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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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