What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-15 compared with 2023-03-16 · 400 added, 426 removed, 1145 unchanged (42% of the section changed)

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Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Stockholders' Equity

Consolidated Statements of Stockholders' Equity (Deficit)

Consolidated Statements of Cash Flows

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We have audited the accompanying consolidated balance sheets of Groupon, Inc.

and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes and the schedule listed in the Index at Item 15(2) (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity (deficit), and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes and the schedule listed in the Index at Item 15(2) (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

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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

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• We tested the effectiveness of controls over the estimation of the variable consideration revenue.

• We evaluated the Company’s model used to measure the variable consideration revenue amount by considering if it conforms with the objectives and measurement principles of the revenue recognition standard related to variable consideration.

• We evaluated the Company’s model, including testing the mathematical accuracy of the model, used to measure the variable consideration revenue amount by considering if it conforms with the objectives and measurement principles of the revenue recognition standard related to variable consideration.

• We evaluated whether the Company used the proper data in the model.

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The Company received a proposed income tax assessment from the tax authority in one foreign jurisdiction in the amount of $120.7 million, inclusive of estimated incremental interest from the original assessment.

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.

In December 2023, the subsidiary subject to the proposed assessment received an unfavorable ruling at the lowest court level.

The subsidiary has lodged a second-level appeal and requested the suspension of a provisional payment demand of approximately $76.5 million.

The Company believes the assessment, which primarily relates to transfer pricing on transactions occurring in 2011, is without merit and has been vigorously defending the subsidiary in that matter.

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.

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• With the assistance of our foreign and US income tax specialists, we evaluated management’s analysis regarding the likelihood of sustaining its foreign tax position upon examination by the relevant foreign tax authorities;

and, we evaluated management’s estimate of the amount of tax benefit recognized.

we evaluated management’s estimate of the amount of tax benefit recognized;

and, we evaluated the likelihood of suspension of the provisional payment demand.

• We assessed the basis of the Company’s analysis and measurement by:

◦ Obtaining, reading, and evaluating the outside legal opinion received by the Company supporting its foreign tax position

◦ Obtaining, reading, and evaluating the outside legal opinion received by the Company supporting its position

◦ Obtaining, reading, and evaluating the written response from the outside legal counsel representing the Company provided to us as part of our annual legal inquiry process

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Critical Audit Matter Description

The Company’s annual and periodic evaluations of goodwill impairment involve the comparison of the fair value of each of the Company’s reporting units to its carrying value.

The Company determines the fair value of its reporting units primarily using the income approach (including discounted cash flows).

With respect to the income approach, management makes significant estimates and assumptions related to forecasts of future performance, including revenues, cost of revenue, and operating expenses and risk-adjusted discount rates.

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

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.

The Company’s annual evaluation of goodwill impairment involves the comparison of the fair value of the Company’s North America reporting unit to its carrying value.

The Company determines the fair value of the North America reporting unit using the income approach (including discounted cash flows).

When measuring fair value based on discounted cash flows, the Company makes assumptions about risk-adjusted discount rates, including weighted average cost of capital;

rates of increase in revenue, cost of revenue and operating expenses;

rates of long-term growth;

working capital levels;

and income tax rates.

The North America goodwill balance subject to the impairment test was $178.7 million as of December 31, 2023.

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

How the Critical Audit Matter Was Addressed in the Audit

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:

Our audit procedures related to the Company’s forecast 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 assessments, including those over the forecasts.

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

• 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.

• We evaluated the reasonableness of management’s forecast 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, 2) risk-adjusted discount rates, and 3) the long-term growth rate by:

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

◦ Testing the source information and the mathematical accuracy of the calculation underlying the determination of the risk-adjusted discount rates, and developing a range of independent estimates and comparing those to the risk-adjusted discount rates selected by management.

◦ Testing the source information and the mathematical accuracy of the calculation underlying the determination of the risk-adjusted discount rate, and developing a range of independent estimates and comparing those to the risk-adjusted discount rate selected by management.

/s/ Deloitte & Touche LLP

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Commitments and contingencies (see Note 9)

Stockholders' equity

Stockholders' equity (deficit)

Common Stock, par value $ 0.0001 per share, 100,500,000 shares authorized;

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Total Groupon, Inc.

stockholders' equity 8,475 209,872

stockholders' equity (deficit)

( 40,631 ) 8,475

Noncontrolling interests 319 383

Total equity 8,858 210,296

Total liabilities and equity $ 793,117 $ 1,157,881

Total equity (deficit)

( 40,312 ) 8,858

Total liabilities and equity (deficit)

$ 570,956 $ 793,117

See Notes to Consolidated Financial Statements.

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Other income (expense), net ( 25,174 ) ( 24,155 ) 92,680

Income (loss) from continuing operations before provision (benefit) for income taxes

Income (loss) before provision (benefit) for income taxes

( 43,426 ) ( 191,970 ) 88,025

Provision (benefit) for income taxes 9,508 42,410 ( 32,323 )

Income (loss) from continuing operations

( 234,380 ) 120,348 ( 286,562 )

Income (loss) from discontinued operations, net of tax

Net income (loss)

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$ ( 55,410 ) $ ( 237,609 ) $ 118,668

Basic net income (loss) per share:

Continuing operations $ ( 7.88 ) $ 4.04 $ ( 10.08 )

Discontinued operations — — 0.01

Basic net income (loss) per share $ ( 7.88 ) $ 4.04 $ ( 10.07 )

Diluted net income (loss) per share:

Continuing operations $ ( 7.88 ) $ 3.68 $ ( 10.08 )

Discontinued operations — — 0.01

Diluted net income (loss) per share $ ( 7.88 ) $ 3.68 $ ( 10.07 )

Net income (loss) per share:

$ ( 1.77 ) $ ( 7.88 ) $ 4.04

$ ( 1.77 ) $ ( 7.88 ) $ 3.68

Weighted average number of shares outstanding:

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2023 2022 2021

Income (loss) from continuing operations $ ( 234,380 ) $ 120,348 $ ( 286,562 )

Other comprehensive income (loss) from continuing operations:

Net income (loss)

$ ( 52,934 ) $ ( 234,380 ) $ 120,348

Other comprehensive income (loss):

Net change in unrealized gain (loss) on foreign currency translation adjustments ( 8,589 ) 7,755 ( 40,195 )

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

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

Comprehensive income (loss) from continuing operations ( 226,625 ) 112,426 ( 322,534 )

Income (loss) from discontinued operations — — 382

Comprehensive income (loss) from discontinued operations — — 382

Other comprehensive income (loss)

( 8,589 ) 7,755 ( 7,922 )

Comprehensive income (loss) ( 61,523 ) ( 226,625 ) 112,426

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GROUPON, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(in thousands, except share amounts)

Groupon, Inc.

Stockholders' Equity

Stockholders' Equity (Deficit)

Common Stock Additional Paid-In Capital Treasury Stock Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Groupon, Inc.

