Groupon Announces Fourth Quarter and Fiscal Year 2016 Results

2017-02-15 08:31 ET - News Release

 

Added 5.2 million net new customers and achieved double digit Gross Profit growth in North America for 2016

 

Fourth quarter revenue of $934.9 million, $3.1 billion for the full year

Fourth quarter gross billings of $1.7 billion, $6.1 billion for the full year

Fourth quarter net loss of $50.2 million, $183.3 million for the full year

Fourth quarter Adjusted EBITDA of $80.6 million, $178.1 million for the full year

Fourth quarter loss per share of $0.09; non-GAAP earnings per share of $0.07

Operating cash flow of $117.1 million for the full year; free cash flow of $48.2 million for the full year

Added 5.2 million net new customers in North America, bringing North America active customers to 31.1 million; global active customers reached 52.7 million

2017 gross profit guidance of $1.30 billion to $1.35 billion, an increase of $40 to $90 million compared to 2016 results for the countries in our go-forward footprint on an FX-neutral basis

2017 Adjusted EBITDA guidance of $200 million to $240 million, an increase of $16 to $56 million compared to 2016 results for our go-forward footprint on an FX-neutral basis

 

Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter and fiscal year ended December 31, 2016.

 

"In 2016, our concentrated focus on key strategic initiatives provided a strong foundation for Groupon going forward and resulted in a streamlined global operation, a healthier Goods business, improved customer service and strong customer acquisitions after a successful online and offline marketing strategy," said CEO Rich Williams. "We look forward to continuing to invest in the Groupon brand and unlocking the true potential of our business as we make Groupon the daily habit in local commerce."

 

Groupon’s fourth quarter and full year 2016 consolidated financial results include the results of LivingSocial’s operations for the partial period from the acquisition date of October 31, 2016 to December 31, 2016.

 

Fourth Quarter 2016 Summary

 

Gross Billings were $1.70 billion in the fourth quarter 2016, down slightly from $1.71 billion in the fourth quarter 2015. Gross billings were impacted by dispositions and country exits in connection with Groupon’s restructuring efforts, partially offset by the addition of LivingSocial. On a same-country, FX-neutral basis, gross billings grew 2% year-over-year. North America gross billings increased 6%, reflecting growth of new customers as well as the acquisition of LivingSocial, while EMEA declined by 9% (5% FX-neutral) and Rest of World declined by 15% (15% FX-neutral). Gross billings reflect the total dollar value of customer purchases of goods and services.

Revenue was $934.9 million in the fourth quarter 2016, compared with $917.2 million in the fourth quarter 2015. Revenue increased 2% globally, or 4% on a same-country, FX-neutral basis. North America revenue increased 5%, EMEA declined 2% (increased 1% FX-neutral) and Rest of World declined 12% (8% FX-neutral).

Gross profit was $369.9 million in the fourth quarter 2016, compared with $371.7 million in the fourth quarter 2015. North America gross profit increased 14%, EMEA declined 25% and Rest of World declined 10%.

Net loss from continuing operations was $50.2 million in the fourth quarter 2016, compared with $32.6 million in the fourth quarter 2015. Net loss attributable to common stockholders was $52.6 million, or $0.09 per share. Net loss was negatively impacted by non-operating losses of $40.8 million in the fourth quarter 2016 from declines in the fair value of investments, primarily attributable to Ticket Monster.

Non-GAAP net income attributable to common stockholders was $42.5 million, or $0.07 per share.

Adjusted EBITDA, a non-GAAP performance measure, was $80.6 million in the fourth quarter 2016, compared with $67.0 million in the fourth quarter 2015, reflecting execution of our streamlining initiatives.

Global units sold declined 0.4% year-over-year to 62.0 million, primarily driven by country exits and our restructuring efforts in international segments. Units in North America increased 3%, EMEA grew 6%, and Rest of World declined 29%. Units are defined as purchases made through our online marketplaces, before refunds and cancellations.

Operating cash flow was $288.7 million in the fourth quarter 2016. Free cash flow, a non-GAAP financial measure, was $269.0 million in the fourth quarter 2016.

Cash and cash equivalents as of December 31, 2016 were $891.8 million, and we had no outstanding borrowings under our $250.0 million revolving credit facility.

Full Year 2016 Summary

 

Gross Billings were $6.1 billion in 2016, compared with $6.3 billion in 2015. On a same-country, FX-neutral basis, gross billings grew 2% year-over-year. North America gross billings increased 6%, reflecting the contribution of new active customer cohorts, while EMEA declined by 11% (9% FX-neutral) and Rest of World declined by 24% (19% FX-neutral).

Revenue was $3.14 billion in 2016, compared with $3.12 billion in 2015. Revenue grew 1% globally, or 4% on a same-country, FX-neutral basis. North America revenue increased 5%, EMEA declined 5% (3% FX-neutral) and Rest of World declined 19% (11% FX-neutral).

Gross profit was $1.36 billion in 2016, compared with $1.39 billion in 2015. North America gross profit increased 10%, EMEA declined 19% and Rest of World declined 21%.

Net loss from continuing operations was $183.3 million in 2016, compared with $89.2 million in 2015. Net loss attributable to common stockholders was $194.6 million, or $0.34 per share. Net loss was negatively impacted by non-operating losses of $48.1 million in the full year from declines in the fair value of investments, primarily attributable to Ticket Monster.

Non-GAAP net income attributable to common stockholders was $23.0 million, or $0.04 per share.

Adjusted EBITDA was $178.1 million in 2016, compared with $256.8 million in 2015 and ahead of our guidance range of $150 million to $165 million, reflecting our increased marketing investments in customer acquisition.

Global units sold declined 3% year-over-year to 214.3 million in 2016. Units in North America increased 5%, EMEA declined 4%, and Rest of World declined 29%.

Operating cash flow for 2016 was $117.1 million. Free cash flow, a non-GAAP financial measure, was $48.2 million in 2016, which reflects the adverse cash flow impact of restructuring charges, country exits, and the funding of our securities litigation settlement.

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.

 

Fourth Quarter and Full Year 2016 Highlights

 

North America Local Billings grew 11% year-over-year in the fourth quarter 2016. North America Local Billings growth accelerated throughout 2016 reaching 11% year-over-year growth in the fourth quarter 2016. LivingSocial contributed 4 percentage points to fourth quarter 2016 year-over-year growth.

North America customer additions accelerated to 2.0 million in the fourth quarter 2016. North America active customers reached 31.1 million as of December 31, 2016, adding 5.2 million for 2016, which marks the highest acquisition in four years. Fourth quarter net additions were 2.0 million, with 1.0 million unique customers added from LivingSocial. Active customers represent unique user accounts that have made a purchase through one of our online marketplaces during the trailing twelve months.

North America gross profit increased $31.5 million year-over-year in the fourth quarter 2016. North America gross profit growth accelerated to 14% year-over-year in the fourth quarter 2016 driven by 16% growth in Local and 14% growth in Shopping. For 2016, North America gross profit increased $84.0 million to $885.5 million.

SG&A declined $33.5 million year-over-year in the fourth quarter 2016, on solid execution of operational streamlining initiatives. SG&A in all markets declined year-over-year in the fourth quarter 2016 as we continue to drive operational efficiency through regional shared service centers and automated processes, which we expect to not only improve our customer service but also create greater operating leverage over time. SG&A declined $126.6 million year-over-year in 2016, or $89.1 million excluding the impact of a litigation reserve recorded in 2015.

Share Repurchase

 

During the fourth quarter 2016, Groupon repurchased 12,397,795 shares of its common stock for an aggregate purchase price of $49.9 million. During the full year 2016, Groupon repurchased 43,227,743 shares of its common stock for an aggregate purchase price of $162.4 million. Up to $195.0 million of common stock was available for repurchase under Groupon’s share repurchase program as of December 31, 2016. The timing and amount of any share repurchases are determined based on market conditions, share price and other factors, and the program may be discontinued or suspended at any time.

 

Outlook

 

Groupon is providing its outlook for 2017, which reflects current foreign exchange rates, as well as expected marketing investments, the acquisition of LivingSocial, potential disruptions related to country exits, and cost benefits associated with our streamlining initiatives. As previously announced, Groupon expects to exit 11 countries as part of its streamline and simplify initiative, and the company expects to report these countries as discontinued operations beginning in first quarter 2017. The basis for our full year 2017 guidance is continuing operations.

