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Groupon Announces Fourth Quarter and Fiscal Year 2015 Results

 

Groupon exceeds top end of guidance range on Revenue, Adjusted EBITDA and Non-GAAP Earnings per Share

  • Fourth quarter gross billings of $1.7 billion, $6.3 billion for the full year
  • Fourth quarter revenue of $917.2 million, $3.1 billion for the full year
  • Fourth quarter Adjusted EBITDA of $67.0 million, $256.8 million for the full year
  • Fourth quarter GAAP loss per share of $0.08; non-GAAP earnings per share of $0.04
  • Operating Cash Flow of $292.1 million for the trailing twelve month period; Free Cash Flow of $208.1 million
  • Affirmed fiscal year 2016 revenue guidance of $2.75 billion to $3.05 billion and increased 2016 expected Adjusted EBITDA range to $80 million to $130 million

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

"2015 saw sustained progress toward our vision of making Groupon the daily habit in local commerce," said CEO Rich Williams. "Following a stronger than expected fourth quarter, we enter 2016 with a continued focus on streamlining our global operations, reducing our reliance on low margin products in our shopping business and rekindling our customer acquisition efforts to set the stage for accelerated growth."

Fourth Quarter 2015 Summary

  • Gross billings, which reflect the total dollar value of customer purchases of goods and services, was $1.71 billion in the fourth quarter 2015, compared with $1.72 billion in the fourth quarter 2014. Gross billings declined 1% globally, but grew 4% 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 11%, EMEA declined 2% and Rest of World declined 7%.
  • Revenue was $917.2 million in the fourth quarter 2015, compared with $883.2 million in the fourth quarter 2014. Revenue increased 4% globally, or 9% 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 13%, EMEA increased 3% and Rest of World declined 8%.
  • Gross profit was $371.7 million in the fourth quarter 2015, compared with $378.1 million in the fourth quarter 2014. Gross profit declined 2% globally, but grew 4% excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter.
  • Adjusted EBITDA, a non-GAAP financial measure, was $67.0 million in the fourth quarter 2015, compared with $92.9 million in the fourth quarter 2014.
  • Net loss attributable to common stockholders was $46.5 million, or $0.08 per share. Non-GAAP earnings attributable to common stockholders was $23.3 million, or $0.04 per share.
  • Operating cash flow for the trailing twelve months ended December 31, 2015 was $292.1 million. Free cash flow, a non-GAAP financial measure, was $233.5 million in the fourth quarter 2015, bringing free cash flow for the trailing twelve months ended December 31, 2015 to $208.1 million.
  • Cash and cash equivalents as of December 31, 2015 was $853.4 million and we had no outstanding borrowings under our revolving credit facility.

Full Year 2015 Summary

  • Gross billings was $6.3 billion in 2015, compared with $6.2 billion in 2014. Gross billings was approximately flat, but grew 8% excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the year. On this F/X neutral basis, North America billings increased 12%, EMEA increased 3% and Rest of World was approximately flat.
  • Revenue was $3.1 billion in 2015, compared with $3.0 billion in 2014. Revenue grew 3% globally, or 9% excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the year. On this F/X neutral basis, North America revenue increased 12%, EMEA increased 7% and Rest of World declined 6%.
  • Gross profit was $1.4 billion in 2015, compared with $1.5 billion in 2014. Gross profit declined 5%, but grew 2% excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the year.
  • Adjusted EBITDA was $256.8 million in 2015, compared with $262.3 million in 2014.
  • Net earnings attributable to common stockholders were $20.7 million, or $0.03 per share. Earnings per share includes $0.19 from discontinued operations, which was driven by the gain on our sale of a controlling stake in Ticket Monster. Non-GAAP earnings attributable to common stockholders was $91.0 million, or $0.14 per share.

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, were approximately flat year-over-year at 62 million for the fourth quarter 2015. North America units increased 12%, EMEA units declined 3% and Rest of World units declined 31%.
  • Active deals: At the end of the fourth quarter 2015, on average, active deals were approximately 650,000 globally, with nearly 350,000 in North America. Both include approximately 70,000 Coupons.
  • Active customers: Active customers, or customers that have purchased a voucher or product within the last twelve months, grew 3% year-over-year, to 48.9 million as of December 31, 2015, comprising 25.9 million in North America, 15.4 million in EMEA, and 7.6 million in Rest of World.
  • Customer spend: Fourth quarter 2015 trailing twelve month billings per average active customer was $130, compared with $137 in the fourth quarter 2014.

Share Repurchase

During the fourth quarter 2015, Groupon repurchased 35,326,954 shares of its Class A common stock for an aggregate purchase price of $112.5 million, as of December 31, 2015. Up to $156.8 million of Class A common stock remained available for repurchase under Groupon's share repurchase program 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

Groupon's outlook for 2016 reflects current foreign exchange rates, as well as expected marketing investments, continued progress on increasing Shopping margins, and a reduction of our international footprint. We continue to expect revenue of between $2.75 and $3.05 billion for the full year, and we are increasing the company's expected 2016 adjusted EBITDA range to between $80 million and $130 million. Moving forward, we are only providing annual Revenue and adjusted EBITDA guidance, which we will update quarterly.

Conference Call

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

Groupon encourages investors to use its investor relations website as a way of easily finding information about the company. Groupon promptly makes available on this website, free of charge, the reports that the company files or furnishes with the SEC, corporate governance information (including Groupon's Global Code of Conduct), and select press releases and social media postings. Groupon uses its investor relations site (investor.groupon.com) and its blog (https://www.groupon.com/blog) as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Non-GAAP Financial Measures

In addition to financial results reported in accordance with U.S. 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, non-GAAP net income attributable to common stockholders, non-GAAP earnings per share and free cash flow. These non-GAAP financial measures, which are presented on a continuing operations basis, are intended to aid investors in better understanding Groupon's current financial performance and its prospects for the future as seen through the eyes of management. We believe that these non-GAAP financial measures facilitate comparisons with our historical results and with the results of peer companies who present similar measures (although other companies may define non-GAAP measures differently than we define them, even when similar terms are used to identify such measures). However, non-GAAP financial measures are not intended to be a substitute for those reported in accordance with U.S. GAAP. For reconciliations of these measures to the most applicable financial measures under U.S. GAAP, see ''Non-GAAP Reconciliation Schedules'' and ''Supplemental Financial Information and Business Metrics'' included in the tables accompanying this release.

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

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

Acquisition-related expense (benefit), net. Acquisition-related expense (benefit), net is comprised of the change in the fair value of contingent consideration arrangements and external transaction costs related to business combinations, primarily consisting of legal and advisory fees. The composition of our contingent consideration arrangements and the impact of those arrangements on our operating results vary over time based on a number of factors, including the terms of our business combinations and the timing of those transactions. We exclude acquisition-related expense (benefit), net because we believe that non-GAAP financial measures excluding this item provide meaningful supplemental information about our operating performance and facilitate comparisons to our historical operating results.

Depreciation and amortization. We exclude depreciation and amortization expenses because they are non-cash in nature and we believe that non-GAAP financial measures excluding these items provide meaningful supplemental information about our operating performance and liquidity.

