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Groupon Announces Fourth Quarter and Fiscal Year 2014 Results

 

  • Fourth quarter gross billings of $2.1 billion, $7.6 billion for the full year
  • Fourth quarter revenue of $925.4 million, $3.2 billion for the full year
  • Fourth quarter Adjusted EBITDA of $87.0 million, $253.4 million for the full year
  • Fourth quarter GAAP earnings per share of $0.01; non-GAAP earnings per share of $0.06

CHICAGO--(BUSINESS WIRE)-- Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter and fiscal year ended December 31, 2014.

"2014 was a transformational year for Groupon, as we made significant progress in our strategy to become the world's leading local commerce destination," said Eric Lefkofsky, CEO of Groupon. "Global billings hit their highest level ever in the quarter, growing more than 30%, driven in part by our reignited North America Local business. We now turn our attention to further building out our marketplace to ensure that our more than 260 million subscribers have an amazing experience every time they use Groupon."

Fourth Quarter 2014 Summary

  • Gross billings, which reflect the total dollar value of customer purchases of goods and services, increased 31% globally to $2.1 billion in the fourth quarter 2014, compared with $1.6 billion in the fourth quarter 2013. Excluding the $82.2 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, billings increased 36% compared with fourth quarter 2013. On this F/X neutral basis, North America billings increased 20%, EMEA increased 8% and Rest of World increased 154%, driven by the first-quarter acquisition of Ticket Monster.
  • Revenue increased 20%, to $925.4 million in the fourth quarter 2014, compared with $768.4 million in the fourth quarter 2013. Excluding the $32.5 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, revenue increased 25% compared with fourth quarter 2013. On this F/X neutral basis, North America revenue increased 24%, EMEA increased 18% and Rest of World increased 50%.
  • Gross profit was $393.5 million in the fourth quarter 2014, compared with $378.2 million in the fourth quarter 2013.
  • Adjusted EBITDA, a non-GAAP financial measure, was $87.0 million in the fourth quarter 2014, compared with $72.0 million in the fourth quarter 2013, as higher gross profit was partially offset by increased investment related to the Ticket Monster and ideel acquisitions, as well as an unfavorable impact from year-over-year changes in foreign exchange rates.
  • Net income attributable to common stockholders was $8.8 million, or $0.01 per share. Non-GAAP earnings per share was $0.06.
  • Fourth quarter 2014 results included $11.4 million of pre-tax non-operating foreign currency losses and a $16.7 million decrease to income tax expense from a reduction in liabilities for uncertain tax positions.
  • Operating cash flow for the trailing twelve months ended December 31, 2014 was $288.8 million. Free cash flow, a non-GAAP financial measure, was $266.0 million in the fourth quarter 2014, bringing free cash flow for the trailing twelve months ended December 31, 2014 to $200.5 million.
  • At the end of the quarter, Groupon had $1.1 billion in cash and cash equivalents.

Full Year 2014 Summary

  • Gross billings increased 32% globally to $7.6 billion in 2014, compared with $5.8 billion in 2013. Excluding the $39.9 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the year, billings increased 32% compared with 2013. On this F/X neutral basis, North America billings increased 16%, EMEA increased 4% and Rest of World increased 144%, driven by the first-quarter acquisition of Ticket Monster.
  • Revenue increased 24%, to $3.2 billion in 2014, compared with $2.6 billion in 2013. Excluding the $26.1 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the year, revenue increased 25% compared with 2013. On this F/X neutral basis, North America revenue increased 20%, EMEA increased 30% and Rest of World increased 38%.
  • Gross profit was $1.55 billion in 2014, compared with $1.50 billion in 2013.
  • Adjusted EBITDA was $253.4 million in 2014, compared with $286.7 million in 2013, reflecting SG&A expense related to the Ticket Monster and ideel acquisitions, as well as an increase in overall marketing expense.
  • Net loss attributable to common stockholders was $73.1 million, or $0.11 per share. Non-GAAP earnings per share was $0.08.
  • 2014 results included $31.5 million of pre-tax non-operating foreign currency losses and $24.4 million of decreases to income tax expense from reductions in liabilities for uncertain tax positions.

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, exceeded 100 million for the first quarter ever, increasing 81% year-over-year to 101 million in the fourth quarter 2014. North America units increased 11%, EMEA units increased 20% and Rest of World units increased 340%, driven by the first-quarter acquisition of Ticket Monster.
  • Active deals: At the end of the fourth quarter 2014, on average, active deals were approximately 370,000 globally, compared with approximately 300,000 at the end of the third quarter 2014. North American active deals increased to over 135,000.
  • Active customers: Active customers, or customers that have purchased a voucher or product within the last twelve months, grew 23% year-over-year, to 53.9 million as of December 31, 2014, comprising 24.1 million in North America, 15.2 million in EMEA, and 14.6 million in Rest of World.
  • Customer spend: Fourth quarter 2014 trailing twelve month billings per average active customer was $155, compared with $149 in the third quarter 2014.
  • Traffic: Almost 110 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 fourth quarter 2014.
  • Search: In the fourth quarter 2014, approximately 26% of total transactions in North America were related to search, compared with 19% in the fourth quarter 2013.
  • Rest of World: Rest of World generated billings growth of 141% and a segment operating loss of $16.2 million in the fourth quarter 2014, $13.1 million of which was related to Ticket Monster, reflecting continued investment in that business. The company announced last quarter that it is exploring a range of financing and strategic alternatives for its Asian businesses, including Ticket Monster. As part of that process, multiple parties have expressed preliminary interest in Ticket Monster, although it is too early to comment on structure, pricing or the likelihood of a transaction, as the process is still underway. Excluding Ticket Monster, Rest of World was near break even in the quarter, compared with a $14.7 million segment operating loss in the fourth quarter 2013.

