239

 
19,023

 
20,462

 
22,320

 
4.3
 
 
 
 
 
 
Goods
311,382

 
285,819

 
421,931

 
252,350

 
222,058

 
(28.7)
 
 
 
 
 
 
Total Revenue
$
516,922

 
$
483,281

 
$
650,753

 
$
473,357

 
$
451,912

 
(12.6)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Profit:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Local
$
158,812

 
$
152,873

 
$
185,280

 
$
169,342

 
$
179,609

 
13.1
%
 
 
 
 
 
Travel
16,334

 
17,257

 
15,052

 
15,165

 
17,755

 
8.7
 
 
 
 
 
 
Goods
42,028

 
31,531

 
50,437

 
36,430

 
36,496

 
(13.2)
 
 
 
 
 
 
Total Gross Profit
$
217,174

 
$
201,661

 
$
250,769

 
$
220,937

 
$
233,860

 
7.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss)
$
(31,284
)
 
$
(24,470
)
 
$
12,265

 
$
(14,783
)
 
$
(12,033
)
 
61.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Segment:
 
 
 
 
 
 
 
 
 
 
Q2 2017
 
Gross Billings:
 
 
 
 
 
 
 
 
 
 
Y/Y Growth
 
FX Effect (3)
 
Y/Y Growth excluding FX (3)
 
 
Local
$
196,857

 
$
184,068

 
$
221,337

 
$
191,219

 
$
189,408

 
(3.8)
%
3.9
 
0.1
%
 
Travel
56,409

 
58,964

 
60,099

 
53,161

 
45,981

 
(18.5)
 
1.8
 
(16.7)
 
 
Goods
170,019

 
158,965

 
211,963

 
149,079

 
154,417

 
(9.2)
 
2.5
 
(6.7)
 
 
Total Gross Billings
$
423,285

 
$
401,997

 
$
493,399

 
$
393,459

 
$
389,806

 
(7.9)
%
3.0
 
(4.9)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Local
$
67,956

 
$
64,282

 
$
68,900

 
$
63,575

 
$
66,108

 
(2.7)
%
4.2
 
1.5
%
 
Travel
11,640

 
13,524

 
12,141

 
11,002

 
10,796

 
(7.3)
 
1.9
 
(5.4)
 
 
Goods
127,242

 
125,468

 
173,071

 
125,692

 
133,803

 
5.2
 
2.8
 
8.0
 
 
Total Revenue
$
206,838

 
$
203,274

 
$
254,112

 
$
200,269

 
$
210,707

 
1.9
%
3.2
 
5.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Profit:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Local
$
62,970

 
$
59,257

 
$
63,987

 
$
59,194

 
$
62,303

 
(1.1)
%
4.3
 
3.2
%
 
Travel
10,484

 
12,378

 
11,087

 
10,036

 
9,996

 
(4.7)
 
1.9
 
(2.8)
 
 
Goods
24,749

 
19,972

 
26,063

 
19,284

 
21,908

 
(11.5)
 
2.5
 
(9.0)
 
 
Total Gross Profit
$
98,203

 
$
91,607

 
$
101,137

 
$
88,514

 
$
94,207

 
(4.1)
%
3.6
 
(0.5)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss)
$
(8,469
)
 
$
(370
)
 
$
(2,762
)
 
$
3,103

 
$
4,635

 
154.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Results of Operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Billings:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Local
$
739,296

 
$
714,836

 
$
812,021

 
$
778,985

 
$
805,241

 
8.9
%
1.1
 
10.0
%
 
Travel
161,797

 
152,528

 
150,158

 
167,324

 
158,651

 
(1.9)
 
0.6
 
(1.3)
 
 
Goods
488,446

 
455,595

 
643,351

 
411,667

 
400,341

 
(18.0)
 
0.8
 
(17.2)
 
 
Total Gross Billings
$
1,389,539

 
$
1,322,959

 
$
1,605,530

 
$
1,357,976

 
$
1,364,233

 
(1.8)
%
0.9
 
(0.9)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Local
$
252,095

 
$
240,505

 
$
278,699

 
$
264,120

 
$
273,642

 
8.5
%
1.2
 
9.7
%
 
Travel
33,041

 
34,763

 
31,164

 
31,464

 
33,116

 
0.2
 
0.7
 
0.9
 
 
Goods
438,624

 
411,287

 
595,002

 
378,042

 
355,861

 
(18.9)
 
0.9
 
(18.0)
 
  Total Revenue
$
723,760

 
$
686,555

 
$
904,865

 
$
673,626

 
$
662,619

 
(8.4)
%
0.9
 
(7.5)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Profit:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Local
$
221,782

 
$
212,130

 
$
249,267

 
$
228,536

 
$
241,912

 
9.1
%
1.2
 
10.3
%
 
Travel
26,818

 
29,635

 
26,139

 
25,201

 
27,751

 
3.5
 
0.7
 
4.2
 
 
Goods
66,777

 
51,503

 
76,500

 
55,714

 
58,404

 
(12.5)
 