 

For the full year 2017, Groupon expects gross profit to be in the range of $1.30 billion and $1.35 billion, an increase of $40 to $90 million compared to full year 2016 results for the 15 countries in our go-forward footprint on an FX-neutral basis.

Groupon also expects Adjusted EBITDA to be in the range of $200 million and $240 million, an increase of $16 to $56 million compared to full year 2016 results for the 15 countries in our go-forward footprint on an FX-neutral basis.

Conference Call

 

A conference call will be webcast live today at 9:00 a.m. CST / 10:00 a.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. GAAP, we have provided the following non-GAAP financial measures: Adjusted EBITDA, non-GAAP net income (loss) attributable to common stockholders, non-GAAP earnings (loss) per share, free cash flow and foreign currency exchange rate neutral operating results. These non-GAAP financial measures, which are presented on a continuing operations basis, are intended to aid investors in better understanding our current financial performance and 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, these 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: gains and losses related to minority investments, foreign currency gains and losses, interest income and interest expense, including non-cash interest expense from our convertible senior notes. 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.

 

Special Charges and Credits. For the years ended December 31, 2016 and 2015, special charges and credits included gains from business dispositions and charges related to our restructuring plan. For the year ended December 31, 2015, special charges and credits also included the write-off of a prepaid asset related to a marketing program that was discontinued because the counterparty ceased operations and the expense related to a significant increase in the contingent liability for our securities litigation matter. We exclude special charges and credits from Adjusted EBITDA because we believe that excluding those items provides meaningful supplemental information about our core operating performance and facilitates comparisons with our historical results.

 

Income Tax Effect of Items Excluded from Non-GAAP Financial Measures. Wedetermine the income tax effect of items excluded from our measures of non-GAAP net income (loss) attributable to common stockholders and non-GAAP earnings (loss) per share by performing a tax provision calculation using pre-tax income (loss) amounts that have been adjusted to exclude those items in the respective jurisdictions to which they relate. The difference between the income tax expense (benefit) determined on that basis and our reported income tax expense (benefit) represents the income tax effect of the excluded items.

 

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 performance 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 special charges and credits. 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 performance in the same manner as our management and Board of Directors.

 

Non-GAAP net income (loss) attributable to common stockholders and non-GAAPearnings (loss) per share are non-GAAP performance measures that 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,

restructuring charges,

gains on business dispositions,

non-cash interest expense on convertible senior notes,

special charges and credits,

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 the above 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.

 

Same country operating results are non-GAAP performance measures that reflect the results of the countries in which we maintained continuous business operations throughout the comparative periods presented. We use same country operating results, including same country operating results presented on a foreign exchange rate neutral basis, to better understand the performance of our ongoing business operations and to facilitate comparisons to our historical operating results.

 

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. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties 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; effectively dealing with challenges arising from our international operations, including fluctuations in currency exchange rates and any potential adverse impact from the United Kingdom’s likely exit from the European Union; retaining existing customers and adding new customers; 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; our senior convertible notes; and our ability to realize the anticipated benefits from the hedge and warrant transactions. 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 year ended December 31, 2016, 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 15, 2017. 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 building the daily habit in local commerce, offering a vast mobile and online marketplace where people discover and save on amazing things to do, eat, see and buy. By enabling real-time commerce across local businesses, travel destinations, consumer products and live events, shoppers can find the best a city has to offer.

 

Groupon is redefining how small businesses attract and retain customers by providing them with customizable and scalable marketing tools and services to profitably grow their businesses.

 

To download Groupon's top-rated mobile apps, visit www.groupon.com/mobile. To search for great deals or subscribe to Groupon emails, visit www.groupon.com. To learn more about the company’s merchant solutions and how to work with Groupon, visit www.groupon.com/merchant.

 

Groupon, Inc.
Summary Consolidated and Segment Results
(in thousands, except share and per share amounts)
(unaudited)
		The financial results of Ticket Monster are presented as discontinued operations in the accompanying condensed consolidated financial statements and tables for the three months and year ended December 31, 2015. All prior period financial information and operational metrics have been retrospectively adjusted to reflect this presentation.
				Three Months Ended December 31,															Y/Y % Growth excluding FX(2)			Year Ended December 31,															Y/Y % Growth excluding FX (2)
				2016				2015				Y/Y % Growth			FX Effect (2)							2016				2015				Y/Y % Growth			FX Effect (2)
		Gross Billings(1):
		North America		$	1,112,131			$	1,050,361			5.9	%		$	25			5.9	%		$	3,936,421			$	3,709,797			6.1	%		$	(1,060	)		6.1	%
		EMEA			443,910				487,147			(8.9)				(17,556	)		(5.3	)			1,588,438				1,794,354			(11.5	)			(38,151	)		(9.3	)
		Rest of World			143,416				169,484			(15.4)				(1,083	)		(14.7	)			571,645				751,389			(23.9	)			(36,711	)		(19.0	)
		Consolidated gross billings		$	1,699,457			$	1,706,992			(0.4)	%		$	(18,614	)		0.6	%		$	6,096,504			$	6,255,540			(2.5	)%		$	(75,922	)		(1.3	)%
		Revenue:
		North America		$	650,753			$	622,647			4.5	%		$	10			4.5	%		$	2,151,769			$	2,047,742			5.1	%		$	(250	)		5.1	%
		EMEA			243,348				248,326			(2.0)				(6,742	)		0.7				827,196				867,880			(4.7	)			(14,368	)		(3.0	)
		Rest of World			40,784				46,197			(11.7)				(1,814	)		(7.8	)			164,389				203,894			(19.4	)			(16,389	)		(11.3	)
		Consolidated revenue		$	934,885			$	917,170			1.9	%		$	(8,546	)		2.9	%		$	3,143,354			$	3,119,516			0.8	%		$	(31,007	)		1.8	%
												-
		Income (loss) from operations		$	7,424			$	(5,423	)		(236.9)	%		$	(145	)		(239.6	)%		$	(109,763	)		$	(79,777	)		(37.6	)%		$	(1,150	)		(36.1	)%
		Income (loss) from continuing operations			(50,204	)			(32,552	)													(183,323	)			(89,171	)
		Income (loss) from discontinued operations, net of tax (3)			—				(10,613	)													—				122,850
		Net income (loss) attributable to Groupon, Inc.		$	(52,588	)		$	(46,528	)												$	(194,587	)		$	20,668
		Basic and diluted net income (loss) per share (4):.
		Continuing operations		$	(0.09	)		$	(0.06	)												$	(0.34	)		$	(0.16	)
		Discontinued operations			—				(0.02	)													—				0.19
		Basic and diluted net income (loss) per share		$	(0.09	)		$	(0.08	)												$	(0.34	)		$	0.03
		Weighted average number of shares outstanding (4)
		Basic			570,546,159				607,517,010														576,354,258				650,106,225
		Diluted			570,546,159				607,517,010														576,354,258				650,106,225
(1)		Represents the total dollar value of customer purchases of goods and services.
(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, 2015.
(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.
(4)		The structure of the Company's common stock changed during the year ended December 31, 2016. For additional information, refer to Note 11, Stockholders' Equity, and Note 17, Income (Loss) per Share, in the Company's Annual Report on Form 10-K for the year ended December 31, 2016.