Share Repurchase Program

During the fourth quarter 2014, Groupon repurchased 1,152,100 shares of its Class A common stock at an average price of $7.04 per share, for an aggregate purchase price of $8.1 million. Under the existing authorization, Groupon has repurchased a total of 27,239,104 shares at an average price of $7.29 per share, for an aggregate purchase price of $198.5 million. Groupon is authorized to repurchase up to an additional $101.5 million of Class A common stock under the August 2013 share repurchase authorization. The program, which is intended to partially offset dilution from employee stock grants, terminates in August 2015.

Outlook

For the first quarter 2015, reflecting current foreign exchange rates, Groupon expects revenue of between $790 million and $840 million. This guidance anticipates approximately 500 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, and $15 million of continued investment in Tmon, Groupon expects Adjusted EBITDA for the first quarter 2015 of between $45 million and $65 million, and non-GAAP earnings per share of between $0.00 and $0.02.

For the full year 2015, Groupon is reiterating the target shared at its November 2014 Investor Day of at least 25% year-over-year growth in Adjusted EBITDA, or slightly higher on an F/X neutral basis. As such, Groupon expects Adjusted EBITDA for the full year 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.

Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) excluding income taxes, interest and other non-operating items, depreciation and amortization, stock-based compensation, and acquisition-related expense (benefit), net. Our definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Adjusted EBITDA is a key measure used by our management and Board of Directors to evaluate operating performance, generate future plans and make strategic decisions regarding the allocation of capital. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

Non-GAAP earnings (loss) per share adjusts our earnings (loss) per share to exclude the impact of stock-based compensation expense, amortization of acquired intangible assets, and acquisition-related expense (benefit), net, and the income tax effect of those items. We believe that this non-GAAP financial measure provides useful supplemental information for evaluating our operating performance.

We previously updated our non-GAAP earnings (loss) per share measure, effective beginning with the first quarter 2014, to exclude amortization of acquired intangible assets, net of tax, in addition to stock compensation and acquisition-related expenses, which we excluded historically. Due to our significant acquisition activity in January 2014 and potential acquisition activity in the future, we believe that excluding the impact of this item from our non-GAAP earnings (loss) per share measure enables more meaningful comparisons with our historical results. Beginning in the first quarter 2015, we will be updating our non-GAAP earnings per share measure to also exclude non-operating foreign currency gains and losses on intercompany balances. We believe that excluding this item will enable more meaningful comparisons with our historical results.

Free cash flow is a non-GAAP financial measure that comprises net cash provided by (used in) operating activities less purchases of property and equipment and capitalized software. We use free cash flow, and ratios based on it, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe that it typically represents a more useful measure of cash flows because purchases of fixed assets, software developed for internal-use and website development costs are necessary components of our ongoing operations. Free cash flow is not intended to represent the total increase or decrease in Groupon's cash balance for the applicable period.

Note on Forward-Looking Statements

The statements contained in this release that refer to plans and expectations for the next quarter, the full year or the future are forward-looking statements that involve a number of risks and uncertainties, and actual results could differ materially from those discussed. The risks and uncertainties that could cause our results to differ materially from those included in the forward-looking statements include, but are not limited to, volatility in our revenue and operating results; risks related to our business strategy including our marketing strategy and spend; effectively dealing with challenges arising from our international operations; 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; handling acquisitions, joint ventures and strategic investments effectively; seasonality; payment-related risks; customer and merchant fraud; global economic uncertainty; and our ability to raise capital if necessary. We urge you to refer to the factors included under the headings ''Risk Factors'' and ''Management's Discussion and Analysis of Financial Condition and Results of Operations'' in the company's Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, copies of which may be obtained by visiting the company's Investor Relations web site at http://investor.groupon.com or the SEC's web site at www.sec.gov. Groupon's actual results could differ materially from those predicted or implied and reported results should not be considered an indication of future performance.

You should not rely upon forward-looking statements as predictions of future events. Although Groupon believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither the company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements reflect Groupon's expectations as of February 12, 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)
   

 

         

 

 

 

         

 

   

Three Months Ended

December 31,

         

Y/Y %

Growth

excluding

FX (2)

 

Year Ended

December 31,

         

Y/Y %

Growth

excluding

FX (2)

    2014   2013   Y/Y % Growth   FX Effect (2)     2014   2013   Y/Y % Growth   FX Effect (2)  
Gross Billings (1):                                        
North America   $ 948,579   $ 788,721     20.3 %   $ (939 )   20.4 %   $ 3,303,479     $ 2,847,244     16.0 %   $ (2,971 )   16.1 %
EMEA     560,541     565,713     (0.9 )     (49,057 )   7.8       2,046,807       1,983,599     3.2       (7,462 )   3.6  
Rest of World     574,848     238,673     140.9       (32,203 )   154.3       2,230,674       926,487     140.8       (29,467 )   143.9  
Consolidated gross billings   $ 2,083,968   $ 1,593,107     30.8 %   $ (82,199 )   36.0 %   $ 7,580,960     $ 5,757,330     31.7 %   $ (39,900 )   32.4 %
                                         
Revenue:                                        
North America   $ 550,974   $ 443,784     24.2 %   $ (257 )   24.2 %   $ 1,824,461     $ 1,521,358     19.9 %   $ (862 )   20.0 %
EMEA     272,475     251,205     8.5       (24,066 )   18.0       961,130       742,915     29.4       (4,374 )   30.0  
Rest of World     101,972     73,458     38.8       (8,209 )   50.0       406,097       309,382     31.3       (20,838 )   38.0  
Consolidated revenue   $ 925,421   $ 768,447     20.4 %   $ (32,532 )   24.7 %   $ 3,191,688     $ 2,573,655     24.0 %   $ (26,074 )   25.0 %
                                         
