What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-11 compared with 2024-03-15 · 135 added, 125 removed, 322 unchanged (45% of the section changed)

8 unchanged sentences

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

See Item 8, Note 18, Segment Information, for additional information.

See Item 8, Note 18, Segment and Geographical Information, for additional information.

We generate service revenue from Local, Goods and Travel categories.

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

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

2022 Cost Savings Plan

In August 2022, we initiated the 2022 Cost Savings Plan, including the first phase initiated August 2022, the second January 2023 and the third July 2023, which is designed to reduce our expense structure and align with our go-forward business and financial objectives.

The 2022 Cost Savings Plan included the 2022 Restructuring Plan, as well as other planned savings to be achieved through other actions, such as future reductions in our facilities footprint at natural lease terminations (or by exercising existing options in leases), renegotiating contractual arrangements with certain service providers and continuing to make elective decisions to eliminate vacant positions rather than rehire.

The 2022 Restructuring Plan is expected to include an overall reduction of approximately 1,150 positions globally, with the majority of these reductions completed as of March 31, 2023 and the remainder 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.

See Item 8, Note 13, Restructuring and Related Charges , for additional information.

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

We are investing significant resources in making our platform more efficient, stable and agile.

By improving our technology, our customer base can enjoy a modernized experience along with seamless execution of new product innovation, improved customer experience and customer satisfaction.

Our platform migrations are strategic investments in our ability to innovate faster, serve merchants better, and create more engaging experiences for our customers.

How We Measure Our Business

We use several operating and financial metrics to assess the progress of our business and make decisions on where to allocate capital, time and technology investments.

Certain of the financial metrics are reported in accordance with U.S.

GAAP and certain of those metrics are considered non-GAAP financial measures.

We use several operating and financial metrics to assess the progress of our business and make strategic decisions.

Certain of the financial metrics are reported in accordance with GAAP and certain of those metrics are considered non-GAAP financial measures.

As our business evolves, we may make changes to the key financial and operating metrics that we use to measure our business.

For further information and reconciliations to the most applicable financial measures under U.S.

GAAP, refer to our discussion under Non-GAAP Financial Measures in the Results of Operations section.

For further information and reconciliations to the most applicable financial measures under GAAP, refer to our discussion under Non-GAAP Financial Measures in the Results of Operations section.

Operating Metrics

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Gross billings is an indicator of our growth and business performance as it measures the dollar volume of transactions generated through our marketplaces.

Tracking gross billings also allows us to monitor the percentage of gross billings that we are able to retain after payments to merchants.

However, we are focused on achieving long-term gross profit and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") growth.

Tracking gross billings

also allows us to monitor the percentage of gross billings that we are able to retain after payments to merchants.

However, we are focused on achieving long-term gross profit and EBITDA growth.

• Units are the number of purchases during the reporting period, before refunds and cancellations, made either through one of our online marketplaces, a third-party marketplace, or directly with a merchant for which we earn a commission.

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We report units on a gross basis prior to the consideration of customer refunds and therefore units are not always a good proxy for gross billings.

• Active customers are unique user accounts that have made a purchase during the trailing twelve months ("TTM") either through one of our online marketplaces or directly with a merchant for which we earned a commission.

• Active customers are unique user accounts that have made a purchase during the TTM either through one of our online marketplaces or directly with a merchant for which we earned a commission.

We consider this metric to be an important indicator of our business performance as it helps us to understand how the number of customers actively purchasing our offerings is trending.

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• Gross profit reflects the net margin we earn after deducting our Cost of revenue from our Revenue.

• Contribution Profit is our measure of segment profitability, defined as net revenues less cost of sales and marketing expense.

See Item 8, Note 18, Segment and Geographical Information , for additional information.

• Adjusted EBITDA is a non-GAAP financial measure that we define as Net income (loss) excluding income taxes, interest and other non-operating items, depreciation and amortization, stock-based compensation, and other special charges and credits, including items that are unusual in nature or infrequently occurring.

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• Free cash flow is a non-GAAP financial measure that comprises Net cash provided by (used in) operating activities from operations less purchases of property and equipment and capitalized software.

information and a reconciliation to Net cash provided by (used in) operating activities, refer to our discussion in the Liquidity and Capital Resources section.

