Groupon, Inc. · NASDAQ:GRPN
Groupon — Q4 2022 Earnings Presentation
33 slides from Groupon's earnings presentation, Mar 16, 2023
Slide 1: GRPN Investor Presentation 4Q22
GRPN Investor Presentation 4Q22 March 16, 2023
Slide 2: Forward-looking statements and other information
Forward-looking statements and other information 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 within the meaning of Section 27A of the Securities Act of 1933, as amended, and Sectio
Slide 3: Trusted Local Marketplace
Trusted Local Marketplace. Where customers go to buy services and experiences that make life less boring and deliver boundless value. 3
Slide 4: Global, scaled, two-sided marketplace with undervalued assets
Scaled local marketplace with room to grow ● Leading player in the large and growing addressable market for local services and experiences ● Two-sided marketplace with massive global scale ● Delivered $1.8B+ in Local Billings in 2022 ● Beloved brand: ~1.5B Groupons sold to date1 Valuable, underutili
Slide 5: A scaled local marketplace with room to grow
1 Million+ Merchant partners worked with to date ● Large and growing addressable market in local A scaled local 1.5 Billion+ ● Groupon’s two-sided Groupons sold to date marketplace with marketplace has massive global scale room to grow ● Beloved brand Connecting millions of $35 Billion+ local custom
Slide 6: Our Sales-led Transformation Strategy to Unlock Growth and Profitability
Our Sales-led Transformation Strategy to Unlock Growth and Profitability
Slide 7: Executing Sales-Led Transformation Strategy
Executing Sales-Led Transformation Strategy Transforming Groupon into the go-to destination for local experiences and services Our transformation strategy is focused on three core areas: Improving Our Marketplace Inventory to Drive Consumer Demand Ensure that we meet our customers needs every single
Slide 8: Potential to unlock marketplace flywheel and significant shareholder value
Right Inventory Location and Merchant Partner to Fulfill Intent Self-Service Tools Personalization Potential to unlock marketplace flywheel and significant shareholder value Amazing Merchant Amazing Customer Partner Experience Local Marketplace for Experience All Occasions & Economic Cycles Scaled Gl
Slide 9: Improving our Inventory to Drive Consumer Demand
Improving our Inventory to Drive Consumer Demand
Slide 10: Improving Our Inventory: Testing Initiatives
Improving Our Inventory: Testing Initiatives Gained valuable insight that is informing our sales-led transformation strategy Tested initiatives to determine the best strategy ● Throughout 2022, tested various initiatives, including: ○ Groupon Incentives ○ Personalized Promotions & Cross-Promotion ○
Slide 11: Improving our Inventory: Onboard & Retain Better Inventory
Improving our Inventory: Onboard & Retain Better Inventory If we win the right supply and expand our selection of fresh, new offerings, we believe demand will follow Leveraging our sales force and refining our sales process for acquiring and retaining high-quality inventory ● Acquisition: Sales reps
Slide 12: Improving our Inventory: Hyper-Local Merchant Acquisition Approach
Improving our Inventory: Hyper-Local Merchant Acquisition Approach Focused on acquiring the right merchant in the right category, the right location and with the right deal structure Taking a Hyper-Local Merchant Acquisition Approach ● Identifying and prioritizing acquisition of high-quality merchan
Slide 13: Improving our Inventory: To Drive Customer Demand
Improving our Inventory: To Drive Customer Demand Build a more inspiring inventory base that engages customers and drives purchase frequency ● We will leverage an improved inventory base to power better search and relevance and recommendations ○ Focused on optimizing our search algorithms and better
Slide 14: Reduce Marketing and Promotional Spend and Improve ROI
Reduce Marketing and Promotional Spend and Improve ROI
Slide 15: Reducing Marketing & Promotional Spend and Improve ROI
Reducing Marketing & Promotional Spend and Improve ROI ● With improved inventory and organic demand, we can reduce our marketing and promotional spend and increase ROI ● Transforming our inventory also means connecting it more directly to consumer demand ● We believe this will allow us to ○ Reduce m
Slide 16: 2023 Goals Summary
