Groupon, Inc.
Aug 7, 2015
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Groupon Announces Second Quarter 2015 Results

 

CHICAGO--(BUSINESS WIRE)-- Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter ended June 30, 2015.

"Our marketplace transition continues to gain steam as we delivered another solid quarter," said Groupon CEO Eric Lefkofsky. "Adjusting for currency, all of our businesses in North America and abroad are now growing. Groupon remains an indispensable platform for small businesses while becoming more and more of a daily habit for customers."

Second Quarter 2015 Summary

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

Share Repurchase

During the second quarter 2015, Groupon repurchased 19,334,744 shares of its Class A common stock at an average price of $6.34 per share, for an aggregate purchase price of $122.7 million. Groupon's original share repurchase authorization has now been completed, and it has commenced repurchases under its recently announced $500 million share repurchase program. Up to $461.0 million of Class A common stock remains available for repurchase under this 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.

Completion of Ticket Monster Sale

As previously disclosed, on May 27, 2015, Groupon announced that it had completed the sale of a controlling stake in Ticket Monster, its South Korean e-commerce business to a partnership formed by KKR and Hong-Kong-based Anchor Equity Partners, for $360 million, including $285 million in cash received by Groupon. Second quarter results include a $202.2 million pretax gain on the sale.

Outlook

Groupon's outlook for the third quarter and full year 2015 reflects current foreign exchange rates, as well as expected investments in three high-frequency use cases in Local - food and drink; health, beauty, and wellness; and things to do.

For the third quarter 2015, Groupon expects revenue of between $700 million and $750 million. This guidance anticipates nearly 600 basis points of unfavorable impact on the year-over-year growth rate from changes in foreign exchange rates. Groupon expects Adjusted EBITDA for the third quarter 2015 of between $45 million and $65 million, and non-GAAP earnings per share of between $0.00 and $0.02.

For the full year 2015, Groupon continues to expect revenue of between $3.15 billion and $3.3 billion. This guidance anticipates nearly 600 basis points of unfavorable impact on the year-over-year growth rate from changes in foreign exchange rates. In addition, Groupon now expects Adjusted EBITDA for the full year 2015 of closer to $290 million.

Conference Call

A conference call will be webcast live today at 7:30 a.m. CDT / 8:30 a.m. EDT, and will be available on Groupon's investor relations website at http://investor.groupon.com. This call will contain forward-looking statements and other material information regarding the Company's financial and operating results.

Groupon encourages investors to use its investor relations website as a way of easily finding information about the company. Groupon promptly makes available on this website, free of charge, the reports that the company files or furnishes with the SEC, corporate governance information (including Groupon's Global Code of Conduct), and select press releases and social media postings.

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 operating performance and facilitates comparisons to our historical operating 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 comparable prior-year period. We present foreign exchange rate neutral information to facilitate comparisons to our historical operating results.

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

Non-GAAP 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:

We believe that excluding these items from our measures of non-GAAP net income (loss) attributable to common stockholders and 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, and ratios based on it, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe that it typically represents a more useful measure of cash flows because purchases of fixed assets, software developed for internal-use and website development costs are necessary components of our ongoing operations. Free cash flow is not intended to represent the total increase or decrease in Groupon's cash balance for the applicable period.

Note on Forward-Looking Statements

The statements contained in this release that refer to plans and expectations for the next quarter, the full year or the future are forward-looking statements 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 marketing strategy and spend; effectively dealing with challenges arising from our international operations including fluctuations in currency exchange rates; retaining existing customers and adding new customers; retaining and adding new and high quality merchants; cyber security breaches; incurring expenses as we expand our business; competing successfully in our industry; maintaining favorable payment terms with our business partners; providing a strong mobile experience for our customers; delivery and routing of our emails; maintaining a strong brand; managing inventory and order fulfillment risks; integrating our technology platforms; managing refund risks; retaining, attracting and integrating members of our executive team; litigation; compliance with domestic and foreign laws and regulations, including the CARD Act and regulation of the Internet and e-commerce; tax liabilities; tax legislation; maintaining our information technology infrastructure; protecting our intellectual property; completing and realizing the anticipated benefits from acquisitions, dispositions, joint ventures and strategic investments; seasonality; payment-related risks; customer and merchant fraud; global economic uncertainty; and our ability to raise capital if necessary. For additional information regarding these and other risks and uncertainties, we urge you to refer to the factors included under the headings ''Risk Factors'' and ''Management's Discussion and Analysis of Financial Condition and Results of Operations'' in the company's Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission, copies of which may be obtained by visiting the company's Investor Relations web site at http://investor.groupon.com or the SEC's web site at www.sec.gov. Groupon's actual results could differ materially from those predicted or implied and reported results should not be considered an indication of future performance.

You should not rely upon forward-looking statements as predictions of future events. Although Groupon believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither the company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements reflect Groupon's expectations as of August 7, 2015. Groupon undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in its expectations.

About Groupon

Groupon (NASDAQ: GRPN) is a global leader of local commerce and the place you start when you want to buy just about anything, anytime, anywhere. By leveraging the company's global relationships and scale, Groupon offers consumers a vast marketplace of unbeatable deals all over the world. Shoppers discover the best a city has to offer on the web or on mobile with Groupon Local, enjoy vacations with Groupon Getaways, and find a curated selection of electronics, fashion, home furnishings and more with Groupon Goods.

