Groupon Q1 2025 Earnings Report

Groupon EPS Results

• Actual EPS: $0.18
• Consensus EPS: -$0.20
• Beat/Miss: Beat by +$0.38
• One Year Ago EPS: N/A

Groupon Revenue Results

• Actual Revenue: $117.19 million
• Expected Revenue: $115.51 million
• Beat/Miss: Beat by +$1.68 million
• YoY Revenue Growth: N/A

Groupon Announcement Details

• Quarter: Q1 2025
• Date: 5/7/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 8:00AM ET

Groupon (NASDAQ:GRPN), together with its subsidiaries, operates a marketplace that connects consumers to merchants. It operates in two segments, North America and International. The company sells goods or services on behalf of third-party merchants. It serves customers through its mobile applications and websites. The company was formerly known as ThePoint.com, Inc. and changed its name to Groupon, Inc. in October 2008. Groupon, Inc. was incorporated in 2008 and is headquartered in Chicago, Illinois.

Groupon Q1 2025 Earnings Call Transcript

Key Takeaways

• Groupon’s Q1 2025 results exceeded guidance with global billings up 1.4% YoY, North America Local billings accelerating to 11% YoY, and “Things to Do” transactions growing double digits for the fifth consecutive quarter.
• The company raised its full-year billings guidance to 3–5% growth while maintaining revenue and adjusted EBITDA targets despite divesting its GiftCloud subsidiary, signaling confidence in the core business.
• Management highlighted a transformation strategy focused on hyperlocal quality deals, platform modernization, and compressed take-rates to build a sustainable foundation, expecting billings and revenue growth to converge over time.
• Investments in performance marketing have improved ROI, allowing for higher volume acquisition, and Groupon is piloting social-media influencer channels while steadily enhancing its checkout and mobile experience through its MobileNext platform.
• Executives view the current macroeconomic environment as a tailwind, noting accelerated merchant adoption of Groupon’s performance-based platform, deeper partnerships with enterprise clients, and a growing pipeline of high-quality supply.

Presentation

[Operator]

Hello, and welcome to Groupon's First Quarter twenty twenty five Financial Results Conference Call. On the call today are Chief Executive Officer, Dushan Sanketfel Chief Financial Officer and Senior Vice President of Finance, Rana Keshat. 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 materials, including its earnings commentary 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 the following discussion and responses to your questions reflect management's views as of today, 05/08/2025 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 quarterly reports on Form 10 Q.

[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 or 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, CEO & Director at Groupon]

Hello, and thanks for joining us for our first quarter two thousand twenty five earnings call. It's a pleasure to be with all of you. Yesterday, after the market closed, we released our earnings and posted our earnings commentary on our relationships website. 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. For more details on our quarterly performance, I encourage you to read our earnings commentary.

[Dusan Senkypl, CEO & Director at Groupon]

In addition, I encourage you to review our press release and 10 Q, which contain more detail on our fourth quarter and full year results. I am pleased to report a strong start to the year with our q one results exceeding guidance on both billings and adjusted EBITDA with a slight beat on revenue. Global billings grew 1.4% year over year, marking our continued progress towards sustained growth. This performance was powered by North America Local, which accelerated to 11% year over year growth in billings, the first time we've seen double digit growth in this segment since 02/2017, excluding the pandemic recovery period. Our hyperlocal strategy is delivering strong results with our top 10 cities in North America growing billings by double digits.

[Dusan Senkypl, CEO & Director at Groupon]

Enterprise clients continue to flourish on our platform. Looking at our vertical performance within North America local, things to do grew billings double digits for the fifth straight quarter. We believe our things to do franchise is significantly outpacing current industry trends and is poised to continue strong absolute and relative performance as we head into the important summer season. Our international local business, excluding Italy, also showed impressive improvement with approximately 5% year over year billings growth. As I start my third year as CEO of Groupon, I believe the time has come and the team is ready to start playing offense.