Interest and Other Non-Operating Items. Interest and other non-operating items include: interest income, interest expense, gains and losses related to minority investments, and foreign currency gains and losses. We exclude interest and other non-operating items from certain of our non-GAAP financial measures because we believe that excluding these items provides meaningful supplemental information about our core operating performance and facilitates comparisons to our historical operating results.

Items That Are Unusual in Nature or Infrequently Occurring. During the twelve months ended December 31, 2015, items that we believe to be unusual in nature or infrequently occurring were (a) charges related to our restructuring program, (b) the gain on our disposition of Groupon India, (c) the write-off of a prepaid asset related to a marketing program that was discontinued because the counterparty ceased operations and (d) the expense related to a significant increase in the contingent liability for our securities litigation matter. We exclude items that are unusual in nature or infrequently occurring because we believe that excluding those items provides meaningful supplemental information about our core operating performance and facilitates comparisons to our historical results.

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

Foreign exchange rate neutral operating results show our current period operating results as if foreign currency exchange rates had remained the same as those in effect in the prior-year period. We present foreign exchange rate neutral information to facilitate comparisons to our historical operating results.

Adjusted EBITDA is a non-GAAP 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, acquisition-related expense (benefit), net and other items that are unusual in nature or infrequently occurring. Our definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Adjusted EBITDA is a key measure used by our management and Board of Directors to evaluate operating performance, generate future operating plans and make strategic decisions 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 net income (loss) attributable to common stockholders and non-GAAP earnings (loss) per share adjust our net income (loss) attributable to common stockholders and earnings (loss) per share to exclude the impact of:

  • stock-based compensation,
  • amortization of acquired intangible assets,
  • acquisition-related expense (benefit), net,
  • items that are unusual in nature or infrequently occurring,
  • non-operating foreign currency gains and losses related to intercompany balances and reclassifications of cumulative translation adjustments to earnings as a result of business dispositions or country exits,
  • non-operating gains and losses from minority investments that we have elected to record at fair value with changes in fair value reported in earnings,
  • income (loss) from discontinued operations and
  • the income tax effect of those items.

We believe that excluding these items from our measures of non-GAAP net income (loss) attributable to common stockholders and non-GAAP earnings (loss) per share provides useful supplemental information for evaluating our operating performance and facilitates comparisons to our historical results by eliminating items that are non-cash in nature, relate to discrete events or are otherwise not indicative of the core operating performance of our ongoing business.

Free cash flow is a non-GAAP 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 to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe that it typically represents a more useful measure of cash flows because purchases of fixed assets, software developed for internal-use and website development costs are necessary components of our ongoing operations. Free cash flow is not intended to represent the total increase or decrease in Groupon's cash balance for the applicable period.

Note on Forward-Looking Statements

The statements contained in this release that refer to plans and expectations for the next quarter, the full year or the future are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve a number of risks and uncertainties, and actual results could differ materially from those discussed. The words ''may,'' will,'' should,'' ''could,'' ''expect,'' anticipate,'' ''believe,'' ''estimate,'' intend,'' ''continue'' and other similar expressions are intended to identify forward-looking statements. 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 strategy to grow our local marketplaces, marketing strategy and spend and the productivity of those marketing investments and the impact of our shift away from lower margin products in our Goods category; effectively dealing with challenges arising from our international operations, including fluctuations in currency exchange rates; retaining existing customers and adding new customers, including as we increase our marketing spend and shift away from lower margin products in our Goods category; retaining and adding high quality merchants; cyber security breaches; incurring expenses as we expand our business; competing successfully in our industry; maintaining favorable payment terms with our business partners; providing a strong mobile experience for our customers; delivery and routing of our emails; product liability claims; managing inventory and order fulfillment risks; integrating our technology platforms; litigation; managing refund risks; retaining, attracting and integrating members of our executive team; difficulties, delays or our inability to successfully complete all or part of the announced restructuring actions or to realize the operating efficiencies and other benefits of such restructuring actions; higher than anticipated restructuring charges or changes in the timing of such restructuring charges; completing and realizing the anticipated benefits from acquisitions, dispositions, joint ventures and strategic investments; tax liabilities; tax legislation; compliance with domestic and foreign laws and regulations, including the CARD Act and regulation of the Internet and e-commerce; classification of our independent contractors; maintaining our information technology infrastructure; protecting our intellectual property; maintaining a strong brand; seasonality; customer and merchant fraud; payment-related risks; our ability to raise capital if necessary and our outstanding indebtedness; global economic uncertainty; the impact of our ongoing strategic review and any potential strategic alternatives we may choose to pursue. For additional information regarding these and other risks and uncertainties, we urge you to refer to the factors included under the headings ''Risk Factors'' and ''Management's Discussion and Analysis of Financial Condition and Results of Operations'' in the company's Annual Report on Form 10-K for the ended December 31, 2015 and our other filings with the Securities and Exchange Commission, copies of which may be obtained by visiting the company's Investor Relations web site at http://investor.groupon.com or the SEC's web site at www.sec.gov. Groupon's actual results could differ materially from those predicted or implied and reported results should not be considered an indication of future performance.

You should not rely upon forward-looking statements as predictions of future events. Although Groupon believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither the company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements reflect Groupon's expectations as of February 11, 2016. 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, including the gain on disposition and related tax effects, are presented as discontinued operations in the accompanying condensed consolidated financial statements and tables for the three months and year ended December 31, 2015. Additionally, the assets and liabilities of Ticket Monster are presented as held for sale in the accompanying condensed consolidated balance sheet as of December 31, 2014. All prior period financial information and operational metrics have been retrospectively adjusted to reflect this presentation.
                                                 
    Three Months Ended         Year Ended      
    December 31,         December 31,      
                      Y/Y % Growth                   Y/Y % Growth
                  FX Effect   excluding               FX Effect   excluding
      2015       2014     Y/Y % Growth    

(2)

 

FX (2)

    2015       2014     Y/Y % Growth  

(2)

 

FX (2)

Gross Billings(1):                                                
North America   $ 1,050,361     $ 948,579     10.7   %   $ (1,511 )   10.9   %   $ 3,709,797     $ 3,303,479     12.3   %   $ (5,415 )   12.5   %
EMEA     487,147       560,541     (13.1 )       (61,482 )   (2.1 )       1,794,354       2,046,807     (12.3 )       (317,640 )   3.2    
Rest of World     169,484       215,549     (21.4 )       (31,574 )   (6.7 )       751,389       887,546     (15.3 )       (132,679 )   (0.4 )  
Consolidated gross billings   $ 1,706,992     $ 1,724,669     (1.0 ) %   $ (94,567 )   4.5   %   $ 6,255,540     $ 6,237,832     0.3   %   $ (455,734 )   7.6   %
                                                 
Revenue:                                                
North America   $ 622,647     $ 550,974     13.0   %   $ (408 )   13.1   %   $ 2,047,742     $ 1,824,461     12.2   %   $ (1,351 )   12.3   %
EMEA     248,326       272,475     (8.9 )       (33,198 )   3.3         867,880       961,130     (9.7 )       (157,892 )   6.7    
Rest of World     46,197       59,779     (22.7 )       (8,785 )   (8.0 )       203,894       256,532     (20.5 )       (36,932 )   (6.1 )  
Consolidated revenue   $ 917,170     $ 883,228     3.8   %   $ (42,391 )   8.6   %   $ 3,119,516     $ 3,042,123     2.5   %   $ (196,175 )   9.0   %
                                                 
