1Q15 Earnings May 2015

Transcription

1 1Q15 Earnings May 2015

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 marketing strategy and spend; effectively dealing with challenges arising from our international operations including fluctuations in currency exchange rates; retaining existing customers and adding new customers; retaining and adding new and 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; maintaining a strong brand; managing inventory and order fulfillment risks; integrating our technology platforms; managing refund risks; retaining our executive team; litigation; compliance with domestic and foreign laws and regulations, including the CARD Act and regulation of the Internet and e- commerce; tax liabilities; tax legislation; maintaining our information technology infrastructure; protecting our intellectual property; completing and realizing the anticipated benefits from acquisitions, dispositions, joint ventures and strategic investments, including our proposed Ticket Monster transaction; seasonality; payment-related risks; customer and merchant fraud; global economic uncertainty; and our ability to raise capital if necessary. 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 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 May 5, 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 Mission: To connect local commerce, increasing consumer buying power while driving more business to local merchants through price and discovery. 3

4 The Local Market is Large and Unique ~$6.3B Gross Billings 1 <0.1% Local Commerce Marketplace Worldwide Source: Euromonitor and Company Data (1) TTM Gross Billings as of 1Q15 4

5 In 2015, We re Focused on Connecting Consumers to Merchants through our Marketplace Connecting merchants through Groupon OS, our merchant facing operating system, including tablets, beacons, and merchant app (~11k tablets deployed) >160M Monthly Unique Visitors ~105M Mobile Downloads, >50% Mobile Transaction Mix ~900k Merchant Pages released to be indexed, Almost 27M tips and ratings 27% NA % of transactions related to search (vs. 1Q14) >425k Active Deals (~365k ex. Coupons vs. >180k in 1Q14) All data as of March 31, 2015 with the exception of mobile downloads and Merchant Pages released to be indexed, which are as of April 30,

6 Key Metrics Active Deals 1 >425K 30.0% 25.0% Search bps y/y 27% Active Customers 3 45M +7% y/y 48M $180 $160 $140 Spend per Average Active Customer -1% $136 y/y $ M Units 5 +6% y/y 54M >180K +127% y/y 20.0% 15.0% $120 $ % 36.0 $ % $40 $ Q14 1Q15 0.0% 1Q14 1Q Q14 1Q15 1Q14 1Q Q14 1Q15 (1) Active deals represents the number of daily featured, Deal Bank deals and Coupons offered on average at the end of that period; 1Q15 includes the addition of nearly 60k Coupons. (2) Search represents percentage of transactions in North America related to search (includes free text search on web and mobile; excludes SEO and SEM). (3) Active customers reflect the total number of unique user accounts who have purchased a voucher or product during the trailing twelve months. (4) Spend per average active customer reflects the total gross billings generated in the trailing twelve months per average active customer over that period. (5) Units reflect vouchers and products sold before cancellations and refunds. 6

7 Overview of Sale of Ticket Monster Stake Transaction Overview 1 TMON Ownership 1 o Controlling stake sold to KKR and Anchor Equity Partners for $360M in cash o Management to be issued a 13% stake, subject to timing and performance-based vesting conditions o The investments value TMON at $782M on a fully diluted basis o Groupon will retain an approximate 41% stake on a fully diluted basis o Proceeds expected to be used for general corporate purposes and share repurchases o Transaction expected to close in 2Q15, subject to regulatory and customary closing conditions o Gain on sale is expected to be between $195M and $205M on a pre-tax basis (1) Represents transaction value on a fully diluted basis, assuming a full vesting of management s stake. (2) Of the $360 million paid in cash, Groupon will receive $285 million, with the remainder to be retained by TMON. 2 46% 13% 41% Transaction Value: $782M 1 KKR and Anchor Groupon Management 7

8 Financial Summary Consolidated Quarterly Gross Billings & Revenue Adjusted EBITDA 1 Chart Title $93 $2,000 $1,500 $1,521 $1,502 $1,490 $1,725 $1, % Y/Y ex. F/X $60 $64 $72 $1,000 $46 $500 $728 $716 $714 $883 $ % Y/Y ex. F/X 1Q14 2Q14 3Q14 4Q14 1Q15 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 (loss) income from continuing operations. 8

