4Q15 Earnings February 2016

Transcription

1 4Q15 Earnings February 2016

2 Forward-Looking Statements The statements contained in this presentation that refer to plans and expectations for the next quarter, the full year or the future are forward-looking statements that involve a number of risks and uncertainties, and actual results could differ materially from those discussed. The risks and uncertainties that could cause our results to differ materially from those included in the forward-looking statements include, but are not limited to, volatility in our revenue and operating results; risks related to our business strategy, including our strategy to grow our local marketplaces, marketing strategy and spend and the productivity of those marketing investments and the impact of our shift away from lower margin products in our Goods category; effectively dealing with challenges arising from our international operations, including fluctuations in currency exchange rates; retaining existing customers and adding new customers, including as we increase our marketing spend and shift away from lower margin products in our Goods category; retaining and adding high quality merchants; cyber security breaches; incurring expenses as we expand our business; competing successfully in our industry; maintaining favorable payment terms with our business partners; providing a strong mobile experience for our customers; delivery and routing of our s; product liability claims; managing inventory and order fulfillment risks; integrating our technology platforms; litigation; managing refund risks; retaining, attracting and integrating members of our executive team; difficulties, delays or our inability to successfully complete all or part of the announced restructuring actions or to realize the operating efficiencies and other benefits of such restructuring actions; higher than anticipated restructuring charges or changes in the timing of such restructuring charges; completing and realizing the anticipated benefits from acquisitions, dispositions, joint ventures and strategic investments; tax liabilities; tax legislation; compliance with domestic and foreign laws and regulations, including the CARD Act and regulation of the Internet and e- commerce; classification of our independent contractors; maintaining our information technology infrastructure; protecting our intellectual property; maintaining a strong brand; seasonality; customer and merchant fraud; payment-related risks; our ability to raise capital if necessary and our outstanding indebtedness; global economic uncertainty; the impact of our ongoing strategic review and any potential strategic alternatives we may choose to pursue. For additional information regarding these and other risks and uncertainties, we urge you to refer to the factors included under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the company's Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, copies of which may be obtained by visiting the company's Investor Relations web site at investor.groupon.com or the SEC's web site at Groupon's actual results could differ materially from those predicted or implied and reported results should not be considered an indication of future performance. You should not rely upon forward-looking statements as predictions of future events. Although Groupon believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither the company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements reflect Groupon s expectations as of February 11, Groupon undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in its expectations. Additional information relating to certain of our financial measures contained herein is available in our most recent earnings release and at our website at investor.groupon.com. 2

3 Vision: We re building the daily habit for local commerce. 3

4 Q Financial Highlights o Gross Billings increased 4% 1 to $1.71 billion and Revenue increased 9% 1 to $917 million o North America Gross billings increased 11% to $1.05 billion, which is the highest ever reported for the segment o North America Services billings increased 7% o North America Shopping Margins improved 100 bps to 10.3% o Adjusted EBITDA 2 of $67 million; TTM Free Cash Flow 3 of $208 million o Non-GAAP earnings per share of $0.04 o We repurchased approximately 35 million shares during Q4. Approximately $157 million remained available for repurchase under our existing authorization as of 12/31/15. All comparisons are year-over-year. (1) Excludes the unfavorable impact from year-over-year changes in foreign exchange rates. (2) Adjusted EBITDA is a non-gaap financial measure. See appendix for a reconciliation to the most comparable U.S. GAAP financial measure, Net (loss) income from continuing operations. (3) Free cash flow is a non-gaap financial measure. See appendix for a reconciliation to the most comparable U.S. GAAP financial measure, Net cash provided by (used in) operating activities from continuing operations. 4

5 Our Marketplace Fundamentals Remain Strong Active Customers 1 47M +3% y/y 49M $180 $160 Spend per Average Active Customer 2 +1% $147 y/y $149 33% Search 3 34% Active Deals 4 ~650K +8% y/y $140 $120 $100 $80-5% y/y or +2% ex. FX 31% 29% 27% 25% +800 bps y/y 26% ~330K +97% y/y +159% y/y $60 23% $40 21% $20 19% 4Q14 4Q15 4Q14 4Q15 17% 4Q14 4Q15 4Q14 4Q15 Global North America (1) Active customers reflect the total number of unique user accounts who have purchased a voucher or product during the trailing twelve months. (2) Spend per average active customer reflects the total gross billings generated in the trailing twelve months per average active customer over that period. (3) Search represents percentage of transactions in North America related to search (includes free text search on web and mobile; excludes SEO and SEM). (4) Active deals represents the number of daily featured, Deal Bank deals and Coupons offered on average at the end of that period; 4Q15 includes the addition of nearly 70k Coupons. 5