Income (loss) from operations $ (5,423 )   $ 33,640     (116.1 ) %   $ (2,742 )   (108.0 ) %   $ (79,777 )   $ 30,701     (359.9 ) %   $ (2,064 )   (353.1 ) %
                                                 
Income (loss) from continuing operations   (32,552 )     26,566                       (89,171 )     (18,473 )                
                                                 
Income (loss) from discontinued operations, net of tax (3)   (10,613 )     (15,182 )                     122,850       (45,446 )                
                                                 
Net income (loss) attributable to Groupon, Inc. $ (46,528 )   $ 8,788                     $ 20,668     $ (73,090 )                
                                                 
Basic net income (loss) per share:                                            
Continuing operations   $ (0.06 )   $ 0.04                     $ (0.16 )   $ (0.04 )                
Discontinued operations     (0.02 )     (0.03 )                     0.19       (0.07 )                
Basic net income (loss) per share $ (0.08 )   $ 0.01                     $ 0.03     $ (0.11 )                
                                                 
Diluted net income (loss) per share:                                            
Continuing operations   $ (0.06 )   $ 0.04                     $ (0.16 )   $ (0.04 )                
Discontinued operations     (0.02 )     (0.03 )                     0.19       (0.07 )                
Diluted net income (loss) per share $ (0.08 )   $ 0.01                     $ 0.03     $ (0.11 )                
                                                 
Weighted average number of shares outstanding                                      
Basic     607,517,010       671,885,967                       650,106,225       674,832,393                  
Diluted     607,517,010       681,543,847                       650,106,225       674,832,393                  

(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, 2014.
     

(3)

  The $10.6 million loss presented within income (loss) from discontinued operations, net of tax, for the three months ended December 31, 2015 represents additional income tax expense attributed to discontinued operations, which resulted from the valuation allowance that was recognized during the period against the Company's net deferred tax assets in the United States.
                 
Groupon, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                 
    Three Months Ended December 31,   Year Ended December 31,
    2015   2014   2015   2014
Operating activities                
Net income (loss)   $ (43,165 )   $ 11,384     $ 33,679     $ (63,919 )
Less: Income (loss) from discontinued operations, net of tax     (10,613 )     (15,182 )     122,850       (45,446 )
Income (loss) from continuing operations     (32,552 )     26,566       (89,171 )     (18,473 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Depreciation and amortization of property, equipment and software     28,807       25,414       113,048       94,145  
Amortization of acquired intangible assets     4,956       4,708       19,922       20,896  
Stock-based compensation     32,865       29,961       142,069       115,290  
Restructuring-related long-lived asset impairments     6,922             7,267        
Gain on disposition of business                 (13,710 )      
Deferred income taxes     6,267       (9,168 )     (8,985 )     (11,124 )
Excess tax benefits on stock-based compensation     (1,431 )     (3,407 )     (7,629 )     (15,980 )
Loss on equity method investments                       459  
Gain (loss) from changes in fair value of contingent consideration     508       (1,385 )     240       (2,444 )
Loss from changes in fair value of investments     829             2,943        
Impairments of investments                       2,036  
Change in assets and liabilities, net of acquisitions:          
Restricted cash     75       (491 )     4,630       7,195  
Accounts receivable     6,960       10,280       13,313       (16,277 )
Prepaid expenses and other current assets     61,358       36,816       21,545       13,933  
Accounts payable     9,545       (1,073 )     8,601       (14,046 )
Accrued merchant and supplier payables     142,069       155,991       40,217       54,921  
Accrued expenses and other current liabilities     (1,174 )     11,117       56,040       (9,986 )
Other, net     (16,980 )     (12,057 )     (18,222 )     31,952  
Net cash provided by (used in) operating activities from continuing operations     249,024       273,272       292,118       252,497  
Net cash provided by (used in) operating activities from discontinued operations     (670 )     13,550       (37,248 )     36,327  
Net cash provided by (used in) operating activities     248,354       286,822       254,870       288,824  
                 
Net cash provided by (used in) investing activities from continuing operations     (31,238 )     (35,175 )     (177,250 )     (152,818 )
Net cash provided by (used in) investing activities from discontinued operations           (714 )     244,470       (76,638 )
Net cash provided by (used in) investing activities     (31,238 )     (35,889 )     67,220       (229,456 )
                 
Net cash provided by (used in) financing activities     (322,166 )     (21,088 )     (508,156 )     (194,156 )
                 
Effect of exchange rate changes on cash and cash equivalents, including cash classified within current assets held for sale     (5,147 )     (13,100 )     (32,485 )     (33,771 )
Net increase (decrease) in cash and cash equivalents, including cash classified within current assets held for sale     (110,197 )     216,745       (218,551 )     (168,559 )
Less: Net increase (decrease) in cash classified within current assets held for sale           11,955       (55,279 )     55,279  
Net increase (decrease) in cash and cash equivalents     (110,197 )     204,790       (163,272 )     (223,838 )
Cash and cash equivalents, beginning of period     963,559       811,844       1,016,634       1,240,472  
Cash and cash equivalents, end of period   $ 853,362     $ 1,016,634     $ 853,362     $ 1,016,634  
                 
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,
    2015   2014   2015   2014
Revenue:                
Third party and other   $ 345,260     $ 367,902     $ 1,372,533     $ 1,501,011  
Direct     571,910       515,326       1,746,983       1,541,112  
Total revenue     917,170       883,228       3,119,516       3,042,123  
Cost of revenue:                
Third party and other     43,640       49,725       188,932       203,058  
Direct     501,790       455,394       1,545,519       1,373,756  
Total cost of revenue     545,430       505,119       1,734,451       1,576,814  
Gross profit     371,740       378,109       1,385,065       1,465,309  
Operating expenses:                
Marketing     83,208       59,812       254,335       241,954  
Selling, general and administrative     287,976       285,466       1,192,792       1,191,385  
Restructuring charges     5,422             29,568        
Gain on disposition of business                 (13,710 )      
Acquisition-related expense (benefit), net     557       (809 )     1,857       1,269  
Total operating expenses     377,163       344,469       1,464,842       1,434,608  
Income (loss) from operations     (5,423 )     33,640       (79,777 )     30,701  
Other income (expense), net (1)     (3,393 )     (11,531 )     (28,539 )     (33,450 )
Income (loss) from continuing operations before provision (benefit) for income taxes     (8,816 )     22,109       (108,316 )     (2,749 )
Provision (benefit) for income taxes     23,736       (4,457 )     (19,145 )     15,724  
Income (loss) from continuing operations     (32,552 )     26,566       (89,171 )     (18,473 )
Income (loss) from discontinued operations, net of tax     (10,613 )     (15,182 )     122,850       (45,446 )
Net income (loss)     (43,165 )     11,384       33,679       (63,919 )
Net income (loss) attributable to noncontrolling interests     (3,363 )     (2,596 )     (13,011 )     (9,171 )
Net income (loss) attributable to Groupon, Inc.   $ (46,528 )   $ 8,788     $ 20,668     $ (73,090 )
                 
