What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-03-16 compared with 2022-02-28 · 387 added, 429 removed, 1184 unchanged (41% of the section changed)

16 unchanged sentences

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2022, expressed an unqualified opinion on the Company’s internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 16, 2023, expressed an adverse opinion on the Company's internal control over financial reporting because of a material weakness.

Basis for Opinion

12 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Going Concern – Refer to Note 2 to the financial statements

Critical Audit Matter Description

The Company has suffered recurring losses from operations resulting in net cash outflows from operating activities of $136 million for the year ended December 31, 2022.

While the Company was in compliance with the covenants of the Third Amendment Credit Agreement as of December 31, 2022, the borrowing capacity was restricted and downward revisions to the 2023 forecast indicated that the Company may not be in compliance in future periods.

To assess their ability to meet obligations as they come due and assess future compliance with debt covenants for at least twelve months from the issuance date of the financial statements, the Company has forecasted future financial results which requires significant judgment and estimation.

Additionally, there is significant judgment

involved in determining that it is probable that management’s plans will be effectively implemented and alleviate substantial doubt about the Company’s ability to continue as a going concern.

Auditing management’s conclusion that it is probable that the Company's plans will be achieved and alleviate substantial doubt about the Company's ability to continue as a going concern and auditing the Company's disclosure regarding liquidity and going concern, specifically the judgments and estimates in the Company’s forecasted financial results involved especially subjective judgment and significant audit effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s evaluation and disclosure of liquidity and going concern included the following, among others:

• We tested the effectiveness of internal controls over the Company’s going concern evaluation, including the inputs, estimates and assumptions used in their forecasted financial results.

• We evaluated the Company’s forecasted financial results and ability to meet obligations as they come due for at least twelve months from the issuance date of these financial statements by:

◦ Testing management’s key assumptions, including ability to achieve forecasted results through executing a transformation strategy which includes cost savings from restructuring actions.

◦ Obtaining the Company’s amended debt agreements and assessing whether the terms were appropriately considered when concluding on the Company’s debt covenant compliance.

◦ Comparing the Company’s forecasted future financial results to (1) historical results and previous forecasts, (2) internal communications to management and the Board of Directors, (3) historical variances in forecasted balances against actual results including first two months of 2023 and (4) macroeconomic factors.

• We evaluated the completeness of the Company’s future obligations and evaluated consistency of evidence obtained in other areas of the audit.

• We evaluated management’s plans, including the estimated cost savings and probability that the Company will be able to successfully implement these plans to alleviate substantial doubt about the Company’s ability to continue as a going concern.

Variable Consideration Revenue Recognition –Refer to Notes 2 and 12 to the financial statements

12 unchanged sentences

• We evaluated the assumptions used in the model, specifically the estimated redemption rates for cohorts of vouchers, by comparing the assumed redemption rates used in the model to historical redemption rates for similar vouchers.

Valuation Allowance on Deferred Tax Assets—Refer to Notes 2 and Note 15 to the financial statements

Critical Audit Matter Description

The Company recognizes deferred income tax assets and liabilities for the estimated future tax effects attributable to temporary differences and carryforwards.

Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized in the future.

Future realization of deferred tax assets depends on the existence of sufficient taxable income within the carryback or carryforward period of the appropriate character under the relevant tax law.

Sources of taxable income include future reversals of deferred tax assets and liabilities, future taxable income (exclusive of the reversals of deferred tax assets and liabilities), taxable income in prior carryback year(s) if permitted under the tax law, and tax planning strategies.

During 2021, the Company reversed $57.7 million of its valuation allowance related to domestic deferred tax assets because they concluded that it was more-likely-than-not that the domestic deferred tax assets were realizable based on current circumstances.

The Company’s valuation allowance for all deferred tax assets was $145.1 million as of December 31, 2021.

The Company’s determination of the valuation allowance involves estimates.

Management’s primary estimate in determining whether a valuation allowance should be established is the projection of future sources of taxable income.

Auditing management’s estimate of future sources of taxable income, which affects the recorded valuation allowances, involved especially subjective judgment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to evaluating the basis for management’s conclusions regarding the realizability of deferred tax assets included the following, among others:

• We tested the effectiveness of controls over management’s deferred tax asset realizability assessment.

• With the assistance of our income tax specialists, we considered relevant tax laws and regulations in evaluating the appropriateness of management’s estimates of future sources of taxable income.

• We evaluated the reasonableness of management’s estimates of future sources of taxable income by comparing the estimates to historical sources of taxable income or losses and to forecasted information used in other areas of management’s accounting reporting models.

We also evaluated management’s ability to reliably forecast by comparing actual results to management’s historical forecasts.

• With the assistance of our income tax specialists, we evaluated whether the estimated future sources of taxable income were of the appropriate character to utilize the deferred tax assets under tax law.

• We evaluated management’s assessment that it is more-likely-than-not that sufficient taxable income will be generated in the future to utilize the net domestic deferred tax assets.

We considered the appropriateness of the timing of the change in assessment of realizability of the domestic deferred tax assets, giving consideration to current and historical facts and circumstances.

Income Taxes—Foreign Tax Position—Refer to Notes 2 and 14 to the financial statements

1 unchanged sentence

The Company received a proposed income tax assessment from the tax authority in one foreign jurisdiction in the amount of $113.5 million, inclusive of estimated incremental interest from the original assessment.

The Company believes the assessment, which primarily relates to transfer pricing on transactions occurring during 2011, is without merit and it intends to vigorously defend itself.

The Company believes the assessment, which primarily relates to transfer pricing on transactions occurring in 2011, is without merit and it intends to vigorously defend itself.

Given the complexity of the relevant tax laws and regulations, auditing management’s evaluation and accounting for the tax position associated with the foreign income tax assessment involved especially subjective and complex judgments.

16 unchanged sentences

The goodwill balance subject to the impairment test was $178.7 million as of December 31, 2022.

The Company did not record any goodwill impairment charges for the year ended December 31, 2021.

As discussed in Note 4, the Company performed an interim quantitative assessment to evaluate goodwill for impairment during the first, second, and fourth quarter of 2022 due to continued downward revisions to the forecast.

As a result of the Q2 2022 interim quantitative assessment, an impairment of $35.4 million was recognized, representing the full impairment of goodwill for the international reporting unit.

Auditing the estimates and assumptions that impacted the valuation of the reporting units involved especially subjective judgment, specifically related to the forecasts of revenues, cost of revenue, and operating expenses and selection of risk-adjusted discount rates.

1 unchanged sentence

Our audit procedures related to the Company’s forecasts of revenues, cost of revenue, and operating expenses and its selection of risk-adjusted discount rates included the following, among others:

• We tested the effectiveness of controls over the annual and periodic goodwill impairment assessment, including those over the forecasts.

• We tested the effectiveness of controls over the annual and periodic goodwill impairment assessments, including those over the forecasts.

• We evaluated management’s ability to reliably forecast by comparing actual results to management’s historical forecasts.

macroeconomic forecasts, and (4) forecasts utilized in other areas of the audit to evaluate consistency, where appropriate.

• We evaluated the reasonableness of management’s forecasts by comparing the forecasts to (1) historical results and previous forecasts, (2) internal communications to management and the Board of Directors, (3) macroeconomic forecasts, and (4) forecasts utilized in other areas of the audit to evaluate consistency, where appropriate.

Additionally, we obtained and evaluated management’s written analysis supporting the forecasted cash flows.

• With the assistance of fair value specialists, we evaluated the reasonableness of the 1) valuation methodology and 2) risk-adjusted discount rates by:

• With the assistance of fair value specialists, we evaluated the reasonableness of the 1) valuation methodology, 2) risk-adjusted discount rates, and 3) the long-term growth rate by:

◦ Evaluating whether the fair value models being used are appropriate considering the Company’s circumstances and valuation premise identified

2 unchanged sentences

Chicago, Illinois

February 28, 2022

March 16, 2023

We have served as the Company's auditor since 2017.

96 unchanged sentences

Reclassification of cumulative foreign currency translation adjustments (See Note 13)

Net change in unrealized gain (loss) on available-for-sale securities (net of tax effect of $ 0 for all periods presented)

Other comprehensive income (loss) from continuing operations 7,755 ( 7,922 ) ( 35,972 )

16 unchanged sentences

Balance at December 31, 2019 38,584,854 $ 4 $ 2,310,393 ( 10,294,117 ) $ ( 922,666 ) $ ( 1,032,876 ) $ 39,081 $ 393,936 $ 1,110 $ 395,046

Cumulative effect of change in accounting principle due to adoption of ASC Topic 326, net of tax — — — — — ( 79 ) — ( 79 ) — ( 79 )

Comprehensive income (loss) — — — — — ( 287,931 ) ( 35,972 ) ( 323,903 ) 1,751 ( 322,152 )

Exercise of stock options 3,743 — 40 — — — — 40 — 40

Vesting of restricted stock units and performance share units 784,385 — — — — — — — — —

2 unchanged sentences

Stock-based compensation on equity-classified awards — — 45,684 — — — — 45,684 — 45,684

Repurchases of common stock — — — ( 701,361 ) ( 45,175 ) — — ( 45,175 ) — ( 45,175 )

Distributions to noncontrolling interest holders — — — — — — — — ( 2,862 ) ( 2,862 )

Balance at December 31, 2020 39,142,896 $ 4 $ 2,348,114 ( 10,294,117 ) $ ( 922,666 ) $ ( 1,320,886 ) $ 3,109 $ 107,675 $ ( 1 ) $ 107,674

Cumulative effect of change in accounting principle due to adoption of ASC Topic 326, net of tax — — — — — ( 79 ) — ( 79 ) — ( 79 )

Cumulative effect of change in accounting principle due to adoption of ASU 2020-06, net of tax — — ( 64,319 ) — — 45,350 — ( 18,969 ) — ( 18,969 )

Comprehensive income (loss) — — — — — 118,668 ( 7,922 ) 110,746 1,680 112,426

2 unchanged sentences

Tax withholdings related to net share settlements of stock-based compensation awards ( 504,735 ) — ( 19,834 ) — — — — ( 19,834 ) — ( 19,834 )

Purchase of capped call transactions, net of tax — — ( 20,502 ) — — — — ( 20,502 ) — ( 20,502 )

Settlement of convertible note hedges, net of tax — — 14,511 — — — — 14,511 — 14,511

Settlement of warrants — — ( 1,752 ) — — — — ( 1,752 ) — ( 1,752 )

Stock-based compensation on equity-classified awards — — 36,869 — — — — 36,869 — 36,869

1 unchanged sentence

Balance at December 31, 2021 40,007,255 $ 4 $ 2,294,215 ( 10,294,117 ) $ ( 922,666 ) $ ( 1,156,868 ) $ ( 4,813 ) $ 209,872 $ 424 $ 210,296

Cumulative effect of change in accounting principle due to adoption of ASU 2020-06, net of tax — — ( 64,319 ) — — 45,350 — ( 18,969 ) — ( 18,969 )

Comprehensive income (loss) — — — — — ( 237,609 ) 7,755 ( 229,854 ) 3,229 ( 226,625 )

2 unchanged sentences

Tax withholdings related to net share settlements of stock-based compensation awards ( 405,185 ) — ( 6,043 ) — — — — ( 6,043 ) — ( 6,043 )

Purchase of capped call transactions, net of tax — — ( 20,502 ) — — — — ( 20,502 ) — ( 20,502 )

Settlement of convertible note hedges, net of tax — — 14,511 — — — — 14,511 — 14,511

Settlement of warrants — — ( 1,752 ) — — — — ( 1,752 ) — ( 1,752 )

Stock-based compensation on equity-classified awards — — 33,395 — — — — 33,395 — 33,395

27 unchanged sentences

1,520 1,601 14,621

(Gain) loss on early lease termination ( 4,471 ) — —

Foreign currency translation adjustments reclassified into earnings — ( 32,273 ) —

Foreign currency (gains) losses, net 10,934 26,730 ( 22,351 )

Change in assets and liabilities:

30 unchanged sentences

Financing activities

Proceeds from borrowings under revolving credit agreement 40,000 — 200,000

Payments of borrowings under revolving credit agreement ( 65,000 ) ( 100,000 ) —

Proceeds from issuance of 2026 convertible notes — 230,000 —

Proceeds from (payments of) borrowings under revolving credit agreement ( 100,000 ) 200,000 —

Issuance costs for 2026 convertible notes and revolving credit agreement ( 490 ) ( 7,747 ) ( 1,686 )

3 unchanged sentences

Payments for the settlement of warrants — ( 1,345 ) —

Payments for repurchases of common stock

— — ( 45,631 )

Taxes paid related to net share settlements of stock-based compensation awards

24 unchanged sentences

Supplemental disclosure of cash flow information

Income tax payments (refunds) for continuing operations $ 11,145 $ 3,262 $ 11,898

Cash paid for interest 5,940 13,866 12,749

Income tax payments $ 5,184 $ 11,145 $ 3,262

Increase (decrease) in liabilities related to purchases of property and equipment and capitalized software $ 3,325 $ 672 $ 637

Supplemental cash flow information on our leasing obligations

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from finance leases $ ( 120 ) $ ( 522 ) $ ( 1,021 )

Operating cash flows from operating leases ( 33,079 ) ( 36,864 ) ( 36,723 )

Right-of-use assets obtained in exchange for lease liabilities:

Finance leases — — 3,929

Operating leases 683 16,415 27,293

Cash paid for amounts included in the measurement of operating lease liabilities 31,508 33,079 36,864

Right-of-use assets obtained in exchange for operating lease liabilities $ 2,635 $ 683 $ 16,415

(1) The following table provides a reconciliation of cash, cash equivalents and restricted cash shown above to amounts reported within the Consolidated Balance Sheets as of December 31, 2022, 2021 and 2020 (in thousands):

2 unchanged sentences

Restricted cash included in prepaid expenses and other current assets 417 757 498

Restricted cash included in other non-current assets — — 236

Cash, cash equivalents and restricted cash $ 281,696 $ 499,483 $ 851,085

10 unchanged sentences

See Note 18, Segment Information, for more information .