		Groupon, Inc.
		Condensed Consolidated Statements of Cash Flows
		(in thousands)
		(unaudited)
				Three Months Ended December 31,								Year Ended December 31,
				2016				2015 (1)				2016				2015 (1)
		Operating activities
		Net income (loss)		$	(50,204	)		$	(43,165	)		$	(183,323	)		$	33,679
		Less: Income (loss) from discontinued operations, net of tax			—				(10,613	)			—				122,850
		Income (loss) from continuing operations			(50,204	)			(32,552	)			(183,323	)			(89,171	)
		Adjustments to reconcile net income (loss) to net cash provided by operating activities:
		Depreciation and amortization of property, equipment and software			30,023				28,807				118,720				113,048
		Amortization of acquired intangible assets			5,305				4,956				18,948				19,922
		Stock-based compensation			23,402				32,865				118,152				142,069
		Restructuring-related long-lived asset impairments			376				6,922				421				7,267
		Gains on business dispositions			(312	)			—				(11,711	)			(13,710	)
		Deferred income taxes			(4,185	)			6,267				(10,621	)			(8,985	)
		(Gain) loss from changes in fair value of contingent consideration			(38	)			508				4,092				240
		(Gain) loss from changes in fair value of investments			40,840				829				48,141				2,943
		Amortization of debt discount on convertible senior notes			2,522				—				7,376				—
		Change in assets and liabilities, net of acquisitions:
		Restricted cash			(995	)			75				(1,327	)			4,630
		Accounts receivable			(10,970	)			6,960				(14,563	)			13,313
		Prepaid expenses and other current assets			30,070				61,358				40,808				21,545
		Accounts payable			7,540				9,545				3,214				8,601
		Accrued merchant and supplier payables			190,261				142,069				18,445				40,217
		Accrued expenses and other current liabilities			13,407				(1,174	)			(34,512	)			56,040
		Other, net			11,620				(16,980	)			(5,155	)			(18,222	)
		Net cash provided by (used in) operating activities from continuing operations			288,662				250,455				117,105				299,747
		Net cash provided by (used in) operating activities from discontinued operations			—				(670	)			—				(37,248	)
		Net cash provided by (used in) operating activities			288,662				249,785				117,105				262,499
		Net cash provided by (used in) investing activities from continuing operations			(5,767	)			(31,238	)			(57,486	)			(177,250	)
		Net cash provided by (used in) investing activities from discontinued operations			—				—				—				244,470
		Net cash provided by (used in) investing activities			(5,767	)			(31,238	)			(57,486	)			67,220
		Net cash provided by (used in) financing activities			(67,533	)			(323,597	)			(14,665	)			(515,785	)
		Effect of exchange rate changes on cash and cash equivalents, including cash classified within current assets held for sale			(13,263	)			(5,147	)			(6,470	)			(32,485	)
		Net increase (decrease) in cash and cash equivalents, including cash classified within current assets held for sale			202,099				(110,197	)			38,484				(218,551	)
		Less: Net increase (decrease) in cash classified within current assets held for sale			—				—				—				(55,279	)
		Net increase (decrease) in cash and cash equivalents			202,099				(110,197	)			38,484				(163,272	)
		Cash and cash equivalents, beginning of period			689,747				963,559				853,362				1,016,634
		Cash and cash equivalents, end of period		$	891,846			$	853,362			$	891,846			$	853,362
(1)		The Company adopted the guidance in Accounting Standards Update ("ASU") 2016-09, Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting, on January 1, 2016. ASU 2016-09 requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. Previously, income tax benefits at settlement of an award were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award's vesting period. The Company has elected to apply that change in cash flow classification on a retrospective basis, which has resulted in an increase to net cash provided by (used in) operating activities and net cash used in financing activities of $1.4 million for the three months ended December 31, 2015, and increases to net cash provided by (used in) operating activities and net cash used in financing activities of $7.6 million for the year ended December 31, 2015.

Groupon, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
				Three Months Ended December 31,								Year Ended December 31,
				2016				2015				2016				2015
		Revenue:
		Third party and other		$	341,013			$	345,260			$	1,303,546			$	1,372,533
		Direct			593,872				571,910				1,839,808				1,746,983
		Total revenue			934,885				917,170				3,143,354				3,119,516
		Cost of revenue:
		Third party and other			40,728				43,640				171,728				188,932
		Direct			524,287				501,790				1,614,723				1,545,519
		Total cost of revenue			565,015				545,430				1,786,451				1,734,451
		Gross profit			369,870				371,740				1,356,903				1,385,065
		Operating expenses:
		Marketing			93,335				83,208				362,951				254,335
		Selling, general and administrative			254,458				287,976				1,066,168				1,192,792
		Restructuring charges			13,620				5,422				43,608				29,568
		Gains on business dispositions			(312	)			—				(11,711	)			(13,710	)
		Acquisition-related expense (benefit), net			1,345				557				5,650				1,857
		Total operating expenses			362,446				377,163				1,466,666				1,464,842
		Income (loss) from operations			7,424				(5,423	)			(109,763	)			(79,777	)
		Other income (expense), net			(61,804	)			(3,393	)			(76,107	)			(28,539	)
		Income (loss) from continuing operations before provision (benefit) for income taxes			(54,380	)			(8,816	)			(185,870	)			(108,316	)
		Provision (benefit) for income taxes			(4,176	)			23,736				(2,547	)			(19,145	)
		Income (loss) from continuing operations			(50,204	)			(32,552	)			(183,323	)			(89,171	)
		Income (loss) from discontinued operations, net of tax			—				(10,613	)			—				122,850
		Net income (loss)			(50,204	)			(43,165	)			(183,323	)			33,679
		Net income (loss) attributable to noncontrolling interests			(2,384	)			(3,363	)			(11,264	)			(13,011	)
		Net income (loss) attributable to Groupon, Inc.		$	(52,588	)		$	(46,528	)		$	(194,587	)		$	20,668
		Basic and diluted net income (loss) per share (1):
		Continuing operations		$	(0.09	)		$	(0.06	)		$	(0.34	)		$	(0.16	)
		Discontinued operations			—				(0.02	)			—				0.19
		Basic and diluted net income (loss) per share		$	(0.09	)		$	(0.08	)		$	(0.34	)		$	0.03
		Weighted average number of shares outstanding (1)
		Basic			570,546,159				607,517,010				576,354,258				650,106,225
		Diluted			570,546,159				607,517,010				576,354,258				650,106,225
(1)		The structure of the Company's common stock changed during the year ended December 31, 2016. For additional information, refer to Note 11, Stockholders' Equity, and Note 17, Income (Loss) per Share, in theCompany's Annual Report on Form 10-K for the year ended December 31, 2016.

Groupon, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
		December 31,		December 31,
		2016		2015
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$ 891,846		$ 853,362
Accounts receivable, net		86,655		68,175
Prepaid expenses and other current assets		113,435		153,705
Total current assets		1,091,936		1,075,242
Property, equipment and software, net		171,006		198,897
Goodwill		283,962		287,332
Intangible assets, net		42,915		36,483
Investments (including $110,066 and $163,675 at December 31, 2016 and December 31, 2015, respectively, at fair value)		141,882		178,236
Deferred income taxes		5,231		3,454
Other non-current assets		24,445		16,620
Total Assets		$ 1,761,377		$ 1,796,264
Liabilities and Equity
Current liabilities:
Accounts payable		$ 29,273		$ 24,590
Accrued merchant and supplier payables		800,697		776,211
Accrued expenses and other current liabilities		383,081		402,724
Total current liabilities		1,213,051		1,203,525
Convertible senior notes, net		178,995		—
Deferred income taxes		4,215		8,612
Other non-current liabilities		100,054		113,540
Total Liabilities		1,496,315		1,325,677
Commitments and contingencies
Stockholders' Equity
Class A common stock, par value $0.0001 per share, no shares authorized, issued or outstanding at December 31, 2016 and 2,000,000,000 shares authorized, 717,387,446 shares issued and 588,919,281 shares outstanding at December 31, 2015		—		72
Class B common stock, par value $0.0001 per share, no shares authorized, issued or outstanding at December 31, 2016 and 10,000,000 shares authorized, 2,399,976 shares issued and outstanding at December 31, 2015		—		—
Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, 736,531,771 shares issued and 564,835,863 shares outstanding at December 31, 2016 and no shares issued or outstanding at December 31, 2015		74		—
Additional paid-in capital		2,112,728		1,964,453
Treasury stock, at cost, 171,695,908 shares at December 31, 2016 and 128,468,165 shares at December 31, 2015		(807,424)		(645,041)
Accumulated deficit		(1,099,010)		(901,292)
Accumulated other comprehensive income (loss)		58,052		51,206
Total Groupon, Inc. Stockholders' Equity		264,420		469,398
Noncontrolling interests		642		1,189
Total Equity		265,062		470,587
Total Liabilities and Equity		$ 1,761,377		$ 1,796,264

