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Groupon Announces First Quarter 2015 Results

  • Gross billings of $1.6 billion
  • Revenue of $750.4 million
  • Adjusted EBITDA of $72.4 million
  • GAAP loss per share of $0.02; non-GAAP earnings per share of $0.03
  • Free Cash Flow of $222.0 million for the trailing twelve month period

CHICAGO--(BUSINESS WIRE)-- Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter ended March 31, 2015.

"Q1 was a strong quarter, despite significant headwinds from foreign exchange rates, as we delivered 58% year-over-year growth in Adjusted EBITDA," said Eric Lefkofsky, CEO of Groupon. "Our North America business saw its third-straight quarter of double digit billings increases in all three categories, and we made continued progress in our mission to connect local commerce through our predominantly mobile marketplace."

Groupon previously announced that it has entered into an agreement to sell a controlling stake in Ticket Monster, its South Korean e-commerce business, to a partnership formed by KKR and Anchor Equity Partners. As a result, Ticket Monster will be presented as a discontinued operation in the Company's consolidated financial statements for all historical periods, effective in the first quarter 2015. Results have been retrospectively adjusted to exclude Ticket Monster in this release and in the tables accompanying this release. As such, all financial information and operational metrics herein pertain to continuing operations, unless otherwise noted.

First Quarter 2015 Summary

  • Gross billings, which reflect the total dollar value of customer purchases of goods and services, increased to $1.6 billion in the first quarter 2015, compared with $1.5 billion in the first quarter 2014. Gross billings grew 10% globally, excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter. On this F/X neutral basis, North America billings increased 14%, EMEA increased 7% and Rest of World declined 1%. Including the $117.7 million unfavorable impact from foreign exchange, billings increased 2% compared with first quarter 2014.
  • Revenue increased to $750.4 million in the first quarter 2015, compared with $728.4 million in the first quarter 2014. Revenue grew 10%, excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter. On this F/X neutral basis, North America revenue increased 11%, EMEA increased 13% and Rest of World declined 8%. Including the $51.3 million unfavorable impact from foreign exchange, revenue increased 3% compared with first quarter 2014.
  • Gross profit was $347.4 million in the first quarter 2015, compared with $365.5 million in the first quarter 2014. Excluding the $27.7 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, gross profit would have been $375.1 million.
  • Adjusted EBITDA, a non-GAAP financial measure, was $72.4 million in the first quarter 2015, compared with $45.8 million in the first quarter 2014, as lower gross profit was more than offset by lower operating expenses, both reflecting the impact of year-over-year changes in foreign exchange rates.
  • Net loss attributable to common stockholders was $14.3 million, or $0.02 per share. Non-GAAP net earnings attributable to common stockholders was $21.3 million, or $0.03 per share.
  • First quarter 2015 results included $19.5 million of pre-tax non-operating foreign currency losses, $17.6 million of which was related to non-cash losses on intercompany balances.
  • Operating cash flow for the trailing twelve months ended March 31, 2015 was $307.8 million. Free cash flow, a non-GAAP financial measure, was $22.4 million in the first quarter 2015, bringing free cash flow for the trailing twelve months ended March 31, 2015 to $222.0 million.
  • At the end of the quarter, Groupon had $975.5 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 6% year-over-year to 54 million in the first quarter 2015. North America units increased 8%, EMEA units increased 10% and Rest of World units declined 7%.
  • Active deals: At the end of the first quarter 2015, on average, active deals were more than 425,000 globally, with over 200,000 in North America. Both include the addition of nearly 60,000 Coupons.
  • Active customers: Active customers, or customers that have purchased a voucher or product within the last twelve months, grew 7% year-over-year, to 48.1 million as of March 31, 2015, comprising 24.6 million in North America, 15.3 million in EMEA, and 8.2 million in Rest of World.
  • Customer spend: First quarter 2015 trailing twelve month billings per average active customer was $135, compared with $136 in the first quarter 2014.
  • Traffic: Approximately 105 million people have now downloaded Groupon mobile apps worldwide. In addition, monthly unique visitors, or the count of users accessing Groupon on both web and mobile devices, was over 160 million globally at the end of the first quarter 2015.
  • Search: In the first quarter 2015, approximately 27% of total transactions in North America were related to search, compared with 20% in the first quarter 2014.

Ticket Monster Sale

As previously disclosed, on April 20, 2015, Groupon announced the sale of a controlling stake in Ticket Monster, its South Korean e-commerce business, for $360 million, to a partnership formed by KKR and Hong-Kong-based Anchor Equity Partners. Groupon will ultimately retain a 41% fully diluted stake in Ticket Monster, upon vesting of management's interest. The transaction is expected to close in the second quarter 2015, subject to regulatory and customary closing conditions. The company continues to explore a range of financing and strategic alternatives for its other Asian businesses, as announced in the third quarter 2014.

Share Repurchase

During the first quarter 2015, under its existing $300 million share repurchase program, Groupon repurchased 2,417,700 shares of its Class A common stock at an average price of $7.67 per share, for an aggregate purchase price of $18.5 million. Up to $83.0 million of Class A common stock remains available for repurchase under this program, through August 2015. In April 2015, Groupon announced that its Board approved a new $300 million share repurchase program. The new share repurchase program is subject to, and will be effective upon, the closing of the proposed Ticket Monster transaction, through August 2017. The timing and amount of any share repurchases are determined based on market conditions, share price and other factors, and the programs may be discontinued or suspended at any time.

