Groupon, Inc. · NASDAQ:GRPN
Groupon — Q2 2022 Earnings Presentation
39 slides from Groupon's earnings presentation, Aug 9, 2022
Slide 1: GRPN Investor Presentation 2Q22
GRPN Investor Presentation 2Q22 August 8, 2022
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 and big potential
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 $1.6B+ in Local Billings in 2021 ● 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 ● ~70% of our customer base Connecting millions of $35 Billion+
Slide 6: Our Turnaround Strategy to Unlock Growth and Profitability
Our Turnaround Strategy to Unlock Growth and Profitability
Slide 7: Executing Turnaround Strategy
Executing Turnaround Strategy Transforming Groupon into the go-to destination for local experiences and services Reducing Cost Structure Fundamentally Improving our Marketplace Experience Executing a multi-phased cost savings plan to align our Ensure that we meet our customers needs every single tim
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: 1. Reduce our Cost Structure
1. Reduce our Cost Structure
Slide 10: Streamlining our Cost Base & Improving Productivity
Executing a multi-phase cost savings plan to better align with where our business is today… Redesign expected to reduce cost structure by $150 million by end of 2023 ● Aggressively right-sizing our tech org to align with our current and future business needs, on both the payroll and non-payroll side
Slide 11: Unlocking a Sustainable Financial Model
Unlocking a Sustainable Financial Model Expect improved financial results in Full Year 2023 2023 AND BEYOND 15-20% Sustainable Annual Adjusted $100M Annual Free Cash Flow* EBITDA margins* Creating a business model with goal of generating positive free cash flow every quarter, starting in 4Q 2022 * We
Slide 12: 2. Fundamentally Improving our Marketplace Experience
2. Fundamentally Improving our Marketplace Experience
Slide 13: Fundamentally Improving Our Marketplace Experience
Fundamentally Improving Our Marketplace Experience Meet our customers needs every single time they come to our marketplace to drive purchase frequency and improve customer retention Purchase Frequency + = Create a better Lean into customer experience marketing Customer Retention Improve inventory Di
Slide 14: Create a Better Customer Experience: Pricing & Trust
Create a Better Customer Experience: Pricing & Trust Pricing: ● When customers come to our marketplace in search of a deal on something, they have to be able to trust that we offer the best deal ● Reviewed pricing in North America and put a new process in place to improve our ability to monitor pric
Slide 15: Create a Better Customer Experience: Cross-Promotion & Personalized Promotion
Create a Better Customer Experience: Cross-Promotion & Personalized Promotion [] Successfully launched experiment to increase cross-vertical purchases; Scaling in Q3 ● Launched experiment in NA to figure out how to better leverage power of our horizontal marketplace ● Used personalized promotions to
Slide 16: Improve Inventory Density
Improve Inventory Density Build optimal inventory density that satisfies and inspires our customers based on their intent ● Focused on creating more opportunities for our customers to buy the everyday services and experiences they are looking for on Groupon ● Determining right balance between breadth
Slide 17: Improve Inventory Density: Re-thinking Card Linked Offers
Improve Inventory Density: Re-thinking Card Linked Offers Re-launching our card-linked offers in the high-frequency Dining vertical ● Partnering with leading CLO provider in the food and dining space ● Anticipate partnership will approximately triple our Dining inventory in North America in 3Q22 ● B
Slide 18: Improve Inventory Density: Market-Rate Inventory
Improve Inventory Density: Market-Rate Inventory Experimenting with ways to drive conversion and monetization of our market-rate inventory to increase customer acquisition and retention ● Figuring out how to better leverage our market-rate inventory to make Groupon more top of mind with customers an
Slide 19: Atlanta Case Study
Atlanta Case Study Testing ability to ‘supercharge’ unit velocity in the Atlanta market Case Study Overview: Simultaneously running a number of our experiments to improve Inventory density and the customer experience Choose the Atlanta market because our current footprint is less mature Key KPIs: In
Slide 20: Using Marketing to drive growth
Using Marketing to drive growth Strategic marketing will play a key role in retaining and bringing new customers to our platform ● Given the operational progress we've made, we are now in a position to increase our marketing investment to drive growth ● Identified several opportunities for reallocati