Groupon, Inc.
Segment Information
(in thousands)
(unaudited)
				Three Months Ended December 31,									Year Ended December 31,
				2016				2015					2016				2015
		North America
		Gross billings (1)		$	1,112,131			$	1,050,361				$	3,936,421			$	3,709,797
		Revenue		$	650,753			$	622,647				$	2,151,769			$	2,047,742
		Segment cost of revenue and operating expenses (2)(3)(4)			616,103				625,171					2,126,834				2,029,643
		Segment operating income (loss) (2)(3)(4)		$	34,650			$	(2,524	)			$	24,935			$	18,099
		Segment operating income (loss) as a percent of segment gross billings			3.1	%			(0.2	)%				0.6	%			0.5	%
		Segment operating income (loss) as a percent of segment revenue			5.3	%			(0.4	)%				1.2	%			0.9	%
		EMEA
		Gross billings (1)		$	443,910			$	487,147				$	1,588,438			$	1,794,354
		Revenue		$	243,348			$	248,326				$	827,196			$	867,880
		Segment cost of revenue and operating expenses (2)(4)(5)			242,883				211,443					813,177				797,786
		Segment operating income (loss) (2)(4)(5)		$	465			$	36,883				$	14,019			$	70,094
		Segment operating income (loss) as a percent of segment gross billings			0.1	%			7.6	%				0.9	%			3.9	%
		Segment operating income (loss) as a percent of segment revenue			0.2	%			14.9	%				1.7	%			8.1	%
		Rest of World
		Gross billings (1)		$	143,416			$	169,484				$	571,645			$	751,389
		Revenue		$	40,784			$	46,197				$	164,389			$	203,894
		Segment cost of revenue and operating expenses (2)(4)			43,888				52,731					190,135				228,273
		Segment operating income (loss) (2)(4)		$	(3,104	)		$	(6,534	)			$	(25,746	)		$	(24,379	)
		Segment operating income (loss) as a percent of segment gross billings			(2.2	)%			(3.9	)%				(4.5	)%			(3.2	)%
		Segment operating income (loss) as a percent of segment revenue			(7.6	)%			(14.1	)%				(15.7	)%			(12.0	)%
(1)		Represents the total dollar value of customer purchases of goods and services.
(2)		Segment cost of revenue and operating expenses and segment operating income (loss) exclude stock-based compensation and acquisition-related expense (benefit), net.
(3)		Segment cost of revenue and operating expenses for North America for the year ended December 31, 2015 includes a $37.5 million expense related to an increase in the Company's contingent liability for its securities litigation matter.
(4)		Segment cost of revenue and operating expenses for the three months ended December 31, 2016 includes restructuring charges of $2.7 million in North America, $9.2 million in EMEA and $1.7 million in Rest of World. Segment cost of revenue and operating expenses for the year ended December 31, 2016 includes restructuring charges of $9.5 million in North America (which excludes $2.6 million of stock-based compensation), $23.1 million in EMEA (which excludes $2.0 million of stock-based compensation) and $6.3 million in Rest of World (which excludes $0.1 million of stock-based compensation). Segment cost of revenue and operating expenses for the three months ended December 31, 2015 includes restructuring charges (credits) of $9.1 million in North America, $(3.6) million in EMEA and $(0.1) million in Rest of World. Segment cost of revenue and operating expenses for the year ended December 31, 2015 includes restructuring charges of $10.5 million in North America, $16.1 million in EMEA and $3.0 million in Rest of World.
(5)		Segment cost of revenue and operating expenses for EMEA for the year ended December 31, 2015 includes a $6.7 million expense for the write-off of a prepaid asset related to a marketing program that was discontinued because the counterparty ceased operations.

