What changed in this filing

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Item 1. Business

2022-02-28 compared with 2021-02-25 · 113 added, 84 removed, 104 unchanged (65% of the section changed)

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We operate in two segments, North America and International, and in three categories, Local, Goods and Travel.

Our mission is to be the destination where consumers discover fun things to do and local businesses thrive.

For our customers, this means giving them an amazing selection of experiences at great values.

For our merchants, this means making it easy for them to partner with Groupon and reach millions of consumers around the world.

Currently, we generate product and service revenue from the following business operations.

See Item 1, Note 19, Segment Information, for additional information.

Currently, we generate service and product revenue from the following business operations.

Service Revenue from Local, Travel, and Goods Categories:

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Product Revenue from Goods Category:

We generate product revenue from our sales of first-party Goods inventory, which are direct sales of merchandise inventory.

For product revenue transactions, we are the primary party responsible for providing the good to the customer, we have inventory risk and we have discretion in establishing prices.

We generate product revenue from sales of our first-party Goods merchandise inventory.

For product revenue transactions, we are the primary party responsible for providing the merchandise to the customer, we have inventory risk and we have discretion in establishing prices.

As such, product revenue is reported on a gross basis as the purchase price received from the customer.

Product revenue, including associated shipping revenue, is recognized when title passes to the customer upon delivery of the product.

We have transitioned to a third-party marketplace in North America as of the end of 2020 and will begin to transition to a third-party marketplace in International in the second quarter 2021.

Following the International transition, we expect our Goods category to primarily generate revenue on a net basis within service revenue.

GROUPON, the GROUPON logo and other GROUPON-formative marks are trademarks of Groupon, Inc.

in the United States or other countries.

This Annual Report on Form 10-K also includes other trademarks of Groupon and trademarks of other persons.

In the third quarter 2020, we shifted our strategy and plan to prioritize expanding our Local inventory and modernizing our marketplace by improving the merchant and customer experiences.

While both of these are important to building a successful marketplace, we believe the most critical of these is expanding Local inventory.

Product revenue, including associated shipping revenue, is recognized when the merchandise is delivered to the customer.

We fully transitioned to a third-party marketplace in North America in 2020 and in International in the fourth quarter of 2021.

In a third-party marketplace model, our merchants generally assume inventory and refund risk;

therefore, we expect our Goods category to primarily generate revenue on a net basis within service revenue in future periods.

Our mission is to be the destination for experiences where consumers discover fun things to do and local businesses thrive.

In 2021, our strategic priorities were to expand our Local inventory and modernize our marketplace by improving the merchant and customer experiences.

We are focused on reducing marketplace friction by making it easier for our customers to find, buy, and redeem a Groupon.

To do this, we are exploring and launching new initiatives that we believe will improve engagement, conversion and customer purchase frequency over time.

For merchants, we are continuing to focus on being a better partner by offering self-service options, advertising products and booking capabilities.

Our Categories

Our Local category includes offerings from local and national merchants, and other revenue sources that are primarily generated through our relationships with local and national merchants, including advertising revenue.

Our offerings comprise multiple subcategories of local experiences, including:

Our Local category includes experiences from local and national merchants, and other revenue sources that are primarily generated through our relationships with local and national merchants, including advertising revenue.

Our local inventory comprises multiple subcategories of experiences, including:

things to do;

beauty and wellness;

In addition to local and national offerings, we give consumers the ability to access digital coupons from thousands of retailers through our coupons offering.

In addition to local and national offerings, we give consumers the ability to access digital coupons from thousands of retailers through our coupons offerings.

In our Goods category, we earn product revenue from transactions in which we sell merchandise inventory directly to customers, as well as service revenue from transactions in which third-party merchants sell products to customers through our marketplaces.

When our transition to a third-party Goods marketplace is complete, we will primarily recognize Goods transaction revenue on a net basis within service revenue.

Our Goods category currently offers merchandise across multiple product lines, including electronics, sporting goods, jewelry, toys, household items and apparel.

Through our Travel category, we feature travel offers at both discounted and market rates, including hotels, airfare and package deals covering both domestic and international travel.