COVID-19 Pandemic

For the years ended December 31, 2021 and 2020, the COVID-19 pandemic has had an adverse impact on our financial condition, results of operations and cash flow, including the impairment of our long-lived assets and goodwill.

See Note 3, COVID-19 Pandemic, for more information.

Macroeconomic Conditions and COVID-19 Pandemic

The COVID-19 pandemic has changed the environment that our business operates in, which includes changes in consumer behavior and macroeconomic impacts affecting both us and our merchants.

Certain adverse consequences of the pandemic continue to impact the macroeconomic environment and may persist for some time.

Impacts to our operations may be caused by macroeconomic trends such as inflationary pressures, higher labor costs, labor shortages and resulting changes in consumer and merchant behavior.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

7 unchanged sentences

Investments in entities in which we do not have a controlling financial interest are accounted for at fair value, as available-for-sale securities or at cost adjusted for observable price changes and impairments, as appropriate.

Adoption of New Accounting Standards

We adopted the guidance in Accounting Standards Update ("ASU") 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes, on January 1, 2021 .

This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

The adoption of ASU 2019-12 did not have a material impact on the consolidated financial statements.

We adopted the guidance in ASU 2020-03, Codification Improvements to Financial Instruments, on January 1, 2021.

This ASU amends a wide variety of Topics in the Codification, including revolving-debt arrangements and allowance for credit losses related to leases.

The adoption of ASU 2020-03 did not have a material impact on the consolidated financial statements.

We early adopted the guidance in ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, on January 1, 2021.

The ASU removes the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion feature.

Additionally, the ASU removes certain conditions for equity classification related to contracts in an entity’s own equity (e.g., warrants) and amends certain guidance related to the computation of income (loss) per share for convertible instruments and contracts in an entity’s own equity.

Prior to the adoption of ASU 2020-06, we separated the convertible senior notes due 2022 (the "Atairos Notes") into their liability and equity components.

Following the adoption of ASU 2020-06, the previously bifurcated equity component of the Atairos Notes was recombined with the liability component, resulting in a single liability-classified instrument.

The carrying value of the Atairos Notes at transition was determined by recalculating the basis of the Atairos Notes as if the conversion option had not been bifurcated at issuance.

Transaction costs related to the issuance of the Atairos Notes that were allocated to the equity component were reclassified out of Additional paid-in-

Going Concern

The accompanying Consolidated Financial Statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

In accordance with ASU No.

2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40) , we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the Consolidated Financial Statements are issued.

Our Net cash used in operating activities was $ 136.0 million and $ 124.0 million for the years ended December 31, 2022 and December 31, 2021.

Cash and cash equivalents were $ 281.3 million as of December 31, 2022.

While we were in compliance with the covenants of our Third Amendment Credit Agreement as of December 31, 2022, our borrowing capacity was restricted and downward revisions to our 2023 forecast indicated we may not be in compliance in future periods.

We took steps to amend the credit facility to provide us covenant relief and flexibility in our operations as described in Note 7, Financing Arrangements .

These conditions and events raised substantial doubt about our ability to continue as a going concern.

In January 2023, our Board approved the second phase of the 2022 Restructuring Plan, which includes an overall reduction of approximately 500 positions globally.

A substantial portion of these reductions occurred in January 2023 and the remaining are expected to occur by the end of the second quarter 2023.

We estimate that the second phase of our 2022 Restructuring plan and related costs savings initiatives will result in approximately $ 100.0 million in annualized cost savings.

Further, following the completion of our cloud migration project in February 2023, we have begun to accelerate our efforts to optimize our technology stack and cloud workloads resulting in additional cost savings and we plan to improve the efficiency of our marketing investment resulting in reductions to marketing expense for the remainder of 2023.

Management will also take steps to minimize the risk certain payment

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

capital and the amortization and the related debt discount associated with these costs were recalculated through the transition date.

The transaction costs were recorded as a debt discount in the consolidated balance sheets and amortized to interest expense over the remaining term of the Atairos Notes.

Together with the cash interest, this resulted in an effective interest rate of 3.76 %.

As a result of adopting ASU 2020-06 in the first quarter of 2021, we recorded a $67.0 million net reduction to additional paid-in capital, a $ 19.0 million increase to Convertible senior notes, net and a $ 48.0 million reduction to our opening accumulated deficit as of January 1, 2021.

In the fourth quarter of 2021, we recorded an additional $ 2.7 million adjustment to our opening accumulated deficit and additional paid-in capital related to tax impacts of our bond hedges.

processors will require reserves or holdback receivables.

We believe management's plans as described above are probable of being achieved to alleviate substantial doubt about our ability to continue as a going concern and we will have sufficient liquidity to meet our obligations as they become due over the next twelve months.

We are also currently evaluating several different strategies to enhance our liquidity position.

These strategies may include, but are not limited to, pursuing additional actions under our multi-phase cost-savings plan, seeking additional financing from both the public and private markets through the issuance of equity or debt securities, and monetizing certain assets.

Adoption of New Accounting Standards

There were no new accounting standards adopted during the year ended December 31, 2022.

Reclassifications

22 unchanged sentences

Property and equipment are stated at cost.

Depreciation and amortization of property and equipment is recorded on a straight-line basis over the estimated useful lives of the assets.

Depreciation and amortization of property and equipment is recorded on a straight-line basis over the estimated useful lives of the assets within Selling, general and administrative expense on the Consolidated Statements of Operations.

Generally, the useful lives are three to five years for computer hardware, office equipment, furniture and fixtures and the shorter of the term of the lease or the expected life of the underlying asset for leasehold improvements.

2 unchanged sentences

Costs incurred in the planning and evaluation stage of internally-developed software and website development are expensed as incurred.

Costs incurred and accumulated during the application development stage are capitalized and included within Property, equipment and software, net on the consolidated balance sheets.

Amortization of internal-use software is recorded on a straight-line basis over the two-year estimated useful life of the assets.

Costs incurred and accumulated during the application

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

development stage are capitalized and included within Property, equipment and software, net on the Consolidated Balance Sheets.

Amortization of internal-use software is recorded on a straight-line basis over the two-year estimated useful life of the assets within Cost of revenue and Selling, general and administrative expense on the Consolidated Statements of Operations.

Cloud Computing Costs

12 unchanged sentences

If the fair value is less than the carrying value, we recognize an impairment equal to the difference between the carrying value of the reporting unit and its fair value, not to exceed the carrying value of goodwill.

Investments in equity shares without a readily determinable fair value and for which we do not have the ability to exercise significant influence are accounted for at cost adjusted for observable price changes and impairments, with changes in the measurement recognized through net income (loss).

Those investments are classified within Investments on the Consolidated Balance Sheets.

7 unchanged sentences

Investments with unrealized losses that are determined to be other-than-temporary are written down to fair value with a charge to earnings.

Unrealized losses that are determined to be temporary in nature are recorded, net of tax, in Accumulated other comprehensive income (loss) for available-for-sale securities.

We account for income taxes using the asset and liability method, under which deferred income tax assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases.

We regularly review deferred tax assets to assess whether it is more likely than not that the deferred tax assets will be realized and, if necessary, establish a valuation allowance for portions of such assets to reduce the carrying value.

Unrealized losses that are determined to be temporary in nature are recorded, net of tax, in Accumulated other comprehensive income (loss) for available-for-sale securities on the Consolidated Balance Sheets.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For purposes of assessing whether it is more likely than not that deferred tax assets will be realized, we consider the following four sources of taxable income for each tax jurisdiction:

9 unchanged sentences

Lease Obligations

We have entered into various non-cancelable operating lease agreements for our offices and data centers and non-cancelable finance lease agreements for property and equipment.

We have entered into various non-cancelable operating lease agreements for our offices and data centers.

Significant judgment is required when determining whether a contract is or contains a lease.

6 unchanged sentences

Right-of-use assets are measured based on the lease liability adjusted for any initial direct costs, prepaid rent, or lease incentives.

Minimum lease payments made under operating and finance leases are apportioned between interest expense and a reduction of the related operating and finance lease obligations.

Operating lease costs, including interest expense on operating leases, are presented within Selling, general and administrative expense on the consolidated statements of operations and the related operating lease obligation is presented within Accrued expenses and other current liabilities and Operating lease obligations on the consolidated balance sheets.

Amortization and interest expense on finance leases are presented within Selling, general and administrative expense and Other income (expense), net, respectively, on the consolidated statements of operations and the related finance lease obligation is presented within Accrued expenses and other current liabilities and Other non-current liabilities on the consolidated balance sheets.

Minimum lease payments made under operating leases are apportioned between interest expense and a reduction of the related operating lease obligations.

Operating lease costs, including interest expense on operating leases, are generally presented within Selling, general and administrative expense on the Consolidated Statements of Operations and the related operating lease obligation is presented within Accrued expenses and other current liabilities and Operating lease obligations on the Consolidated Balance Sheets.

Short term leases with an initial term of 12 months or less are not recorded on the balance sheet and are expensed in the period in which they are incurred.

1 unchanged sentence

We assess whether it is reasonably certain that we will exercise an option to renew or terminate a lease by considering factors that create an economic incentive or disincentive.

Certain lease agreements include variable lease costs which are primarily related to costs that are dependent on our usage of the underlying asset or lease payments that are dependent on an index when that index has changed since lease commencement.

Those costs are expenses in the period in which they are incurred.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Those costs are expensed in the period in which they are incurred.

We have also subleased certain office facilities under operating lease agreements, for which we recognize sublease income on a straight-line basis over their respective lease terms.

Sublease income is generally presented within Selling, general and administrative expense on the consolidated statements of operations.

Sublease income is generally presented within Restructuring and related charges on the Consolidated Statements of Operations.

Revenue Recognition

3 unchanged sentences

Local, Goods and Travel.

Service revenue

Service and Product Revenue

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

7 unchanged sentences

Additionally, we earn advertising revenue when the advertiser's logo or website link has been included on our websites or in specified email distributions for the requisite period of time as set forth in the agreement with the advertiser.

Product revenue

We generate product revenue from our sales of first-party Goods transactions, 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.

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.

Historically, we generated product revenue from our sales of first-party Goods transactions, which were direct sales of merchandise inventory.

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

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

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

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

21 unchanged sentences

Breakage income from customer credits that are not expected to be used is estimated and recognized as revenue in proportion to the pattern of redemption for customer credits that are used.

Customer credits can be redeemed through our online marketplaces for goods or services provided by a third-party merchant or for merchandise inventory sold by us.

Customer credits can be redeemed through our online marketplaces for goods or services provided by a third-party merchant.

When customer credits are redeemed for goods or services provided by a third-party merchant, service revenue is recognized on a net basis as the difference between the carrying amount of the customer credit liability derecognized and the amount due to the merchant for the related transaction.

When customer credits are redeemed for merchandise inventory sold by us, product revenue is recognized on a gross basis equal to the amount of the customer credit liability derecognized.

Customer credits are primarily used within one year of issuance.

Sales and Related Taxes

5 unchanged sentences

Cost of revenue is comprised of direct and certain indirect costs incurred to generate revenue.

Costs incurred to generate revenue, which include credit card processing fees, editorial costs, compensation expense for technology support personnel who are responsible for maintaining the infrastructure of our websites, amortization of internal-use software relating to customer-facing applications, web hosting and other processing fees are attributed to the cost of service and product revenue in proportion to gross billings during the period.

For product revenue transactions, cost of revenue also includes the cost of inventory, shipping and fulfillment costs and inventory markdowns.

Fulfillment costs are comprised of third-party logistics provider and other costs and, prior to fully impairing our fulfillment center in 2020, rent, depreciation, personnel costs and other costs of operating our fulfillment center.

Impairment of Long-Lived Assets

2 unchanged sentences

If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Long-lived assets or disposal groups classified as held for sale are recorded at the lower of their carrying amount or fair value less estimated selling costs.

Long-lived assets are not depreciated or amortized while classified as held for sale.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock-Based Compensation

9 unchanged sentences

Recently Issued Accounting Standards

In October 2020, the FASB issued ASU 2020-10, Codification Improvements .

This ASU amends a variety of Topics, including presentation and disclosures of financial statements, interim reporting, accounting changes and error corrections.

This ASU will be effective for annual reporting periods beginning after December 15, 2021 and interim periods within those annual periods beginning after December 15, 2022 and early adoption is permitted.

We believe that the adoption of this guidance will not have a material impact on our consolidated financial statements.

There are no other accounting standards that have been issued but not yet adopted that we believe could have a material impact on our consolidated financial statements.

COVID-19 PANDEMIC

Since March 2020, the COVID-19 pandemic has led to a significant decrease in consumer demand and active customers, a decrease in customer redemptions, and elevated refund levels due to changes in consumer behavior and protective measures taken to control the spread of COVID-19.

The COVID-19 pandemic has had an adverse impact on our financial condition, results of operations and cash flows, which included impairments of our goodwill and long-lived assets.

Recovery from the COVID-19 pandemic has been and could continue to be volatile and prolonged given the unprecedented and continuously evolving nature of the situation and the emergence and spread of new variants.