[Dusan Senkypl, CEO & Director at Groupon]

Our mission remains clear, to transform from a daily deals platform selling everything to everyone into a trusted destination for quality local experiences at unbeatable value. Our transformation strategy is working across marketplace health, platform modernization, and financial strength. We are seeing success in shifting from chasing volume to building quality, make migrating from legacy systems to a modern platform, and moving from negative to positive financial performance. While our strong billings growth is encouraging, I want to note that our progress in revenue is currently lagging billings due to compression of take rates in North America local. This evolution in take rates is deliberate and a natural consequence of our focus on building a sustainable foundation for long term growth.

[Dusan Senkypl, CEO & Director at Groupon]

For example, higher redemption rates cost a short term headwind to revenue but are a great sign for the long term health of our marketplace. Over time, as we make progress on delivering these healthy marketplace fundamentals, we expect billings and revenue growth rates will converge. On the leadership front, we've strengthened our team with key appointments, including Josef Bourian, our new chief marketing officer, and Alej Drabeck, our new chief technology officer. We've also promoted Barbara Weiss to chief revenue officer and Filip Popovich to chief commercial officer to lead our supply side commercial strategy and Maria Havlicekova to chief product officer. The business exited q one with strong momentum and continues to perform well.

[Dusan Senkypl, CEO & Director at Groupon]

Looking ahead to q two, we expect another quarter of accelerating year over year growth in both billings and revenue. For the full year, we raised our guidance for billings growth rate from two to 4% to three to 5% and kept our revenue and adjusted EBITDA guidance unchanged. I want to emphasize that we maintained our revenue and adjusted EBITDA guidance despite completing the sale of our wholly owned subsidiary GiftCloud in early April, which removes approximately 6,000,000 in revenue and 4,000,000 in adjusted EBITDA from our consolidated results for the remainder of the 02/2025. Effectively, by keeping the overall revenue and adjusted EBITDA target unchanged, we are raising our guidance for the core business, demonstrating our confidence in our core business. It's an exciting time to be at Groupon.

[Dusan Senkypl, CEO & Director at Groupon]

We are no longer just stabilizing the business. We see several green shoots of growth across our business, and we are building the foundation for long term sustained growth. With our platform modernization underway, improving customer experience on both sides of the platform, continued progress in financial performance, and a clear strategic direction, I believe we are positioned for success in 02/2025 and beyond. I would like to thank our team for their dedication and hard work that have made this progress possible. This journey has not been easy, and their continued commitment to our mission and to our transformation has been really great.

[Dusan Senkypl, CEO & Director at Groupon]

With that, let's open the call for questions.

[Operator]

Thank you, Dushan. Our first question comes from Bobby Brooks from Northland Capital. Bobby, you can now unmute your line.

[Bobby Brooks, Vice President, Senior Equity Research Analyst at Northland Capital Markets]

Hey, guys. Thank you for taking my question. I guess something that really caught my eye in the prepared remarks that you put out yesterday was the number of North American merchants doing more than 1,000,000 in billings was up 43% year over year. Could you just discuss what is driving that strength? Is it the new go to market strategy and focusing on higher quality merchants and providing them with better tools to track deal performance, or is it something different and more in-depth?

[Dusan Senkypl, CEO & Director at Groupon]

So, Benif, Bobby, I can take your question. Thank you. Thank you for it. How I see it in last, I would say, eighteen months, we are improving in what we call hyper geo approach that it means we are looking in more detail in what what inventory we need in every single location. We are improving our category management in terms of understanding what's the inventory we need.

[Dusan Senkypl, CEO & Director at Groupon]

And by combination of both and focusing on deals which our customers need in in a given location and on the quality of deals, we can be a better partner not only to our enterprise partners, but across the board also to to local merchants. So I believe this is this is the result of of our more focused switching from number of merchants on the platform to quality of merchants, quality of deals, quality of service, which we are providing to to our customers. And I would probably also mention that the current macro environment is definitely not hurting us. I see it, like, quite the opposite.

[Bobby Brooks, Vice President, Senior Equity Research Analyst at Northland Capital Markets]

Got it. And then just, like, a clarifying piece on that. Is the greater than 1,000,000 in billings, is that on, like, a year, like, a twelve month trailing basis, I would guess, or is it on, like, an intra quarter basis? I was just curious on that, like, definition.

