Q4 2021 Groupon Inc Earnings Call
[music].
Okay.
Good day, everyone and welcome to Grupo <unk> fourth quarter and full year 2021 financial results Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the Companys formal remarks to ask a question. Please press star followed by the pound sorry.
Star followed by the number one on your Touchtone phone.
Once again that star one to ask a question.
Today's conference call is being recorded for opening remarks, I would like to turn the call over to Chief Communications Officer, Jennifer Goldman. Please go ahead.
Good morning, and welcome to <unk> fourth quarter and full year 2021 financial results conference call on the call today are CEO Kdr dish bond day, and interim CFO Damien Schmidt.
The following discussion and responses to your questions reflect management's views as of today March one 2022, only and will include forward looking statements.
Actual results may differ materially from those expressed or implied in our forward looking statements. Additionally, 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.
<unk>, our Investor Relations website at Investor <unk>, <unk> Dot com as a way of easily finding information about the company.
Upon 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 social 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.
In 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 S GAAP and with that I'm happy to turn the call over to KAR.
Good morning, everyone and thank you for joining us today.
This morning, I'm going to start by sharing a little bit about myself.
And why I am excited about the opportunity to lead Groupon.
Then I will provide some early observation and perspective on our.
Strategic assets my approach to operational excellence.
Putting our customers and merchant partners first.
I will look forward to sharing the details about our go forward strategy and priorities on our next earnings call in May.
So let me start with a little bit about me, where I came from.
A bit of my career at the crossroad of retention through customer experience and E Commerce.
Which is why I'm so excited to be joining the team at this pivotal moment in group one's journey.
While end software engineer by trade.
I have spent the last 10 years at zappos in various leadership positions.
Across product marketing and general management responsibilities.
Before managing the entire business as CEO and most recently as CEO .
Highlighted team that was tasked with not only growing our business, but growing profitability.
The biggest lesson I learned is that putting customer needs first as the best way to drive long term success.
I believe it is also critical that the company delivered a consistent product experience.
This can maximize the impact of marketing, which drives both new customer acquisition through word of mouth and long term loyalty.
What drew me to Groupon, specifically is the unique marketplace of local experiences.
Our marketplace helps people create memories and forge new connections that can last a lifetime.
And that especially.
With over 23 million active customers are very familiar brand that drives a lot of organic traffic and a globally scaled platform with advanced capabilities Groupon is unique.
Our two sided marketplace has the ability to connect customers with its inventory of local experiences online.
And then deliver those experiences offline through local merchant partners.
From outside looking in I could see the progress coupon had made over the last 18 months to expand its inventory.
Coupon has a tremendous scale in the local experience this market.
Which is also highly fragmented.
But despite these positive characteristics.
We have not yet tapped into our full potential.
Just give me Lee I took this job because I believe we can convince more customers and more merchants to use groupon more frequently and create value for all our stakeholders.
And I felt very confident that my experience growth mindset, and a new perspective on how groupon can deepen relationships with customers and merchant partners to increase retention.
Could accelerate company's progress.
Over the last few months.
I have immersed myself in the business.
<unk> been reviewing our strategy and operations and speaking with employees merchant partners and customers around the world.
And frankly I'm, even more excited about the opportunity ahead than the day I joined.
In a world seeking connection I firmly believe we have all of the right ingredients to grow our marketplace.
He had on my observation so far.
To start <unk>.
<unk> customers low coupon.
You can see this in our App reviews and in the customer comments on our partner offered pages.
We are definitely creating great memories.
In addition, groupon teammates are dedicated and eager to help customers and video open to change that will create better outcomes for our customers.
Merchant partners and Groupon.
Second groupon as a horizontal marketplace with shoppers, who can buy a variety of experiences across our local verticals.
So we have the potential to create a strong cohort of crossover shoppers.
This is important for two really critical reasons.
Horizontal marketplaces can drive higher purchase frequency because they're applicable use case is broader.