Groupon, Inc.
Non-GAAP Reconciliation Schedules
(in thousands, except share and per share amounts)
(unaudited)
		Adjusted EBITDA, non-GAAP earnings attributable to common stockholders and non-GAAP earnings per share are non-GAAP performance measures. The Company reconciles Adjusted EBITDA to the most comparable U.S. GAAP performance measure, "Net income (loss) from continuing operations" for the periods presented and the Company reconciles non-GAAP earnings per share to the most comparable U.S. GAAP performance 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 performance measure, "Income (loss) from continuing operations."
				Q4 2014				Q1 2015				Q2 2015				Q3 2015				Q4 2015			Q1 2016				Q2 2016				Q3 2016				Q4 2016
		Income (loss) from continuing operations		$	26,566			$	(16,739	)		$	(15,267	)		$	(24,613	)		$	(32,552	)	$	(45,596	)		$	(51,731	)		$	(35,792	)		$	(50,204	)
		Adjustments:
		Stock-based compensation (1)			29,961				35,144				38,467				35,432				32,691			27,976				35,244				26,176				23,242
		Depreciation and amortization			30,122				32,200				31,372				35,635				33,763			34,797				34,290				33,253				35,328
		Acquisition-related expense (benefit), net			(809	)			(269	)			505				1,064				557			3,464				850				(9	)			1,345
		Restructuring charges			—				—				—				24,146				5,422			12,444				16,085				1,459				13,620
		Gains on business dispositions			—				—				—				(13,710	)			—			—				(9,339	)			(2,060	)			(312	)
		Prepaid marketing write-off			—				—				—				6,690				—			—				—				—				—
		Securities litigation expense			—				—				—				37,500				—			—				—				—				—
		Non-operating expense (income), net			11,531				19,927				(2,941	)			8,160				3,393			(3,486	)			10,761				7,028				61,804
		Provision (benefit) for income taxes			(4,457	)			2,107				8,982				(53,970	)			23,736			1,749				(2,199	)			2,079				(4,176	)
		Total adjustments			66,348				89,109				76,385				80,947				99,562			76,944				85,692				67,926				130,851
		Adjusted EBITDA		$	92,914			$	72,370			$	61,118			$	56,334			$	67,010		$	31,348			$	33,961			$	32,134			$	80,647
(1)		Represents stock-based compensation recorded within cost of revenue, marketing expense, and selling, general and administrative expense. Non-operating expense (income), net, includes $0.02 million, $0.1 million, $0.2 million, $0.2 million, $0.2 million, $0.3 million and $0.1 million of additional stock-based compensation for the three months ended June 30, 2015, September 30, 2015, December 31, 2015, March 31, 2016, June 30, 2016, September 30, 2016 and December 31, 2016, respectively. Restructuring charges includes $2.6 million and $2.1 million of additional stock-based compensation for the three months ended March 31, 2016 and June 30, 2016, respectively.
		The following is a reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, "Income (loss) from continuing operations" for the years ended December 31, 2016 and 2015:
				Year Ended December 31,
				2016				2015
		Income (loss) from continuing operations		$	(183,323	)		$	(89,171	)
		Adjustments:
		Stock-based compensation (1)			112,638				141,734
		Depreciation and amortization			137,668				132,970
		Acquisition-related expense (benefit), net			5,650				1,857
		Restructuring charges			43,608				29,568
		Gains on business dispositions			(11,711	)			(13,710	)
		Prepaid marketing write-off			—				6,690
		Securities litigation expense			—				37,500
		Non-operating expense (income), net			76,107				28,539
		Provision (benefit) for income taxes			(2,547	)			(19,145	)
		Total adjustments			361,413				346,003
		Adjusted EBITDA		$	178,090			$	256,832
(1)		Includes stock-based compensation recorded within cost of revenue, marketing expense, and selling, general and administrative expense. Restructuring charges and non-operating expense (income), net, includes $4.7 million and $0.8 million of additional stock-based compensation for the year ended December 31, 2016. Non-operating expense (income), net, includes $0.3 million of additional stock-based compensation for the year ended December 31, 2015.
		The following is a reconciliation of net income (loss) attributable to common stockholders to non-GAAP net income (loss) attributable to common stockholders and a reconciliation of diluted net income (loss) per share to non-GAAP net income (loss) per share for the three months and year ended December 31, 2016:
				Three Months Ended December 31, 2016				Year Ended December 31, 2016
		Net income (loss) attributable to common stockholders		$	(52,588	)		$	(194,587	)
		Stock-based compensation(1)			23,402				113,469
		Amortization of acquired intangible assets			5,305				18,948
		Acquisition-related expense (benefit), net			1,345				5,650
		Restructuring charges			13,620				43,608
		Gains on business dispositions			(312	)			(11,711	)
		Intercompany foreign currency losses (gains) and reclassifications of translation adjustments to earnings (2)			16,292				7,915
		Losses (gains), net from changes in fair value of investments			40,840				48,141
		Non-cash interest expense on convertible senior notes			2,522				7,376
		Income tax effect of above adjustments			(7,952	)			(15,801	)
		Non-GAAP net income (loss) attributable to common stockholders		$	42,474			$	23,008
		Weighted-average shares of common stock - basic			570,546,159				576,354,258
		Effect of dilutive securities			54,543,720				36,458,342
		Weighted-average shares of common stock - diluted			625,089,879				612,812,600
		Diluted net income (loss) per share		$	(0.09	)		$	(0.34	)
		Impact of stock-based compensation, amortization of acquired intangible assets, acquisition-related expense (benefit), net, intercompany foreign currency losses (gains), special charges and credits, income (loss) from discontinued operations and related tax effects			0.16				0.38
		Non-GAAP net income (loss) per share		$	0.07			$	0.04
(1)		Excludes $4.7 million of stock-based compensation classified within restructuring charges for the year ended December 31, 2016, respectively.
(2)		Foreign currency gains (losses), net for the three months and year ended December 31, 2016 includes $6.0 million and $5.7 million, respectively, of net cumulative translation losses that were reclassified to earnings as a result of the Company's exit from certain countries as part of its restructuring plan.
		The following is a reconciliation of the Company's annual outlook for Adjusted EBITDA to the Company's outlook for the most comparable U.S. GAAP performance measure, "Income (loss) from continuing operations." In October 2016, the Company completed a strategic review of our remaining international markets and decided to focus its business on 15 core countries and to pursue strategic alternatives for the remaining 11 countries. Based on the Company’s review of quantitative and qualitative factors, it believes that the disposition of those 11 countries represents a strategic shift that will likely have a major effect on its operations and financial results. As such, the Company anticipates that when either the businesses have been disposed of in those 11 countries or have met the criteria for held-for-sale classification, their financial results, including any gains or losses on disposition, will be presented as discontinued operations in the Company’s consolidated statements of operations. As such, this forward-looking guidance for the year ending December 31, 2017 has been provided on a continuing operations basis.
				Year Ending December 31, 2017
		Expected income (loss) from continuing operations range		$(42,500) to $(17,500)
		Expected adjustments:
		Stock-based compensation		90,000 to 100,000
		Depreciation and amortization		125,000
		Non-operating expense (income), net		20,000
		Provision (benefit) for income taxes		7,500 to 12,500
		Total expected adjustments		$242,500 to $257,500
		Expected Adjusted EBITDA range		$200,000 to $240,000
		The outlook provided above does not reflect the potential impact of any additional restructuring actions that the Company may decide to pursue, business acquisitions or dispositions, changes in the fair values of investments or contingent consideration, foreign currency gains or losses or unusual or infrequently occurring items that may occur during 2017.
Groupon, Inc.
Non-GAAP Reconciliation Schedules
(in thousands, except share and per share amounts)
(unaudited)
		Foreign exchange rate neutral operating results are non-GAAP financial measures. The Company reconciles foreign exchange rate neutral operating results to the most comparable U.S. GAAP financial measures, "Gross billings," "Revenue" and "Income (loss) from continuing operations," respectively, for the periods presented. The Company reconciles "foreign exchange rate neutral Gross billings growth" and "foreign exchange rate neutral Revenue growth" to year-over-year growth rates for the most comparable U.S. GAAP financial measures, "Gross billings growth" and "Revenue growth," respectively, for the periods presented.