For further information and a reconciliation to Net cash provided by (used in) operating activities, refer to our discussion in the Liquidity and Capital Resources section.

The following table presents the above financial metrics for the years ended December 31, 2024 and 2023 (in thousands):

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Gross profit 444,306 450,664

Contribution profit

300,099 340,159

Adjusted EBITDA 69,308 55,453

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We evaluate marketing expense as a percentage of gross profit because it gives us an indication of how well our marketing spend is driving gross profit performance.

• Selling, general and administrative ("SG&A") expenses include selling expenses such as sales commissions and other compensation expenses for sales representatives, as well as costs associated with supporting the sales function such as technology, telecommunications and travel.

• SG &A expenses include selling expenses such as sales commissions and other compensation expenses for sales representatives, as well as costs associated with supporting the sales function such as technology, telecommunications and travel.

General and administrative expenses include compensation expense for employees involved in customer service, operations, technology and product development, as well as general corporate functions, such as finance, legal and human resources.

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Merchants can withdraw their offerings from our marketplace at any time, and their willingness to continue offering services through our marketplace depends on the effectiveness of our marketplace offering.

We are focused on improving our marketplace offering and merchant value proposition by exploring opportunities to better balance the needs of merchant partners, customers and Groupon, for example, by offering flexible deal structures.

We are focused on improving our marketplace offering and merchant value proposition by exploring opportunities to better balance the needs of merchant partners, customers and Groupon.

Acquiring and retaining customers .

To acquire and retain customers to drive higher volumes on our platform from new and existing customers, we are focused on strengthening our product offering, improving the attractiveness of our offerings, and rebuilding our performance marketing campaigns.

Impact of macroeconomic conditions .

We have been, and may continue to be, impacted by adverse consequences of the macroeconomic environment, including but not limited to, inflationary pressures, higher labor costs, labor shortages, supply chain challenges and resulting changes in consumer and merchant behavior.

We will continue to monitor the impact of macroeconomic conditions on our business.

We have been, and may continue to be, impacted by adverse consequences of the macroeconomic environment, including but not limited to, inflationary pressures, higher labor costs, tariff policy, labor shortages, supply chain challenges and changes in consumer and merchant behavior.

To minimize the impact of macroeconomic conditions on our business, we are focusing on building long-term relationships with local merchants to enhance our inventory selection, improving the customer experience through inventory curation and expanding convenience in order to drive customer demand and purchase frequency.

Results of Operations

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Comparison of the Years Ended December 31, 2024 and 2023:

North America gross billings, units and TTM active customers decreased by $97.0 million, 5.4 million and 1.0 million for the year ended December 31, 2023 compared with the prior year.

These decreases were primarily attributable to a decline in demand for our Goods and Local categories and an overall decline in engagement on our platform that resulted in fewer unit sales and lower gross billings.

North America gross billings and units decreased by $8.5 million and 1.2 million, while TTM active customers remained flat for the year ended December 31, 2024 compared with the prior year period.

As a result of favorable refund rates and our supply transformation efforts, our Local category experienced growth in gross billings, active customers and units.

The Local category growth is offset by a de-emphasis on our Goods category evidenced by a decrease of our Goods active customers that resulted in fewer unit sales and lower gross billings year over year.

Financial Metrics

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Total gross profit $ 338,164 $ 328,993 2.8

Gross margin (1)

33.3 % 35.2 %

% of Consolidated revenue 76.4 73.8

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% of Consolidated gross profit 76.1 73.0

(1) Represents the percentage of gross billings that we retained after deducting the merchant's share from gross billings.

Comparison of the Years Ended December 31, 2024 and 2023:

North America revenue, cost of revenue and gross profit decreased by $56.3 million, $11.2 million and $45.2 million for the year ended December 31, 2023 compared with the prior year.

These declines were primarily attributable to a decline in demand for our Goods and Local categories and an overall decline in engagement on our platform that resulted in fewer unit sales and lower gross billings.

North America revenue and cost of revenue decreased by $3.9 million and $13.1 million while gross profit increased by $9.2 million for the year ended December 31, 2024 compared with the prior year period.

As a result of favorable refund rates and our supply transformation efforts, our Local category experienced revenue growth.