The future impact of COVID-19 on our business, results of operations, financial condition and liquidity is highly uncertain and will ultimately depend on future developments, including the magnitude and duration of the pandemic and the protective measures taken to reduce its spread.

We will continue to monitor the impact of COVID-19 on our business, particularly in our International segment where restrictions to date have been more prolonged and stricter than in North America.

During the first quarter 2020, we determined the significant deterioration in our financial performance due to the disruption in our operations from COVID-19 and the sustained decrease in our stock price required us to evaluate our goodwill and long-lived assets for impairment, which resulted in impairments for both.

During the third quarter 2021, we determined the prolonged recovery from the pandemic, particularly in our International segment, and the sustained decrease in our stock price required us to evaluate our goodwill and long-lived assets for impairment.

We determined there was no impairment for goodwill;

however, we recognized impairment for certain right-of-use assets and leasehold improvements related to our restructuring plan due to changes in sublease assumptions.

See Note 4, Property, Equipment and Software, Net , Note 5, Goodwill and Other Intangible Assets ,

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 9, Leases and Note 14, Restructuring and Related Charges for more information.

In April 2020, the Board approved a multi-phase restructuring plan related to our previously-announced strategic shift and as part of the cost cutting measures implemented in response to the impact of COVID-19 on our business.

Actions taken under our restructuring plan changed how we used certain long-lived assets and required us to evaluate those long-lived assets for impairment, which resulted in impairments of our long-lived assets.

These impairments are included in Restructuring and related charges on the consolidated statement of operations.

See Note 14, Restructuring and Related Charges, for more information.

COVID-19 impacted the financial performance of our investees and resulted in an impairment of an Other equity investment and a loss on a fair value option investment that are included in Other income (expense), net on the consolidated statement of operations during the year ended December 31, 2020.

See Note 6, Investments, for more information.

Future events and changing market conditions due to the impact of COVID-19 may require us to re-evaluate the estimates used in our fair value measurements, which could result in additional impairment of goodwill and long-lived assets in future periods that may have a material effect on our operating results.

There are no accounting standards that have been issued but not yet adopted that we believe could have a material impact on our Consolidated Financial Statements.

GROUPON, INC.

11 unchanged sentences

(1) The net carrying amount of internally-developed software was $ 48.6 million and $ 54.7 million as of December 31, 2022 and 2021.

We recognized long-lived asset impairments during the third quarter 2021 for certain leasehold improvements under our restructuring plan and the first quarter 2020 for property, equipment and software, net, as described in Note 3, COVID-19 Pandemic .

See Note 14, Restructuring and Related Charges , for more information on our restructuring impairments and details in the table below.

The asset impairments described above were written down to fair value based on the discounted cash flow method under the income approach that uses Level 3 inputs.

We evaluated long-lived assets for impairment, due to the events described below, which indicated that the carrying amount of certain asset groups were not recoverable.

The asset impairments were written down to fair value based on the discounted cash flow method under the income approach that uses Level 3 inputs.

The significant estimates used in the discounted cash flow models are the risk-adjusted discount rates;

4 unchanged sentences

and income tax rates.

During the first quarter of 2022, we determined the impact to our business from the new variant of COVID-19 required us to evaluate our long-lived assets for impairment.

Our interim quantitative assessment for the first quarter of 2022 did not identify any long-lived asset impairment.

During the second quarter of 2022, we determined a downward revision of our forecast required us to evaluate our long-lived assets for impairment.

As a result of our interim quantitative assessment, we recognized long-lived asset impairment related to certain asset groups within our International reporting unit.

See details in the table below.

During the fourth quarter of 2022, we determined a further downward revision of our forecast required us to evaluate our long-lived assets for impairment.

As a result of our interim quantitative assessment, we recognized long-lived asset impairment related to certain asset groups within our International reporting unit.

Additionally, during the fourth quarter of 2022, we determined that certain internally developed software was no longer in use.

As a result, we recognized long-lived asset impairment related to internally developed software.

See details in the table below.

During the third quarter of 2021, we recognized long-lived asset impairments for certain leasehold improvements under our 2020 Restructuring Plan and during the first quarter 2020 for property, equipment and software, net under our 2020 Restructuring Plan.

See details in the table below and Note 13, Restructuring and Related Charges , for more information.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes impairment charges for property, equipment and software that are presented within Restructuring and related charges and Long-lived asset impairment on the Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020 (in thousands):

Year Ended December 31,

2022 2021 2020

Long-lived asset impairment:

7 unchanged sentences

Total property, equipment and software impairment $ 4,489 $ 870 $ 15,178

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes impairment for long-lived assets by asset type for the years ended December 31, 2022, 2021 and 2020 (in thousands):

21 unchanged sentences

Balance as of December 31, 2020 $ 178,685 $ 36,014 $ 214,699

Impairment — ( 109,486 ) ( 109,486 )

— 3,776 3,776

Foreign currency translation

1 unchanged sentence

Balance as of December 31, 2021 $ 178,685 $ 37,708 $ 216,393

— 3,776 3,776

Goodwill impairment — ( 35,424 ) ( 35,424 )

Foreign currency translation

3 unchanged sentences

(2) Represents the reclassification between Right-of-use assets - operating leases, net and Goodwill due to an adjustment in the allocation of impairments recorded in 2020 between those two accounts.

In order to evaluate goodwill for impairment, we compare the fair values of our two reporting units, North America and International, to their carrying values.

In determining the fair values of our reporting units, we use the discounted cash flow method under the income approach and the market multiple valuation approach that use Level 3 inputs.

During the third quarter of 2021, we evaluated our goodwill for impairment due to the circumstances described in Note 3, COVID-19 Pandemic .

The fair value of the reporting units exceeded the carrying value, therefore we concluded that goodwill was not impaired for either of our reporting units.

Additionally, we performed our annual goodwill impairment assessment as of October 1, 2021 and determined no reporting units' carrying values were in excess of their estimated fair values.

Therefore, we did no t recognize goodwill impairment for any of our reporting units during the year ended December 31, 2021.

During the first quarter 2020, we recognized goodwill impairment, as shown in the table above, due to the circumstances described in Note 3, COVID-19 Pandemic , within our International segment related to our EMEA operations.

We did no t recognize any goodwill impairment in our North America or Asia Pacific reporting units.

During the third quarter 2020, we exited our operations in Japan and New Zealand as part of our restructuring plan, which represents the majority of the countries in our Asia Pacific reporting unit.

We evaluated goodwill for impairment, due to the events described below, which indicated that the carrying amount of certain reporting units' were in excess of their estimated fair value.

In determining the fair values of our reporting units, we used the discounted cash flow method under the income approach that uses Level 3 inputs.

During the first quarter of 2022, we determined the impact to our business from the new variant of COVID-19 required us to evaluate our goodwill for impairment.

Our interim quantitative assessment for the first quarter of 2022 did no t identify any goodwill impairment.

During the second quarter of 2022, we determined a downward revision of our forecast required us to evaluate our goodwill for impairment.

As a result of our interim quantitative assessment, we recognized goodwill impairment within our International reporting unit, representing a full impairment of goodwill for that reporting unit.

We performed our annual goodwill impairment assessment as of October 1, 2022.

Our annual assessment determined that no reporting units' carrying values were in excess of their estimated fair values and, therefore, we did no t recognize goodwill impairment for either of our reporting units.

During the fourth quarter of 2022, subsequent to our annual goodwill impairment assessment, we determined a further downward revision of our forecast required us to evaluate our goodwill for impairment.

Our interim quantitative assessment did not identify any goodwill impairment.

During the third quarter of 2021, we determined the prolonged recovery from the COVID-19 pandemic and the sustained decrease in our stock price required us to evaluate our goodwill for impairment.

Additionally, we performed our annual goodwill impairment assessment as of October 1, 2021.

Our assessments determined that no reporting units' carrying values were in excess of their estimated fair values.

Therefore, we did no t recognize goodwill impairment for either of our reporting units during the year ended December 31, 2021.

During the first quarter 2020, we determined the significant deterioration in our financial performance due to the disruption in our operations from COVID-19 and the sustained decrease in our stock price required us to evaluate our goodwill for impairment, which resulted in goodwill impairment of $ 109.5 million within our International segment related to our EMEA operations.

We did not recognize any goodwill impairment in our North America or Asia Pacific reporting units.

During the third quarter 2020, we exited our operations in Japan and New Zealand as part of our restructuring plan, which represented the majority of the countries in our Asia Pacific reporting unit.

As a result, we combined the remainder of the Asia Pacific reporting unit and the EMEA reporting unit into a single International reporting unit, consistent with how management reviews the operating results of the business.

1 unchanged sentence

Based on those assessments, we determined that the likelihood of a goodwill impairment did not reach the more-likely-than-not threshold.

Accordingly, we concluded that goodwill relating to those reporting units was not impaired and further quantitative testing was not required to be performed.

There was no goodwill impairment for the year ended December 31, 2019.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

we concluded that goodwill related to those reporting units were not impaired and further quantitative testing was not required to be performed.

Additionally, we performed our annual goodwill impairment assessment as of October 1, 2020.

Our assessment determined that no reporting units' carrying values were in excess of their estimated fair values.

Therefore, we did not recognize goodwill impairment for either of our reporting units for the annual impairment test during the year ended December 31, 2020.

The following table summarizes intangible assets as of December 31, 2022 and 2021 (in thousands):

3 unchanged sentences

Trade names 9,340 8,382 958 9,604 8,215 1,389

Developed technology 540 540 — 2,121 1,863 258

Patents 13,341 6,701 6,640 12,455 5,712 6,743

9 unchanged sentences

The following table summarizes our percentage ownership in our investments for the periods noted below:

December 31, 2021 December 31, 2020

Available-for-sale securities 1 % to 19 % 19 % to 25 %

Fair value option investments 10 % to 19 % 10 % to 19 %

Other equity investments 1 % to 19 % 1 % to 19 %

Available-for-Sale Securities

In the fourth quarter 2021, one of our available-for-sale security investments completed a merger transaction in which we received equity in the surviving company as merger consideration.

We determined that the fair value of the transferred investment was zero.

We recorded an impairment of an available-for-sale security of $ 10.0 million for the year ended December 31, 2019 due to declines in the financial performance of the investee.

This impairment is classified within Other income (expense), net on the consolidated statements of operations.

Our available-for-sale securities had a fair value of $ 0.0 million as of December 31, 2021 and 2020, and no activity was recorded in those years.

Fair Value Option Investments

In connection with the dispositions of controlling stakes in Ticket Monster, an entity based in the Republic of Korea, and Groupon India in prior periods, we obtained minority investments in Monster Holdings LP ("Monster LP") and in Nearbuy Pte Ltd.

We made an irrevocable election to account for both of those investments at fair value with changes in fair value reported in earnings.

We elected to apply fair value accounting to those investments because we believe that fair value is the most relevant measurement attribute for those investments, as well as to reduce operational and accounting complexity.

Our election to apply fair value accounting to those investments has and may continue to cause fluctuations in our earnings from period to period.

In 2019 we recognized a $ 69.4 million loss from changes in the fair value of our investment in Monster LP mainly due to revised cash flow projections and an increase in the discount rate applied to those forecasts.

The revisions to the financial projections were due to the deterioration in Monster LP's financial condition and continued underperformance compared with prior projections.

There was no activity recorded for this investment for the years ended December 31, 2021 and 2020.

During the first quarter 2020, we recognized a $ 1.4 million loss from changes in the fair value of our investment in Nearbuy due to revised cash flow projections and an increase in the discount rate applied to those forecasts.

The revisions to the financial projections were due to the deterioration in the financial condition of Nearbuy as a result of COVID-19, which resulted in underperformance as compared with prior projections and an increase to financial projection risk.

In 2019, we recognized a $ 3.1 million loss from changes in the fair value of our investment in Nearbuy due to revised cash flow projections.

There was no activity recorded for this investment for the year ended December 31, 2021.

The fair value of both of these investments was $ 0.0 million as of December 31, 2021 and 2020.

December 31, 2022 and 2021

Other equity investments 1 % to 19 %

Available-for-sale securities 1 % to 19 %

Fair value option investments 10 % to 19 %

Other Equity Investments

Other equity investments represent equity investments without readily determinable fair values.

We have elected to record equity investments without readily determinable fair values at cost adjusted for observable price changes and impairments.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes other equity investment activity for the years ended December 31, 2021 and 2020 (in thousands):

Balance as of December 31, 2019 $ 75,171

Impairment of investments included in earnings ( 6,684 )

Foreign currency translation

We have elected to record equity investments without readily determinable fair values at cost adjusted for observable price changes in orderly transactions and impairments.

As of December 31, 2022, the balance for our other equity investments was $ 119.5 million and there was no activity recorded for the year ended December 31, 2022.

The following table summarizes other equity investment activity for the year ended December 31, 2021 (in thousands):

Balance as of December 31, 2020 $ 37,671

4 unchanged sentences

("SumUp"), a privately-held mobile payments company.

During the third quarter 2021 and fourth quarter 2019, we adjusted the carrying value of our other equity investment in SumUp due to observable price changes in orderly transactions, which resulted in unrealized gains of $ 89.1 million and $ 51.4 million for the years ended December 31, 2021 and December 31, 2019.

These unrealized gains are classified within Other income (expense), net on the consolidated statements of operations.

During the first quarter 2020, we also sold 50 % of our shares in this investment for total cash consideration of $ 34.0 million, which approximated the cost adjusted for observable price changes as of December 31, 2019.

During the third quarter 2021, we adjusted the carrying value of our other equity investment in SumUp due to observable price changes in orderly transactions, which resulted in an unrealized gain of $ 89.1 million for the year ended December 31, 2021.