Income (loss) from operations   $ 18,394   $ 13,352     37.8 %   $ (828 )   44.0 %   $ (14,842 )   $ 75,754     (119.6 )%   $ 1,389     (121.4 )%
                                         
Net income (loss) attributable to Groupon, Inc.   $ 8,788   $ (81,247 )               $ (73,090 )   $ (95,393 )            
                                         
Net income (loss) per share                                        
Basic   $ 0.01   $ (0.12 )               $ (0.11 )   $ (0.14 )            
Diluted   $ 0.01   $ (0.12 )               $ (0.11 )   $ (0.14 )            
                                         
Weighted average number of shares outstanding                                    
Basic     671,885,967     668,046,073                   674,832,393       663,910,194              
Diluted     681,543,847     668,046,073                   674,832,393       663,910,194              
(1) Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds.
(2) Represents the change in financial measures that would have resulted had average exchange rates in the reporting periods been the same as those in effect during the three months and year ended December 31, 2013.
Groupon, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
    Three Months Ended

December 31,

  Year Ended

December 31,

    2014   2013   2014   2013
Operating activities                
Net income (loss)   $ 11,384     $ (78,861 )   $ (63,919 )   $ (88,946 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:                
Depreciation and amortization of property, equipment and software     26,323       18,637       97,799       67,823  
Amortization of acquired intangible assets     11,054       5,495       47,122       21,626  
Stock-based compensation     32,061       32,239       122,019       121,462  
Deferred income taxes     (9,150 )     (16,830 )     (11,106 )     (18,055 )
Excess tax benefits on stock-based compensation     (3,407 )     (8,338 )     (15,980 )     (20,454 )
(Income) loss on equity method investments     -       (14 )     459       44  
Net gain from changes in fair value of contingent consideration     (1,385 )     (895 )     (2,444 )     (3,171 )
Impairments of investments     -       85,925       2,036       85,925  
Change in assets and liabilities, net of acquisitions:                
Restricted cash     (951 )     2,264       6,010       2,183  
Accounts receivable     15,607       1,990       (13,660 )     10,989  
Prepaid expenses and other current assets     32,475       (76,052 )     78       (62,906 )
Accounts payable     (2,947 )     (5,421 )     (11,911 )     (31,288 )
Accrued merchant and supplier payables     176,325       160,758       115,106       88,468  
Accrued expenses and other current liabilities     10,909       31,843       (16,182 )     4,053  
Other, net     (11,476 )     25,535       33,397       40,679  
Net cash provided by operating activities     286,822       178,275       288,824       218,432  
                 
Net cash used in investing activities     (35,889 )     (23,330 )     (229,456 )     (96,315 )
                 
Net cash used in financing activities     (21,088 )     (55,444 )     (194,156 )     (81,697 )
                 
Effect of exchange rate changes on cash and cash equivalents     (13,100 )     1,114       (33,771 )     (9,237 )
Net increase (decrease) in cash and cash equivalents     216,745       100,615       (168,559 )     31,183  
Cash and cash equivalents, beginning of period     855,168       1,139,857       1,240,472       1,209,289  
Cash and cash equivalents, end of period   $ 1,071,913     $ 1,240,472     $ 1,071,913     $ 1,240,472  
Groupon, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
 
   

Three Months Ended December 31,

 

Year Ended December 31,

    2014   2013   2014   2013
Revenue:                
Third party and other   $ 395,366     $ 401,688     $ 1,627,539     $ 1,654,654  
Direct     530,055       366,759       1,564,149       919,001  
Total revenue     925,421       768,447       3,191,688       2,573,655  
Cost of revenue:                
Third party and other     59,659       52,538       241,885       232,062  
Direct     472,303       337,701       1,400,617       840,060  
Total cost of revenue     531,962       390,239       1,642,502       1,072,122  
Gross profit     393,459       378,208       1,549,186       1,501,533  
Operating expenses:                
Marketing     65,909       56,505       269,043       214,824  
Selling, general and administrative     309,965       306,086       1,293,716       1,210,966  
Acquisition-related (benefit) expense, net     (809 )     2,265       1,269       (11 )
Total operating expenses     375,065       364,856       1,564,028       1,425,779  
Income (loss) from operations     18,394       13,352       (14,842 )     75,754  
Other expense, net (1)     (11,467 )     (84,833 )     (33,353 )     (94,663 )
Income (loss) before provision for income taxes     6,927       (71,481 )     (48,195 )     (18,909 )
(Benefit) provision for income taxes     (4,457 )     7,380       15,724       70,037  
Net income (loss)     11,384       (78,861 )     (63,919 )     (88,946 )
Net income attributable to noncontrolling interests     (2,596 )     (2,386 )     (9,171 )     (6,447 )
Net income (loss) attributable to Groupon, Inc.   $ 8,788     $ (81,247 )   $ (73,090 )   $ (95,393 )
                 
Net income (loss) per share                
Basic   $ 0.01     $ (0.12 )   $ (0.11 )   $ (0.14 )
Diluted   $ 0.01     $ (0.12 )   $ (0.11 )   $ (0.14 )
                 
Weighted average number of shares outstanding                
Basic     671,885,967       668,046,073       674,832,393       663,910,194  
Diluted     681,543,847       668,046,073       674,832,393       663,910,194  
(1) Other expense, net includes foreign currency (losses) gains of $(11.4) million and $0.9 million for the three months ended December 31, 2014 and 2013, respectively, and $(31.5) million and $(10.3) million for the year ended December 31, 2014 and 2013, respectively. For the three months and year ended December 31, 2013, Other expense, net includes an $85.5 million impairment of the Company's minority investment in Life Media Limited ("F-tuan"), an entity with operations in China.

