Q4 2023 Groupon Inc Earnings Call

Operator: Hello, and welcome to Groupon's fourth quarter 2023 financial results conference call. On the call today are Interim Chief Executive Officer Dusan Senkypl. Chief Financial Officer Yuri Ponrt and Senior Vice President, Corporate Development, and Investor Relations, Raina Kashyap. 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 followed by the number one on your catch-tone phone.

Hello, and welcome to group on fourth quarter 2023 financial results conference call on the call today are interim Chief Executive Officer do Shine some Campbell.

Speaker Change: Keith exactly Chief Financial Officer, Yuri partner, and senior Vice President Corporate development and Investor Relations Rana Kashyap 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 press the star key followed.

Speaker Change: By the number one on your Touchtone phone once again, that's star one to ask a question today's conference call is being recorded before we begin a groupon would like me to remind listeners that the following discussion and responses to your questions reflect management's views as of today March 15th 2024.

Operator: Once again, that's star number one to ask a question. Today's conference call is being recorded. Before we begin, Groupon would like me to remind listeners that the following discussion and responses to your questions reflect management's views as of today, March 15, 2024 only, and will include forward-looking statements. However, actual results may differ materially from those expressed or implied in the company's forward-looking statements.

Speaker Change: We're only and will include forward looking statements.

Speaker Change: Actual results may differ materially from those expressed or implied in the company's forward looking statements Groupon undertakes no obligation.

Operator: Groupon undertakes no obligation to update these forward-looking statements as a result of new information or future events. Additional information about risks and other factors that could potentially impact the company's financial results is included in their earnings press release and in their filings with the SBA, including their annual report on Form 10K. We encourage investors to use Groupon's Investor Relations website at investor.groupon.com as a way of easily finding information about the company. Groupon promptly makes available on this website the reports that the company files or finishes with the SEC, corporate government information, and select press releases and social media posts. On the call today, the company will discuss the following non-GAAP financial measures, adjusted EBITDA, and free cash flow. In Groupon's press release and their filings with the SEC, each of which is posted on their investor relations website. You will find additional disclosures regarding these non-GAAP measures, including reconciliation of these measures to the most comparable measures under U.S. GAAP. And with that, I am happy to turn the call over to Deshpande. Hello, and thanks for joining us for our fourth quarter and full year 2023 earnings call. It's a pleasure to be with all of you.

Speaker Change: To update these forward looking statements as a result of new information or future events additional information about risks and other factors that could potentially impact the company's financial results are included in their earnings press release and in their filings with the SEC, including their annual report I'm.

Speaker Change: Form 10-K, we encourage investors to you she use group bonds Investor Relations website at Investor Dot group on Dot com.

Speaker Change: As a way of easily finding information about the company Groupon promptly makes available on this website. The reports that the company files or furnishes with the SEC corporate government information and select press releases and social media postings on the call today the company will discuss.

Speaker Change: The following non-GAAP financial measures adjusted EBITDA, and free cash flow and Groupon as a press release in their filings with the SEC each of which is posted on their Investor Relations website, you will find additional disclosures regarding these non-GAAP measures and including reconciliation of these measures.

Speaker Change: To the most comparable measures under the U S GAAP and with that I am happy to turn the call over to Deshawn.

Deshawn: Hello, and thanks for joining us for our fourth quarter and full year 2020 earnings call.

Deshawn: Pleasure to be with all of you.

Dusan Senkypl: Today's prepared remarks are posted on our investor relations website, along with an investor presentation, which I will refer to during my remarks. In addition, I encourage you to review our press release and 10k, which contain more detail on our Q4 and full year 2023 results. I will start today's call on slide five and cover the key takeaways from the fourth quarter. First, our number.

Deshawn: It's pretty bad.

Deshawn: Posted on our Investor Relations website.

Deshawn: The presentation, we try to go out and for us to during my remarks.

Deshawn: In other Sherman Alright, and encourage you to review our press release, and 10-K, which contain more detail on our Q4 and full year two.

Deshawn: Thank you for your results.

Speaker Change: I will start todays call on slide five I've covered the key takeaways from the fourth quarter.

Speaker Change: First our numbers.