Slide 21: Differentiate Inventory to Drive Growth
Differentiate Inventory to Drive Growth Creating curated inventory collections that combine Local inventory in new, unique ways to drive consumer demand ● We have a broad spectrum of Deal inventory, but our offering is not always differentiated enough to be compelling to consumers ● These will be un
Slide 22: Differentiate Inventory to Drive Growth
Differentiate Inventory to Drive Growth Launching premium Beauty and Wellness marketplace experience to better serve high-intent customers ● Taking an innovative approach to attract top-tier inventory and better serve high-intent customers ● Plan to launch a new Beauty and Wellness marketplace exper
Slide 23: Second Quarter Results
Second Quarter Results
Slide 24: Key second quarter results
Key second quarter results 21M 12M $460M $153M Active Units Billings Revenue Customers1 Sold $134M $6M $316M Gross Profit Adjusted Cash EBITDA2 (as of 6/30)3 1. Active Customers are defined as unique user accounts that have made a purchase during the trailing twelve months ("TTM") either through one o
Slide 25: Additional insights on second quarter results
Q2 Global Local Billings - NA and International Local Billings at 53% and 50% of 2019 levels, respectively, as Local performance continues to stabilize and refund levels showed sequential improvement Additional Grew our high value, active Local customer base year-over-year in North America and Inter
Slide 26: Improving the Composition of our Customer Base
NA Active Local Customers 1 11.3M 11.0M 10.5M 10.8M 10.4M Improving the Composition of our Customer Base Focused on growing our high-value Local customer base and Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 unlocking purchase frequency to capture more customer wallet share and drive more demand to Group
Slide 27: 3Q22 Perspective
3Q22 Perspective
Slide 28: 3Q22 perspective
3Q22 perspective Factors to Consider ● Local Billings: ○ July Local Billings were approximately 50% of 2019 levels, as they were impacted by the lack of seasonal inventory ○ While very early, since we began leaning into marketing, we’ve seen North America Local Billings tick up a few points as a % o
Slide 29: Guidance Implications for Expense Reductions
Guidance Implications for Expense Reductions Multi-Phase Cost Savings Plan ● Phase 1 will reduce current cost structure by $150M ● Majority of actions will occur in 2022 and relate to the following areas: ○ Right-sizing our tech org to align with our current and future business needs; Intend to redu
Slide 30: Expected SG&A and Cash Implications for Expense Reductions
Expected SG&A and Cash Implications for Expense Reductions SG&A (1) Cash Savings 2021 SG&A (1) $440M 2022 Cloud migration costs + $35M 2022 Wage & other inflation + $15M SG&A - adjusted baseline $490M SG&A Cost Savings - $(100)M $(100)M CapEx Reduction - -- $(15)M Other Savings (non-SG&A) - -- $(20)M
Slide 31: FY 2023 Adjusted EBITDA to Free Cash Flow Conversion
FY 2023 Adjusted EBITDA to Free Cash Flow Conversion TBD based on Local $100M+ performance ($30-$35M) ($10-$20M) TBD Adjusted EBITDA* CapEx Other Restructuring Net Working Capital Free Cash Expenses Costs Inflows/(Outflows) Flow* Includes ~$135M benefit from cost (tax, interest, other) savings actions
Slide 32: Global, scaled, two-sided marketplace with undervalued assets and big potential
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 $1.6B+ in Local Billings in 2021 ● Beloved brand: ~1.5B Groupons sold to date1 Valuable, underutili
Slide 33: Appendix
Appendix
Slide 34: 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 35: 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 36: Non-GAAP Reconciliations: Adjusted EBITDA
Non-GAAP Reconciliations* Adjusted EBITDA - Quarterly (in thousands) *See Q2 2022 earnings press release posted on our Investor Relations website for additional information regarding non-GAAP financial measures 36
Slide 37: Non-GAAP Reconciliations: Free Cash Flow
Non-GAAP Reconciliations* Free Cash Flow (in thousands) *See Q2 2022 earnings press release posted on our Investor Relations website for additional information regarding non-GAAP financial measures 37
Slide 38: Non-GAAP Reconciliations: Local gross billings
Non-GAAP Reconciliations* Local gross billings as a percentage of 2019 and sequential quarter-over-quarter growth (dollars in thousands) *See Q2 2022 earnings press release posted on our Investor Relations website for additional information regarding non-GAAP financial measures 38
Slide 39: Non-GAAP Reconciliations: SG&A
Non-GAAP Reconciliations* Selling, general and administrative reconciliation *See Q2 2022 earnings press release posted on our Investor Relations website for additional information regarding non-GAAP financial measures 39