9 Financial Summary Consolidated Expenses Cost of Revenue Marketing and Order Discounts 1 % of Gross Billings 24% 23% 24% 29% 26% 6% 5% 5% 5% 6% $363 $350 $359 $505 $403 $23 $21 $21 $30 $41 $69 $58 $55 $60 $53 Selling, General & Administrative Marketing Order Discounts Stock Compensation and Acquisition-Related 17% 19% 2% 2% 2% 2% 2% $301 $306 $299 $285 $290 $27 $30 $25 $32 $25 $30 $32 $29 $35 $XX (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. 9

10 Financial Summary Cash Flow Operating Cash Flow (TTM) 1 Free Cash Flow (TTM) $308 $222 $252 $169 $195 $158 $130 $123 $74 $43 (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. 10

11 Other Financial Highlights ` 1Q 2015 ($ millions) 12/31/11 GAAP Loss per Share $(0.02) 1 Non-GAAP EPS $0.03 Operating Cash Flow $41M Operating Cash Flow TTM $308M 2 Free Cash Flow $22M 2 Free Cash Flow TTM $222M Cash and Cash Equivalents $976M Repurchased 2.4M shares in the first quarter, for an aggregate purchase price of $18.5M; $83M remains available under existing share repurchase authorization (1) Non-GAAP EPS is a non-gaap financial measure. See appendix for a reconciliation to the most comparable U.S. GAAP financial measure, Diluted net income (loss) per share. (2) 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. 11

12 Financial Summary Segment North America EMEA Rest of World Gross Billings & Revenue Chart Title $949 $782 $799 $774 $894 $700 $ % Y/Y ex. F/X $500 Gross Billings & Revenue $514 $483 $489 $561 $459 Gross Billings & Revenue $60 $50 $40 $30 $20 $10 $431 $424 $418 $11 1% $15 $13 $551 $31 $480 Gross Billings Revenue Segment Operating Income & Margin 1 $25 2% 2% 3% 3% $400 $ % Y/Y ex. F/X $200 60% $60 50% $50 40% $40 30% $30 $20 10% $10 0% $231 $228 $230 Segment Operating Income & Margin 1 $19 $28 $22 4% 6% 5% $272 $35 6% $216 Gross Billings Revenue $20 4% +7% Y/Y ex. F/X +13% Y/Y ex. F/X 60% 50% 40% 30% 10% 0% $5 $3 $1 $(1) $(3) $(5) $(7) $(9) $(11) $(13) $225 $220 $227 $216 $199 $66 $65 $66 $60 $54 Segment Operating Loss & Margin -5% -4% $(12) 1Q14 Gross Billings $(10) $(2) $(3) -1% -1% Revenue $(4) -2% 2Q14 3Q14 4Q14 1Q15 Segment Op. Income SOI % of Billings Segment Op. Income SOI % of Billings Segment Op. Loss Seg Op Loss % of Billings 1-1% Y/Y ex. F/X -8%Y/Y ex. F/X 50% 40% 30% 10% 0% -10% - -30% (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. 12