		The effect on the Company's gross billings, revenue and income (loss) from changes in exchange rates versus the U.S. Dollar for the three months ended December 31, 2016 was as follows:
				Three Months Ended December 31, 2016												Three Months Ended December 31, 2016
				At Avg. Q4 2015 Rates (1)				Exchange Rate Effect (2)				As Reported				At Avg. Q3 2016 Rates (3)				Exchange Rate Effect (2)			As Reported
		Gross billings		$	1,718,071			$	(18,614	)		$	1,699,457			$	1,719,411			$	(19,954	)	$	1,699,457
		Revenue			943,431				(8,546	)			934,885				944,772				(9,887	)		934,885
		Income (loss) from operations		$	7,569			$	(145	)		$	7,424			$	6,974			$	450		$	7,424
		The effect on the Company's gross billings, revenue and income (loss) from operations from changes in exchange rates versus the U.S. Dollar for the year ended December 31, 2016 was as follows:
				Year Ended December 31, 2016												Year Ended December 31, 2016
				At Avg. Q4 2015 YTD Rates (1)				Exchange Rate Effect (2)				As Reported				At Avg. Q4'15-Q3'16 Rates (3)				Exchange Rate Effect (2)			As Reported
		Gross billings		$	6,172,426			$	(75,922	)		$	6,096,504			$	6,114,028			$	(17,524	)	$	6,096,504
		Revenue			3,174,361				(31,007	)			3,143,354				3,152,794				(9,440	)		3,143,354
		Income (loss) from operations		$	(108,613	)		$	(1,150	)		$	(109,763	)		$	(108,319	)		$	(1,444	)	$	(109,763	)
(1)		Represents the financial statement balances that would have resulted had average exchange rates in the reporting periods been the same as those in effect during the three months and year ended December 31, 2015.
(2)		Represents the increase or decrease in reported amounts resulting from changes in exchange rates from those in effect in the comparable prior periods.
(3)		Represents the financial statement balances that would have resulted had average exchange rates in the reporting periods been the same as those in effect during the three and twelve months ended September 30, 2016.
		The following is a quarterly reconciliation of foreign exchange rate neutral Gross billings growth from the comparable quarterly periods of the prior year to reported Gross billings growth from the comparable quarterly periods of the prior year.
				Q4 2015				Q1 2016				Q2 2016				Q3 2016				Q4 2016
		EMEA Gross billings growth			(13	)%			(15	)%			(12	)%			(10	)%			(9	)%
		FX Effect			11				3				—				2				4
		EMEA Gross billings growth, excluding FX			(2	)%			(12	)%			(12	)%			(8	)%			(5	)%
		Rest of World Gross billings growth			(21	)%			(28	)%			(27	)%			(24	)%			(15	)%
		FX Effect			14				11				6				1				—
		Rest of World Gross billings growth, excluding FX			(7	)%			(17	)%			(21	)%			(23	)%			(15	)%
		Consolidated Gross billings growth			(1	)%			(5	)%			(2	)%			(2	)%			—	%
		FX Effect			5				2				—				—				1
		Consolidated Gross billings growth, excluding FX			4	%			(3	)%			(2	)%			(2	)%			1	%
		The following is a quarterly reconciliation of foreign exchange rate neutral Revenue growth from the comparable quarterly periods of the prior year to reported Revenue growth from the comparable quarterly periods of the prior year.
				Q4 2015				Q1 2016				Q2 2016				Q3 2016				Q4 2016
		EMEA Revenue growth			(9	)%			(13	)%			(3	)%			(1	)%			(2	)%
		FX Effect			12				3				—				1				3
		EMEA Revenue growth, excluding FX			3	%			(10	)%			(3	)%			—	%			1	%
		Rest of World Revenue growth			(23	)%			(22	)%			(23	)%			(19	)%			(12	)%
		FX Effect			15				14				9				4				4
		Rest of World Revenue growth, excluding FX			(8	)%			(8	)%			(14	)%			(15	)%			(8	)%
		Consolidated Revenue growth			4	%			(2	)%			2	%			1	%			2	%
		FX Effect			5				1				1				1				1
		Consolidated Revenue growth, excluding FX			9	%			(1	)%			3	%			2	%			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 December 31, 2016 was as follows:
		At Avg. Q4 2015 Rates (1)				Exchange Rate Effect (2)				December 31, 2016 As Reported				December 31, 2015 As Reported				Y/Y % Growth				Y/Y% Growth excluding FX
Local:
Third party and other		$	590,657			$	27			$	590,684			$	531,154				11.2	%		11.2	%
Travel:
Third party			90,057				2				90,059				89,389				0.7	%		0.7	%
Total services			680,714				29				680,743				620,543				9.7	%		9.7	%
Goods:
Third party			12,211				(4	)			12,207				12,951				(5.7	) %		(5.7	) %
Direct			419,181				—				419,181				416,867				0.6	%		0.6	%
Total			431,392				(4	)			431,388				429,818				0.4	%		0.4	%
Total gross billings		$	1,112,106			$	25			$	1,112,131			$	1,050,361				5.9	%		5.9	%
The effect on EMEA's gross billings by category from changes in foreign exchange rates versus the U.S. Dollar for the three months ended December 31, 2016 was as follows:
		At Avg. Q4 2015 Rates (1)				Exchange Rate Effect (2)				December 31, 2016 As Reported				December 31, 2015 As Reported				Y/Y % Growth				Y/Y% Growth excluding FX
Local:
Third party and other		$	192,321			$	(11,909	)		$	180,412			$	197,445				(8.6	) %		(2.6	) %
Travel:
Third party			56,419				(805	)			55,614				59,836				(7.1	) %		(5.7	) %
Total services			248,740				(12,714	)			236,026				257,281				(8.3	) %		(3.3	) %
Goods:
Third party			43,041				(2,467	)			40,574				83,295				(51.3	) %		(48.3	) %
Direct			169,685				(2,375	)			167,310				146,571				14.1	%		15.8	%
Total			212,726				(4,842	)			207,884				229,866				(9.6	) %		(7.5	) %
Total gross billings		$	461,466			$	(17,556	)		$	443,910			$	487,147				(8.9	) %		(5.3	) %
The effect on Rest of World's gross billings by category from changes in foreign exchange rates versus the U.S. Dollar for the three months ended December 31, 2016 was as follows:
		At Avg. Q4 2015 Rates (1)				Exchange Rate Effect (2)				December 31, 2016 As Reported				December 31, 2015 As Reported				Y/Y % Growth				Y/Y% Growth excluding FX
Local:
Third party and other		$	86,184			$	1,165			$	87,349			$	83,430				4.7	%		3.3	%
Travel:
Third party			21,397				(663	)			20,734				25,369				(18.3	) %		(15.7	) %
Total services			107,581				502				108,083				108,799				(0.7	) %		(1.1	) %
Goods:
Third party			28,255				(306	)			27,949				52,213				(46.5	) %		(45.9	) %
Direct			8,663				(1,279	)			7,384				8,472				(12.8	) %		2.3	%
Total			36,918				(1,585	)			35,333				60,685				(41.8	) %		(39.2	) %
Total gross billings		$	144,499			$	(1,083	)		$	143,416			$	169,484				(15.4	) %		(14.7	) %
The effect on consolidated gross billings by category from changes in foreign exchange rates versus the U.S. Dollar for the three months ended December 31, 2016 was as follows:
		At Avg. Q4 2015 Rates (1)				Exchange Rate Effect (2)				December 31, 2016 As Reported				December 31, 2015 As Reported				Y/Y % Growth				Y/Y% Growth excluding FX
Local:
Third party and other		$	869,162			$	(10,717	)		$	858,445			$	812,029				5.7	%		7.0	%
Travel:
Third party			167,873				(1,466	)			166,407				174,594				(4.7	) %		(3.8	) %
Total services			1,037,035				(12,183	)			1,024,852				986,623				3.9	%		5.1	%
Goods:
Third party			83,507				(2,777	)			80,730				148,459				(45.6	) %		(43.8	) %
Direct			597,529				(3,654	)			593,875				571,910				3.8	%		4.5	%
Total			681,036				(6,431	)			674,605				720,369				(6.4	) %		(5.5	) %
Total gross billings		$	1,718,071			$	(18,614	)		$	1,699,457			$	1,706,992				(0.4	) %		0.6	%
(1)		Represents the financial statement balances that would have resulted had average exchange rates in the reporting period been the same as those in effect during the three months ended December 31, 2015.
(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.
The following is a reconciliation of foreign exchange rate neutral same-country gross billings growth for the three months and year ended December 31, 2016 from the comparable prior year period:
		Three Months Ended December 31, 2016				Three Months Ended December 31, 2015				Y/Y % Growth				Year Ended December 31, 2016				Year Ended December 31, 2015				Y/Y % Growth
Gross billings as reported		$	1,699,457			$	1,706,992				(0.4	)%		$	6,096,504			$	6,255,540			(2.5	)%
Less: Gross billings from countries where Groupon no longer operates			(5,038	)			(34,490	)							(53,046	)			(233,865	)
Exchange rate effect (1)			18,578				—								69,271				—
FX neutral same-country gross billings		$	1,712,997			$	1,672,502				2.4	%		$	6,112,729			$	6,021,675			1.5	%
(1)		Represents the increase or decrease in reported amounts resulting from changes in exchange rates from those in effect in the comparable prior year period.
The following is a reconciliation of foreign exchange rate neutral same-country gross billings growth for our EMEA segment for the three months ended December 31, 2016 from the comparable prior year period:
		Three Months Ended December 31, 2016				Three Months Ended December 31, 2015				Y/Y % Growth
EMEA gross billings as reported		$	443,910			$	487,147				(8.9	)%
Less: EMEA Gross billings from countries where Groupon no longer operates			(1,599	)			(23,306	)
Exchange rate effect (1)			17,499				—
FX-neutral same-country gross billings		$	459,810			$	463,841				(0.9	)%
(1)		Represents the increase or decrease in reported amounts resulting from changes in exchange rates from those in effect in the comparable prior year period.
The following is a reconciliation of foreign exchange rate neutral same-country revenue growth for the three months and year ended December 31, 2016 from the comparable prior year period:
		Three Months Ended December 31, 2016				Three Months Ended December 31, 2015				Y/Y % Growth				Year Ended December 31, 2016				Year Ended December 31, 2015				Y/Y % Growth
Revenue as reported		$	934,885			$	917,170				1.9	%		$	3,143,354			$	3,119,516			0.8	%
Less: Revenue from countries where Groupon no longer operates			(2,656	)			(13,297	)							(22,855	)			(85,377	)
Exchange rate effect (1)			8,555				—								28,055				—
FX-neutral same-country revenue		$	940,784			$	903,873				4.1	%		$	3,148,554			$	3,034,139			3.8	%
(1)		Represents the increase or decrease in reported amounts resulting from changes in exchange rates from those in effect in the comparable prior year period.
The following is a reconciliation of foreign exchange rate neutral same-country gross profit growth for the three months and year ended December 31, 2016 from the comparable prior year period:
		Three Months Ended December 31, 2016				Three Months Ended December 31, 2015				Y/Y % Growth				Year Ended December 31, 2016				Year Ended December 31, 2015				Y/Y % Growth
Gross profit as reported		$	369,870			$	371,740				(0.5	)%		$	1,356,903			$	1,385,065			(2.0	)%
Less: Gross profit from countries where Groupon no longer operates			(1,511	)			(7,326	)							(12,128	)			(48,212	)
Exchange rate effect (1)			4,801				—								17,208				—
FX-neutral same-country gross profit		$	373,160			$	364,414				2.4	%		$	1,361,983			$	1,336,853			1.9	%
(1)		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 (10)
		(financial data in thousands; active customers in millions)
		(unaudited)
				Q4 2015				Q1 2016				Q2 2016				Q3 2016				Q4 2016
		Segments
		North America Segment:
		Gross Billings (1):
		Local (2) Gross Billings		$	531,154			$	539,623			$	542,439			$	530,768			$	590,684
		Travel Gross Billings			89,389				103,390				105,388				93,564				90,059
		Gross Billings - Services			620,543				643,013				647,827				624,332				680,743
		Gross Billings - Goods			429,818				294,061				318,427				296,630				431,388
		Total Gross Billings		$	1,050,361			$	937,074			$	966,254			$	920,962			$	1,112,131
		Year-over-year growth			11	%			5	%			8	%			6	%			6	%
		% Third Party and Other			60	%			70	%			68	%			69	%			62	%
		% Direct			40	%			30	%			32	%			31	%			38	%
		Gross BillingsTrailing Twelve Months (TTM)		$	3,709,797			$	3,752,894			$	3,822,892			$	3,874,651			$	3,936,421
		Revenue (3):
		Local Revenue		$	184,201			$	192,153			$	184,139			$	176,220			$	209,799
		Travel Revenue			18,390				20,914				21,401				21,241				19,023
		Revenue - Services			202,591				213,067				205,540				197,461				228,822
		Revenue - Goods			420,056				287,746				311,382				285,820				421,931
		Total Revenue		$	622,647			$	500,813			$	516,922			$	483,281			$	650,753
		Year-over-year growth			13	%			4	%			7	%			4	%			5	%
		% Third Party and Other			33	%			43	%			40	%			41	%			36	%
		% Direct			67	%			57	%			60	%			59	%			64	%
		Revenue TTM		$	2,047,742			$	2,068,673			$	2,104,313			$	2,123,663			$	2,151,769
		Gross Profit (4):
		Local Gross Profit		$	159,745			$	164,018			$	158,812			$	152,873			$	185,280
		% of North America Local Gross Billings			30.1	%			30.4	%			29.3	%			28.8	%			31.4	%
		Travel Gross Profit			15,207				15,712				16,334				17,257				15,052
		% of North America Travel Gross Billings			17.0	%			15.2	%			15.5	%			18.4	%			16.7	%
		Gross Profit - Services			174,952				179,730				175,146				170,130				200,332
		% of North America Services Gross Billings			28.2	%			28.0	%			27.0	%			27.2	%			29.4	%
		Gross Profit - Goods			44,329				36,213				42,028				31,531				50,437
		% of North America Goods Gross Billings			10.3	%			12.3	%			13.2	%			10.6	%			11.7	%
		Total Gross Profit		$	219,281			$	215,943			$	217,174			$	201,661			$	250,769
		Year-over-year growth			12	%			11	%			10	%			5	%			14	%
		% Third Party and Other			81	%			84	%			82	%			85	%			81	%
		% Direct			19	%			16	%			18	%			15	%			19	%
		% of North America Total Gross Billings			20.9	%			23.0	%			22.5	%			21.9	%			22.5	%
		EMEA Segment:
		Gross Billings:
		Local Gross Billings		$	197,445			$	174,033			$	165,290			$	158,792			$	180,412
		Travel Gross Billings			59,836				57,201				52,880				57,594				55,614
		Gross Billings - Services			257,281				231,234				218,170				216,386				236,026
		Gross Billings - Goods			229,866				160,993				163,139				154,606				207,884
		Total Gross Billings		$	487,147			$	392,227			$	381,309			$	370,992			$	443,910
		Year-over-year growth			(13	)%			(15	)%			(12	)%			(10	)%			(9	)%
		Year-over-year growth, excluding FX (5)			(2	)%			(12	)%			(12	)%			(8	)%			(5	)%
		% Third Party and Other			70	%			73	%			68	%			68	%			62	%
		% Direct			30	%			27	%			32	%			32	%			38	%
		Gross BillingsTTM		$	1,794,354			$	1,727,392			$	1,675,165			$	1,631,675			$	1,588,438
		Revenue:
		Local Revenue		$	73,225			$	61,886			$	60,616			$	58,581			$	60,600
		Travel Revenue			11,681				11,178				10,709				12,866				11,156
		Revenue - Services			84,906				73,064				71,325				71,447				71,756
		Revenue - Goods			163,420				115,906				126,980				125,126				171,592
		Total Revenue		$	248,326			$	188,970			$	198,305			$	196,573			$	243,348
		Year-over-year growth			(9	)%			(13	)%			(3	)%			(1	)%			(2	)%
		Year-over-year growth, excluding FX			3	%			(10	)%			(3	)%			-	%			1	%
		% Third Party and Other			41	%			44	%			39	%			39	%			31	%
		% Direct			59	%			56	%			61	%			61	%			69	%
		Revenue TTM		$	867,880			$	840,630			$	834,888			$	832,174			$	827,196
		Gross Profit:
		Local Gross Profit		$	68,966			$	58,263			$	56,849			$	54,467			$	56,603
		% of EMEA Local Gross Billings			34.9	%			33.5	%			34.4	%			34.3	%			31.4	%
		Travel Gross Profit			10,732				10,215				9,784				11,882				10,247
		% of EMEA Travel Gross Billings			17.9	%			17.9	%			18.5	%			20.6	%			18.4	%
		Gross Profit - Services			79,698				68,478				66,633				66,349				66,850
		% of EMEA Services Gross Billings			31.0	%			29.6	%			30.5	%			30.7	%			28.3	%
		Gross Profit - Goods			43,026				26,412				23,525				18,710				25,449
		% of EMEA Goods Gross Billings			18.7	%			16.4	%			14.4	%			12.1	%			12.2	%
		Total Gross Profit		$	122,724			$	94,890			$	90,158			$	85,059			$	92,299
		Year-over-year growth			(14	)%			(18	)%			(13	)%			(18	)%			(25	)%
		% Third Party and Other			77	%			82	%			79	%			83	%			76	%
		% Direct			23	%			18	%			21	%			17	%			24	%
		% of EMEA Total Gross Billings			25.2	%			24.2	%			23.6	%			22.9	%			20.8	%
		Rest of World Segment:
		Gross Billings:
		Local Gross Billings		$	83,430			$	75,294			$	84,581			$	80,318			$	87,349
		Travel Gross Billings			25,369				23,928				22,300				24,166				20,734
		Gross Billings - Services			108,799				99,222				106,881				104,484				108,083
		Gross Billings - Goods			60,685				43,487				38,438				35,717				35,333
		Total Gross Billings		$	169,484			$	142,709			$	145,319			$	140,201			$	143,416
		Year-over-year growth			(21	)%			(28	)%			(27	)%			(24	)%			(15	)%
		Year-over-year growth, excluding FX			(7	)%			(17	)%			(21	)%			(23	)%			(15	)%
		% Third Party and Other			95	%			95	%			95	%			95	%			95	%
		% Direct			5	%			5	%			5	%			5	%			5	%
		Gross BillingsTTM		$	751,389			$	695,263			$	641,361			$	597,713			$	571,645
		Revenue:
		Local Revenue		$	22,229			$	22,082			$	22,461			$	21,876			$	22,069
		Travel Revenue			5,098				5,049				4,321				5,075				4,424
		Revenue - Services			27,327				27,131				26,782				26,951				26,493
		Revenue - Goods			18,870				15,057				14,021				13,663				14,291
		Total Revenue		$	46,197			$	42,188			$	40,803			$	40,614			$	40,784
		Year-over-year growth			(23	)%			(22	)%			(23	)%			(19	)%			(12	)%
		Year-over-year growth, excluding FX			(8	)%			(8	)%			(14	)%			(15	)%			(8	)%
		% Third Party and Other			82	%			85	%			82	%			84	%			82	%
		% Direct			18	%			15	%			18	%			16	%			18	%
		Revenue TTM		$	203,894			$	191,828			$	179,565			$	169,802			$	164,389
		Gross Profit:
		Local Gross Profit		$	18,889			$	18,771			$	18,739			$	18,645			$	19,245
		% of Rest of World Local Gross Billings			22.6	%			24.9	%			22.2	%			23.2	%			22.0	%
		Travel Gross Profit			4,040				3,997				3,240				3,962				3,502