0.9
 
(11.6)
 
 
Total Gross Profit
$
315,377

 
$
293,268

 
$
351,906

 
$
309,451

 
$
328,067

 
4.0
%
1.2
 
5.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss)
$
(39,753
)
 
$
(24,840
)
 
$
9,503

 
$
(11,680
)
 
$
(7,398
)
 
81.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities from continuing operations
$
(51,009
)
 
$
(39,879
)
 
$
294,593

 
$
(136,233
)
 
$
(20,695
)
 
59.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Free Cash Flow
$
(67,508
)
 
$
(52,561
)
 
$
275,339

 
$
(150,309
)
 
$
(36,080
)
 
46.6
%
 
 
 
 
        




 
 
Q2 2016
 
Q3 2016
 
Q4 2016
 
Q1 2017
 
Q2 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Metrics:
 
 
 
 
 
 
 
 
 
 
Active Customers (4)
 
 
 
 
 
 
 
 
 
 
 
North America
27.9

 
29.1

 
31.1

 
31.6

 
31.9

 
 
International
17.0

 
16.6

 
16.8

 
16.7

 
16.4

 
 
Total Active Customers
44.9

 
45.7

 
47.9

 
48.3

 
48.3

 
 
 
 
 
 
 
 
 
 
 
 
 
TTM Gross Billings / Average Active Customer
 
 
 
 
 
 
 
 
 
 
North America
$
145

 
$
142

 
$
138

 
$
136

 
$
133

 
International
105

 
103

 
102

 
101

 
101

 
Consolidated
129

 
127

 
124

 
123

 
121

 
 
 
 
 
 
 
 
 
 
 
 
 
TTM Gross Profit / Average Active Customer
 
 
 
 
 
 
 
 
 
 
North America
$
32

 
$
31

 
$
31

 
$
30

 
$
30

 
International
25

 
25

 
23

 
22

 
23

 
Consolidated
29

 
29

 
28

 
27

 
28

 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Units
46.2

 
44.4

 
57.9

 
45.7

 
44.5

 
 
Year-over-year unit growth:
 
 
 
 
 
 
 
 
 
 
 
North America
5.9

%
6.4

%
3.2

%
(0.4
)
%
(1.9
)
%
 
International
(18.4
)
 
(18.5
)
 
(0.3
)
 
(8.7
)
 
(7.8
)
 
 
Consolidated
(3.2
)
 
(2.9
)
 
2.0

 
(3.1
)
 
(3.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Headcount (5)
 
 
 
 
 
 
 
 
 
 
 
Sales (6)
2,893

 
2,695

 
2,626

 
2,624

 
2,485

 
 
Other
4,383

 
4,389

 
4,641

 
4,496

 
4,176

 
 
Total Headcount
7,276

 
7,084

 
7,267

 
7,120

 
6,661

 

(1)
The financial results of the exited 11 countries are presented as discontinued operations in the accompanying condensed consolidated financial statements and tables. All prior period financial information and operational metrics have been retrospectively adjusted to reflect this presentation.
(2)
Represents the total dollar value of customer purchases of goods and services.
(3)
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.
(4)
Reflects the total number of unique user accounts who made a purchase through one of our online marketplaces during the trailing twelve months. North America active customers for the quarter ended June 30, 2017 includes approximately 0.7 million incremental active customers from the acquisition of LivingSocial, Inc.
(5)
Prior period headcount amounts exclude employees of discontinued operations. Including those employees, our headcount decreased by 1,944 employees, or 23%, year-over-year in the second quarter of 2017, from 8,605 total employees in the prior year period.
(6)
Includes merchant sales representatives, as well as sales support personnel from our continuing operations.




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

Adjusted EBITDA, non-GAAP earnings attributable to common stockholders and non-GAAP earnings per share are non-GAAP performance measures. The Company reconciles Adjusted EBITDA to the most comparable U.S. GAAP performance measure, "Net income (loss) from continuing operations" for the periods presented and the Company reconciles non-GAAP earnings per share to the most comparable U.S. GAAP performance measure, "Diluted net income (loss) per share," for the periods presented.

The following is a quarterly reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP performance measure, "Income (loss) from continuing operations."
 