For many of our travel offerings, the customer must contact the merchant directly to make a travel reservation after purchasing a travel voucher from us.

However, for some of our hotel offerings, customers make room reservations directly through our websites.

Our customers access our online local commerce marketplaces through our mobile applications and our websites, which primarily consist of localized groupon.com sites in many countries.

Our transition to a third-party Goods marketplace was completed in the fourth quarter of 2021 and, going forward, we will primarily recognize Goods transaction revenue on a net basis within service revenue.

Our Goods category currently includes merchandise across multiple product lines, such as electronics, sporting goods, jewelry, toys, household items and apparel.

Through our Travel category, we feature travel experiences at both discounted and market rates, including hotels, airfare and package deals covering both domestic and international travel.

For many of our travel experiences, the customer must contact the merchant directly to make a travel reservation after purchasing a travel voucher from us.

However, for some of our hotel offerings, customers make room reservations directly through our websites and mobile applications.

Traffic Channels and Platforms

Our customers access our online local commerce marketplaces through our mobile applications and our websites.

Our applications and mobile websites enable consumers to browse, purchase, manage and redeem deals on their mobile devices.

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We use a variety of marketing channels to direct customers to the offerings available through these marketplaces, as described in the Marketing section below.

We primarily use marketing to acquire and retain customers and promote awareness of our marketplaces.

In light of the impact of COVID-19 on our business in 2020, we significantly reduced marketing expense due to lower consumer demand and by shortening payback thresholds and delaying brand marketing investments.

We would expect our marketing spend to increase as consumer demand recovers.

We primarily use marketing to acquire and retain customers and promote awareness of our marketplaces and brand.

We use a variety of marketing channels to make customers aware of our offerings, including search engines, email and push notifications, affiliate channels, social and display advertising and offline marketing.

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We use search engine optimization ("SEO") and search engine marketing ("SEM") to increase the visibility of our offerings in web search results.

Email and push notifications.

Email and mobile messaging.

We communicate offerings through email and by push notifications to our customers based on their locations and personal preferences.

A customer who interacts with an email or push notification is directed to our website or mobile application to learn more about the deal and to make a purchase.

Additionally, we plan to introduce short message service ("SMS") notifications in 2022.

Affiliate channels.

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Affiliates earn commissions when customers access our offerings through links on their websites and make purchases on our platform.

We expect to continue to leverage affiliate relationships to extend our deals to a broad base of potential customers.

We expect to continue to leverage affiliate relationships to extend our deals to a broader base of potential customers.

Social and display.

We publish offerings through various social networks and adapt our notifications to the particular format of each of these social networking platforms.

We promote and publish our content and offerings through various social networks and adapt our notifications to the particular format of each of these social networking platforms.

Our websites and mobile applications enable consumers to share our offerings with their personal social networks.

We also promote our offerings using display advertising on websites.

We also promote our offerings via display advertising across various content publishers.

Television and other offline.

We use offline marketing such as television advertising, and to a lesser extent, print and radio advertising, to help build awareness of our offerings and brand.

Our marketing activities also include elements that are not presented as Marketing on our consolidated statements of operations, such as order discounts and free shipping on qualifying merchandise sales.

At times, we use other offline marketing channels such as connected television and traditional television advertising, and to a lesser extent, print and radio advertising, to help build awareness of our offerings and brand.

Human Capital Management

We believe attracting and retaining global talent is key to our success.

Our Chief People Officer and Global Head of Diversity, Equity & Inclusion, together with our Chief Executive Officer and Chief Administrative Officer, are responsible for developing and executing our human capital strategy, with oversight from the Company's Board of Directors (the "Board") and relevant Board committees.

This includes the recruitment, development and retention of talent to support our operations and execute our strategy and the design of our employee compensation and benefit programs.

As of December 31, 2021, we had employees consisting of the following:

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Other key operational functions include engineering, product, marketing and editorial.

We believe attracting and retaining global talent is key to our success.