Outlook

For the second quarter 2015, reflecting current foreign exchange rates and the exclusion of Ticket Monster, Groupon expects revenue of between $700 million and $750 million. This guidance anticipates approximately 800 basis points of unfavorable impact on the year-over-year growth rate from changes in foreign exchange rates.

Based on current foreign exchange rates, Groupon expects Adjusted EBITDA for the second quarter 2015 of between $55 million and $75 million, and non-GAAP earnings per share from continuing operations of between $0.01 and $0.03.

For the full year 2015, based on current foreign exchange rates and the exclusion of Ticket Monster, Groupon expects revenue of between $3.15 billion and $3.3 billion. This guidance anticipates approximately 700 basis points of unfavorable impact on the year-over-year growth rate from changes in foreign exchange rates.

In addition, based on current foreign exchange rates, Groupon continues to expect Adjusted EBITDA for the full year 2015 of greater than $315 million.

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 non-GAAP earnings (loss) per share. 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 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.

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. We present foreign exchange rate neutral information to facilitate comparisons to our historical operating results.

Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) from continuing operations excluding income taxes, interest and other non-operating items, depreciation and amortization, stock-based compensation, 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.

Non-GAAP earnings (loss) attributable to common stockholders and non-GAAP earnings (loss) per share adjust our net loss attributable to common stockholders and earnings (loss) per share to exclude the impact of stock-based compensation expense, amortization of acquired intangible assets, acquisition-related expense (benefit), net, non-operating foreign currency gains and losses on intercompany balances and income (loss) from discontinued operations, and the income tax effect of those items. We believe that these non-GAAP financial measures provide useful supplemental information for evaluating our operating performance.

Beginning in the first quarter 2015, we have updated our non-GAAP earnings (loss) attributable to common stockholders and non-GAAP earnings (loss) per share measures to exclude non-operating foreign currency gains and losses on intercompany balances and income (loss) from discontinued operations, in addition to stock compensation, acquisition-related expense (benefit), net, and amortization of acquired intangibles, which we have excluded historically. We believe that excluding non-operating foreign currency gains and losses on intercompany balances provides meaningful supplemental information about our operating performance because those gains and losses are driven by changes in currency exchange rates. Additionally, we believe that excluding income (loss) from discontinued operations provides meaningful information for evaluating the operating performance of our ongoing business by excluding the results of operations that are being sold.

Free cash flow is a non-GAAP financial measure that comprises net cash provided by (used in) operating activities from continuing operations less purchases of property and equipment and capitalized software from continuing operations. We use free cash flow, 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 including our marketing strategy and spend; effectively dealing with challenges arising from our international operations including fluctuations in currency exchange rates; retaining existing customers and adding new customers; retaining and adding new and 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; maintaining a strong brand; managing inventory and order fulfillment risks; integrating our technology platforms; managing refund risks; retaining our executive team; litigation; compliance with domestic and foreign laws and regulations, including the CARD Act and regulation of the Internet and e-commerce; tax liabilities; tax legislation; maintaining our information technology infrastructure; protecting our intellectual property; completing and realizing the anticipated benefits from acquisitions, dispositions, joint ventures and strategic investments, including our proposed Ticket Monster transaction; seasonality; payment-related risks; customer and merchant fraud; global economic uncertainty; and our ability to raise capital if necessary. 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 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 May 5, 2015. 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 top-rated 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

           
Groupon, Inc.
Summary Consolidated and Segment Results
(in thousands, except share and per share amounts)
(unaudited)
 
The financial results of Ticket Monster are presented as discontinued operations and its assets and liabilities are presented as held for sale in the condensed consolidated financial statements and accompanying tables. All prior period financial information and operational metrics have been retrospectively adjusted to reflect this presentation.

 

 

 

Three Months Ended March 31,

FX

Y/Y % Growth

2015 2014 Y/Y % Growth

Effect(2)

excluding FX(2)

Gross Billings(1):
North America $ 893,977 $ 781,769 14.4 % $ (1,100 ) 14.5 %
EMEA 459,189 513,588 (10.6 ) (91,866 ) 7.3
Rest of World   198,835     225,349   (11.8 )   (24,772 ) (0.8 )
Consolidated gross billings $ 1,552,001   $ 1,520,706   2.1 % $ (117,738 ) 9.8 %
 
Revenue:
North America $ 479,882 $ 431,062 11.3 % $ (328 ) 11.4 %
EMEA 216,220 230,893 (6.4 ) (43,894 ) 12.7
Rest of World   54,254     66,460   (18.4 )   (7,085 ) (7.7 )
Consolidated revenue $ 750,356   $ 728,415   3.0 % $ (51,307 ) 10.1 %
 
Income (loss) from operations $ 5,295 $ (6,364 ) 183.2 % $ (1,405 ) 205.3 %
 
Loss from continuing operations (16,739 ) (21,774 )
 
Income (loss) from discontinued operations, net of tax 6,284 (13,589 )
 
Net loss attributable to Groupon, Inc. $ (14,273 ) $ (37,795 )
 
Basic net income (loss) per share:
Continuing operations $ (0.03 ) $ (0.04 )
Discontinued operations   0.01     (0.02 )
Basic net loss per share $ (0.02 ) $ (0.06 )
 
Diluted net income (loss) per share:
Continuing operations $ (0.03 ) $ (0.04 )
Discontinued operations $ 0.01   $ (0.02 )
Diluted net loss per share $ (0.02 ) $ (0.06 )
 
Weighted average number of shares outstanding
Basic 676,382,937 682,378,690
Diluted 676,382,937 682,378,690
(1)   Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds.
(2) Represents the change in financial measures that would have resulted had average exchange rates in the reporting period been the same as those in effect during the three months ended March 31, 2014.
 