		% of Rest of World Travel Gross Billings			15.9	%			16.7	%			14.5	%			16.4	%			16.9	%
		Gross Profit - Services			22,929				22,768				21,979				22,607				22,747
		% of Rest of World Services Gross Billings			21.1	%			22.9	%			20.6	%			21.6	%			21.0	%
		Gross Profit - Goods			6,806				5,727				4,277				4,790				4,055
		% of Rest of World Goods Gross Billings			11.2	%			13.2	%			11.1	%			13.4	%			11.5	%
		Total Gross Profit		$	29,735			$	28,495			$	26,256			$	27,397			$	26,802
		Year-over-year growth			(23	)%			(24	)%			(28	)%			(20	)%			(10	)%
		% Third Party and Other			99	%			100	%			99	%			100	%			102	%
		% Direct			1	%			-	%			1	%			-	%			(2	)%
		% of Rest of World Total Gross Billings			17.5	%			20.0	%			18.1	%			19.5	%			18.7	%
		Consolidated Results of Operations:
		Gross Billings:
		Local Gross Billings		$	812,029			$	788,950			$	792,310			$	769,878			$	858,445
		Travel Gross Billings			174,594				184,519				180,568				175,324				166,407
		Gross Billings - Services			986,623				973,469				972,878				945,202				1,024,852
		Gross Billings - Goods			720,369				498,541				520,004				486,953				674,605
		Total Gross Billings		$	1,706,992			$	1,472,010			$	1,492,882			$	1,432,155			$	1,699,457
		Year-over-year growth			(1	)%			(5	)%			(2	)%			(2	)%			-	%
		Year-over-year growth, excluding FX			4	%			(3	)%			(2	)%			(2	)%			1	%
		% Third Party and Other			66	%			73	%			71	%			71	%			65	%
		% Direct			34	%			27	%			29	%			29	%			35	%
		Gross Billings TTM		$	6,255,540			$	6,175,549			$	6,139,418			$	6,104,039			$	6,096,504
		Year-over-year growth			-	%			(1	)%			(2	)%			(3	)%			(3	)%
		Revenue:
		Local Revenue		$	279,655			$	276,121			$	267,216			$	256,677			$	292,468
		Travel Revenue			35,169				37,141				36,431				39,182				34,603
		Revenue - Services			314,824				313,262				303,647				295,859				327,071
		Revenue - Goods			602,346				418,709				452,383				424,609				607,814
		Total Revenue		$	917,170			$	731,971			$	756,030			$	720,468			$	934,885
		Year-over-year growth			4	%			(2	)%			2	%			1	%			2	%
		Year-over-year growth, excluding FX			9	%			(1	)%			3	%			2	%			3	%
		% Third Party and Other			38	%			46	%			42	%			43	%			36	%
		% Direct			62	%			54	%			58	%			57	%			64	%
		Revenue TTM		$	3,119,516			$	3,101,131			$	3,118,766			$	3,125,639			$	3,143,354
		Year-over-year growth			3	%			1	%			-	%			1	%			1	%
		Gross Profit:
		Local Gross Profit		$	247,600			$	241,052			$	234,400			$	225,985			$	261,128
		% of Consolidated Local Gross Billings			30.5	%			30.6	%			29.6	%			29.4	%			30.4	%
		Travel Gross Profit			29,979				29,924				29,358				33,101				28,801
		% of Consolidated Travel Gross Billings			17.2	%			16.2	%			16.3	%			18.9	%			17.3	%
		Gross Profit - Services			277,579				270,976				263,758				259,086				289,929
		% of Consolidated Services Gross Billings			28.1	%			27.8	%			27.1	%			27.4	%			28.3	%
		Gross Profit - Goods			94,161				68,352				69,830				55,031				79,941
		% of Consolidated Goods Gross Billings			13.1	%			13.7	%			13.4	%			11.3	%			11.9	%
		Total Gross Profit		$	371,740			$	339,328			$	333,588			$	314,117			$	369,870
		Year-over-year growth			(2	)%			(2	)%			(1	)%			(4	)%			(1	)%
		% Third Party and Other			81	%			85	%			82	%			86	%			81	%
		% Direct			19	%			15	%			18	%			14	%			19	%
		% of Total Consolidated Gross Billings			21.8	%			23.1	%			22.3	%			21.9	%			21.8	%
		Marketing		$	83,208			$	89,765			$	91,993			$	87,858			$	93,335
		Selling, general and administrative		$	287,976			$	280,988			$	277,168			$	253,554			$	254,458
		Income (loss) from continuing operations		$	(32,552	)		$	(45,596	)		$	(51,731	)		$	(35,792	)		$	(50,204	)
		Adjusted EBITDA		$	67,010			$	31,348			$	33,961			$	32,134			$	80,647
		% of Total Consolidated Gross Billings			3.9	%			2.1	%			2.3	%			2.2	%			4.7	%
		% of Total Consolidated Revenue			7.3	%			4.3	%			4.5	%			4.5	%			8.6	%
Groupon, Inc.
Supplemental Financial Information and Business Metrics (10)
(financial data in thousands; active customers in millions)
(unaudited)
		Free cash flow is a non-GAAP financial measure. The following is a reconciliation of free cash flow to the most comparable U.S. GAAP financial measure, "Net cash provided by (used in) operating activities from continuing operations."
				Q4 2015 (9)				Q1 2016				Q2 2016				Q3 2016				Q4 2016
		Net cash provided by (used in) operating activities from continuing operations		$	250,455			$	(76,725	)		$	(54,010	)		$	(40,822	)		$	288,662
		Purchases of property and equipment and capitalized software from continuing operations			(15,507	)			(19,952	)			(16,395	)			(12,868	)			(19,678	)
		Free cash flow		$	234,948			$	(96,677	)		$	(70,405	)		$	(53,690	)		$	268,984
		Net cash provided by (used in) operating activities from continuing operations (TTM)		$	299,747			$	179,415			$	112,080			$	78,898			$	117,105
		Purchases of property and equipment and capitalized software from continuing operations (TTM)			(83,988	)			(85,646	)			(79,589	)			(64,722	)			(68,893	)
		Free cash flow (TTM)		$	215,759			$	93,769			$	32,491			$	14,176			$	48,212
		Net cash provided by (used in) investing activities from continuing operations		$	(31,238	)		$	(20,778	)		$	(18,853	)		$	(12,088	)		$	(5,767	)
		Net cash provided by (used in) financing activities		$	(323,597	)		$	(78,015	)		$	169,225			$	(38,342	)		$	(67,533	)
		Net cash provided by (used in) investing activities from continuing operations (TTM)		$	(177,250	)		$	(178,585	)		$	(168,897	)		$	(82,957	)		$	(57,486	)
		Net cash provided by (used in) financing activities (TTM)		$	(515,785	)		$	(557,962	)		$	(247,180	)		$	(270,729	)		$	(14,665	)
		Other Metrics:
		Active Customers (6)
		North America			25.9				26.9				27.9				29.1				31.1
		EMEA			15.4				15.3				15.3				15.4				15.5
		Rest of World			7.6				7.2				6.8				6.3				6.1
		Total Active Customers			48.9				49.4				50.0				50.8				52.7
		TTM Gross Billings / Average Active Customer (7)
		North America		$	149			$	146			$	145			$	142			$	138
		EMEA			117				113				109				106				103
		Rest of World			96				90				86				84				84
		Consolidated			130				127				125				123				120
		Global headcount as of December 31, 2016 and 2015 was as follows:
				Q4 2015				Q4 2016
		Sales (8)			3,992				3,108
		% North America			34	%			36	%
		% EMEA			41	%			42	%
		% Rest of World			25	%			22	%
		Other			5,880				5,215
		Total Headcount			9,872				8,323
(1)		Represents the total dollar value of customer purchases of goods and services.
(2)		Local represents deals from local merchants, deals with national merchants, and deals through local events. Other revenue transactions, which include advertising, payment processing, and commission revenue, are also included within the Local category.
(3)		Includes third party revenue, direct revenue and other revenue. Third party revenue is related to sales for which the Company acts as a marketing agent for the merchant. This revenue is recorded on a net basis. Direct revenue is primarily related to the sale of merchandise for which the Company is the merchant of record. These revenues are accounted for on a gross basis, with the cost of inventory included in cost of revenue. Other revenue primarily consists of commission revenue, payment processing revenue and advertising revenue.
(4)		Represents third party revenue, direct revenue and other revenue reduced by cost of revenue.
(5)		Represents the change in financial measures that would have resulted had average exchange rates in the reporting periods been the same as those in effect in the prior year periods.
(6)		Reflects the total number of unique user accounts who made a purchase through one of our online marketplaces during the trailing twelve months. North America active customers for the quarter ended December 31, 2016 includes approximately 1.0 million incremental active customers from the acquisition of LivingSocial, Inc.
(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)		The Company adopted the guidance in ASU 2016-09 on January 1, 2016. ASU 2016-09 requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. Previously, income tax benefits at settlement of an award were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award's vesting period. The Company has elected to apply that change in cash flow classification on a retrospective basis, which has resulted in adjustments to net cash provided by (used in) operating activities, net cash used in financing activities, and free cash flow for the three-month and trailing twelve-month periods ended December 31, 2015.
(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.

 

 

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Contacts:

Groupon, Inc.
Investor Relations
Deb Schwartz
312-999-3098
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or
Public Relations
Bill Roberts
312-459-5191