Stockholders' Equity Non-controlling Interests Total Equity

Stockholders' Equity (Deficit)

Non-controlling Interests Total Equity (Deficit)

Shares Amount Shares Amount

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

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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

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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 )

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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

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Comprehensive income (loss) — — — — — ( 55,410 ) ( 8,589 ) ( 63,999 ) 2,476 ( 61,523 )

Exercise of stock options

437,500 — 2,625 — — — — 2,625 — 2,625

Vesting of restricted stock units and performance share units 1,385,284 — — — — — — — — —

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$ ( 52,934 ) $ ( 234,380 ) $ 120,348

Income (loss) from discontinued operations, net of tax

Income (loss) from continuing operations

( 234,380 ) 120,348 ( 286,562 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

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1,735 49,099 ( 33,985 )

Amortization of debt discount on convertible senior notes

1,520 1,601 14,621

(Gain) loss on early lease termination

( 729 ) ( 4,471 ) —

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

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Operating lease obligations ( 27,149 ) ( 30,295 ) ( 31,801 )

Payments for early lease terminations

( 9,724 ) — —

Net cash provided by (used in) operating activities from continuing operations

( 1,427 ) ( 13,193 ) ( 13,706 )

Net cash provided by (used in) operating activities from discontinued operations

Net cash provided by (used in) operating activities

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Proceeds from sale or divestment of investment 18,924 — 6,950

Proceeds from sale of fixed assets

Acquisitions of intangible assets and other investing activities

( 2,525 ) ( 2,677 ) ( 3,131 )

Net cash provided by (used in) investing activities from continuing operations

( 38,845 ) ( 45,811 ) ( 21,346 )

Net cash provided by (used in) investing activities from discontinued operations

Net cash provided by (used in) investing activities

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( 3,299 ) ( 6,065 ) ( 19,834 )

Proceeds from stock option exercises and employee stock purchase plan

2,932 1,105 1,128

Payments of finance lease obligations

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( 35,690 ) ( 34,407 ) ( 183,850 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash, including cash classified within current assets of discontinued operations

( 8,548 ) 2,017 6,574

Net increase (decrease) in cash, cash equivalents and restricted cash, including cash classified within current assets of discontinued operations

Effect of exchange rate changes on cash, cash equivalents and restricted cash

1,014 ( 8,548 ) 2,017

Net increase (decrease) in cash classified within current assets of discontinued operations

Net increase (decrease) in cash, cash equivalents and restricted cash

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See Note 18, Segment Information, 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

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The Consolidated Financial Statements were prepared in accordance with U.S.

GAAP and include the assets, liabilities, revenue and expenses of all wholly-owned subsidiaries and majority-owned subsidiaries over which we exercise control and variable interest entities for which we have determined that we are the primary beneficiary.

generally accepted accounting principles ("GAAP") and include the assets, liabilities, revenue and expenses of all wholly-owned subsidiaries and majority-owned subsidiaries over which we exercise control and variable interest entities for which we have determined that we are the primary beneficiary.

Outside stockholders' interests in subsidiaries are shown on the Consolidated Financial Statements as Noncontrolling interests.

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.

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)

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.

The accompanying Consolidated Financial Statements are prepared in accordance with U.S.

GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Beginning in the fourth quarter 2022, we disclosed conditions and events such as increasing cash outflows, operating losses and insufficient cash balances that, when considered in the aggregate, raised substantial doubt about our ability to continue as a going concern.

However, that doubt was alleviated through management's plans.

In the second quarter 2023, the addition of the maturing credit facility indicated that substantial doubt was no longer alleviated by management's plans.

In the fourth quarter of 2023, we executed a fully backstopped Rights Offering that closed in January 2024.

The Rights Offering was oversubscribed and raised $ 80.0 million.

In February 2024, we used $ 43.1 million of proceeds from the Rights Offering to repay our credit facility in advance of its maturity in May 2024.

In the fourth quarter of 2023, we also received $ 18.9 million in proceeds from the sale of a portion of our non-controlling equity interest in SumUp.

Our net cash used in operating activities has improved year-over-year, from $ 78.0 million and $ 136.0 million for the years ended December 31, 2023 and December 31, 2022, with net cash provided by operating activities of $ 54.5 million and $ 15.9 million for the three months ended December 31, 2023 and December 31, 2022.

Accordingly, management has concluded that there is no longer substantial doubt about our ability to continue as a going concern.

Adoption of New Accounting Standards

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The preparation of financial statements in conformity with U.S.

generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes.

GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes.

Estimates in our financial statements include, but are not limited to, the following:

variable consideration from unredeemed vouchers;

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

consideration from unredeemed vouchers;

income taxes;

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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

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.

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 within Cost of revenue and Selling, general and administrative expense on the Consolidated Statements of Operations.

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Goodwill is allocated to our reporting units at acquisition.

Our reporting units are the same as our operating segments, North America and International.

Once goodwill has been allocated to the reporting units, it no longer retains its identification with a particular acquisition and becomes identified with the reporting unit in its entirety.

Accordingly, the fair value of the reporting unit as a whole is available to support the recoverability of its goodwill.

We evaluate goodwill for impairment annually on October 1 or more frequently when an event occurs or circumstances change that indicates the carrying value may not be recoverable.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We evaluate goodwill for impairment annually on October 1 or more frequently when an event occurs or circumstances change that indicates the carrying value of a reporting unit may exceed its fair value.

We have the option to assess goodwill for impairment by first performing a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value.

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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)

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.

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During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain.

For example, our effective tax rate could be adversely affected by earnings being lower than anticipated in countries where it has lower statutory rates and higher than anticipated in countries where it has higher statutory rates, by changes in foreign currency exchange rates, by changes in the valuation of deferred tax assets and liabilities, by changes in the measurement of uncertain tax positions or by changes in the relevant laws, regulations, principles and interpretations.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

relevant laws, regulations, principles and interpretations.

We account for uncertainty in income taxes by recognizing the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit.

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Lease Obligations

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

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

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

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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.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 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 Restructuring and related charges on the Consolidated Statements of Operations.

Revenue Recognition

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Revenue from hotel reservation offerings is recognized at the time the reservation is made, net of an allowance for estimated cancellations.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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The liability for estimated refunds is included within Accrued expenses and other current liabilities on the Consolidated Balance Sheets.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We estimate our refund reserve using historical refund experience by category.

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Customer credits are primarily used within one year of issuance.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Sales and Related Taxes

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Cost of Revenue

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

Cost of revenue consists 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.

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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

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Expense is generally recognized on a straight-line basis over the service period during which awards are expected to vest, except for awards with both performance conditions and a graded vesting schedule, which are recognized using the accelerated method.

We present stock-based compensation expense within the Consolidated Statements of Operations based on the classification of the respective employees' cash compensation.

We present stock-based compensation expense within the Consolidated Statements of Operations.

Foreign Currency

Balance sheet accounts of our operations outside of the United States are translated from foreign currencies into U.S.

dollars at exchange rates as of the Consolidated Balance Sheet dates.

dollars at exchange rates as of the Consolidated Balance Sheet date.

Revenue and expenses are translated at average exchange rates during the period.

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Recently Issued Accounting Standards

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.

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07 Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

The Company is assessing the effect this guidance may have on our disclosures.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

This ASU is effective for annual periods beginning after December 15, 2024.