[Dusan Senkypl, CEO & Director at Groupon]

It's based on a trailing twelve months basis.

[Bobby Brooks, Vice President, Senior Equity Research Analyst at Northland Capital Markets]

Got it. Thank you. And then just one more for me. Is is is something I noticed, like, kinda browsing the website intra quarters, Some some a couple different, like, professional or one professional sports team that I saw specifically, you know, was selling tickets through Groupon, and the checkout process was extremely smooth. Never having to leave the Groupon website and being able to pick the seat and pay all within the Groupon platform.

[Bobby Brooks, Vice President, Senior Equity Research Analyst at Northland Capital Markets]

This seems like something that might be a new integration based off the new platform. Is my assumption right? And and maybe just touch on, like, that if if that's a new ability, touch on, like, how that's helping grow the business.

[Dusan Senkypl, CEO & Director at Groupon]

So, Bobby, I was commenting on several calls that with new platform, we will be able to iterate in in faster pace, and this is one of the results. And, obviously, checkout is one of key components of of the website. So the team which is maintaining checkout is pretty much everyday looking what we can improve, and there is still way to go. But compare comparing where Groupon was two years ago, I believe we made a significant process both in terms of how easy the checkout is, but also in terms of payment methods which our customers can can use.

[Bobby Brooks, Vice President, Senior Equity Research Analyst at Northland Capital Markets]

Fair enough. I'll I'll return back to the queue.

[Operator]

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

[Eric Sheridan, Managing Director at Goldman Sachs]

Great. Thank you so much for taking the questions. I did want to follow-up on the macro commentary in the prepared remarks. Maybe you could just go a little bit deeper in your own view about how the macro environment could act as a tailwind in the business? And then more specifically, it sounds like the implication is that the merchant pipeline, could be increasing as certain brands and merchants want to go deeper on the platform given the current environment.

[Eric Sheridan, Managing Director at Goldman Sachs]

I wanted to if we could get as much detail as we could there about the way you're thinking about the pipeline on the supply side as an output of the macro environment. And then maybe after that, I just have one quick follow-up.

[Dusan Senkypl, CEO & Director at Groupon]

Thank you, Eric, for the for the question. You know very well the macro environment is extremely volatile, and it has impact on consumer spending. And, unfortunately, it's also very difficult to to predict predict how customers will believe. But what we see in in general, we see this as a tailwind for our business, and we see it specifically on supply side where we see signs of weakening traffic trends from some of our clients. And because Groupon is a great performance based platform, I believe that in in this time, it's it's simply a great opportunity to work together.

[Dusan Senkypl, CEO & Director at Groupon]

And we are just trying to figure out what what are the best products for clients, how we can help them, how we can together with merchant partners create products for for our clients. So we see in general in enterprise segment, but actually same applies in local, that we are really deepening cooperation with our existing clients, and we see also, like, faster inflow of new brands coming to to Groupon. But at the same time, I would like to mention that these are kind of early signs, and the overall situation in macro, but also in our marketplace in this term is is quite fluid. So we need to follow very closely what's going on on the in macro and NA mainly, but Western Europe is very similar and just adapt.

[Eric Sheridan, Managing Director at Goldman Sachs]

Great. Thank you. And maybe just one quick follow-up. You had a number of comments in the prepared remarks around marketing investments and the ROI you're achieving on those marketing investments. Can you talk a little bit about your own attempts internally to optimize dollars against your return goals for deploying those dollars and or how the overall marketing environment and pricing and auction density might have helped or acted as different sorts of headwinds to the ROI in the quarter?

[Eric Sheridan, Managing Director at Goldman Sachs]

Just wanna understand a little bit of the external versus the internal dynamic on marketing ROI. Thanks.

[Dusan Senkypl, CEO & Director at Groupon]

Yeah. So in in general, last last two years, our strategy is to be able to acquire our new customers pretty much at the with with ROI 100% in seven day windows, which pretty much means that the profit margin which we have on the first order is cost of our our acquisition. We I was commenting in in the script, and I see performance of our marketing channels improving, which is allowing us to increase volumes. Because in marketing, in general, if you want to increase volume, very every incremental dollar and click or traffic or eyeball which you are buying is more expensive. So if we are claiming that we are growing and increasing marketing with the same ROI.