Groupon, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
     
Three Months Ended March 31,
2015     2014
Operating activities
Net loss $ (10,455 ) $ (35,363 )
Less: Income (loss) from discontinued operations, net of tax   6,284     (13,589 )
Loss from continuing operations (16,739 ) (21,774 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of property, equipment and software 26,266 21,448
Amortization of acquired intangible assets 5,934 5,985
Stock-based compensation 35,144 22,911
Deferred income taxes 22 573
Excess tax benefits on stock-based compensation (2,896 ) (5,855 )
Gain on equity method investments (52 )
Gain from changes in fair value of contingent consideration (279 ) (39 )
Impairments of investments 397
Change in assets and liabilities, net of acquisitions:
Restricted cash 3,245 3,536
Accounts receivable (8,901 ) (20,835 )
Prepaid expenses and other current assets (2,513 ) 3,013
Accounts payable 2,244 2,313
Accrued merchant and supplier payables (17,034 ) (33,523 )
Accrued expenses and other current liabilities (2,470 ) (2,202 )
Other, net   18,688     9,530  
Net cash provided by (used in) operating activities from continuing operations 40,711 (14,574 )
Net cash used in operating activities from discontinued operations   (24,355 )   (6,143 )
Net cash provided by (used in) operating activities   16,356     (20,717 )
 
Net cash used in investing activities from continuing operations (19,443 ) (62,994 )
Net cash used in investing activities from discontinued operations   (624 )   (75,614 )
Net cash used in investing activities (20,067 ) (138,608 )
 
Net cash used in financing activities (32,942 ) (41,492 )
 
Effect of exchange rate changes on cash and cash equivalents, including cash classified within current assets held for sale   (30,199 )   (831 )
Net decrease in cash and cash equivalents, including cash classified within current assets held for sale (66,852 ) (201,648 )
Less: Net (decrease) increase in cash classified within current assets held for sale   (25,722 )   18,006  
Net decrease in cash and cash equivalents (41,130 ) (219,654 )
Cash and cash equivalents, beginning of period   1,016,634     1,240,472  
Cash and cash equivalents, end of period $ 975,504   $ 1,020,818  
 
Groupon, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
     
Three Months Ended March 31,
2015     2014
Revenue:
Third party and other $ 360,121 $ 397,702
Direct   390,235     330,713  
Total revenue   750,356     728,415  
Cost of revenue:
Third party and other 51,697 53,802
Direct   351,253     309,101  
Total cost of revenue   402,950     362,903  
Gross profit   347,406     365,512  
Operating expenses:
Marketing 52,533 69,185
Selling, general and administrative 289,847 300,906
Acquisition-related (benefit) expense, net   (269 )   1,785  
Total operating expenses   342,111     371,876  
Income (loss) from operations 5,295 (6,364 )
Other expense, net   (19,927 )   (840 )
Loss from continuing operations before provision for income taxes (14,632 ) (7,204 )
Provision for income taxes   2,107     14,570  
Loss from continuing operations (16,739 ) (21,774 )
Income (loss) from discontinued operations, net of tax   6,284     (13,589 )
Net loss (10,455 ) (35,363 )
Net income attributable to noncontrolling interests   (3,818 )   (2,432 )
Net loss attributable to Groupon, Inc. $ (14,273 ) $ (37,795 )
 
Basic net income (loss) per share:
Continuing operations $ (0.03 ) $ (0.04 )
Discontinued operations   0.01     (0.02 )
Basic net loss per share $ (0.02 ) $ (0.06 )
 
Diluted net income (loss) per share:
Continuing operations $ (0.03 ) $ (0.04 )
Discontinued operations   0.01     (0.02 )
Diluted net loss per share $ (0.02 ) $ (0.06 )
 
Weighted average number of shares outstanding
Basic 676,382,937 682,378,690
Diluted 676,382,937 682,378,690
(1)   Other expense, net includes foreign currency losses of $19.5 million and $0.7 million for the three months ended March 31, 2015 and 2014, respectively.
 
Groupon, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
       
March 31, 2015 December 31, 2014
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 975,504 $ 1,016,634
Accounts receivable, net 92,140 90,597
Deferred income taxes 44,379 16,271
Prepaid expenses and other current assets 184,092 192,382
Current assets held for sale   362,731     85,445  
Total current assets 1,658,846 1,401,329
Property, equipment and software, net 169,966 176,004
Goodwill 224,685 236,756
Intangible assets, net 24,854 30,609
Investments 22,970 24,298
Deferred income taxes, non-current 39,453 41,323
Other non-current assets 13,877 16,173
Non-current assets held for sale       301,105  
Total Assets $ 2,154,651   $ 2,227,597  
Liabilities and Equity
Current liabilities:
Accounts payable $ 17,539 $ 13,822
Accrued merchant and supplier payables 723,593 772,156
Accrued expenses 194,311 214,260
Deferred income taxes 29,077 31,998
Other current liabilities 125,243 127,121
Current liabilities held for sale   172,375     166,239  
Total current liabilities 1,262,138 1,325,596
Deferred income taxes, non-current 719 773
Other non-current liabilities 122,781 129,531
Non-current liabilities held for sale       6,753  
Total Liabilities   1,385,638     1,462,653  
Commitments and contingencies
Stockholders' Equity
Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 704,655,248 shares issued and 674,998,444 shares outstanding at March 31, 2015 and 699,008,084 shares issued and 671,768,980 shares outstanding at December 31, 2014 70 70
Class B common stock, par value $0.0001 per share, 10,000,000 shares authorized, 2,399,976 shares issued and outstanding at March 31, 2015 and December 31, 2014
Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, no shares issued and outstanding at March 31, 2015 and December 31, 2014
Additional paid-in capital 1,873,582 1,847,420
Treasury stock, at cost, 29,656,804 shares at March 31, 2015 and 27,239,104 shares at December 31, 2014 (217,000 ) (198,467 )
Accumulated deficit (936,233 ) (921,960 )
Accumulated other comprehensive income   44,216     35,763  
Total Groupon, Inc. Stockholders' Equity 764,635 762,826
Noncontrolling interests   4,378     2,118  
Total Equity   769,013     764,944  
Total Liabilities and Equity $ 2,154,651   $ 2,227,597  
 