The Company is assessing the effect this guidance may have on our disclosures.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

PROPERTY, EQUIPMENT AND SOFTWARE, NET

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(1) The net carrying amount of internally-developed software was $ 28.4 million and $ 48.6 million as of December 31, 2023 and 2022.

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;

forecasted revenue, cost of revenue and operating expenses;

forecasted capital expenditures and working capital needs;

weighted-average cost of capital;

rates of long-term growth;

and income tax rates.

We performed an assessment in the first, second, third and fourth quarters of 2023 and did not identify a triggering event that would have required us to test for impairment for such periods.

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.

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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.

During the third quarter of 2021, we recognized long-lived asset impairments for certain leasehold improvements under our 2020 Restructuring Plan.

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

In order to evaluate long-lived assets for impairment in 2022 and 2021, we compared the fair value our asset groups to their carrying value.

In determining the fair values of our asset groups, we used 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;

forecasted revenue, cost of revenue and operating expenses;

forecasted capital expenditures and working capital needs;

weighted-average cost of capital;

rates of long-term growth;

and income tax rates.

GROUPON, INC.

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Total $ 43,401 $ 54,170 $ 63,925

The above amounts include amortization of internally-developed software of $ 44.2 million, $ 50.5 million and $ 58.8 million, and amortization expense on assets under finance leases of $ 0.5 million, $ 3.6 million and $ 6.7 million, for the years ended December 31, 2022, 2021 and 2020.

The above amounts include amortization of internally-developed software of $ 38.1 million, $ 44.2 million and $ 50.5 million for the years ended December 31, 2023, 2022 and 2021.

GROUPON, INC.

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GOODWILL AND OTHER INTANGIBLE ASSETS

The following table summarizes goodwill activity by segment for the years ended December 31, 2022 and 2021 (in thousands):

North America International (1)

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

— 3,776 3,776

Foreign currency translation

— ( 2,082 ) ( 2,082 )

The following table summarizes goodwill activity by segment for the year ended December 31, 2022 (in thousands).

There was no activity for the year ended December 31, 2023.

North America (1)

International (2)

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

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Balance as of December 31, 2022 $ 178,685 $ — $ 178,685

(1) As of December 31, 2021, and 2020, the International reporting unit had a negative carrying value.

(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.

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.

(1) As of December 31, 2023, the North America reporting unit had a negative carrying value.

(2) As of December 31, 2021, the International reporting unit had a negative carrying value.

We performed an assessment in the first, second, third and fourth quarters of 2023 and did not identify a triggering event that would have required us to test for impairment for such periods.

Additionally, we performed our annual goodwill impairment assessment as of October 1, 2023, which did no t identify any goodwill impairment.

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.

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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.

Our assessments did not identify any goodwill impairment.

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.

As a result of the change in reporting units, we performed a qualitative assessment of potential goodwill impairment for the new International reporting unit and performed separate qualitative assessments of potential goodwill impairment for our Asia Pacific and EMEA reporting units immediately prior to the change.

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

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.

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

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.

The following table summarizes intangible assets as of December 31, 2023 and 2022 (in thousands):

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Amortization of intangible assets is computed using the straight-line method over their estimated useful lives, which range from 1 to 10 years.

Amortization expense from continuing operations related to intangible assets was $ 8.5 million, $ 8.9 million and $ 9.7 million for the years ended December 31, 2022, 2021 and 2020.

Amortization expense related to intangible assets was $ 7.8 million, $ 8.5 million and $ 8.9 million for the years ended December 31, 2023, 2022 and 2021.

As of December 31, 2023, our estimated future amortization expense related to intangible assets is as follows (in thousands):

Thereafter 609

Total $ 17,641

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Total $ 11,404

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

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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, 2023 (in thousands).

There was no activity for the year ended December 31, 2022:

Balance as of December 31, 2022 $ 119,541

Upward adjustment for observable price change 89,083

Foreign currency translation

Gain (loss) from changes in fair value and foreign currency depreciation

Balance as of December 31, 2023 $ 74,823

We hold a 2.29 % non-controlling equity interest in SumUp Holdings S.a.r.l.

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

We hold a 1.79 % non-controlling equity interest in SumUp, a privately-held mobile payments company.

During the third quarter of 2023, we recorded a remeasurement of our investment in SumUp, resulting in a decline of $ 25.8 million based on a preliminary Share Purchase Agreement (the "Purchase Agreement").

This remeasurement represents non-cash investing activity.

The loss was driven by a share price reduction on a Euro basis as well as foreign currency depreciation of US dollars versus Euros.

The loss on the remeasurement is classified within Other income (expense), net on the Consolidated Statements of Operations for the year ended December 31, 2023.

During the fourth quarter of 2023, we entered into the Purchase Agreement agreeing to sell approximately 9.4 % of our shares in SumUp and received cash of $ 8.8 million in connection with the sale.

As a result of the transaction, our non-controlling equity interest in SumUp decreased from 2.29 % to 2.08 %.

Additionally, during the fourth quarter of 2023, the Company entered into a separate Share Purchase Agreement pursuant to which it has agreed to sell shares representing approximately 11.7 % of its 2.08 % interest in SumUp at approximately the same price as agreed to in connection with the first transaction noted above and received cash of $ 10.2 million in relation to the sale.

As a result of the second transaction, our non-controlling equity interest in SumUp decreased from 2.08 % to 1.79 %.

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.

The unrealized gain is presented within Other income (expense), net on the Consolidated Statements of Operations for the year ended December 31, 2021.

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.

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.

During the second quarter 2021, we

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Available-for-Sale Securities

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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

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

fair value with changes in fair value reported in earnings.

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.

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.

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.

The fair value of both of these investments was $ 0.0 million as of December 31, 2023 and 2022 and no financial statement activity was recorded for the years ended December 31, 2023, 2022 and 2021.

SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS INFORMATION

The following table summarizes Other income (expense), net for the years ended December 31, 2022, 2021 and 2020 (in thousands):

Year Ended December 31,

2022 2021 2020

Interest income $ 9,533 $ 5,116 $ 6,351

Interest expense ( 14,380 ) ( 17,206 ) ( 33,192 )

Changes in fair value of investments (1)

— 95,623 ( 8,089 )

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

Foreign currency gains (losses), net and other (2)

( 19,308 ) 14,237 17,962

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

(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, 2023 and 2022 (in thousands):

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Deferred cloud implementation cost 14,627 9,362

Restricted Cash (1)

Other 7,797 8,583

Total prepaid expenses and other current assets $ 63,647 $ 41,101

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(1) Primarily consists of cash collateral related to our letters of credit.

See Note 7, Financing Arrangements for additional information .

The following table summarizes Other non-current assets as of December 31, 2023 and 2022 (in thousands):

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Total other non-current assets $ 6,095 $ 27,491

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes Accrued expenses and other current liabilities as of December 31, 2023 and 2022 (in thousands):

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Total accrued expenses and other current liabilities $ 101,939 $ 171,452

(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.

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

This balance was paid in January 2023.

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Total other non-current liabilities $ 13,262 $ 18,586

FINANCING ARRANGEMENTS

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.

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)

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 %.

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-classified instrument.

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.