Groupon is redefining how traditional small businesses attract, retain and interact with customers by providing merchants with a suite of products and services, including customizable deal campaigns, credit card payment processing capabilities, and point-of-sale solutions that help businesses grow and operate more effectively. To search for great deals or subscribe to Groupon emails, visit www.Groupon.com. To download Groupon's top-rated mobile apps, visit www.groupon.com/mobile. To learn more about the company's merchant solutions and how to work with Groupon, visit www.GrouponWorks.com

Groupon, Inc.
Summary Consolidated and Segment Results
(in thousands, except share and per share amounts)
(unaudited)
   
The financial results of Ticket Monster, 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 and six months ended June 30, 2015. Additionally, the assets and liabilities for 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 June 30,

         

Six Months Ended June 30,

       
      2015       2014    

Y/Y %
Growth

 

FX
Effect(2)

 

Y/Y %
Growth
excluding
FX(2)

    2015       2014    

Y/Y %
Growth

 

FX
Effect(2)

 

Y/Y %
Growth
excluding

FX(2)

Gross Billings(1):                                                
North America   $ 896,256     $ 798,845     12.2   %   $ (1,166 )   12.3   %   $ 1,790,233     $ 1,580,614     13.3   %   $ (2,264 )   13.4   %
EMEA     433,536       483,255     (10.3 )       (91,894 )   8.7         892,725       996,843     (10.4 )       (183,746 )   8.0    
Rest of World     199,221       220,010     (9.4 )       (33,150 )   5.6         398,056       445,359     (10.6 )       (57,895 )   2.4    
Consolidated gross billings   $ 1,529,013     $ 1,502,110     1.8   %   $ (126,210 )   10.2   %   $ 3,081,014     $ 3,022,816     1.9   %   $ (243,905 )   10.0   %
                                                 
Revenue:                                                
North America   $ 481,282     $ 423,931     13.5   %   $ (215 )   13.6   %   $ 961,164     $ 854,993     12.4   %   $ (549 )   12.5   %
EMEA     204,047       227,690     (10.4 )       (44,911 )   9.3         420,267       458,583     (8.4 )       (88,799 )   11.0    
Rest of World     53,066       64,590     (17.8 )       (9,071 )   (3.8 )       107,320       131,050     (18.1 )       (16,195 )   (5.7 )  
Consolidated revenue   $ 738,395     $ 716,211     3.1   %   $ (54,197 )   10.7   %   $ 1,488,751     $ 1,444,626     3.1   %   $ (105,543 )   10.4   %
                                                 
(Loss) income from operations   $ (9,226 )   $ 2,376     (488.3 ) %   $ 1,452     (549.4 ) %   $ (3,931 )   $ (3,988 )   1.4   %   $ 15     (1.1 ) %
                                                 
Loss from continuing operations     (15,267 )     (10,692 )                     (32,006 )     (32,466 )                
                                                 
Income (loss) from discontinued operations, net of tax     127,179       (10,230 )                     133,463       (23,819 )                
                                                 
Net income (loss) attributable to Groupon, Inc.   $ 109,084     $ (22,875 )                   $ 94,811     $ (60,670 )                
                                                 
Basic net income (loss) per share:                                                
Continuing operations   $ (0.03 )   $ (0.02 )                   $ (0.06 )   $ (0.05 )                
Discontinued operations     0.19       (0.01 )                     0.20       (0.04 )                
Basic net income (loss) per share   $ 0.16     $ (0.03 )                   $ 0.14     $ (0.09 )                
                                                 
Diluted net income (loss) per share:                                                
Continuing operations   $ (0.03 )   $ (0.02 )                   $ (0.06 )   $ (0.05 )                
Discontinued operations     0.19       (0.01 )                     0.20       (0.04 )                
Diluted net income (loss) per share   $ 0.16     $ (0.03 )                   $ 0.14     $ (0.09 )                
                                                 
Weighted average number of shares outstanding                                              
Basic     671,630,169       675,538,392                       674,006,553       678,958,541                  
Diluted     671,630,169       675,538,392                       674,006,553       678,958,541                  
(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 and six months ended June 30, 2014.
Groupon, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                 
    Three Months Ended June 30,   Six Months Ended June 30,
    2015   2014   2015   2014
Operating activities                
Net income (loss)   $ 111,912     $ (20,922 )   $ 101,457     $ (56,285 )
Less: Income (loss) from discontinued operations, net of tax     127,179       (10,230 )     133,463       (23,819 )
Loss from continuing operations     (15,267 )     (10,692 )     (32,006 )     (32,466 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:                
Depreciation and amortization of property, equipment and software     27,500       21,928       53,766       43,376  
Amortization of acquired intangible assets     3,872       5,096       9,806       11,081  
Stock-based compensation     38,485       29,738       73,629       52,649  
Deferred income taxes     (72 )     (57 )     (50 )     516  
Excess tax benefits on stock-based compensation     (3,330 )     (4,077 )     (6,226 )     (9,932 )
Loss on equity method investments           420             368  
Gain from changes in fair value of contingent consideration     (424 )           (703 )     (39 )
Gain from changes in fair value of investment     (450 )           (450 )      
Impairments of investments           191             588  
Change in assets and liabilities, net of acquisitions:                
Restricted cash     (82 )     (1,864 )     3,163       1,672  
Accounts receivable     (1,381 )     (1,385 )     (10,282 )     (22,220 )
Prepaid expenses and other current assets     (3,934 )     1,144       (6,447 )     4,157  
Accounts payable     (8,559 )     (9,781 )     (6,315 )     (7,468 )
Accrued merchant and supplier payables     (33,499 )     (34,961 )     (50,533 )     (68,484 )
Accrued expenses and other current liabilities     8,515       (26,754 )     6,045       (28,956 )
Other, net     (1,379 )     2,529       17,309       12,059  
Net cash provided by (used in) operating activities from continuing operations     9,995       (28,525 )     50,706       (43,099 )
Net cash provided by (used in) operating activities from discontinued operations     6,982       5,778       (17,373 )     (365 )
Net cash provided by (used in) operating activities     16,977       (22,747 )     33,333       (43,464 )
                 
Net cash used in investing activities from continuing operations     (28,541 )     (32,157 )     (47,984 )     (95,151 )
Net cash provided by (used in) investing activities from discontinued operations     245,094       (2,341 )     244,470       (77,955 )
Net cash provided by (used in) investing activities     216,553       (34,498 )     196,486       (173,106 )
                 
Net cash used in financing activities     (138,227 )     (114,753 )     (171,169 )     (156,245 )
                 