The decrease in cost of revenue is primarily due to a decrease in amortization of internally-developed software relating to customer-facing applications.

Gross profit increased due to revenue remaining relatively flat and a decrease in cost of revenue.

Marketing and Contribution Profit

We define contribution profit as gross profit less marketing expense.

North America marketing and contribution profit for the years ended December 31, 2024 and 2023 were as follows (dollars in thousands):

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Marketing $ 113,096 $ 73,178 54.5 %

% of Gross Profit 22.2 % 27.8 %

30.1 % 19.3 %

Contribution Profit $ 225,068 $ 255,815 (12.0) %

Comparison of the Years Ended December 31, 2024 and 2023:

North America marketing expense and marketing expense as a percentage of gross profit decreased for the year ended December 31, 2023 compared with the prior year primarily driven by a decrease in marketing-related payroll, traffic declines, and a lower investment in our online marketing spend.

North America contribution profit decreased for the year ended December 31, 2023 compared with the prior year primarily due to a decrease in gross profit.

North America marketing expense and marketing expense as a percentage of revenue increased for the year ended December 31, 2024 compared with the prior year period, primarily driven by an increased investment in our performance marketing campaigns.

North America contribution profit decreased for the year ended December 31, 2024 compared with the prior year period, primarily due to an increase in marketing expense.

International

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Comparison of the Years Ended December 31, 2024 and 2023:

International gross billings, units and TTM active customers decreased by $80.9 million, 3.8 million and 1.3 million for the year ended December 31, 2023 compared with the prior year.

These declines were primarily attributable to a decline in our Goods category and an overall decrease in demand.

In addition, there was an $8.0 million favorable impact on gross billings from year-over-year changes in foreign currency exchange rates.

International gross billings, units and TTM active customers decreased by $78.4 million, 3.5 million and 1.1 million for the year ended December 31, 2024 compared with the prior year period.

The Local category decrease was primarily attributable to the exit of our Local business in Italy and a decline in site traffic.

The decline in our Goods and Travel categories were primarily attributable to an overall decline in site traffic.

In addition, there was a $3.4 million favorable impact on gross billings from year-over-year changes in foreign currency exchange rates.

Financial Metrics

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Total gross profit $ 106,142 $ 121,671 (12.8)

Gross margin (1)

26.8 % 27.8 %

% of Consolidated revenue 23.6 % 26.2 %

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% of Consolidated gross profit 23.9 27.0

(1) Represents the percentage of gross billings that we retained after deducting the merchant's share from gross billings.

Comparison of the Years Ended December 31, 2024 and 2023:

International revenue, cost of revenue and gross profit decreased by $27.9 million, $0.9 million and $27.0 million for the year ended December 31, 2023 compared with the prior year.

These decreases were primarily due to a decline in our Goods category and an overall decrease in demand.

Revenue and gross profit also had favorable impacts of $2.3 million and $2.1 million from year-over-year changes in foreign currency exchange rates.

International revenue, cost of revenue and gross profit decreased by $18.5 million, $2.9 million and $15.5 million for the year ended December 31, 2024 compared with the prior year period.

The Local category decrease was primarily attributable to the exit of our Local business in Italy and a decline in site traffic.

The decline in our Goods and Travel categories were primarily attributable to an overall decline in site traffic.

Revenue and gross profit had favorable impacts of $1.0 million and $0.9 million from year-over-year changes in foreign currency exchange rates.

Marketing and Contribution Profit

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Marketing $ 31,111 $ 37,327 (16.7) %

% of Gross Profit 30.7 % 30.5 %

26.7 % 27.7 %

Contribution Profit $ 75,031 $ 84,344 (11.0) %

Comparison of the Years Ended December 31, 2024 and 2023:

International marketing expense decreased for the year ended December 31, 2023 compared with the prior year primarily due to traffic declines and a lower investment in our online marketing spend.

Marketing expense as a percentage of gross profit remained relatively flat for the year ended December 31, 2023 compared with the prior year.

International contribution profit decreased for the year ended December 31, 2023 compared with the prior year primarily due to a decrease in gross profit.

International marketing expense and marketing expense as a percentage of revenue decreased for the year ended December 31, 2024 compared to the prior year period, primarily due to traffic declines and a lower investment in our online marketing spend.

