Groupon Q1 Earnings Call Highlights

Key Points

• Groupon reported Q1 billings of $383 million (down 1%), revenue of $117 million (flat) and adjusted EBITDA of $12.8 million—results were slightly below guidance due to softness in managed/organic channels, a slowdown in North America Local, weakness in health/beauty/wellness and winter weather, though management said April showed early improvement and it reaffirmed full‑year guidance.
• Management launched Project Foundry to make Groupon an AI‑native company, embedding AI across marketing, product and merchant outreach and targeting AI voice agents to set the majority of new merchant meetings by end‑2026 (with every leader expected to use AI agents by end‑Q2).
• Groupon reduced headcount ~5% in Q1 and is evaluating roughly an additional 15% of cuts plus other cost actions, while executing buybacks (2.8M shares for $29.7M) and treating its SumUp stake as a non‑core asset to be monetized opportunistically.

Groupon NASDAQ: GRPN executives outlined a softer-than-expected start to 2026 while emphasizing an accelerated push to rebuild the company around artificial intelligence, according to management commentary on the company’s first-quarter 2026 results call held May 8.

Chief Executive Officer Dušan Šenkypl said first-quarter performance “fell short of our expectations,” citing pressures in core marketing channels and North America Local, alongside weather-related disruption early in the quarter. At the same time, Šenkypl and Chief Financial Officer Rana Kashyap discussed an expanded internal effort—dubbed Project Foundry—to make Groupon an “AI-native” organization, including pilots of AI voice agents for merchant outreach and broader automation across marketing and product workflows.

First-quarter results and key headwinds

Šenkypl reported global billings of $383 million, down 1% year-over-year and “slightly below our guidance.” Revenue was $117 million, flat year-over-year and within the company’s guidance range. Adjusted EBITDA was $12.8 million, which Šenkypl said was “slightly below our guidance range.”

Adjusted EBITDA included approximately $2 million of severance costs recorded in SG&A tied to a roughly 5% headcount reduction in the quarter, according to Šenkypl. Kashyap later explained the company did not adjust that severance out of adjusted EBITDA because it was not part of a board-approved restructuring action and the company follows an established definition for the metric. She said the company disclosed the severance item to improve transparency around quarterly “puts and takes.”

Management attributed the quarter’s pressures to three primary areas:

• Softness in managed and organic channels, which Šenkypl said the company had flagged on its prior call.
• Deceleration in North America Local, where SMB merchant acquisition slowed and enterprise “turned negative for the first time in five quarters.”
• A softer quarter in health, beauty, and wellness after four consecutive quarters of growth.

Šenkypl added that severe winter weather in January and February created a near-term headwind, while “Things to Do continued to grow across both North America and International,” partially offsetting the pressures.

Early signs of improvement in April

Šenkypl said April results improved, pointing to North America Local “re-accelerated,” a recovery in managed channels with email returning to positive year-over-year growth, and an SEO trajectory that “turned positive in mid-April.” He characterized those as early indicators and said they validated work on the customer data platform and “AI-driven content,” supporting confidence in the back half of the year.

However, Šenkypl noted that “none of the Q1 results yet reflect the operating impact of Project Foundry.”

Project Foundry and an “AI-native” operating model

Šenkypl described Foundry as “the most consequential operating decision this management team has made since arriving at Groupon three years ago,” framing it as a redesign of how the company works rather than a single product launch. He said Groupon is embedding AI agents into core functions to give owners direct access to data and tools, aiming to act “in hours rather than weeks” while removing layers between ideas and execution.