Effect of exchange rate changes on cash and cash equivalents, including cash classified within current assets held for sale     9,784       1,262       (20,415 )     431  
Net increase (decrease) in cash and cash equivalents, including cash classified within current assets held for sale     105,087       (170,736 )     38,235       (372,384 )
Less: Net (decrease) increase in cash classified within current assets held for sale     (29,557 )     4,669       (55,279 )     22,675  
Net increase (decrease) in cash and cash equivalents     134,644       (175,405 )     93,514       (395,059 )
Cash and cash equivalents, beginning of period     975,504       1,020,818       1,016,634       1,240,472  
Cash and cash equivalents, end of period   $ 1,110,148     $ 845,413     $ 1,110,148     $ 845,413  
Groupon, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
                 
    Three Months Ended June 30,   Six Months Ended June 30,
    2015   2014   2015   2014
Revenue:                
Third party and other   $ 340,846     $ 372,504     $ 700,967     $ 770,206  
Direct     397,549       343,707       787,784       674,420  
Total revenue     738,395       716,211       1,488,751       1,444,626  
Cost of revenue:                
Third party and other     47,545       48,757       99,242       102,559  
Direct     353,843       301,044       705,096       610,145  
Total cost of revenue     401,388       349,801       804,338       712,704  
Gross profit     337,007       366,410       684,413       731,922  
Operating expenses:                
Marketing     57,007       57,699       109,540       126,884  
Selling, general and administrative     288,721       305,738       578,568       606,644  
Acquisition-related expense, net     505       597       236       2,382  
Total operating expenses     346,233       364,034       688,344       735,910  
(Loss) income from operations     (9,226 )     2,376       (3,931 )     (3,988 )
Other income (expense), net (1)     2,941       (1,023 )     (16,986 )     (1,863 )
(Loss) income from continuing operations before provision for income taxes     (6,285 )     1,353       (20,917 )     (5,851 )
Provision for income taxes     8,982       12,045       11,089       26,615  
Loss from continuing operations     (15,267 )     (10,692 )     (32,006 )     (32,466 )
Income (loss) from discontinued operations, net of tax     127,179       (10,230 )     133,463       (23,819 )
Net income (loss)     111,912       (20,922 )     101,457       (56,285 )
Net income attributable to noncontrolling interests     (2,828 )     (1,953 )     (6,646 )     (4,385 )
Net income (loss) attributable to Groupon, Inc.   $ 109,084     $ (22,875 )   $ 94,811     $ (60,670 )
                 
Basic net income (loss) per share:                
Continuing operations   $ (0.03 )   $ (0.02 )   $ (0.06 )   $ (0.05 )
Discontinued operations     0.19       (0.01 )     0.20       (0.04 )
Basic net income (loss) per share   $ 0.16     $ (0.03 )   $ 0.14     $ (0.09 )
                 
Diluted net income (loss) per share:                
Continuing operations   $ (0.03 )   $ (0.02 )   $ (0.06 )   $ (0.05 )
Discontinued operations     0.19       (0.01 )     0.20       (0.04 )
Diluted net income (loss) per share   $ 0.16     $ (0.03 )   $ 0.14     $ (0.09 )
                 
Weighted average number of shares outstanding                
Basic     671,630,169       675,538,392       674,006,553       678,958,541  
Diluted     671,630,169       675,538,392       674,006,553       678,958,541  
(1)   Other income (expense), net includes foreign currency gains of $2.5 million and losses of $0.7 million for the three months ended June 30, 2015 and 2014, respectively and losses of $17.0 million and $1.5 million for the six months ended June 30, 2015 and 2014, respectively.
Groupon, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
         
    June 30, 2015   December 31, 2014
    (unaudited)    
Assets        
Current assets:        
Cash and cash equivalents   $ 1,110,148     $ 1,016,634  
Accounts receivable, net     95,311       90,597  
Deferred income taxes     18,462       16,271  
Prepaid expenses and other current assets     173,446       192,382  
Current assets held for sale           85,445  
Total current assets     1,397,367       1,401,329  
Property, equipment and software, net     173,426       176,004  
Goodwill     231,461       236,756  
Intangible assets, net     23,846       30,609  
Investments (including $135.4 million and $7.4 million at June 30, 2015 and December 31, 2014, respectively, at fair value)     150,018       24,298  
Deferred income taxes, non-current     24,219       41,323  
Other non-current assets     20,489       16,173  
Non-current assets held for sale           301,105  
Total Assets   $ 2,020,826     $ 2,227,597  
Liabilities and Equity        
Current liabilities:        
Accounts payable   $ 16,273     $ 13,822  
Accrued merchant and supplier payables     699,765       772,156  
Accrued expenses     220,048       214,260  
Deferred income taxes     29,815       31,998  
Other current liabilities     123,092       127,121  
Current liabilities held for sale           166,239  
Total current liabilities     1,088,993       1,325,596  
Deferred income taxes, non-current     9,083       773  
Other non-current liabilities     130,004       129,531  
Non-current liabilities held for sale           6,753  
Total Liabilities     1,228,080       1,462,653  
Commitments and contingencies        
Stockholders' Equity        
Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 709,198,287 shares issued and 660,206,739 shares outstanding at June 30, 2015 and 699,008,084 shares issued and 671,768,980 shares outstanding at December 31, 2014     71       70  
Class B common stock, par value $0.0001 per share, 10,000,000 shares authorized, 2,399,976 shares issued and outstanding at June 30, 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 June 30, 2015 and December 31, 2014            
Additional paid-in capital     1,902,892       1,847,420  
Treasury stock, at cost, 48,991,548 shares at June 30, 2015 and 27,239,104 shares at December 31, 2014     (339,626 )     (198,467 )
Accumulated deficit     (827,149 )     (921,960 )
Accumulated other comprehensive income     55,688       35,763  
Total Groupon, Inc. Stockholders' Equity     791,876       762,826  
Noncontrolling interests     870       2,118  
Total Equity     792,746       764,944  
Total Liabilities and Equity   $ 2,020,826     $ 2,227,597  
Groupon, Inc.
Segment Information
(in thousands)
(unaudited)
                   
