3Q13 Earnings November 2013

Transcription

1 3Q13 Earnings November 2013

2 Forward Looking Statements The statements contained in this presentation that refer to plans and expectations for the next quarter 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; responding to changes in the market; effectively dealing with challenges arising from our international operations; retaining existing customers and adding new customers; retaining existing merchant partners and adding new merchant partners; incurring expenses as we expand our business; competing against smaller competitors and competitors with more financial resources than us; maintaining favorable terms with our business partners; maintaining a strong brand; managing inventory and order fulfillment; integrating our technology platforms; managing refund risks; retaining our executive team; litigation; regulations, including the CARD Act and regulation of the Internet; tax liabilities; tax legislation; maintaining our information technology infrastructure; security breaches; protecting our intellectual property; handling acquisitions, joint ventures and strategic investments effectively; seasonality; payment-related risks; customer and merchant partner fraud; global economic uncertainty; compliance with rules and regulations associated with being a public company; and our ability to raise capital if necessary. 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 November 7, Groupon undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this presentation 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.

3 Mission: To be the world s commerce operating system, increasing consumer buying power while driving more business to merchants through price and discovery.

4 Areas of Focus Having evolved from one city to over one thousand, from a few customers to over 43 million, we are now focused on our next phase of evolution, building the world s largest marketplace of deals. There are four areas we re focused on to capitalize on this opportunity: Mobile Local Pull >65M local merchants worldwide,~30m in our core categories, we have only featured >500,000 to date 1 One Playbook (1) Localeze/Neustar & Factual.com Business Listings and Company Data

5 Mobile: leading the mobile commerce revolution Groupon crossed the 50% threshold in September in North American transactions occurring on mobile devices, which we believe makes us the first large-scale e-commerce company in North America that is predominantly mobile. Over 40% of global transactions were completed on mobile devices in September 2013 Over 9 million people worldwide downloaded our mobile apps in Q3, another record for us, and over 60 million have downloaded them to date Mobile Transaction Mix Monthly, January 2011 to September 2013 (% of transactions) 100% 80% 60% 40% 0% September 13 March 13 October 12 April 12 October 11 April 11 June 13 January 13 July 12 January 12 January 11 July 11 North America Global

6 Pull: meeting customer demand by expanding beyond ( Push ) to search ( Pull ) In September, roughly 6% of total traffic in North America was related to search activity, with customers that search spending over 25 percent more than those that do not Estimated >65,000 active deals, on average, in North America In the third quarter, direct remained less than 40% of North American transactions In September, 75% of the merchant contracts signed in North America opted to feature in our Pull marketplace, with a monthly recurring deal ~1,000 active deals worldwide IPO September 2013

7 One Playbook: Continued progress with NA playbook Rolling out processes/technology globally that have driven improvement in NA: Best business practices/processes Customer facing tools/technology to enhance the customer experience (eg. SmartDeals, Deal Bank) Proprietary sales tools to increase productivity (eg. Sales Workbench, Coffee, Deal Wizard, and Quantum Lead) Integration of underlying technology platforms Billings Improvement MSAT/CSAT Improvement EMEA y/y billings growth accelerated from 4% growth in 2Q13 to 12% growth in 3Q13 ROW y/y billings decline improved from 21% in 2Q13 to 13% in 3Q13 In EMEA, customer and merchant satisfaction improved 1 in many countries EMEA customer adds were positive after three quarters of declines (1) Based on customer and merchant satisfaction scores per ForSee Customer and Merchant Satisfaction Surveys, September 2013 (surveys commissioned by Groupon).

8 Ticket Monster Acquisition Rationale A leading ecommerce site in Korea, one of the largest ecommerce markets in the world Shares the Groupon vision Truly mobile marketplace Heavily reliant on organic traffic through their marketplace, with accounting for less than 10% of total sales Diverse product set across local, product, and travel Transaction & Timing $260M total purchase price, including up to $160M Class A common stock and at least $100M cash; final allocation to be determined upon close Expect transaction to close in first half of 2014 Subject to regulatory approval and other customary closing conditions

9 Non Financial Metrics North America EMEA Rest of World Units 1 Unit Sales grew 9% YoY globally in 3Q13, to 46M YoY by Segment +19% +1% ROW NA EMEA ~Flat Active Customers 2 (in millions) % % 41% 42% % 44% % 45% 3Q12 4Q12 1Q13 2Q % 23% 23% 22% 22% 32% 46% 3Q13 Spend per Average Active Customer 3 Active Deals 4 Customer Spend globally declined $1 vs. 2Q13 to $ Estimated >65,000 active deals on average in NA, up from >54,000 in 2Q13 and ~1,000 worldwide at the time of the IPO IPO September 2013 (1) Units reflect vouchers and products sold before cancellations and refunds. (2) Active customers reflect the total number of unique user accounts who have purchased a Groupon during the trailing twelve months. (3) Spend per average active customer reflects the total gross billings generated in the trailing twelve months per average active customer over that period. (4) Active deals reflect the number of daily featured and Deal Bank deals offered on average at the end of the quarter.