Groupon, Inc.
Segment Information
(in thousands)
(unaudited)
       
Three Months Ended March 31,
2015 2014
North America
Gross billings (1) $ 893,977 $ 781,769
Revenue 479,882 431,062
Segment cost of revenue and operating expenses (2)   455,216     419,677  
Segment operating income (2) $ 24,666 $ 11,385
Segment operating income as a percent of segment gross billings 2.8 % 1.5 %
Segment operating income as a percent of segment revenue 5.1 % 2.6 %
 
EMEA
Gross billings (1) $ 459,189 $ 513,588
Revenue 216,220 230,893
Segment cost of revenue and operating expenses (2)   196,568     211,970  
Segment operating income (2) $ 19,652 $ 18,923
Segment operating income as a percent of segment gross billings 4.3 % 3.7 %
Segment operating income as a percent of segment revenue 9.1 % 8.2 %
 
Rest of World
Gross billings (1) $ 198,835 $ 225,349
Revenue 54,254 66,460
Segment cost of revenue and operating expenses (2)   58,402     78,436  
Segment operating loss (2) $ (4,148 ) $ (11,976 )
Segment operating loss as a percent of segment gross billings (2.1 ) % (5.3 ) %
Segment operating loss as a percent of segment revenue (7.6 ) % (18.0 ) %
(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 (benefit) expense, net.
 
Groupon, Inc.
Non-GAAP Reconciliation Schedules
(in thousands, except share and per share amounts)
(unaudited)
           

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

 
The following is a quarterly reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, "Net (loss) income from continuing operations."
 
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015
(Loss) income from continuing operations $ (21,774 ) $ (10,692 ) $ (12,573 ) $ 26,566 $ (16,739 )
Adjustments:
Stock-based compensation 22,911 29,738 32,680 29,961 35,144
Acquisition-related expense (benefit), net 1,785 597 (304 ) (809 ) (269 )
Depreciation and amortization 27,433 27,024 30,462 30,122 32,200
Other expense, net 840 1,023 20,056 11,531 19,927
Provision (benefit) for income taxes   14,570     12,045     (6,434 )   (4,457 )   2,107  
Total adjustments   67,539     70,427     76,460     66,348     89,109  
Adjusted EBITDA $ 45,765   $ 59,735   $ 63,887   $ 92,914   $ 72,370  
 
The following is a reconciliation of net income (loss) attributable to common stockholders to non-GAAP net income (loss) attributable to common stockholders and a reconciliation of diluted net income (loss) per share to non-GAAP net income (loss) per share for the three months ended March 31, 2015:
 

Three Months Ended March 31, 2015

Net income (loss) attributable to common stockholders $ (14,273 )
Stock-based compensation 35,144
Amortization of acquired intangible assets 5,934
Acquisition-related (benefit) expense, net (269 )
Intercompany foreign currency losses (gains) 17,638
Income tax effect of above adjustments (16,559 )
Income from discontinued operations, net of tax   (6,284 )
Non-GAAP net income (loss) attributable to common stockholders $ 21,331  
 
Diluted shares 676,382,937
Incremental diluted shares   8,715,925  
Adjusted diluted shares   685,098,862  
 
Diluted net income (loss) per share $ (0.02 )
Impact of stock-based compensation, amortization of acquired intangible assets, acquisition-related (benefit) expense, net, intercompany foreign currency losses (gains), income from discontinued operations and related tax effects   0.05  
Non-GAAP net income (loss) per share $ 0.03  
 
Foreign exchange rate neutral operating results are non-GAAP financial measures. The Company reconciles foreign exchange rate neutral operating results to the most comparable U.S. GAAP financial measures, "Gross billings," "Revenue" and "Income (loss) from continuing operations," respectively, for the periods presented. The Company reconciles "foreign exchange rate neutral Gross billings growth" and "foreign exchange rate neutral Revenue growth" to year-over-year growth rates for the most comparable U.S. GAAP financial measures, "Gross billings growth" and "Revenue growth," respectively, for the periods presented.
 
