Groupon Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
March 12, 2025

Key Takeaways

  • Groupon delivered $69 million in adjusted EBITDA and $41 million in free cash flow for full-year 2024, marking its first positive free cash flow since the pandemic.
  • North America Local billings rebounded to 8% year-over-year growth in Q4, while International Local ex-Italy rose 2% with positive momentum across all major markets.
  • The company completed key platform modernization projects—including a private cloud detection platform, North America cloud infrastructure, a new website, and an ERP system—to accelerate innovation and enhance customer experience.
  • For Q1 2025, Groupon expects a slightly negative billings trend and FX headwinds but still anticipates positive adjusted EBITDA despite seasonal negative cash flow.
  • With a stronger cash position of $229 million and a clear 2025 roadmap focused on city-by-city expansion, high-impact verticals, improved personalization, merchant tools, and a mobile app launch in Q2, Groupon aims to sustain growth and value creation.
AI Generated. May Contain Errors.
Earnings Conference Call
Groupon Q4 2024
00:00 / 00:00

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Operator

Hello and welcome to Groupon's Fourth Quarter twenty twenty four Financial Results Conference Call. On the call today are Chief Executive Officer, Dushan Sanghfull Chief Financial Officer, Yajit Pampf and Senior Vice President of Corporate Development and Investor Relations, Rana Kashat. At this time, all participants are in a listen only mode. Today's call will be a question and answer session only. The company has posted earnings material, including earnings commentary and earnings slides on the company's Investor Relations website at investor.groupon.com.

Operator

Today's conference call is being recorded. Before we begin, Groupon would like to remind listeners that the following discussion and responses to your questions reflect management's views as of today, 03/12/2025 only and will include forward looking statements. Actual results may differ materially from those expressed or implied in the company's forward looking statements. Groupon undertakes no obligation to update these forward looking statements as a result of new information or future events. Additional information about risks and other factors that could potentially impact the company's financial results are included in its earnings press release and in its filings with the SEC including its annual report on Form 10 K.

Operator

We encourage investors to use Groupon's Investor Relations website at investor.groupon.com as a way of easily finding information about the company. Groupon promptly makes available on this website the reports that the company files and furnishes with the SEC, corporate governance information and select press releases and social media postings. On the call today, the company will also discuss the following non GAAP financial measures: adjusted EBITDA and free cash flow. In Groupon's press release and their filings with the SEC, each of which is posted on its Investor Relations website, you will find additional disclosures regarding these non GAAP measures, including reconciliations of these measures to the most comparable measures under U. S.

Operator

GAAP. And with that, I'd like to turn it over to Dushan to make a few opening remarks before we jump into Q and A.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

Hello and thanks for joining us for our fourth quarter and full year twenty twenty four earnings call. It's a pleasure to be the following. Yesterday, after the market closed, we released our earnings and posted our earnings commentary and updated slides on our Investor Relationships website. In addition, I encourage you to review our press release and 10 K, which contain more detail on our fourth quarter and full year results. Today, my plan is to make brief opening remarks and then open up the call for questions, both live from our analysts and several that were presubmitted in advance.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

I'm pleased to share that 2024 was a pivotal year in Groupon's transformation journey and we are entering 2025 with significant momentum. Groupon today is fundamentally different than it was two years ago when I joined the CEO. While our core mission remains unchanged to be the trusted destination for discovering high quality local experiences at unbeatable value, how we deliver on this mission has evolved significantly. Our transformation is delivering results across three key areas. First, in marketplace health.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

We have shifted from chasing volume to building qualitative evidenced by North America locals positive 8% billing growth in Q4 after declining nineteen percent in 2022. This improvement stems directly from our focus on curated experiences and strategic merchant partnerships. Second, in our platform modernization, we've completed major migrations including our private cloud detection platform, North America cloud infrastructure, new website and ERP system. These aren't just technical upgrades. They are strategic investments that enable us to innovate faster and create more engaging experiences.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

Third, in our financial strength, we generated $69,000,000 in adjusted EBITDA and $41,000,000 in free cash flow for the full year, our first positive free cash flow since exiting the pandemic. This improvement flows directly from our more efficient operations and healthier marketplace dynamics. For Q4 specifically, after a challenging Q3 impacted by technical migrations, we rebounded stronger. We are seeing encouraging signs across the business. North America local returned to 8% billing growth.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