Basic net income (loss) per share:                
Continuing operations   $ (0.06 )   $ 0.04     $ (0.16 )   $ (0.04 )
Discontinued operations     (0.02 )     (0.03 )     0.19       (0.07 )
Basic net income (loss) per share   $ (0.08 )   $ 0.01     $ 0.03     $ (0.11 )
                 
Diluted net income (loss) per share:                
Continuing operations   $ (0.06 )   $ 0.04     $ (0.16 )   $ (0.04 )
Discontinued operations     (0.02 )     (0.03 )     0.19       (0.07 )
Diluted net income (loss) per share   $ (0.08 )   $ 0.01     $ 0.03     $ (0.11 )
                 
Weighted average number of shares outstanding              
Basic     607,517,010       671,885,967       650,106,225       674,832,393  
Diluted     607,517,010       681,543,847       650,106,225       674,832,393  

(1)

  Other income (expense), net includes foreign currency losses of $1.7 million and $11.4 million for the three months ended December 31, 2015 and 2014, respectively, and foreign currency losses of $23.8 million and $31.5 million for the year ended December 31, 2015 and 2014, respectively.
Groupon, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
           
      December 31,
      2015   2014
Assets          
Current assets:          
Cash and cash equivalents     $ 853,362     $ 1,016,634  
Accounts receivable, net       68,175       90,597  
Prepaid expenses and other current assets       153,705       192,382  
Current assets held for sale             85,445  
Total current assets       1,075,242       1,385,058  
Property, equipment and software, net       198,897       176,004  
Goodwill       287,332       236,756  
Intangible assets, net       36,483       30,609  
Investments (including $163.7 million and $7.4 million at December 31, 2015 and December 31, 2014, respectively, at fair value)     178,236       24,298  
Deferred income taxes       3,454       57,594  
Other non-current assets       16,620       16,173  
Non-current assets held for sale             301,105  
Total Assets     $ 1,796,264     $ 2,227,597  
Liabilities and Equity          
Current liabilities:          
Accounts payable     $ 24,590     $ 13,822  
Accrued merchant and supplier payables       776,211       772,156  
Accrued expenses and other current liabilities       402,724       341,381  
Current liabilities held for sale             166,239  
Total current liabilities       1,203,525       1,293,598  
Deferred income taxes       8,612       32,771  
Other non-current liabilities       113,540       129,531  
Non-current liabilities held for sale             6,753  
Total Liabilities       1,325,677       1,462,653  
Commitments and contingencies (see Note 10)          
Stockholders' Equity          
Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 717,387,446 shares issued and 588,919,281 shares outstanding at December 31, 2015 and 699,008,084 shares issued and 671,768,980 shares outstanding at December 31, 2014     72       70  
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, 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 December 31, 2015 and December 31, 2014            
Additional paid-in capital       1,964,453       1,847,420  
Treasury stock, at cost, 128,468,165 shares at December 31, 2015 and 27,239,104 shares at December 31, 2014     (645,041 )     (198,467 )
Accumulated deficit       (901,292 )     (921,960 )
Accumulated other comprehensive income (loss)       51,206       35,763  
Total Groupon, Inc. Stockholders' Equity       469,398       762,826  
Noncontrolling interests       1,189       2,118  
Total Equity       470,587       764,944  
Total Liabilities and Equity     $ 1,796,264     $ 2,227,597  
                   
Groupon, Inc.
Segment Information
(in thousands)
(unaudited)
                   
      Three Months Ended December 31,   Year Ended December 31,
      2015   2014   2015   2014
North America                  
Gross billings (1)     $ 1,050,361     $ 948,579     $ 3,709,797     $ 3,303,479  
Revenue       622,647       550,974       2,047,742       1,824,461  
Segment cost of revenue and operating expenses (2)(3)(4)     625,171       520,140       2,029,643       1,755,113  
Segment operating income (loss) (2)     $ (2,524 )   $ 30,834     $ 18,099     $ 69,348  
Segment operating income (loss) as a percent of segment gross billings     (0.2 )%     3.3 %     0.5 %     2.1 %
Segment operating income (loss) as a percent of segment revenue     (0.4 )%     5.6 %     0.9 %     3.8 %
                   
EMEA                  
Gross billings (1)     $ 487,147     $ 560,541     $ 1,794,354     $ 2,046,807  
Revenue       248,326       272,475       867,880       961,130  
Segment cost of revenue and operating expenses (2)(4)(5)     211,443       237,468       797,786       857,062  
Segment operating income (2)     $ 36,883     $ 35,007     $ 70,094     $ 104,068  
Segment operating income as a percent of segment gross billings     7.6 %     6.2 %     3.9 %     5.1 %
Segment operating income as a percent of segment revenue     14.9 %     12.8 %     8.1 %     10.8 %
                   
Rest of World                  
Gross billings (1)     $ 169,484     $ 215,549     $ 751,389     $ 887,546  
Revenue       46,197       59,779       203,894       256,532  
Segment cost of revenue and operating expenses (2)(4)     52,731       62,828       228,273       282,688  
Segment operating loss (2)     $ (6,534 )   $ (3,049 )   $ (24,379 )   $ (26,156 )
Segment operating loss as a percent of segment gross billings     (3.9 )%     (1.4 )%     (3.2 )%     (2.9 )%
Segment operating loss as a percent of segment revenue     (14.1 )%     (5.1 )%     (12.0 )%     (10.2 )%

(1)

  Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds.
     

(2)

  Segment cost of revenue and operating expenses and segment operating income (loss) exclude stock-based compensation and acquisition-related expense (benefit), net.
     

(3)

  Segment cost of revenue and operating expenses for North America for the year ended December 31, 2015 includes a $37.5 million expense related to an increase in the Company's contingent liability for its securities litigation matter.
     

(4)

  Segment cost of revenue and operating expenses for the three months ended December 31, 2015 includes restructuring charges (credits) of $9.1 million in North America, $(3.6) million in EMEA and $(0.1) million in Rest of World. Segment cost of revenue and operating expenses for the year ended December 31, 2015 includes restructuring charges of $10.5 million in North America, $16.1 million in EMEA and $3.0 million in Rest of World.
     

(5)

  Segment cost of revenue and operating expenses for EMEA for the year ended December 31, 2015 includes a $6.7 million expense for the write-off of a prepaid asset related to a marketing program that was discontinued because the counterparty ceased operations.
Groupon, Inc.
Non-GAAP Reconciliation Schedules
(in thousands, except share and per share amounts)
(unaudited)
     
Adjusted EBITDA, non-GAAP earnings attributable to common stockholders and non-GAAP earnings per share are non-GAAP financial measures. The Company reconciles Adjusted EBITDA to the most comparable U.S. GAAP financial measure, "Net income (loss) from continuing operations" for the periods presented and the Company reconciles non-GAAP earnings per share to the most comparable U.S. GAAP 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, "Income (loss) from continuing operations."
                       