The effect on the Company's gross billings, revenue and income (loss) from changes in exchange rates versus the U.S. Dollar for the three months ended March 31, 2015 was as follows:
 
Three Months Ended March 31, 2015 Three Months Ended March 31, 2015

At Avg. Q1 2014

Rates(1)

  Exchange Rate

Effect(2)

  As

Reported

At Avg. Q4 2014

Rates(3)

  Exchange Rate

Effect(2)

  As

Reported

Gross billings $ 1,669,739 $ (117,738 ) $ 1,552,001 $ 1,609,255 $ (57,254 ) $ 1,552,001
Revenue 801,663 (51,307 ) 750,356 775,503 (25,147 ) 750,356
Income (loss) from operations $ 6,700 $ (1,405 ) $ 5,295 $ 6,460 $ (1,165 ) $ 5,295
 
(1) Represents the financial statement balances that would have resulted had average exchange rates in the reporting period been the same as those in effect during the three months ended March 31, 2014.
(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 period been the same as those in effect during the three months ended December 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.
 
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015
EMEA Gross billings growth, excluding FX 1 % (4 ) % 10 % 8 % 7 %
FX Effect   3     4         (9 )   (18 )
EMEA Gross billings growth 4 % % 10 % (1 ) % (11 ) %
 
Rest of World Gross billings growth, excluding FX 9 % 8 %

1

% % (1 ) %
FX Effect   (13 )   (8 )   (4 )   (10 )   (11 )
Rest of World Gross billings growth (4 ) % % (3 ) % (10 ) % (12 ) %
 
Consolidated Gross billings growth, excluding FX 9 % 6 % 12 % 13 % 10 %
FX Effect   (1 )       (1 )   (5 )   (8 )
Consolidated Gross billings growth 8 % 6 % 11 % 8 % 2 %
 
The following is a quarterly reconciliation of foreign exchange rate neutral Revenue growth from the comparable quarterly periods of the prior year to reported Revenue growth from the comparable quarterly periods of the prior year.
 
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015
EMEA Revenue growth, excluding FX 22 % 36 % 55 % 18 % 13 %
FX Effect   4     6     1     (10 )   (19 )
EMEA Revenue growth 26 % 42 % 56 % 8 % (6 ) %
 
Rest of World Revenue growth, excluding FX (2 ) % (1 ) % (20 ) % (9 ) % (8 ) %
FX Effect   (13 )   (9 )   (4 )   (10 )   (10 )
Rest of World Revenue growth (15 ) % (10 ) % (24 ) % (19 ) % (18 ) %
 
Consolidated Revenue growth, excluding FX 22 % 17 % 21 % 19 % 10 %
FX Effect   (1 )   1     (1 )   (4 )   (7 )
Consolidated Revenue growth 21 % 18 % 20 % 15 % 3 %
 
The effect on North America's gross billings by category from changes in foreign exchange rates versus the U.S. Dollar for the three months ended March 31, 2015 was as follows:
         

At Avg. Q1

2014 Rates (1)

Exchange

Rate

Effect (2)

March 31, 2015

As Reported

March 31, 2014

As Reported

Y/Y %

Growth

Y/Y%
Growth
excluding
FX

Local:
Third party and other $ 513,222 $ (664 ) $ 512,558 $ 456,952 12.2 % 12.3 %
 
Goods:
Third party 6,677 (317 ) 6,360 6,782 (6.2 ) % (1.5 ) %
Direct   278,381      

278,381

  236,114 17.9   17.9  
Total 285,058 (317 ) 284,741 242,896 17.2 % 17.4
 
Travel:
Third party 96,797 (119 ) 96,678 81,921 18.0 % 18.2 %
           
Total gross billings $ 895,077 $ (1,100 ) $ 893,977 $ 781,769 14.4   % 14.5   %
 
The effect on EMEA's gross billings by category from changes in foreign exchange rates versus the U.S. Dollar for the three months ended March 31, 2015 was as follows:
 
At Avg. Q1

2014 Rates (1)

Exchange

Rate

Effect (2)

March 31, 2015

As Reported

March 31, 2014

As Reported

Y/Y %

Growth

Y/Y%
Growth
excluding
FX

Local:
Third party and other $ 258,190 $ (40,592 ) $ 217,598 $ 262,141 (17.0 ) % (1.5 ) %
 
Goods:
Third party 83,200 (13,663 ) 69,537 93,599 (25.7 ) % (11.1 ) %
Direct   129,559   (22,570 )   106,989   89,414 19.7   44.9  
Total 212,759 (36,233 ) 176,526 183,013 (3.5 ) % 16.3 %
 
Travel:
Third party 80,106 (15,041 ) 65,065 68,434 (4.9 ) % 17.1 %
           
Total gross billings $ 551,055 $ (91,866 ) $ 459,189 $ 513,588 (10.6 ) % 7.3   %
 
The effect on Rest of World's gross billings by category from changes in foreign exchange rates versus the U.S. Dollar for the three months ended March 31, 2015 was as follows:
 
At Avg. Q1

2014 Rates (1)

Exchange

Rate

Effect (2)

March 31, 2015

As Reported

March 31, 2014

As Reported

Y/Y %

Growth

Y/Y%
Growth
excluding
FX

Local:
Third party and other $ 112,736 $ (13,001 ) $ 99,735 $ 112,660 (11.5 ) % 0.1 %
 
Goods:
Third party 67,910 (6,621 ) 61,289 74,338 (17.6 ) % (8.6 ) %
Direct   5,594   (729 )   4,865   5,185 (6.2 ) 7.9  
Total 73,504 (7,350 ) 66,154 79,523 (16.8 ) % (7.6 ) %
 
Travel:
Third party 37,367 (4,421 ) 32,946 33,166 (0.7 ) % 12.7 %
           
Total gross billings $ 223,607 $ (24,772 ) $ 198,835 $ 225,349 (11.8 ) % (0.8 ) %
 