International contribution profit decreased for the year ended December 31, 2024 compared with the prior year period, primarily due to a decrease in revenue.

Consolidated Operating Expenses

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295,399 350,405 (15.7)

Goodwill impairment — 35,424 (100.0)

Long-lived asset impairment — 12,259 (100.0)

Restructuring and related charges 1,066 8,006 (86.7)

(Gain) on sale of assets

Total operating expenses

$ 435,512 $ 468,916 (7.1)

% of Gross profit:

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Selling, general and administrative 66.5 % 77.8 %

(1) The years ended December 31, 2023 and 2022 includes $14.3 million and $28.6 million of stock-based compensation expense and $26.2 million and $30.1 million of dep reciation and amortization expense.

(1) The years ended December 31, 2024 and 2023 include $26.6 million and $14.3 million of stock-based compensation expense and $17.0 million and $26.2 million of dep reciation and amortization expense.

Comparison of the Years ended December 31, 2024 and 2023:

Marketing expense and marketing expense as a percentage of gross profit decreased for the year ended December 31, 2023 compared with the prior year due to a decrease in marketing-related payroll costs, traffic declines, and a lower investment in our online marketing spend.

SG&A and SG&A as a percentage of gross profit decreased for the year ended December 31, 2023 compared with the prior year primarily due to lower payroll-related expenses.

During the year ended December 31, 2022, we recognized goodwill and long-lived asset impairment of $35.4 million and $12.3 million, respectively.

We had no similar activity in the current year period.

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

Restructuring and related charges decreased for the year ended December 31, 2023 compared with the prior year, primarily due to impairment recognized in the year ended December 31, 2022 related to our right-of-use assets - operating leases for our 2020 Restructuring Plan.

We had no similar activity in the current year period.

See Item 8, Note 8, Leases and Note 13, Restructuring and Related Charges , for additional information.

Marketing expense and marketing expense as a percentage of gross profit increased for the year ended December 31, 2024 compared with the prior year period, due to an increased investment in our North America performance marketing campaigns.

SG&A and SG&A as a percentage of gross profit decreased for the year ended December 31, 2024 compared with the prior year period, primarily due to a decrease in cloud computing costs and a reduction in headcount as a result of our 2022 Restructuring Plan.

Restructuring and related charges decreased for the year ended December 31, 2024 compared with the prior year period, primarily due to a decrease in severance and benefit costs related to our 2022 Restructuring Plan, partially offset by an increase in charges related to the Italy Restructuring Plan.

See Item 8, Note 13, Restructuring and Related Charges, for additional information.

Gain on sale of assets increased for the year ended December 31, 2024 compared with the prior year period, primarily due to a gain from the sale of certain intangible assets.

See Item 8, Note 4, Goodwill and Other Intangible Assets, for additional information.

Consolidated Other Income (Expense), Net

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Comparison of the Years Ended December 31, 2024 and 2023:

The change in Other income (expense), net for the year ended December 31, 2023 compared with the prior year is related to a remeasurement of our investment in SumUp of $25.8 million in the year ended December 31, 2023, We had no similar activity in the prior year period.

The change in Other income (expense), net for the year ended December 31, 2024 compared with the prior year period is primarily related to a $40.3 million change in foreign currency gains and losses.

This was partially offset by a remeasurement of our investment in SumUp of $25.8 million in the year ended December 31, 2023, with no comparable activity in the current year period.

See Item 8, Note 5, Investments, for additional information.

This was mostly offset by a $25.4 million favorable year-over-year change in foreign currency gains and losses.

Consolidated Provision (Benefit) for Income Taxes

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The primary factors impacting the effective tax rate for the years ended December 31, 2024 and 2023 were the pretax losses incurred in jurisdictions that have valuation allowances against their net deferred tax assets.

The year ended December 31, 2022 was also impacted by the reversal of reserves for uncertain tax positions due to closure of applicable statutes of limitations and non-deductible goodwill impairment.

Additionally, for the year ended December 31, 2022, we recorded a valuation allowance against the remaining U.S.

federal and state deferred tax assets.

For the year ended December 31, 2023, we continue to maintain a full valuation allowance against all U.S.

For the years ended December 31, 2024 and 2023, we continue to maintain a full valuation allowance against all U.S.

federal and state deferred tax assets.