International local excluding Italy grew billings by 2% with positive momentum in all four major markets. We saw double digit growth in key verticals including Things to Do, Enterprise Brands and Gifting and Seasonal offerings. Looking ahead to 2025, we are confident this will be the year at year end Groupon to sustain growth. Our 2025 strategy focuses on winning in key markets through our proven city by city approach and prioritizing high impact categories like streets to do, beauty and wellness and gifting, enhancing customer retention through improved personalization, boosting merchant success with enhanced tools and completing our remaining technical migration including our North America mobile app in Q2. With a much better cash position of $229,000,000 versus the previous year and a clear roadmap for growth, we are well positioned to create value for all stakeholders as we execute the next chapter in Groupon's transformation.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

I want to thank the Groupon team for their resilience and commitment, which have been instrumental in our progress. With that, let's open the call for questions.

Operator

Thanks Dushan. Our first question comes from Sean McGowan from Roth Capital. Sean, you can now unmute.

Sean McGowan
Equity Research at Roth Capital Partners, LLC

Thank you. Appreciate that. Yes, can you talk a little bit about the what you think was driving that local growth in The U. S? It seemed like it really turned around.

Sean McGowan
Equity Research at Roth Capital Partners, LLC

I mean, I think when you gave us an update on the third quarter conference call, it was running down through October. So what do you think drove that turnaround in the late part of the quarter?

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

Yes. So thanks for the question. We had a lot of headwinds during last year with technical migrations and platform projects, which were impacting our ability to deliver. So it was definitely one of the drivers. And as we were either finalizing them or mitigating impact, our platform returned to, let's say, the performance which we are expecting from it.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

But at the same time, during the last earnings calls, I was talking about our strategy shift shifting to curated marketplace with a sales organization focusing on quality and we don't go for quantity, but we really look what we need on our platform. We are also spending much more time with our merchants to make sure that they have deals which perform. So I would say that this is a combination of all these elements, which finally all fit together on paper and they are reflected in the results, especially in the later part of Q4.

Sean McGowan
Equity Research at Roth Capital Partners, LLC

Can I ask if you were able to recover any of the lost cohort, that cohort that fell off more loyal customers? Were you able to get any of those guys back?

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

It's highly related to overall platform stability, which significantly improved. We saw improvement in this cohort, but overall I would say that the team did a great job really on focusing on what's wrong, on what are the issues with every individual customer which we have and it reflected in better results not only from this cohort but overall on the platform through higher convergence.

Sean McGowan
Equity Research at Roth Capital Partners, LLC

Great. Thank you very much.

Operator

Our next question will come from Bobby Brooks from Northland Capital. Bobby, you can now unmute your line.

Bobby Brooks
Vice President at Northland Capital Markets

Hey, good morning guys. Thank you for taking my question. So I wanted to ask on the top in the slide deck, it mentioned that the top five metro areas in North America saw double digit growth in the fourth quarter. Could you just discuss what drove that strength? And was this and probably more so, was this a result of your team specifically targeting those top five metros first?

Bobby Brooks
Vice President at Northland Capital Markets

And if so, then is this something that you think you can then roll out and replicate that strategy, something that you can roll out and replicate to other metros?

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

Yes. Thanks, Bobby, for the question. Actually, we were also talking about international and Spain as a first sign of the result of a strategy shift, which we did some two years ago as a pilot and actually in Spain, we have some areas and some metros which are actually hitting twenty nineteen numbers. And during last eighteen months, let's say, we started implementing similar metros also in NA, Specifically, I was discussing on previous call explaining that we are building this market management capability within Groupon, which is focusing for us on the largest metros where we are defining what we need, what are the deals which should be on the platform and actually also deals which should not be on the platform. So this is the reflection of this strategy.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

We are still in the middle of it. There is plenty of work ahead of us, but the goal is that once this process, this structure will be optimized for top two metros in NA, we will be scaling to our locations too.