Transaction costs related to the issuance of the Atairos Notes that were allocated to the equity component were reclassified out of Additional paid-in capital and the amortization and the related debt discount associated with these costs was recalculated through the transition date.

This resulted in an effective interest rate of 3.76 %.

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):

The following table summarizes Other income (expense), net for the years ended December 31, 2023, 2022 and 2021 (in thousands):

Year Ended December 31,

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

2023 2022 2021

Amortization of debt discount 451 14,621

Total $ 3,475 $ 22,749

Note Hedges and Warrants

In May 2016, we purchased convertible note hedges with respect to our common stock for a cost of $ 59.1 million from certain bank counterparties.

The convertible note hedges were intended to reduce the potential economic dilution upon conversion of the Atairos Notes.

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

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.

Taken together, the purchase of the convertible note hedges and sale of warrants offset any actual dilution from the conversion of the Atairos Notes and increased the overall conversion price from $ 108.00 to $ 170.00 per share.

In connection with the repurchase of the Atairos Notes, we entered into agreements (collectively "the Unwind Agreements") with each of the bank counterparties in May 2021 to unwind the convertible note hedges and warrants.

Pursuant to the terms of the Unwind Agreements, we received cash proceeds of $ 2.3 million for the settlement of the convertible note hedges and paid cash consideration of $ 1.3 million for the settlement of the warrants.

1.125 % Convertible Senior Notes due 2026

In March and April 2021, we issued $ 230.0 million aggregate principal amount of convertible senior notes due 2026 (the "2026 Notes") in a private offering to qualified institutional buyers.

The net proceeds from this offering were $ 222.1 million.

The 2026 Notes bear interest at a rate of 1.125 % per annum, payable semiannually in arrears on March 15 and September 15 of each year, which began on September 15, 2021.

The 2026 Notes will mature on March 15, 2026, subject to earlier repurchase, redemption or conversion.

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.

Interest income $ 10,264 $ 9,533 $ 5,116

Interest expense ( 15,718 ) ( 14,380 ) ( 17,206 )

Changes in fair value of investments (1)

( 25,847 ) — 95,623

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

Foreign currency gains (losses), net and other (2)

6,127 ( 19,308 ) 14,237

Other income (expense), net $ ( 25,174 ) $ ( 24,155 ) $ 92,680

(1) The $ 25.8 million loss for the year ended December 31, 2023 relates to a remeasurement of our investment in SumUp.

The year ended December 31, 2021 includes an $ 89.1 million unrealized gain due to an upward adjustment for an observable price change of SumUp.

(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.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FINANCING ARRANGEMENTS

Convertible Senior Notes due 2026

The 2026 notes bear interest at a rate of 1.125 % per annum, payable semiannually in arrears on March 15 and September 15 of each year, with an annual effective interest rate of 1.83 %.

The 2026 Notes will mature on March 15, 2026, subject to earlier repurchase, redemption or conversion.

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.

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

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.

The Indenture includes customary events of default, including that acceleration of indebtedness under the 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.

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Those transaction costs were recorded as a debt discount in the Consolidated Balance Sheets and are amortized to interest expense.

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 Convertible senior notes, net in the accompanying Consolidated Balance Sheets.

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Capped Call Transactions

In March and April 2021, in connection with the offering of the 2026 Notes, we entered into privately-negotiated capped call transactions with each of Barclays Bank PLC, BNP Paribas and Mizuho Markets Americas LLC.

In connection with the 2026 Notes, we entered into privately-negotiated capped call transactions with each of Barclays Bank PLC, BNP Paribas and Mizuho Markets Americas LLC.

The capped call transactions cover, subject to customary adjustments, the number of shares of Common Stock initially underlying the 2026 Notes.

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Revolving Credit Agreement

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 May 2019, we entered into a second amended and restated senior secured revolving credit agreement, which matures on May 14, 2024, as amended from time to time, the Credit Agreement.

On February 12, 2024, we prepaid $ 43.1 million to terminate all commitments to extend further credit under the Credit Agreement using our $ 80.0 million in proceeds received from the Rights Offering.

The terms of the Rights Offering permit the Company to use the proceeds for general corporate purposes, including the repayment of debt.

We were not subject to any early termination penalties under the Credit Agreement.

The payment of the Payoff Amount terminated our obligations under the Credit Agreement, except for ordinary and customary survival terms.

In addition, we retained access to letters of credit, originally available under the Credit Agreement.

In September 2022, we entered into the Third Amendment to the 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

In March 2023, we entered into the Fourth Amendment to the Credit Agreement to modify certain financial covenants and provide for additional flexibility in our operations, among other changes, including certain modifications to (i) our requirements to maintain a monthly minimum liquidity balance (including any undrawn amounts under the revolving credit facility) of at least $ 50.0 million, (ii) the calculation of EBITDA under the Fourth Amendment, (iii) mandatory prepayment requirements, and (iv) certain affirmative covenants.

In addition, the Fourth Amendment reduced our borrowing capacity under our senior secured revolving credit facility from $ 150.0 million to $ 75.0 million, which provides for the issuance of up to $ 75.0 million in letters of credit, provided that the sum of

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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:

incur additional indebtedness;

make dividend and other restricted payments, including limiting the amount of our share repurchases;

enter into sale and leaseback transactions;

make investments, loans or advances;

grant or incur liens on assets;

engage in mergers, consolidations, liquidations or dissolutions;

and engage in transactions with related parties and other affiliates.

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.

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.

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.

outstanding borrowings and letters of credit do not exceed the maximum funding commitment of $ 75.0 million.

In November, 2023, the Company entered into the Fifth amendment to the Credit Agreement to provide for additional flexibility with regards to the fully backstopped Rights Offering.

See Note 10, Stockholders' Equity (Deficit) for additional information regarding the Rights Offering.

Specifically, the Company entered into the Fifth Amendment to the Credit Agreement.

The Fifth Amendment effects certain modifications to the definition of the term “Change in Control” and adds the term “Disqualified Equity Interest” to the Credit Agreement, among other changes.

In addition, the Fifth Amendment modifies the restricted payment covenant to permit the Company to declare and pay dividends with respect to its Equity Interests (other than Disqualified Equity Interests) payable solely in additional shares of its Equity Interests (other than Disqualified Equity Interests).

We deferred debt issuance costs of $ 4.6 million in aggregate in connection with the Credit Agreement.

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

As of December 31, 2023, we were in compliance with the applicable covenants under the Credit Agreement.

Non-compliance with the covenants under the 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 Credit Agreement or reduce the available commitments at any time.

Borrowings under the Second Amendment 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 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 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 0.40 % on the daily amount of the unused commitments under the Credit Agreement.

After June 30, 2023, the applicable spreads and commitment fee will revert to the levels set by the Second Amendment, 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 0.40 % on the daily amount of the unused commitments under the Credit Agreement.

The 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.

entity whose assets substantially consist of capital stock and/or intercompany debt of one or more foreign subsidiaries, subject to certain exceptions.

Certain of our domestic and foreign subsidiaries are guarantors 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.