    Three Months Ended June 30,     Six Months Ended June 30,
    2015   2014     2015   2014
North America                  
Gross billings (1)   $ 896,256     $ 798,845       $ 1,790,233     $ 1,580,614  
Revenue     481,282       423,931         961,164       854,993  
Segment cost of revenue and operating expenses (2)     454,413       409,386         909,629       829,063  
Segment operating income (2)   $ 26,869     $ 14,545       $ 51,535     $ 25,930  
Segment operating income as a percent of segment gross billings     3.0 %     1.8 %       2.9 %     1.6 %
Segment operating income as a percent of segment revenue     5.6 %     3.4 %       5.4 %     3.0 %
                   
EMEA                  
Gross billings (1)   $ 433,536     $ 483,255       $ 892,725     $ 996,843  
Revenue     204,047       227,690         420,267       458,583  
Segment cost of revenue and operating expenses (2)     194,378       199,981         390,946       411,951  
Segment operating income (2)   $ 9,669     $ 27,709       $ 29,321     $ 46,632  
Segment operating income as a percent of segment gross billings     2.2 %     5.7 %       3.3 %     4.7 %
Segment operating income as a percent of segment revenue     4.7 %     12.2 %       7.0 %     10.2 %
                   
Rest of World                  
Gross billings (1)   $ 199,221     $ 220,010       $ 398,056     $ 445,359  
Revenue     53,066       64,590         107,320       131,050  
Segment cost of revenue and operating expenses (2)     59,858       74,133         118,260       152,569  
Segment operating loss (2)   $ (6,792 )   $ (9,543 )     $ (10,940 )   $ (21,519 )
Segment operating loss as a percent of segment gross billings     (3.4 )%     (4.3 )%       (2.7 )%     (4.8 )%
Segment operating loss as a percent of segment revenue     (12.8 )%     (14.8 )%       (10.2 )%     (16.4 )%
(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, net.
Groupon, Inc.
Non-GAAP Reconciliation Schedules
(in thousands, except share and per share amounts)
(unaudited)
     
Adjusted EBITDA, non-GAAP earnings attributable to common stockholders and non-GAAP earnings per share are non-GAAP financial measures. The Company reconciles Adjusted EBITDA to the most comparable U.S. GAAP financial measure, "Net (loss) income from continuing operations" for the periods presented and the Company reconciles non-GAAP earnings per share to the most comparable U.S. GAAP financial measure, "Diluted net income (loss) per share," for the periods presented.
     
The following is a quarterly reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, "Net (loss) income from continuing operations."
      Q2 2014   Q3 2014   Q4 2014   Q1 2015   Q2 2015
(Loss) income from continuing operations   $ (10,692 )   $ (12,573 )   $ 26,566     $ (16,739 )   $ (15,267 )
Adjustments:                    
Stock-based compensation (1)     29,738       32,680       29,961       35,144       38,467  
Acquisition-related expense (benefit), net     597       (304 )     (809 )     (269 )     505  
Depreciation and amortization     27,024       30,462       30,122       32,200       31,372  
Other expense (income), net     1,023       20,056       11,531       19,927       (2,941 )
Provision (benefit) for income taxes     12,045       (6,434 )     (4,457 )     2,107       8,982  
Total adjustments     70,427       76,460       66,348       89,109       76,385  
Adjusted EBITDA   $ 59,735     $ 63,887     $ 92,914     $ 72,370     $ 61,118  
(1)  

Includes stock-based compensation classified within cost of revenue, marketing expense, and selling, general and administrative expense. Other expense (income), net, includes $0.02 million of additional stock-based compensation for the three months ended June 30, 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 and six months ended June 30, 2015:
      Three Months Ended   Six Months Ended
      June 30, 2015   June 30, 2015
Net income attributable to common stockholders   $ 109,084     $ 94,811  
Stock-based compensation     38,485       73,629  
Amortization of acquired intangible assets     3,872       9,806  
Acquisition-related expense, net     505       236  
Intercompany foreign currency (gains) losses and reclassification of translation adjustment to earnings (1)     (1,680 )     15,957  
Gain from changes in fair value of investment     (450 )     (450 )
Income tax effect of above adjustments     (8,831 )     (25,390 )
Income from discontinued operations, net of tax     (127,179 )     (133,463 )
Non-GAAP net income attributable to common stockholders   $ 13,806     $ 35,136  
           
Diluted shares     671,630,169       674,006,553  
Incremental diluted shares     6,950,563       7,833,244  
Adjusted diluted shares     678,580,732       681,839,797  
           
Diluted net income per share   $ 0.16     $ 0.14  
Impact of stock-based compensation, amortization of acquired intangible assets, acquisition-related (benefit) expense, net, intercompany foreign currency losses (gains), income from discontinued operations and related tax effects     (0.14 )     (0.09 )
Non-GAAP net income per share   $ 0.02     $ 0.05  
(1)   For the three and six months ended June 30, 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.
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 June 30, 2015 was as follows:
           
      Three Months Ended June 30, 2015   Three Months Ended June 30, 2015
      At Avg. Q2 2014   Exchange Rate   As   At Avg. Q1 2015   Exchange Rate   As
     

Rates (1)

 

Effect (2)

  Reported  

Rates (3)

 

Effect (2)

  Reported
Gross billings   $ 1,655,223       $ (126,210 )     $ 1,529,013       $ 1,536,816       $ (7,803 )     $ 1,529,013  
Revenue       792,592         (54,197 )       738,395         742,128         (3,733 )       738,395  
(Loss) income from operations   $ (10,678 )     $ 1,452       $ (9,226 )     $ (9,364 )     $ 138       $ (9,226 )
The effect on the Company's gross billings, revenue and income (loss) from changes in exchange rates versus the U.S. Dollar for the six months ended June 30, 2015 was as follows:
           
      Six Months Ended June 30, 2015   Six Months Ended June 30, 2015
      At Avg. Q2 2014 YTD   Exchange Rate   As   At Avg. Q4'14-Q1'15   Exchange Rate   As
     

Rates (1)

 

Effect (2)

  Reported  

Rates (3)

 

Effect (2)

  Reported
Gross billings   $ 3,324,919       $ (243,905 )     $ 3,081,014     $ 3,144,686       $ (63,672 )     $ 3,081,014  
Revenue       1,594,294         (105,543 )       1,488,751       1,516,989         (28,238 )       1,488,751  
(Loss) income from operations   $ (3,946 )     $ 15       $ (3,931 )   $ (3,455 )     $ (476 )     $ (3,931 )
(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 and six months ended June 30, 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 six months ended March 31, 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.
                                 