10 Financial Summary Consolidated Gross Billings & Revenue Operating Income (Loss) $1,520 $1,408 $1,414 $1,343 $1, % Y/Y $25 $21 $27 $14 $569 $638 $601 $609 $595 +5% Y/Y $(13) 3Q12 4Q12 1Q13 2Q13 3Q13 Gross Billings Revenue

11 Expense Summary Consolidated Cost of Revenue Marketing % of Revenue 32% 44% 37% 37% 40% 12% 10% 8% 9% 9% $182 $282 $222 $224 $235 $71 $61 $50 $55 $53 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 Selling, General & Administrative Stock Compensation and Acquisition-Related 51% 48% 51% 50% 49% 4% 4% 5% 5% 4% $288 $308 $308 $303 $294 $25 $27 $30 $32 $25 3Q12 4Q12 1Q13 2Q13 3Q13

12 Financial Summary Segment North America Gross Billings & Revenue EMEA Gross Billings & Revenue Rest of World Gross Billings & Revenue $719 $681 $712 $665 $552 $292 3Q12 $375 $340 $377 $361 4Q12 1Q13 2Q13 3Q13 + Y/Y +24% Y/Y $396 $187 3Q12 $532 $176 $492 $184 $482 $160 $443 $148 4Q12 1Q13 2Q13 3Q13 +12% Y/Y -21%Y/Y $270 $90 3Q12 $269 $234 $219 $234 $87 $78 $72 $86 4Q12 1Q13 2Q13 3Q13-13% Y/Y -4%Y/Y Gross Billings Revenue Gross Billings Revenue Gross Billings Revenue $60 $50 $40 $30 $20 $10 $ Segment Operating Income & Margin Segment Operating Income & Margin Segment Operating Loss & Margin $49 $39 $41 $25 13% $17 12% 13% 5% 7% 3Q12 4Q12 1Q13 2Q13 3Q13 1Q12 2Q12 3Q12 4Q12 1Q % $50 45% $45 40% $40 35% $35 30% $30 25% $25 $20 15% $15 10% $10 5% $5 0% $ 50% $5 45% $ 40% 35% $(5) 30% $(10) 25% $(15) 15% $(20) 10% $(25) 5% $(2) $34 $29 $25 $(12) 16% 19% 15% $(14) $16 $(18) (2)% $9 (20)% (14)% $(24) 11% (20)% (31)% 5% 0% $(30) 3Q12 1Q12 4Q12 2Q12 1Q13 3Q12 2Q13 4Q12 3Q13 1Q13 50% 40% 30% 10% 0% 10% 30% 40% (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 segment revenue.

13 Financial Summary Category Gross Billings Gross Profit and Gross Margin 1 $1,218 56% $1,520 52% $1,408 59% $1,414 57% $1,343 54% $450 $400 $350 $300 $250 $200 32% $387 68% $356 23% 69% $379 $385 27% 27% 74% 75% $360 27% 74% 35% 30% 25% 15% 31% 36% 28% 31% 13% 12% 13% 12% 3Q12 33% $150 $100 $50 13% 9% 9% 10% $ 23% 22% 16% 16% 17% 9% 9% 2Q12 3Q12 4Q12 1Q13 2Q13 4Q12 1Q13 2Q13 3Q13 10% 5% 0% Local Goods Travel & Other 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.

14 Financial Summary Local 1 $500 North America 60% $400 EMEA 80% $450 Rest of World 90% $450 $400 $350 $300 $250 $200 $150 $100 $50 $ $356 35% $430 28% $123 $119 $450 $450 32% $146 $154 $403 34% 34% $138 30% $200 (1) Local represents deals from local merchants, deals with national merchants, and through local events (i.e. GrouponLive 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. 50% 40% 10% 0% $350 $300 $250 $150 $100 $50 $ 54% $183 $240 37% $259 37% $241 41% $99 $88 $97 $99 $207 39% $81 $400 70% $350 60% 50% 40% 30% $100 10% $50 0% $145 28% 33% 28% $129 $120 Billings Gross Profit Gross Margin % of Billings 2 $300 $250 $200 $150 $ 31% $115 37% $118 $41 $36 $39 $35 $44 80% 70% 60% 50% 40% 30% 10% 0%