And the customer acquisition and retention dynamics are typically much healthier than vertical marketplaces.
For example, with a strong dining vertical set we can spend less to acquire customers.
But then showcase our selection of things to do experiences, which often have higher average order values.
To these customers.
Over the long term.
This positions groupon to keep customer acquisition cost.
In check while.
Increasing customer lifetime value.
Third this is something I've already highlighted but it bears repeating.
Tremendous global scale.
This means that when we figure out new levers to drive growth, we can roll them out quickly on a global stage and monetize them on our scale platform.
Fourth.
We have data feedback network that is untapped in our current experience.
We have so many data assets such as location high locked in rates.
And massive email reach that we can infuse into our customer experience to make our customer journey and merchant partner experience much better.
We are not taking advantage of this today.
And finally, our focus on winning in local is the right focus.
We are most differentiated in this category, we have a solid foundation in place to accelerate our growth and progress.
So groupon has several moving assets.
Assets that I believe are under monetize.
Namely customers, a global scale backbone and information.
A company with one of these assets would be exciting.
So I'm very encourage by our opportunity to harness the power of all three.
In 2021, the team did a great job of controlling the controllable impacting our business.
And despite challenges created by factors like the Omicron and Delta variants.
And supply demand imbalances impacting our merchant partners the team made progress expanding our local inventory and modernizing the marketplace.
We grew North America full year local billings by 22% compared with 2020.
We also made progress improving the composition of our customer base and we have grown the number of active local customers in North America on a trailing 12 month basis for the past three consecutive quarters.
So we have made some progress but from my perspective, we have so much potential to deliver a lot more impact.
As I mentioned the team has done a lot of foundational work over the past year and half to expand our inventory and increased our offerings to the customers.
But now we must build an even better understanding of the critical value propositions, we must provide for our customers and the critical value proposition, we must provide for our merchant partners.
Despite our competitive advantage, a highly fragmented and large addressable market groupon hasnt been able to capture additional share in the local.
In fact for some time prior to pandemic, our business was actually shrinking.
I believe this performance stems from an operating philosophy that has not been centered enough around delighting, our merchant partners and customers and prioritizing initiatives and utilizing the data that our core goal.
I believe that we must incorporate these operating tenants in order to sustain the growth over the long term and achieve operational excellence.
I also believe the root of many of our challenges stems from the broadness of our module partner and customer value propositions.
We have been trying to be everything to everyone and instead.
We need to focus on delivering the most important elements of our value proposition to ensure we are delighting and retaining both customers and merchant partners.
Yeah.
Throughout my career.
Learn through experience that if you consistently delight your end users and obsess about details in every single interaction.
You will create long term loyalty and this is the key to retention.
So here at Groupon, we must figure out what is the most critical need we must satisfy for our merchant partners.
Our customers.
We intend to dig deeply into understanding our value proposition.
Key inputs and drivers to do a better job of prioritizing our initiatives and investments and driving focus operational excellence.
While I am still in the process of digging through our value propositions for our merchant partners and customers.
My goal is for every decision every change we make to our marketplace going forward.
To be focused on the long term benefits to our business.
We need to do a better job of prioritizing the interests of customers and merchant partners first.
We should also be great for Groupon long term future.
In short we are going to be obsessed with meeting the needs of our customer and merchant partners.
I believe this is how we will create significant value for all our stakeholders over the long term.
Practically speaking what does that mean, let me give you an example.
We need to create better algorithm that does a better job of helping us build a more strategic inventory base.
That takes into account our platform capacity and balances both supply coverage at.
And breadth of inventory and supply density, meaning the desktop inventory, we need to create more certainty around the flywheel.
Impact of adding new merchant partners.
Creating supply redundancy, how many new customers can we attract with each new lifting the ad.
I believe that we must more effectively ensure that we have great inventory on our marketplace in order to unlock our growth slightly.