      Q4 2014   Q1 2015   Q2 2015   Q3 2015   Q4 2015
Income (loss) from continuing operations   $ 26,566   $ (16,739)   $ (15,267)   $ (24,613)   $ (32,552)
Adjustments:                    
Stock-based compensation (1)   29,961   35,144   38,467   35,432   32,691
Depreciation and amortization   30,122   32,200   31,372   35,635   33,763
Acquisition-related expense (benefit), net   (809)   (269)   505   1,064   557
Restructuring charges         24,146   5,422
Gain on disposition of business         (13,710)  
Prepaid marketing write-off         6,690  
Securities litigation expense         37,500  
Non-operating expense (income), net   11,531   19,927   (2,941)   8,160   3,393
Provision (benefit) for income taxes   (4,457)   2,107   8,982   (53,970)   23,736
Total adjustments   66,348   89,109   76,385   80,947   99,562
Adjusted EBITDA   $ 92,914   $ 72,370   $ 61,118   $ 56,334   $ 67,010

(1)

  Includes stock-based compensation recorded within cost of revenue, marketing expense, and selling, general and administrative expense. Non-operating expense (income), net, includes $0.02 million, $0.1 million and $0.2 million of additional stock-based compensation for the three months ended June 30, 2015, three months ended September 30, 2015 and three months ended December 31, 2015, respectively.
     
    The following is a reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, "Net income (loss) from continuing operations" for the years ended December 31, 2015 and 2014:
      Year Ended December 31,
      2015   2014
Income (loss) from continuing operations   $ (89,171 )   $ (18,473 )
Adjustments:        
Stock-based compensation (1)     141,734       115,290  
Depreciation and amortization     132,970       115,041  
Acquisition-related expense (benefit), net     1,857       1,269  
Restructuring charges     29,568        
Gain on disposition of business     (13,710 )      
Prepaid marketing write-off     6,690        
Securities litigation expense     37,500        
Non-operating expense (income), net     28,539       33,450  
Provision (benefit) for income taxes     (19,145 )     15,724  
Total adjustments     346,003       280,774  
Adjusted EBITDA   $ 256,832     $ 262,301  

(1)

  Includes stock-based compensation recorded within cost of revenue, marketing expense, and selling, general and administrative expense. Non-operating expense (income), net, includes $0.3 million of additional stock-based compensation for the year ended December 31, 2015.
     
    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 and year ended December 31, 2015:
      Three Months Ended   Year Ended
      December 31, 2015   December 31, 2015
Net income (loss) attributable to common stockholders   $ (46,528 )   $ 20,668  
Stock-based compensation     32,865       142,069  
Amortization of acquired intangible assets     4,956       19,922  
Acquisition-related expense (benefit), net     557       1,857  
Restructuring charges     5,422       29,568  
Gain on disposition of business           (13,710 )
Prepaid marketing write-off           6,690  
Securities litigation expense           37,500  
Intercompany foreign currency losses (gains) and reclassifications of translation adjustments to earnings (1)     (400 )     20,266  
Loss from changes in fair value of investments     829       2,943  
Income tax effect of above adjustments     14,979       (53,953 )
Loss (income) from discontinued operations, net of tax     10,613       (122,850 )
Non-GAAP net income (loss) attributable to common stockholders   $ 23,293     $ 90,970  
           
Diluted shares     607,517,010       650,106,225  
Incremental diluted shares     6,367,291       6,854,909  
Adjusted diluted shares     613,884,301       656,961,134  
           
Diluted net income (loss) per share (2)   $ (0.08 )   $ 0.03  
Impact of stock-based compensation, amortization of acquired intangible assets, acquisition-related expense (benefit), net, intercompany foreign currency losses (gains), items that are unusual in nature and infrequently occurring, income (loss) from discontinued operations and related tax effects     0.12       0.11  
Non-GAAP net income (loss) per share   $ 0.04     $ 0.14  

(1)

  For the three months and year ended December 31, 2015, a $3.7 million net cumulative translation adjustment gain was reclassified to earnings as a result of the Company's exit from certain countries as part of its restructuring plan. For the year ended December 31, 2015, a $4.4 million loss related to the cumulative translation adjustment from the Company's legacy business in the Republic of Korea was reclassified to earnings as a result of the Ticket Monster disposition.
     

(2)

  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 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 December 31, 2015 was as follows:
      Three Months Ended December 31, 2015   Three Months Ended December 31, 2015
      At Avg. Q4 2014   Exchange Rate   As   At Avg. Q3 2015   Exchange Rate   As
     

Rates (1)

 

Effect (2)

  Reported  

Rates (3)

 

Effect (2)

  Reported
Gross billings   $ 1,801,559     $ (94,567 )   $ 1,706,992     $ 1,721,580     $ (14,588 )   $ 1,706,992  
Revenue       959,561       (42,391 )     917,170       923,903       (6,733 )     917,170  
Income (loss) from operations   $ (2,681 )   $ (2,742 )   $ (5,423 )   $ (4,620 )   $ (803 )   $ (5,423 )
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 year ended December 31, 2015 was as follows:
      Year Ended December 31, 2015   Year Ended December 31, 2015
      At Avg. Q4           At Avg. Q4'14-        
      2014 YTD   Exchange Rate   As   Q3'15   Exchange Rate   As
     

Rates (1)

 

Effect (2)

  Reported  

Rates (3)

 

Effect (2)

  Reported
Gross billings   $ 6,711,274     $ (455,734 )   $ 6,255,540     $ 6,346,012     $ (90,472 )   $ 6,255,540  
Revenue       3,315,691       (196,175 )     3,119,516       3,158,228       (38,712 )     3,119,516  
Income (loss) from operations   $ (77,713 )   $ (2,064 )   $ (79,777 )   $ (78,679 )   $ (1,098 )   $ (79,777 )

(1)

  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 months and year ended December 31, 2014.
     

(2)

  Represents the increase or decrease in reported amounts resulting from changes in exchange rates from those in effect in the comparable prior periods.
     

(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, 2015.
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 2014     Q1 2015     Q2 2015     Q3 2015     Q4 2015  
EMEA Gross billings growth, excluding FX   8   %   7   %   9   %   (1 ) %   (2 ) %
FX Effect     (9 )     (18 )     (19 )     (14 )     (11 )  
EMEA Gross billings growth   (1 ) %   (11 ) %   (10 ) %   (15 ) %   (13 ) %
                                 
Rest of World Gross billings growth, excluding FX     %   (1 ) %   6   %     %   (7 ) %
FX Effect     (10 )     (11 )     (15 )     (19 )     (14 )  
Rest of World Gross billings growth   (10 ) %   (12 ) %   (9 ) %   (19 ) %   (21 ) %
                                 
Consolidated Gross billings growth, excluding FX   13   %   10   %   10   %   6   %   4   %
FX Effect     (5 )     (8 )     (8 )     (8 )     (5 )  
Consolidated Gross billings growth   8   %   2   %   2   %   (2 ) %   (1 ) %
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 2014     Q1 2015     Q2 2015     Q3 2015     Q4 2015  
EMEA Revenue growth, excluding FX   18   %   13   %   9   %   2   %   3   %
FX Effect     (10 )     (19 )     (19 )     (15 )     (12 )  
EMEA Revenue growth   8   %   (6 ) %   (10 ) %   (13 ) %   (9 ) %
                                 
Rest of World Revenue growth, excluding FX   (9 ) %   (8 ) %   (4 ) %   (5 ) %   (8 ) %
FX Effect     (10 )     (10 )     (14 )     (18 )     (15 )  
Rest of World Revenue growth   (19 ) %   (18 ) %   (18 ) %   (23 ) %   (23 ) %
                                 
