Groupon, Inc. Q4 FY2024 earnings call

• 2024 was a pivotal year in Groupon's transformation. Shifted to building quality in marketplace health, with North America Local showing 8% billing growth in Q4 after decline. • Completed major platform migrations like fraud detection, cloud infrastructure, website, and ERP system. • Generated $69 million in adjusted EBITDA and $41 million in free cash flow for 2024, first positive free cash flow since pandemic. • Q4 rebounded strongly after Q3 challenges, with North America Local returning to growth, international local (excluding Italy) showing positive momentum, and double-digit growth in key verticals. • 2025 strategy focuses on winning in key markets via city-by-city approach, prioritizing high-impact categories, enhancing customer retention, boosting merchant success, and completing remaining technical migrations including North America mobile app in Q2.

North America Local saw 8% billings growth in Q4. International Local, excluding Italy, had 2% billings growth. These represent the financial performance of the respective segments.

• Confident 2025 will be year to return to sustained growth. • 2025 strategy includes winning in key markets, enhancing personalization, boosting merchant tools, and completing technical migrations. • $229 million cash position provides a clear roadmap for growth. • First quarter outlook assumes better performance in local than Q4 but not double-digit billings growth.

• Actual results may differ materially from forward-looking statements. • Risks and other factors impacting financial results are in earnings press release and SEC filings. • Impact of U.S. tariffs minimal on Groupon as most business is local experiences, with goods business being less than 5% of revenues in 2024 and not expected to grow in 2025.

Q: Talk about what drove local growth in the U.S. in the late part of Q4?

A: Combination of platform stability improvement, strategy shift to curated marketplace with focus on quality, spending time with merchants to ensure performing deals.

Q: Were able to recover lost cohorts of loyal customers?

A: Highly related to platform stability improvement, saw improvement in that cohort with better focus on individual customers leading to higher conversions.

Q: What drove strength in top five metro areas in North America and replicability?

A: Strategy shift implemented, starting with pilot in Spain and then NA, building market management capability, still learning but goal is to scale to other locations.

Q: How are higher quality merchants being brought onto the platform?

A: Starts with consultative sales approach, focusing on value for customers, not deepest discounts, example with massage deals showing shift to higher quality and gifting suitability.

Q: Metrics on gifting improvement?

A: Peak holiday season gifting was low double-digit share of orders, strong trend and growth, but far from 50% benchmark, need to improve inventory of suitable deals.

Q: Impact of U.S. tariffs on Groupon?

A: Minimal as most business is local experiences, goods business is less than 5% of revenues and not expected to impact 2025 outlook.

Q: Relationship between user engagement and North America local growth?

A: Better conversion on platform, effective acquisition marketing platform, increased conversion in sales process, focus now on retention to increase customer transactions.