[Dusan Senkypl, CEO & Director at Groupon]

It means that in general, we are improving conversion rates in in our marketing, and we actually see some additional opportunities how to continue in in this trend going forward. So I believe that performance marketing for us will be a tailwind in in near future. At the same time, as the team is strengthening, I was mentioning that the new CMO started. We are also exploring new channels in the mid and upper part of of the of the funnel, which is mainly social media influencers, and we already have several pilots in place where where we can present coupons to really millions of people on on social media and on platforms where Groupon was not pass not active in the past. So this is another opportunity which I'm extremely happy about, and I'm looking forward on the results.

[Operator]

Thank you, Eric. Our next question is from Sean McGowan from ROTH Capital Partners. Sean, you can now unmute your line.

[Sean McGowan, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Thank you. I appreciate that. A couple of questions. Could you give us a little bit more color on international? You've talked in the past about Spain being one of the markets where you initiated some of these fixes earlier, and and it was really paying off quite well.

[Sean McGowan, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Could you just give us an update on some of those markets that have been in the in that turnaround process longer?

[Dusan Senkypl, CEO & Director at Groupon]

Okay. Thank you, Sean, for the for the question. In general, I would say that the trends across all major markets in international continue to to improve, and we are and I'm personally very happy with performance of international markets. The the leading market in terms of growth is still Spain, which simply has eighteen months head start in terms of when we started the the transformation and the the process and the the framework which we use for transformation in Spain is is simply working working great, and we have very strong double digit growth in in Spain. All other big markets, meaning Germany, UK, France, are also performing very well, and we see that the trend is is is still improving.

[Dusan Senkypl, CEO & Director at Groupon]

You know, the the comp is a little bit different going forward in in q two because last year, we we lost Italy as as a market. So that's why the the perform although overall, we were slightly negative last quarter. It will change because we will not be comparing again against Italy. But when I'm looking really on performance of every single country, it's it's it's going in the in the right direction. And the playbook and the stuff which we do there is pretty similar to what we do in United States.

[Dusan Senkypl, CEO & Director at Groupon]

On every market, we want to have very strong leader, strong owner who owns all business. We go hyper local, meaning we are focusing on the largest cities in international. It's typically the capital city as the first one and then typically second or third largest city in the in the country and making sure that we are adding both high quality local deals. But similar to United States, we see high importance of high quality enterprise deals because these other deals which are driving traffic to the to the Groupon, and that traffic is converting not only on these enterprise deals, but also converting to to local merchants.

[Sean McGowan, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Great. Thanks for that color. And then, if you could just give us a quick update on, the international website and mobile app, updates. You know, I think those are things we're expecting in the first half. Where where are we on those?

[Dusan Senkypl, CEO & Director at Groupon]

So on on last earnings call, he mentioned that this year, we will be taking very cautious approach, and we, quite frankly, have a slow progress during the quarter. We have very good visibility into each step in the conversion funnel of our MobileNEXT application versus legacy application. We see there in that conversion funnel both good and bad guys, meaning that in certain steps, we see that the legacy customers are used to something slightly different than what we have in in Mobilinx application. So our approach is to make it more similar and closer to legacy because we simply don't want to have don't want to hurt performance. But at the same time, we see in the conversion process several good guys, meaning in certain steps, the mobile next approach is is showing better conversions.

[Dusan Senkypl, CEO & Director at Groupon]

So in the long run, we are committed to the pro project. We believe that it will bring an upside opportunity for Groupon, not only in the website where we already have it already implemented, but also in the application. In terms of when and how we need to finish first NA app, and once we finish NA app, we will continue with international. But at this point, I don't want to provide a timeline because, like, our priority is really to make sure that our systems are stable, our customers don't have any issues, and the performance of the whole company, the financial performance is simply deliver. That's the priority number one for me.

[Sean McGowan, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Cool. Alright. Thank you. I'll get back in the queue as well. Thank you.

