Groupon, Inc. · NASDAQ:GRPN
Groupon — Q4 2020 Earnings Presentation
38 slides from Groupon's earnings presentation, Feb 25, 2021
Slide 1: GRPN Investor Presentation 4Q20
GRPN Investor Presentation 4Q20 February 25, 2021 1
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: The Destination for Experiences
THE DESTINATION FOR EXPERIENCES WHERE CUSTOMERS DISCOVER FUN THINGS TO DO & LOCAL BUSINESSES THRIVE 3
Slide 4: Leading local marketplace with proven profitability and long-term growth opportunity
Leading local marketplace with proven profitability and long-term growth opportunity Beloved global brand that connects millions of customers and merchants, known for providing unbeatable value A leader in the fragmented $1T Local Market, leveraging our scale and focusing on where we are most differen
Slide 5: Our Large Addressable Market Opportunity
Our Large Addressable Market Opportunity 5
Slide 6: A leading local marketplace with room to grow
A leading local marketplace with room to grow Connecting ~30M1 customers to our global marketplace 1 Million+ Merchants worked with to date ● Large and growing addressable market in local ● Groupon’s two-sided marketplace has massive 1.5 Billion+ global scale Groupons sold to date ● Nearly 60% of ou
Slide 7: Positioned to grow wallet share with global consumers
Positioned to grow wallet share with global consumers Our customers... ● We believe there are 80+ Grouponable moments in a single year... have an average household income of $75K1 ● ...and Groupon is only capturing 4% of those experiences ● Executing on our strategic priorities creates live in a cit
Slide 8: We are a leader in a $1T+ market
We are a leader in a $1T+ market… …yet we are capturing only a fraction of the market opportunity $1T+ TAM for local experiences where we have a right to win $1T+ addressable market Top player... < 1% share Total captured market1 Groupon 2019 share2 (1) Estimated market share of top competitors as o
Slide 9: Our Strategy for Growth
Our Strategy for Growth 9
Slide 10: Groupon: the destination for experiences
Groupon: the destination for experiences ● In mid-2020 we reimagined our merchant and customer value propositions and launched a targeted strategy to strengthen our local marketplace offering ● By putting our new customer and merchant value propositions front and center we believe we can build a new
Slide 11: Groupon can unlock a powerful marketplace flywheel
Groupon can unlock a powerful marketplace flywheel Right Inventory in the Right Markets Merchant Self Location and Service Tools Personalization Amazing Amazing Merchant Exp Growth Mobile CX Customer and Traffic New Search, Relevance Scale &, Navigation Features Frictionless Exp; Bookable Inventory 11
Slide 12: Expand Inventory
Expand Inventory 12
Slide 13: Growing high-quality inventory is our #1 priority
Growing high-quality inventory is our #1 priority Expanding inventory is critical to our growth 3 key inventory products: Deals, Offers, and Market Rate Our goal is to provide value to merchants at any stage of their growth cycle and encourage them to list more inventory with Groupon ● Deals: remove
Slide 14: Deals: removing restrictions to drive customer engagement
Deals: removing restrictions to drive customer engagement Groupon is known for great deals, part of our core customer value proposition By relaxing restrictions on Deals we expect to drive purchase frequency and billings growth We know our customers want to... ● Purchase the same Deal more than once
Slide 15: Offers: inventory product to drive purchase frequency
Offers: inventory product to drive purchase frequency Offers will provide customers with a ~15% discount and merchants with a lower cost listing option Why Offers? Not every merchant wants to run a deeply-discounted Deal and even for those who do, a deeply-discounted Deal may not make sense at all tim
Slide 16: Market Rate: accelerate quality inventory growth
Market Rate: accelerate quality inventory growth Market rate inventory gives customers access to a broader variety of merchants Helps position Groupon as the customer destination for high-quality, local experiences and an “always-on”, pay-for-performance merchant sales channel Will continue to acqui
Slide 17: Portfolio of complementary inventory listing options
Portfolio of complementary, inventory listing options DEALS Unlock our marketplace flywheel to create value for merchants, customers, OFFERS and Groupon MARKET RATE 17
Slide 18: Expanding Inventory: 6-month, 4-market inventory test
Expanding Inventory: 6-month, 4-market inventory test Test Goal: Grow inventory, units and billings by unrestricting Deals and launching Offers in our most important Local categories -- Things To Do and Beauty & Wellness INVENTORY TEST PLAN Clearly define success signals (inventory INITIAL KPIs TEST G
Slide 19: Expanding Inventory: next steps
Expanding Inventory: next steps Scaling now in North America Remove repeat purchase restrictions on Deals in all verticals ● Will increase amount of purchasable inventory ● 2021: increase the percent of Deal inventory available for repeat purchase to 80%+ Launch Offers to Beauty & Wellness merchants