Our Chief People Officer, together with our Chief Executive Officer and Chief Administrative Officer, are responsible for developing and executing our human capital strategy, with oversight of the Board and Board committees.

This includes the recruitment, development, and retention of talent to support our operations and execute our strategy and the design of our employee compensation and benefit programs.

Key areas of our focus include:

Inclusion and Diversity .

Inclusion and diversity is important to all aspects of our business, and particularly vital to attracting, developing and retaining employees from underrepresented groups.

We believe that by building a global team of employees who have diverse experiences, backgrounds, skills and perspectives, we will be able to better support our employees, merchants and customers.

We have established multiple internal diversity and inclusion resources that allow employees to engage on important issues.

Some of these resources include business resource groups and resource action groups (Listen, Learn, Mobilize, and Support) that are focused on the Black Lives Matters movement.

In addition to these resources, we invest in our mentoring and leadership programs as well as other events that are specifically focused on nurturing the professional development of our diverse employees, showcasing growth opportunities within Groupon, and providing them with unique tools and experiences they need to thrive at Groupon.

Within our human capital strategy, there are five core pillars:

Diversity, Equity & Inclusion, Workplace Culture & Values, Compensation & Benefits, Social Responsibility and Emerging Employee Needs.

Diversity, Equity and Inclusion .

Diversity, equity and inclusion ("DEI") is integrated into our business and we are building a resilient, engaged and energized team of collaborative people from all over the world who celebrate diversity.

We consider it vital to attract, develop and retain employees from underrepresented groups and build a global team that reflects the diversity of the merchants and customers we serve and the communities in which we live and work.

We believe that a global team of employees with diverse experiences, backgrounds, skills and perspectives will allow us to take a more innovative approach to problem solving and lead to better outcomes and higher productivity.

Our company-wide DEI program includes a range of initiatives and programs that have the overarching goal of making our employees, merchants and customers feel seen and valued.

In 2021, we completed the following:

• Implemented an analytics-based approach to provide data-driven insights and increase visibility as we aim to improve workforce diversity, identify inequities and reduce turnover;

• Re-launched and expanded our Employee Resource Groups;

• Enabled diverse merchant self-identification;

• Expanded DEI programming;

• Created and offered an inclusive leadership training program for employees;

• Recognized, celebrated and supported multiple merchant-facing campaigns and employee-facing celebrations including Asian American Pacific Islander Month, Pride Month, Juneteenth, National Black Business Month, National Hispanic Heritage Awareness Month, Global Diversity Awareness Month and Women’s Small Business Month.

As we look forward to 2022 and beyond, we plan to continue to build upon our existing initiatives to enable a thriving culture through a diverse workforce at a local level.

Our global DEI vision and strategy are tied to the same operational goals as the rest of our organization, which help us design, lead and execute on a data-driven strategy, which we believe will ultimately lead to better business outcomes.

We are making efforts to improve the representation and harness the diversity of our workforce - in particular, we are focused on increasing the number of women and people of color in leadership roles.

Moving forward we plan to focus on the following:

• Collecting and measuring the right data to enable us to improve workforce diversity, identify inequities and reduce turnover;

• Increasing representation of underrepresented groups through the following:

◦ Establishing more programs focused on the hiring and retention of members of underrepresented populations;

◦ Sourcing and identifying a diverse range of applicants for all of the positions that we advertise, especially at Director and above levels, to specifically target our representation opportunities at more senior levels;

◦ Building relationships with Historically Black Colleges and Universities and other organizations that serve underrepresented communities and populations to increase our pipeline of diverse candidates;

• Providing programming and tools that help our employees incorporate DEI strategies and goals into their annual performance goals;

• Offering workshops and other forums to allow our employees to become more culturally competent;

• Creating new programming to build and champion our diverse merchant base.

Workplace Culture and Values .

To support talent development, we offer training and development programs supporting our ethics, workplace culture and managers.

To ensure we are supporting a thriving and vibrant culture, we conduct frequent Pulse Engagement Surveys throughout the year to help understand our employees’ needs and concerns

and uncover insights that will allow us to positively impact our employee experience.