6 Financial Summary Consolidated Quarterly Gross Billings & Revenue USD, Millions Adjusted EBITDA 1 USD, Millions Chart Title Billings $2,000 $100 $93 $1,725 $1,707 $90 $1,500 $1,552 $1,529 $1,468 +4% Y/Y ex. F/X $80 $70 $60 $72 $61 $56 $67 $1,000 $50 +9% Y/Y ex. F/X $40 $30 $500 $883 $750 $738 $714 $917 $20 $10 Gross Billings Revenue (1) Adjusted EBITDA is a non-gaap financial measure. See appendix for a reconciliation to the most comparable U.S. GAAP financial measure, Net income (loss) from continuing operations. 6

7 Financial Summary Consolidated Annual Gross Billings & Revenue USD, Millions Adjusted EBITDA 1 USD, Millions $7,000 $6,000 $5,380 Chart Title $5,757 $6,238 $6,256 +8% Y/Y ex. F/X AEBITDA $260 $287 $262 $257 $5,000 $4,000 $3,986 $3,000 $2,000 +9% Y/Y ex. F/X $1,000 $1,610 $2,334 $2,574 $3,042 $3,120 $(112) Gross Billings Revenue (1) Adjusted EBITDA is a non-gaap financial measure. See appendix for a reconciliation to the most comparable U.S. GAAP financial measure, Net income (loss) from continuing operations. 7

8 Financial Summary Cash Flow Operating Cash Flow (TTM) USD, Millions Free Cash Flow (TTM) 1 USD, Millions $346 $267 $252 $308 $316 $292 $169 $222 $228 $208 (1) Free cash flow is a non-gaap financial measure. See appendix for a reconciliation to the most comparable U.S. GAAP financial measure, Net cash provided by (used in) operating activities from continuing operations. 8

9 Financial Summary Segment North America Gross Billings & Revenue (USD, Millions) EMEA Gross Billings & Revenue (USD, Millions) Rest of World Gross Billings & Revenue (USD, Millions) $1,050 $949 $894 $896 $ % Y/Y ex. F/X +13% Y/Y ex. F/X $561 $459 $434 $414 $487-2% Y/Y ex. F/X $551 $480 $481 $464 $623 $272 $216 $204 $199 $248 +3% Y/Y ex. F/X $216 $199 $199 $184 $169-7% Y/Y ex. F/X $60 $54 $53 $50 $46-8%Y/Y ex. F/X Gross Billings Revenue 9

10 $100 60% Financial Summary Segment Operating Results $90 $80 50% North America Segment Operating Income (Loss) & Margin 1 $60 60% $70 $60 EMEA 40% Segment Operating Income (Loss) & Margin 1 Rest of World Segment Operating Income (Loss) & Margin 1 $50 $50 30% $40 $30 $20 $10 $(10) $(20) $(30) $(40) $31 $25 $27-0.2% 3% 3% 3% -4% $(3) $(31) 2,3 5 40% 20% 0% -20% -40% -60% $40 $30 $20 $10 $35 6% $20 4% $10 2% $4 1% $37 8% 3,4 5 20% 10% 0% $(5) $(10) $(15) 4Q14 1Q15 2Q15 3Q15 3 4Q15 5-1% -2% $(3) $(4) -3% -4% -4% $(7) $(7) $(7) 0% -2% -4% -6% -8% Segment Operating Income (Loss) $(20) Segment Operating Income (Loss) % of Billings -10% -12% $(25) (1) Represents segment revenue less cost of revenue and operating expenses, excluding stock-based compensation and acquisition-related expense (benefit), net, in absolute dollars and as a percentage of gross billings. Segment operating margin is defined as segment operating income (loss) as a percent of gross billings in order to eliminate the differences in gross versus net presentation of revenue. -14% (2) Segment cost of revenue and operating expenses for the three months ended September 30, 2015 for North America includes a $37.5 million expense related to an increase in the Company's contingent liability for its securities litigation matter. (3) Segment cost of revenue and operating expenses for the three months ended September 30, 2015 includes restructuring charges of $1.4 million in North America, $(30) $19.7 million in EMEA and $3.0 million in Rest of World. (4) Segment cost of revenue and operating expenses for the three months ended September 30, 2015 for EMEA includes a $6.7 million expense for the write-off of a prepaid asset related to a marketing program that was discontinued because the -16% counterparty ceased operations. (5) Segment cost of revenue and operating expenses for the three months ended December 31, 2015 includes restructuring charges of $9.1 million in North America, ($3.6) million in EMEA, and ($0.1) million in Rest of World. 10 $(35)