[Operator]

Thank you, Sean. We'll now post written questions to management that came in through our investor relations press line. Investors on the line, please raise your hands if you have follow-up questions. Our first written question, you identified product velocity as a key focus area. What specific metrics are you using to measure improvement in this area, and what are your targets for increasing the pace of innovation?

[Dusan Senkypl, CEO & Director at Groupon]

So, internally, we are looking on the velocity of delivery for engineering and product teams. From from the outside, I would say, higher level perspective, it's simply looking on the our ability to deliver small weekly changes on our website platform and our application platform and there were multiple improvements. We were touching in previous question today, for example, the checkout, but there are many other parts of the website where we released improvements, being it merchant pages, being it location or or search. And we will simply continue. And I believe as we will be moving more and more technology to MobileNext, we will see improvements in the phase.

[Dusan Senkypl, CEO & Director at Groupon]

And from a shareholder and user customer perspective, both on the side of merchant and consumer, simply, we want to make sure that they see that Groupon is changing, and we will be seeing more and more features. We are working, for example, also on new maps because that's the functionality where we believe that we can provide much more value to our customers. And there are there are few more interesting projects, one more of which I can actually mention is search because search is one of key drivers of revenue and conversion, and we believe that it's possible to do much more with search versus what we have right now.

[Operator]

Thank you, Dushan. Looks like we have a follow-up question from Bobby Brooks from Northland Capital. Bobby, you can now unmute your line.

[Bobby Brooks, Vice President, Senior Equity Research Analyst at Northland Capital Markets]

Hey, guys. Thanks for taking taking the follow-up question. So in 4Q, you know, kind of a key point was how the top five the the top five metros in North America were up double digits on billings. Now in the first quarter, that's expanded to the top 10 metros up double digits. So I was curious, was this an expansion of the number was this expansion of the number of cities seeing double digit growth a result of you expanding that grow go to market strategy to the new cities, or is that the or or is it maybe something where it was already happening in the other cities that you go to market, but now it's it's it's just starting to kinda take hold.

[Bobby Brooks, Vice President, Senior Equity Research Analyst at Northland Capital Markets]

Right?

[Dusan Senkypl, CEO & Director at Groupon]

Yeah. So, Bobby, this is something which is mainly about the timing. Because when we were deciding where and how we will focus our say sales capacities, which are unfortunately not unlimited, we were simply deciding what percentage of our workforce will be focusing on top five, what percentage will be focusing on top 10. And because on top five, we simply had more more capacity, we were able to see the growth faster, and the growth in other 10 cities simply came later. But in general, we are not limiting new deals and ourselves just to be top 10 cities.

[Dusan Senkypl, CEO & Director at Groupon]

We simply target all big cities in the in The United States. But, unfortunately, due due to lack of capacity, it it simply takes longer with with some cities. At the same time, we are with our one of key projects which we are running in sales, we are doubling down mainly on the biggest biggest locations because there is that compounding effect when you have enough customers and at the same time, good density of high quality deals, the pace of improvement is accelerating. So I don't expect that we would be kind of covering top 50 cities in United States with the, let's say, similar per capita Salesforce. I still expect that we will be pushing these top locations, and I would say top 10 is a good number more than the rest of the country.

[Dusan Senkypl, CEO & Director at Groupon]

But we expect and we see performance improvement in all big cities being ahead of performance in in smaller cities and smaller locations.

[Bobby Brooks, Vice President, Senior Equity Research Analyst at Northland Capital Markets]

Got it. And then just, like, kind of piggybacking on that, I think it's clear that your take, you're switching from, you know, kind of a defense to offense. Is it right for me to think and I on the last call, you it was mentioned that, like, hey. Like, we're still kinda tweaking the go to market strategy. So, like, taking those two things into account, it seems like you've kinda figured out the you kinda unlocked the right go to market strategy and and kind of those your response last time.

[Bobby Brooks, Vice President, Senior Equity Research Analyst at Northland Capital Markets]

Is it right for me to think now this, like, in I

[Dusan Senkypl, CEO & Director at Groupon]

was mentioning in opening remarks also some organizational changes, which we did. Mainly in in this regard, this is this is about Barbara Weiss being promoted and Philip Popovich being promoted. And this this duo will create very powerful team where Philip is bringing category management and very deep and high analytical skills, helping our hyper geo approach to add also not only where we need deals, but what exactly are are the deals, what should be the profit margin structure, what should be the pricing structure. So, yeah, we are we are doubling down on this. I believe that the the approach which we took since early last year is is the right one, but we are improving every quarter.