We also need to figure out fundamentals of a stronger partnership that works better for our merchant partners.
This is how we will demand trade our opposition with delighting our merchant partners to.
To grow the business, we need to better understand what are the most important area that merchant partners need Groupon health net.
For instance, right now we are trying to help merchants partners with both marketing management by driving customer acquisition and awareness.
And revenue management by running yield management.
In order to successfully deliver.
On what we promise our merchant partners, we need to focus on the role that is most important today.
One early learning.
We have seen is that while historically, we'd part bill.
Beauty and wellness merchant partners view us viewed the groupon marketplace as a tool to acquire customers.
In fact, only roughly 20% are using us to acquire customers and some 80% are using us for yield management.
This suggest that.
That.
Can realign our priorities to better serve this need.
While we havent yet determined the most important role for Groupon to play with merchant partners let.
Let me walk you through what I'm digging into first and exploring.
Building trust with our merchant partners.
We have to ensure that they want to come back.
To partner with two point again and again.
And merchant partner economics, it's wider that we get more insight into our merchant partners economics.
And the expectations for what Groupon will provide and at what cost.
Today, we are not capturing this type of information from our merchant partners and we intend to build out our capabilities on this front.
We have long viewed our core customer value proposition has unbeatable value on local experiences.
And selection and convenience that allows customers to find and enjoy local experiences.
But in my early observations.
We may not always be delivering on this promise.
One area, where we can do more is building customer trust.
Customers need to be able to trust that coupon will always deliver on our value proposition.
This is table stakes for any marketplace.
And we are taking steps to make sure that trust and our marketplace remains high.
Building Trust with our customers is critical if you want them to come back to our marketplace again and again.
For example in the past customers didn't have an easy way to get a refund directly from Groupon, if the transaction didn't go as planned.
To address this.
<unk> improved our refund practices to be more proactive.
Giving the customer refund if a merchant partner is not honoring groupon.
Trust building is an ongoing process.
And we will continue to invest in this area.
We also need to make sure that we have great customer service.
Have created contact, but then that will allow customers to easily reach customer service through their own upon portal.
Naturally trust is just one area we are digging into.
It should give you a sense of how we are digging into our customer value proposition.
We will continue to refine our consumer marketing strategy.
Philosophically this is how I see groupon approaching marketing.
I believe we should spend money on marketing only when we see organic traction.
Marketing should not be used to fuel the fire. If there is no flat to begin with.
Retail heightened focus on putting the needs of our customers and merchant partners first.
We believe we will be in a better position to assess the organic traction we are gaining.
And this will be the best signals to indicate where to pour gas to fuel the fire.
While we have been disciplined in our approach to the marketing investment.
We will be looking to become even more disciplined going forward.
Deploying marketing dollars only where we see this organic traction.
In the future you should look forward to groupon doing a better job of leveraging marketing and proprietary customer information to accelerate our growth.
From day to day interactions consumers have with our marketplace to strategic opportunities to drive awareness.
And capture mind share during peak consumer moments here.
All of these big picture ideas will require that we take a hard look at how we are balancing the needs of customers.
Local merchant partners and Groupon.
We are a two sided marketplace, we need to make sure.
We delight, both customers and merchant partners, while creating a benefit for groupon.
Doing this will enable us to do a better job retaining customers and merchant partners and allow us to get our climbing Tony.
I intend to move quickly and decisively to lead Groupon forward.
For the next three months.
As we and the rest of the world emerge from the impact of yet another Covid Vivian you can expect to hear from us about our enhanced mission.
That we are aligning our business and operating strategy.
We will continue to assess as quickly as we can what is working and what isn't working.
This assessment will continue with the core questions about each of our investments.
Is this good for the customer is this good for merchant partners and then is this good for Groupon.
Within this framework, we will also be assessing.
<unk> core areas.
How can we drive growth with the new supply density and demand inputs.