The effect on consolidated gross billings by category from changes in foreign exchange rates versus the U.S. Dollar for the three months ended March 31, 2015 was as follows:
 
At Avg. Q1

2014 Rates (1)

Exchange

Rate

Effect (2)

March 31, 2015

As Reported

March 31, 2014

As Reported

Y/Y %

Growth

Y/Y%
Growth
excluding
FX

Local:
Third party and other $ 884,148 $ (54,257 ) $ 829,891 $ 831,753 (0.2 ) % 6.3 %
 
Goods:
Third party 157,787 (20,601 ) 137,186 174,719 (21.5 ) % (9.7 ) %
Direct   413,534   (23,299 )   390,235   330,713 18.0   25.0  
Total 571,321 (43,900 ) 527,421 505,432 4.4 % 13.0 %
 
Travel:
Third party 214,270 (19,581 ) 194,689 183,521 6.1 % 16.8 %
           
Total gross billings $ 1,669,739 $ (117,738 ) $ 1,552,001 $ 1,520,706 2.1   % 9.8   %
(1)   Represents the financial statement balances that would have resulted had average exchange rates in the reporting period been the same as those in effect during the three months ended March 31, 2014.
(2) Represents the increase or decrease in reported amounts resulting from changes in exchange rates from those in effect in the comparable period.
 
Groupon, Inc.

Supplemental Financial Information and Business Metrics (9)(10)

(financial data in thousands; active customers in millions)
(unaudited)
         
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015
Segments
North America Segment:
Gross Billings (1):
Local(2) Gross Billings $ 456,952 $ 461,366 $ 446,573 $ 499,250 $ 512,558
Goods Gross Billings 242,896 247,618 242,893 369,033 284,741
Travel Gross Billings   81,921     89,861     84,820     80,296     96,678  
Total Gross Billings $ 781,769 $ 798,845 $ 774,286 $ 948,579 $ 893,977
Year-over-year growth 15 % 12 % 16 % 20 % 14 %
% Third Party and Other 70 % 70 % 69 % 62 % 69 %
% Direct 30 % 30 % 31 % 38 % 31 %
Gross BillingsTrailing Twelve Months (TTM) $ 2,947,694 $ 3,034,334 $ 3,143,621 $ 3,303,479 $ 3,415,687
 
Revenue (3):
Local Revenue $ 177,247 $ 164,500 $ 161,912 $ 170,946 $ 180,864
Goods Revenue 237,435 241,626 238,955 362,863 279,029
Travel Revenue   16,380     17,805     17,627     17,165     19,989  
Total Revenue $ 431,062 $ 423,931 $ 418,494 $ 550,974 $ 479,882
Year-over-year growth 27 % 12 % 16 % 24 % 11 %
% Third Party and Other 45 % 43 % 43 % 35 % 42 %
% Direct 55 % 57 % 57 % 65 % 58 %
Revenue TTM $ 1,612,866 $ 1,659,615 $ 1,717,271 $ 1,824,461 $ 1,873,281
 
Gross Profit (4):
Local Gross Profit $ 152,622 $ 142,674 $ 138,189 $ 147,582 $ 154,776
% of North America Local Gross Billings 33.4 % 30.9 % 30.9 % 29.6 % 30.2 %
Goods Gross Profit 12,604 22,961 23,953 34,404 23,923
% of North America Goods Gross Billings 5.2 % 9.3 % 9.9 % 9.3 % 8.4 %
Travel Gross Profit 14,442 14,365 14,000 14,187 15,791
% of North America Travel Gross Billings   17.6   %   16.0   %   16.5   %   17.7   %   16.3   %
Total Gross Profit $ 179,668 $ 180,000 $ 176,142 $ 196,173 $ 194,490
Year-over-year growth 4 % (7 ) % 3 % 13 % 8 %
% Third Party and Other 94 % 88 % 87 % 83 % 88 %
% Direct 6 % 12 % 13 % 17 % 12 %
% of North America Total Gross Billings 23.0 % 22.5 % 22.7 % 20.7 % 21.8 %
 
EMEA Segment:
Gross Billings:
Local Gross Billings $ 262,141 $ 227,266 $ 218,615 $ 242,119 $ 217,598
Goods Gross Billings 183,013 190,957 191,006 245,712 176,526
Travel Gross Billings   68,434     65,032     79,802     72,710     65,065  
Total Gross Billings $ 513,588 $ 483,255 $ 489,423 $ 560,541 $ 459,189
Year-over-year growth 4 % % 10 % (1 )

%

(11 ) %
Year-over-year growth, excluding FX (5) 1 % (4 ) % 10 % 8 % 7 %
% Third Party and Other 83 % 80 % 78 % 74 % 77 %
% Direct 17 % 20 % 22 % 26 % 23 %

Gross Billings TTM

$ 2,004,869 $ 2,005,874 $ 2,051,979 $ 2,046,807 $ 1,992,408
 
Revenue:
Local Revenue $ 109,120 $ 96,485 $ 90,002 $ 95,572 $ 82,536
Goods Revenue 106,889 115,413 123,110 160,582 118,967
Travel Revenue   14,884     15,792     16,960     16,321     14,717  
Total Revenue $ 230,893 $ 227,690 $ 230,072 $ 272,475 $ 216,220
Year-over-year growth 26 % 42 % 56 % 8 % (6 ) %
Year-over-year growth, excluding FX 22 % 36 % 55 % 18 % 13 %
% Third Party and Other 61 % 57 % 53 % 46 % 51 %
% Direct 39 % 43 % 47 % 54 % 49 %
Revenue TTM $ 790,010 $ 857,738 $ 939,860 $ 961,130 $ 946,457
 