      Q2 2014     Q3 2014     Q4 2014     Q1 2015     Q2 2015  
EMEA Gross billings growth, excluding FX   (4 ) %   10   %   8   %   7   %   9   %
FX Effect     4             (9 )     (18 )     (19 )  
EMEA Gross billings growth     %   10   %   (1 ) %   (11 ) %   (10 ) %
                                 
Rest of World Gross billings growth, excluding FX   8   %   1   %     %   (1 ) %   6   %
FX Effect     (8 )     (4 )     (10 )     (11 )     (15 )  
Rest of World Gross billings growth     %   (3 ) %   (10 ) %   (12 ) %   (9 ) %
                                 
Consolidated Gross billings growth, excluding FX   6   %   12   %   13   %   10   %   10   %
FX Effect           (1 )     (5 )     (8 )     (8 )  
Consolidated Gross billings growth   6   %   11   %   8   %   2   %   2   %
The following is a quarterly reconciliation of foreign exchange rate neutral Revenue growth from the comparable quarterly periods of the prior year to reported Revenue growth from the comparable quarterly periods of the prior year.
      Q2 2014     Q3 2014     Q4 2014     Q1 2015     Q2 2015  
EMEA Revenue growth, excluding FX   36   %   55   %   18   %   13   %   9   %
FX Effect     6       1       (10 )     (19 )     (19 )  
EMEA Revenue growth   42   %   56   %   8   %   (6 ) %   (10 ) %
                                 
Rest of World Revenue growth, excluding FX   (1 ) %   (20 ) %   (9 ) %   (8 ) %   (4 ) %
FX Effect     (9 )     (4 )     (10 )     (10 )     (14 )  
Rest of World Revenue growth   (10 ) %   (24 ) %   (19 ) %   (18 ) %   (18 ) %
                                 
Consolidated Revenue growth, excluding FX   17   %   21   %   19   %   10   %   11   %
FX Effect     1       (1 )     (4 )     (7 )     (8 )  
Consolidated Revenue growth   18   %   20   %   15   %   3   %   3   %
The effect on North America's gross billings by category from changes in foreign exchange rates versus the U.S. Dollar for the three months ended June 30, 2015 was as follows:
                           
                        Y/Y%  
        Exchange               Growth  
    At Avg. Q2   Rate   June 30, 2015   June 30, 2014   Y/Y %   excluding  
   

2014 Rates (1)

 

Effect (2)

  As Reported   As Reported   Growth   FX  
Local:                          
Third party and other   $ 500,047   $ (669 )   $ 499,378   $ 461,366   8.2 % 8.4 %
                           
Goods:                          
Third party     9,098     (320 )     8,778     7,391   18.8 % 23.1 %
Direct     285,192           285,192     240,227   18.7   18.7  
Total     294,290     (320 )     293,970     247,618   18.7 % 18.8  
                           
Travel:                          
Third party     103,085     (177 )     102,908     89,861   14.5 % 14.7 %
                           
Total gross billings   $ 897,422   $ (1,166 )   $ 896,256   $ 798,845   12.2 % 12.3 %
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 June 30, 2015 was as follows:
                        Y/Y%  
        Exchange               Growth  
    At Avg. Q2   Rate   June 30, 2015   June 30, 2014   Y/Y %   excluding  
   

2014 Rates (1)

 

Effect (2)

  As Reported   As Reported   Growth   FX  
                           
Local:                          
Third party and other   $ 237,441   $ (38,888 )   $ 198,553   $ 227,266   (12.6 ) % 4.5   %
                           
Goods:                          
Third party     83,861     (14,124 )     69,737     92,389   (24.5 ) % (9.2 ) %
Direct     130,612     (24,910 )     105,702     98,568   7.2     32.5    
Total     214,473     (39,034 )     175,439     190,957   (8.1 ) % 12.3   %
                           
Travel:                          
Third party     73,516     (13,972 )     59,544     65,032   (8.4 ) % 13.0   %
                           
Total gross billings   $ 525,430   $ (91,894 )   $ 433,536   $ 483,255   (10.3 ) % 8.7   %
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 June 30, 2015 was as follows:
                        Y/Y%  
        Exchange               Growth  
    At Avg. Q2   Rate   June 30, 2015   June 30, 2014   Y/Y %   excluding  
   

2014 Rates (1)

 

Effect (2)

  As Reported   As Reported   Growth   FX  
Local:                          
Third party and other   $ 118,168   $ (17,765 )   $ 100,403   $ 112,741   (10.9 ) % 4.8 %
                           
Goods:                          
Third party     69,419     (8,519 )     60,900     68,964   (11.7 ) % 0.7 %
Direct     7,578     (923 )     6,655     4,912   35.5     54.3  
Total     76,997     (9,442 )     67,555     73,876   (8.6 ) % 4.2 %
                           
Travel:                          
Third party     37,206     (5,943 )     31,263     33,393   (6.4 ) % 11.4 %
                           
Total gross billings   $ 232,371   $ (33,150 )   $ 199,221   $ 220,010   (9.4 ) % 5.6 %
The effect on consolidated gross billings by category from changes in foreign exchange rates versus the U.S. Dollar for the three months ended June 30, 2015 was as follows:
                        Y/Y%  
        Exchange               Growth  
    At Avg. Q2   Rate   June 30, 2015   June 30, 2014   Y/Y %   excluding  
   