Dusan Senkypl: I am pleased to deliver another quarter of progress on our reported financial results, as our fourth-quarter numbers came in above the high end of guidance on both revenue and adjusted EBITDA. Our strong performance was driven by our North America segment, where revenues in our local and travel categories were down a combined 3% year-over-year, a major improvement compared to the same period last year when these categories were down 31%. It's encouraging to see the progress in our North America local and travel categories, which represent 70% of consolidated revenue. While we are far from declaring victory and clearly have more work to do in our international segment and our goods category, the improved performance of our main market is a strong positive indicator that our transformation plan is working. In addition to our top-line improvements, we also made progress on the bottom line, where adjusted EBITDA margins improved by 2,400 basic points compared to the last fourth quarter. Combination of better top-line and bottom-line performance resulted in positive $51 million of free cash flow, as our negative working capital cycle benefited from both four-quarter holiday strength and a moderating year-over-year decline.

Speaker Change: I am pleased to deliver another quarter of progress on our reported financial results.

Speaker Change: Our fourth quarter numbers came in above the high end of guidance on both revenue and adjusted EBITDA.

Speaker Change: Our strong performance was driven by our North America segment revenues.

Speaker Change: Revenues in our local and travel categories were down a combined 3% year over year, a major improvement compared to the same period last year when the <unk> categories are down for one person.

Speaker Change: It's encouraging to see the progress in our North America, local and promote categories, which represent 70% of consolidated revenue.

Speaker Change: While we are far from declaring victory I'm clearly have more work to do in our international segment and our goods category. The improved performance of our main markets. This is a strong indicator that our transformation plan is working.

Speaker Change: In addition to our top line improvements. We also made progress on the bottom line adjusted EBITDA margins improved 2400 basis points compared to the last fourth quarter.

Speaker Change: A combination of both topline and Bottomline performance resulted in positive it's been about a million.

Speaker Change: Free cash flow as our negative working capital cycle benefited from both fourth quarter holidays.

Speaker Change: I'm wondering I think year over year declines.

Dusan Senkypl: From my perspective, robust financial performance is the cornerstone of a thriving organization, fueling innovation, employee satisfaction, and long-term shareholder value. I am pleased to end year one of our transformation on a strong note. Second, our balance sheet. I am pleased to report that the combination of our improved financial performance and increased liquidity results in our going concern issue. Since speaking with you on our third quarter earnings call, we closed on our plan to raise $100 million in liquidity through a combination of asset sales and a fully backstop price offering. The rights offering was significantly oversubscribed, and I would like to thank all our investors for their support. Using part of the proceeds from the rights offering, in February, we prepaid and terminated our credit agreement.

Speaker Change: From my perspective robust financial performance is the cornerstone of a thriving organization for you all.

Speaker Change: Innovation employee satisfaction.

Speaker Change: Long term shareholder value.

Speaker Change: Pleased to enter the eurobond of our transformation on a stone cold.

Speaker Change: Second.

Speaker Change: Our balance sheet.

Speaker Change: Im pleased to report that the combination of our improved financial performance and increased liquidity results, our going concern issue.

Speaker Change: Since speaking with you on our first quarter earnings call. We closed on our plan to raise hundreds of million in liquidity through a combination of asset sales and a fully backstop rights offering.

Speaker Change: The rights offering was significantly oversubscribed and I would like to thank all our investors for their support.

Speaker Change: Using part of the proceeds from the rights offering in February of the prepaid and terminated our credit agreement.

Dusan Senkypl: This is an important milestone to provide clarity to all stakeholders, including our customers, merchants, employees, suppliers, and shareholders, that Groupon has a solid financial foundation and we are not going anywhere. Third, an update on our project. Last quarter, I explained that the pace of our transformation will depend on our progress executing key projects across our businesses. While I will go into more details in subsequent slides, I want to briefly highlight two key projects, our new consumer front-end and our gifting initiative. Since we spoke last, the team has made significant progress on our new consumer front-end, which is currently running at 3% of North America web and touch traffic and expected to ramp up further in the coming weeks. Turning to gifting, our V1 offering had strong results, and we saw December gift orders grow over 50% versus December last year. While these numbers are from a very small base, I am pleased with the early results as they support our thesis that Groupon can become a leading destination for giftable experiences. Turning to slide 6. I want to take a minute and step back.