13 Gross Billings Chart Title $1,521 $1,502 $1,490 55% 33% 12% 53% 13% Financial Summary Category $1,725 $1,552 24% 24% 24%,940 $101,970 $104,030 $105,060 $106,090 $107,120 $108,150 $109,180 $110,210 $111,240 $112,270 $113,300 $114,330 $115,360 $116,390 $117,420 $119,480 $120,510 $121,540 $123,600 $124,630 $125,660 $126,690 $127,720 $128,750 $129,780 $130,810 $131,840 $132,870 $133,900 $134,930 $135,960 $136,990 $139,050 $140,080 $141,110 $142,140 $143,170 $144,200 $145,230 $146,260 $147,290 $148,320 $149,350 $150,380 $151,410 $152,440 $153,470 $154,500 $155,530 $156,560 $158,620 $159,650 $160,680 $161,710 $162,740 $163,770 $164,800 $165,830 $166,860 $167,890 $168,920 $169,950 $170,980 $172,010 $173,040 $174,070 $175,100 $176,130 $178,190 $179,220 $180,250 $181,280 $182,310 $183,340 $184,370 $185,400 $186,430 $187,460 $188,490 $189,520 $190,550 $191,580 $192,610 $193,640 $194,670 $195,700 $197,760 $198,790 $199,820 $200,850 $201,880 $202,910 $203,940 $204,970 $206,000 $207,030 $208,060 $209,090 $210,120 $211,150 $212,180 $213,210 $214,240 $215,270 $217,330 $218,360 $219,390 $220,420 $221,450 $222,480 $223,510 $224,540 $225,570 $226,600 $227,630 $228,660 $229,690 $230,720 $232,780 $233,810 $234,840 $236,900 $237,930 $238,960 $239,990 $241,020 $242,050 $243,080 $244,110 $245,140 $246,170 $247,200 $248,230 $249,260 $250,290 $252,350 $253,380 $254,410 $255,440 $256,470 $257,500 $258,530 $259,560 $260,590 $261,620 $262,650 $263,680 $264,710 $265,740 $266,770 $267,800 $268,830 $269,860 $271,920 $272,950 $273,980 $275,010 $276,040 $277,070 $278,100 $279,130 $280,160 $281,190 $282,220 $283,250 $284,280 $285,310 $286,340 $287,370 $288,400 $289,430 $291,490 $292,520 $293,550 $294,580 $295,610 $296,640 $297,670 $298,700 $299,730 $300,760 $301,790 $302,820 $303,850 $304,880 $305,910 $306,940 $307,970 $309,000 $311,060 $312,090 $313,120 $314,150 $315,180 $316,210 $317,240 $318,270 $319,300 $320,330 $321,360 $322,390 $323,420 $324,450 $326,510 $327,540 $328,570 $330,630 $331,660 $332,690 $333,720 $334,750 $335,780 $336,810 $337,840 $338,870 $339,900 $340,930 $341,960 $342,990 $344,020 $346,080 $347,110 $348,140 $349,170 $350,200 $351,230 $352,260 $353,290 $354,320 $355,350 $356,380 $357,410 $358,440 $359,470 $360,500 $361,530 $362,560 $363,590 $365,650 $366,680 $367,710 $368,740 $369,770 $370,800 $371,830 $372,860 $373,890 $374,920 $375,950 $376,980 $378,010 $379,040 $380,070 $381,100 $382,130 $383,160 $385,220 $386,250 $387,280 $388,310 $389,340 $390,370 $391,400 $392,430 $393,460 $394,490 $395,520 $396,550 $397,580 $398,610 $399,640 $400,670 $401,700 $402,730 $404,790 $405,820 $406,850 $407,880 $408,910 $409,940 $410,970 $412,000 $413,030 $414,060 $415,090 $416,120 $417,150 $418,180 $420,240 $421,270 $422,300 $424,360 $425,390 $426,420 $427,450 $428,480 $429,510 $430,540 $431,570 $432,600 $433,630 $434,660 $435,690 $436,720 $437,750 $439,810 $440,840 $441,870 $442,900 $443,930 $444,960 $445,990 $447,020 $448,050 $449,080 $450,110 $451,140 $452,170 $453,200 $454,230 $455,260 $456,290 $457,320 $459,380 $460,410 $461,440 $462,470 $463,500 $464,530 $465,560 $466,590 $467,620 $468,650 $469,680 $470,710 $471,740 $472,770 $473,800 $474,830 $475,860 $476,890 $478,950 $479,980 $481,010 $482,040 $483,070 $484,100 $485,130 $486,160 $487,190 $488,220 $489,250 $490,280 $491,310 $492,340 $493,370 $494,400 $495,430 $496,460 $498,520 $499,550 $500,580 $501,610 $502,640 $503,670 $504,700 $505,730 $506,760 $507,790 $508,820 $509,850 $510,880 $511,910 $512,940 $513,970 $515,000 $497,490 $477,920 $458,350 $438,780 $419,210 $423,330 $403,760 $384,190 $366 $366 $364,620 $355 $345,050 $325,480 $329,600 $310,030 $290,460 $270,890 $251,320 53% 49% 53% $231,750 $235,870 $216,300 78% 73% 72% $196,730 $177,160 $157,590 $138,020 $118,450 $122,570 $103,000 $10,300 $11,330 $12,360 $13,390 $14,420 $15,450 $16,480 $17,510 $18,540 $19,570 $20,600 $21,630 $22,660 $23,690 $25,750 $26,780 $27,810 $29,870 $30,900 $31,930 $32,960 $33,990 $35,020 $36,050 $37,080 $38,110 $39,140 $40,170 $41,200 $42,230 $43,260 $45,320 $46,350 $47,380 $48,410 $49,440 $50,470 $51,500 $52,530 $53,560 $54,590 $55,620 $56,650 $57,680 $58,710 $59,740 $60,770 $61,800 $62,830 $64,890 $65,920 $66,950 $67,980 $69,010 $70,040 $71,070 $72,100 $73,130 $74,160 $75,190 $76,220 $77,250 $78,280 $79,310 $80,340 $81,370 $82,400 $84,460 $85,490 $86,520 $87,550 $88,580 $89,610 $90,640 $91,670 $92,700 $93,730 $94,760 $95,790 $96,820 $97,850 $98,880 $99,910 34% 40% $83,430 $63,860 13% 18% 18% $44,290 $24,720 $28,840 13% 11% 13% $1,030 $2,060 $3,090 $4,120 $5,150 $6,180 $7,210 $8,240 $9,270 9% 9% 10% 34% 34% Gross Profit and Gross Margin 22% 22% 1 2 $378 70% 21% $347 74% 16% 9% 10% $1 $1 $1 $1 $1 $0 $0 $0 $0 Local Goods Travel Gross Margin % of Billings 2 (1) Local represents deals from local and national merchants and deals on local events. Other revenue transactions, which include advertising, payment processing, point of sale and commission revenue, were previously aggregated with the Travel category. (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. 13