The unrealized gain is presented within Other income (expense), net on the Consolidated Statements of Operations.

During the first quarter 2020, we also sold 50 % of our shares in this investment for total cash consideration of $ 34.0 million.

During the third quarter 2021, we also sold 100 % of our shares in one of our other equity investments for total cash consideration of $ 2.6 million and recognized a gain of $ 2.2 million.

In the second quarter 2021, we divested our shares in one of our other equity investments and recognized a gain and total cash consideration of $ 4.2 million.

The gains on our investments have been presented in Other income (expense), net in the consolidated statements of operations for the year ended December 31, 2021.

During the second quarter 2021, we divested our shares in one of our other equity investments and recognized a gain and total cash consideration of $ 4.2 million.

The gains on our investments have been presented within Other income (expense), net in the Consolidated Statements of Operations for the year ended December 31, 2021.

During the first quarter 2020, we recorded a $ 6.7 million impairment to one of our other equity method investments as a result of revised cash flow projections and a deterioration in financial condition due to COVID-19.

This impairment is classified within Other income (expense), net on the consolidated statements of operations.

This impairment is presented within Other income (expense), net on the Consolidated Statements of Operations.

Available-for-Sale Securities

Our available-for-sale securities had a fair value of $ 0.0 million as of December 31, 2022 and 2021 and no financial statement activity was recorded for the years ended December 31, 2022, 2021 and 2020.

During the fourth quarter 2021, one of our available-for-sale security investments completed a merger transaction in which we received equity in the surviving company as merger consideration.

We determined that the fair value of the transferred investment was zero .

Fair Value Option Investments

We made an irrevocable election to account for both of those investments at

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

fair value with changes in fair value reported in earnings.

Our election to apply fair value accounting to those investments has and may continue to cause fluctuations in our earnings from period to period.

The fair value of both of these investments was $ 0.0 million as of December 31, 2022 and 2021 and no activity was recorded in those years.

SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS INFORMATION

5 unchanged sentences

Changes in fair value of investments (1)

— 95,623 ( 8,089 )

Loss on extinguishment of debt — ( 5,090 ) —

2 unchanged sentences

Other income (expense), net $ ( 24,155 ) $ 92,680 $ ( 16,968 )

(1) Includes a $ 32.3 million cumulative foreign currency translation adjustment gain that was reclassified into earnings during the first quarter of 2021 as a result of the substantial liquidation of our subsidiary in Japan as part of our restructuring actions.

See Note 14, Restructuring and Related Charges , for additional information.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(1) Includes an $ 89.1 million unrealized gain due to an upward adjustment for an observable price change of SumUp for the year ended December 31, 2021.

(2) Includes a $ 32.3 million cumulative foreign currency translation adjustment gain that was reclassified into earnings for the year ended December 31, 2021 as a result of the substantial liquidation of our subsidiary in Japan as part of our 2020 Restructuring Plan.

The following table summarizes Prepaid expenses and other current assets as of December 31, 2022 and 2021 (in thousands):

4 unchanged sentences

Total prepaid expenses and other current assets $ 41,101 $ 52,570

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes Other non-current assets as of December 31, 2022 and 2021 (in thousands):

Debt issue costs, net 660 1,852

Deferred contract acquisition costs $ 4,815 $ 7,080

Deferred cloud implementation costs 17,684 11,986

11,986 10,402

Other 4,992 6,036

Total other non-current assets $ 27,491 $ 25,102

(1) Following our review of long-lived assets for impairment in the first quarter of 2020, as described in Note 3, COVID-19 Pandemic , we recognized $ 0.9 million of long-lived asset impairments related to our EMEA operations, which is included in Other non-current assets.

The following table summarizes accrued merchant and supplier payables as of December 31, 2021 and 2020 (in thousands):

Accrued merchant payables $ 258,101 $ 303,260

Accrued supplier payables (1)

11,408 107,703

Total accrued merchant and supplier payables $ 269,509 $ 410,963

(1) Amounts include payables to suppliers of inventories and providers of shipping and fulfillment services.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes Accrued expenses and other current liabilities as of December 31, 2022 and 2021 (in thousands):

Refund reserve $ 11,072 $ 19,601

$ 19,601 $ 33,173

Compensation and benefits 15,005 30,367

2 unchanged sentences

Customer credits 36,220 56,558

Income taxes payable 601 7,862

Deferred revenue 3,523 11,223

Operating and finance lease obligations 32,663 37,755

Deferred cloud computing contract incentive 3,000 3,000

Operating lease obligations 37,525 32,062

47,252 51,476

Total accrued expenses and other current liabilities $ 171,452 $ 239,313

(1) In 2020, we experienced increased refund levels due to the impacts of COVID-19 which impacted our refund reserve estimate.

(2) Includes $ 2.7 million as of December 31, 2021 and $ 2.9 million as of December 31, 2020 in certain payroll taxes under the Coronavirus Aid, Relief and Economic Security ("CARES") Act.

The 2020 balance was paid in the fourth quarter 2021.

The 2021 balance is due by December 31, 2022.

(1) Includes certain payroll taxes deferred under the Coronavirus Aid, Relief and Economic Security ("CARES") Act of $ 2.7 million as of December 31, 2021 and 2022.

This balance was paid in January 2023.

The following table summarizes Other non-current liabilities as of December 31, 2022 and 2021 (in thousands):

1 unchanged sentence

Deferred income taxes 3,100 2,802

Deferred cloud computing contract incentive 1,250 4,250

Other 4,273 7,433

Total other non-current liabilities $ 18,586 $ 34,448

(1) Includes $ 2.9 million as of December 31, 2020 in certain payroll taxes under the Coronavirus Aid, Relief and Economic Security ("CARES") Act.

The 2020 balance is due December 31, 2022.

FINANCING ARRANGEMENTS

Adoption of ASU 2020-06

On January 1, 2021, we early adopted ASU 2020-06 using the modified retrospective method.

The ASU eliminates the requirement to separately recognize an equity component when accounting for convertible debt that may be cash-settled upon conversion or convertible instruments with a beneficial conversion feature.

Beginning January 1, 2021, our consolidated financials are presented in accordance with ASU 2020-06, while prior period amounts are not adjusted and continue to be reported in accordance with our historical policies.

The new guidance changed the accounting for our 3.25 % Convertible Senior Notes, due 2022, as discussed below.

3.25 % Convertible Senior Notes due 2022

In April 2016, we issued $ 250.0 million in aggregate principal amount of convertible senior notes (the "Atairos Notes") in a private placement to A-G Holdings, L.P.

In May 2021, we repurchased the Atairos Notes for an

On January 1, 2021, we adopted ASU 2020-06 using the modified retrospective method.

This ASU eliminates the requirement to separately recognize an equity component when accounting for convertible debt in certain circumstances, removes certain conditions for equity classification of related contracts and amends the related guidance as to the computation of income (loss) per share.

As a result of adopting ASU 2020-06, we recorded a $ 67.0 million net reduction to Additional paid-in capital, a $ 19.0 million increase to Convertible senior notes, net and a $ 48.0 million reduction to our opening Accumulated deficit in our Consolidated Balance Sheets as of January 1, 2021.

In the fourth quarter of 2021, we recorded an additional $ 2.7 million adjustment to our opening Accumulated deficit and Additional paid-in capital related to tax impacts of our bond hedges.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

aggregate purchase price equal to $ 255.0 million, consisting of the $ 250.0 million outstanding principal amount, $ 1.0 million of accrued interest through the repurchase date and a $ 4.0 million prepayment penalty.

In the second quarter 2021, we recognized a $ 5.1 million loss on the early extinguishment of the Atairos Notes, which is presented in Other income (expense), net on the consolidated statements of operations.

Prior to the adoption of ASU 2020-06, we separated the Atairos Notes into their liability and equity components.

The liability was initially calculated by measuring the fair value of similar liability without an associated conversion feature.

The difference between the principal amount of the Atairos Notes and the liability component was recognized in equity, effectively resulting in a debt discount.

We incurred transactions costs of $ 6.8 million related to the issuance of the Atairos Notes.

Transaction costs attributable to the liability component of $ 4.8 million were also recorded as a debt discount in the consolidated balance sheets.

The debt discount was amortized to interest expense over the terms of the Atairos Notes.

Together with cash interest, this resulted in an effective interest rate of 9.75 %.

Transaction costs attributable to the equity component of $ 2.0 million were recorded in stockholders' equity as a reduction of the equity component.

Following the adoption of ASU 2020-06, the previously bifurcated equity component of our Atairos Notes was recombined with the liability component, resulting in a single liability-classifed instrument.

Prior to the adoption of ASU 2020-06, the difference between the principal amount of the Atairos Notes and the liability component of the Atairos Notes was recognized in equity, effectively resulting in a debt discount.

The debt discount was amortized to interest expense over the terms of the Atairos Notes which, combined with cash interest, resulted in an effective interest rate of 9.75 %.

The carrying value of the Atairos Notes at the transition was determined by recalculating the basis of the notes as if the conversion option had not been bifurcated at issuance.

1 unchanged sentence

This resulted in an effective interest rate of 3.76 %.

The carrying amount of the Atairos Notes consisted of the following as of December 31, 2020 (in thousands):

December 31, 2020

Liability component:

Principal amount $ 250,000

debt discount - transaction costs ( 1,459 )

debt discount - equity ( 19,051 )

Net carrying amount of liability component $ 229,490

Net carrying amount of equity component $ 67,014

We classified the fair value of the Atairos Notes as a Level 3 measurement due to the lack of observable market data over fair value inputs such as our stock price volatility over the terms of the Atairos Notes and our cost of debt.

The estimated fair value of the Atairos Notes as of December 31, 2020 was $ 263.3 million, and was determined using a lattice model.

In May 2021, we repurchased the Atairos Notes for an aggregate purchase price equal to $ 255.0 million, consisting of the $ 250.0 million outstanding principal amount, $ 1.0 million of accrued interest through the repurchase date and a $ 4.0 million prepayment penalty.

In connection with the repurchase of the Atairos Notes, we recognized a $ 5.1 million loss on the early extinguishment, which is presented in Other income (expense), net on the Consolidated Statements of Operations.

During the years ended December 31, 2021 and 2020, we recognized interest costs on the Atairos Notes as follows (in thousands):

Year Ended December 31,

2021 2020 2019

Contractual interest ( 3.25 % of the principal amount per annum)

6 unchanged sentences

We also sold warrants for total cash proceeds of $ 35.5 million to certain bank counterparties.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The amounts paid and received for the convertible note hedges and warrants were recorded in Additional paid-in capital in the consolidated balance sheets as of December 31, 2020.

The convertible note hedges and warrants were not remeasured as long as they continue to meet the condition for equity classification.

The amounts paid for the convertible note hedges were tax deductible over the term of the Atairos Notes, while the proceeds received from the warrants were not taxable.

Under the if-converted method, the shares of common stock underlying the conversion option in the Atairos Notes are included in the diluted income (loss) per share denominator and the interest expense and amortization of the transaction costs on the Atairos Notes, net of tax, is added to the numerator.

8 unchanged sentences

We used $ 27.4 million of the net proceeds from the offering to pay the cost of certain related capped call transactions and used the remaining net proceeds, together with cash on hand, to repurchase the Atairos Notes.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Each $1,000 of principal amount of the 2026 Notes initially is convertible into 14.6800 shares of common stock, which is equivalent to an initial conversion price of $ 68.12 per share, subject to adjustment upon the occurrence of specified events.

10 unchanged sentences

and structurally junior to all indebtedness and other liabilities of current or future subsidiaries (including trade payables).

The Indenture includes customary events of default.

The Indenture includes customary events of default, including that acceleration of indebtedness under the Amended Credit Agreement could result in an event of default under the Indenture.

If an event of default, as defined in the Indenture, occurs and is continuing, the principal amount of the 2026 Notes and any accrued and unpaid interest may be declared immediately due and payable.

In the case of bankruptcy or insolvency, the principal amount of the 2026 Notes and any accrued and unpaid interest would automatically become immediately due and payable.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We account for the 2026 Notes as a single liability-classified instrument measured at amortized cost due to the adoption of ASU 2020-06.

We account for the 2026 Notes as a single liability-classified instrument measured at amortized cost.

The carrying value of the 2026 Notes was determined by deducting transaction costs incurred in connection with the issuance of the 2026 Notes of $ 7.8 million from the principal amount.

1 unchanged sentence

Together with the cash interest, this results in an effective interest rate of 1.83 % over the term of the 2026 Notes.

We have presented the 2026 Notes in non-current liabilities in the accompanying consolidated balance sheets.

The carrying amount of the 2026 Notes consisted of the following as of December 31, 2021 (in thousands):

December 31, 2021

We have presented the 2026 Notes in Convertible senior notes, net in the accompanying Consolidated Balance Sheets.

The carrying amount of the 2026 Notes consisted of the following as of December 31, 2022 and 2021 (in thousands):

Principal amount $ 230,000 $ 230,000

2 unchanged sentences

We classified the fair value of the 2026 Notes as a Level 3 measurement due to the lack of observable market data over fair value inputs such as our stock price volatility over the term of the 2026 Notes and our cost of debt.

The estimated fair value of the 2026 Notes as of December 31, 2021 was $ 183.3 million and was determined using a lattice model.

During the years ended December 31, 2021, we recognized interest costs on the 2026 Notes as follows (in thousands):

The estimated fair value of the 2026 Notes as of December 31, 2022 and 2021 was $ 133.1 million and $ 183.3 million and was determined using a lattice model.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the years ended December 31, 2022 and 2021, we recognized interest costs on the 2026 Notes as follows (in thousands):

Year Ended December 31,

12 unchanged sentences

In May 2019, we entered into a second amended and restated senior secured revolving credit agreement which provided for aggregate principal borrowings of up to $ 400.0 million (prior to the amendments described below) and matures in May 2024.