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

Amounts committed to outstanding borrowings and letters of credit under the Credit Agreement as of December 31, 2023 and 2022 were as follows (in thousands):

December 31, 2023 December 31, 2022

Borrowings $ 42,776 $ 75,000

Letters of credit (1)

25,200 24,900

(1) Under the Credit Agreement, cash collateral was required if letters of credit extended beyond May 14, 2024.

Cash collateral is treated as restricted cash on the Consolidated Balance Sheets.

See Note 6, Supplemental Consolidated Balance Sheets and Statements of Operations Information for additional information .

Our operating leases primarily consist of leases for real estate throughout the world with lease expirations between 2024 and 2025.

These arrangements typically do not transfer ownership of the underlying asset as we do

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 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").

not assume, nor do we intend to assume, the risks and rewards of ownership.

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

In November 2023, we signed a lease for our new headquarters that continues to be located in Chicago, Illinois.

We had access to the facility effective December 2023 and the lease expires on December 15, 2025.

We previously leased 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.

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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.

We subleased a portion of 600 West Chicago to Uptake, Inc.

("Uptake"), 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.

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.

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

Given the uncertainty of collectability of our sublease income with Uptake, 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.

In the first quarter of 2023, we initiated a lawsuit against Uptake for breach of the lease agreement and settled that lawsuit in the fourth quarter of 2023.

See note 9, Commitments and Contingencies for additional information.

The following summarizes right-of-use assets as of December 31, 2023 and 2022 (in thousands):

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Right-of-use assets - operating leases $ 18,099 $ 60,204

Right-of-use assets - finance leases (1)

Total right-of-use assets, gross 60,204 95,233

accumulated depreciation and amortization ( 15,902 ) ( 48,077 )

Right-of-use assets, net $ 12,127 $ 49,192

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

Right-of-use assets - operating leases, net $ 2,197 $ 12,127

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.

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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.

Due to actions taken under our 2020 Restructuring Plan, we recognized impairment of $ 6.8 million related to right-of-use assets - operating leases for the year ended December 31, 2021, 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, 2023, 2022 and 2021 (in thousands):

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(2) Variable lease costs presented as Selling, general and administrative and Restructuring and related charges in the Consolidated Statements of Operations totaled $ 3.7 million and $ 2.6 million for the year ended December 31, 2023, $ 5.6 million and $ 2.4 million for the year ended December 31, 2022 and $ 4.7 million and $ 1.7 million for the year ended December 31, 2021.

(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.

(3) Sublease income, gross primarily presented as Restructuring and related charges in the Consolidated Statements of Operations for the years ended December 31, 2023 and entirely for the years ended December 31, 2022 and 2021.

Additionally, for the year ended December 31, 2023, sublease income, gross includes the settlement related to Uptake.

See Note 9, Commitments and Contingencies for additional information.

As of December 31, 2023, the future payments under operating leases for each of the next five years and thereafter are as follows (in thousands):

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As of December 31, 2023, we do not have any material non-cancelable operating lease commitments that have not yet commenced.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2023 and 2022, the weighted-average remaining lease term and weighted-average discount rate for our operating leases were as follows:

December 31, 2023 December 31, 2022

Weighted-average lease term 1 year 3 years

Weighted-average lease term 1 year 1 year

Weighted-average discount rate 5.8 % 6.4 %

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

COMMITMENTS AND CONTINGENCIES

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As of December 31, 2023, future payments under these contractual obligations were as follows (in thousands):

2023 $ 11,530

Total purchase obligations $ 36,349

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securities law, consumer class actions and suits alleging, among other things, violations of state consumer protection or privacy laws.

On April 28, 2020, an individual plaintiff filed a securities fraud class action complaint in the United States District Court for the Northern District of Illinois, and in July 2020, another individual was appointed as lead plaintiff ("Securities Lawsuit").

The lawsuit covers the time period from July 30, 2019 through February 18, 2020.

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.

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.

We sublease a portion of 600 West Chicago to Uptake.

In the first quarter of 2023, we initiated a lawsuit against Uptake in the Circuit Court of Cook County for breach of the lease agreement.

In the fourth quarter of 2023, that lawsuit was settled amicably for $ 4.25 million.

The matter has been concluded and the full settlement was received as of December 31, 2023.

The settlement was recorded within Restructuring and related charges in the Consolidated Statements of Operations.

On June 13, 2023, Groupon was granted final approval of a settlement that resolved four shareholder derivative lawsuits in relation to a previously settled lawsuit that alleged 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.

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

The Court awarded attorneys' fees in the amount of $ 950,000 to Plaintiffs' counsel.

That amount was covered under Groupon's insurance policies and was paid directly by Groupon's insurance carriers in July 2023.

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.

We are subject to intellectual property disputes, including patent infringement claims, and expect that we will continue to be subject to intellectual property infringement claims as our services expand in scope and complexity.

In the past, we have litigated such claims, and we are presently involved in several patent infringement and other intellectual property-related claims, including pending litigation or trademark disputes relating to, for example, our Goods category, some of which could involve potentially substantial claims for damages or injunctive relief.

In the past and/or at present, we have litigated patent infringement and other intellectual property-related claims, including pending litigation or trademark disputes relating to, for example, our Goods category, some of which involved or could have involved potentially substantial claims for damages or injunctive relief.

We may also become more vulnerable to third-party claims as laws such as the Digital Millennium Copyright Act are interpreted by the courts, and we become subject to laws in jurisdictions where the underlying laws with respect to the potential liability of online intermediaries are either unclear or less favorable.

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We also are subject to consumer claims or lawsuits relating to alleged violations of consumer protection or privacy rights and statutes, some of which could involve potentially substantial claims for damages, including statutory or punitive damages.

Consumer and privacy-related claims or lawsuits, whether meritorious or not, could be time consuming, result in costly litigation, damage awards, fines and penalties, injunctive relief or increased costs of doing business through adverse judgment or settlement, or require us to change our business practices, sometimes in expensive ways.

Consumer and privacy-related claims or lawsuits, whether meritorious or not, could be time consuming, result in costly litigation, damage awards, fines and penalties, injunctive relief or increased

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

costs of doing business through adverse judgment or settlement, or require us to change our business practices, sometimes in expensive ways.

We are also subject to, or in the future may become subject to, a variety of regulatory inquiries, audits, and investigations across the jurisdictions where we conduct our business, including, for example, inquiries related to consumer protection, employment matters and/or hiring practices, marketing practices, tax, unclaimed property and privacy rules and regulations.

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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

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.

Indemnifications

In October 2016, we completed a strategic review of our international markets and decided to pursue strategic alternatives for our operations in 12 countries, which were primarily based in Asia and Latin America.

In connection with the disposition of our operations in Latin America in 2017, we recorded $ 5.4 million in indemnification liabilities for certain tax and other matters upon the closing of the transactions as an adjustment to the net loss on the dispositions within discontinued operations at their fair value.

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

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, 2023.

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.

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, 2023 were approximately $ 11.7 million.

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.

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Historically, any payments that we have made under these agreements have not had a material impact on our operating results, financial position or cash flows.

STOCKHOLDERS' EQUITY

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

STOCKHOLDERS' EQUITY (DEFICIT)

Preferred Stock

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As of December 31, 2023, $ 245.0 million of Common Stock remained available for purchase under our program.