This survey covers a wide range of topics including leadership;

corporate strategy;

DEI and manager support.

In 2021, we had strong employee engagement scores.

Each of our employees play an important role in ensuring that we maintain a high level of business ethics, safety and integrity.

To facilitate this, all employees complete our mandatory ethics training module annually.

Additionally, we have established an internal process called Groupon Ethics Reporting Service, which is communicated to employees during the annual ethics training and can be used to bring to management’s attention a wide range of concerns, including violations of our policies.

To support talent development, we offer a variety of training and development programs supporting our ethics, workplace culture and managers.

For example, we require our employees to complete unconscious bias training and Code of Conduct training.

In addition, all managers must complete Respect In the Workplace Training.

We also offer various other training programs to employees, such as, Change & Resilience, Managing Through Change, FS90 (leader habits and manager expectations for new leaders) and Authentic Allyship Workshops.

We also encourage internal referrals and postings for open roles and partner with organizations in order to proactively recruit more candidates from diverse backgrounds.

We also offer various other training programs to employees, such as, Change & Resilience, Managing Through Change, FS90 (a course that reinforces leader habits and manager expectations for new managers) and Authentic Allyship Workshops.

Additionally, in 2022 we are launching a customized Director Development Program to support leaders with the tools they need to succeed.

We also encourage internal referrals and postings for open roles.

Compensation and Benefits.

To attract and retain qualified employees, we offer competitive compensation and comprehensive benefits, which are designed to attract, reward, and engage top talent and include standard health, dental, vision, life and disability insurance benefits as well as a 401(k) plan with company matching for our U.S.

In addition, Groupon is focused on the health and well-being of employees, and we have significantly expanded our wellness programming to combat burnout and support the overall health of our employees.

Our wellness program includes access to mental health support and services, Global Wellness Week, which is an entire week dedicated to personal wellness programming aimed at boosting all of our physical, nutritional and mental well-being, as well as digital detox days.

Social Responsibility .

Social responsibility is important at Groupon, and we empower our employees to volunteer and participate in the communities in which we operate and live.

Social responsibility is important to us, and we empower our employees to take part in making the communities in which we operate better places to work and live.

We believe thriving local communities are good for everyone.

Further, our efforts in this area support the success of our core Local business.

We provide numerous opportunities for our employees to volunteer with causes they care about throughout the year and support local communities through our platform and community development efforts.

In 2020, our business was significantly impacted by COVID-19.

We implemented changes in our workforce and how we work in response to the pandemic.

For example, we instituted a remote work plan and most of our employees have been working remotely since early 2020.

We continue to evaluate our return to office plans, with the health and safety of our employees being a primary consideration.

In addition, in response to the COVID-19 pandemic, in 2020, our Board approved a multi-phase restructuring plan that includes the termination and furlough of employees.

See Item 8, Note 16, Restructuring and Related Charges, for additional information.

We provide numerous opportunities for our employees to volunteer with causes they care about throughout the year and support communities through investment in local and national nonprofits focused on global issues like economic opportunity and hunger relief.

In 2021, we supported more than 4,000 small businesses and entrepreneurs globally through social responsibility programming and initiatives and more than 30% of our workforce engaged in community activities through the Groupon Volunteers program.

Emerging Employee Needs :

Since early 2020, our business has been significantly impacted by COVID-19.

In response to the pandemic, we implemented changes in our workforce and how we work in response to the pandemic.

For example, in response to employee needs and the evolving nature of work, we developed a more flexible, hybrid working approach designed to optimize collaboration across our global employee base and maintain the accountability and productivity of our performance culture.

We anticipate the return of employees to the workplace in 2022 utilizing our hybrid working design, and our global Human Resources team will continue to support the efforts for a smooth return to a safe working environment with the health and safety of our employees being a primary consideration.

Additionally, in response to challenges created by the COVID-19 pandemic, we developed and launched a program on Building Resilience through Psychological Flexibility, which is available to all employees.

Our goal is to nurture a performance driven culture - one that will be led by our values and focused on agility, results and accountability.