Groupon, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)
 
    December 31, 2014   December 31, 2013
    (unaudited)    
Assets        
Current assets:        
Cash and cash equivalents   $ 1,071,913     $ 1,240,472  
Accounts receivable, net     105,154       83,673  
Deferred income taxes     16,271       27,938  
Prepaid expenses and other current assets     207,991       210,415  
Total current assets     1,401,329       1,562,498  
Property, equipment and software, net     182,475       134,423  
Goodwill     447,810       220,827  
Intangible assets, net     110,557       28,443  
Investments     24,298       20,652  
Deferred income taxes, non-current     41,835       35,941  
Other non-current assets     19,293       39,226  
Total Assets   $ 2,227,597     $ 2,042,010  
Liabilities and Equity        
Current liabilities:        
Accounts payable   $ 21,855     $ 27,573  
Accrued merchant and supplier payables     910,567       752,943  
Accrued expenses     230,352       226,986  
Deferred income taxes     32,510       47,558  
Other current liabilities     130,312       132,718  
Total current liabilities     1,325,596       1,187,778  
Deferred income taxes, non-current     773       10,853  
Other non-current liabilities     136,284       131,697  
Total Liabilities     1,462,653       1,330,328  
Commitments and contingencies        
Stockholders' Equity        
Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 699,008,084 shares issued and 671,768,980 shares outstanding at December 31, 2014 and 670,149,976 shares issued and 665,717,176 shares outstanding at December 31, 2013     70       67  
Class B common stock, par value $0.0001 per share, 10,000,000 shares authorized, 2,399,976 shares issued and outstanding at December 31, 2014 and December 31, 2013     -       -  
Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, no shares issued and outstanding at December 31, 2014 and December 31, 2013     -       -  
Additional paid-in capital     1,847,420       1,584,211  
Treasury stock, at cost, 27,239,104 shares at December 31, 2014 and 4,432,800 shares at December 31, 2013     (198,467 )     (46,587 )
Accumulated deficit     (921,960 )     (848,870 )
Accumulated other comprehensive income     35,763       24,830  
Total Groupon, Inc. Stockholders' Equity     762,826       713,651  
Noncontrolling interests     2,118       (1,969 )
Total Equity     764,944       711,682  
Total Liabilities and Equity   $ 2,227,597     $ 2,042,010  
Groupon, Inc.
Segment Information
(in thousands)
(unaudited)
 
    Three Months Ended December 31,   Year Ended December 31,
    2014   2013   2014   2013
North America                
Gross billings (1)   $ 948,579     $ 788,721     $ 3,303,479     $ 2,847,244  
Revenue     550,974       443,784       1,824,461       1,521,358  
Segment cost of revenue and operating expenses (2)     520,140       418,214       1,755,113       1,380,746  
Segment operating income (2)   $ 30,834     $ 25,570     $ 69,348     $ 140,612  
Segment operating income as a percent of segment gross billings     3.3 %     3.2 %     2.1 %     4.9 %
Segment operating income as a percent of segment revenue     5.6 %     5.8 %     3.8 %     9.2 %
                 
EMEA                
Gross billings (1)   $ 560,541     $ 565,713     $ 2,046,807     $ 1,983,599  
Revenue     272,475       251,205       961,130       742,915  
Segment cost of revenue and operating expenses (2)     237,468       214,187       857,062       631,409  
Segment operating income (2)   $ 35,007     $ 37,018     $ 104,068     $ 111,506  
Segment operating income as a percent of segment gross billings     6.2 %     6.5 %     5.1 %     5.6 %
Segment operating income as a percent of segment revenue     12.8 %     14.7 %     10.8 %     15.0 %
                 
Rest of World                
Gross billings (1)   $ 574,848     $ 238,673     $ 2,230,674     $ 926,487  
Revenue     101,972       73,458       406,097       309,382  
Segment cost of revenue and operating expenses (2)     118,167       88,190       471,067       364,295  
Segment operating loss (2)   $ (16,195 )   $ (14,732 )   $ (64,970 )   $ (54,913 )
Segment operating loss as a percent of segment gross billings     (2.8 )%     (6.2 )%     (2.9 )%     (5.9 )%
Segment operating loss as a percent of segment revenue     (15.9 )%     (20.1 )%     (16.0 )%     (17.7 )%
(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 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," 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."
                     
    Q4 2013   Q1 2014   Q2 2014   Q3 2014   Q4 2014
Net (loss) income   $ (78,861 )   $ (35,363 )   $ (20,922 )   $ (19,018 )   $ 11,384  
Adjustments:                    
Stock-based compensation     32,239       23,729       31,655       34,574       32,061  
Acquisition-related expense (benefit), net     2,265       1,785       597       (304 )     (809 )
Depreciation and amortization     24,132       34,740       34,658       38,146       37,377  
Other expense, net     84,833       840       1,023       20,023       11,467  
Provision (benefit) for income taxes     7,380       14,570       12,045       (6,434 )     (4,457 )
Total adjustments     150,849       75,664       79,978       86,005       75,639  
Adjusted EBITDA   $ 71,988     $ 40,301     $ 59,056     $ 66,987     $ 87,023  
                     