Consolidated Revenue growth, excluding FX   19   %   10   %   11   %   7   %   9   %
FX Effect     (4 )     (7 )     (8 )     (7 )     (5 )  
Consolidated Revenue growth   15   %   3   %   3   %     %   4   %
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 December 31, 2015 was as follows:
        Exchange                  
    At Avg. Q4   Rate   December 31, 2015   December 31, 2014   Y/Y %   Y/Y% Growth  
   

2014 Rates (1)

 

Effect (2)

  As Reported   As Reported   Growth   excluding FX  
Local:                          
Third party and other   $ 532,015   $ (861 )   $ 531,154   $ 499,250   6.4 % 6.6 %
                           
Travel:                          
Third party     89,589     (200 )     89,389     80,296   11.3 % 11.6 %
Total services     621,604     (1,061 )     620,543     579,546   7.1 % 7.3 %
                           
Goods:                          
Third party     13,401     (450 )     12,951     8,277   56.5 % 61.9 %
Direct     416,867           416,867     360,756   15.6   15.6  
Total     430,268     (450 )     429,818     369,033   16.5 % 16.6  
                           
Total gross billings   $ 1,051,872   $ (1,511 )   $ 1,050,361   $ 948,579   10.7 % 10.9 %
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 December 31, 2015 was as follows:
        Exchange                  
    At Avg. Q4   Rate   December 31, 2015   December 31, 2014   Y/Y %   Y/Y% Growth  
   

2014 Rates (1)

 

Effect (2)

  As Reported   As Reported   Growth   excluding FX  
Local:                          
Third party and other   $ 219,817   $ (22,372 )   $ 197,445   $ 242,119   (18.5 ) % (9.2 ) %
                           
Travel:                          
Third party     68,439   $ (8,603 )     59,836     72,710   (17.7 ) % (5.9 ) %
Total services     288,256     (30,975 )     257,281     314,829   (18.3 ) % (8.4 ) %
                           
Goods:                          
Third party     92,612     (9,317 )     83,295     99,710   (16.5 ) % (7.1 ) %
Direct     167,761     (21,190 )     146,571     146,002   0.4     14.9    

Total

    260,373     (30,507 )     229,866     245,712   (6.4 ) % 6.0   %
                           
Total gross billings   $ 548,629   $ (61,482 )   $ 487,147   $ 560,541   (13.1 ) % (2.1 ) %
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 December 31, 2015 was as follows:
        Exchange                  
    At Avg. Q4   Rate   December 31, 2015   December 31, 2014   Y/Y %   Y/Y% Growth  
   

2014 Rates (1)

 

Effect (2)

  As Reported   As Reported   Growth   excluding FX  
Local:                          
Third party and other   $ 99,590   $ (16,160 )   $ 83,430   $ 105,420   (20.9 ) % (5.5 ) %
                           
Travel:                          
Third party     31,010   $ (5,641 )     25,369     32,313   (21.5 ) % (4.0 ) %

Total services

    130,600     (21,801 )     108,799     137,733   (21.0 ) % (5.2 ) %
                           
Goods:                          
Third party     60,357     (8,144 )     52,213     69,248   (24.6 ) % (12.8 ) %
Direct     10,101     (1,629 )     8,472     8,568   (1.1 )   17.9    
Total     70,458     (9,773 )     60,685     77,816   (22.0 ) % (9.5 ) %
                           
Total gross billings   $ 201,058   $ (31,574 )   $ 169,484   $ 215,549   (21.4 ) % (6.7 ) %
The effect on consolidated gross billings by category from changes in foreign exchange rates versus the U.S. Dollar for the three months ended December 31, 2015 was as follows:
        Exchange                  
    At Avg. Q4   Rate   December 31, 2015   December 31, 2014   Y/Y %   Y/Y% Growth  
   

2014 Rates (1)

 

Effect (2)

  As Reported   As Reported   Growth   excluding FX  
Local:                          
Third party and other   $ 851,422   $ (39,393)   $ 812,029   $ 846,789   (4.1) % 0.5 %
                           
Travel:                          
Third party   $ 189,038   $ (14,444)   174,594   185,319   (5.8) % 2.0 %
Total services   1,040,460   (53,837)   986,623   1,032,108   (4.4) % 0.8 %
                           
Goods:                          
Third party   166,370   (17,911)   148,459   177,235   (16.2) % (6.1) %
Direct   594,729   (22,819)   571,910   515,326   11.0   15.4  
Total   761,099   (40,730)   720,369   692,561   4.0 % 9.9 %
                           
Total gross billings   $ 1,801,559   $ (94,567)   $ 1,706,992   $ 1,724,669   (1.0) % 4.5 %
   

(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 December 31, 2014.
         
   

(2)

  Represents the increase or decrease in reported amounts resulting from changes in exchange rates from those in effect in the comparable prior year period.
Groupon, Inc.
Supplemental Financial Information and Business Metrics (9) (10)
(financial data in thousands; active customers in millions)
(unaudited)
                         
      Q4 2014   Q1 2015   Q2 2015   Q3 2015   Q4 2015  
Segments                      
North America Segment:                  
Gross Billings (1):                    
  Local (2) Gross Billings   $ 499,250     $ 512,558     $ 499,378     $ 481,608     $ 531,154    
  Travel Gross Billings     80,296       96,678       102,908       101,801       89,389    
  Gross Billings - Services     579,546       609,236       602,286       583,409       620,543    
  Gross Billings - Goods     369,033       284,741       293,970       285,794       429,818    
  Total Gross Billings   $ 948,579     $ 893,977     $ 896,256     $ 869,203     $ 1,050,361    
  Year-over-year growth     20   %   14   %   12   %   12   %   11   %
  % Third Party and Other     62   %   69   %   68   %   68   %   60   %
  % Direct     38   %   31   %   32   %   32   %   40   %
Gross BillingsTrailing Twelve Months (TTM)   $ 3,303,479     $ 3,415,687     $ 3,513,098     $ 3,608,015     $ 3,709,797    
                         
Revenue (3):                      
  Local Revenue   $ 170,946     $ 180,864     $ 172,461     $ 163,786     $ 184,201    
  Travel Revenue     17,165       19,989       21,958       21,394       18,390    
  Revenue - Services     188,111       200,853       194,419       185,180       202,591    
  Revenue - Goods     362,863       279,029       286,863       278,751       420,056    
  Total Revenue   $ 550,974     $ 479,882     $ 481,282     $ 463,931     $ 622,647    
  Year-over-year growth     24   %   11   %   14   %   11   %   13   %
  % Third Party and Other     35   %   42   %   41   %   40   %   33   %
  % Direct     65   %   58   %   59   %   60   %   67   %
Revenue TTM   $ 1,824,461     $ 1,873,281     $ 1,930,632     $ 1,976,069     $ 2,047,742    
                         