We believe that this culture is foundational to our ability to drive our organization toward our long-term vision of being the destination for Local experiences.

We intend to continue to focus on driving measurable results that will "show up" in our ability to attract and retain talent and build a resilient workforce well positioned to help us reach our long-term goals.

Our websites are hosted at two U.S.

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We compete with other marketplaces, and some of our competitors have longer operating histories, significantly greater financial, technical, marketing and other resources.

In addition, we compete with companies who address only specific verticals in the local experiences market, and in some categories, such as Goods and Travel, companies who have greater scale and larger customer bases than we do.

In addition, we compete with companies who address only specific verticals in the local experiences market, and in our Goods and Travel categories, companies who have greater scale and larger customer bases than we do.

These factors may allow our competitors to benefit from their existing customer base with lower acquisition costs or to respond more quickly than we can to new or emerging technologies and changes in customer trends.

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Historically, we experienced seasonal buying patterns mirroring that of the larger consumer retail and e-commerce markets, where demand increases during the fourth quarter holiday season.

That seasonal pattern was less pronounced in 2020 due to the impacts of COVID-19 on our business.

That seasonal pattern has been less pronounced lately due to the de-emphasis on our Goods category and the impacts of COVID-19.

We are subject to a number of foreign and domestic laws and regulations that affect companies conducting business on the Internet.

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laws and regulations, such as the Bank Secrecy Act of 1970 (the "Bank Secrecy Act"), the Dodd-Frank Wall Street Reform and Consumer Protection Act, the USA PATRIOT Act and the CARD Act impose certain anti-money laundering requirements on companies that are financial institutions or that provide financial products and services.

Those laws and regulations broadly define financial institutions to include money services businesses such as money transmitters, check cashers and sellers or issuers of stored value.

Those laws and regulations broadly define financial institutions to include money services

businesses such as money transmitters, check cashers and sellers or issuers of stored value.

Requirements imposed on financial institutions under those laws include customer identification and verification programs, record retention policies and procedures and transaction reporting.

We do not believe that we are a financial institution subject to those laws and regulations.

We are subject to a variety of federal, state and international laws and regulations governing consumer data.

The General Data Protection Regulation ("GDPR"), which was adopted by the European Union and became effective in May 2018, and the California Consumer Privacy Act (“CCPA”) which became effective January 1, 2020, require companies to satisfy specific requirements regarding the handling of personal and sensitive data, including its collection, use, protection and the ability of persons whose data is stored to, among other things, access and/or delete such data about themselves.

Our ongoing efforts to comply with the GDPR, CCPA and other relevant privacy and data protection laws and regulations, have required updates to certain business practices and systems.

compliance with any privacy and data protection laws and regulations could result in significant monetary fines.

We are subject to a variety of U.S.

federal, state and international laws and regulations governing consumer data.

The General Data Protection Regulation ("GDPR"), which was adopted by the European Union and became effective in May 2018, the California Consumer Privacy Act (“CCPA”) which became effective January 1, 2020, and the California Privacy Rights Act (the "CPRA"), which expands on the CCPA and will go into effect in 2023, require companies to satisfy specific requirements regarding the handling of personal and sensitive data, including its collection, use, protection and the ability of persons whose data is stored to, among other things, access and/or delete such data about themselves.

The Virginia Consumer Data Protection Act (the "CDPA") and the Colorado Privacy Act (the "CPA"), which will also go into effect in 2023 provide new data privacy rights to their respective residents.

Our ongoing efforts to comply with these laws and regulations and other relevant privacy and data protection laws and regulations, have required updates to certain business practices and systems.

Non-compliance with any privacy and data protection laws and regulations could result in significant monetary fines.

For instance, non-compliance with the GDPR could result in proceedings against us by governmental entities or others and fines up to the greater of €20 million or 4% of annual global revenue.

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We are currently subject to, and expect to face in the future, lawsuits and allegations that we have infringed the intellectual property rights of third parties.

As our business grows, we will likely face more claims of infringement, and may experience an adverse result which could impact our business and/or our operating results.

As our business evolves, we may face more claims of infringement, and may experience an adverse result which could impact our business and/or our operating results.