11 Appendix 11

12 Financial Summary Services 1 North America Gross Billings & Gross Profit (USD, Millions) EMEA Gross Billings & Gross Profit (USD, Millions) Rest of World Gross Billings & Gross Profit (USD, Millions) $800 50% $ % $ % $700 $600 $580 $609 $602 $583 $621 $700 $ % $700 $ % 160% 100% 140% $500 28% 28% 28% 27% 28% $500 80% $ % $400 $400 $ % $300 $300 $315 $283 $258 $247 $257 60% $300 80% $200 $200 33% 32% 32% 32% 31% 40% $200 60% $100 $162 $171 $166 $156 $175 0% $100 $105 $90 $82 $79 $80 20% 0% $100 $138 $133 $132 $124 23% 23% 22% 22% $109 21% $31 $31 $30 $27 $23 40% 20% 0% Gross Billings Gross Profit Gross Margin % of Billings 2 (1) Services represents deals from local and national merchants and deals on local events, as well as travel deals. (2) Gross margin is defined as gross profit as a percent of gross billings in order to eliminate the differences in gross versus net presentation of revenue. 12

13 Financial Summary Shopping North America Gross Billings & Gross Profit (USD, Millions) EMEA Gross Billings & Gross Profit (USD, Millions) Rest of World Gross Billings & Gross Profit (USD, Millions) $500 50% $ % $ % $450 $430 $ % $ % $400 $369 $400 $ % $350 $ % $ % $300 $250 $285 $294 $286 $300 $250 $246 $230 80% $300 $ % 100% $200 $200 $177 $175 $167 60% $200 80% $150 $100 $50 12% 10% 10% 9% 8% $34 $24 $31 $35 $44 0% $150 $100 $50 19% 16% 14% 15% 12% $38 $43 $25 $22 $25 40% 20% 0% $150 $100 $50 $78 $66 $68 $60 $61 10% 10% 10% 11% 11% $7 $7 $7 $7 $7 60% 40% 20% 0% Gross Billings Gross Profit Gross Margin % of Billings 1 (1) Gross margin is defined as gross profit as a percent of gross billings in order to eliminate the differences in gross versus net presentation of revenue. 13

14 Financial Summary Consolidated Expenses Cost of Revenue USD, Millions Marketing and Order Discounts USD, Millions 1 % of Gross Billings 29% 26% 26% 26% 32% 5% 6% 6% 7% 7% $505 $403 $401 $385 $545 $30 $41 $39 $43 $60 $53 $57 $62 $39 $83 Selling, General & Administrative USD, Millions Marketing Order Discounts Stock Compensation and Acquisition-Related USD, Millions 17% 19% 19% 22% 17% 2% 2% 3% 3% 2% $285 $290 $289 $326 $288 $29 $35 $39 $37 $33 (1) Order Discounts are considered to be a marketing-related activity, even though they are not presented as Marketing on our consolidated statements of operations. Instead, Order Discounts are a reduction to Gross Billings and Revenue. Percent of Gross Billings presentation includes both Marketing and Order Discounts. 14

15 Non-GAAP Reconciliations Adjusted EBITDA - Quarterly (in thousands) 1 The following is a reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, Income (loss) from continuing operations : Income (loss) from continuing operations $26,566 $(16,739) $(15,267) $(24,613) $(32,552) Adjustments Stock-based compensation 29,961 35,144 38,467 35,432 32,691 Depreciation and amortization 30,122 32,200 31,372 35,635 33,763 Acquisition-related expense (benefit), net (809) (269) 505 1, Restructuring charges 24,146 5,422 Gain on disposition of business (13,710) Prepaid marketing write-off 6,690 Securities litigation expense 37,500 Non-operating expense (income), net 11,531 19,927 (2,941) 8,160 3,393 Provision (benefit) for income taxes (4,457) 2,107 8,982 (53,970) 23,736 Total Adjustments 66,348 89,109 76,385 80,947 99,562 Adjusted EBITDA $92,914 $72,370 $61,118 $56,334 $67,010 (1) See press release posted on our Investor Relations website for additional information regarding non-gaap financial measures. 15

16 Non-GAAP Reconciliations cont d Adjusted EBITDA - Annual (in thousands) The following is a reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, Income (loss) from continuing operations : Income (loss) from continuing operations $(297,762) $(51,031) $(88,946) $(18,473) $(89,171) Adjustments Stock-based compensation 93, , , , ,734 Depreciation and amortization 32,055 55,801 89, , ,970 Acquisition-related expense (benefit), net (4,537) 897 (11) 1,269 1,857 Restructuring charges 29,568 Gain on disposition of business (13,710) Prepaid marketing write-off 6,690 Securities litigation expense 37,500 Non-operating expense (income), net 20,679 3,759 94,663 33,450 28,539 Provision (benefit) for income taxes 43, ,973 70,037 15,724 (19,145) Total Adjustments 185, , , , ,003 Adjusted EBITDA $(112,278) $259,516 $286,654 $262,301 $256,832 (1) See press release posted on our Investor Relations website for additional information regarding non-gaap financial measures. 16