Gross Profit:
Local Gross Profit $ 100,066 $ 90,373 $ 83,956 $ 90,150 $ 77,356
% of EMEA Local Gross Billings 38.2 % 39.8 % 38.4 % 37.2 % 35.5 %
Goods Gross Profit 27,302 35,432 32,252 38,154 25,481
% of EMEA Goods Gross Billings 14.9 % 18.6 % 16.9 % 15.5 % 14.4 %
Travel Gross Profit 13,669 14,894 15,440 15,226 12,400
% of EMEA Travel Gross Billings   20.0   %   22.9   %   19.3   %   20.9   %   19.1   %
Total Gross Profit $ 141,037 $ 140,699 $ 131,648 $ 143,530 $ 115,237
Year-over-year growth (8 ) % 1 % 6 % (6 ) % (18 ) %
% Third Party and Other 92 % 85 % 85 % 82 % 87 %
% Direct 8 % 15 % 15 % 18 % 13 %
% of EMEA Total Gross Billings 27.5 % 29.1 % 26.9 % 25.6 % 25.1 %
 
Rest of World Segment:
Gross Billings:
Local Gross Billings $ 112,660 $ 112,741 $ 120,269 $ 105,420 $ 99,735
Goods Gross Billings 79,523 73,876 70,615 77,816 66,154
Travel Gross Billings   33,166     33,393     35,754     32,313     32,946  
Total Gross Billings $ 225,349 $ 220,010 $ 226,638 $ 215,549 $ 198,835
Year-over-year growth (4 ) % % (3 ) % (10 ) % (12 ) %
Year-over-year growth, excluding FX 9 % 8 % 1 % % (1 ) %
% Third Party and Other 98 % 98 % 98 % 96 % 98 %
% Direct 2 % 2 % 2 % 4 % 2 %

Gross Billings TTM

$ 917,704 $ 918,363 $ 910,670 $ 887,546 $ 861,032
 
Revenue:
Local Revenue $ 38,932 $ 37,018 $ 39,034 $ 32,264 $ 30,281
Goods Revenue 20,628 21,065 19,426 21,758 17,478
Travel Revenue   6,900     6,507     7,243     5,757     6,495  
Total Revenue $ 66,460 $ 64,590 $ 65,703 $ 59,779 $ 54,254
Year-over-year growth (15 ) % (10 ) % (24 ) % (19 ) % (18 ) %
Year-over-year growth, excluding FX (2 ) % (1 ) % (20 ) % (9 ) % (8 ) %
% Third Party and Other 92 % 92 % 92 % 86 % 91 %
% Direct 8 % 8 % 8 % 14 % 9 %
Revenue TTM $ 297,792 $ 290,779 $ 270,211 $ 256,532 $ 244,326
 
Gross Profit:
Local Gross Profit $ 31,798 $ 31,997 $ 34,373 $ 27,175 $ 26,161
% of Rest of World Local Gross Billings 28.2 % 28.4 % 28.6 % 25.8 % 26.2 %
Goods Gross Profit 7,364 8,786 7,571 7,416 6,612
% of Rest of World Goods Gross Billings 9.3 % 11.9 % 10.7 % 9.5 % 10.0 %
Travel Gross Profit 5,645 4,928 5,544 3,815 4,906
% of Rest of World Travel Gross Billings   17.0   %   14.8   %   15.5   %   11.8   %   14.9   %
Total Gross Profit $ 44,807 $ 45,711 $ 47,488 $ 38,406 $ 37,679
Year-over-year growth (15 ) % (10 ) % (26 ) % (24 ) % (16 ) %
% Third Party and Other 103 % 99 % 100 % 96 % 99 %
% Direct (3 ) % 1 % % 4 % 1 %
% of Rest of World Total Gross Billings 19.9 % 20.8 % 21.0 % 17.8 % 18.9 %
 
Consolidated Results of Operations:
Gross Billings:
Local Gross Billings $ 831,753 $ 801,373 $ 785,457 $ 846,789 $ 829,891
Goods Gross Billings 505,432 512,451 504,514 692,561 527,421
Travel Gross Billings   183,521     188,286     200,376     185,319     194,689  
Total Gross Billings $ 1,520,706 $ 1,502,110 $ 1,490,347 $ 1,724,669 $ 1,552,001
Year-over-year growth 8 % 6 % 11 % 8 % 2 %
Year-over-year growth, excluding FX 9 % 6 % 12 % 13 % 10 %
% Third Party and Other 78 % 77 % 76 % 70 % 75 %
% Direct 22 % 23 % 24 % 30 % 25 %
Gross Billings TTM $ 5,870,267 $ 5,958,571 $ 6,106,270 $ 6,237,832 $ 6,269,127
Year-over-year growth 8 % 7 % 7 % 8 % 7 %
 