We have received in the past, and we anticipate we will receive in the future, communications alleging that items offered or sold through our website infringe third-party copyrights, trademarks, patents and trade names or other intellectual property rights or that we have otherwise infringed third parties’ past, current or future intellectual property rights.

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We may implement measures in an effort to protect against these potential liabilities that could require us to spend substantial resources and/or to reduce revenue by discontinuing certain service offerings.

Any costs incurred as a result of liability or asserted liability relating to the sale of unlawful goods or the unlawful sale of goods could harm our business.

Any costs incurred as a result of liability or asserted liability relating to the sale of unlawful or infringing goods or goods of disputed authenticity or other infringement related claims could harm our business.

Information About Our Executive Officers

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Name Age Position

Aaron Cooper 45 Interim Chief Executive Officer

Melissa Thomas 41 Chief Financial Officer

Kedar Deshpande 43 Chief Executive Officer

Damien Schmitz 44 Interim Chief Financial Officer

Dane Drobny 54 Chief Administrative Officer, General Counsel and Corporate Secretary

Aaron Cooper was appointed as our Interim Chief Executive Officer in March 2020.

He previously served as the President of North America since July 2017, and various senior leadership positions from May 2010 to July 2017, including the Chief Marketing Officer, Head of Global Travel, head of the North America Goods category and head of the North America Local category.

Prior to joining Groupon, Mr.

Cooper served as Executive Vice President Marketing at optionsXpress from January 2009 to May 2010 and as Group Vice President, Online Marketing at

Orbitz Worldwide, Inc.

from 2004 to 2009.

Prior to Orbitz, Mr.

Cooper held consulting roles at AEG Partners, AOL and Price Waterhouse Management Consultants.

Melissa Thomas was appointed as our Chief Financial Officer in February 2020.

She previously served as our Interim Chief Financial Officer since August 2019, our Chief Accounting Officer and Treasurer since November 2018 and our Vice President of Commercial Finance since May 2017.

Prior to joining Groupon, Ms.

Thomas served as Vice President of Finance at Surgical Care Affiliates from June 2016 to May 2017.

From August 2007 to May 2016, Ms.

Thomas served in a variety of finance and accounting leadership roles at Orbitz Worldwide (NYSE:

OWW), most recently as Vice President of Finance.

Prior to Orbitz, Ms.

Thomas held accounting positions at Equity Office Properties and began her career at PricewaterhouseCoopers.

Dane Drobny has served as our Chief Administrative Officer, General Counsel and Corporate Secretary since July 2014.

Kedar Deshpande was appointed as our Chief Executive Officer in December 2021.

He previously served as the Chief Executive Officer of Zappos.com (“Zappos”) and in various positions at Zappos from March 2011 to August 2020, including as Zappos’ Chief Operating Officer from 2019 to 2020 and senior leadership roles in technology and marketing, as well as project management roles.

Prior to that, he was a software engineer at General Electric.

Damien Schmitz was appointed as our Interim Chief Financial Officer in November 2021.

He previously served as our Senior Vice President, Finance since October 2021, and Vice President, Finance since January 2019.

Prior to that he served as Vice President, Finance and Chief Financial Officer, International from January 2018 to January 2019 and in various finance leadership roles at the Company since October 2012, including Senior Director, Global FP&A from September 2016 to December 2017.

Prior to joining the company, Mr.

Schmitz held consulting roles with Price Waterhouse Coopers LLP and 3M Company.

Dane Drobny has served as our General Counsel and Corporate Secretary since July 2014 and our Chief Administrative Officer since April 2020.

Prior to joining Groupon, Mr.

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Our Code of Conduct, Corporate Governance Guidelines and committee charters are also posted on the site.

We use our Investor Relations website (investor.groupon.com) and our blog (www.groupon.com/blog) as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.

Information contained on our website and blog is not a part of this Annual Report on Form 10-K.

We use our Investor Relations website (investor.groupon.com) and our press site (www.groupon.com/press) as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.

Information contained on our website and press site is not a part of this Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business