The timing and amount of share repurchases, if any, will be determined based on market conditions,

The timing and amount of share repurchases, if any, will be determined based on market conditions, limitations under the Credit Agreement, share price, available cash and other factors, and the share repurchase program may be terminated at any time.

Rights Offering

On November 7, 2023, the Board approved an $ 80.0 million fully backstopped Rights Offering to our stockholders of record of our Common Stock, as of the close of business on November 20, 2023.

To be able to execute the Rights Offering, the Credit Agreement was amended.

See Note 7 , Financing Arrangements for additional information.

The Rights Offering was made through the distribution of non-transferable subscription rights to purchase shares of Common Stock at a subscription price of $ 11.30 per share and otherwise on such terms and subject to such conditions as may be required to comply with any applicable Nasdaq Global Market stock exchange rules and regulations.

The subscription period for the Rights Offering expired at 5:00 p.m., New York City time, on January 17, 2024 (the "Expiration Date").

The Rights Offering was fully backstopped by Pale Fire Capital SICAV a.s.

(the “Backstop Party”), an entity affiliated with (i) Dusan Senkypl, the Company’s Interim Chief Executive Officer and a member of the Board, and (ii) Jan Barta, a member of the Board.

The Backstop Party had a binding commitment to (i) fully exercise its pro rata subscription right prior to the Expiration Date of the Rights Offering and (ii) fully purchase any and all unsubscribed shares in the Rights Offering following the Expiration Date at the same price and on the same terms and conditions as other participants in the Rights Offering.

On January 22, 2024, Groupon announced the closing of its $ 80.0 million fully backstopped Rights Offering for shares of its Common Stock, par value $ 0.0001 per share.

Pursuant to the terms of the Rights Offering, 7,079,646 shares of Common Stock were purchased at $ 11.30 per share, generating $ 80.0 million in gross proceeds to the Company.

As detailed below, the Rights Offering was oversubscribed, and the subscriptions, inclusive of the exercise of all over-subscription privileges (such aggregate number, the “Subscriptions”), well exceeded $ 80.0 million, the maximum aggregate offering size of the Rights Offering.

Through the exercise of both basic subscription rights and over-subscription privileges the Backstop Party, subscribed for approximately 7.1 million shares and other stockholders subscribed for approximately 9.7 million shares.

The Company is issuing 4,574,113 shares of Common Stock via the exercise of the basic subscription rights

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

limitations under the Amended Credit Agreement, share price, available cash and other factors, and the share repurchase program may be terminated at any time.

and 2,505,533 shares of Common Stock via the exercise of over-subscription privileges.

The Backstop Party purchased approximately 3.1 million shares of Common Stock in connection with the Rights Offering.

Pursuant to the Backstop Agreement, dated November 9, 2023, the Backstop Party agreed to (i) exercise its basic subscription rights in full and (ii) purchase any and all shares of Common Stock not subscribed for following the Expiration Date of the Rights Offering.

As no shares remained unsubscribed following the Expiration Date, the purchase of unsubscribed shares became unnecessary.

COMPENSATION ARRANGEMENTS

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In August 2011, we established the Groupon, Inc.

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.

2011 Stock Plan (the "2011 Plan"), most recently amended in March 2023, under which options, restricted stock units and performance stock units for up to 13,775,000 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").

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Selling, general and administrative 14,309 28,557 31,836

Restructuring and related charges — — 1,735

Total stock-based compensation expense $ 14,481 $ 30,006 $ 33,169

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The Groupon, Inc.

2012 Employee Stock Purchase Plan, as amended, authorizes us to grant up to 1,000,000 shares of common stock under that plan.

2012 Employee Stock Purchase Plan ("ESPP"), as amended, authorizes us to grant up to 1,000,000 shares of Common Stock under that plan.

For the years ended December 31, 2023, 2022 and 2021, 45,879 , 83,551 and 49,399 shares of Common Stock were issued under the ESPP.

Restricted Stock Units

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 restricted stock units granted under the 2011 Plan ("Restricted Stock Units") 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, 2023:

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The fair value of Restricted Stock Units that vested during each of the three years ended December 31, 2023, 2022 and 2021 was $ 8.9 million, $ 15.6 million and $ 48.8 million.

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.

As of December 31, 2023, $ 4.4 million of unrecognized compensation costs related to unvested employee Restricted Stock Units are expected to be recognized over a remaining weighted-average period of 0.64 years.

Stock Options

On March 30, 2023, we issued 3,500,000 units of stock options with a per share value of $ 0.95 , a strike price of $ 6.00 and vesting over two years .

The exercise price of stock options granted is equal to the fair market value of the underlying stock on the date of grant.

The contractual term for these stock options expires three years from the grant date.

The fair value of stock options on the grant date is amortized on a straight-line basis over the requisite service period.

The fair value of stock options granted is estimated on the date of grant using the Black-Scholes-Merton option-pricing model.

Expected volatility is based on Groupon's historical volatility over the estimated expected life of the stock options.

The expected term represents the period of time the stock options are expected to be outstanding.

The risk-free interest rate is based on yields on U.S.

Treasury STRIPS with maturity similar to the estimated expected life of the stock options.

The weighted-average assumptions for stock options granted are outlined in the following table:

Dividend yield 0.0 %

Risk-free interest rate 4.1 %

Expected term (in years) 2

Expected volatility 78.2 %

The table below summarizes stock option activity for the year ended December 31, 2023:

Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands)

Outstanding at December 31, 2022 — $ — — $ —

Granted 3,500,000 6.00 3.00 —

Exercised ( 437,500 ) 6.00 — —

Outstanding at December 31, 2023 2,187,500 6.00 2.25 14,963

Exercisable at December 31, 2023 875,000 $ 6.00 2.25 5,985

As of December 31, 2023, there was $ 2.1 million of total unrecognized compensation costs related to unvested stock options granted under the 2011 Plan.

That cost is expected to be recognized over a weighted-average period of 1.25 years.

The total fair value of shares vested during the year ended December 31, 2023 was $ 0.8 million.

Performance Share Units

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.

We have 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 service 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.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The table below summarizes Performance Share Unit activity under the 2011 Plan for the year ended December 31, 2023:

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Vested ( 17,269 ) 24.13

Forfeited — —

Unvested at December 31, 2023 506,324 $ 6.34

Maximum shares issuable upon vesting at December 31, 2023

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.

As of December 31, 2023, unrecognized compensation costs related to unvested Performance Share Units were $ 1.2 million.

That cost is expected to be recognized over a remaining weighted-average period of 0.33 years.

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.

As of December 31, 2023, there were no Market-based Performance Share Units outstanding.

During the year ended 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.

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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.

As of December 31, 2021 and 2020, our deferred revenue was $ 3.5 million and $ 11.2 million, all of which was recognized during the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2023, 2022 and 2021, our deferred revenue was $ 2.7 million, $ 1.6 million and $ 3.5 million.

All deferred revenue was recognized in the following annual period for the respective year-end.

GROUPON, INC.

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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.

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

Customer credits are typically used within one year of issuance.