                     
The following is a reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, "Net loss" for the years ended December 31, 2014 and 2013:
    Year Ended December 31,            
    2014   2013            
Net loss   $ (63,919 )   $ (88,946 )            
Adjustments:                    
Stock-based compensation     122,019       121,462              
Acquisition-related expense (benefit), net     1,269       (11 )            
Depreciation and amortization     144,921       89,449              
Other expense, net     33,353       94,663              
Provision for income taxes     15,724       70,037              
Total adjustments     317,286       375,600              
Adjusted EBITDA   $ 253,367     $ 286,654              
The following is a reconciliation of diluted net income (loss) per share to diluted non-GAAP earnings per share for the three months and year ended December 31, 2014:
         
    Three Months Ended   Year Ended
    December 31, 2014   December 31, 2014
Net income (loss) attributable to common stockholders   $ 8,788     $ (73,090 )
Stock-based compensation     32,061       122,019  
Amortization of acquired intangible assets     11,054       47,122  
Acquisition-related (benefit) expense, net     (809 )     1,269  
Income tax effect of adjustments     (13,503 )     (44,593 )
Net earnings attributable to common stockholders excluding stock-based compensation,    
amortization of acquired intangible assets and acquisition-related (benefit) expense, net   $ 37,591     $ 52,727  
         
Diluted shares     681,543,847       674,832,393  
Incremental diluted shares     -       10,152,694  
Adjusted diluted shares     681,543,847       684,985,087  
         
Diluted net income (loss) per share   $ 0.01     $ (0.11 )
Impact of stock-based compensation, amortization of acquired intangible assets    
and acquisition-related (benefit) expense, net (1)     0.05       0.19  
Non-GAAP earnings per share (1)   $ 0.06     $ 0.08  
         
(1) The sum of per share amounts for quarterly periods may not equal year-to-date amounts due to rounding.
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 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 Company reconciles foreign exchange rate neutral Gross billings growth excluding our Korean operations to year-over-year growth rates for the most comparable U.S. GAAP financial measure "Gross billings growth" for our Rest of World segment.
                         
The effect on the Company's gross billings, revenue and income (loss) from operations from changes in exchange rates versus the U.S. Dollar for the three months ended December 31, 2014 was as follows:
         
    Three Months Ended December 31, 2014   Three Months Ended December 31, 2014
    At Avg.   Exchange       At Avg.   Exchange    
    Q4 2013

Rates (1)

  Rate

Effect (2)

  As

Reported

  Q3 2014

Rates (3)

  Rate

Effect (2)

  As

Reported

Gross billings   $ 2,166,167     $ (82,199 )   $ 2,083,968     $ 2,157,789     $ (73,821 )   $ 2,083,968  
Revenue     957,953       (32,532 )     925,421       949,475       (24,054 )     925,421  
Income (loss) from operations   $ 19,222     $ (828 )   $ 18,394     $ 18,696     $ (302 )   $ 18,394  
                         
The effect on the Company's gross billings, revenue and (loss) income from operations from changes in exchange rates versus the U.S. Dollar for the year ended December 31, 2014 was as follows:
                         
    Year Ended December 31, 2014   Year Ended December 31, 2014
    At Avg.   Exchange       At Avg.   Exchange    
    2013 YTD

Rates (1)

  Rate

Effect (2)

  As

Reported

  Q4'13 - Q3'14

Rates (3)

  Rate

Effect (2)

  As

Reported

Gross billings   $ 7,620,860     $ (39,900 )   $ 7,580,960     $ 7,662,774     $ (81,814 )   $ 7,580,960  
Revenue     3,217,762       (26,074 )     3,191,688       3,224,026       (32,338 )     3,191,688  
(Loss) income from operations   $ (16,231 )   $ 1,389     $ (14,842 )   $ (14,358 )   $ (484 )   $ (14,842 )
                         
(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 and year ended December 31, 2013.
(2) Represents the increase or decrease in reported amounts resulting from changes in exchange rates from those in effect in the comparable period.
(3) Represents the financial statement balances that would have resulted had average exchange rates in the reporting periods been the same as those in effect during the three and twelve months ended September 30, 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.
    Q4 2013   Q1 2014   Q2 2014   Q3 2014   Q4 2014  
EMEA Gross billings growth, excluding FX   3 % 1 % (4) % 10 % 8 %
FX Effect   3   3   4   -   (9)  
EMEA Gross billings growth   6 % 4 % - % 10 % (1) %
                       
Rest of World Gross billings growth, excluding FX   (2) % 133 % 141 % 147 % 154 %
FX Effect   (9)   (10)   4   8   (13)  
Rest of World Gross billings growth   (11) % 123 % 145 % 155 % 141 %
                       
Consolidated Gross billings growth, excluding FX   5 % 30 % 27 % 37 % 36 %
FX Effect   -   (1)   2   2   (5)  
Consolidated Gross billings growth   5 % 29 % 29 % 39 % 31 %
The following is a reconciliation of Rest of World foreign exchange rate neutral Gross billings growth, excluding the impact of Ticket Monster and Groupon's legacy Korean operations, from the comparable quarterly period of the prior year to reported Rest of World Gross billings growth from the comparable quarterly period of the prior year.
  Q4 2014            
Rest of World Gross billings growth, excluding Korean operations and FX 6 %          
Korean operations impact on Gross billings growth 148            
Rest of World Gross billings growth, excluding FX 154 %          
FX Effect (13)            
Rest of World Gross billings growth 141 %          
The following is a reconciliation of Ticket Monster foreign exchange rate neutral Gross billings growth from the comparable period of the prior year to Gross billings growth from the comparable period of the prior year.
                         
    Three Months Ended     Year Ended              
    December 31, 2014 (1)     December 31, 2014 (1)              
Ticket Monster Gross billings growth, excluding FX   38 %   47 %            
FX Effect   (4)     5              
Ticket Monster Gross billings growth   34 %   52 %            
                         
(1) The 2013 results of Ticket Monster used to measure Gross billings growth reflect the quarterly and full year periods prior to Groupon's acquisition of that business on January 2, 2014.
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.
         
