Groupon Announces Second Quarter 2015 Results

  • Gross billings of $1.53 billion
  • Revenue of $738.4 million
  • Adjusted EBITDA of $61.1 million
  • GAAP earnings per share of $0.16; non-GAAP earnings per share of $0.02
  • Free Cash Flow of $266.8 million for the trailing twelve month period

CHICAGO--()--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

  • Gross billings, which reflect the total dollar value of customer purchases of goods and services, increased to $1.53 billion in the second quarter 2015, compared with $1.50 billion in the second quarter 2014. Gross billings grew 2% globally, or 10% 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 12%, EMEA increased 9% and Rest of World increased 6%.
  • Revenue increased to $738.4 million in the second quarter 2015, compared with $716.2 million in the second quarter 2014. Revenue grew 3% globally, or 11% 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 14%, EMEA increased 9% and Rest of World declined 4%.
  • Gross profit was $337.0 million in the second quarter 2015, compared with $366.4 million in the second quarter 2014. Excluding the $28.3 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, gross profit would have been $365.3 million.
  • Adjusted EBITDA, a non-GAAP financial measure, was $61.1 million in the second quarter 2015, compared with $59.7 million in the second quarter 2014, as lower gross profit was mostly offset by lower operating expenses, both reflecting the impact of year-over-year changes in foreign exchange rates.
  • Net earnings attributable to common stockholders was $109.1 million, or $0.16 per share, including $0.21 related to the gain on the Ticket Monster sale. Non-GAAP earnings attributable to common stockholders was $13.8 million, or $0.02 per share.
  • Operating cash flow for the trailing twelve months ended June 30, 2015 was $346.3 million. Free cash flow, a non-GAAP financial measure, was negative $12.5 million in the second quarter 2015, bringing free cash flow for the trailing twelve months ended June 30, 2015 to $266.8 million.
  • At the end of the quarter, Groupon had $1.1 billion in cash and cash equivalents.

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, increased 7% year-over-year to 53 million in the second quarter 2015. North America units increased 9%, EMEA units increased 10% and Rest of World units declined 3%.
  • Active deals: At the end of the second quarter 2015, on average, active deals were nearly 510,000 globally, with approximately 240,000 in North America. Both include the addition of approximately 75,000 Coupons.
  • Active customers: Active customers, or customers that have purchased a voucher or product within the last twelve months, grew 6% year-over-year, to 48.6 million as of June 30, 2015, comprising 24.9 million in North America, 15.5 million in EMEA, and 8.2 million in Rest of World.
  • Customer spend: Second quarter 2015 trailing twelve month billings per average active customer was $133, compared with $136 in the second quarter 2014.

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 second 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:

  • stock-based compensation,
  • amortization of acquired intangible assets,
  • acquisition-related expense (benefit), net,
  • non-operating foreign currency gains and losses related to intercompany balances and the reclassification of the cumulative translation loss from our legacy business in the Republic of Korea to earnings as a result of the Ticket Monster disposition,
  • 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 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.

Contacts

Groupon, Inc.
Investor Relations
Genny Konz
Tom Grant
312-999-3098
ir@groupon.com
or
Public Relations
Bill Roberts
312-459-5191

Release Summary

Groupon announced financial results for the quarter ended June 30, 2015

Contacts

Groupon, Inc.
Investor Relations
Genny Konz
Tom Grant
312-999-3098
ir@groupon.com
or
Public Relations
Bill Roberts
312-459-5191