And can be gain any additional operating efficiencies by replacing manual processes with automation throughout our organization.
Next quarter I haven't shared our execution timeline and corresponding near to medium term kpis and goals that we will use to measure success against our priorities.
As I mentioned earlier.
At that point.
We'll be in a position to give you financial guidance for the full year.
Moving forward our goal is that everything we work on ladders up to the most important tenant for groupon.
Acting in the long term interest of customers merchant partners and Groupon.
To create value for all of our stakeholders.
This means we will be obsessed with delighting, our customers and merchant partners.
That we plan to act with greater intention.
To become even more disciplined to bringing operational excellence to everything we do that will allow us to reach our full potential and deliver the forecast durable.
Profitable growth, we believe is within our reach.
With that I will turn it over to Damien for a high level review of our financial results and first quarter guidance.
Thanks Kate.
And thanks to everyone, who is joining us today.
Today I'll use my time to provide further insights into.
Our fourth quarter operating and financial results and our financial outlook for the first quarter of 2022.
I'll also provide some perspective full year 2022 trajectories.
In addition to my prepared remarks, I encourage you to review our slides press release, and 10-K, which contains more detail on our Q4 results and first quarter outlook.
Starting with our consolidated fourth quarter results with.
We delivered $621 million of gross billings of $223 million of revenue.
$195 million of gross profit and $37 million of adjusted EBITDA.
We ended the year with $499 million in cash, including $100 million drawn on the revolver and generated positive free cash flow.
As <unk> mentioned earlier the team did a great job focusing on what we could control.
And as a result, we made significant progress stabilizing our category.
In the quarter global local billings grew 36% versus the prior year and 8% versus the prior quarter.
<unk> the emergence of the omicron bearing in December which significantly impacted consumer demand in the latter part of the quarter.
We also continued to make progress improving the composition of our customer base.
We continue to take actions aimed at building a stronger healthier marketplace, which we believe will allow us to unlock purchase frequency capture more customer wallet share and deliver more value to our merchant partners over time.
Within our North America customer base, we grew our <unk> customers grew third consecutive quarter.
As a result, we had $11 3 million active local customers in the fourth quarter.
5% versus the third quarter.
This growth in local customers offset the decline in our lower value goods customers during the quarter.
And within our international markets. We are encouraged by the progress we made rebuilding and improving the composition of our local customer base this quarter, especially in light of the prolonged COVID-19 headwinds there.
In fact, we grew our active local customers, 10% versus the third quarter and as a result had $4 5 million active customers in the fourth quarter.
The team also made important progress expanding our local inventory a modernized in the marketplace in 2021, we hit our inventory goals in North America, we remove repeat restrictions on over 80% of our local dealer inventory grew listings per beauty and wellness merchant approximately 40% since launching.
<unk> offers inventory product.
And we made substantial improvements to our self service tools, making it much easier for merchants to partner with Dupont <unk>.
During the fourth quarter, approximately 57% of the deals launched in North America will launch the self service.
Next I'll provide more insights into our fourth quarter financial results.
Starting with our segment and category results as expected trends hasn't been linear recovery has been volatile as new Covid variance has emerged starting with North America local billings grew 32% versus the prior year and were 65% of 2019 levels sequential improvement up 300 basis.
Points.
Looking at the trajectory intra quarter.
Local billings as a percent to 2019 levels improves sequentially in October and were particularly strong during the November peak cyber period, driven by our beauty and wellness and things to do verticals Novell.
November local billings reached 76% of 2019 levels, which was the highest point of the recovery we've seen so far.
However, we saw local performance pulled back meaningfully in December with the emergence of the omicron variant and this trend continued into early 2022.
International local billings grew 49% versus the prior year and were 52% of 2019 levels on an FX neutral basis up.
500 basis points versus the third quarter looking.
Looking at the trajectory intra quarter.
Similar to North America International recovery rates improved in October and early November .