15 Financial Summary Goods North America EMEA Rest of World $275 60% $275 80% $275 90% $241 70% 80% $225 50% $225 $225 $197 $195 $205 60% 70% $175 $152 $165 40% $175 $147 $149 $168 $170 $175 50% 60% 50% $125 30% $125 40% $125 $75 18% $75 32% 27% 30% $75 $77 $96 $78 $72 $79 40% 30% $25 $(25) 14% 11% 9% 8% $28 $23 $27 $12 $22 10% $25 0% $(25) 19% 16% 17% $47 $38 $40 $27 $29 $25 10% Billings Gross Profit Gross Margin % of Billings 1 0% $(25) 18% 18% 15% 12% 9% $14 $18 $7 $9 $12 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 Financial Summary Travel and Other $95 North America 60% $95 EMEA 80% $95 Rest of World 90% $85 $85 $88 $84 $85 70% 80% $75 $65 $66 $65 $68 50% $75 $65 40% $66 $74 $66 $75 60% $65 70% 60% $55 $45 $45 $48 $55 30% $45 50% $55 40% $45 $48 $44 50% $35 $25 $15 $5 21% $9 $10 22% 17% $14 $13 $12 $35 $25 $15 10% $5 25% 21% $16 $17 $17 19% $14 $14 $35 30% $25 $15 10% $5 $36 $37 $32 19% 19% 22% 18% 15% $9 $7 $7 $6 $8 40% 30% 10% $(5) 0% $(5) 0% $(5) 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.

17 Financial Summary Cash Flow Operating Cash Flow Free Cash Flow 1 $40 $70 $60 $66 $30 $26 $26 $29 $50 $42 $43 $20 $40 $10 $30 $20 $ $10 $9 $(10) $(6) $ $(20) $(10) $(20) 3Q12 $(12) $(30) $(27) 4Q12 1Q13 2Q13 3Q13 (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.

18 Other Financial Highlights 3Q 2013 ($ millions) 12/31/11 GAAP Loss per Share $(0.00) EPS excluding stock-based compensation 1 and acquisition-related benefit, net Operating Cash Flow $0.02 $(12M) Operating Cash Flow TTM $106M Free Cash Flow 2 $(27M) 2 Free Cash Flow TTM $22M Cash and Cash Equivalents $1,140M Repurchased 770,900 shares in the third quarter, for an aggregate purchase price of $9 million; $291 million remains available under existing share repurchase authorization (1) Diluted earnings per share excluding stock based compensation and acquisition related benefit, net is a non GAAP financial measure. See appendix for a reconciliation to the most comparable U.S. GAAP financial measure, Diluted net 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.

19 Appendix

20 Non-GAAP Reconciliation EPS excluding Stock-Based Compensation and Acquisition-Related Benefit, net (in thousands, except share and per share amounts) The following is a reconciliation of diluted earnings per share excluding stock-based compensation and acquisition-related benefit, net to the most comparable U.S. GAAP financial measure, Diluted net loss per share : Three Months Ended September 30, 2013 Net loss attributable to common stockholders $(2,580) Stock-based compensation 26,870 Acquisition-related benefit, net (1,529) Income tax effect of adjustments (8,292) Net income attributable to common stockholders, excluding stock-based compensation and acquisition-related benefit, net $14,469 Diluted shares 666,432,848 Incremental diluted shares (1) 18,501,055 Adjusted diluted shares 684,933,903 Diluted net loss per share $(0.00) Impact of stock-based compensation and acquisition-related benefit, net and the related income tax effects 0.02 Diluted earnings per share excluding stock-based compensation and acquisition-related benefit, net $0.02 (1) Outstanding equity awards are not reflected in the diluted net loss per share calculation for the three months ended September 30, 2013 because the effect would be antidilutive. However, those awards have been reflected in the calculation of diluted earnings per share excluding stock based compensation and acquisition related benefit, net for the three months ended September 30, 2013 because they have a dilutive effect on that calculation.

21 Non-GAAP Reconciliation 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 (TTM) : 3Q13 Net cash provided by operating activities (TTM) $105,874 Purchases of property and equipment and capitalized software (TTM) (83,608) Free Cash Flow (TTM) $22,266 Net cash used in investing activities (TTM) $(125,738) Net cash used in financing activities (TTM) $(32,748) 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 : Net cash provided by (used in) operating activities $42,088 $65,717 $8,760 $43,302 $(11,905) Purchases of property and equipment and capitalized software (16,010) (40,034) (14,468) (14,042) (15,064) Free Cash Flow $26,078 $25,683 $(5,708) $29,260 $(26,969) Net cash used in investing activities $(35,629) $(52,753) $(30,679) $(15,862) $(26,444) Net cash provided by (used in) financing activities $2,707 $(6,495) $(9,342) $(7,941) $(8,970)

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