2014 Rates (1)

 

Effect (2)

  As Reported   As Reported   Growth   FX  
Local:                          
Third party and other   $ 855,656   $ (57,322 )   $ 798,334   $ 801,373   (0.4 ) % 6.8   %
                           
Goods:                          
Third party     162,378     (22,963 )     139,415     168,744   (17.4 ) % (3.8 ) %
Direct     423,382     (25,833 )     397,549     343,707   15.7     23.2    
Total     585,760     (48,796 )     536,964     512,451   4.8   % 14.3   %
                           
Travel:                          
Third party     213,807     (20,092 )     193,715     188,286   2.9   % 13.6   %
                           
Total gross billings   $ 1,655,223   $ (126,210 )   $ 1,529,013   $ 1,502,110   1.8   % 10.2   %
(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 June 30, 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)  
                         
      Q2 2014   Q3 2014   Q4 2014   Q1 2015   Q2 2015  
Segments                      
North America Segment:                      
Gross Billings (1):                      
  Local(2) Gross Billings   $ 461,366     $ 446,573     $ 499,250     $ 512,558     $ 499,378    
  Travel Gross Billings     89,861       84,820       80,296       96,678       102,908    
  Gross Billings - Services     551,227       531,393       579,546       609,236       602,286    
  Gross Billings - Goods     247,618       242,893       369,033       284,741       293,970    
  Total Gross Billings   $ 798,845     $ 774,286     $ 948,579     $ 893,977     $ 896,256    
  Year-over-year growth     12   %   16   %   20   %   14   %   12   %
  % Third Party and Other     70   %   69   %   62   %   69   %   68   %
  % Direct     30   %   31   %   38   %   31   %   32   %
Gross Billings Trailing Twelve Months (TTM)   $ 3,034,334     $ 3,143,621     $ 3,303,479     $ 3,415,687     $ 3,513,098    
                         
Revenue (3):                      
  Local Revenue   $ 164,500     $ 161,912     $ 170,946     $ 180,864     $ 172,461    
  Travel Revenue     17,805       17,627       17,165       19,989       21,958    
  Revenue - Services     182,305       179,539       188,111       200,853       194,419    
  Revenue - Goods     241,626       238,955       362,863       279,029       286,863    
  Total Revenue   $ 423,931     $ 418,494     $ 550,974     $ 479,882     $ 481,282    
  Year-over-year growth     12   %   16   %   24   %   11   %   14   %
  % Third Party and Other     43   %   43   %   35   %   42   %   41   %
  % Direct     57   %   57   %   65   %   58   %   59   %
Revenue TTM   $ 1,659,615     $ 1,717,271     $ 1,824,461     $ 1,873,281     $ 1,930,632    
                         
Gross Profit (4):                      
  Local Gross Profit   $ 142,674     $ 138,189     $ 147,582     $ 154,776     $ 147,574    
  % of North America Local Gross Billings     30.9   %   30.9   %   29.6   %   30.2   %   29.6   %
  Travel Gross Profit     14,365       14,000       14,187       15,791       18,385    
  % of North America Travel Gross Billings     16.0   %   16.5   %   17.7   %   16.3       17.9   %
  Gross Profit - Services     157,039       152,189       161,769       170,567       165,959    
  % of North America Services Gross Billings     28.5   %   28.6   %   27.9   %   28.0   %   27.6   %
  Gross Profit - Goods     22,961       23,953       34,404       23,923       30,598    
  % of North America Goods Gross Billings     9.3   %   9.9   %   9.3   %   8.4   %   10.4   %
  Total Gross Profit   $ 180,000     $ 176,142     $ 196,173     $ 194,490     $ 196,557    
  Year-over-year growth     (7 ) %   3   %   13   %   8   %   9   %
  % Third Party and Other     88   %   87   %   83   %   88   %   85   %
  % Direct     12   %   13   %   17   %   12   %   15   %
  % of North America Total Gross Billings     22.5   %   22.7   %   20.7   %   21.8   %   21.9   %
                         
EMEA Segment:                      
Gross Billings:                      
  Local Gross Billings   $ 227,266     $ 218,615     $ 242,119     $ 217,598     $ 198,553    
  Travel Gross Billings     65,032       79,802       72,710       65,065       59,544    
  Gross Billings - Services     292,298       298,417       314,829       282,663       258,097    
  Gross Billings - Goods     190,957       191,006       245,712       176,526       175,439    
  Total Gross Billings   $ 483,255     $ 489,423     $ 560,541     $ 459,189     $ 433,536    
  Year-over-year growth       %   10   %   (1 ) %   (11 ) %   (10 ) %
  Year-over-year growth, excluding FX     (4 ) %   10   %   8   %   7   %   9   %
  % Third Party and Other     80   %   78   %   74   %   77   %   76   %
  % Direct     20   %   22   %   26   %   23   %   24   %

Gross Billings TTM

  $ 2,005,874     $ 2,051,979     $ 2,046,807     $ 1,992,408     $ 1,942,689    
                         
Revenue:                      
  Local Revenue   $ 96,485     $ 90,002     $ 95,572     $ 82,536     $ 75,543    
  Travel Revenue     15,792       16,960       16,321       14,717       13,100    
  Revenue - Services     112,277       106,962       111,893       97,253       88,643    
  Revenue - Goods     115,413       123,110       160,582       118,967       115,404    
  Total Revenue   $ 227,690     $ 230,072     $ 272,475     $ 216,220     $ 204,047    
  Year-over-year growth     42   %   56   %   8   %   (6 ) %   (10 ) %
  Year-over-year growth, excluding FX     36   %   55   %   18   %   13   %   9   %
  % Third Party and Other     57   %   53   %   46   %   51   %   48   %
  % Direct     43   %   47   %   54   %   49   %   52   %
Revenue TTM   $ 857,738     $ 939,860     $ 961,130     $ 946,457     $ 922,814    
                         