And while we saw recovery pullback for the remainder of the quarter with the emergence of the omicron variance across EMEA. The pullback was less pronounced than in North America, given the existing restrictions carty in place in those markets.
As we've said before we expect a longer recovery cycle in international where restrictions have been more prolonged constrictor.
Moving to our goods category performance here was in line with our expectations and we completed the international goods transition to a third party marketplace model during the fourth quarter hitting this milestone allows us to on the goods category on a much more fixed cost base and significantly simplifies our operations as a reminder, in the third party model.
Recognize goods revenue on a net basis.
Moving down the P&L SG&A was 126 million in the fourth quarter.
G&A expenses came in lower than expected, but were up slightly on a sequential basis, reflecting the planned costs associated with their migration to the cloud.
We have continued to focus on controlling fixed costs to ensure that we have the financial flexibility, we need to navigate the recovery and invest in future growth opportunities.
We also continued to diversify our marketing efforts across both mid and upper funnel campaigns to drive consideration awareness during the quarter.
While marketing expense increased to $68 million, we kept our investment levels at 30% of gross profit, which was in line with our investment in the third quarter and historical averages.
As Kate mentioned.
We intend to take advantage of opportunities to leverage marketing to accelerate our growth over time, but we will remain prudent with our spend.
Turning to our cash position.
In the fourth quarter, we returned to cash generation was $19 million of free cash flow.
We ended the year with a cash balance of $499 million, which includes the $100 million drawn on the revolver.
Our liquidity position remains solid and we are in.
The balance sheet that provides us with the financial flexibility to withstand the transient impacts of COVID-19 invest in opportunities to drive long term growth.
Now I'll take you through our expectations for the first quarter of 2022.
Taking a step back we exited 2021 in a better position than we entered the year, but like many others, we're seeing volatility from Covid.
Just on this in the first quarter.
We expect to deliver $160 million to $170 million of revenue and approximately breakeven adjusted EBITDA. Let me give you a little more color on our outlook as you might suspect local billings are being impacted by OMA <unk> and this has led to a further step down in performance during January in both the U S International markets.
With higher case counts and Youre seeing a more pronounced impact from local crops, we saw from Delta variant.
Notwithstanding this and based on what we observe with Delta last year. We continue to believe this is headwind as transient.
For example last year when Covid cases were rising we saw an immediate response of both sides of our marketplace lower demand from customers and lower supply availability from our merchant partners.
Similarly, after Delta case counts went down and stayed down you saw local recovery ramp in October and November .
While past performance isn't always indicative of future performance, we have begun to see this pattern play out again in the wake of BOMA crime.
In February <unk>.
Weather has warmed up in parts of the U S restrictions have begun to ease we are seeing an uptick in volumes over the past couple of weeks recovery levels of advanced although they have not yet returned to pre OMA crime bumps.
Turning to a few other items for your models.
As I mentioned earlier, we have fully transitioned our goods category to a third party marketplace and as a result, 2022 total goods revenue will be recognized on a net basis.
To illustrate this effect on our P&L.
<unk> revenue had been reported on a net basis in 2021, <unk> revenue would've been approximately 55% lower than the $243 million. We report it as a reminder, the revenue recognition change does not impact gross profit.
Our first quarter outlook assumes year over year goods performance that is similar to what we reported for the fourth quarter.
Lastly, we expect SG&A expense to increase sequentially compared with the fourth quarter driven by the planned expenses associated with our cloud migration and timing of payroll related expenses.
I'd also like to provide a current perspective on our trajectory for the full year.
We expect local billings recovery to accelerate throughout 2022 in both North America and international.
Although we saw a step back and recovery due to omicron, we're beginning to see signs that organic recovery tailwind on the supply and demand are resuming.
Cron receipts and macro conditions gradually improve.
Guarding our full year adjusted EBITDA as a reminder, we recorded a $31 million benefit from variable consideration revenue in 2021 related vouchers sold in prior periods.
