What changed in this filing

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Item 1. Business

2023-03-16 compared with 2022-02-28 · 69 added, 110 removed, 107 unchanged (63% of the section changed)

Groupon is a global scaled two-sided marketplace that connects consumers to merchants.

Consumers access our marketplace through our mobile applications and our websites, primarily localized groupon.com sites in many countries.

Consumers access our marketplace through our mobile applications and our websites, which are primarily localized groupon.com sites in thirteen countries.

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

See Item 1, Note 18, 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:

Service revenue primarily represents the net commissions earned from selling goods or services on behalf of third-party merchants.

Service revenue is reported on a net basis as the purchase price collected from the customer less the portion of the purchase price that is payable to the third-party merchant.

We also earn commissions when customers make purchases with retailers using digital coupons accessed through our websites and mobile applications.

Product Revenue from Goods Category:

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 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.

Revenue is earned through service revenue transactions, during which we generate commissions by selling goods or services on behalf of third-party merchants.

Service revenue also includes commissions we earn when customers make purchases with retailers using digital coupons accessed through our digital properties.

In prior periods, we generated product revenue from direct sales of our first-party Goods inventory.

Our product revenue was reported on a gross basis as the purchase price received from the customer.

Our strategy is to be the trusted marketplace where customers go to buy local services and experiences.

We plan to grow our revenue by building long-term relationships with local merchants to improve our inventory selection and improving the customer experience through inventory curation and improved convenience in order to drive customer demand and purchase frequency.

Our Categories

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 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.

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.

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

Our local inventory includes, things to do, beauty and wellness and dining, as well as other types of experiences and services.

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

We recognize Goods revenue on a net basis within service revenue.

Our Goods category 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.

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

For the year ended December 31, 2021, over 75% of our global transactions were completed on mobile devices.

For the year ended December 31, 2022, approximately 80% of our global transactions were completed on mobile devices.

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 and brand.

We 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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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.

Additionally, we introduced 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 broader base of potential customers.

Social and display.

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Television and other offline.

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.

At times, we use other offline marketing channels such as connected television and traditional television 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.

Our senior leadership team is responsible for developing and executing our human capital strategy, with oversight from our Board of Directors (the "Board").

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:

As of December 31, 2022, we had employees in the following geographies and roles:

Sales Corporate, Operational and Customer Support Total Employees

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International 502 1,603 2,105

Total 1,079 2,596 3,675

783 2,121 2,904

(1) In January 2023, the board approved the second phase of the 2022 Restructuring Plan, which includes an overall reduction of approximately 500 positions globally.

Our sales force consists of merchant sales representatives and sales support staff who acquire and build merchant relationships and provide ongoing consultative expertise.

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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 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.

Our People & Culture, Diversity, Equity & Inclusion ("DEI"), Compensation & Benefits, Social Responsibility, and Future of Work.

Our People & Culture.

Groupon helps customers discover experiences that make for a full, fun, and rewarding life.

We take the same approach to our work culture - we believe that having teams of resilient, energized, diverse, and collaborative people from all over the world make Groupon unique.

Our goal is to support a culture that inspires innovation, rewards smart decision-making, and celebrates success.

In 2022, we conducted quarterly Pulse Engagement Surveys to gain insights into the engagement levels of our team members and to measure the overall health of our culture.

These surveys covered a wide range of topics including well-being, engagement, leadership, performance and strategy, and DEI.

Managers used the responses to identify focus areas for their teams and to implement formal action plans.

We had strong employee engagement scores with an 80% response rate.

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.

To facilitate this, all employees are required to complete the following full-length training courses once every two years:

• Global Code of Conduct;

• Anti-Corruption;

• Respectful and Harassment Free Workplace.

In alternate years, employees are required to complete a Global Code of Conduct Recertification Quiz.

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 (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.

To support the career development of our team members, we offer a variety of training and development programs supporting our ethics, workplace culture and manager behaviors.

For example, we require all employees to complete unconscious bias training and all managers to complete Respect in the Workplace training.

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), Authentic Allyship Workshops, and a Director Development Program to equip leaders with the tools they need to succeed, We also launched Accelerate, a 7-month program designed and run in partnership with the organization everywoman with the goal to accelerate the development and careers of our top female talent.