Cost of Obtaining Contracts

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Allowance for Expected Credit Losses on Accounts Receivable

The following table summarizes the activity in the allowance for expected credit losses on accounts receivables for the year ended December 31, 2022 (in thousands):

The following table summarizes the activity in the allowance for expected credit losses on accounts receivables for the years ended December 31, 2023 and 2022 (in thousands):

Allowance for Expected Credit Losses

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Balance as of December 31, 2023 $ 2,856

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)

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.

Variable Consideration for Unredeemed Vouchers

During the years ended December 31, 2023, 2022, and 2021, we recognized $ 6.1 million, $ 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 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, however redemption rates for vouchers sold in more recent periods have improved.

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

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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.

The 2022 Restructuring Plan, including the first phase initiated August 2022, second phase initiated January 2023 and the third phase initiated July 2023 is expected to include an overall reduction of approximately 1,150 positions globally through natural attrition or involuntary termination.

The majority of these reductions were completed as of March 31, 2023 and the remainder are expected to occur by the end of 2024.

In connection with these actions, we expect to record total pre-tax charges of $ 22.0 million to $ 24.1 million.

A majority of the pre-tax charges are expected to be paid in cash and 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 $ 21.4 million since the inception of the 2022 Restructuring Plan.

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

The following tables summarize activity by segment related to the 2022 Restructuring Plan for the years ended December 31, 2023 and 2022 (in thousands):

Year Ended December 31, 2023

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Consolidated $ 10,862 $ 938 $ 11,800

(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):

(1) The employee severance and benefits costs for the year ended December 31, 2023 are related to the termination of approximately 470 employees.

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.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes restructuring liability activity for the years ended December 31, 2023 and 2022 for the 2022 Restructuring Plan (in thousands):

Employee Severance and Benefit Costs Other Exit Costs Total

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$ 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)

Charges payable in cash 10,862 938 11,800

Cash payments ( 10,602 ) ( 894 ) ( 11,496 )

Foreign currency translation 109 — 109

Balance as of December 31, 2023 (1)

$ 544 $ 44 $ 588

(1) Substantially all of the remaining cash payments for costs related to the 2022 Restructuring Plan are expected to be disbursed by the end of 2024.

2020 Restructuring Plan

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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.

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):

The following tables summarize activity by segment related to the 2020 Restructuring Plan for the years ended December 31, 2023, 2022 and 2021 (in thousands):

Year Ended December 31, 2023

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)

Employee Severance and Benefit Costs (Credits) Legal and Advisory Costs (Credits)

Property, Equipment and Software Impairments Lease-related Charges (Credits)

Total Restructuring Charges (Credits)

North America $ 102 $ 9 $ — $ ( 2,254 ) $ ( 2,143 )

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Year Ended December 31, 2022

Employee Severance and Benefit Costs (Credits) Legal and Advisory Costs (Credits)

Property, Equipment and Software Impairments Right-of-Use Asset Impairments and Lease-related Charges (Credits) Total Restructuring Charges (Credits)

North America $ 1 $ 155 $ — $ 418 $ 574

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Consolidated $ ( 94 ) $ 247 $ — $ 2,548 $ 2,701

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Year Ended December 31, 2021

Employee Severance and Benefit Costs (Credits) Legal and Advisory Costs (Credits)

Property, Equipment and Software Impairments Right-of-Use Asset Impairments and Lease-related Charges (Credits) Total Restructuring Charges (Credits)

North America $ 458 $ 1,696 $ 602 $ 7,278 $ 10,034

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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.

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

The year ended December 31, 2023 includes a $ 4.25 million settlement related to Uptake in our North America segment.

See Note 9, Commitments and Contingencies 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.

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

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.

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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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes restructuring liability activity for the years ended December 31, 2022 and 2021 (in thousands):

The following table summarizes restructuring liability activity for the years ended December 31, 2023 and 2022 for the 2020 Restructuring Plan (in thousands):

Employee Severance and Benefit Costs Other Exit Costs Total

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Balance as of December 31, 2022 $ 4,306 $ 301 $ 4,607

Charges payable in cash ( 94 ) 247 153

Charges payable in cash and changes in estimate (1)

( 2,788 ) 19 ( 2,769 )

Cash payments ( 727 ) ( 113 ) ( 840 )

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$ 839 $ 214 $ 1,053

(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):

(1) The credit recorded during the year ended December 31, 2023 primarily relates to the release of our estimated accrual for certain severance benefits upon expiration of the eligible payout period

(2) Substantially all of the cash payments for the 2020 Restructuring Plan costs have been disbursed

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The components of pretax income (loss) for the years ended December 31, 2023, 2022 and 2021 were as follows (in thousands):

Year Ended December 31,

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International ( 59,711 ) ( 126,714 ) 27,150

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

Income (loss) before provision (benefit) for income taxes

$ ( 43,426 ) $ ( 191,970 ) $ 88,025

The Provision (benefit) for income taxes for the years ended December 31, 2023, 2022 and 2021 consisted of the following components (in thousands):

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$ 9,508 $ 42,410 $ ( 32,323 )

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

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The items accounting for differences between the income tax provision (benefit) from continuing operations computed at the U.S.

The items accounting for differences between the income tax provision (benefit) computed at the U.S.

federal statutory rate and the Provision (benefit) for income taxes for the years ended December 31, 2023, 2022 and 2021 were as follows (in thousands):

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Tax attribute expiration — 5,519 —

Goodwill impairment 7,213 — 23,202

Asset impairments

( 82,988 ) 7,213 —

Observable price change on an other equity investment — — ( 17,955 )

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federal statutory rate through December 31, 2023.

This resulted in an adverse impact to the Provision (benefit) for income taxes in this rate reconciliation for the years ended December 31, 2022, 2021 and 2020 prior to the impact of valuation allowances, due to the net pretax losses from continuing operations in certain foreign jurisdictions with lower tax rates.

This resulted in an adverse impact to the Provision (benefit) for income taxes in this rate reconciliation for the years ended December 31, 2023, 2022 and 2021 prior to the impact of valuation allowances, due to the net pretax losses from operations in certain foreign jurisdictions with lower tax rates.

GROUPON, INC.

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Net operating loss and tax credit carryforwards (1)

217,560 135,743

Property, equipment and software, net 8,462 —

Intangible assets, net 20,586 19,139

Right-of-use assets

Investments 26,350 20,360

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Prepaid expenses and other assets ( 11,399 ) ( 11,983 )

Operating lease obligation

Property, equipment and software, net — ( 1,470 )

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

Right-of-use assets

Deferred revenue ( 8,931 ) ( 8,027 )

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Net deferred tax asset (liability) $ 9,114 $ 10,450

(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.

(1) Includes $ 83.0 million of tax losses recorded in 2023 due to an impairment of investment in subsidiaries.

An offsetting valuation allowance was recorded in 2023.

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

As of December 31, 2023, we continue to maintain a valuation allowance against substantially all of our U.S.

federal and state and foreign deferred tax assets.

At 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.

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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.

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We are subject to claims for tax assessments by foreign jurisdictions, including a proposed assessment for $ 120.7 million, inclusive of estimated incremental interest from the original assessment.