In July 2020, we entered into an amendment to the revolving credit agreement (the "First Amendment") which permanently reduced borrowing capacity under our senior secured revolving credit facility from $ 400.0 million to $ 225.0 million.

In March 2021, we entered into a second amendment to the revolving credit agreement (the "Second Amendment", as amended by the First Amendment and the Second Amendment, the "Second Amendment Credit Agreement") to, among other things, permit the issuance of the 2026 Notes and related capped call transactions.

The Second Amendment also permanently removed requirements that we maintain (i) a maximum senior secured indebtedness to Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") ratio and (ii) unrestricted cash of not less than $ 250.0 million.

Further, the Second Amendment changed the requirement to maintain a minimum fixed charge coverage ratio to a requirement to maintain a minimum interest coverage ratio.

In September 2022, we entered into a third amendment to the revolving credit agreement (the "Third Amendment" and the Second Amendment Credit Agreement as amended, the "Third Amendment Credit Agreement") to modify certain financial covenants and provide for additional flexibility in our operations, including certain modifications to our requirement to maintain (i) a maximum funded indebtedness to EBITDA ratio and (ii) a monthly minimum liquidity balance.

In addition to the modifications described below, the Third Amendment reduced our borrowing capacity under our senior secured revolving credit facility from $ 225.0 million to $ 150.0 million.

In March 2023, we entered into a fourth amendment to the revolving credit agreement (the "Fourth Amendment" and the Third Amendment Credit Agreement as amended, the "Amended Credit Agreement" to modify certain financial covenants and provide for additional flexibility in its operations, among other changes, including certain modifications to (i) our requirements to maintain monthly minimum liquidity balance (including any undrawn

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In July 2020, we entered into an amendment to the revolving credit agreement (the "First Amendment") in order to provide us with, among other things, operational flexibility and covenant relief through the end of the first quarter of 2021 in light of the ongoing impacts of COVID-19 on our business.

In addition to the covenant relief described below, the First Amendment permanently reduces borrowing capacity under our senior secured revolving credit facility from $ 400.0 million to $ 225.0 million.

In March 2021, we entered into a second amendment to the revolving credit agreement (the "Second Amendment," together with the First Amendment, the "Amendments") to extend the suspension period provided by the First Amendment through the fourth quarter 2021 (unless terminated by us prior to then) (the "Suspension Period"), amend and remove certain financial covenants applicable after the amended Suspension Period ends and permit the issuance of the 2026 Notes and related capped call transactions.

We collectively refer to the revolving credit agreement as amended by the Amendments as the "Amended Credit Agreement").

We voluntarily elected to early terminate the Suspension Period as of the third quarter of 2021.

We deferred debt issuance costs of $ 3.5 million as a result of entering into the Amended Credit Agreement.

amounts under the revolving credit facility) of at least $ 50.0 million, (ii) the calculation of EBITDA under the Amended Credit Agreement, (iii) mandatory prepayment requirements and (iv) certain affirmative covenants.

In addition to the modifications described below, the Fourth Amendment reduced our borrowing capacity under our senior secured revolving credit facility from $ 150.0 million to $ 75.0 million.

We deferred debt issuance costs of $ 4.0 million in aggregate in connection with the Third Amendment Credit Agreement.

Deferred debt issuance costs are included within Other non-current assets on the Consolidated Balance Sheets as of December 31, 2022 and are amortized to interest expense over the term of the respective agreement.

Pursuant to the Amendments, during the Suspension Period, we were exempt from certain covenant restrictions, namely the requirements to maintain a maximum funded indebtedness to Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") ratio and a minimum liquidity balance (including any undrawn amounts under the credit facility) of at least 70.0 % of our accrued merchant and supplier payables balance (which covenant applies again beginning in the third quarter 2021 following our voluntary early termination on the Suspension Period).

Additionally, the Amendments provide that, during the Suspension Period, we were required to maintain specified minimum quarterly EBITDA levels and to maintain a monthly minimum liquidity balance (including any undrawn amounts under the credit facility) of at least 100.0 % of our accrued merchant and supplier payables balance for such month plus $ 50.0 million.

The Second Amendment also permanently removes requirements that we maintain (i) a maximum senior secured indebtedness to EBITDA ratio and (ii) unrestricted cash of not less than $ 250.0 million.

Finally, the Second Amendment changes the requirement to maintain a minimum fixed charge coverage ratio to a requirement to maintain a minimum interest coverage ratio.

Following our voluntary early termination of the Suspension Period, we are subject to the ordinary course covenants under the Amended Credit Agreement beginning in the third quarter 2021.

In addition, under the Amended Credit Agreement, we are subject to various covenants, including customary restrictive covenants that limit our ability to, among other things:

6 unchanged sentences

and engage in transactions with related parties and other affiliates.

The Amendments further restricts certain of these negative covenants during the Suspension Period, including our ability to make share repurchases, acquisitions, investments and to incur additional indebtedness and liens.

As of December 31, 2021, we were in compliance with the applicable covenants under our Amended Credit Agreement.

The Fourth Amendment imposes additional restrictions on our ability to make certain investments, to incur certain additional indebtedness and to designate unrestricted subsidiaries..

As of December 31, 2022, we were in compliance with the applicable covenants under the Third Amendment Credit Agreement.

Non-compliance with the covenants under the Amended Credit Agreement may result in termination of the commitments thereunder and any then outstanding borrowings may be declared due and payable immediately.

We have the right to terminate the Amended Credit Agreement or reduce the available commitments at any time.

The Amendments also increased interest rates through the end of the Suspension Period (i.e., through the third quarter 2021), raising the alternative base rate and Canadian prime spreads to 1.50 %, the fixed rate spreads to 2.50 % and the commitment fee to 0.40 % on the daily amount of the unused commitments under the Amended Credit Agreement.

Following the Suspension Period, the applicable spread and commitment fee will revert to pre-Amendment levels, which provides for (a) interest at a rate per annum equal to (i) an adjusted LIBO rate or (ii) a customary base rate (with loans denominated in certain currencies bearing interest at rates specific to such currencies) plus an additional margin ranging between 0.50 % and 2.00 % and (b) commitment fees ranging from 0.25 % to 0.35 % on the daily amount of unused commitments.

The Amended Credit Agreement also includes a replacement mechanism for the discontinuation of the adjusted LIBO rate.

Borrowings under the Second Amendment Credit Agreement bore (a) interest at a rate per annum equal to (i) an adjusted LIBO rate or (ii) a customary base rate (with loans denominated in certain currencies bearing interest at rates specific to such currencies) plus an additional margin ranging between 0.50 % and 2.00 % and (b) commitment fees ranging from 0.25 % to 0.35 % on the daily amount of unused commitments.

The Second Amendment Credit Agreement also includes a replacement mechanism for the discontinuation of the adjusted LIBO rate.

The Third Amendment replaced LIBOR as a benchmark interest rate under the Second Amendment Credit Agreement with Term Secured Overnight Financing Rate ("SOFR") plus a credit spread adjustment of 10 basis points.

The Third Amendment also provides that, from the date of the Third Amendment through the fiscal quarter ending June 30, 2023, the Alternate Base Rate ("ABR") and Canadian prime spreads shall be raised to 1.50 %, the fixed rate spreads to 2.50 % and the commitment fee to 0.4 % on the daily amount of the unused commitments under the Amended Credit Agreement.

After June 30, 2023, the applicable spreads and commitment fee will revert to the levels set by the Second Amendment Credit Agreement, with the addition of a new tier that is applicable when the ratio of funded indebtedness to EBITDA exceeds 3.00 :1.00 and provides for ABR and Canadian prime spreads of 1.25 %, fixed rate spreads of 2.25 % and a commitment fee of 0.4 % on the daily amount of the unused commitments under the Amended Credit Agreement.

In addition, the Amended Credit Agreement provides for the issuance of up to $ 75.0 million in letters of credit, provided that the sum of outstanding borrowings and letters of credit do not exceed the maximum funding commitment of $ 75.0 million.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Amended Credit Agreement is secured by substantially all of our tangible and intangible assets, including a pledge of 100 % of the outstanding capital stock of substantially all of our direct and indirect domestic subsidiaries and 65 % of the shares or equity interests of first-tier foreign subsidiaries and each U.S.

1 unchanged sentence

Certain of our domestic and foreign subsidiaries are guarantors under the Amended Credit Agreement.

We had $ 100.0 million of outstanding borrowings and $ 25.8 million of letters of credit outstanding as of December 31, 2021, and $ 200.0 million of outstanding borrowings and $ 20.6 million of letters of credit outstanding as of December 31, 2020 under the Amended Credit Agreement.

We had $ 75.0 million of outstanding borrowings and $ 24.9 million of letters of credit outstanding as of December 31, 2022, and $ 100.0 million of outstanding borrowings and $ 25.8 million of letters of credit outstanding as of December 31, 2021 under the Third Amendment Credit Agreement.

In connection with entering into the Fourth Amendment to our Third Amendment Credit Agreement in March 2023, our borrowing capacity under the Amended Credit Agreement was reduced from $ 150.0 million to $ 75.0 million and consequently we repaid $ 25.0 million of these outstanding amounts in connection with the Fourth Amendment.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our operating leases primarily consist of leases for real estate throughout the world with lease expirations between 2023 and 2027.

These arrangements typically do not transfer ownership of the underlying asset as we do not assume, nor do we intend to assume, the risks and rewards of ownership.

Our finance leases are related to property and equipment, primarily computer hardware, all of which expire in 2022.

We lease our headquarters located in Chicago, Illinois ("600 West Chicago") through January 31, 2026.

We sublease a portion of that space to Uptake, Inc., a Lightbank LLC portfolio company as a related party transaction.

Our finance leases were related to property and equipment, primarily computer hardware, all of which were expired as of December 31, 2022.

We lease our headquarters located in Chicago, Illinois ("600 West Chicago").

During the year ended December 31, 2022, we reassessed the term of our 600 West Chicago operating lease as we were reasonably certain to exercise our option to early terminate the lease.

As a result, our expected future minimum lease payments related to that lease were modified.

Our reassessment included an increase in our Accrued expenses and other current liabilities of $ 11.6 million, a decrease to our long-term Operating lease obligations of $ 25.6 million, a decrease to our Right-of-use assets - operating leases, net of $ 9.5 million in the Consolidated Balance Sheets and a gain of $ 4.5 million in Restructuring and related charges in the Consolidated Statements of Operations.

Refer to Note 13, Restructuring and Related Charges for additional information on the gain recognized.

In January 2023, we exercised our option to early terminate our lease at 600 West Chicago effective on January 31, 2024, which required us to pay a penalty of $ 9.6 million with our early termination notice.

Prior to exercising our option to early terminate, the expiration of 600 West Chicago was January 31, 2026.

We sublease a portion of 600 West Chicago to Uptake, Inc., a Lightbank LLC portfolio company as a related party transaction.

The sublease was a market rate transaction on terms that we believe are no less favorable than would have been reached with an unrelated party.

The sublease extends through January 31, 2026 and sublease rentals over the entire term total $ 18.2 million.

We have also subleased other office facilities under operating lease agreements with expirations between 2023 and 2026 that are not significant.

As part of our reassessment of 600 West Chicago and early termination option noted above, we modified the sublease term to expire on January 30, 2024, as well.

Uptake is contractually obligated to pay $ 2.5 million in future sublease payments, however, the collectability of our sublease income is not reasonably assured.

Given the uncertainty of collectability of our sublease income, we recognized impairment of $ 1.8 million related to that portion of the right-of-use assets - operating leases for the year ended December 31, 2022, which is presented in Restructuring and related charges on the Consolidated Statements of Operations.

We have also subleased other office facilities under operating lease agreements with expirations in 2023 for future sublease income of $ 2.1 million.

The following summarizes right-of-use assets as of December 31, 2022 and 2021 (in thousands):

6 unchanged sentences

(1) Right-of-use assets for finance leases are included in Property, equipment and software, net on the Consolidated Balance Sheet.

Due to actions taken under our restructuring plan, we recognized impairment of $ 6.8 million and $ 16.0 million related to related to right-of-use assets - operating leases for the years ended December 31, 2021 and 2020, which are presented in Restructuring and related charges on the consolidated statement of operations.

See Note 3, COVID-19 Pandemic and Note 14, Restructuring and Related Charges for more information.

Due to the circumstances described in Note 3, COVID-19 Pandemic , we recognized long-lived asset impairments related to right-of-use assets - operating leases of $ 10.5 million and right-of-use assets - finance leases of $ 1.3 million within our International segment related to our EMEA operations for the year ended December 31, 2020, which are presented in Long-lived asset impairments on the consolidated statements of operations.

For the year ended December 31, 2022, we determined a downward revision of our forecast in the second quarter of 2022 and further downward revision in the fourth quarter of 2022 each required us to evaluate our long-lived assets for impairment.

As a result of our interim quantitative assessments, we recognized impairment related to our right-of-use assets - operating leases of $ 7.8 million within our International segment, which is presented in Long-lived asset impairments on the Consolidated Statements of Operations.

We also recognized impairment for our right-of-use assets - operating leases related to our 2020 Restructuring Plan of $ 1.2 million, which is presented in Restructuring and related charges on the Consolidated Statements of Operations.