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Non-GAAP Financial Measures

In addition to financial results reported in accordance with U.S.

GAAP, we have provided the following non-GAAP financial measures:

In addition to financial results reported in accordance with GAAP, we have provided the following non-GAAP financial measures:

Adjusted EBITDA, free cash flow and foreign currency exchange rate neutral operating results.

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We believe that those non-GAAP financial measures facilitate comparisons with our historical results and with the results of peer companies who present similar measures (although other companies may define non-GAAP measures differently than we define them, even when similar terms are used to identify such measures).

However, those non-GAAP financial measures are not intended to be a substitute for those reported in accordance with U.S.

However, those non-GAAP financial measures are not intended to be a substitute for those reported in accordance with GAAP.

Adjusted EBITDA .

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Our definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures.

Adjusted EBITDA is a key measure used by our management and Board to evaluate operating performance, generate future operating plans and make strategic decisions for the allocation of capital.

Adjusted EBITDA is a key measure used by our management and Board to evaluate operating performance, generate future operating plans and make strategic decisions.

Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board.

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We exclude stock-based compensation expense and depreciation and amortization because they are primarily non-cash in nature and we believe that non-GAAP financial measures excluding those items provide meaningful supplemental information about our operating performance and liquidity.

For the years ended December 31, 2023 and 2022, special charges and credits included charges related to our 2022 and 2020 restructuring plans

and goodwill and long-lived asset impairments.

For the years ended December 31, 2024 and 2023, special charges and credits included charges related to our Italy, 2022 and 2020 Restructuring Plans, gain on sale of assets and foreign VAT assessments.

We exclude special charges and credits from Adjusted EBITDA because we believe that excluding those items provides meaningful supplemental information about our core operating performance and facilitates comparisons with our historical results.

The following is a reconciliation of Adjusted EBITDA to the most comparable U.S.

GAAP financial measure, Net income (loss) for the years ended December 31, 2023 and 2022 (dollars in thousands):

For the foreign VAT assessments, we also considered the fact that we ceased operations in Portugal in 2016 and it is not part of our ongoing business.

We have not engaged in any revenue-generating or payroll-related activity in Portugal since ceasing those operations nor do we intend to engage in these activities in that jurisdiction in the future.

The following is a reconciliation of Adjusted EBITDA to the most comparable GAAP financial measure, Net income (loss) for the years ended December 31, 2024 and 2023 (dollars in thousands):

Year Ended December 31,

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Stock-based compensation (1)

26,734 14,481

Depreciation and amortization 30,900 51,218

Restructuring and related charges (2)

Goodwill impairment — 35,424

Long-lived asset impairment — 12,259

(Gain) on sale of assets

Foreign VAT assessments (3)

Other (income) expense, net (4)

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Adjusted EBITDA $ 69,308 $ 55,453

(1) Includes a settlement of $4.25 million related to Uptake for the year ended December 31, 2023.

See note 9, Commitments and Contingencies and Note 13, Restructuring and Related Charges for additional information.

Includes $3.0 million of right-of-use assets - operating leases impairment for the year ended December 31, 2022.

Refer to Item 8, Note 8, Leases and Note 13, Restructuring and Related Charges, for additional information.

(1) Stock-based compensation excludes expense related to the 2024 Executive PSUs that are required to be settled in cash.

Refer to Item 8, Note 11, Compensation Arrangements, for additional information.

(2) Includes a settlement of $4.25 million related to our sublease to Uptake for the year ended December 31, 2023.

Refer to Item 8, Note 9, Commitments and Contingencies and Item 8, Note 13, Restructuring and Related Charges, for additional information.

(3) The Foreign VAT assessments adjustment excludes related interest expense of $1.8 million for the year ended December 31, 2024 as the interest expense is included within Other (income) expense, net.

Refer to Item 8, Note 9, Commitments and Contingencies for additional information.

(4) Includes $1.6 million related to a loss on extinguishment of exchanged debt in connection with the Exchange and Subscription Agreements for the year ended December 31, 2024.

Refer to Item 8, Note 7, Financing Arrangements .

Includes a $25.8 million remeasurement of our investment in SumUp during the year ended December 31, 2023.