Gross Profit:                      
  Local Gross Profit   $ 90,373     $ 83,956     $ 90,150     $ 77,356     $ 70,270    
  % of EMEA Local Gross Billings     39.8   %   38.4   %   37.2   %   35.5   %   35.4   %
  Travel Gross Profit     14,894       15,440       15,226       12,400       11,939    
  % of EMEA Travel Gross Billings     22.9   %   19.3   %   20.9   %   19.1       20.1   %
  Gross Profit - Services     105,267       99,396       105,376       89,756       82,209    
  % of EMEA Services Gross Billings     36.0   %   33.3   %   33.5   %   31.8   %   31.9   %
  Gross Profit - Goods     35,432       32,252       38,154       25,481       21,878    
  % of EMEA Goods Gross Billings     18.6   %   16.9   %   15.5   %   14.4   %   12.5   %
  Total Gross Profit   $ 140,699     $ 131,648     $ 143,530     $ 115,237     $ 104,087    
  Year-over-year growth     1   %   6   %   (6 ) %   (18 ) %   (26 ) %
  % Third Party and Other     85   %   85   %   82   %   87   %   86   %
  % Direct     15   %   15   %   18   %   13   %   14   %
  % of EMEA Total Gross Billings     29.1   %   26.9   %   25.6   %   25.1   %   24.0   %
                         
Rest of World Segment:                      
Gross Billings:                      
  Local Gross Billings   $ 112,741     $ 120,269     $ 105,420     $ 99,735     $ 100,403    
  Travel Gross Billings     33,393       35,754       32,313       32,946       31,263    
  Gross Billings - Services     146,134       156,023       137,733       132,681       131,666    
  Gross Billings - Goods     73,876       70,615       77,816       66,154       67,555    
  Total Gross Billings   $ 220,010     $ 226,638     $ 215,549     $ 198,835     $ 199,221    
  Year-over-year growth       %   (3 ) %   (10 ) %   (12 ) %   (9 ) %
  Year-over-year growth, excluding FX     8   %   1   %     %   (1 ) %   6   %
  % Third Party and Other     98   %   98   %   96   %   98   %   97   %
  % Direct     2   %   2   %   4   %   2   %   3   %
Gross Billings TTM   $ 918,363     $ 910,670     $ 887,546     $ 861,032     $ 840,243    
                         
Revenue:                      
  Local Revenue   $ 37,018     $ 39,034     $ 32,264     $ 30,281     $ 28,499    
  Travel Revenue     6,507       7,243       5,757       6,495       6,363    
  Revenue - Services     43,525       46,277       38,021       36,776       34,862    
  Revenue - Goods     21,065       19,426       21,758       17,478       18,204    
  Total Revenue   $ 64,590     $ 65,703     $ 59,779     $ 54,254     $ 53,066    
  Year-over-year growth     (10 ) %   (24 ) %   (19 ) %   (18 ) %   (18 ) %
  Year-over-year growth, excluding FX     (1 ) %   (20 ) %   (9 ) %   (8 ) %   (4 ) %
  % Third Party and Other     92   %   92   %   86   %   91   %   87   %
  % Direct     8   %   8   %   14   %   9   %   13   %
Revenue TTM   $ 290,779     $ 270,211     $ 256,532     $ 244,326     $ 232,802    
                         
Gross Profit:                      
  Local Gross Profit   $ 31,997     $ 34,373     $ 27,175     $ 26,161     $ 24,567    
  % of Rest of World Local Gross Billings     28.4   %   28.6   %   25.8   %   26.2   %   24.5   %
  Travel Gross Profit     4,928       5,544       3,815       4,906       5,012    
  % of Rest of World Travel Gross Billings     14.8   %   15.5   %   11.8   %   14.9   %   16.0   %
  Gross Profit - Services     36,925       39,917       30,990       31,067       29,579    
  % of Rest of World Services Gross Billings     25.3   %   25.6   %   22.5   %   23.4   %   22.5   %
  Gross Profit - Goods     8,786       7,571       7,416       6,612       6,784    
  % of Rest of World Goods Gross Billings     11.9   %   10.7   %   9.5   %   10.0   %   10.0   %
  Total Gross Profit   $ 45,711     $ 47,488     $ 38,406     $ 37,679     $ 36,363    
  Year-over-year growth     (10 ) %   (26 ) %   (24 ) %   (16 ) %   (20 ) %
  % Third Party and Other     99   %   100   %   96   %   99   %   99   %
  % Direct     1   %     %   4   %   1   %   1   %
  % of Rest of World Total Gross Billings     20.8   %   21.0   %   17.8   %   18.9   %   18.3   %
                         
Consolidated Results of Operations:                  
Gross Billings:                      
  Local Gross Billings   $ 801,373     $ 785,457     $ 846,789     $ 829,891     $ 798,334    
  Travel Gross Billings     188,286       200,376       185,319       194,689       193,715    
  Gross Billings - Services     989,659       985,833       1,032,108       1,024,580       992,049    
  Gross Billings - Goods     512,451       504,514       692,561       527,421       536,964    
  Total Gross Billings   $ 1,502,110     $ 1,490,347     $ 1,724,669     $ 1,552,001     $ 1,529,013    
  Year-over-year growth     6   %   11   %   8   %   2   %   2   %
  Year-over-year growth, excluding FX     6   %   12   %   13   %   10   %   10   %
  % Third Party and Other     77   %   76   %   70   %   75   %   74   %
  % Direct     23   %   24   %   30   %   25   %   26   %
Gross Billings TTM   $ 5,958,571     $ 6,106,270     $ 6,237,832     $ 6,269,127     $ 6,296,030    
  Year-over-year growth     7   %   7   %   8   %   7   %   6 % %
                         