See Note 13, Restructuring and Related Charges , for more information

Due to actions taken under our 2020 Restructuring Pl an, we recognized impairment of $ 6.8 million and $ 16.0 million related to right-of-use assets - operating leases for the years ended December 31, 2021 and 2020, which are presented in Restructuring and related charges on the Consolidated Statements of Operations.

See Note 13, Restructuring and Related Charges , for more information.

For the year ended December 31, 2020, we determined the significant deterioration in our financial performance due to the disruption in our operations from COVID-19 and the sustained decrease in our stock price

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

required us to evaluate our long-lived assets for impairment, and we recognized impairment related to right-of-use assets - operating leases of $ 10.5 million and right-of-use assets - finance leases of $ 1.3 million within our International segment, which are presented in Long-lived asset impairments on the Consolidated Statements of Operations.

The following table summarizes our lease costs and sublease income for the years ended December 31, 2022, 2021 and 2020 (in thousands):

13 unchanged sentences

Total lease cost $ 25,509 $ 30,898 $ 41,892

(1) Operating lease costs presented as Selling, general and administrative and Restructuring and related charges in the consolidated statements of operations totaled $ 17.6 million and $ 7.8 million for the year ended December 31, 2021 and $ 23.1 million and $ 7.8 million for the year ended December 31, 2020.

(2) Variable lease costs presented as Selling, general and administrative and Restructuring and related charges in the consolidated statements of operations totaled $ 4.7 million and $ 1.7 million for the year ended December 31, 2021 and $ 7.0 million and $ 1.1 million for the year ended December 31, 2020.

(3) Sublease income, gross presented as Selling, general and administrative and Restructuring and related charges in the consolidated statements of operations totaled $ 0.0 million and $ 4.6 million for the year ended December 31, 2021 and $ 1.2 million and $ 3.5 million for the year ended December 31, 2020.

As of December 31, 2021, the future payments under finance leases and operating leases for each of the next five years and thereafter are as follows (in thousands):

Finance Leases Operating Leases

2022 612 35,845

2023 — 26,737

2024 — 19,153

2025 — 16,078

Thereafter — 82

(1) Operating lease costs presented as Selling, general and administrative and Restructuring and related charges in the Consolidated Statements of Operations totaled $ 15.7 million and $ 5.2 million for the year ended December 31, 2022, $ 17.6 million and $ 7.8 million for the year ended December 31, 2021 and $ 23.1 million and $ 7.8 million for the year ended December 31, 2020.

(2) Variable lease costs presented as Selling, general and administrative and Restructuring and related charges in the Consolidated Statements of Operations totaled $ 5.6 million and $ 2.4 million for the year ended December 31, 2022, $ 4.7 million and $ 1.7 million for the year ended December 31, 2021 and $ 7.0 million and $ 1.1 million for the year ended December 31, 2020.

(3) Sublease income, gross presented entirely as Restructuring and related charges in the Consolidated Statements of Operations for the years ended December 31, 2022 and December 31, 2021 and presented as Selling, general and administrative and Restructuring and related charges in the Consolidated Statements of Operations totaled $ 1.2 million and $ 3.5 million for the year ended December 31, 2020.

As of December 31, 2022, the future payments under operating leases for each of the next five years and thereafter are as follows (in thousands):

Operating Leases

Total minimum lease payments 48,358

4 unchanged sentences

As of December 31, 2022, we do not have any material non-cancelable operating lease commitments that have not yet commenced.

As of December 31, 2021, the weighted-average remaining lease term and weighted-average discount rate for our finance leases and operating leases were as follows:

Finance Leases Operating Leases

Weighted-average lease term 1 year 3 years

Weighted-average discount rate 4.9 % 5.4 %

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2021, the future amounts due under subleases for each of the next five years and thereafter are as follows (in thousands):

Total future sublease income $ 14,380

As of December 31, 2022 and 2021, the weighted-average remaining lease term and weighted-average discount rate for our operating leases were as follows:

December 31, 2022 December 31, 2021

Weighted-average lease term 1 year 3 years

Weighted-average discount rate 6.4 % 5.4 %

COMMITMENTS AND CONTINGENCIES

11 unchanged sentences

The lead plaintiff alleges that Groupon and certain of its officers made materially false and/or misleading statements or omissions regarding its business, operations and prospects, specifically as it relates to reiterating its full year guidance on November 4, 2019 and the Groupon Select program.

Plaintiff seeks unspecified compensatory damages and attorneys' fees.

Discovery has now commenced in this matter.

We intend to continue to vigorously defend the case, which we believe to be without merit.

In addition, three shareholders have filed separate shareholder derivative lawsuits in relation to the same events that are the subject of the securities litigation described above (collectively, the “Derivative Lawsuits”).

First, on September 9, 2021, a shareholder named Jonathan Frankel filed a federal derivative lawsuit in the United States District Court for District of Delaware.

Second, on January 19, 2022, a shareholder named Alyssa Estreen filed a derivative lawsuit in the Court of Chancery in the State of Delaware.

Finally, on January 24, 2022, a shareholder named Saman Khoury filed a derivative lawsuit, also in the Court of Chancery in the State of Delaware.

All three lawsuits name Groupon and certain of the Company's former and current officers and directors.

The allegations in all three Derivative Lawsuits relate to the same time period and events that are the subject of the Securities Lawsuit and allege that the Company and its shareholders have sustained damages as a result of the conduct of certain current and former officers and directors.

The Plaintiffs in each of these Derivatives Lawsuits seek unspecified damages they allege were sustained by the Company, injunctive and equitable relief and attorneys' fees.

On May 6, 2022, the parties reached an agreement to settle this matter in its entirety for $ 13.5 million and signed a term sheet memorializing preliminary terms.

On June 27, 2022, the District Court granted preliminary approval of the settlement.

On October 28, 2022, the District Court granted final approval of the settlement class with no class members opting out and no objections.

Now that the settlement class has been confirmed and the case is fully resolved with no opt outs, all class members must follow a claims process administered by a third party and will be barred from filing future lawsuits based on these events.

The full amount of the $ 13.5 million settlement is covered under Groupon's insurance policies and was paid into an escrow fund by Groupon’s insurance carriers on July 26, 2022.

The settlement accrual and insurance receivable were settled as of December 31, 2022.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In addition, four shareholders have filed separate shareholder derivative lawsuits in relation to the same events that are subject to the securities litigation described above (collectively, the “Derivative Lawsuits”).

First, on September 9, 2021, a shareholder named Jonathan Frankel filed a federal derivative lawsuit in the United States District Court for District of Delaware.

Second, on January 19, 2022, a shareholder named Alyssa Estreen filed a derivative lawsuit in the Court of Chancery in the State of Delaware.

Third, on January 24, 2022, a shareholder named Saman Khoury filed a derivative lawsuit, also in the Court of Chancery in the State of Delaware.

Finally, on May 9, 2022 a shareholder named Moriah Anders filed a lawsuit, also in the Court of Chancery in the State of Delaware.

All four lawsuits name Groupon and certain of the Company's former and current officers and directors.

The allegations in all four Derivative Lawsuits relate to the same time period and events that are the subject of the Securities Lawsuit and allege that the Company and its shareholders have sustained damages as a result of the conduct of certain current and former officers and directors.

The Plaintiffs in each of these Derivative Lawsuits seek unspecified damages they allege were sustained by the Company, injunctive and equitable relief and attorneys' fees.

All four matters have been stayed pending settlement discussions.

On February 2, 2023, the Parties to all four Derivative Lawsuits executed a Stipulation of Settlement that was filed in Delaware Chancery Court.

Under the settlement, Groupon has agreed to undertake certain corporate reforms.

The Settlement requires notice to shareholders and Court approval.

Counsel for the Plaintiffs will submit a petition to the Court to be awarded attorneys' fees, the amount of which is at the discretion of the Court.

Any attorney fee award will be covered under Groupon's directors and officers insurance policies.

In addition, third parties have from time to time claimed, and others may claim in the future, that we have infringed their intellectual property rights.

12 unchanged sentences

However, we believe that the amount of reasonably possible losses in excess of the amounts accrued for those matters would not have a material adverse effect on our business, consolidated financial position, results of operations or cash flows.

Our accrued liabilities for loss contingencies related to legal and regulatory matters may change in the future as a result of new developments, including, but not limited to, the occurrence of new legal matters, changes in the law or regulatory environment, adverse or favorable rulings, newly discovered facts relevant to the matter, or changes in the strategy for the matter.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the strategy for the matter.

Regardless of the outcome, litigation and other regulatory matters can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

3 unchanged sentences

We estimated the indemnification liabilities using a probability-weighted expected cash flow approach.

In 2020 and 2019, we decreased our indemnification liabilities due to the expiration of certain indemnification obligations.

The resulting benefit of $ 0.4 million and $ 2.2 million is recorded within Income (loss) from discontinued operations on the consolidated statements of operations for the years ended December 31, 2020 and 2019.

In 2020, we decreased our indemnification liabilities due to the expiration of certain contingent liabilities under our indemnification obligations.

The resulting benefit of $ 0.4 million is recorded within Income (loss) from discontinued operations, net of tax on the Consolidated Statements of Operations for the year ended December 31, 2020.

Our remaining indemnification liabilities were $ 2.8 million as of December 31, 2022.

We estimate that the total amount of obligations that are reasonably possible to arise under the indemnifications in excess of amounts accrued as of December 31, 2022 is approximately $ 11.7 million.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the years ended December 31, 2021, 2020 and 2019, we recognized $ 0.0 million , $ 0.4 million and $ 2.6 million in income (loss) from discontinued operations, net of tax primarily for gains related to the expiration of certain contingent liabilities under indemnification agreements.

In the normal course of business to facilitate transactions related to our operations, we indemnify certain parties, including employees, lessors, service providers, merchants, and counterparties to investment agreements and asset and stock purchase agreements with respect to various matters.

1 unchanged sentence

These agreements may limit the time within which an indemnification claim can be made and the amount of the claim.

We are also subject to increased exposure to various claims as a result of our divestitures and acquisitions, particularly in cases where we are entering into new businesses in connection with such acquisitions.

We are also subject to increased exposure to various claims as a result of our divestitures and acquisitions.

We may also become more vulnerable to claims as we expand the range and scope of our services and are subject to laws in jurisdictions where the underlying laws with respect to potential liability are either unclear or less favorable.

3 unchanged sentences

STOCKHOLDERS' EQUITY

Reverse Stock Split

On June 9, 2020, our stockholders approved amendments to our Restated Certificate of Incorporation to effect a reverse stock split of our shares of common stock, and our Board approved a final reverse stock split ratio of 1-for-20 and a corresponding reduction in the number of authorized shares of our common stock.

The reverse stock split became effective on June 10, 2020.

On the effective date, every 20 shares of issued and outstanding common stock were combined and converted into one issued and outstanding share of common stock.

The number of authorized shares of Common Stock was reduced proportionately.

Fractional shares were cancelled and stockholders received cash in lieu thereof and the par value per share of common stock remains unchanged.

A proportionate adjustment was also made to the maximum number of shares of common stock issuable under the Groupon, Inc.

Stock Plans (the "Plans"), and the Groupon, Inc.

2012 Employee Stock Purchase Plan, as amended ("ESPP").

Preferred Stock

16 unchanged sentences

Groupon, Inc.

In January 2008, we adopted the 2008 Stock Option Plan, as amended (the "2008 Plan"), under which options for up to 3,230,925 shares of common stock were authorized to be issued to employees, consultants and directors.

The 2008 Plan was frozen in December 2010.

In April 2010, we established the Groupon, Inc.

2010 Stock Plan (the "2010 Plan"), as amended in April 2011, under which options and restricted stock units ("RSUs") for up to 1,000,000 shares of common stock were authorized for future issuance to employees, consultants and directors.

No new awards may be granted under the 2010 Plan following our initial public offering in November 2011.

In August 2011, we established the Groupon, Inc.

2011 Stock Plan (the "2011 Plan"), as amended in November 2013, May 2014, June 2016 and April 2019, under which options, RSUs and performance stock units for up to 9,375,000 shares of common stock were authorized for future issuance to employees, consultants and directors.

The Groupon, Inc.

Stock Plans described above (the "Plans") are administered by the Compensation Committee of the Board (the "Compensation Committee").

As of December 31, 2021, 2,055,180 shares of common stock were available for future issuance under the Plans.

The stock-based compensation expense related to stock awards issued under the Plans and acquisition-related awards are presented within the following line items of the consolidated statements of operations for the years ended December 31, 2021, 2020 and 2019 (in thousands):

2011 Stock Plan (the "2011 Plan"), as amended in November 2013, May 2014, June 2016, April 2019, and June 2022, under which options, restricted stock units and performance stock units for up to 11,875,000 shares of common stock were authorized for future issuance to employees, consultants and directors.

The 2011 Plan is administered by the Compensation Committee of the Board (the "Compensation Committee").

As of December 31, 2022, 3,266,298 shares of common stock were available for future issuance under the 2011 Plan.

The stock-based compensation expense related to stock awards issued under the 2011 Plan and acquisition-related awards are presented within the following line items of the Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020 (in thousands):

Year Ended December 31,

10 unchanged sentences

For the years ended December 31, 2022, 2021 and 2020, 83,551 , 49,399 and 69,371 shares of common stock were issued under the ESPP.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Restricted Stock Units

The restricted stock units granted under the Plans generally have vesting periods between one and four years and are amortized on a straight-line basis over their requisite service period.

The table below summarizes restricted stock unit activity under the Plans for the year ended December 31, 2021:

The restricted stock units granted under the 2011 Plan generally have vesting periods between one and four years and are amortized on a straight-line basis over their requisite service period.