 
Q2 2016
 
Q3 2016
 
Q4 2016
 
Q1 2017
 
Q2 2017
Income (loss) from continuing operations
 
$
(48,768
)
 
$
(34,447
)
 
$
(39,455
)
 
$
(20,869
)
 
$
(5,403
)
Adjustments:
 
 
 
 
 
 
 
 
 
 
  Stock-based compensation (1)
 
34,210

 
25,457

 
22,563

 
19,650

 
21,392

  Depreciation and amortization
 
33,916

 
32,897

 
34,681

 
34,067

 
34,679

  Acquisition-related expense (benefit), net
 
850

 
(9
)
 
1,345

 
12

 
36

  Restructuring charges
 
15,702

 
1,163

 
12,060

 
2,731

 
4,584

  Gains on business dispositions
 
(9,339
)
 
(2,060
)
 
—

 
—

 
—

  Non-operating expense (income), net
 
11,253

 
7,917

 
54,737

 
4,602

 
(5,878
)
 Provision (benefit) for income taxes
 
(2,238
)
 
1,690

 
(5,779
)
 
4,587

 
3,883

Total adjustments
 
84,354

 
67,055

 
119,607

 
65,649

 
58,696

Adjusted EBITDA
 
$
35,586

 
$
32,608

 
$
80,152

 
$
44,780

 
$
53,293


(1)
Represents stock-based compensation recorded within cost of revenue, marketing expense, and selling, general and administrative expense. Non-operating expense (income), net, includes $0.2 million, $0.3 million, $0.2 million, $0.1 million and $0.0 million of additional stock-based compensation for the three months ended June 30, 2016, September 30, 2016, December 31, 2016, March 31, 2017, and June 30, 2017, respectively. Restructuring charges include $2.1 million of additional stock-based compensation for the three months ended June 30, 2016.
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, 2017
Expected income (loss) from continuing operations range
$(17,500) to $(7,500)

Expected adjustments:
 
  Stock-based compensation
80,000 to 90,000

  Depreciation and amortization
135,000

  Restructuring charges
7,500

  Non-operating expense (income), net
1,000

  Provision (benefit) for income taxes
9,000 to 14,000

Total expected adjustments
$232,500 to $247,500

Expected Adjusted EBITDA range
$215,000 to $240,000


The outlook provided above does not reflect the potential impact of any additional restructuring actions that the Company may decide to pursue, business or asset acquisitions or dispositions, changes in the fair values of investments or contingent consideration, foreign currency gains or losses or unusual or infrequently occurring items that may occur during the remainder of 2017.
    




The following is a reconciliation of net income (loss) attributable to common stockholders to non-GAAP net income (loss) attributable to common stockholders and a reconciliation of diluted net income (loss) per share to non-GAAP net income (loss) per share for the three and six months ended June 30, 2017:
 
 
Three Months Ended 
 June 30, 2017
 
Six Months Ended
June 30, 2017
Net income (loss) attributable to common stockholders
$
(9,326
)
 
$
(33,740
)
Stock-based compensation
21,440

 
41,141

Amortization of acquired intangible assets
6,183

 
11,583

Acquisition-related expense (benefit), net
36

 
48

Restructuring charges
4,584

 
7,315

Losses (gains), net from changes in fair value of investments
1,448

 
1,145

Intercompany foreign currency losses (gains) and reclassifications of translation adjustments to earnings
(10,112
)
 
(10,222
)
Non-cash interest expense on convertible senior notes
2,655

 
5,242

Income tax effect of above adjustments
(6,329
)
 
(6,274
)
Loss from discontinued operations, net of tax
1,376

 
889

Non-GAAP net income (loss) attributable to common stockholders
$
11,955

 
$
17,127

 
 
 
 
Weighted-average shares of common stock - basic
559,762,180

 
560,978,712

Effect of dilutive securities
6,821,360

 
7,152,421

Weighted-average shares of common stock - diluted
566,583,540

 
568,131,133

 
 
 
 
Diluted net income (loss) per share
$
(0.02
)
 
$
(0.06
)
Impact of stock-based compensation, amortization of acquired intangible assets, acquisition-related expense (benefit), net, intercompany foreign currency losses (gains), special charges and credits, loss from discontinued operations and related tax effects
0.04

 
0.09

Non-GAAP net income (loss) per share
$
0.02

 
$
0.03

    
Free cash flow is a non-GAAP financial measure. The following is a reconciliation of free cash flow to the most comparable U.S. GAAP financial measure, "Net cash provided by (used in) operating activities from continuing operations."
 
 
Q2 2016
 
Q3 2016
 
Q4 2016
 
Q1 2017
 
Q2 2017
 
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities from continuing operations
$
(51,009
)
 
$
(39,879
)
 
$
294,593

 
$
(136,233
)
 
$
(20,695
)
Purchases of property and equipment and capitalized software from continuing operations
(16,499
)
 
(12,682
)
 
(19,254
)
 
(14,076
)
 
(15,385
)
Free cash flow
$
(67,508
)
 
$
(52,561
)
 
$
275,339

 
$
(150,309
)
 
$
(36,080
)
 
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) investing activities from continuing operations
$
(18,957
)
 
$
(11,902
)
 
$
(4,049
)
 
$
(14,020
)
 
$
(13,782
)
Net cash provided by (used in) financing activities
$
169,225

 
$
(38,342
)
 
$
(67,533
)
 
$
(45,726
)
 
$
(47,924
)