Excluding this benefit we expect our full year 2022, adjusted EBITDA to be higher than full year 2021, and therefore expect to generate more than $112 million of adjusted EBITDA in 2022.
We wanted to provide these current perspective on full year to give you an understanding of our baseline expectations, while we continue our marketplace assessments.
We look forward to sharing our operating priorities go forward strategy and updated financial outlook on our first quarter results call in May.
Finally, I wanted to provide you with a few insights on cash flow.
Typical characteristic of a healthy growing marketplaces, a positive net working capital and cash flow generation.
Many of the cash flow headwinds, we faced in 2021 were transient in nature, and we expect to return to historical cash flow patterns going forward, if our local recovery accelerates throughout the year as we are expecting there is no reason why our marketplace should not be generating free cash flow in 2022.
I will now turn it back over to Kate for some closing thoughts.
Thanks Damian.
Let me be clear.
Moving with a sense of urgency.
As I did today and going forward.
You can expect me.
To continue to us the right questions to make sure I am focusing on what matters most.
Explain our findings both good and bad along with any next steps we will be taking.
And transparently communicate with you regularly.
To bring you along for the journey from here to there.
Although we have a lot of work ahead of US Groupon has employees, who I know.
No.
Up to the challenge.
<unk>.
<unk> team's sense of urgency.
I couldnt be more excited about the opportunities we have excellent groupon progress towards becoming the destination for local.
And I look forward to providing additional updates next quarter.
With that I will turn it over to the operator for any questions on our fourth quarter and full year performance.
At this time as a reminder, if you would like to ask a question press star one on your telephone keypad again that is star and the number one. Your first question is from the line of Trevor Young with Barclays.
Great. Thanks, a few if I may so let's take them one by one.
We didn't quite get the stabilization and users that we expected earlier in the year, but some positive indications on the subset of local customers that was a new disclosure that was super helpful. One will overall customers turned the corner and any sort of positive indications. So far the marketing efforts are driving increased app downloads engagement.
Converting to transactions that sort of thing.
Good morning, Trevor Thanks for your question.
This is good.
I would like to provide some commentary on this particular question on then probably Damian can add more insight to that.
So first and foremost I think local.
Customers are the most important customers for us as we have mentioned and the way I look at the overall customer base is that.
We can get other customers.
Get them to experience our local hoppers, that's the most critical aspect for us.
We have grown our local customers.
Every single quarter for class III quantitative quarters in North America.
Im very pleased with that particular performance.
Now going forward, we will continue to be focused on how can we grow these local customers.
Continue to look for the opportunities to get more customer existing customers engage into local.
And Thats, what we will be focused on.
Jimmy do you want to add thanks, Peter and thanks for the question Trevor as you mentioned one of the key metrics as local customers, which is why we wanted to provide this transparency for you and obviously omicron is impacting us in the first quarter, but will ramp we would expect to grow.
What were customers over the course of 2020 to note that in the short term, we will see some further headwinds from goods in the first half of this year and this total top customer accounts.
Thanks for that that's really.
That's really helpful. Thanks, and then.
Damian on the <unk>.
<unk> Guide obviously, the continued revenue declines and I know you gave a little bit of math around the impact from the one Peter three shifts how much of this is really a mix of seasonality in the guided stepped down in GBS and omicron versus the that.
And that business shift.
On the EBITDA, what if any incremental areas of spend everything thats kind of informing that EBITDA down to something closer to breakeven.
Yeah sure so coming off the backdrop of the positive fourth quarter results totally get the question here. So if you can unpack the revenue number a little bit.
Around one third of.
Revenue sequential move is from seasonality and the overall migration from goods third party two thirds of which is more of a business pullback from <unk>. So it's mostly an <unk> story in this first quarter again, which we continue to believe is transient on our marketplace as far as the cost profile.