Revenue:                      
  Local Revenue   $ 298,003     $ 290,948     $ 298,782     $ 293,681     $ 276,503    
  Travel Revenue     40,104       41,830       39,243       41,201       41,421    
  Revenue - Services     338,107       332,778       338,025       334,882       317,924    
  Revenue - Goods     378,104       381,491       545,203       415,474       420,471    
Total Revenue   $ 716,211     $ 714,269     $ 883,228     $ 750,356     $ 738,395    
  Year-over-year growth     18   %   20   %   15   %   3   %   3   %
  Year-over-year growth, excluding FX     17   %   21   %   19   %   10   %   11   %
  % Third Party and Other     52   %   51   %   42   %   48   %   46   %
  % Direct     48   %   49   %   58   %   52   %   54   %
Revenue TTM   $ 2,808,132     $ 2,927,342     $ 3,042,123     $ 3,064,064     $ 3,086,248    
  Year-over-year growth     16   %   20   %   18   %   13   %   10   %
                         
Gross Profit:                      
  Local Gross Profit   $ 265,044     $ 256,518     $ 264,907     $ 258,293     $ 242,411    
  % of Consolidated Local Gross Billings     33.1   %   32.7   %   31.3   %   31.1   %   30.4   %
  Travel Gross Profit     34,187       34,984       33,228       33,097       35,336    
  % of Consolidated Travel Gross Billings     18.2   %   17.5   %   17.9   %   17.0   %   18.2   %
  Gross Profit - Services     299,231       291,502       298,135       291,390       277,747    
  % of Consolidated Services Gross Billings     30.2   %   29.6   %   28.9   %   28.4   %   28.0   %
  Gross Profit - Goods     67,179       63,776       79,974       56,016       59,260    
  % of Consolidated Goods Gross Billings     13.1   %   12.6   %   11.5   %   10.6   %   11.0   %
  Total Gross Profit   $ 366,410     $ 355,278     $ 378,109     $ 347,406     $ 337,007    
  Year-over-year growth     (5 ) %   (1 ) %     %   (5 ) %   (8 ) %
  % Third Party and Other     88   %   88   %   84   %   89   %   87   %
  % Direct     12   %   12   %   16   %   11   %   13   %
  % of Total Consolidated Gross Billings     24.4   %   23.8   %   21.9   %   22.4   %   22.0   %
                         
Marketing   $ 57,699     $ 55,258     $ 59,812     $ 52,533     $ 57,007    
Selling, general and administrative   $ 305,738     $ 299,275     $ 285,472     $ 289,847     $ 288,721    
Adjusted EBITDA   $ 59,735     $ 63,887     $ 92,914     $ 72,370     $ 61,118    
  % of Total Consolidated Gross Billings     4.0   %   4.3   %   5.4   %   4.7   %   4.0   %
  % of Total Consolidated Revenue     8.3   %   8.9   %   10.5   %   9.6   %   8.3   %
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."
                       
      Q2 2014   Q3 2014   Q4 2014   Q1 2015   Q2 2015
                       
Net cash (used in) provided by operating activities from continuing operations   $ (28,525 )   $ 22,324     $ 273,272     $ 40,711     $ 9,995  
Purchases of property and equipment and capitalized software from continuing operations     (28,712 )     (18,638 )     (20,117 )     (18,294 )     (22,452 )
Free cash flow   $ (57,237 )   $ 3,686     $ 253,155     $ 22,417     $ (12,457 )
                       
Net cash provided by operating activities from continuing operations (TTM)   $ 123,271     $ 157,500     $ 252,497     $ 307,782     $ 346,302  
Purchases of property and equipment and capitalized software from continuing operations (TTM)     (79,800 )     (83,374 )     (83,560 )     (85,761 )     (79,501 )
Free cash flow (TTM)   $ 43,471     $ 74,126     $ 168,937     $ 222,021     $ 266,801  
                       
Net cash used in investing activities from continuing operations   $ (32,157 )   $ (19,046 )   $ (35,175 )   $ (19,443 )   $ (28,541 )
Net cash used in financing activities   $ (114,753 )   $ (16,823 )   $ (21,088 )   $ (32,942 )   $ (138,227 )
                       
Net cash used in investing activities from continuing operations (TTM)   $ (144,925 )   $ (137,527 )   $ (149,372 )   $ (105,821 )   $ (102,205 )
Net cash used in financing activities (TTM)   $ (220,659 )   $ (228,512 )   $ (194,156 )   $ (185,606 )   $ (209,080 )
                       
Other Metrics:                    
Active Customers (6)                    
  North America     22.6       23.5       24.1       24.6       24.9  
  EMEA     14.5       14.9       15.2       15.3       15.5  
  Rest of World     8.8       8.2       8.1       8.2       8.2  
  Total Active Customers     45.9       46.6       47.4       48.1       48.6  
                       
TTM Gross Billings / Average Active Customer (7)                  
North America   $ 145     $ 145     $ 147     $ 147     $ 148  
EMEA     141       142       139       134       130  
Rest of World     104       108       105       101       98  
Consolidated     136       137       137       135       133  
Global headcount as of June 30, 2015 and 2014 was as follows:
           
      Q2 2014   Q2 2015
  Sales (8)   4,551   4,321
  % North America   29 %   29 %
  % EMEA   44 %   43 %
  % Rest of World   27 %   28 %
  Other   6,287   6,365
  Total Headcount   10,838   10,686
(1)   Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds.
     
(2)   Local represents deals from local merchants, deals with national merchants, and deals through local events. Other revenue transactions include advertising, payment processing, point of sale and commission revenue.
     
(3)   Includes third party revenue, direct revenue and other revenue. Third party revenue is related to sales for which the Company acts as a marketing agent for the merchant. This revenue is recorded on a net basis. Direct revenue is primarily related to the sale of products for which the Company is the merchant of record. These revenues are accounted for on a gross basis, with the cost of inventory included in cost of revenue. Other revenue primarily consists of advertising revenue, payment processing revenue, point of sale revenue and commission revenue.
     
(4)   Represents third party revenue, direct revenue and other revenue reduced by cost of revenue.
     
(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
Genny Konz
Tom Grant
312-999-3098
ir@groupon.com
or
Public Relations
Bill Roberts
312-459-5191

 

Source: Groupon, Inc.

 

 

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