Slide 20: Improve the Merchant & Customer Experiences
Improve the Merchant & Customer Experiences 20
Slide 21: Prioritize our merchants' success
Prioritize our merchants’ success Partner with our merchants to help them grow their businesses Roadmap focused on merchant tools that allow them to build, grow and scale their businesses on the Groupon marketplace Shift Groupon from high-touch, costly model to one where merchants use proven self-se
Slide 22: Then vs Now: being a better partner to our merchants
Then vs Now: being a better partner to our merchants THEN NOW ● Merchants can join Groupon via self-service ● Phone interaction required to join the marketplace ● Launching a deal? Do it in less than 24 hours via self-service Campaign Builder ● Launching a deal? Another labor intensive interaction r
Slide 23: Deliver an amazing customer experience
Deliver an amazing customer experience Improve customer journey from discovery to purchase to redemption Product roadmap focuses on increasing customer purchase frequency Leverage machine learning to produce rapid insights that power curation, search relevance and other UX improvements Position Grou
Slide 24: Reimagining the customer experience
Reimagining the customer experience 2Q21: Launching new customer experience in North America app, mobile web, and desktop New customer experience intended to leverage and amplify our expanded inventory base and drive purchase frequency Personalized homepage: make it easier and more engaging as custo
Slide 25: Product roadmap
Product roadmap Steady cadence of new features will improve the customer and merchant experiences Recap of 2020 Launches Customer Experience Merchant Experience ✔ Map-based search ✔ COVID-19 safety program ✔ Self-service campaign builder ✔ Curated Results ✔ Self-service offer creation enhancements ✔
Slide 26: Reducing our Cost Structure
Reducing our Cost Structure 26
Slide 27: Resetting our cost structure
Resetting our cost structure Committed to operational rigor: lower costs, improve speed and leverage Initiated phase one of our restructuring plan in April 2020 and implemented other cost savings and liquidity preservation measures Began executing phase two of our restructuring plan in August 2020,
Slide 28: Fourth Quarter Results
Fourth Quarter Results 28
Slide 29: Key fourth quarter results
Key fourth quarter results Active Customers1 30M Units 25M Billings $633M Revenue $343M Gross Profit $179M Adjusted EBITDA2 $40M Cash (as of 12/31) $851M3 (1) Fourth quarter purchasers declined at a faster rate y/y than active customers; purchasers down 41% & 39% in NA and Int’l, respectively (2) Adj
Slide 30: Additional insights on fourth quarter results
Additional insights on fourth quarter results Sold 25+ million units in the fourth quarter, demonstrating our scale and durability in the midst of a global pandemic NA Beauty & Wellness bookings >75% recovered in Oct and certain categories, such as high-end cosmetic services ~90% recovered Local rev
Slide 31: 1Q21 and FY21 Perspective
1Q21 and FY21 Perspective 31
Slide 32: 1Q21 perspective
1Q21 perspective Q1 QTD Trends1 ● North America Local billings are down ~49% year-over-year quarter-to-date, tracking at ~51% of 2019 levels ● International Local billings are down ~63% year-over-year quarter-to-date, tracking at ~37% of 2019 levels Factors to Consider ● Seasonality: Q1 gross profit
Slide 33: FY21 outlook and perspective
FY21 outlook and perspective Outlook ● Revenue expected to range from $930 to $980 million ● Adjusted EBITDA expected to range from $100 to $110 million Factors to Consider ● Reflects our current expectation for Local recovery and our Goods revenue being largely reflected on a net basis; does not assu
Slide 34: Unlocking the power of our financial model
Unlocking the power of our financial model ● Durable business model and strong balance sheet provide a foundation for growth ● Strengthening our marketplace offering and closing the gap between our large market opportunity and business performance ● Executing on our priorities to Expand Inventory and
Slide 35: Appendix
Appendix 35
Slide 36: Goods revenue recognition 1P vs. 3P example
Goods revenue recognition 1P vs. 3P example1: $100 customer purchase First Party Goods Third Party Goods Billings don’t change; this is what our customer pays to Billings $100 $100 Groupon In 3P model, Groupon revenue is the commission from Revenue $100 $17 the sale (net of merchant payment) Gross P
Slide 37: Non-GAAP Reconciliations: Adjusted EBITDA
Non-GAAP Reconciliations* Adjusted EBITDA - Quarterly (in thousands) 37 *See Q4 2020 earnings release press release posted on our Investor Relations website for additional information regarding non-GAAP financial measures
Slide 38: Non-GAAP Reconciliations: Free Cash Flow
Non-GAAP Reconciliations* Free Cash Flow (in thousands) 38 *See Q4 2020 earnings release press release posted on our Investor Relations website for additional information regarding non-GAAP financial measures