  Q4 2013   Q1 2014   Q2 2014   Q3 2014   Q4 2014          
EMEA Revenue growth, excluding FX 38 % 22 % 36 % 55 % 18 %        
FX Effect 5   4   6   1   (10)          
EMEA Revenue growth 43 % 26 % 42 % 56 % 8 %        
                             
Rest of World Revenue growth, excluding FX (6) % 35 % 44 % 26 % 50 %        
FX Effect (9)   (12)   (4)   -   (11)          
Rest of World Revenue growth (15) % 23 % 40 % 26 % 39 %        
                             
Consolidated Revenue growth, excluding FX 20 % 26 % 22 % 27 % 25 %        
FX Effect -   -   2   -   (5)          
Consolidated Revenue growth 20 % 26 % 24 % 27 % 20 %        

Groupon, Inc.

Supplemental Financial Information and Business Metrics (11)

(financial data in thousands; active customers in millions)

(unaudited)

    Q4 2013     Q1 2014     Q2 2014     Q3 2014     Q4 2014  
Segments                              
North America Segment:                              
Gross Billings (1):                              
Local (2) Gross Billings   $ 439,131     $ 456,952     $ 461,366     $ 446,573     $ 499,250  
Goods Gross Billings   286,039     242,896     247,618     242,893     369,033  
Travel (2) Gross Billings   63,551     81,921     89,861     84,820     80,296  
Total Gross Billings   $ 788,721     $ 781,769     $ 798,845     $ 774,286     $ 948,579  
Year-over-year growth   10 %   15 %   12 %   16 %   20 %
% Third Party and Other   67 %   70 %   70 %   69 %   62 %
% Direct   33 %   30 %   30 %   31 %   38 %
Gross Billings Trailing Twelve Months (TTM)   $ 2,847,244     $ 2,947,694     $ 3,034,334     $ 3,143,621     $ 3,303,479  
                               
Revenue (3):                              
Local Revenue   $ 161,601     $ 177,247     $ 164,500     $ 161,912     $ 170,946  
Goods Revenue   268,281     237,435     241,626     238,955     362,863  
Travel Revenue   13,902     16,380     17,805     17,627     17,165  
Total Revenue   $ 443,784     $ 431,062     $ 423,931     $ 418,494     $ 550,974  
Year-over-year growth   18 %   27 %   12 %   16 %   24 %
% Third Party and Other   41 %   45 %   43 %   43 %   35 %
% Direct   59 %   55 %   57 %   57 %   65 %
Revenue TTM   $ 1,521,358     $ 1,612,866     $ 1,659,615     $ 1,717,271     $ 1,824,461  
                               
Gross Profit (4):                              
Local Gross Profit   $ 140,944     $ 152,622     $ 142,674     $ 138,189     $ 147,582  
% of North America Local Gross Billings   32.1 %   33.4 %   30.9 %   30.9 %   29.6 %
Goods Gross Profit   21,030     12,604     22,961     23,953     34,404  
% of North America Goods Gross Billings   7.4 %   5.2 %   9.3 %   9.9 %   9.3 %
Travel Gross Profit   12,352     14,442     14,365     14,000     14,187  
% of North America Travel Gross Billings   19.4 %   17.6 %   16.0 %   16.5 %   17.7 %
Total Gross Profit   $ 174,326     $ 179,668     $ 180,000     $ 176,142     $ 196,173  
Year-over-year growth   15 %   4 %   (7) %   3 %   13 %
% Third Party and Other   91 %   94 %   88 %   87 %   83 %
% Direct   9 %   6 %   12 %   13 %   17 %
% of North America Total Gross Billings   22.1 %   23.0 %   22.5 %   22.7 %   20.7 %
                               
EMEA Segment:                              
Gross Billings:                              
Local Gross Billings   $ 277,472     $ 262,141     $ 227,266     $ 218,615     $ 242,119  
Goods Gross Billings   219,880     183,013     190,957     191,006     245,712  
Travel Gross Billings   68,361     68,434     65,032     79,802     72,710  
Total Gross Billings   $ 565,713     $ 513,588     $ 483,255     $ 489,423     $ 560,541  
Year-over-year growth   6 %   4 %   - %   10 %   (1) %
Year-over-year growth, excluding FX (5)   3 %   1 %   (4) %   10 %   8 %
% Third Party and Other   83 %   83 %   80 %   78 %   74 %
% Direct   17 %   17 %   20 %   22 %   26 %
Gross Billings TTM   $ 1,983,599     $ 2,004,869     $ 2,005,874     $ 2,051,979     $ 2,046,807  
                               
Revenue:                              
Local Revenue   $ 116,061     $ 109,120     $ 96,485     $ 90,002     $ 95,572  
Goods Revenue   119,274     106,889     115,413     123,110     160,582  
Travel Revenue   15,870     14,884     15,792     16,960     16,321  
Total Revenue   $ 251,205     $ 230,893     $ 227,690     $ 230,072     $ 272,475  
Year-over-year growth   43 %   26 %   42 %   56 %   8 %
Year-over-year growth, excluding FX   38 %   22 %   36 %   55 %   18 %
% Third Party and Other   61 %   61 %   57 %   53 %   46 %
% Direct   39 %   39 %   43 %   47 %   54 %
Revenue TTM   $ 742,915     $ 790,010     $ 857,738     $ 939,860     $ 961,130  
                               
Gross Profit:                              
Local Gross Profit   $ 105,210     $ 100,066     $ 90,373     $ 83,956     $ 90,150  