Among initiatives highlighted on the call:

• AI voice agents for merchant outreach: Groupon is piloting AI agents to conduct outbound calls to SMB merchants. Šenkypl said the company’s objective is for “the majority of new merchant meetings to be set by AI voice agents by the end of 2026.” Addressing skepticism about merchant receptivity, he said only a “minority” refuse to speak with AI and argued that improved model quality makes AI calls difficult to distinguish from human outreach.
• AI-driven marketing stack: Management said teams are using AI across SEM and SEO to evaluate performance, generate creative variants, and run experiments more rapidly. In response to an analyst question on channel mix, Šenkypl said Groupon is not leaning away from specific marketing channels, but sees “disproportionately bigger opportunity” on Meta versus Google, where he believes Groupon has already penetrated most suitable surfaces. He also cited opportunities in video content and experimentation with AI-generated videos to support advertising on Meta and “also on TikTok more.”
• Product development workflow changes: Šenkypl said product teams are increasingly starting from “AI-built demos rather than written specifications,” and in some workflows shipping consumer-facing functionality “without traditional engineering involvement.”
• Marketplace AI features: He said “Groupon IQ,” an AI deal creation platform, is in production, and AI-generated review summaries are live across the marketplace.

Šenkypl said the company expects “every leader at Groupon to be using AI agents” by the end of the second quarter. When asked whether AI adoption was being pursued primarily to cut costs, he said the main motivation was operational speed, calling AI-native teams “speedboats” that can ship products in “days or weeks.”

Restructuring, platform rebuild, and capital allocation

Alongside Foundry, management discussed further cost actions. Groupon reduced total headcount by approximately 5% in the first quarter and is evaluating additional restructuring actions in the second quarter that could reduce global headcount by “approximately an additional 15%,” plus other cost reduction and automation initiatives. Šenkypl emphasized the plans were not finalized or board approved, and the company would share details after approval.

Separately, Šenkypl said Groupon’s customer-facing platform rebuild is in the “final stretch.” He reported the new iOS app is fully deployed across North America, the new Android app launched in North America at the end of Q1 to new users, and a new international web platform is live in all markets. He added that upgrades were delivered without material disruption to results.

On capital allocation, Šenkypl said Groupon executed against its buyback authorization, repurchasing 2.8 million shares for $29.7 million at a weighted average price of $10.58 since March 10, representing about 7% of shares outstanding. As of May 7, he said approximately $215 million remained available under the program.

Kashyap also addressed Groupon’s minority stake in SumUp. She said the company views SumUp as a valuable asset but “non-core” and does not plan to hold it long term, adding that any monetization would be evaluated opportunistically and capital would be allocated consistent with Groupon’s existing framework, including potential buybacks and investment needs. She said timing for any liquidity event is “quite uncertain.”

Guidance reiterated; Q2 outlook reflects tougher comparisons

Šenkypl said the company is reaffirming full-year expectations: billing growth of 3% to 5%, revenue of $513 million to $523 million, adjusted EBITDA of $70 million to $75 million, and free cash flow of at least $60 million. For the second quarter, Groupon guided to billings flat to up 2%, revenue of $176 million to $178 million, and adjusted EBITDA of $13 million to $15 million.

While noting April’s improved start, Šenkypl said the second-quarter outlook was set in a similar range to Q1 to account for a difficult comparison later in the quarter tied to “several large enterprise campaigns” with different performance expectations this year.

In Q&A, Kashyap briefly addressed tax-related volatility, saying there was “nothing structurally that’s changed” and offering to discuss details offline. She added the company expects cash tax benefits from legislation passed last year and expects to be “more efficient” on a cash tax basis this year.

About Groupon NASDAQ: GRPN

Groupon, Inc operates an online marketplace that connects subscribers with local merchants offering discounted goods, services and experiences. Through its website and mobile applications, Groupon provides time-limited deals across categories such as restaurants, travel, beauty and wellness, home services, and consumer products. Merchants partner with Groupon to attract new customers and drive foot traffic, leveraging the platform's targeted marketing tools and large subscriber base to promote special offers and vouchers.

Founded in Chicago in 2008 by Andrew Mason, Eric Lefkofsky and Brad Keywell, Groupon pioneered the daily-deals model, quickly growing its user community and merchant network.

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