Groupon, Inc. · NASDAQ:GRPN
Groupon — Q2 2020 Earnings Presentation
35 slides from Groupon's earnings presentation, Aug 6, 2020
Slide 1: GRPN 2Q20 Earnings
GRPN 2Q20 Earnings August 6, 2020 1
Slide 2: Forward-looking statements
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 within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securitie
Slide 3: Resilient business model and operating leverage create strong foundation for growth
Resilient business model and operating leverage create strong foundation for growth ● COVID-19 has deeply impacted our business ○ Local units were down nearly 80% in late March ○ We were in a cash burn position ● We moved quickly to stabilize the business in the midst of the pandemic ○ Created signi
Slide 4: Our Large Addressable Market Opportunity
Our Large Addressable Market Opportunity 4
Slide 5: Groupon is a leading local marketplace
Groupon is a leading local marketplace Connecting ~38M1 customers to hundreds of thousands of merchants Top 5 E-commerce brand 2 ● Beloved brand known for Deals; opportunity to leverage Local offering and grow brand equity 1 in 5 ● Two-sided marketplace with massive global scale U.S. internet users c
Slide 6: Pre-COVID, in 2019 our best NA customers were ~8M strong
Pre-COVID, in 2019 our best NA customers were ~8M strong Our best customer... ● Our best NA customers purchased ~58% of total units sold in 2019 and spent ~$2.1B1 has household income of $75K to $100K ● They purchased from us ~7x in 2019 on average vs. customer average of 3-4x per year lives in a ci
Slide 7: 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 Groupon 2019 Billings $1T+ TAM $3.4B in Local for local experiences where we have a right to win Experiences1 $1T+ addressable market Top player... Things to Do Beauty & Wellness Dining $1B+ $900M+ $350
Slide 8: The Destination for Experiences
THE DESTINATION FOR EXPERIENCES WHERE CUSTOMERS DISCOVER FUN THINGS TO DO & LOCAL BUSINESSES THRIVE 8
Slide 9: Our Strategy for Growth
Our Strategy for Growth 9
Slide 10: Groupon: the destination for experiences
Groupon: the destination for experiences ● Over the past four months, we’ve created robust merchant and customer value propositions and a targeted strategy rooted in strengthening our marketplace offering ● We’re rebuilding our marketplace offering with our new customer and merchant value propositions
Slide 11: Expanding inventory can unlock a powerful flywheel
Expanding inventory can unlock a powerful 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 App Scale 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 Launching inventory products to drive growth Expanding inventory is our critical path to growth; can unlock customer purchase frequency and drive billings growth Inventory strategy is focused on 3 key inventory initiatives: Deals, Offers, and Market R
Slide 14: Deals: removing restrictions to drive customer engagement
Deals: removing restrictions to drive customer engagement Groupon is known for great deals, which is part of the 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
Slide 15: Offers: launching new product to drive purchase frequency
Offers: launching new 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
Slide 16: Market Rate: accelerate quality inventory growth
Market Rate: accelerate quality inventory growth Market rate inventory will give customers access to a broader variety of merchants Will help position Groupon as the customer destination for high-quality, local experiences and an “always-on” merchant sales channel Will continue to acquire new Market
Slide 17: Expanding Inventory: test for signal before we scale
Expanding Inventory: test for signal before we scale Goal: Scale inventory, market by market, in the most important Local categories -- Things To Do and Beauty & Wellness -- focusing on growing across Deals and Offers How the inventory test will work ✓ Clearly define success signals (inventory growth,
Slide 18: Expanding Inventory: our scorecard for success
Expanding Inventory: our scorecard for success We will test and iterate quickly These targets refer only to the test markets and represent a starting point for growth INITIAL KPIs ASAP 6 MONTHS 6 MONTHS+ 25-50% increase in key Inventory continued growth continued growth zip codes & verticals low sin
Slide 19: 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 19
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 self-service tools that allow merchants to build, grow and scale their businesses on the Groupon marketplace Position Groupon as a unique, valuable always-on sales channel Shift Groupon
Slide 22: Deliver an amazing customer experience
Deliver an amazing customer experience Improve customer journey from discovery to purchase to redemption Product roadmap prioritizes bookability, search, inspiration, and curation to increase customer purchase frequency Leverage machine learning to produce rapid insights that power curation, search
Slide 23: Product roadmap
Product roadmap Leveraging data to launch innovative products Steady cadence of new features will improve the customer and merchant experiences Curation • Bookable • Search • Discovery • Personalization Q1 & Q2 2020 (launched) Q3 2020 Q4 2020 Customer Experience Merchant Experience Customer Experien
Slide 24: Continued Focus on Reducing our Cost Structure
Continued Focus on Reducing our Cost Structure 24
Slide 25: 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 and implemented other cost savings and liquidity preservation measures Will begin executing phase two of our restructuring plan in August, which
Slide 26: A Different Approach to Execution
A Different Approach to Execution 26
Slide 27: A different approach to execution
A different approach to execution Powering our teams for success Empowering our teams ● Focused on the most important business opportunities ● Iterating faster to launch innovative products ● New approach expected to lead to better business decisions and outcomes Moving faster ● Restructuring to bec
Slide 28: Unlocking the power of our financial model
Unlocking the power of our financial model ● We are executing a targeted strategy rooted in strengthening our marketplace offering and the disconnect between our large market opportunity and our business performance ● We intend to execute exceptionally well to Expand Inventory and Modernize the Mercha
Slide 29: Second Quarter Results
Second Quarter Results 29
Slide 30: Key second quarter results
Key second quarter results Active Customers1 38M Units 23M Billings $583M Revenue $396M Gross Profit $137M Adjusted EBITDA2 $1M Cash (as of 6/30) $785M3 (1) Second quarter purchasers declined at a faster rate y/y than active customers; purchasers down 47% & 34% in NA and Int’l, respectively (2) Adjus
Slide 31: Third Quarter 2020 Perspective
Third Quarter 2020 Perspective 31
Slide 32: Third Quarter 2020 Perspective
Third Quarter 2020 Perspective Third Quarter Factors to Consider For 2020 Modeling Purposes ● Goods transition to 3rd party marketplace model in NA ● Expect Goods shift to 3rd party marketplace model to happen throughout 3Q20; largely complete by end to be largely complete for North America in 3Q20;
Slide 33: Appendix
Appendix 33
Slide 34: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted EBITDA - Quarterly 34
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations Free Cash Flow 35