Additionally, we encourage cross-team growth opportunities through our Internal Talent Mobility process.

Diversity, Equity and Inclusion .

Diversity, equity and inclusion is integrated into our business and we believe that attracting and retaining diverse, global talent will create a culture where everyone can feel like they belong, find authentic connections and take part in experiences that connect to their own identities.

We also want the diversity of our internal team to reflect the diversity of the merchants and customers we serve and the communities in which we live and work.

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, including:

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

• Employee Resource Groups;

• Diverse merchant self-identification;

• Inclusive leadership training program for employees;

• 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.

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.

We also provide Talkspace, a virtual service that connects employees and family members with licensed mental health providers for counseling and therapy.

Social Responsibility .

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 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.

We are committed to empowering our employees to take part in making the communities in which we operate better places to work and live.

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 global nonprofits focused on systemic issues like economic opportunity and hunger relief.

In 2022, we supported nearly 2,000 small businesses and entrepreneurs globally through social responsibility programming and approximately 43% of our workforce engaged in community activities through the Groupon Volunteers program.

Future of Work.

We believe it is important for our employees to do their jobs where they feel they can do it best.

Whether that means working remotely from home or in one of our global offices - we want our employees to thrive in a work environment that suits their needs.

Following office closures from the COVID-19 pandemic in 2020 and 2021, we launched a test of an approach that we call “@flex.” Flex, which represents our “flexibility” and related hybrid working options, was rolled out incrementally across our 20 offices worldwide.

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

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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.

data centers in California and at an international data center in Ireland.

Our data centers host our public-facing websites and applications, as well as our back-end business intelligence systems.

We employ security practices to protect and maintain the systems located at our data centers.

We are migrating our public-facing websites and applications and our back-end business intelligence systems to the cloud.

We have invested in intrusion and anomaly detection tools to try to recognize intrusions to our websites.

In early 2023, we completed the migration of our public-facing websites, internal applications and services, as well as our back-end business intelligence systems from being hosted at our data centers to a multi-cloud infrastructure.

We employ security practices and modern tools to try to recognize intrusions to our technology infrastructure.

We engage independent third-party Internet security firms to regularly test the security of our websites and identify vulnerabilities.

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We believe we can compete due to the access we provide our merchants to our large customer base, our trusted brand, and the investments we are making in self-service tools that will allow merchants to manage demand more effectively and better attract and retain customers.

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 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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In addition, certain foreign jurisdictions have laws that govern disclosure and certain product terms and conditions, including restrictions on expiration dates and fees, that may apply to Groupon vouchers.

There are also a number of legislative proposals pending before the U.S.

There are also a number of

legislative proposals pending before the U.S.

Congress, various state legislative bodies and foreign governments that could affect us, and our global operations may be constrained by regulatory regimes and laws in Europe and other jurisdictions outside the United States that may be more restrictive and adversely impact our business.

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.

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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.

The General Data Protection Regulation ("GDPR"), which was adopted by the European Union and became effective in May 2018 and the California Privacy Rights Act (the "CPRA"), which expands on and effectively replaces the California Consumer Privacy Act (the "CCPA") and became effective January 1, 2023, requires 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 both 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.

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 and non-compliance with CPRA could result in fines of up to $7,500 per violation in addition to providing consumers with a private right of action.

We continue to monitor developments in laws and regulations relating to privacy and consumer data, and we expect these evolving laws and regulations will continue to impact our business in the future.

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Information About Our Executive Officers

The following table sets forth information about our executive officers:

The following table sets forth information about our executive officers (as of the date of this filing):

Name Age Position

Kedar Deshpande 44 Chief Executive Officer

Damien Schmitz 44 Interim Chief Financial Officer

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

Damien Schmitz 45 Chief Financial Officer

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

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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.

Damien Schmitz was appointed as our Chief Financial Officer in November 2022.

He previously served as the Interim Chief Financial Officer since November 2021, 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.

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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.

Drobny was Senior Vice President, General Counsel and Corporate Secretary at Sears Holdings Corporation (NASDAQ:

SHLD) from May 2010 to June 2014.

Prior to joining Sears Holdings, he spent 17 years at the international law firm of Winston & Strawn LLP, most recently as a partner.

Available Information

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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