17 Non-GAAP Reconciliations cont d Non-GAAP Earnings Per Share and Non-GAAP Earnings (in thousands, except share and per share amounts) The following is a reconciliation of net income (loss) attributable to common stockholders to non-gaap net income (loss) attributable to common stockholders and a reconciliation of diluted net income (loss) per share to non-gaap net income (loss) per share: Three Months Ended December 31, 2015 Twelve Months Ended December 31, 2015 Net income (loss) attributable to common stockholders $(46,528) $20,668 Stock-based compensation 32, ,069 Amortization of acquired intangible assets 4,956 19,922 Acquisition-related expense (benefit), net 557 1,857 Restructuring charges 5,422 29,568 Gain on disposition of business Prepaid marketing write-off Securities litigation expense (13,710) 6,690 37,500 Intercompany foreign currency losses (gains) and reclassifications of translation adjustments to earnings 1 (400) 20,266 Loss from changes in fair value of investments 829 2,943 Income tax effect of above adjustments 14,979 (53,953) Loss (income) from discontinued operations, net of tax 10,613 (122,850) Non-GAAP net income (loss) attributable to common stockholders $23,293 $90,970 Diluted shares 607,517, ,106,225 Incremental diluted shares 6,367,291 6,854,909 Adjusted diluted shares 613,884, ,961,134 Diluted net income (loss) per share $(0.08) $0.03 Impact of stock-based compensation, amortization of acquired intangible assets, acquisition-related expense (benefit), net, intercompany foreign currency losses (gains), items that are unusual in nature and infrequently occurring, income (loss) from discontinued operations and related tax $0.12 $0.11 Non-GAAP net income (loss) per share $0.04 $0.14 (1) For the three months and year ended December 31, 2015, a $3.7 million net cumulative translation adjustment gain was reclassified to earnings as a result of the Company's exit from certain countries as part of its restructuring plan. For the year ended December 31, 2015, a $4.4 million loss related to the cumulative translation adjustment from the Company's legacy business in the Republic of Korea was reclassified to earnings as a result of the Ticket Monster disposition. 17

18 Non-GAAP Reconciliations cont d Free Cash Flow (in thousands) The following is a reconciliation of free cash flow (TTM) to the most comparable U.S. GAAP financial measure, Net cash provided by (used in) operating activities from continuing operations (TTM) : Net cash provided by (used in) operating activities from continuing operations (TTM) Purchases of property and equipment and capitalized software from continuing operations (TTM) $252,497 $307,782 $346,302 $316,366 $292,118 (83,560) (85,761) (79,501) (88,598) (83,988) Free Cash Flow (TTM) $168,937 $222,021 $266,801 $227,768 $208,130 Net cash provided by (used in) investing activities from continuing operations (TTM) $(152,818) $(105,821) $(102,205) $(181,187) $(177,250) Net cash provided by (used in) financing activities (TTM) $(194,156) $(185,606) $(209,080) $(207,078) $(508,156) The following is a reconciliation of free cash flow to the most comparable U.S. GAAP financial measure, Net cash provided by (used in) operating activities from continuing operations : Net cash provided by (used in) operating activities from continuing operations Purchases of property and equipment and capitalized software from continuing operations $273,272 $40,711 $9,995 $(7,612) $249,024 (20,117) (18,294) (22,452) (27,735) (15,507) Free Cash Flow $253,155 $22,417 $(12,457) $(35,347) $233,517 Net cash provided by (used in) investing activities from continuing operations $(35,175) $(19,443) $(28,541) $(98,028) $(31,238) Net cash provided by (used in) financing activities $(21,088) $(32,942) $(138,227) $(14,821) $(322,166) 18

19 Non-GAAP Reconciliations cont d Foreign exchange rate neutral The following is a quarterly reconciliation of foreign exchange rate neutral Gross billings growth from the comparable quarterly period of the prior year to reported Gross billings growth from the comparable quarterly period of the prior year: 4Q15 EMEA Gross billings growth, excluding FX (2) % FX Effect (11) EMEA Gross billings growth (13) % The following is a quarterly reconciliation of foreign exchange rate neutral Revenue growth from the comparable quarterly period of the prior year to reported Revenue growth from the comparable quarterly period of the prior year: 4Q15 EMEA Revenue growth, excluding FX 3 % FX Effect (12) EMEA Revenue growth (9) % Rest of World Gross billings growth, excluding FX (7) % FX Effect (14) Rest of World Gross billings growth (21) % Rest of World Revenue growth, excluding FX (8) % FX Effect (15) Rest of World Revenue growth (23) % Consolidated Gross billings growth, excluding FX 4 % FX Effect (5) Consolidated Gross billings growth (1) % Consolidated Revenue growth, excluding FX 9 % FX Effect (5) Consolidated Revenue growth 4 % 19

20