14 Financial Summary Local 1 North America $1 $400 EMEA 80% $450 Rest of World 200% $500 $400 $300 $200 $457 $461 33% $153 $143 $447 31% 31% $138 $513 $499 30% 30% $148 $155 $1 $0 $0 $0 $0 $350 $300 $250 $200 $150 $50 $262 38% $227 40% $90 $219 38% $84 $242 $218 37% 36% $90 $77 $400 70% $350 60% $300 50% $250 40% $200 30% $150 10% $50 $113 $113 $120 $105 28% 28% 29% 26% 26% 180% 160% 140% 1 100% 80% 60% 40% Billings Gross Profit Gross Margin % of Billings 2 0% $32 $32 $34 $27 $26 0% (1) Local represents deals from local and national merchants and deals on local events. Other revenue transactions, which include advertising, payment processing, point of sale and commission revenue, were previously aggregated with the Travel category. (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. 14

15 Financial Summary Goods North America 60% $400 EMEA 60% Rest of World 1 $400 $369 $350 $350 $350 50% 50% $ % $300 $300 $285 $250 $243 $248 $243 40% $250 $246 40% $250 80% $200 30% $200 $183 $191 $191 $177 $200 30% 60% $150 9% 10% 9% 8% $150 10% 15% 19% 17% 16% 14% $150 10% $80 $74 $71 $78 $66 40% $50 5% $50 $50 9% 12% 11% 10% 10% $13 $23 $24 $34 $24 0% $27 $35 $32 $38 $25 0% $7 $9 $8 $7 $7 0% 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. 15

16 Financial Summary Travel North America 60% EMEA 60% $130 Rest of World 100% $120 $120 $120 90% $80 $60 $40 $20 $82 18% $90 $85 16% 17% $80 18% $97 16% $14 $14 $14 $14 $16 50% 40% 30% 10% 0% $80 $60 $40 $20 $68 $65 23% $80 19% $73 21% $65 19% $14 $15 $15 $15 $12 $110 50% $90 40% 30% $80 $70 $60 $50 $40 $30 10% $20 0% $10 $33 $33 $36 17% 15% Billings Gross Profit Gross Margin % of Billings 1 16% $32 $33 12% 15% $6 $5 $6 $4 $5 80% 70% 60% 50% 40% 30% 10% 0% (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. 16

17 Guidance Q Revenue AEBITDA Non-GAAP EPS Q $700-$750M $55-$75M $0.01-$ Q ex. Tmon $716M $60M FY 2015 Revenue AEBITDA 2015 $3.15B-$3.3B >$315M ex. Tmon $3.04B $262M (1) Q2 guidance anticipates ~800 bps of unfavorable impact on the year-over-year growth rate from changes in F/X rates; full-year guidance anticipates ~700 bps of anticipated impact from F/X. 17