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Free cash flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures.

In addition, free cash flow reflects the impact of the timing difference between when we are paid by customers and when we pay merchants and suppliers.

Therefore, we believe it is important to view free cash flow as a complement to our Consolidated Statements of Cash Flows.

For a reconciliation of free cash flow to the most comparable U.S.

GAAP financial measure, see Liquidity and Capital Resources below.

For a reconciliation of free cash flow to the most comparable GAAP financial measure, see Liquidity and Capital Resources below.

Foreign currency exchange rate neutral operating results .

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Selling, general and administrative 294,628 771 295,399 347,683 2,722 350,405

Goodwill impairment — — — 39,518 (4,094) 35,424

Long-lived asset impairment — — — 13,704 (1,445) 12,259

Restructuring charges 959 107 1,066 8,183 (177) 8,006

(Gain) on sale of assets

(5,160) — (5,160) — — —

Income (loss) from operations $ 8,828 $ (34) $ 8,794 $ (16,904) $ (1,348) $ (18,252)

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Liquidity and Capital Resources

Our principal source of liquidity is our cash balance, which includes outstanding borrowings under the Credit Agreement, See Item 8, Note 7, Financing Arrangements for additional information, totaling $141.6 million as of December 31, 2023.

Our principal source of liquidity is our cash balance totaling $228.8 million as of December 31, 2024.

The Company's cash requirements are subject to change as business conditions warrant and opportunities arise.

Additionally, with the Rights Offering, termination of our Credit Agreement in February 2024, and the Exchange and Subscription Agreements in November 2024, we believe that the Company has sufficient liquidity to support its overall ongoing operational needs within the next 12 months.

We are subject to claims for tax assessments by foreign jurisdictions, including a proposed Assessment for $122.3 million (€117.5 million), inclusive of estimated incremental interest from the original Assessment.

The subsidiary subject to the Assessment is Groupon S.r.l., one of the Company's Italian subsidiaries formerly with operations relating specifically to the local voucher business in Italy.

In December 2024, Groupon S.r.l.

received an unfavorable ruling at the second-level Tax Court.

The Company continues to believe that the Assessment is without merit and Groupon S.r.l.

intends to pursue a prompt appeal to the Italian Supreme Court.

If Groupon S.r.l.

loses that appeal, Groupon S.r.l.

plans to further challenge the Assessment and seek relief in an international mutual agreement procedure that involves the tax authorities of Ireland and Italy.

Under Italian tax court procedures, taxpayers are required to deposit “provisional payments” while tax appeals are pending, which are held in trust by tax authorities and returned to the taxpayer if the taxpayer prevails on the appeal.

At present, Groupon S.r.l.

would be required to deposit provisional amounts equal to two-thirds of the assessed amount.

However, Groupon S.r.l.

has sought and obtained approval of installment plans whereby the provisional payments may be deposited pro rata in monthly installments over seventy-two months.

A third provisional amount (equal to the remaining third of the Assessment) would come due in October 2025.

However, contemporaneous with its appeal to the Italian Supreme Court, Groupon S.r.l.

intends to seek a full stay of the provisional payment obligations.

Groupon S.r.l.

expects a hearing on the possible stay of provisional payments to take place in the first half of 2025.

If Groupon S.r.l.

does not succeed in staying the provisional payment obligation, Groupon S.r.l.

will consider its options, including making monthly installment payments up to the amount of its assets, or undertaking further restructuring actions.

The payments due in 2025 under the terms of the installment plans total $13.7 million (€13.2 million).

Such amounts are recorded as Other non-current assets within the Consolidated Balance Sheets when cash is remitted.

The Company continues to expect that the Assessment will not result in financial exposure that exceeds the amounts disclosed in its Form 8-K, filed on April 15, 2024.

We do not expect any related developments to impact the ability of the Company to meet its obligations outside of Groupon S.r.l.

See Item 1, Note 14, Income Taxes, for additional information.

Our net cash flows from operating, investing and financing activities for the years ended December 31, 2024 and 2023 were as follows (in thousands):

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Free cash flow is a non-GAAP liquidity measure that comprises net cash provided by operating activities, less purchases of property and equipment and capitalized software.

Our free cash flow for the years ended December 31, 2023 and 2022 and reconciliations to the most comparable U.S.