The table below summarizes restricted stock unit activity under the 2011 Plan for the year ended December 31, 2022:

Restricted Stock Units Weighted- Average Grant Date Fair Value (per share)

4 unchanged sentences

Unvested at December 31, 2022 2,876,089 $ 19.33

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The weighted-average grant date fair value of restricted stock units granted in 2021 and 2020 was $ 31.48 and $ 24.92 .

The fair value of restricted stock units that vested during each of the three years ended December 31, 2022, 2021 and 2020 was $ 15.6 million, $ 48.8 million and $ 19.2 million.

As of December 31, 2021, $ 49.9 million of unrecognized compensation costs related to unvested employee restricted stock units are expected to be recognized over a remaining weighted-average period of 1.11 years.

As of December 31, 2022, $ 39.3 million of unrecognized compensation costs related to unvested employee restricted stock units are expected to be recognized over a remaining weighted-average period of 1 year.

Performance Share Units

We grant performance share units under the Plans that vest in shares of our common stock upon the achievement of financial and operational targets specified in the respective award agreement ("Performance Share Units").

During the year ended December 31, 2019, we also granted performance share units subject to a market condition ("Market-based Performance Share Units").

The Market-based Performance Share Units will vest if our average daily closing stock price is equal to or greater than $ 120.00 per share over a period of 30 consecutive trading days prior to December 31, 2022 or if a change in control occurs during the performance period at the specified stock price (and on a proportional basis for a change in control price between the grant date price and the specified stock price).

We used a Monte Carlo simulation to calculate the grant date fair value of the awards and the related derived service period over which we recognized the expense.

The key inputs used in the Monte Carlo simulation were the risk-free rate, our volatility of 49.8 % and our cost of equity of 12.8 %.

Our Performance Share Units and Market-based Performance Share Units are subject to continued employment through the performance period dictated by the award and certification by the Compensation Committee that the specified performance conditions have been achieved.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The table below summarizes Performance Share Unit activity under the Plans for the year ended December 31, 2021:

Performance Share Units Weighted-Average Grant Date Fair Value (per unit) Market-based Performance Share Units Weighted-Average Grant Date Fair Value (per unit)

We have previously granted performance share units under the 2011 Plan that vest in shares of our common stock upon the achievement of financial and operational targets specified in the respective award agreement ("Performance Share Units").

Our existing Performance Share Units are subject to continued employment through the performance period dictated by the award and certification by the Compensation Committee of the Board that the specified performance conditions have been achieved.

The table below summarizes Performance Share Unit activity under the 2011 Plan for the year ended December 31, 2022:

Performance Share Units Weighted-Average Grant Date Fair Value (per unit)

Unvested at December 31, 2021 37,763 $ 28.39

41,729 15.44 — —

Vested ( 20,494 ) 31.97

2 unchanged sentences

Maximum shares issuable upon vesting at December 31, 2022

37,763 57,668

(1) Performance Share Units granted during the year ended December 31, 2021 relate to the issuance of incremental shares upon the Compensation Committee's certification of the achievement of the 2020 performance metrics.

As of December 31, 2021, $ 0.1 million of unrecognized compensation costs related to unvested Performance Share Units are expected to be recognized over a remaining weighted-average period of 0.99 years.

We have recognized all compensation costs related to our unvested Market-Based Performance Share Units.

As of December 31, 2022, we have recognized substantially all expense related to the unvested Performance Share Units, which vested in the first quarter of 2023.

We have also previously granted performance share units subject to a market condition ("Market-based Performance Share Units").

As of December 31, 2022, 24,335 Market-based Performance Share Units were forfeited and 33,333 Market-based Performance Share Units expired as the market conditions were not met.

No Market-based Performance Share Units remain unvested and all related compensation costs have been recognized as of December 31, 2022.

Defined Contribution Plans

7 unchanged sentences

Contract Balances

Our deferred revenue relates to product sales and gift card revenue.

Revenue for product sales is recognized as the products are delivered to customers, generally within two weeks following the balance sheet date, while revenue for gift cards is recognized upon customer redemption.

Our deferred revenue relates to gift card revenue and is recognized upon customer redemption.

For prior periods, deferred revenue also included product sales and was recognized as the products were delivered to customers, generally within two weeks following the balance sheet date.

Our deferred revenue was $ 1.6 million as of December 31, 2022.

17 unchanged sentences

(1) Historically, customer credits have primarily been used within one year of issuance;

however, usage patterns have been impacted from changes in customer behavior due to COVID-19.

(2) The increase in our breakage revenue recognized is largely due to a change in estimate due to lower customer usage patterns since the onset of COVID-19.

however, usage patterns were impacted from changes in customer behavior due to COVID-19.

(2) The increase in our breakage revenue recognized was largely due to a change in estimate due to lower customer usage patterns from COVID-19.

Cost of Obtaining Contracts

2 unchanged sentences

The amortization of deferred contract acquisition costs is classified within Selling, general and administrative expense in the Consolidated Statements of Operations.

For the years ended December 31, 2021, 2020 and 2019, we amortized $ 10.5 million, $ 15.3 million and $ 20.4 million of deferred contract acquisition costs and did not recognize any impairment losses in relation to the deferred costs.

For the years ended December 31, 2022, 2021 and 2020, we amortized $ 10.7 million, $ 10.5 million and $ 15.3 million of deferred contract acquisition costs.

Allowance for Expected Credit Losses on Accounts Receivable

10 unchanged sentences

Balance as of December 31, 2022 $ 4,538

Variable Consideration for Unredeemed Vouchers

During the years ended December 31, 2022 and 2021, we recognized $ 9.1 million and $ 31.4 million of variable consideration from unredeemed vouchers that were sold in a prior year.

During the year ended December

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Variable Consideration for Unredeemed Vouchers

During the year ended December 31, 2021, we recognized $ 31.4 million of variable consideration from unredeemed vouchers that were sold in a prior year.

We have observed redemption rates lower than our historical estimates for vouchers sold at the onset of the COVID-19 pandemic, the substantial majority of which reached expiration during the year ended December 31, 2021.

Although redemption rates for vouchers sold in more recent periods have improved, the impact of COVID-19 on redemption behavior in future periods is still uncertain.

31, 2021, the substantial majority of vouchers sold at the onset of the COVID-19 pandemic reached expiration at redemption rates lower than our historical estimates.

Although redemption rates for vouchers sold in more recent periods have improved, the impact of macroeconomic conditions on redemption behavior in future periods is still uncertain.

When actual redemptions differ from our estimates, the effects could be material to the Consolidated Financial Statements.

RESTRUCTURING AND RELATED CHARGES

In April 2020, the Board approved a multi-phase restructuring plan related to our previously announced strategic shift and as part of the cost cutting measures implemented in response to the impact of COVID-19 on our business.

In August 2022 and April 2020, we initiated Board-approved restructuring plans.

Costs incurred related to the restructuring plans are classified as Restructuring and related charges on the Consolidated Statements of Operations.

The restructuring activities are summarized by plan in the sections below.

2022 Restructuring Plan

In August 2022, we initiated a multi-phase cost savings plan designed to reduce our expense structure to align with our go-forward business and financial objectives (the “2022 Cost Savings Plan”).

The 2022 Cost Savings Plan included a restructuring plan, approved by our Board on August 5, 2022 (the “2022 Restructuring Plan”).

The first phase of the 2022 Restructuring Plan includes an overall reduction of approximately 500 positions globally, with the majority of these reductions completed by the end of 2022 and the remainder expected in 2023.

In connection with the first phase, we expect to record total pre-tax charges of $ 10.0 million to $ 20.0 million.

Substantially all of the pre-tax charges are expected to be paid in cash and will relate to employee severance and compensation benefits, with an immaterial amount of charges related to other exit costs.

We have incurred total pretax charges of $ 9.6 million since the inception of the 2022 Restructuring Plan.

Our actions under the plan are substantially complete and we expect any future charges or credits will be from changes in estimates.

The following tables summarize costs incurred by segment related to the 2022 Restructuring Plan for the year ended December 31, 2022 (in thousands):

Year Ended December 31, 2022

Employee Severance and Benefit Costs (Credits) (1)

Other Exit Costs Total Restructuring Charges (Credits)

North America $ 8,024 $ 161 $ 8,185

International 1,464 — 1,464

Consolidated $ 9,488 $ 161 $ 9,649

(1) The employee severance and benefits costs for the year ended December 31, 2022 are related to the termination of approximately 380 employees, of which 16 are still completing their notice period and legally-required severance and benefits have been recognized as of December 31, 2022.

Additional severance and benefits costs related to the remaining 16 employees may be incurred in future periods.

The following table summarizes restructuring liability activity for the 2022 Restructuring Plan (in thousands):

Employee Severance and Benefit Costs Other Exit Costs Total

Balance as of December 31, 2021

Charges payable in cash 9,488 161 9,649

Cash payments ( 9,315 ) ( 161 ) ( 9,476 )

Foreign currency translation 2 — 2

Balance as of December 31, 2022 (1)

$ 175 $ — $ 175

(1) Substantially all of the remaining cash payments for the 2022 Restructuring Plan costs are expected to be disbursed through 2023.

In January 2023, the Board approved the second phase of the 2022 Restructuring Plan, which is expected to include an overall reduction of approximately 500 positions globally, with the majority of these reductions expected to occur by the end of the second quarter 2023.

In connection with the second phase, we expect to record total pre-tax charges of $ 10.0 million to $ 20.0 million.

A majority of the pre-tax charges for the second phase are expected to be paid in cash and primarily relate to employee severance and compensation benefits, with an immaterial amount of charges related to other exit costs.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2020 Restructuring Plan

We have incurred total pretax charges of $ 109.4 million since the inception of the 2020 Restructuring Plan.

Our actions under this plan were substantially completed by December 31, 2021, and our current and future charges or credits will be from changes in estimates.

Our 2020 Restructuring Plan included workforce reductions of approximately 1,600 positions globally, the exit or discontinuation of the use of certain leases and other assets, impairments of our right-of-use and other long-lived assets, and the exit of our operations in New Zealand and Japan.

In the first quarter 2021, we substantially liquidated our subsidiary in Japan and reclassified $ 32.3 million of cumulative foreign currency translation gains into earnings, which is presented in Other income (expense), net on the Consolidated Statements of Operations for the year ended December 31, 2021.

Costs incurred related to the restructuring plan are classified as Restructuring and related charges on the consolidated statements of operations.

The following tables summarize costs incurred by segment related to the 2020 Restructuring Plan for the years ended December 31, 2022, 2021 and 2020 (in thousands):

9 unchanged sentences

Consolidated $ 28,803 $ 2,377 $ 870 $ 9,845 $ 41,895

Year Ended December 31, 2020

Employee Severance and Benefit Costs (Credits) Legal and Advisory Costs Property, Equipment and Software Impairments Right-of-Use Asset Impairments and Lease-related Charges (Credits) Total Restructuring Charges (Credits)

North America $ 17,322 $ 1,308 $ 5,322 $ 13,775 $ 37,727

International 20,679 829 291 5,310 27,109

Consolidated $ 38,001 $ 2,137 $ 5,613 $ 19,085 $ 64,836

As a part of our 2020 Restructuring Plan, we terminated or modified several of our leases.

In other cases we vacated our leased facilities, and some of those facilities are being actively marketed for sublease or we are in negotiations with the landlord to potentially terminate or modify those leases.

For the year ended December 31, 2021, we recognized $ 5.5 million and $ 2.2 million of long-lived asset impairment in our North America and International segments due to actions taken under our restructuring plan.

For the year ended December 31, 2020, we recognized $ 18.1 million and $ 3.5 million of long-lived asset impairment in our North America and International segments due to actions taken under our restructuring plan.

See Note 3, COVID-19 Pandemic, Note 4, Property, Equipment and Software, Net and Note 9, Leases for additional information.

For the year ended December 31, 2022, we recognized long-lived asset impairment related to those leases of $ 1.8 million and $ 1.2 million in our North America and International segments.

In addition, during the year ended December 31, 2022, we recognized a gain of $ 4.5 million for one of our previously-impaired leases in our North America segment due to our reassessment of our 600 West Chicago lease given our option to early terminate.

For the year ended December 31, 2021, we recognized long-lived asset impairment of $ 5.5 million and $ 2.2 million in our North America and International segments.

For the year ended December 31, 2020, we recognized long-lived asset impairment of $ 18.1 million and $ 3.5 million in our North America and International segments.

See Note 3, Property, Equipment and Software, Net and Note 8, Leases for additional information.

Rent expense, including amortization of the right-of-use asset and accretion of the operating lease liability, sublease income, termination and modification gains and losses, and other variable lease costs related to the leased facilities vacated as part of our 2020 Restructuring Plan are presented within Restructuring and related charges in the Consolidated Statements of Operations.

The current and non-current liabilities associated with these leases continue to be presented within Other current liabilities and Operating lease obligations in the consolidated balance sheets.

The current and non-current liabilities associated with these leases continue to be presented within Accrued expenses and other current liabilities and Operating lease obligations in the Consolidated Balance Sheets.

GROUPON, INC.

5 unchanged sentences

Charges payable in cash 28,803 2,376 31,179

36,266 2,137 38,403

Cash payments ( 30,100 ) ( 2,897 ) ( 32,997 )

6 unchanged sentences

$ 4,306 $ 301 $ 4,607

(1) Amounts included in the year ended December 31, 2019 are related to prior restructuring plans and the liabilities under those plans have been substantially settled.

(2) Excludes stock-based compensation of $ 1.7 million related to accelerated vesting of stock-based compensation awards for certain employees terminated as a result of our restructuring activities.

(3) Includes employee severance and benefit costs related to the termination of employees.