% of EMEA Local Gross Billings

  37.9 %   38.2 %   39.8 %   38.4 %   37.2 %
Goods Gross Profit   33,526     27,302     35,432     32,252     38,154  
% of EMEA Goods Gross Billings   15.2 %   14.9 %   18.6 %   16.9 %   15.5 %
Travel Gross Profit   14,457     13,669     14,894     15,440     15,226  
% of EMEA Travel Gross Billings   21.1 %   20.0 %   22.9 %   19.3 %   20.9 %
Total Gross Profit   $ 153,193     $ 141,037     $ 140,699     $ 131,648     $ 143,530  
Year-over-year growth   7 %   (8) %   1 %   6 %   (6) %
% Third Party and Other   91 %   92 %   85 %   85 %   82 %
% Direct   9 %   8 %   15 %   15 %   18 %
% of EMEA Total Gross Billings   27.1 %   27.5 %   29.1 %   26.9 %   25.6 %
                               
Rest of World Segment:                              
Gross Billings:                              
Local Gross Billings   $ 116,824     $ 167,833     $ 170,237     $ 190,254     $ 161,236  
Goods Gross Billings   89,451     283,091     281,300     289,210     336,355  
Travel Gross Billings   32,398     70,930     85,409     117,562     77,257  
Total Gross Billings   $ 238,673     $ 521,854     $ 536,946     $ 597,026     $ 574,848  
Year-over-year growth   (11) %   123 %   145 %   155 %   141 %
Year-over-year growth, excluding FX   (2) %   133 %   141 %   147 %   154 %
% Third Party and Other   97 %   99 %   99 %   98 %   96 %
% Direct   3 %   1 %   1 %   2 %   4 %
Gross Billings TTM   $ 926,487     $ 1,214,209     $ 1,531,804     $ 1,894,499     $ 2,230,674  
                               
Revenue:                              
Local Revenue   $ 40,847     $ 43,814     $ 42,711     $ 45,085     $ 35,942  
Goods Revenue   26,158     41,855     45,537     48,889     57,595  
Travel Revenue   6,453     10,013     11,707     14,514     8,435  
Total Revenue   $ 73,458     $ 95,682     $ 99,955     $ 108,488     $ 101,972  
Year-over-year growth   (15) %   23 %   40 %   26 %   39 %
Year-over-year growth, excluding FX   (6) %   35 %   44 %   26 %   50 %
% Third Party and Other   90 %   94 %   93 %   90 %   77 %
% Direct   10 %   6 %   7 %   10 %   23 %
Revenue TTM   $ 309,382     $ 327,014     $ 355,366     $ 377,583     $ 406,097  
                               
Gross Profit:                              
Local Gross Profit   $ 33,596     $ 34,748     $ 35,618     $ 38,592     $ 29,569  
% of Rest of World Local Gross Billings   28.8 %   20.7 %   20.9 %   20.3 %   18.3 %
Goods Gross Profit   11,781     22,135     24,623     22,877     18,867  
% of Rest of World Goods Gross Billings   13.2 %   7.8 %   8.8 %   7.9 %   5.6 %
Travel Gross Profit   5,312     8,133     8,922     10,885     5,320  
% of Rest of World Travel Gross Billings   16.4 %   11.5 %   10.4 %   9.3 %   6.9 %
Total Gross Profit   $ 50,689     $ 65,016     $ 69,163     $ 72,354     $ 53,756  
Year-over-year growth   (16) %   23 %   37 %   12 %   6 %
% Third Party and Other   101 %   102 %   100 %   102 %   101 %
% Direct   (1) %   (2) %   - %   (2) %   (1) %
% of Rest of World Total Gross Billings   21.2 %   12.5 %   12.9 %   12.1 %   9.4 %
Consolidated Results of Operations:                              
Gross Billings:                              
Local Gross Billings   $ 833,427     $ 886,926     $ 858,869     $ 855,442     $ 902,605  
Goods Gross Billings   595,370     709,000     719,875     723,109     951,100  
Travel Gross Billings   164,310     221,285     240,302     282,184     230,263  
Total Gross Billings   $ 1,593,107     $ 1,817,211     $ 1,819,046     $ 1,860,735     $ 2,083,968  
Year-over-year growth   5 %   29 %   29 %   39 %   31 %
Year-over-year growth, excluding FX   5 %   30 %   27 %   37 %   36 %
% Third Party and Other   77 %   82 %   81 %   81 %   75 %
% Direct   23 %   18 %   19 %   19 %   25 %
Gross Billings TTM   $ 5,757,330     $ 6,166,772     $ 6,572,012     $ 7,090,099     $ 7,580,960  
Year-over-year growth   7 %   14 %   18 %   25 %   32 %
                               
Revenue:                              
Local Revenue   $ 318,509     $ 330,181     $ 303,696     $ 296,999     $ 302,460  
Goods Revenue   413,713     386,179     402,576     410,954     581,040  
Travel Revenue   36,225     41,277     45,304     49,101     41,921  
Total Revenue   $ 768,447     $ 757,637     $ 751,576     $ 757,054     $ 925,421  
Year-over-year growth   20 %   26 %   23 %   27 %   20 %
Year-over-year growth, excluding FX   20 %   26 %   22 %   27 %   25 %
% Third Party and Other   52 %   56 %   54 %   53 %   43 %
% Direct   48 %   44 %   46 %   47 %   57 %

Revenue TTM

  $ 2,573,655     $ 2,729,890     $ 2,872,719     $ 3,034,714     $ 3,191,688  
Year-over-year growth   10 %   15 %   19 %   24 %   24 %
                               