Gross Profit (4):                    
  Local Gross Profit   $ 147,582     $ 154,776     $ 147,574     $ 138,798     $ 159,745    
  % of North America Local Gross Billings     29.6   %   30.2   %   29.6   %   28.8   %   30.1   %
  Travel Gross Profit     14,187       15,791       18,385       17,644       15,207    
  % of North America Travel Gross Billings     17.7   %   16.3   %   17.9   %   17.3   %   17.0   %
  Gross Profit - Services     161,769       170,567       165,959       156,442       174,952    
  % of North America Services Gross Billings     27.9   %   28.0   %   27.6   %   26.8   %   28.2   %
  Gross Profit - Goods     34,404       23,923       30,598       34,801       44,329    
  % of North America Goods Gross Billings     9.3   %   8.4   %   10.4   %   12.2   %   10.3   %
  Total Gross Profit   $ 196,173     $ 194,490     $ 196,557     $ 191,243     $ 219,281    
  Year-over-year growth     13   %   8   %   9   %   9   %   12   %
  % Third Party and Other     83   %   88   %   85   %   83   %   81   %
  % Direct     17   %   12   %   15   %   17   %   19   %
  % of North America Total Gross Billings     20.7   %   21.8   %   21.9   %   22.0   %   20.9   %
                         
EMEA Segment:                    
Gross Billings:                    
  Local Gross Billings   $ 242,119     $ 217,598     $ 198,553     $ 182,540     $ 197,445    
  Travel Gross Billings     72,710       65,065       59,544       64,916       59,836    
  Gross Billings - Services     314,829       282,663       258,097       247,456       257,281    
  Gross Billings - Goods     245,712       176,526       175,439       167,026       229,866    
  Total Gross Billings   $ 560,541     $ 459,189     $ 433,536     $ 414,482     $ 487,147    
  Year-over-year growth     (1 ) %   (11 ) %   (10 ) %   (15 ) %   (13 ) %
  Year-over-year growth, excluding FX (5)     8   %   7   %   9   %   (1 ) %   (2 ) %
  % Third Party and Other     74   %   77   %   76   %   75   %   70   %
  % Direct     26   %   23   %   24   %   25   %   30   %

Gross Billings TTM

  $ 2,046,807     $ 1,992,408     $ 1,942,689     $ 1,867,748     $ 1,794,354    
                         
Revenue:                      
  Local Revenue   $ 95,572     $ 82,536     $ 75,543     $ 70,781     $ 73,225    
  Travel Revenue     16,321       14,717       13,100       13,561       11,681    
  Revenue - Services     111,893       97,253       88,643       84,342       84,906    
  Revenue - Goods     160,582       118,967       115,404       114,945       163,420    
  Total Revenue   $ 272,475     $ 216,220     $ 204,047     $ 199,287     $ 248,326    
  Year-over-year growth     8   %   (6 ) %   (10 ) %   (13 ) %   9   %
  Year-over-year growth, excluding FX     18   %   13   %   9   %   2   %   3   %
  % Third Party and Other     46   %   51   %   48   %   48   %   41   %
  % Direct     54   %   49   %   52   %   52   %   59   %
Revenue TTM   $ 961,130     $ 946,457     $ 922,814     $ 892,029     $ 867,880    
                         
Gross Profit:                    
  Local Gross Profit   $ 90,150     $ 77,356     $ 70,270     $ 66,288     $ 68,966    
  % of EMEA Local Gross Billings     37.2   %   35.5   %   35.4   %   36.3   %   34.9   %
  Travel Gross Profit     15,226       12,400       11,939       12,323       10,732    
  % of EMEA Travel Gross Billings     20.9   %   19.1   %   20.1   %   19.0   %   17.9   %
  Gross Profit - Services     105,376       89,756       82,209       78,611       79,698    
  % of EMEA Services Gross Billings     33.5   %   31.8   %   31.9   %   31.8   %   31.0   %
  Gross Profit - Goods     38,154       25,481       21,878       24,905       43,026    
  % of EMEA Goods Gross Billings     15.5   %   14.4   %   12.5   %   14.9   %   18.7   %
  Total Gross Profit   $ 143,530     $ 115,237     $ 104,087     $ 103,516     $ 122,724    
  Year-over-year growth     (6 ) %   (18 ) %   (26 ) %   (21 ) %   (14 ) %
  % Third Party and Other     82   %   87   %   86   %   86   %   77   %
  % Direct     18   %   13   %   14   %   14   %   23   %
  % of EMEA Total Gross Billings     25.6   %   25.1   %   24.0   %   25.0   %   25.2   %
                         
Rest of World Segment:                  
Gross Billings:                    
  Local Gross Billings   $ 105,420     $ 99,735     $ 100,403     $ 92,972     $ 83,430    
  Travel Gross Billings     32,313       32,946       31,263       30,709       25,369    
  Gross Billings - Services     137,733       132,681       131,666       123,681       108,799    
  Gross Billings - Goods     77,816       66,154       67,555       60,168       60,685    
  Total Gross Billings   $ 215,549     $ 198,835     $ 199,221     $ 183,849     $ 169,484    
  Year-over-year growth     (10 ) %   (12 ) %   (9 ) %   (19 ) %   (21 ) %
  Year-over-year growth, excluding FX       %   (1 ) %   6   %     %   (7 ) %
  % Third Party and Other     96   %   98   %   97   %   96   %   95   %
  % Direct     4   %   2   %   3   %   4   %   5   %

Gross Billings TTM

  $ 887,546     $ 861,032     $ 840,243     $ 797,454     $ 751,389    
                         
Revenue:                      
  Local Revenue   $ 32,264     $ 30,281     $ 28,499     $ 26,372     $ 22,229    
  Travel Revenue     5,757       6,495       6,363       6,135       5,098    
  Revenue - Services     38,021       36,776       34,862       32,507       27,327    
  Revenue - Goods     21,758       17,478       18,204       17,870       18,870    
  Total Revenue   $ 59,779     $ 54,254     $ 53,066     $ 50,377     $ 46,197    
  Year-over-year growth     (19 ) %   (18 ) %   (18 ) %   (23 ) %   (23 ) %
  Year-over-year growth, excluding FX     (9 ) %   (8 ) %   (4 ) %   (5 ) %   (8 ) %
  % Third Party and Other     86   %   91   %   87   %   86   %   82   %
  % Direct     14   %   9   %   13   %   14   %   18   %
Revenue TTM   $ 256,532     $ 244,326     $ 232,802     $ 217,476     $ 203,894    
                         
Gross Profit:                      
  Local Gross Profit   $ 27,175     $ 26,161     $ 24,567     $ 22,568     $ 18,889    
  % of Rest of World Local Gross Billings     25.8   %   26.2   %   24.5   %   24.3   %   22.6   %
  Travel Gross Profit     3,815       4,906       5,012       4,859       4,040    
  % of Rest of World Travel Gross Billings     11.8   %   14.9   %   16.0   %   15.8   %   15.9   %
  Gross Profit - Services     30,990       31,067       29,579       27,427       22,929    
  % of Rest of World Services Gross Billings     22.5   %   23.4   %   22.5   %   22.2   %   21.1   %
  Gross Profit - Goods     7,416       6,612       6,784       6,726       6,806    
  % of Rest of World Goods Gross Billings     9.5   %   10.0   %   10.0   %   11.2   %   11.2   %
  Total Gross Profit   $ 38,406     $ 37,679     $ 36,363     $ 34,153     $ 29,735    
  Year-over-year growth     (24 ) %   (16 ) %   (20 ) %   (28 ) %   (23 ) %
  % Third Party and Other     96   %   99   %   99   %   99   %   99   %
  % Direct     4   %   1   %   1   %   1   %   1   %
  % of Rest of World Total Gross Billings     17.8   %   18.9   %   18.3   %   18.6   %   17.5   %
                         
