Press release·03/11/2025 21:09:16

Groupon’s Financial Performance: Navigating Challenges and Seeking Growth

Groupon, Inc. is a global scaled two-sided marketplace that connects consumers to merchants by offering goods and services, generally at a discount. The company operates in two segments: North America and International.

Financial Highlights

For the year ended December 31, 2024, Groupon reported:

• Revenue of $492.6 million, a 4.3% decrease from the prior year
• Gross profit of $444.3 million, a 1.4% increase from the prior year
• Adjusted EBITDA of $69.3 million, a 25.0% increase from the prior year
• Free cash flow of $40.6 million, compared to a negative $97.3 million in the prior year

The company’s North America segment saw a 0.7% decrease in gross billings and a 4.8% decrease in units, while International segment gross billings and units decreased by 15.6% and 21.7% respectively.

Factors Affecting Performance

Groupon’s performance was impacted by several key factors:

Attracting and Retaining Local Merchants As Groupon focuses on its local experiences marketplace, it depends on its ability to attract and retain merchants who are willing to offer their experiences on the platform. Merchants can withdraw their offerings at any time, so Groupon is focused on improving its marketplace offering and merchant value proposition.

Acquiring and Retaining Customers To drive higher volumes, Groupon is focused on strengthening its product offering, improving the attractiveness of its offerings, and enhancing the performance of its marketing campaigns to acquire and retain customers.

Impact of Macroeconomic Conditions Groupon has been impacted by adverse macroeconomic conditions, including inflationary pressures, higher labor costs, supply chain challenges and changes in consumer and merchant behavior. To minimize the impact, Groupon is focusing on building long-term relationships with local merchants, improving the customer experience, and expanding convenience to drive customer demand.

Segment Performance

North America North America gross billings and units decreased by 0.7% and 4.8% respectively, while active customers remained flat. The Local category experienced growth, offset by a de-emphasis on the Goods category. Revenue and cost of revenue decreased, while gross profit increased by 2.8%.

Marketing expense and marketing expense as a percentage of revenue increased, driving a 12.0% decrease in contribution profit.

International International gross billings, units and active customers decreased by 15.6%, 21.7% and 17.2% respectively. The declines were primarily attributable to the exit of the Local business in Italy and an overall decline in site traffic.

Revenue, cost of revenue and gross profit decreased by 13.7%, 22.2% and 12.8% respectively. Marketing expense and marketing expense as a percentage of revenue decreased, but contribution profit still declined by 11.0%.

Operating Expenses

Marketing expense increased by 30.5% due to higher investment in performance marketing campaigns. Selling, general and administrative (SG&A) expenses decreased by 15.7%, primarily due to a decrease in cloud computing costs and a reduction in headcount from the 2022 Restructuring Plan. Restructuring and related charges decreased by 86.7% as a result of lower severance and benefit costs. The company also recognized a $5.2 million gain on the sale of certain intangible assets.

Other Income and Taxes

Other income (expense), net increased by $14.0 million, primarily due to a $40.3 million change in foreign currency gains and losses, partially offset by the absence of a $25.8 million remeasurement of the investment in SumUp recorded in the prior year.

The provision for income taxes increased by 174.7%, primarily due to the pretax losses incurred in jurisdictions with valuation allowances against their net deferred tax assets.

Non-GAAP Measures

Groupon uses several non-GAAP financial measures to provide additional information for investors:

• Adjusted EBITDA, which excludes the impact of income taxes, interest, depreciation, amortization, stock-based compensation, and other special charges and credits. Adjusted EBITDA increased by 25.0% to $69.3 million.
• Free cash flow, which comprises net cash provided by operating activities less purchases of property and equipment and capitalized software. Free cash flow improved from a negative $97.3 million in the prior year to a positive $40.6 million.
• Foreign currency exchange rate neutral operating results, which show current period results as if foreign currency exchange rates had remained the same as the prior year.

Liquidity and Capital Resources

As of December 31, 2024, Groupon had $228.8 million in cash and cash equivalents. The company’s cash requirements are subject to change, but with the Rights Offering, termination of the Credit Agreement, and the Exchange and Subscription Agreements, Groupon believes it has sufficient liquidity to support its ongoing operational needs.

Groupon is subject to a proposed $122.3 million income tax assessment from the Italian tax authority, which it is vigorously defending. The company believes the assessment is without merit and intends to pursue an appeal. Groupon does not expect the assessment to result in financial exposure exceeding the amounts disclosed.

In 2024, Groupon issued $197.3 million of new 6.25% Convertible Senior Secured Notes due 2027, using the proceeds to exchange $176.3 million of its existing 1.125% Convertible Senior Notes due 2026. This transaction resulted in a $1.6 million loss on extinguishment of debt.

Outlook and Conclusion

Groupon faces ongoing challenges in its business, including the need to attract and retain merchants and customers, as well as the impact of macroeconomic conditions. However, the company is taking steps to improve its marketplace offering, enhance the customer experience, and manage costs.

The company’s improved free cash flow and Adjusted EBITDA performance in 2024 are positive signs, but Groupon will need to continue executing on its strategic initiatives to drive sustainable growth and profitability. Investors will be closely watching Groupon’s ability to navigate the competitive landscape and economic headwinds in the year ahead.