Overall, we did call out the costs associated with cloud migration, but beyond cloud, which was always part of our planned expenditures no. Other areas of structural investments and you should assume kind of the opex profile that run rate that we intend to grow and ramp our topline off the store fixed cost base going forward.
That's super helpful and last one just to kind of get this on the record since we get so many questions Groupon is liquidated a lot of minority Stakes you've cut your some uptake in the past.
If you could comment on your plans for your some upstate specifically or if not broadly what's your general philosophy towards these minority stakes. Thank you.
So philosophically as we do with our overall broader investment portfolio and we read it.
We regularly evaluate how we can leverage our investments to create long term shareholder value as you name a sum up we do hold it than you saw in our recent disclosures, we do hold a two 4% passive stake and sum up and this has been a great investment for Groupon overall.
<unk>.
I would just also remind you that there is no public.
Public market for shares of <unk> at this time.
Great. Thanks, I'll hop back in the queue.
Your next question is from the line of Mike <unk> with Goldman Sachs.
Good morning, Thank you for the question.
Two if I could first it was encouraging to hear about groupon to focus on improving the customer experience doing things like proactively providing customer refunds and removing restrictions.
I was just wondering if you could talk about any areas of the merchant experience that may be suboptimal that.
My present itself has a similar level of low hanging fruit to improve the experience. Thank you.
Thanks, Mike.
I think there are two different things so that the merchants.
One we.
We need to better understand the intent one merchant is coming on Groupon platform.
So for example, I have talked about we have the ability to understand the merchant need is marketing management from Groupon and we are going to acquire more customers for that are they are looking for more yield on that inventory.
Unfortunately, some of these particular data point and the value proposition to create that sort of feedback for our metrics. These are not capturing those even at the point that we are making are working with our merchant partners.
So I will have more information for you.
In terms of what we're going to offer for our merchant partners.
As we collect more data so right now I'm more focused on collecting and making sure that we have a complete understanding of much of need and how we can calibrate what their expectations are what the information we provide them back it's just right now.
It's going to take time for us to go through those value propositions.
Great. Thank you very much and if I could just.
SaaS go quick modeling question.
Just on the path of.
Local improvement throughout the year.
Can you just talk a little bit about the drivers of that improvement is it simply reopening or are there.
Some things on the product roadmap that might help that thank you very much.
Okay.
I think the there are two different aspects of.
I would say not discrete Kobe, but cook.
So one of the things is for us to make sure that our focused growth to happen we have to create consistently a customer expectation that we address so for example, if BR.
Saving the time for customers are saving the money for our customers we have to consistently do that.
So if you Peel back that out and say in the global recovery. What are the features trust is very important for us, but then there are other aspects as well there are some training some verticals, which are coming back very rapidly and there are some verticals, which are lagging and in general what we will see is that it is also based on geography.
But one thing is consistent and those are value props and thats why we are making sure that our value prop understanding and under currencies in those value props is what will drive the growth for us.
So still going through that particular understanding for myself.
Great Thanks, and congratulations on the new role.
Thank you.
Again, if you would like to ask a question press star one on your telephone keypad again that is star and the number one for any questions.
And your next question is from the line of Jago Iranian with Wedbush.
Hey, good morning, guys.
I would also like to echo the congrats.
And welcome aboard.
Maybe just taking one step back.
And thinking about the strategy that the team we put in place before you joined.
A lot of focus on inventory density.
On offers right growing that out removing the restrictions.
Kind of going Goldman their market by market developing it.
And now we're kind of talking about assessing and refining and kind of feels like we've gone back to John John Board a little bit.
Is that the best strategy changing off the table.
Is it just evolving we could talk about where.
Bridging from where we've been.
Where you want to get I guess.
I'll start there.
Sure.
Thanks for the question and thank you for the questions.
Yes.
I think the overall team.
<unk> team has done a pretty.
Great job in last 18 months of building the inventory.
I think going back this particular inventory buildup just doesn't mean that we will have much more traction.