Revenue:
Local Revenue $ 325,299 $ 298,003 $ 290,948 $ 298,782 $ 293,681
Goods Revenue 364,952 378,104 381,491 545,203 415,474
Travel Revenue   38,164     40,104     41,830     39,243     41,201  
Total Revenue $ 728,415 $ 716,211 $ 714,269 $ 883,228 $ 750,356
Year-over-year growth 21 % 18 % 20 % 15 % 3 %
Year-over-year growth, excluding FX 22 % 17 % 21 % 19 % 10 %
% Third Party and Other 55 % 52 % 51 % 42 % 48 %
% Direct 45 % 48 % 49 % 58 % 52 %
Revenue TTM $ 2,700,668 $ 2,808,132 $ 2,927,342 $ 3,042,123 $ 3,064,064
Year-over-year growth 14 % 16 % 20 % 18 % 13 %
 
Gross Profit:
Local Gross Profit $ 284,486 $ 265,044 $ 256,518 $ 264,907 $ 258,293
% of Consolidated Local Gross Billings 34.2 % 33.1 % 32.7 % 31.3 % 31.1 %
Goods Gross Profit 47,270 67,179 63,776 79,974 56,016
% of Consolidated Goods Gross Billings 9.4 % 13.1 % 12.6 % 11.5 % 10.6 %
Travel Gross Profit 33,756 34,187 34,984 33,228 33,097
% of Consolidated Travel Gross Billings   18.4   %   18.2   %   17.5   %   17.9   %   17.0   %
Total Gross Profit $ 365,512 $ 366,410 $ 355,278 $ 378,109 $ 347,406
Year-over-year growth (4 ) % (5 ) % (1 ) % % (5 ) %
% Third Party and Other 94 % 88 % 88 % 84 % 89 %
% Direct 6 % 12 % 12 % 16 % 11 %
% of Total Consolidated Gross Billings 24.0 % 24.4 % 23.8 % 21.9 % 22.4 %
 
Marketing $ 69,185 $ 57,699 $ 55,258 $ 59,812 $ 52,533
Selling, general and administrative 300,906 305,740 299,275 285,472 289,847
Adjusted EBITDA 45,765 59,735 63,887 92,914 72,370
% of Total Consolidated Gross Billings 3.0 % 4.0 % 4.3 % 5.4 % 4.7 %
% of Total Consolidated Revenue 6.3 % 8.3 % 8.9 % 10.5 % 9.6 %
 
Free cash flow is a non-GAAP financial measure. The following is a reconciliation of free cash flow to the most comparable U.S. GAAP financial measure, "Net cash provided by (used in) operating activities from continuing operations."
 
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015
 
Net cash (used in) provided by operating activities from continuing operations $ (14,574 ) $ (28,525 ) $ 22,324 $ 273,272 $ 40,711
Purchases of property and equipment and capitalized software from continuing operations   (16,093 )   (28,712 )   (18,638 )   (20,117 )   (18,294 )
Free cash flow $ (30,667 ) $ (57,237 ) $ 3,686 $ 253,155 $ 22,417
 
Net cash provided by operating activities from continuing operations (TTM) $ 195,098 $ 123,271 $ 157,500 $ 252,497 $ 307,782
Purchases of property and equipment and capitalized software from continuing operations (TTM)   (65,130 )   (79,800 )   (83,374 )   (83,560 )   (85,761 )
Free cash flow (TTM) $ 129,968 $ 43,471 $ 74,126 $ 168,937 $ 222,021
 
Net cash used in investing activities from continuing operations $ (62,994 ) $ (32,157 ) $ (19,046 ) $ (35,175 ) $ (19,443 )
Net cash used in financing activities $ (41,492 ) $ (114,753 ) $ (16,823 ) $ (21,088 ) $ (32,942 )
 
Net cash used in investing activities from continuing operations (TTM) $ (128,630 ) $ (144,925 ) $ (137,527 ) $ (149,372 ) $ (105,821 )
Net cash used in financing activities (TTM) $ (113,847 ) $ (220,659 ) $ (228,512 ) $ (194,156 ) $ (185,606 )
 
Other Metrics:
Active Customers (6)
North America 21.8 22.6 23.5 24.1 24.6
EMEA 14.5 14.5 14.9 15.2 15.3
Rest of World   8.7     8.8     8.2     8.1     8.2  
Total Active Customers 45.0 45.9 46.6 47.4 48.1
 
TTM Gross Billings / Average Active Customer (7)
North America $ 147 $ 145 $ 145 $ 147 $ 147
EMEA 141 141 142 139 134
Rest of World 104 104 108 105 101
Consolidated 136 136 137 137 135
 
Global headcount as of March 31, 2015 and 2014 was as follows:
 
Q1 2014 Q1 2015
Sales (8) 4,715 4,429
% North America 30 % 30 %
% EMEA 41 % 42 %
% Rest of World 29 % 28 %
Other   6,503     6,386  
Total Headcount 11,218 10,815
(1)   Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds.
(2) Local represents deals from local merchants, deals with national merchants, and deals through local events. Other revenue transactions include advertising, payment processing, point of sale and commission revenue.
(3) Includes third party revenue, direct revenue and other revenue. Third party revenue is related to sales for which the Company acts as a marketing agent for the merchant. This revenue is recorded on a net basis. Direct revenue is primarily related to the sale of products for which the Company is the merchant of record. These revenues are accounted for on a gross basis, with the cost of inventory included in cost of revenue. Other revenue primarily consists of advertising revenue, payment processing revenue, point of sale 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 from continuing operations.
(9) Financial information and other metrics have been retrospectively adjusted to exclude Ticket Monster, which has been classified as discontinued operations.
(10) 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.

Groupon, Inc.
Investor Relations:
Genny Konz, 312-999-3098
ir@groupon.com
or
Public Relations
Bill Roberts, 312-459-5191

Source: Groupon, Inc.

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