GAAP financial measure, Net cash provided by (used in) operating activities, for those periods are as follows (in thousands):

Our free cash flow for the years ended December 31, 2024 and 2023 and reconciliations to the most comparable GAAP financial measure, Net cash provided by (used in) operating activities, for those periods are as follows (in thousands):

Year Ended December 31,

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Our revenue-generating transactions are primarily structured such that we collect cash up-front from customers and pay third-party merchants at a later date, either based upon the customer's redemption of the related voucher or fixed payment terms, which are generally biweekly, throughout the term of the merchant's offering.

Our cash balances fluctuate significantly throughout the year based on many variables, including changes in gross billings, the timing of payments to merchants and suppliers and the mix of transactions between Goods and Local.

Our cash balances fluctuate significantly throughout the year based on many variables, including changes in gross billings and the timing of payments to merchants and suppliers.

Net cash provided by (used in) operating activities

For the year ended December 31, 2023, our net cash used in operating activities was $78.0 million as compared with the prior year period of $136.0 million.

The cash outflow in the year ended December 31, 2023 ha s improved compared to the prior year period due to our cost cutting measures as a result of the impacts of our 2022 Restructuring Plan initiated in August 2022.

The favorable impacts from our 2022 Restructuring Plan were partially offset by improved days payable outstanding from December 31, 2022 to December 31, 2023.

For the year ended December 31, 2024, our net cash provided by operating activities was $55.9 million as compared with net cash used in operating activities of $78.0 million in the prior period.

The improved cash flow from operating activities is primarily due to a reduction in headcount as a result of the impacts of our 2022 Restructuring Plan.

Net cash provided by (used in) investing activities

For the year ended December 31, 2023, our net cash used in investing activities was $1.4 million as compared with the prior year period of $38.8 million.

The year-over-year change was primarily driven by proceeds from the sale of SumUp of $18.9 million and fewer purchases of property and equipment and capitalized software during the year ended December 31, 2023.

For the year ended December 31, 2024, our net cash used in investing activities was $6.8 million as compared with net cash used in investing activities of $1.4 million in the prior period.

The change is primarily driven by proceeds from the sale of SumUp of $18.9 million in the prior year period, with no comparable activity in the current year period, partially offset by $9.1 million of net proceeds from the sale intangible assets and fewer purchases of property and equipment and capitalized software during the year.

Net cash provided by (used in) financing activities

For the year ended December 31, 2023, our net cash used in financing activities was $35.7 million as compared with the prior year period of $34.4 million.

The year-over-year change was primarily driven by $32.2 million in payments of borrowings under our revolving credit facility during the year ended December 31, 2023 compared with $40.0 million in proceeds and $65.0 million in payments during the year ended December 31, 2022,

For the year ended December 31, 2024, our net cash provided by financing activities was $47.8 million as compared with net cash used in financing activities of $35.7 million in the prior period.

The improved cash flow from financing activities is primarily due to $79.6 million of proceeds received from the Rights Offering and $20.0 million of proceeds received in the Exchange and Subscription Agreements, partially offset by an increase of $10.6 million in payments of borrowings under our revolving credit facility.

Matters related to the Rights Offering and Credit Agreement

In March 2023, we entered into the Fourth Amendment to the Credit Agreement, which reduced borrowing capacity under our senior secured revolving credit facility from $150.0 million to $75.0 million.

In connection with the Fourth Amendment, we repaid $27.3 million of outstanding borrowings.

Prior to entering into the Fourth Amendment, our access to the full capacity of our Credit Agreement was partially restricted and our liquidity impacted accordingly.

Prior to entering into the Fourth Amendment, our access to the full capacity of our Credit Agreement was partially restricted and our liquidity impacted

Additionally, we have contracts in place with multiple payment processors, which give our payment processors in certain instances discretion to impose receivable holdbacks or reserve requirements based on changes to our business model or material changes in our financial condition.

Any material increase in receivable holdbacks or reserve requirements could have a material impact on our cash flow and available liquidity.

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

On November 7, 2023, the Board approved the 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.

The below events related to the Rights Offering and Credit Agreement occurred during the first quarter of 2024 and are not reflected in our 2023 results.