Bobby Brooks
Vice President at Northland Capital Markets

Got it. So it's something where, yes, those top five metros were targeted first and going and you're still working on figuring out what the optimist or how to optimize it best, but it's something that you haven't yet rolled out to all different metros.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

Yes, we are still learning the right way how to do it. It's a combination of market management where we are understanding the market dynamics, the specific parameters and behavior of each location. And then there is also the category dimension to it where we are digging much deeper and understanding with our category needs because Groupon is not one price fits all, but we are developing a strategy for each key vertical which we have on the platform. So it's this combination category in one dimension and NGOs as second. And once we will feel comfortable that this is scalar process, which we can have everywhere, we will be rolling that out to more locations. Got it.

Bobby Brooks
Vice President at Northland Capital Markets

And then, so North American active customers, that grew sequentially after, I mean, I have my data back going back to 2018 and there was all sequential declines on active customers in North America. So that was really great to see. And so kind of two questions on that is, one, does your guide bake in any continued customer growth? And could you maybe just touch on what you felt drove that? I know you talked about better conversion.

Bobby Brooks
Vice President at Northland Capital Markets

If you could just share any more details on that, that would be appreciated.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

Yes. So I will go back again to platform stability because it was a big topic for us last year and really in Q4 when all these pieces fit together, we saw performance marketing channels to be really stepping up and improving and we are really driving the acquisition part, which in my opinion, we still have a potential to do more. We have a plan, we improved and strengthened the team in marketing department and we know that we can grow further. But at the same time, we are shifting our focus right now on customer retention where we are bringing some especially tutendering deals, which we call Wow! Deals, which can help us to improve the frequency.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

Because I believe we cracked the customer acquisition and now focus is customer retention, second, third, fourth transaction.

Bobby Brooks
Vice President at Northland Capital Markets

Got it.

Bobby Brooks
Vice President at Northland Capital Markets

And then just kind of confirm, so does the guide does your guide bake in like any customer growth or is that not really a function of it?

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

Our plan expects that we will be doing better and better with customer acquisition. We don't expect that it will be like several times better obviously, but we will be improving and we expect in the plan slight improvement in the retention team.

Operator

Our next question comes from Eric Sheridan from Goldman Sachs. Eric, you can now unmute your line.

Eric Sheridan
Eric Sheridan
Managing Director at Goldman Sachs

Thanks so much for taking the question. Maybe two, if I could. Just coming back to the point on purchase frequency, can you go a little bit deeper in what you see as the critical investments to drive more purchase frequency and what you might be seeing in terms of different behavior in terms of purchase frequency when you align it on top of vertical based behavior on the platform in terms of what resonates and what might be some of the key unlocks to drive increased frequency? And then the second question would just be, you talked a lot about how enterprises increasingly are using Groupon as a platform to go to market. Can you maybe give a few examples of how enterprises as a strategy continues to evolve and what that might do to broaden out supply on the platform over the longer term? Thanks so much.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

Okay. Thank you, Erik, for the question. So I will start with verticals. Yes, we see different behavior in different verticals on the platform. There are verticals like online retail where customers are not buying really the local services and experiences where it's quite open, done open.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

It will depend on our marketing performance and on our marketing systems to be typically in Google, on Facebook when they are looking for some solutions. So if you are buying some stuff, which is kind of commodity and it's still in Groupon, then it's very different behavior. But when we move to categories, which are more local, then that behavior is different. And we see a huge potential to increase purchase frequency. Both VR and we started already late Q4 is doing is that we are adding something which we call Wow!

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

Deals, which are typically food handling, so really great offer with top brands on the market. And our main intention is to offer those ASAP after the first purchase. In the past, we quite often focused after the purchase just to deliver the voucher, then do nothing for next few days and then come back again to customer. Right now, we are improving, shortening that period of time when we communicate with customer. And based on our tests we see very positive reactions from customers.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

So we believe that these like our Wow deals will be one of important elements to drive purchase frequency higher. In terms of enterprise partners, like you see overall market that many companies are really looking for consumer demand and some of them are struggling. So Groupon is a great platform for them. When you are advertising on Google, on Facebook, you are typically paying for clicks and yes, you are optimizing for performance, but Groupon is really the only, I would say, big platform where you can make campaigns which are pure performance based. So they make a lot of sense.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

And then if we dig into categories when typically these businesses have fixed cost or they are selling memberships and suddenly the economics of these deals work great for them and Groupon is really a top platform for them, which they really want to scale. And I would say most limitations, which are there are still on the technical integration part, which is our focus to be more open to more accessible to these enterprises, which they have their own issues with their own quite often legacy platforms and we need to be able to connect them. But in general, when I'm meeting with these partners on every meeting, I have a feeling that we can do much, much bigger business with them versus what we do right now.

Operator

All right. We'll now pose written questions to management that came in through our Investor Relations press line. Our first written question is for Dushan. Can you share what the December Christmas period looked like from a growth perspective? North America Local was running in the low single digits positive during Black Friday Cyber Monday and was likely down negative high single digits to negative low double digits in October based on your commentary at that time around guidance framing.

Operator

So, would this imply the business was running up positive double digits in December Christmas based on reported North American local growth of plus 8% year over year?

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

So December was very good. However, what we have to take into account is that year over year compares impacted by timing of Black Friday and Cyber Monday. So it's not really apples to apples. But even said that on a like for like basis comparing holiday twenty twenty four to holiday twenty twenty three, we believe we had a very successful year in NA Local, including some great numbers in the lead up to Christmas and period between Christmas and New Year. And what's important in the past, we have mentioned that we have observed that our platform tends to perform better during the key buying seasons and Q4 was really no exception to that.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

For our Q1 outlook, as mentioned in earnings commentary, we lost some of the excitement from the Q4 season as we started Q1, but we have been pleased with the momentum in North America local and see continued growth in billings. And while we commented that our first quarter outlook assumes better performance in Lotto versus Q4, at this time we don't believe it will be double digit growth in billings.

Operator

Great. We have a few more questions from our analysts on the call. It looks like Bobby, you had your hand up first.

Bobby Brooks
Vice President at Northland Capital Markets

Hey, thanks guys. Thanks for taking the question again. So bringing higher quality supply onto the platform is a strategy you've talked about a lot since Dushyant took over and specifically on this call. So I was just interested on really how you are getting these higher quality merchants onto the Groupon platform, maybe some examples of wins. But what is typically the selling point that wins these guys over?

Bobby Brooks
Vice President at Northland Capital Markets

Is it the improved tracking you can provide merchants on the deals progress or is it something different?

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

Well, actually it starts with us and with our sales force and the consultative approach, which we were talking about in the past. And let me give you one example. When we started and we were reviewing what we call deal books internally, which is like, let's say, a document which describes what deals we should be getting for the platform. For massage, the most preferred massage type of deal was like with 50% plus discount and $40 per hour. But when we are doing the analytics, we see that really the massages which we sell most are actually something completely else.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

They are quite often above $100 It's a couple massage with nice merchants. So we have to convince our sales force first that we don't go by the deepest discount. We go for something which is a value for customers because Groupon is always a place where we will not be selling the most expensive stuff. We will be selling high quality stuff, which will be a good deal for customer. So now we don't go to the lowest quality merchants.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

We go to good quality and high quality merchants. We don't go there with like 40 doors per hour massage, but we go there with a massage, which makes them more money, which makes also more money to Groupon and actually customers love it more. And it's actually combined with the gifting strategy, which works very well. These are the types of deals, which you can buy and get us a gift because you see the quality immediately. So this is the main strategy, really starting on our side deciding what are the good deals which we need, identify right merchants and negotiate a deal which makes sense for merchant and Groupon.

Bobby Brooks
Vice President at Northland Capital Markets

Awesome. That's terrific, Colin. That makes a lot of sense. And then just the last one for me. So obviously, you guys give a lot of value to the consumers like you just mentioned.

Bobby Brooks
Vice President at Northland Capital Markets

There's obviously some pressure on the consumers here with more macro related stuff. So I was just curious if you could just maybe talk about high level, like would you guys actually see like a counter cyclical tailwinds as the consumer sees more pressure? Or I should say, would you expect that? I mean, that's kind of historically, I think has been the case, but is that something that you think will continue to be the case going forward if we start to see pressure on the consumer?

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

Yves, do you want to take this one?

Jiri Ponrt
Jiri Ponrt
CFO at Groupon

Yes. Thank you, Bubbe. I think this will be headwinds and tailwinds. Definitely, we will be the business which will be interesting for merchants in terms of having if they will have empty capacity, they will be looking for the options, how they can bring the customers in. And I think the Groupon is great place for that.

Jiri Ponrt
Jiri Ponrt
CFO at Groupon

For sure, there will be also tailwinds because the people might have a little bit deeper pockets, so it might have impacted the categories like terrible or goods or high value. But I believe the customers will be looking for the value and I think that the Groupon is a good place for that.

Bobby Brooks
Vice President at Northland Capital Markets

Really appreciate the color guys. I'll turn it back to queue. Thank you.

Operator

Thanks, Bobby. We'll move back to Sean McGowan from ROTH Capital. Sean, please unmute your line.

Sean McGowan
Equity Research at Roth Capital Partners, LLC

Yes, thank you. Just I was wondering, Sean, if you could give any metrics around the improvement in gifting. It seems to have been a big priority of the company and you set some goals of improving that as a percentage of total business. So can you give us some sense of that progress?

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

We didn't disclose any specific numbers yet, but I can share some like top level view. I mentioned that the guesting is gaining importance. And what I can share with you is that during the peak holiday season, the gifting was in double digits share of our orders, very low double digits obviously, but a significant improvement versus last year. We see very strong trend and strong growth there and especially in some categories because some categories are simply more suitable for gifting than others. It's all interconnected.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

It will take us time to get and I believe in the past we were mentioning that the benchmark which we had was 50% for holiday season. We are very far from that. But for that we need to improve inventory. I was answering the previous question with like more luxurious, let's say, massage deals. We need to have enough deals like this because these are the deals which are bought as gifts more often.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

I will also stress out what we mentioned several times that Groupon is performing very well as a platform during season and there are many seasonal occasions where gifting will be helping us because people can be self gifting, gifting to others. So this is all big project which will take us time, but like I see that we are on a very good path in delivering it.

Operator

Thank you, Sean. We'll move back to some written questions. Another one for you, Dushan. Can you talk about the drivers of growth within international excluding Italy?

Operator

Which geographies are you seeing strength in addition to Spain running up to twenty nineteen levels?

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

I was actually mentioning in previous answer that we have some cities in Spain, which are already near twenty nineteen levels, which is extremely encouraging. We see very positive signals and trends in all our big countries, which is Spain, UK, France and Germany, Viscore make approximately 80% of our international logo. In Spain, as I mentioned, we started two years ago by strengthening the sales force, by focusing more on market management, on really deciding what's needed on the platform and we are following same steps in other countries. It starts with strong leadership. So we are strengthening and we did strengthen teams in every single country, which I mentioned.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

We are holistically looking on performance of the country, what deals we should be bringing, but then also rebuilding the cooperation with marketing to make sure that we are promoting right stuff. And although we did not migrate both countries to new platform yet, just by optimizing supply and marketing, we were able to get them to grow and we are very optimistic going forward there.

Operator

Another written question for you, Dushyant. There appears to be a lot of employee turnover, assuming this is just potentially to make sure the go to market is top notch. How are you keeping your top salespeople around? And how variable is their comp structure? Is sales productivity improving?

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

So I have very good feeling about strengthening our management team in sales in general. I think we are on very good path there. And yes, in sales there is and there will be always much, much higher turnover. We pretty much went back to original way how Groupon, but also many other companies I was working with in the past were working, we are hiring a lot of junior people, quite often it's their first job or second job. After college, they go through training and some of them realize this is not for them this type of job.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

Some of them fell in love and become great salespeople. So this is simply debate how we are working and there will be high turnover, especially during the initial stage of hiring. And in terms of remuneration, we are highly performance motivated company and comp structure, I would say. And our top salespeople are making money basically this report that they are bringing and I believe they are happy with the remuneration system.

Operator

Thanks, Krishnan. A written question for you, Yuzhi. What do you believe, if any, will be the impact on Groupon of recent U. S. Tariffs?

Jiri Ponrt
Jiri Ponrt
CFO at Groupon

Yes. As we understand the current discussions about tariff policies, they are targeted mostly to the goods or consumer products. If I look on a Groupon business, most of our business is local experience, meaning local merchants, local products and impact from types is minimum. Mostly, where we will see some impact to our business will be goods, but let's be clear, this line of business is of course less than 5% of our revenues in 2024 and we do not expect the growth in 2025. So it will be smaller and smaller part of our marketplace and therefore, I would say that impact or potential impact of tariffs implications will be minimal and would not be material to our 2025 outlook.

Operator

Thank you, Yitik. We have one more question, it looks like from Sean McGowan. Don, go ahead and unmute your line.

Sean McGowan
Equity Research at Roth Capital Partners, LLC

Thanks. I want to circle back on something. I think in your prepared remarks, you talked about user engagement maybe something that keeps you see some improvement and yet you got the 8% increase in North American local. So can you give us a little bit more color on that, the relationship between user engagement and that growth?

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

So we have in general better conversion on the platform, which is helping us. We are also in our comments, we mentioned that our marketing platform is really working very well, the acquisition marketing platform. So this is primary source of this growth. So we are able to approach customers in NA, but I will say internationally it's a very similar story. We are able to present them appealing offering.

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

We see increased conversion in the sales process, which is something we were expecting when we were talking about the new platform, which we are releasing, but also just coming together with higher quality supply. It's driving also higher AOV, not only gifting, but in general higher quality deals. Now what needs to be coming and what's our focus is retention, meaning we need to increase the number of transactions our customers are doing with Groupon.

Sean McGowan
Equity Research at Roth Capital Partners, LLC

Okay. I think we've talked in the past that each incremental or each turn of user engagement adds tremendously to incremental EBITDA like 100,000,000 for each turn or something like that. Is that still your expectation? And when do you think we start to reflect to that? What do you expect over the next couple of years?

Dusan Senkypl
Dusan Senkypl
CEO & Director at Groupon

So I'm not able to be exactly specific about the numbers, but like just to give you an idea, when we are talking internally about strategy 2025, the first line, the North Star for whole company is customer and merchant retention. So as you see, it's becoming the priority number one for Groupon. In general, we are already experimenting with plenty of not only deals, but different approaches, how to tackle it and I'm optimistic that we will be able to improve it, but we are not ready yet to share specific numbers. I expect improvements this year and then it will gradually continue in next years. Okay. Thank you.

Operator

Thank you, Sean. We have one more written question for Yuji. Yuji, can you comment on the trends underpinning the guide?

Jiri Ponrt
Jiri Ponrt
CFO at Groupon

Yes, for sure. So the trends on that is we left Q4 in definitely better position than we entered Q4 after a very turmoil Q3. So we are continuing in Q1. We expect in Q1 still negative slightly negative trend in billings. This is what we put there.

Jiri Ponrt
Jiri Ponrt
CFO at Groupon

We continue and we still see the lower take rates. It remains year over year. It means that our revenues impact will be more negative versus trends of the billings. But we believe we will be, as we were last year, positive in adjusted EBITDA. About the cash flow, this is these things which we have to take into account.

Jiri Ponrt
Jiri Ponrt
CFO at Groupon

Our business is seasonal in terms of we have strong holiday season in Q4, which is redempted by our customers in Q1, which resulted naturally in negative cash flow in Q1. So this is about Q1. For full year, we actually expect that we will be growing billings. We expect there will be growing revenues. We will be adjusted EBITDA and free cash flow definitely better than we were in 2024.

Jiri Ponrt
Jiri Ponrt
CFO at Groupon

What is probably good to mention here? And we expect some ForEx impact roughly 100 basis points. It's maybe good to mention that last year, we left Italy beginning of Q2 and I mean, not full Italy local market. So this is all the things which we should probably mention. We also believe and I think it was mentioned here already today that we'll continue and we will continue to invest in our marketing and in our sales force.

Jiri Ponrt
Jiri Ponrt
CFO at Groupon

We expect that our SG and A will be flattish year over year. It might be a little bit different each quarter, but we see some pockets where we can still have savings in our SG and A. On the other hand, we are hiring, we are hiring especially to our sales force. And this is a place where we would like to take our savings, which we will deliver during the year 2025 and bringing back to the business and definitely strengthen our capacities in sales force. About marketing, we expect and it was also said here, we expect to be stable spending roughly 30%, thirty five % of our gross profit on marketing, assuming and being conditioned that we are positive in ROI.

Jiri Ponrt
Jiri Ponrt
CFO at Groupon

If we will be positive ROI, we would be able to spend even more, which will certainly will impact our auto point positively.

Operator

Thank you, Yuzhi. There are no other questions. This concludes our call for today. Thank you for everyone for joining. For additional information, please go to investor.groupon.com.

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