18 Appendix 18

19 Non-GAAP Reconciliations 1 Adjusted EBITDA (in thousands) The following is a reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, Net (loss) income from continuing operations : (Loss) income from continuing operations $(21,774) $(10,692) $(12,573) $26,566 $(16,739) Adjustments Stock-based compensation 22,911 29,738 32,680 29,961 35,144 Acquisition-related expense (benefit), net 1, (304) (809) (269) Depreciation and amortization 27,433 27,024 30,462 30,122 32,200 Other expense, net 840 1,023 20,056 11,531 19,927 Provision (benefit) for income taxes 14,570 12,045 (6,434) (4,457) 2,107 Total Adjustments 67,539 70,427 76,460 66,348 89,109 Adjusted EBITDA $45,765 $59,735 $63,887 $92,914 $72,370 (1) See press release posted on our Investor Relations website for additional information regarding non-gaap financial measures. 19

20 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 March 31, 2015 Net income (loss) attributable to common stockholders $(14,273) Stock-based compensation 35,144 Amortization of acquired intangible assets 5,934 Acquisition-related (benefit) expense, net (269) Intercompany foreign currency losses (gains) 17,638 Income tax effect of above adjustments (16,559) Income from discontinued operations, net of tax (6,284) Non-GAAP net income (loss) attributable to common stockholders $21,331 Diluted shares 676,382,937 Incremental diluted shares 8,715,925 Adjusted diluted shares 685,098,862 Diluted net income (loss) per share ($0.02) Impact of stock-based compensation, amortization of acquired intangible assets, acquisition-related (benefit) expense, net, intercompany foreign currency losses (gains), income from discontinued operations and related tax effects Non-GAAP net income (loss) per share $0.03 $

21 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 operating activities from continuing operations TTM) : Net cash provided by operating activities from continuing operations (TTM) Purchases of property and equipment and capitalized software from continuing operations (TTM) Net cash provided by (used in) operating activities from continuing operations Purchases of property and equipment and capitalized software from continuing operations $195,098 $123,271 $157,500 $252,497 $307,782 (65,130) (79,800) (83,374) (83,560) (85,761) Free Cash Flow (TTM) $129,968 $43,471 $74,126 $168,937 $222,021 Net cash used in investing activities from continuing operations (TTM) ($128,630) $(144,925) $(137,527) $(149,372) $(105,821) Net cash used in financing activities (TTM) $(113,847) $(220,659) $(228,512) $(194,156) $(185,606) 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 : $(14,574) $(28,525) $22,324 $273,272 $40,711 (16,093) (28,712) (18,638) (20,117) (18,294) Free Cash Flow $(30,667) $(57,237) $3,686 $253,155 $22,417 Net cash used in investing activities from continuing operations $(62,994) $(32,157) $(19,046) $(35,175) $(19,443) Net cash used in financing activities $(41,492) $(114,753) $(16,823) $(21,088) $(32,942) 21

22 Non-GAAP Reconciliations cont d Foreign Exchange Rates The following is a quarterly reconciliation of foreign exchange rate neutral Gross billings growth from the comparable quarterly periods of the prior year to reported Gross billings growth from the comparable quarterly periods of the prior year: 1Q15 EMEA Gross billings growth, excluding FX 7% % FX Effect (18) EMEA Gross billings growth (11) % The following is a quarterly reconciliation of foreign exchange rate neutral Revenue growth from the comparable quarterly periods of the prior year to reported Revenue growth from the comparable quarterly periods of the prior year: 1Q15 EMEA Revenue growth, excluding FX 13 % FX Effect (19) EMEA Revenue growth (6) % Rest of World Gross billings growth, excluding FX (1) % FX Effect (11) Rest of World Gross billings growth (12) % Rest of World Revenue growth, excluding FX (8) % FX Effect (10) Rest of World Revenue growth (18) % Consolidated Gross billings growth, excluding FX 10 % FX Effect (8) Consolidated Gross billings growth 2 % Consolidated Revenue growth, excluding FX 10 % FX Effect (7) Consolidated Revenue growth 3 % 22

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