Consolidated Results of Operations:              
Gross Billings:                    
  Local Gross Billings   $ 846,789     $ 829,891     $ 798,334     $ 757,120     $ 812,029    
  Travel Gross Billings     185,319       194,689       193,715       197,426       174,594    
  Gross Billings - Services     1,032,108       1,024,580       992,049       954,546       986,623    
  Gross Billings - Goods     692,561       527,421       536,964       512,988       720,369    
  Total Gross Billings   $ 1,724,669     $ 1,552,001     $ 1,529,013     $ 1,467,534     $ 1,706,992    
  Year-over-year growth     8   %   2   %   2   %   (2 ) %   (1 ) %
  Year-over-year growth, excluding FX     13   %   10   %   10   %   6   %   4   %
  % Third Party and Other     70   %   75   %   74   %   74   %   66   %
  % Direct     30   %   25   %   26   %   26   %   34   %
Gross Billings TTM   $ 6,237,832     $ 6,269,127     $ 6,296,030     $ 6,273,217     $ 6,255,540    
  Year-over-year growth     8   %   7   %   6   %   3   %     %
                         
Revenue:                      
  Local Revenue   $ 298,782     $ 293,681     $ 276,503     $ 260,939     $ 279,655    
  Travel Revenue     39,243       41,201       41,421       41,090       35,169    
  Revenue - Services     338,025       334,882       317,924       302,029       314,824    
  Revenue - Goods     545,203       415,474       420,471       411,566       602,346    
Total Revenue   $ 883,228     $ 750,356     $ 738,395     $ 713,595     $ 917,170    
  Year-over-year growth     15   %   3   %   3   %     %   4   %
  Year-over-year growth, excluding FX     19   %   10   %   11   %   7   %   9   %
  % Third Party and Other     42   %   48   %   46   %   46   %   38   %
  % Direct     58   %   52   %   54   %   54   %   62   %
Revenue TTM   $ 3,042,123     $ 3,064,064     $ 3,086,248     $ 3,085,574     $ 3,119,516    
  Year-over-year growth     18   %   13   %   10   %   5   %   3   %
                         
Gross Profit:                      
  Local Gross Profit   $ 264,907     $ 258,293     $ 242,411     $ 227,654     $ 247,600    
  % of Consolidated Local Gross Billings     31.3   %   31.1   %   30.4   %   30.1   %   30.5   %
  Travel Gross Profit     33,228       33,097       35,336       34,826       29,979    
  % of Consolidated Travel Gross Billings     17.9   %   17.0   %   18.2   %   17.6   %   17.2   %
  Gross Profit - Services     298,135       291,390       277,747       262,480       277,579    
  % of Consolidated Services Gross Billings     28.9   %   28.4   %   28.0   %   27.5   %   28.1   %
  Gross Profit - Goods     79,974       56,016       59,260       66,432       94,161    
  % of Consolidated Goods Gross Billings     11.5   %   10.6   %   11.0   %   13.0   %   13.1   %
  Total Gross Profit   $ 378,109     $ 347,406     $ 337,007     $ 328,912     $ 371,740    
  Year-over-year growth       %   (5 ) %   (8 ) %   (7 ) %   (2 ) %
  % Third Party and Other     84   %   89   %   87   %   85   %   81   %
  % Direct     16   %   11   %   13   %   15   %   19   %
  % of Total Consolidated Gross Billings     21.9   %   22.4   %   22.0   %   22.4   %   21.8   %
                         
Marketing   $ 59,812     $ 52,533     $ 57,007     $ 61,587     $ 83,208    
Selling, general and administrative   $ 285,466     $ 289,847     $ 288,721     $ 326,248     $ 287,976    
Adjusted EBITDA   $ 92,914     $ 72,370     $ 61,118     $ 56,334     $ 67,010    
  % of Total Consolidated Gross Billings     5.4   %   4.7   %   4.0   %   3.8   %   3.9   %
  % of Total Consolidated Revenue     10.5   %   9.6   %   8.3   %   7.9   %   7.3   %
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."
      Q4 2014   Q1 2015   Q2 2015   Q3 2015   Q4 2015
                       
Net cash provided by (used in) operating activities from continuing operations   $ 273,272     $ 40,711     $ 9,995     $ (7,612 )   $ 249,024  
Purchases of property and equipment and capitalized software from continuing operations     (20,117 )     (18,294 )     (22,452 )     (27,735 )     (15,507 )
Free cash flow   $ 253,155     $ 22,417     $ (12,457 )   $ (35,347 )   $ 233,517  
                       
Net cash provided by (used in) operating activities from continuing operations (TTM)   $ 252,497     $ 307,782     $ 346,302     $ 316,366     $ 292,118  
Purchases of property and equipment and capitalized software from continuing operations (TTM)     (83,560 )     (85,761 )     (79,501 )     (88,598 )     (83,988 )
Free cash flow (TTM)   $ 168,937     $ 222,021     $ 266,801     $ 227,768     $ 208,130  
                       
Net cash provided by (used in) investing activities from continuing operations   $ (35,175 )   $ (19,443 )   $ (28,541 )   $ (98,028 )   $ (31,238 )
Net cash provided by (used in) financing activities   $ (21,088 )   $ (32,942 )   $ (138,227 )   $ (14,821 )   $ (322,166 )
                       
Net cash provided by (used in) investing activities from continuing operations (TTM)   $ (152,818 )   $ (105,821 )   $ (102,205 )   $ (181,187 )   $ (177,250 )
Net cash provided by (used in) financing activities (TTM)   $ (194,156 )   $ (185,606 )   $ (209,080 )   $ (207,078 )   $ (508,156 )
                       
Other Metrics:                
Active Customers (6)            
  North America     24.1       24.6       24.9       25.2       25.9  
  EMEA     15.2       15.3       15.5       15.4       15.4  
  Rest of World     8.1       8.2       8.2       8.0       7.6  
  Total Active Customers     47.4       48.1       48.6       48.6       48.9  
                       
TTM Gross Billings / Average Active Customer (7)        
North America   $ 147     $ 147     $ 148     $ 148     $ 149  
EMEA     139       134       130       123       117  
Rest of World     105       101       98       99       96  
Consolidated     137       135       133       132       130  
Global headcount as of December 31, 2015 and 2014 was as follows:
           
      Q4 2014   Q4 2015
  Sales (8)   4,493   3,992
  % North America   31 %   34 %
  % EMEA   42 %   41 %
  % Rest of World   27 %   25 %
  Other   6,256   5,880
  Total Headcount   10,749   9,872

(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 with local and national merchants and through local events. Other revenue transactions include advertising, payment processing 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 merchandise 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 commission revenue, payment processing revenue and advertising revenue.
     

(4)

  Represents third party revenue, direct revenue and other revenue reduced by cost of revenue.
     

(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 periods.
     

(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
Tom Grant, 312-999-3098
ir@groupon.com
or
Public Relations
Bill Roberts, 312-459-5191

Source: Groupon, Inc.

 

 

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