[Dusan Senkypl, CEO & Director at Groupon]

And right now, the structure which we have is combination of local understanding or hyper geo understanding with also understanding and people who understand categories because, like, the massage is performing differently versus Botox or some some other product. And now we have people who understand what are the issues for merchants in in this category so that we can prepare a better product, which which is a win win for both Groupon and the merchants.

[Bobby Brooks, Vice President, Senior Equity Research Analyst at Northland Capital Markets]

Got it. So so it's fair to say, like, pedal to the metal. Now it's it's not kind of just as focusing on a couple different cities. Obviously, the bigger cities are the more focused, but it's taking this go to market strategy everywhere Groupon is now.

[Dusan Senkypl, CEO & Director at Groupon]

That's that's true. At the same time, there is still plenty of work ahead of us, so we are definitely not in the finish line. But I believe that we are progressing very well, and the trajectory which which we are on is is a really good one.

[Bobby Brooks, Vice President, Senior Equity Research Analyst at Northland Capital Markets]

I agree with that, and congrats on the great quarter and looking forward to looking forward to the continued progress. I'll return to the queue. Thanks, guys.

[Dusan Senkypl, CEO & Director at Groupon]

Thank you very much.

[Operator]

Thank you, Bobby. We'll go back to another written question. Many companies are integrating AI into their operations and product offerings. How is Groupon leveraging AI, and what impact do you expect to have on your business over the next twelve to twenty four months?

[Dusan Senkypl, CEO & Director at Groupon]

So AI is one of my favorite topics. See for Groupon many, many opportunities going forward. It can definitely help us in in our sales part where going forward, I believe that at least the initial communication with with our merchant partners can be done by by AI. We are heavily investing also into the AI tool, which is analyzing which deals are working in certain environments. And the output of this, which should be coming in next one of two two quarters, will be a significant improvement of our capability to help merchants to to design the right deal, right pricing, which will be working on on Groupon for for them.

[Dusan Senkypl, CEO & Director at Groupon]

Then defi definitely in engineering and technology, we can expect that with AI and the push into AI, we can see significantly improved efficiency. And then in terms of business, we actually see a move on Google and other search engines using what they call AI snippets, and we are making sure that our website and platform is ready so that when customers will be searching on whatever location it will be in in the future, Groupon will be able to provide information compatible with with AI driven search so that they can so that they can directly go to Groupon and finalize the transaction. Or in the future, most likely, it will be possible that agents will will finalize the transaction. Even in in this, we see very interesting trends where in some areas, AI is really picking up very quickly, and we see some drop in traffic. But on the other hand, we are we see dramatic improvement in convergence, meaning that customers who are using AI and who see these AI snippets presenting the deal features, price.

[Dusan Senkypl, CEO & Director at Groupon]

If they come to Groupon, it's much highly likely that they will finalize the transaction. And maybe just one last touch over the next twelve to twenty four months. We just want to make sure that Groupon will be compatible with all major AI platforms, that it will be possible to have some kind of MCP connectors or something like that, whatever technology will be or standard will be in the future So it will be easy for AI engines to connect to Groupon and provide Groupon inventory to customers who are using AI.

[Operator]

Thank you, Doosan. Let's go back to our queue. We have a follow-up from Sean McGowan. Don, you can now unmute your line.

[Sean McGowan, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Thank you. I wanted to, ask a couple of questions about the GiftCloud sale. Specifically, how did the price that you got compared to what you had expected, you know, when you first identified it as a noncore asset that you would look to sell? Should we expect a onetime gain? You know, was it was it significantly higher than the cost basis?

[Sean McGowan, MD & Senior Research Analyst at Roth Capital Partners, LLC]

And then related to that sale, do the terms of the of the recent convert offering restrict what you can do with those proceeds, or was that restriction limited to sum up?

[Dusan Senkypl, CEO & Director at Groupon]

Yeah. I can take the first part. Yujif, if you can take the second part.