Gross Profit:                              
Local Gross Profit   $ 279,750     $ 287,436     $ 268,665     $ 260,737     $ 267,301  
% of Consolidated Local Gross Billings   33.6 %   32.4 %   31.3 %   30.5 %   29.6 %
Goods Gross Profit   66,337     62,041     83,016     79,082     91,425  
% of Consolidated Goods Gross Billings   11.1 %   8.8 %   11.5 %   10.9 %   9.6 %
Travel Gross Profit   32,121     36,244     38,181     40,325     34,733  
% of Consolidated Travel Gross Billings   19.5 %   16.4 %   15.9 %   14.3 %   15.1 %
Total Gross Profit   $ 378,208     $ 385,721     $ 389,862     $ 380,144     $ 393,459  
Year-over-year growth   6 %   2 %   1 %   6 %   4 %
% Third Party and Other   92 %   94 %   89 %   89 %   85 %
% Direct   8 %   6 %   11 %   11 %   15 %
% of Total Consolidated Gross Billings   23.7 %   21.2 %   21.4 %   20.4 %   18.9 %
                               
Adjusted EBITDA   $ 71,988     $ 40,301     $ 59,056     $ 66,987     $ 87,023  
% of Total Consolidated Gross Billings   4.5 %   2.2 %   3.2 %   3.6 %   4.2 %
% of Total Consolidated Revenue   9.4 %   5.3 %   7.9 %   8.8 %   9.4 %
                               
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."
Net cash provided by (used in) operating activities   $ 178,275     $ (20,717)     $ (22,747)     $ 45,466     $ 286,822  
Purchases of property and equipment and capitalized software   (19,931)     (16,355)     (31,053)     (20,053)     (20,831)  
Free cash flow   $ 158,344     $ (37,072)     $ (53,800)     $ 25,413     $ 265,991  
                               
Net cash provided by operating activities (TTM)   $ 218,432     $ 188,955     $ 122,906     $ 180,277     $ 288,824  
Purchases of property and equipment and capitalized software (TTM)   (63,505)     (65,392)     (82,403)     (87,392)     (88,292)  
Free cash flow (TTM)   $ 154,927     $ 123,563     $ 40,503     $ 92,885     $ 200,532  
                               
Net cash used in investing activities   $ (23,330)     $ (138,608)     $ (34,498)     $ (20,461)     $ (35,889)  
Net cash used in financing activities   $ (55,444)     $ (41,492)     $ (114,753)     $ (16,823)     $ (21,088)  
                               
Net cash used in investing activities (TTM)   $ (96,315)     $ (204,244)     $ (222,880)     $ (216,897)     $ (229,456)  
Net cash used in financing activities (TTM)   $ (81,697)     $ (113,847)     $ (220,659)     $ (228,512)     $ (194,156)  
                               
Other Metrics:                              
Active Customers (6)                              
North America   20.8     21.8     22.6     23.5     24.1  
EMEA   14.2     14.5     14.5     14.9     15.2  
Rest of World (7)   8.7     14.1     14.5     14.3     14.6  
Total Active Customers (8)   43.7     50.4     51.6     52.7     53.9  
                               
TTM Gross Billings / Average Active Customer (9)                              
North America   $ 150     $ 147     $ 145     $ 145     $ 147  
EMEA   $ 139     $ 141     $ 141     $ 142     $ 139  
Rest of World (7)   $ 104     $ 106     $ 132     $ 165     $ 191  
Consolidated (8)   $ 137     $ 135     $ 141     $ 149     $ 155  
                               
                               
Global headcount as of December 31, 2014 was as follows:
    Q4 2014                          
Sales (10)   4,984                          
% North America   27 %                        
% EMEA   38 %                        
% Rest of World   35 %                        
Other   6,859                          
Total Headcount   11,843                          
(1) Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds.
(2) Local represents deals from local merchants, deals with national merchants, and deals through local events. Other revenue transactions, which include advertising, payment processing, point of sale and commission revenue, were previously aggregated with our Travel category. During the three months ended March 31, 2014, the Company updated its presentation of category information to include gross billings, revenue and gross profit from those other revenue sources within the Local category, and prior period category information has been retrospectively adjusted to conform to the current period presentation.
(3) Includes third party revenue, direct revenue and other revenue. Third party revenue is related to sales for which the Company acts as a marketing agent for the merchant. This revenue is recorded on a net basis. Direct revenue is primarily related to the sale of products for which the Company is the merchant of record. These revenues are accounted for on a gross basis, with the cost of inventory included in cost of revenue. Other revenue primarily consists of advertising revenue, payment processing revenue, point of sale revenue 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) Active customers in our Rest of World segment as of December 31, 2013, March 31, 2014 and June 30, 2014 have been reduced by 1.2 million, 1.4 million and 1.6 million, respectively, from the amounts previously reported to correct that operational information. Those adjustments increased TTM gross billings per average active customer in our Rest of World segment for the 12-month periods ended December 31, 2013, March 31, 2014 and June 30, 2014 by $9, $9 and $13, respectively, from the amounts previously reported.
(8) The adjustments of active customers in our Rest of World segment as of December 31, 2013, March 31, 2014 and June 30, 2014, described in footnote (7) above, reduced consolidated active customers by the same amounts. Those adjustments increased consolidated TTM gross billings per average active customer for the 12-month periods ended December 31, 2013, March 31, 2014 and June 30, 2014 by $3, $3 and $4, respectively, from the amounts previously reported.
(9) Reflects the total gross billings generated in the trailing twelve months per average active customer over that period.
(10) Includes merchant sales representatives, as well as sales support.
(11) 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
Investor Relations:
Genny Konz
312-999-3098
ir@groupon.com
Public Relations:
Bill Roberts
312-459-5191

Source: Groupon, Inc.

 

 

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