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

On January 22, 2024, we announced the closing of our $80.0 million fully backstopped Rights Offering for shares of our Common Stock.

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.

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

On February 12, 2024, we prepaid the Payoff Amount 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.

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See Item 8, Note 7, Financing Arrangements, for additional information regarding the Credit Agreement and Item 8, Note 10 , Stockholders' Equity (Deficit), for additional information regarding the Rights Offering.

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.

As of December 31, 2023, we had $40.4 million in cash held by our international subsidiaries, which is primarily denominated in Euros, British Pounds Sterling, Canadian dollars, Indian Rupees, Polish Zloty, Swiss Franc, and, to a lesser extent, Australian dollars.

Matters related to the 2026 Notes and 2027 Notes

In 2021, the Company issued the 2026 Notes in the principal amount of $230.0 million, which mature on March 15, 2026.

On November 19, 2024, we issued $197.3 million aggregate principal amount of 2027 Notes.

From the issuance, we (i) exchanged $176.3 million aggregate principal amount of the 2026 Notes and (ii) issued and sold to certain Offering Participants $21.0 million additional principal amount of the 2027 Notes for gross cash proceeds of $20.0 million.

We used the $20.0 million of the cash proceeds to offset the cash outflows associated with the debt issuance costs as well as general corporate purposes.

The 2027 Notes bear interest at a rate of 6.25% per annum, payable semi-annually commencing March 15, 2025 and will mature March 15, 2027, subject to earlier repurchase or conversion.

We may be required to pay additional interest of 2.5% per annum of the 2027 Notes in the event that we fail to pledge certain assets as part of the collateral for the 2027 Notes, unless such assets are sold, by November 20, 2025.

See Item 8, Note 7, Financing Arrangements, for additional information regarding the 2026 and 2027 Notes.

Other Liquidity and Capital Resource matters

As of December 31, 2024, we had $85.7 million in cash held by our international subsidiaries, which is primarily denominated in British Pounds Sterling, Euros, Indian Rupees and Australian dollars.

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

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Critical Accounting Estimates

Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S.

Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with GAAP.

Our significant accounting policies are discussed in Item 8, Note 2, Summary of Significant Accounting Policies , in the notes to the Consolidated Financial Statements.

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Actual results may differ materially from those estimates under different assumptions or conditions.

We believe that the estimates and assumptions related to going concern, revenue recognition, impairment assessments and income taxes have the greatest potential impact on our Consolidated Financial Statements.

We believe that the estimates and assumptions related to revenue recognition, impairment assessments and income taxes have the greatest potential impact on our Consolidated Financial Statements.

Therefore, we consider these to be our critical accounting estimates.

Going Concern

ASC 205-40 Presentation of Financial Statements - Going Concern , requires management to assess the reporting entity's ability to continue as a going concern.

In accordance with this guidance, 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.

Determining the extent to which conditions or events raise substantial doubt about our ability to continue as a going concern requires significant judgement and estimation by us.

Our significant estimates related to this analysis may include identifying business factors such as size, growth and profitability used in the forecasted financial results and liquidity.

We believe that the estimated values used in our going concern analysis are based on reasonable assumptions.

However, such assumptions are inherently uncertain and actual results could differ materially from those estimates.

Revenue Recognition

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Our significant estimates in those fair value measurements may include identifying business factors such as size, growth, profitability and risk and return on investment.

Further, when measuring fair value based on discounted cash flows, we make assumptions about risk-adjusted discount rates, including the weighted average cost of capital;

Further, when measuring fair value based on discounted

cash flows, we make assumptions about risk-adjusted discount rates, including the weighted average cost of capital;

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

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In future measurements of fair value, adverse changes in assumptions could result in impairments of goodwill or long-lived assets that would require non-cash charges to the Consolidated Statements of Operations and those charges could have a material effect on our financial condition and operating results.

See Item 8, Note 2, Summary of Significant Accounting Policies for information about our accounting policies relating to impairment of goodwill and long-lived assets.

See Item 8, Note 2, Summary of Significant Accounting Policies for information about our accounting policies relating to impairment of goodwill, long-lived assets, right-of-use assets and investments.

We account for income taxes using the asset and liability method and assess whether it is more likely than not that the deferred tax assets will be realized.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis