Q4 2020 Groupon Inc Earnings Call
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Good day, everyone and welcome to coupons fourth quarter 2020 financial results conference call at.
And at this time, all participants are in a listen only mode.
A question and answer session will follow the company's formal remarks.
To ask a question press the star key bullets.
And number one on your Touchtone phone once again and star one to ask a question.
Today's conference call is being recorded.
For opening remarks, and I'd like to turn the call over to Chief Communications Officer, Jennifer from Goldman Let's go ahead.
Good morning, and welcome to Groupon <unk> fourth quarter 2020 financial results conference call on the call today are interim CEO, Aaron Cooper and CFO Melissa Thomas.
The following discussion and responses to your questions reflect management's views as of today February 26, 2021, only and will include forward looking statements actual results may differ materially from those expressed or implied in our forward looking statements additional information about risks and other factors that could potentially impact.
Our financial results is included in our earnings press release and in our filings with the SEC, including our annual report on form 10-K.
We encourage investors to use our investor relations website at Investor day at Groupon Dot com as a way of easily finding information about the company Groupon promptly makes available on this website. The reports that the company filed or furnished with the SEC corporate governance information and select press releases and so.
<unk> media postings.
On the call today, we will also discuss the following non-GAAP financial measures.
Adjusted EBITDA free cash flow and FX neutral results and our press release and our filings with the SEC each of which is posted on our Investor Relations website, you will find additional disclosures regarding the non-GAAP measures, including reconciliations of these measures to the most comparable measures under U.
GAAP and with that I'm happy to turn the call over to Aaron.
Thanks, Jennifer and <unk>.
Thank you all for taking the time to join us today.
Im excited to update you on how we finished 2020 and our plans for 2021.
As I reflect on this past year I like so many others I'm sure Gordon.
Lately to the challenges we all face.
But it's also very important for me to acknowledge the resilience that our merchants and customers and employees have shown during these unprecedented times.
And I think about groupon, and how far we've come over the past year and so product the hard work our teams poured into creating a path to growth. We went from local units being down nearly 80% and generating negative adjusted EBITDA to delivering $50 million of adjusted EBITDA for the full year 2020, taking significant fixed costs out.
And strengthening our balance sheet.
On top of improving our financial results. We also transitioned our north American goods category to a third party marketplace and developed and began executing on our strategy to fundamentally addresses on merchant and customer value propositions.
We believe and 2020 and moving faster empowering our teams and focusing on the most important opportunities.
In short we believe we are on a path to growth.
As we move into 2021, and we're excited about our path, which we believe will include a second half organic recovery tailwind.
This tailwind coupled with a meaningfully lower fixed cost base should allow us to drive sequentially, improving gross profit and adjusted EBITDA as we progress throughout 2021.
We believe this anticipated recovery scenario provides a framework for how to think about the base case for Groupon.
Which would suggest and meaningful progress from where we are today.
And just 80% of our 2019 gross profit level, we believe we can deliver $250 million and adjusted EBITDA and 2022.
Of course, however, our intention is to growth and this year you will see us continue to execute on our two strategic priorities expanding inventory and modernizing the marketplace and.
And 2021, our goal is to bring these two priorities together to position Groupon for long term growth by.
By creating and leveraging a significantly improved experience for our customers. We believe we will be able to drive sell through of our expanding inventory, which we intend to grow both by making more of our existing supply repeatable and expanding our marketplace to new merchants.
We will then amplify these efforts with an improved margin experience that will support the continued growth of our marketplace.
Let me first provide you with an update on our inventory strategy.
And our four test markets. We are excited to have exceeded our inventory scorecards, which gives us confidence that our execution of our inventory strategy puts us on a path to growth.
Before I go into the details on the test results and whats going looks like let me quickly remind you about the inventory test parameters.
The goal of our four market test was to grow inventory and improve both units and billings performance for a second troll markets.
We believe we could grow inventory by encouraging merchants to list their full catalogs on the groupon marketplace and provide customers with a broad portfolio of deals offers and market rate experiences.
We launched the test so we could first learn and iterate the force scaling across the rest of our North American and international markets.
The test was divided into two phases.
During the first phase we focused on growing overall inventory by both removing restrictions on deals and launching a new inventory product called offers which would target on incent customers and be a lower cost option for our merchants.
Our goal was to prove out the first part of our hypothesis that offering a portfolio of inventory options with open the door for more merchants to sell the full catalog on our marketplace and position Groupon as and always on sales channel.
Before the launch of offers merchants only had one way of working with Groupon, which was off and too expensive and ultimately limited the inventory on our platform.
While offers provide a lower discount for customers and our typical deal customers can purchase this type of inventory and listing again and again.
The second phase of our tests focused on driving customer demand and proving the second part of our hypothesis.
That having more inventory and the groupon marketplace would improve the customer value proposition result, and a lift and units and billings and longer term position groupon to grow purchase frequency and drive customer loyalty.
We measured success and the test markets through our inventory scorecard, which focused on both supply and demand metrics.
First on the supply side.
Inventory and the foreign market has grown approximately 65% versus our control markets.
We are excited that we exceeded our goal of 50% growth.
In addition, we're proving and offers provide a new value proposition that is resonating with merchants.
In fact, nearly 70% of the supply growth and the test markets has come from offers.
The combination of deals and offers provides a portfolio of listing options for every merchant no matter, where they are and their growth cycle.
Next on the demand side, we also exceeded our goal even in the midst of Covid and even before launching significant customer experience improvements we intend to introduced in Q2 of this year.
We achieved high single digit lift and billings and a low double digit lift and units and the test markets versus control and while we still have more to learn and we believe these results demonstrate that our improved value proposition is resonating across many customer groups.
The units and building list came from a combination of an increase and customers and and increasing purchase frequency with existing customers.
So with these strong test results, we're ready to immediately move into scaling and plan to take a two pronged approach and 2021.
First we've identified parts of the strategy, where we have high confidence and that we can begin scaling now and quickly and.
And second we will continue to test and iterate and other areas before scaling broadly.
Let me talk through what we're scaling now.
First we are moving repeat purchase restrictions on deals across all verticals.
The restriction will focused on removing it the inability to repurchase a deal sometimes within a certain timeframe sometimes forever.
By removing this restriction, we will increase the amount of purchase will inventory and our marketplace and help support our ultimate goal of driving customer purchase frequency higher and increasing customer loyalty.
This focus is driven by what our customers and merchants want and it will be a critical change as we continue to shift our value proposition for customers and merchants and deliver on our promise as a destination for local.
In addition, as I mentioned on the third quarter call through the end of the test we had the most success and growing inventory within our beauty and wellness vertical.
This growth was driven by higher listings per merchant and bringing new merchants onto our platform demonstrating that our new inventory approach has broad appeal.
And the test markets. We found that offers is resonating with both our merchants and customers and.
In fact on the customer demand side offers made up 9% and beating wellness sales and the test markets.
Customers tend to engage and the same set of beauty and wellness experiences frequently and we seek offers us a great opportunity to help merchants build out loyal customer basis and drive purchase frequency for groupon.
Based on our test market results. We have started rolling out our offers inventory product all beauty and wellness merchants and North America.
We expect both our sales force and our newly improved self service tool to play a role and securing this inventory.
So let me summarize our top three priorities as it relates to scaling our inventory growth strategy and navigating the pandemic and related recovery.
One we are removing repeat restrictions on deals across all verticals.
We are rolling out offers to all beauty and wellness merchants and North America and.
And three as we move through the Covid recovery period, we are focused on winning back our merchants that we've lost.
Now, let me outline where we're looking to learn more.
And we know that we're differentiated and our things to do vertical and that our dining inventory is valued by our customers.
During our test we saw that when we increased supply in these verticals it resonated with our customers and increased units sold.
These are great early wins, but as you can imagine COVID-19 has created some noise. So we're gathering more insights on what recovery is likely to look like.
In addition to expanding inventory. We also made important progress on modernizing our marketplace and the fourth quarter I will take you through a few of the highlights on the merchant side.
First on our merchant self service tool, we're excited about the progress we've made here over this past year.
While this growth is off a small base and the fourth quarter, we increased the amount of inventory created through self service by four times versus last year and at the same time, we are improving the quality of this inventory with building it yourself service up seven times.
And we continue to make improvements to the tool during.
During the fourth quarter, we rolled out additional features including personalized recommendations.
For example, we can now automatically recommend pricing discount levels and more based on the type of deal our offer and the merchant is looking to list.
In addition, we launched and integration with Booker a popular beauty and wellness booking solution in North America.
Bookers are first beauty and wellness partner to leverage our groupon and connect API tool to seamlessly integrate quality bookable supply into the groupon marketplace.
We are now turning our focus from the customer experience.
This means that looking ahead to 2021, we intend to build a significantly better customer experience.
One that will leverage and amplify both our expanded inventory base and ongoing improvements to the merchant experience and create a destination marketplace for customers that is highly complementary to the inspiration marketplace that we're already known for.
And the past six months, we've learned from our inventory tests that we can create and path to meaningful change in our marketplace and a short amount of time.
So we are now taking this bold approach with our customer experience as well.
And im excited to share that we've kicked off a product sprint that will allow us to rollout a new customer experience and North America and Q2.
This new experience will dramatically improve the customer journey from discovery to search and will focus on driving engagement conversion and purchase frequency.
Let me give you a few examples of the changes we plan to rollout.
First we will personalize the homepage to make it easier and more engaging as customers search browse and discover experiences.
We're improving our search and relevance capabilities in order to do a better job of matching our customers' intent to search results.
And third we'll be launching a feature set that encourages and makes it easier for customers to repeat purchase which will include driving awareness to customers that we now have deals and offers that can be purchased again and again.
Our goal is to roll out this new experience to every group on user and North America across our App mobile web and desktop and then expand to international to naphtha.
We have a sense of urgency and believe that time is of the essence as we look forward to a day when our customers have the confidence they need to get back to enjoying all of the local experiences that the groupon marketplace offers.
When this does happen we want to be ready to deliver a fundamentally improved experience that can help amplify the tailwind of the COVID-19 recovery.
So to bring this all together, let me give you a sense as to what you should expect from Groupon and we continue to execute on our growth strategy between now and the end of the year.
On inventory, we will see continued expansion of our overall available supply with a focus on retaining and in some cases, bringing back our top merchants as well as attracting new merchants and removing deal restrictions.
Two key goals include increased the percent of deal inventory available for repeat purchase to greater than 80%.
And increased the average listing for merchant for beauty and wellness, which is where we are currently scaling office.
On modernizing the marketplace for merchants will continue to prioritize positioning groupon as a trusted partner and for customers, we're making it easier for them to find buy and redeeming groupon.
And 2021 our goals include.
Continuing to build out tools that will help us be a better partner to our merchants.
Including our self service tool.
Folio of advertising products, including sponsored listings.
And new booking tool features that help merchants drive sales on our platform and.
In short we want to be the value resorts that merchants turn to when they are looking to start build and grow their businesses and.
And for customers. We believe we will exit 2021, with a new experience that positions us to drive more engagement increased repeat purchasers and fundamentally improves the customer journey.
In addition to the inventory and marketplace and modernization work that I've just outlined we know that marketing plays an important role on our success.
That said before I touch on the key elements of our approaching marketing and 2021, let me explain how we believe supply product and marketing fit together as we work towards unlocking the power of our marketplace.
Our brand perception will be led by how our customers and merchants experience on marketplace.
This means how much breadth and depth of inventory, we make available to customers and how we enable them to interact with our platform.
From search checkout to redemption, which are all components of our brand.
As we think about marketing and in particular brand marketing, we know that any strategy must amplify our marketplace experience.
This highlights the importance of first getting the supply and product rights on our platform.
And then we intend to leverage the power of our improved supply and product to drive our brand and marketing efforts.
As we improve our product and supply will be in a position to deploy more marketing spend in the mid and upper funnel. We believe we can drive awareness and engagement and growth top of mind awareness.
This means winning back previous customers and merchants or gaining new ones, we want to be the brand and that helps merchants will cover and get customers back experiencing their local merchants.
Before I turn the call over to Melissa I, just want to underscore how pleased we are with our progress which has been driven by our team's relentless focus on execution.
This quarter, we know and we hit our inventory test goals and continue to improve our marketplace value proposition.
But we also stood up a product strength that we believe will allow us to completely re imagine their customer experience.
During the fourth quarter, we recovered nearly 60% of our 2019 gross profit and despite the pullback. We saw on December we are confident that our progress has put us on the path to profitable growth.
With that I'll turn the call over to Melissa for a recap of our financial results Melissa.
Melissa.
Thanks, Darren and thanks, again to everyone for joining us today.
As I reflect on 2020.
But on a challenging year.
And selling price with the resilience our business has shown and how we continued to deliver sequentially improving results and 2020.
And also so energized.
The Groupon team has stepped up and accomplish so much supervision groupon for recovery and growth.
Today I'll use my time to provide you with a few updates on our financial and operating progress and.
Putting our radio and our fourth quarter results.
Gross drivers and trends.
The status of our restructuring from and lastly, insight on our expectations for the first quarter and full year 2000 and from one.
Starting with our consolidated fourth quarter results.
We delivered 633 nine of gross selling $343 million of revenue for.
179 million of gross profit and $40 million of adjusted EBITDA.
And the mix of rising Covid cases around the world, we delivered another quarter of sequential improvement and gross profit.
And maintaining discipline around our cost and proving that regardless of our business.
We ended the year with a solid balance sheet and liquidity.
And the fourth quarter, we generated nearly $70 million and free cash flow and.
We ended the quarter with approximately 850 level on cash.
Including $200 million of outstanding revolver borrowings.
Next I will provide more insight into our fourth quarter results business drivers and trends.
We ended the quarter with 30 million active customers.
Wanted to once again remind everyone knits and active customers is a trailing 12 month metric. We expect this number to decline as it reflects the ongoing impact of COVID-19.
During the fourth quarter, we sold a total of 25 net.
And well since the onset of the pandemic.
Global local units were $12 million and.
While international local unit were heavily impacted by increase in Covid restrictions North America local units were 7% higher in the fourth quarter compared with the third quarter.
<unk> good units were $13 million.
It was a 45% increase compared with the third quarter.
We were pleased to deliver higher North America, local gross profit compared with the third quarter and.
Well as improved results and our North America and international goods category.
Sequential gross profit improvement and North America local was in part driven by improved unit volume and bookings.
Including within our beauty and wellness vertical.
In fact during October and North America, beauty, and wellness tripling from 175% recovery measured as a percentage of 2019.
In addition, certain categories of home beauty and wellness.
And.
<unk> services for nearly 90% recovered.
On a year over year basis, North America, local unit performance improved and the fourth quarter compared with the third quarter.
And that fell in December we saw a pullback and year over year unit performance.
Richard worsening pandemic conditions and fewer holiday gathering.
And international local and the increased COVID-19 restrictions and a more significant impact on fourth quarter performance.
As I noted on our third quarter earnings call and late October and into November we started to see local down from countries as much as 80% year over year as restrictions were reinstated across Europe.
And that's continued and in some cases tightened throughout the remainder of the fourth quarter.
And we leaned more on Tuesday, and relevant local supply to keep consumers engaged.
Globally, our goods category delivered 42% higher gross profit and the fourth quarter compared with the third quarter.
And we completed the northern Africa transition through a third party marketplace model.
Hitting this milestone and allows us to run the goods category and a much slower fixed cost base.
And this is currently simplify our operations.
Starting with the first quarter of this year.
And would expect the vast majority of northern Africa revenue to be recognized on a net basis.
Regarding the international transition, we will begin the transition from third party and the second quarter and expect to be complete by the end of the third quarter.
Moving down the P&L SG.
SG&A was $128 million and the fourth quarter GAAP.
And over 30% every year.
SG&A came in better than our expectations largely due to lower non payroll spending as we continue to tightly control expenses during the pandemic.
During the fourth quarter, we remain disciplined with our marketing expense.
Moving targeted investments to engage local purchasers.
Marketing expense was $38 million and as a percentage of gross profit was similar to what we reported and the third quarter.
Now for an update on our restructuring plan.
We realized $140 million on cost savings in 2020 related to our restructuring actions and furloughs, which was in line with our stated goal.
And also successfully reduced our non payroll operating expenses and 2020.
Net net we should continue to expect that our fixed cost base, excluding stock based compensation and depreciation and amortization will be 200 million lower and our 2019 cost base.
Ultimately, we remain on track to achieve $225 million of run rate savings in 2022 versus our 2019 cost base.
Looking ahead to 2021 and continue to deal with uncertainty caused by shutdowns related to Covid, which we saw rise in Q4 and remain persistent and so far and Q1.
We want to provide as much transparency as possible and to our expectations for the year.
At a high level, it's important to recognize that our first quarter gross profit and adjusted EBITDA are typically lower than our fourth quarter due to seasonality.
We've included more details on Q1 factors to consider and our slide deck, which we encourage you to review.
Now turning to our expectations for the full year 2021.
For the full year 2021, we expect to deliver $930 million to $980 million of revenue.
And $100 million to $110 million of adjusted EBITDA.
We expect and recovery to be weighted to the second half of the year with adjusted EBITDA weighted significantly to the second half of the year and building throughout the year.
It's important to note that this represents our current expectation for local recovery and our goods business day, largely reported on a net basis.
And does not assume and material contribution from the success of our growth strategy.
We are excited about our potential this year and we will be actively looking for ways to leverage opportunities to accelerate our growth into 2021.
Before opening it up for questions I'll turn it over to Eric for some closing thoughts.
Thanks, Melissa and.
And as I mentioned in my opening comments and so many ways 2020 was a challenging year for everyone.
I can't and my prepared remarks without a heartfelt. Thank you to our team here at Groupon.
We call them on our entire team to focus.
Through walls and make the progress we believe we needed to position Groupon for success and.
And the team day.
And answered this call and I couldnt be proud of.
And 2021, we believe we will make substantial progress towards our mission to be the destination for experiences where customers discover fun things to do and local businesses drive.
Thank you for your time today.
With that I'll open up the call to questions.
At this time I would like to remind everyone in order to ask a question. Please press star and the number one on your telephone keypad.
Your first question comes from Trevor Young from Barclays. Your line is open.
Hi, Thanks for the question.
Color on the <unk> keep the deep.
Local billings were pretty helpful. It seems like the trends and and generally consistent with the four kids and adults was there any change in cadence and like January from February and North.
America abroad from January improved and the U S. Before we had the heavy winter weather and some states and then can you remind us how <unk> 2020 per day.
And we see a sharp falloff in March as we started and get into the Covid situation. Thanks.
Thanks Trevor.
Sure I'll provide some additional color on our Q1 performance quarter to date. So thus far in 2021, we are seeing year over year billings performance for North America local trend a few points better than Q4 levels.
And North America local billings are tracking at around 51% of 2019. So as you would expect and we are performing better in markets with fewer restrictions and whether weather is warmer and.
And we are seeing that our beauty and wellness and things to do volumes are increasing sequentially from January to February which is encouraging and then.
And with respect to international local performance there continues to be impacted by government government mandated restrictions that are in place across Europe and with some of the tightest restrictions in place and our largest international markets like the UK and Germany.
From a quarter to date perspective international local billings are down about 63% year over year and tracking at around 37% of 2019 levels. So while we continue to see near term volatility and we remain.
Confident and our ability to capitalize on the recovery, which we expect to be weighted to the second half of the year.
In terms of Q1, and 2020 and really started to the questioner on when we started to see the impacts of Covid hit.
And in March of 2020 is really where we started.
To see the impact so.
And what you'll you'll want to do it from a modeling perspective, the way that you want to start thinking about it kind of March and forward looking at the percentage of of 2019 on a year over year.
Comparable won't be as meaningful.
That's really helpful.
And just I guess bigger picture are you starting with new merchants setup campaigns for late spring and summer to be prepared for what seems to be this expectation of like pent up demand coming to market, particularly here in the new adds it seems like there is a potential tailwind for both local and travel and that what youre hearing from merchants and how are you guys preparing.
And for that.
Yeah, Hi, thanks for the question.
So as we look to recovery.
We're looking on both the customer and merchant side, and we're really confident based on what we're seeing so let me give you a couple of examples.
And that I think will help you understand.
And as Melissa mentioned, some of our categories, such as M, and auto and beauty and wellness and bringing rather reliable dropped the pandemic once merchants settled in now and once you mentioned such as live events and leisure, where we know those injuries industries will be on the later side of recovery.
We are working with those merchants is really special and I think important.
And when we're talking to some of these merchants we're hearing some of the complexity and they are facing and opening back up. So so let me give you a couple of examples.
And merchant I was speaking to runs indoor things to do all over the nation and in some states. They are still completely almost shut down and and others they've been open.
They are finding is the coupon and the most resilient channels they have on <unk>.
And we are above average for their business and the reason is is that we have our core exploration model that we've been known for where we can inspire demand. We can tell customers that these merchants are opened we can tell customers that they've adopted and added your services and we can let them know before customers are already searching for those things before the demand has already passed.
So we're really being able to be helpful to merchants and that type of case and.
Other one to call out.
Truck and me as being very interesting was the way that destinations are would be using groupon. So if you look at national destinations another one and the leisure space.
They are looking and saying we might not get a lot of demand from overseas and then.
And I get a value demand traveling from across the country. When you do invent things to happen locally and so that's another way that merchants are getting creative and using groupon.
And to take advantage of the way that they're going to be marketing and running their business into recovery so across the board.
And we feel really good about recovery, it's certainly just a matter of when and working with our merchant category by category to bring them back online and I completely agree with your assessment of pent up demand.
Across all our categories. Thanks for the question.
And that's really helpful. Thank you so much.
Again, if you would like to ask a question. Please press star and the number one on your telephone keypad Youre on.
Next question comes from Eric Sheridan from UBS. Your line is open.
Thank you so much from chicken.
<unk>, maybe to reflect channel to Florida.
Coming back to the inventory crushed and what you learned and the four markets you what surprised you to the upside in terms of the test on that produce shortage.
The weighted change versus what your initial goals have been going in and two.
Terms of measuring your.
Sure the confidence interval in the test itself and <unk>.
Now wider should go through the year and then maybe the second part would be when you think about the output for the year.
Measured against the investments you need to make.
Can you give us a little bit better sense ensure the investments that have to go in to widen and the inventory expansion initiative has moved from 21 and how investors should think about the yields of the return on the revenue side becomes on the other side of it. Thanks so much.
Thanks, Eric.
And I'm happy to hit both parts of your question here and I. Appreciate you asking about our strategy. This is where our focus group Inc.
While you look at our business overall, we see these two important horizons, one recovery and our low cost base.
Just a recovery to 80% throws up more EBITDA and 2019 and at 90% for that record EBITDA and what Youre asking about and the second part of that inflection, which is our visit growth plan on top of it.
So as we rollout our test we were really excited by the significant the.
The reaction from customers and merchants and let me ground you in the broader context here, we are opening up our marketplace, we're going from and inspiration marketplace to add a destination components inventory is one component, our CX and merchant experience or is the other component and what.
What you saw on those test results as you saw and outsize engagement from our merchants with a $65, 70% improvement and inventory.
And then with very little change to our customer experience saw engagement from customers.
Both on the billings and units side. So I would say we were actually surprised to the upside because a lot of times and you're rolling out new products. You are looking for quarter point improvements one percentage point improvement and in the middle of Covid.
Saw a very significant reduction.
So if you take that reaction that we saw.
We believe that we are walking down a prudent path.
Marketplace dynamics, where we're opening up supply and opening up the customer and merchant experience really open up both parts of the funnel now and we think that recovery itself.
And we'll actually be a huge marketing event for us to introduce everything that we're scaling to our customers and merchants.
So let's talk about the things that we're scaling because you asked about the investment there.
We're going to go ahead, and we're going to scale removal of restrictions.
We're going to go ahead, and we're going to scale Rolling on offers and we're going to go ahead, and we're going to scale.
<unk> and our customer experience to really open up our marketplace, adding destination features.
This isn't additions and other leveraged work, we're doing where we're scaling our self service on the merchant side and we're scaling sponsored listings as well on the merchant side from merchants can do more so all of these proven marketplace tactics and features on what we're scaling and to punctuate. The point, we feel really good about our cost structure, we feel really good.
About the investment this is a matter of focus and prioritization and increased throughput and Thats. All muscle. This team has built over the last year. So I'm really proud of their energy and focus and I really appreciate your questions on strategy.
Great. Thanks, guys.
Your next question comes from Michael <unk> from Goldman Sachs. Your line is open.
Hi, Good morning, Thank you very much from the time and and the question.
And I'm just wondering if you could talk a little bit more about the removal of deal restrictions.
Typically.
You talked a little bit about how the value proposition for both the merchant and the consumer might change a little bit as a result of that.
Our merchants thinking about the removal deal restrictions.
Does it change your view on Groupon as.
A channel to help with user acquisition and eventually buy more market rate goods too.
On Groupon as more of a kind of revenue and profit driver and.
And have a color there would be very helpful. Thank you.
Thank you so and are now suite of inventory products, we have deals offered and market market rate and you were specifically asking about removal of deal restrictions, which is one lever that merchants have we.
We found that our merchants are very willing to remove the restrictions and debt they're excited to be able to win customers back multiple times and the customers going back multiple times gives merchant confidence that they'll try and oil customers of course merchants have the option to also add and offer where a deal converts to and offer over time.
So that the actual overall all in costs can come down for that repeat purchaser. So we've given merchants all of the tools for them to be able to take advantage of and always on interaction all the time and interaction with groupon.
And where they can take advantage of our unique inspiration components, which is with deals and they can also take advantage of.
Engaging with high intent customers, which is operating margin right.
Is there another question.
Yes. Your next question comes from Douglas Anmuth from Jpmorgan. Your line is open.
Great. Thanks.
You talked about rolling out new customer experience and <unk> North America users.
And one year, a little bit more about.
And what Youre seeing in terms of the early testing there.
And then secondly, just as you.
Thinking about trying to make the business more kind of always on basically and getting towards more repeat purchases can you just give us a sense of how merchants are.
And maybe what percentage of merchants youre seeing that kind of activity from and.
And then I guess also within the test markets and.
Some of those results as well thanks.
Thanks, So as we as we put this into context again, we're opening up the marketplace on both sides. So your first question.
You asked about the customer side.
And so we'll point out the fact, we got the results that we got and our test without any changes to our CX and fact, when you look at our homepage and hasnt been substantially updated and five years.
So the CX changes that we're making.
And make this business more modern and research that we see with our customers, it's intuitive and it helps them search and browse and engage more and more deeply which that homepage. That's our brand and that's what we want to be known for so as we steer reputation from being episodic and inspiration only to more of a destination.
Effectiveness of the <unk> rollout is really important which is why we're spending so much time researching.
And engaging with customers as we develop this so the components to look for new.
And we'll be live and Q2 is a redesigned homepage.
More category buttons and easier to search.
Better relevance and our search so the results are better and we're very excited to have core repeat purchase features which dropped off of the evolve inventory and the improved inventory that our merchants are now putting on this isn't something that was a focus of groupon before because we're so focused on inspiration, but as we set ourselves up to be more on.
Always on sales channel for our merchants and our site that our customers can use more frequently repeat purchase and <unk> features are critical.
Your other question talked about the merchant side and the marketplace, what do we seen them and what we saw pretty quickly when we rollout operating as we start so really strong engagement.
And our BD wellness category, that's why we're rolling that one out at scale. This is where merchants can add on things that they could never afford to add on before and they can and bank customers to repeat with them over and over again. So we saw significant uptake there and then we've seen even in the midst of COVID-19 customers engaging and inventory that Merck.
<unk> could not per quarter, which is exciting on both sides of the marketplace.
As far as deal restriction.
This is something that will be rolling out across the board of course merchants always have full control of what they want to do on groupon, but many of these merchants.
We haven't seen especially now any significant headwind that we see to our ability to hit the targets that we've set out which is 80% of our inventory will have restrictions removed.
And we'll be rolling out operating at scale to increase our inventory and beauty mamas and so we've seen and really good receptivity on both sides of our marketplace, which when you take a step back isn't that surprising because all we're doing here is rolling out proven marketplace dynamics and features.
On top of our already scaled marketplace.
Great. Thank you.
And just a question.
And there are no further questions today. So this concludes today's conference call. Thank you for participating you may now disconnect.
And.
And.
[music].
Okay.
Thank you.
And then.