Substantially all of the remaining cash payments for those costs are expected to be disbursed through 2022.

(1) Substantially all of the remaining cash payments for the 2020 Restructuring Plan costs are expected to be disbursed by the end of 2023.

The components of pretax income (loss) from continuing operations for the years ended December 31, 2022, 2021 and 2020 were as follows (in thousands):

3 unchanged sentences

International ( 126,714 ) 27,150 ( 238,367 )

Income (loss) before provision (benefit) for income taxes $ 88,025 $ ( 294,066 ) $ ( 13,531 )

The provision (benefit) for income taxes from continuing operations for the years ended December 31, 2021, 2020 and 2019 consisted of the following components (in thousands):

Income (loss) from continuing operations before provision (benefit) for income taxes $ ( 191,970 ) $ 88,025 $ ( 294,066 )

The Provision (benefit) for income taxes for the years ended December 31, 2022, 2021 and 2020 consisted of the following components (in thousands):

Year Ended December 31,

11 unchanged sentences

Provision (benefit) for income taxes (1)

All of the provision (benefit) for income taxes of $( 32.3 ) million, $( 7.5 ) million and $ 0.8 million for the years ended December 31, 2021, 2020 and 2019 was related to continuing operations.

$ 42,410 $ ( 32,323 ) $ ( 7,504 )

(1) Amounts included in the Provision (benefit) for income taxes related to continuing operations.

GROUPON, INC.

15 unchanged sentences

Forgiveness of intercompany liabilities 1,468 ( 62 ) ( 2,863 )

Net operating loss expiration — 19,962 12,537

Tax attribute expiration 5,519 — 19,962

Goodwill impairment 7,213 — 23,202

17 unchanged sentences

Unrealized foreign currency exchange losses — 1,078

Capitalized research and development costs (1)

Other 312 244

6 unchanged sentences

Right-of-use asset ( 679 ) ( 7,293 )

Convertible senior notes — ( 1,163 )

Deferred revenue ( 8,027 ) ( 12,755 )

1 unchanged sentence

Net deferred tax asset (liability) $ 10,450 $ 60,143

(1) The 2017 Tax Cuts and Jobs Act amended Internal Revenue Cost Section 174 to require taxpayers to capitalize certain research and experimental expenditures.

This regulatory change is effective for amounts paid or incurred in tax years beginning after December 31, 2021.

A new deferred tax asset has been established in relation to this law change and the capitalized Section 174 costs must be amortized over five years.

We recognize deferred tax assets to the extent that they will be realizable through future reversals of existing taxable temporary differences, through taxable income in carryback years for the applicable jurisdictions or based on projections of future income for those jurisdictions that have achieved sustained profitability.

In evaluating the need for a valuation allowance, management considers both positive and negative evidence that could affect its view of the future realization of deferred tax assets and places greater weight on recent and objectively verifiable current information.

As of December 31, 2021, we have demonstrated sustained profitability and are forecasting pre-tax earnings in the U.S., which have been considered to be sources of positive evidence.

In analyzing all available evidence, management determined there is sufficient positive evidence outweighing negative evidence to conclude that it is more likely than not that a portion of the U.S.

deferred tax assets is realizable.

As a result, we released $ 57.7 million of the valuation allowance against our federal and state deferred tax assets, resulting in a $ 50.3 million reduction to expense, and a $ 7.4 million adjustment to equity.

We continue to maintain a valuation allowance in the U.S.

against capital losses, deferred tax assets that will convert into capital losses upon reversal, and state credits that we are not expecting to be able to realize, and substantially all of our foreign deferred tax assets.

As of December 31, 2022, we were in a cumulative pre-tax loss position, adjusted for certain permanent items, in the U.S.

Additionally, we do not have any sources of income that support utilization of our U.S.

deferred tax assets.

In analyzing all available evidence, management determined that it is not more likely than not that the U.S.

deferred tax assets will be realized due to the significant negative evidence outweighing the positive evidence.

As a result, for the year ended December 31, 2022, we recognized a valuation allowance against all U.S.

federal and state deferred tax assets, which resulted in a $ 51.9 million charge to income tax expense.

We continue to maintain a valuation allowance against substantially all of our foreign deferred tax assets.

At December 31, 2021, we had demonstrated profit, which was considered to be a source of positive evidence.

In analyzing all available evidence at the time, management determined there was sufficient positive evidence outweighing negative evidence to conclude that it was more likely than not that a portion of the U.S.

deferred tax assets were realizable.

As such, for the year ended December 31, 2021, we released $ 57.7 million of the valuation allowance against a portion of our U.S.

federal and state deferred tax assets, resulting in a $ 50.3 million reduction to expense, and a $ 7.4 million adjustment to equity.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We had $ 19.9 million of federal net operating loss carryforwards as of December 31, 2022 which will begin expiring in 2027.

5 unchanged sentences

For tax positions meeting the more-likely-than-not criterion, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes activity related to our gross unrecognized tax benefits, excluding interest and penalties, for the years ended December 31, 2022, 2021 and 2020 (in thousands):

20 unchanged sentences

In general, it is our practice and intention to reinvest the earnings of our non-U.S.

subsidiaries in those operations.

Additionally, while we did not incur the deemed repatriation tax, an actual repatriation from our non-U.S.

subsidiaries in those operations or remit such earnings in a tax-efficient manner.

Additionally, an actual repatriation from our non-U.S.

subsidiaries could be subject to foreign and U.S.

2 unchanged sentences

The actual tax cost resulting from a distribution would depend on income tax laws and circumstances at the time of distribution.

Determination of the amount of unrecognized deferred tax liability related to the excess of the financial reporting basis over the tax basis of our foreign subsidiaries is not practical due to the complexities associated with the calculation .

Determination of the amount of unrecognized deferred tax liability related to the excess of the financial reporting

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

basis over the tax basis of our foreign subsidiaries is not practical due to the complexities associated with the calculation .

VARIABLE INTEREST ENTITY

2 unchanged sentences

Our obligations associated with our interests in the LLC are primarily administering transactions, contributing intellectual property, identifying deals and promoting the sale of deal offerings, coordinating the distribution of deal offerings and providing the record keeping.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Under the LLC agreement, as amended, the LLC shall be dissolved upon the occurrence of any of the following events:

21 unchanged sentences

We have fair value option investments and available-for-sale securities that we measure using the income approach.

We measure the fair value of those available-for-sale securities using the discounted cash flow method.

We have classified these investments as Level 3 due to the lack of observable market data over fair value inputs such as cash flow projections and discount rates.

5 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table provides a roll-forward of the fair value of recurring Level 3 fair value measurements for the years ended December 31, 2021, 2020 and 2019 (in thousands):

Year Ended December 31,

2021 2020 2019

Fair value option investments:

Beginning balance $ — $ 1,405 $ 73,902

Total gains (losses) included in earnings — ( 1,405 ) ( 72,497 )

Ending balance $ — $ — $ 1,405

Unrealized (losses) gains still held (1)

$ — $ ( 1,405 ) $ ( 72,497 )

Preferred shares:

Beginning balance $ — $ — $ 10,340

Total gains (losses) included in other comprehensive income (loss) — — ( 379 )

Impairments included in earnings — — ( 9,961 )

Ending balance $ — $ — $ —

Unrealized gains (losses) still held (1)

$ — $ — $ ( 10,340 )

Contingent consideration:

Beginning balance $ 326 $ 1,298 $ 1,529

Settlements of contingent consideration liabilities ( 393 ) ( 908 ) ( 312 )

Foreign currency translation and total losses (gains) included in earnings 67 ( 64 ) 81

Ending balance $ — $ 326 $ 1,298

Unrealized losses (gains) still held (1)

(1) Represents the unrealized gains or losses recorded in earnings and/or other comprehensive income (loss) during the period for assets and liabilities classified as Level 3 that are still held (or outstanding) at the end of the period.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis, including assets that are written down to fair value as a result of an impairment or increased due to an observable price change in an orderly transaction.

During the year ended December 31, 2021, we adjusted the carrying value of an other equity investment, which resulted in an unrealized gain of $ 89.1 million, and sold shares in two other equity investments for a gain of $ 6.4 million.

For the year ended December 31, 2020, we recognized a $ 6.7 million impairment related to an other equity method investment.

For the year ended December 31, 2019, we adjusted the carrying value of an other equity investment, which resulted in an unrealized gain of $ 51.4 million.

There was no activity in the fair value of recurring Level 3 fair value measurements for the years ended December 31, 2022 and 2021.

During the year ended December 31, 2020, we recognized a $ 1.4 million loss from changes in the fair value of one of our fair value option investments.

See Note 5, Investments , for additional information.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis, including assets that are written down to fair value as a result of an impairment or modified due to an observable price change in an orderly transaction.

We recognized $ 35.4 million in non-cash impairment charges related to goodwill for the year ended December 31, 2022.

We recognized $ 15.3 million in non-cash impairment charges related to long-lived assets for the year ended December 31, 2022, of which $ 3.0 million are included in Restructuring and related charges on our Consolidated Statements of Operations.

We recognized $ 7.7 million in non-cash impairment charges related to Right-of-use assets - operating leases and leasehold improvements during the year ended December 31, 2021, which is included in Restructuring and related charges on our Consolidated Statements of Operations.

1 unchanged sentence

See Note 3, Property, Equipment and Software, Net, Note 4, Goodwill and Other Intangible Assets, Note 8, Leases and Note 13, Restructuring and Related Charges , for additional information.

We classified the fair value of the Atairos Notes and 2026 Notes as a Level 3 measurement due to the lack of observable market data over fair value inputs such as our stock price volatility over the term of the respective note and our cost of debt.

The estimated fair value of the 2026 Notes, that were issued in March and April 2021, was $ 183.3 million as of December 31, 2021 and the Atairos Notes, that were repurchased in May 2021, was $ 263.3 million as of December 31, 2020, both of which were determined using a lattice model.

See Note 8, Financing Arrangements, for additional information.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the year ended December 31, 2020, we recognized a $ 6.7 million impairment related to an other equity method investment.

See Note 5, Investments , for additional information.

Estimated Fair Value of Financial Assets and Liabilities Not Measured at Fair Value

4 unchanged sentences

Diluted net income (loss) per share is computed using the weighted-average number of common shares and the effect of potentially dilutive securities outstanding during the period.

Potentially dilutive securities include stock options, restricted stock units, performance share units, ESPP shares, warrants, convertible senior notes and capped call transactions.

Potentially dilutive securities include restricted stock units, performance share units, ESPP shares, warrants, convertible senior notes and capped call transactions.

If dilutive, those potentially dilutive securities are reflected in diluted net income (loss) per share using the treasury stock method, except for the convertible senior notes, which are subject to the if-converted method.

39 unchanged sentences

— — 2,314,815

Convertible senior notes due 2026 (1)

3,376,400 — —

Warrants — 877,595 2,314,815

4 unchanged sentences

See Note 7, Financing Arrangements , for additional information.

We had outstanding Market-based Performance Share Units as of December 31, 2021 that were eligible to vest into shares of common stock subject to the achievement of specified performance or market conditions.

Contingently-issuable shares are excluded from the computation of diluted net income (loss) per share if, based on current period results, the shares would not be issuable if the end of the reporting period were the end of the contingency period.

As of December 31, 2021, there were up to 57,668 shares of common stock issuable upon vesting of outstanding Market-based Performance Share Units that were excluded from the table above as the performance or market conditions were not satisfied as of the end of the period.

As of December 31, 2022, no Market-based Performance Share Units remain unvested and outstanding, as the performance or market conditions were not met, and are excluded from the table above.

Compensation Arrangements , for additional information.

SEGMENT INFORMATION

5 unchanged sentences

Other operating expenses are excluded from contribution profit as management does not review those expenses by segment.

We completed a transition to a third-party goods marketplace in International in 2021, and therefore we no longer generate product revenue in our Goods category.

For the year ended December 31, 2022, adjustments to accruals previously established in our Goods category related to product are presented within service.

GROUPON, INC.

22 unchanged sentences

(1) North America includes revenue from the United States of $ 428.5 million, $ 597.6 million and $ 808.3 million for the years ended December 31, 2022, 2021 and 2020.

International includes revenue from the United Kingdom of $ 120.8 million, $ 216.3 million and $ 314.3 million for the years ended December 31, 2021, 2020 and 2019.

International includes revenue from the United Kingdom of $ 120.8 million and $ 216.3 million for the years ended December 31, 2021 and 2020.

There were no other individual countries that represented more than 10% of consolidated total revenue for the years ended December 31, 2022, 2021 and 2020.

51 unchanged sentences

(1) North America contains assets from the United States of $ 661.3 million and $ 951.8 million as of December 31, 2022 and 2021.

International contains assets from the United Kingdom of $ 126.0 million as of December 31, 2021 and from Switzerland of $ 151.7 million as of December 31, 2020.

International contains assets from the United Kingdom of $ 126.0 million as of December 31, 2021.

There were no other individual countries that represented more than 10% of consolidated total assets as of December 31, 2022 and 2021.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes tangible property and equipment, net of accumulated depreciation and amortization, by reportable segment as of December 31, 2022 and 2021 (in thousands):

4 unchanged sentences

$ 8,174 $ 18,809

(1) Substantially all tangible property and equipment within North America is located in the United States.

(1) All tangible property and equipment within North America is located in the United States.

There were no other individual countries located outside of the United States where tangible property and equipment, net is material as of December 31, 2022 and 2021.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes depreciation and amortization of property, equipment and software and intangible assets by reportable segment for the years ended December 31, 2022, 2021 and 2020 (in thousands):

14 unchanged sentences

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 8. Financial Statements and Supplementary Data