We have to have the consistency in this inventory buildup to make sure that when customer expect X number of providers in this particular marketplace. In this particular location to have that kind of density.
Otherwise the customer expectations that Oh I looked for this particular thing on Groupon. It was not there that sort of intent capturing requires us to have the right amount of supply.
Density and Brecht book in each vertical and Thats. What we are focused right now to make sure. Those kpis are something we should be intentional about as opposed to that is a byproduct of getting.
Just supply entity that is not going to do it. So we need to have understanding of this demand and supply.
One aspect and we are working on that.
With the great focus at the moment.
Okay.
Maybe bigger picture as you've kind of come on board and given your.
Your previous experience and in line with all the stuff you're talking about just.
How you view the competitive landscape and obviously.
Things like Google and Facebook have taken.
We'll share local AD dollars overtime raw material way.
Pretty big competitors in certain ways, you think about the competitive landscape are competing with.
With those kinds of players with you start to start enrollment.
That's a great question.
The way to look at competitors I think I would first start with what I am excited about groupon.
As I mentioned.
The biggest asset on Groupon front.
Horizontal local marketplace.
The data that we have in our network.
Which frankly, we are not leveraging as I have mentioned before.
And then the third is global scale.
All of these competitors that you mentioned.
None of them are specifically focused on local advertising market.
And then as the utility market that has a different.
But each one of them has a different application groupon is actually focused on local transactions and that's why I believe that we have the ability to go work with merchants and customers to go through the local transaction versus other marketplaces are a different utility for our customers.
For a different application, but it was not meant to be a transaction marketplace.
Okay.
Got it and if I could ask one more.
Damian.
Kind of highlighted.
In the <unk> EBITDA guide.
The cloud investment, but nothing incremental there.
You guys sound pretty confident that EBITDA for the full year will be.
At least as good as it was.
In 2021 Youre also at the beginning of.
This plan to kind of reassess and refined the strategy.
Kind of where what you need to do where.
To improve the platform and the product mix.
What gives you the confidence that there.
There isn't incremental levels of investment that you need to put in place.
Got to where you want to go and thanks guys.
Hey, Thanks for the question, Igor but before I get into kind of an investment levels that initial perspective that we've given here on a full year is really our initial baseline view and that we wanted to communicate out that how we're thinking about the year with topline true.
<unk>.
Namely local in both North America and international ramping throughout the year. The bottom line EBITDA performance is a reflection of that ramping of growth, but as we've said before and I think we've consistently said that we firmly believe we can grow off of a much lower fixed cost base going forward and as I shared in one of the earlier.
Q&A remarks, we don't were kind of running at our SG&A profile that we want right now you Shouldnt really see any kind of an incremental investment in totality and instead than any of us.
<unk> really be rebalancing within our existing portfolio.
Alright, great. Thanks for all the color.
We have a follow up question from the line of Robert Young with Barclays.
Great. Thanks.
Just back to some comments you made in the prepared remarks about your willingness to lean in on AD spend to the extent theres kind of that organic demand or the spark apparel before you add fuel to the fire what are like the one or two gating factors in your view at least initially is to.
Whats, what's keeping that organic demand from coming off thanks.
Thanks for the question Trevor.
Organic demand in general.
We can go and look into which particular vertical is getting the organic demand back and which particular geography is getting organic demand back and we always look at cross verifying. These particular demand signals across different geographies different verticals to see what is happening.
What to me is more important is to find out what are the undercurrent team. What are we seeing and then can we replicate that on the other marketplace.
Other geographies to make sure that that startup.
Bob.
Understanding for customers that sort of context for customers. We are providing that today. Our technological experience is not there to actually take advantage of that across the board and that's why in some particular cases the organic demand.
<unk> is not.
Even if the traffic comes back.
Things that we are showcasing our customers might not be there and the best way.
Great. Thank you.
Okay.
This concludes today's conference call you may now disconnect.