We believe that the assessment, which primarily relates to transfer pricing on transactions occurring in 2011, is without merit and we intend to vigorously defend ourselves in that matter.

In addition to any potential increases in our liabilities for uncertain tax positions from the ultimate resolution of that assessment, we believe that it is reasonably possible that reductions of up to $ 11.5 million in unrecognized tax benefits may occur within the 12 months following December 31, 2022 upon closing of income tax audits or the expiration of applicable statutes of limitations.

We believe that the assessment, which primarily relates to transfer pricing on transactions occurring in 2011, is without merit and the subsidiary subject to the proposed assessment has been vigorously defending itself in that matter.

In December 2023, the subsidiary received an unfavorable ruling at the lowest court level, but has lodged a second-level appeal, based on what it believes to be meritorious defenses to the assessment, and requested the suspension of a provisional payment demand of approximately $ 76.5 million.

Additionally, unrelated to this matter, in February 2024, the subsidiary received a proposed assessment of approximately $ 31.7 million related to a 2017 distribution made to its parent entity.

We believe this assessment is also without merit and the subsidiary intends to vigorously defend against this assessment.

In addition to any potential increases in our liabilities for uncertain tax positions from the ultimate resolution of these assessments, we believe that it is reasonably possible that reductions of up to $ 5.5 million in unrecognized tax benefits may occur within the 12 months following December 31, 2023 upon closing of income tax audits or the expiration of applicable statutes of limitations.

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

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state income taxes.

Aside from limited exceptions for which the related deferred tax liabilities recognized as of December 31, 2022 and 2021 are immaterial, we do not intend to distribute earnings of foreign subsidiaries for which we have an excess of the financial reporting basis over the tax basis of our investments and therefore have not recorded any deferred taxes related to such amounts.

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

Aside from limited exceptions for which the

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 .

related deferred tax liabilities recognized as of December 31, 2023 and 2022 are immaterial, we do not intend to distribute earnings of foreign subsidiaries for which we have an excess of the financial reporting basis over the tax basis of our investments and therefore have not recorded any deferred taxes related to such amounts.

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 .

VARIABLE INTEREST ENTITY

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or (6) a court's dissolution of the LLC.

We have determined that the LLC is a VIE and that we are its primary beneficiary.

We have determined that the LLC is a variable interest entity and that we are its primary beneficiary.

We consolidate the LLC because we have the power to direct the activities of the LLC that most significantly impact the LLC's economic performance.

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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.

Contingent consideration.

During the first quarter 2021, we settled a contingent consideration arrangement to the former owners of a business previously acquired in 2018.

We use the income approach to value contingent consideration obligations based on future financial performance.

We have previously classified our contingent consideration as Level 3 due to the lack of relevant observable market data over fair value inputs such as probability-weighting of payment outcomes.

GROUPON, INC.

1 unchanged sentence

There was no activity in the fair value of recurring Level 3 fair value measurements for the years ended December 31, 2023, 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 a non-cash remeasurement of our investment in SumUp of $ 25.8 million during the year ended December 31, 2023.

During the year ended December 31, 2021, we adjusted the carrying value of SumUp 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.

See Note 5, Investments , for additional information.

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

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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.

We recognized $ 109.5 million in non-cash impairment charges related to goodwill and $ 44.0 million in non-cash impairment charges related to long-lived assets during the year ended December 31, 2020, of which $ 21.6 million is included in Restructuring and related charges on our Consolidated Statements of Operations.

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.

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.

See Note 5, Investments , for additional information.

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

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

Potentially dilutive securities include stock options, 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.

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Basic and diluted net income (loss) per share:

Income (loss) - continuing operations $ ( 234,380 ) $ 120,348 $ ( 286,562 )

Net Income (loss)

$ ( 52,934 ) $ ( 234,380 ) $ 120,348

Net income (loss) attributable to noncontrolling interests 2,476 3,229 1,680

Basic net income (loss) attributable to common stockholders - continuing operations ( 237,609 ) 118,668 ( 288,313 )

Net income (loss) attributable to common stockholders - discontinued operations — — 382

Basic net income (loss) attributable to common stockholders

Diluted net income (loss) attributable to common stockholders - continuing operations ( 237,609 ) 118,668 ( 288,313 )

Net Income (loss) attributable to common stockholders - discontinued operations — — 382

( 55,410 ) ( 237,609 ) 118,668

Diluted net income (loss) attributable to common stockholders

( 55,410 ) ( 237,609 ) 118,668

Interest expense from assumed conversion of convertible senior notes — — 4,643

7 unchanged sentences

Shares used in computation of diluted net income (loss) per share 31,243,179 30,166,100 33,513,440

Basic net income (loss) per share:

Continuing operations $ ( 7.88 ) $ 4.04 $ ( 10.08 )

Discontinued operations — — 0.01

Basic net income (loss) per share $ ( 7.88 ) $ 4.04 $ ( 10.07 )

Diluted net income (loss) per share:

Continuing operations $ ( 7.88 ) $ 3.68 $ ( 10.08 )

Discontinued operations — — 0.01

Diluted net income (loss) per share $ ( 7.88 ) $ 3.68 $ ( 10.07 )

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following weighted-average potentially dilutive instruments are not included in the diluted net income (loss) per share calculations above because they would have had an antidilutive effect on the net income (loss) per share from continuing operations:

Net income (loss) per share:

$ ( 1.77 ) $ ( 7.88 ) $ 4.04

$ ( 1.77 ) $ ( 7.88 ) $ 3.68

Year Ended December 31,

1 unchanged sentence

Restricted stock units 1,475,683 2,587,585 500,763

Stock options

2,477,793 — —

Performance share units and other stock-based compensation awards

Convertible senior notes due 2022 (1)

138,962 97,203 —

7 unchanged sentences

See Note 7, Financing Arrangements , for additional information.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2023, there were no Market-based Performance Share Units.

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.

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.

Compensation Arrangements , for additional information.

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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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes revenue by reportable segment and category for the years ended December 31, 2023, 2022 and 2021 (in thousands):

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(1) North America includes revenue from the United States of $ 374.0 million, $ 428.5 million and $ 597.6 million for the years ended December 31, 2023, 2022 and 2021.

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

International includes revenue from the United Kingdom of $ 120.8 million for the year ended December 31 2021.

There were no other individual countries that represented more than 10% of consolidated total revenue for the years ended December 31, 2023, 2022 and 2021.

Revenue is attributed to individual countries based on the location of the customer.

GROUPON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes cost of revenue by reportable segment and category for the years ended December 31, 2023, 2022 and 2021 (in thousands):

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(1) North America contains assets from the United States of $ 460.2 million and $ 661.3 million as of December 31, 2023 and 2022.

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, 2023 and 2022.

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$ 108 $ 3,888 $ 6,339

SUBSEQUENT EVENTS

Rights Offering

On January 22, 2024, Groupon announced the closing of its $ 80.0 million fully backstopped Rights Offering for shares of its Common Stock, par value $ 0.0001 per share.

See Note 10 , Stockholders' Equity (Deficit) for additional information.

Termination and Payoff of the Credit Agreement

See Note 7 , Financing Arrangements for additional information.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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