2023 Goals Summary Our 2023 goals aim to unlock the marketplace flywheel: ● Increase Billings and Gross Profit by more than 20% for new merchants ● Increase share of new Local deals that sell 10+ vouchers per month in our top U.S. markets from current level of ~20% ● Return overall customer purchase
Slide 17: Reducing our Cost Structure
Reducing our Cost Structure
Slide 18: Executing a multi-phase cost savings plan
Executing a multi-phase cost savings plan to better align with where our business is today… Transforming Groupon into the go-to destination for local experiences and services Phase 1 Cost Actions: ● Achieved $150 million in cost savings through our phase 1 actions, which were substantially complete
Slide 19: Streamlined cost structure supports at least $100M Adjusted EBITDA
Against a meaningfully streamlined cost structure, we believe we can generate at least $100M of Adjusted EBITDA by sustaining Local recovery rates at 50% of 2019 levels 19
Slide 20: Fourth Quarter Results
Fourth Quarter Results
Slide 21: Key fourth quarter results
Key fourth quarter results 19M 14M $468M $148M Active Units Billings Revenue Customers1 Sold $129M $(5)M $281M Gross Profit Adjusted Cash EBITDA2 (as of 12/31)3 1. Active Customers are defined as unique user accounts that have made a purchase during the trailing twelve months ("TTM") either through on
Slide 22: Additional insights on fourth quarter results
Q4 Global Local Billings - NA and International Local Billings at 51% and 49% of 2019 levels, respectively Grew our high-value, active Local customer base year-over-year in International by Additional 10%, improving the composition of our International customer base insights on fourth quarter result
Slide 23: Scaled Customer Base, Room to Improve Retention and Growth
NA Active Local Customers 1 11.5M 11.1M 10.5M 9.9M 9.2M Scaled Customer Base, Room to Improve Retention and Growth Focused on improving supply to align with intent of our Q3 2022 Q4 2021 Q1 2022 Q2 2022 Q4 2022 high-value Local customer base and ultimately unlock purchase frequency and drive demand
Slide 24: 1Q23 Perspective
1Q23 Perspective
Slide 25: 1Q23 perspective
1Q23 perspective Factors to Consider ● Preliminary January & February Local Billings Results (FXN) (1): ○ North America: Estimated to be ~44% of 2019, down 9% y/y ○ International: Estimated to be ~49% of 2019, down 1% y/y ○ Consolidated: Estimated to be ~46% of 2019, down 7% y/y ● Marketing: Expect
Slide 26: Appendix
Appendix
Slide 27: Non-GAAP SG&A Implications for Expense Reductions
Non-GAAP SG&A Implications for Expense Reductions SG&A (1) Walk to $250M Savings 2021A SG&A (1) $440M SG&A Savings (1) $200M 2022 Cloud costs, wage inflation, & other + $50M CapEx $35M SG&A - adjusted baseline $490M Other Cash Savings $15M SG&A Cost Savings - Phase 1 - $(100)M Total Expected Gross $2
Slide 28: Goods revenue presentation
Goods revenue presentation 1P vs. 3P example1: $100 customer purchase First Party Goods Third Party Goods Billings $100 $100 Billings don’t change; this is what our customer pays to Groupon In 3P model, Groupon revenue is the commission from the sale Revenue $100 $17 (net of merchant payment) Gross
Slide 29: Minority Investments Overview
● SumUp Holdings S.a.r.l. (“SumUp”) ○ Groupon has been a passive investor in SumUp, a privately-held, global payments service provider, since 2013 and currently holds a 2.29% non-controlling ownership Minority interest Investments ○ There is no public market for SumUp securities at this time. Other
Slide 30: Non-GAAP Reconciliations: Adjusted EBITDA
Non-GAAP Reconciliations* Adjusted EBITDA - Quarterly (in thousands) *See Q4 2022 earnings press release posted on our Investor Relations website for additional information regarding non-GAAP financial measures 30
Slide 31: Non-GAAP Reconciliations: Free Cash Flow
Non-GAAP Reconciliations* Free Cash Flow (in thousands) *See Q4 2022 earnings press release posted on our Investor Relations website for additional information regarding non-GAAP financial measures 31
Slide 32: Non-GAAP Reconciliations: Local gross billings
Non-GAAP Reconciliations* Local gross billings as a percentage of 2019 *See Q4 2022 earnings press release posted on our Investor Relations website for additional information regarding non-GAAP financial measures 32
Slide 33: Non-GAAP Reconciliations: SG&A
Non-GAAP Reconciliations* Selling, general and administrative reconciliation *See Q4 2022 earnings press release posted on our Investor Relations website for additional information regarding non-GAAP financial measures 33