Groupon Announces Fourth Quarter and Fiscal Year 2015 Results

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

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

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

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

Fourth Quarter 2015 Summary

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

Full Year 2015 Summary

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

Definitions and reconciliations of all non-GAAP financial measures are
included below in the section titled “Non-GAAP Financial Measures” and
in the accompanying tables.

Highlights

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

Share Repurchase

During the fourth quarter 2015, Groupon repurchased 35,326,954 shares of
its Class A common stock for an aggregate purchase price of $112.5
million, as of December 31, 2015. Up to $156.8 million of Class A common
stock remained available for repurchase under Groupon’s share repurchase
program through August 2017. The timing and amount of any share
repurchases are determined based on market conditions, share price and
other factors, and the programs may be discontinued or suspended at any
time.

Outlook

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

Conference Call

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

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

Non-GAAP Financial Measures

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

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

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

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

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

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

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

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

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

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

Non-GAAP net income (loss) attributable to common stockholders and
non-GAAP earnings (loss) per share adjust our net income
(loss) attributable to common stockholders and earnings (loss) per share
to exclude the impact of:

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

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

Free cash flow is a non-GAAP financial measure that comprises net
cash provided by (used in) operating activities from continuing
operations less purchases of property and equipment and capitalized
software from continuing operations. We use free cash flow to conduct
and evaluate our business because, although it is similar to cash flow
from operations, we believe that it typically represents a more useful
measure of cash flows because purchases of fixed assets, software
developed for internal-use and website development costs are necessary
components of our ongoing operations. Free cash flow is not intended to
represent the total increase or decrease in Groupon’s cash balance for
the applicable period.

Note on Forward-Looking Statements

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

You should not rely upon forward-looking statements as predictions of
future events. Although Groupon believes that the expectations reflected
in the forward-looking statements are reasonable, it cannot guarantee
that the future results, levels of activity, performance or events and
circumstances reflected in the forward-looking statements will be
achieved or occur. Moreover, neither the company nor any other person
assumes responsibility for the accuracy and completeness of the
forward-looking statements. The forward-looking statements reflect
Groupon’s expectations as of February 11, 2016. Groupon undertakes no
obligation to update publicly any forward-looking statements for any
reason after the date of this release to conform these statements to
actual results or to changes in its expectations.

About Groupon

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

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

Groupon, Inc.
Summary Consolidated and Segment Results
(in thousands, except share and per share amounts)
(unaudited)
 
The financial results of Ticket Monster, including the gain on
disposition and related tax effects, are presented as discontinued
operations in the accompanying condensed consolidated financial
statements and tables for the three months and year ended December
31, 2015. Additionally, the assets and liabilities of Ticket Monster
are presented as held for sale in the accompanying condensed
consolidated balance sheet as of December 31, 2014. All prior period
financial information and operational metrics have been
retrospectively adjusted to reflect this presentation.
             
Three Months Ended Year Ended
December 31, December 31,
Y/Y % Growth Y/Y % Growth
FX Effect excluding FX Effect excluding
  2015     2014   Y/Y % Growth  

(2)

 

FX (2)

  2015     2014   Y/Y % Growth

(2)

 

FX (2)

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

(1)

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

(2)

Represents the change in financial measures that would have resulted
had average exchange rates in the reporting periods been the same as
those in effect during the three months and year ended December 31,
2014.
 

(3)

The $10.6 million loss presented within income (loss) from
discontinued operations, net of tax, for the three months ended
December 31, 2015 represents additional income tax expense
attributed to discontinued operations, which resulted from the
valuation allowance that was recognized during the period against
the Company’s net deferred tax assets in the United States.

Contacts

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

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