[Sean McGowan, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Okay.

[Dusan Senkypl, CEO & Director at Groupon]

On on the first part, when we were first doing, like, estimations of how much we can make or gain from from these noncore assets, Our estimation was in line, actually, with what we got from GiftCloud. But at the same time, I would like to mention that what we got was on the very high end of of the range which we had for the sale. So stating that I am very happy with with the deal itself. I think it's a good a great deal for GiftCloud and GiftCloud employees, and I think it's a great deal also for for Groupon because the GiftCloud was simply completely different business to what Groupon is is doing, and it will allow part of the management to focus on other growth opportunities. And, usually Yeah.

[Dusan Senkypl, CEO & Director at Groupon]

At least we have a problem.

[Jiri Ponrt, CFO at Groupon]

If I will if alright. If I

[Jiri Ponrt, CFO at Groupon]

will

[Jiri Ponrt, CFO at Groupon]

comment about our proceeds versus our 2,027 bonds, we are allowed to use up to 20,000,000 of proceeds from any noncore asset sale. So it means those money will strengthen our position of cash position end of q two.

[Sean McGowan, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Okay. Great. And and will would there be a onetime gain then booked in the second quarter?

[Jiri Ponrt, CFO at Groupon]

It's, yeah, it's it's it's it's a discontinued operation, so it will not be EBITDA if you are asking for this this question.

[Sean McGowan, MD & Senior Research Analyst at Roth Capital Partners, LLC]

No. I was wondering if there would be you know, in the EBITDA add back, would there be a onetime gain, you know, like, a a couple million bucks or whatever? I I don't know what the cost basis was of it, so I'm just I'm just trying to, you know, anticipate what

[Jiri Ponrt, CFO at Groupon]

we might The the transaction happens in q two, so we will still under consideration, and we will report it in q two with q two earnings. Sorry. Alright.

[Sean McGowan, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Thank you.

[Jiri Ponrt, CFO at Groupon]

Yep.

[Operator]

Thank you, Sean. We'll go back to written questions. You've highlighted a shift in marketing focus from acquisition to lifetime value. Can you discuss this shift more, and what early results are you seeing from initiatives like your Wow Deal pilot?

[Dusan Senkypl, CEO & Director at Groupon]

Yeah. So my view of where we stand with Groupon is that we are extremely success successful in terms of customer acquisition, which is actually a must have if we want to build a marketplace which is sustainable and growing in the in the long run. At the same time, we are simply not happy with purchase frequency, which we see for customers on a on a Groupon, and that's why our internal priority for the whole company, number one priority is retention. It's retention also on merchant side to make cooperation with Groupon sustainable, but it's definitely retention also for for customers. Meaning, we want to find a way how to deliver more value to them and have more more offers.

[Dusan Senkypl, CEO & Director at Groupon]

And the one of projects which we are running in under this, like, strategy umbrella is is Wow Deal pilot where we took a very popular food and drink brand, and we were promoting gift card for from for this food and drink brand to several customer segments within Groupon. And in some cases, we saw even over 25% take rate of that offer, which was extremely encouraging. But at the same time, it it makes complete sense because food and drink is an area where you can expect the highest purchase frequency. And based on the results of this initial pilot, which started already in q four two thousand twenty four, right now, we are expanding it so that we build set or a couple of these, like, wow, top grade deals, which we'll we will be offering to to our customers to just create a habit that they will do two or three transactions on a on Groupon, and they will simply start coming to Groupon for certain types of of of services. So it will be an initiative which will take a long time, but the early results which which we are seeing and especially the initial first first pilot is extremely encouraging for me.

[Dusan Senkypl, CEO & Director at Groupon]

The the results were above what, at least, I was personally expecting.

[Operator]

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

Participants

Executives

• Dusan Senkypl, CEO & Director
• Jiri Ponrt, CFO

Analysts

• Bobby Brooks, Vice President, Senior Equity Research Analyst at Northland Capital Markets
• Eric Sheridan, Managing Director at Goldman Sachs
• Sean McGowan, MD & Senior Research Analyst at Roth Capital Partners, LLC