Speaker Change: This is an important milestone to provide clarity to all stakeholders, including our customers Mark Jones employees suppliers and shareholders that Groupon has a solid financial foundation, and we are not going anywhere.

Speaker Change: Alright.

Speaker Change: Date on our projects.

Speaker Change: Last quarter I explained that the pace of our transformation will depend on our progress executing key projects across our businesses.

Speaker Change: Well I will go into more details in subsequent slides I want to briefly highlight two key projects, our new consumer from and.

Speaker Change: In our gifting in a shopping.

Speaker Change: Since we spoke off the team has made significant progress on our new consumer from <unk>, which is currently running at 3% of North America and touch traffic and expect this to ramp up forever in the coming weeks.

Speaker Change: Turning to give things a reward offering had strong results and we saw December gift orders grow over 50% versus December last year.

Speaker Change: While these numbers are off a very small base I am pleased with the early results as they support our thesis that the groupon can become a leading destination for giftable experiences.

Speaker Change: Turning to slide six.

Speaker Change: I want to take a minute and take a step back.

Dusan Senkypl: It has been almost one year since I accepted the challenge to lead Groupon. In my letter to shareholders published with Q1 earnings last year, I spoke frankly about the financial challenges our business faced and the need to implement a significant and urgent transformation. Over the past year, our team has worked tirelessly to deliver hundreds of small improvements. We have just strengthened our financial position, improved the top-line trajectory, and rebuilt the organization. At the same time, while I am extremely proud of what this team has accomplished, my feeling is we are just getting started on our mission to become the ultimate destination for local experiences and services. Now that we have a strong understanding of internal mechanics, which means people, processes, challenges, and made our company more efficient, we are shifting our focus from mainly internal improvements to delivering projects that will impact our customers, both consumers and merchant partners. We have many opportunities in front of us, much more than our current capacity to execute. We are taking a long-term approach to rebuilding Groupon from the bottom up and avoiding shortcuts that sacrifice the endgame for a temporary sugar-high-to-juice top-line or bottom-line result.

Speaker Change: It hasn't been almost upon the euro since I accepted the challenge to lead group ALM.

Speaker Change: My letter to shareholders published the Q1 earnings last year I spoke frankly about the financial challenges our business space and the needs to implement a significant and urgent transformation.

Speaker Change: Over the past year. Our team has worked tirelessly to deliver hundreds of small improvements, we just strengthened our financial position improved top line trajectory and the rebuild the organization does.

Same time, while I'm extremely proud of what this team has accomplished my feeling is we are just getting started on our mission to become the destination for local experiences and services.

Speaker Change: Now that we have a strong understanding of internal mechanics, which means people processes challenges and to make our company more efficient we are shifting our focus from mainly internal improvements to delivering projects, which will impact our customers both consumers and merchants partners.

Speaker Change: We have many opportunities in front of us much more than our current capacity to execute.

Speaker Change: We are taking a long term approach to the building groupon from the bottom up and avoiding shortcuts with sacrifice the undergoing for a temporary sugar.

Speaker Change: Produced topline or bottom line results.

Dusan Senkypl: Many current projects are laying the foundation for us to become more agile and to increase our capacity to execute. We are redoing our technology stacks and changing Groupon to become a technology-first company. We are changing how we go to market on the supply side and how we understand and interact with our customers. This is a huge lift and will take time to execute. We also see a massive opportunity to leverage the benefits of AI across our business. In sales, we are looking to use AI to generate leads based on our inventory needs and use AI-driven communication to improve sales efficiency.

Speaker Change: Many current projects are laying the foundation for us to become more agile and to increase our capacity to execute.

Speaker Change: We are redoing, our technology stocks and changing groupon to become a technology first company.

We are changing how we go to market on the supply side and how we understand interact with our customers. This.

Speaker Change: This is a huge lift and will take time to execute.

Speaker Change: We also see a massive opportunity to leverage the benefits of AI across our business in sales. We are looking to use AI to generate at least leads based on our inventory needs and use AI driven communication to improve sales efficiency.

Dusan Senkypl: We are progressing on AI tools to help us create higher quality deal page copy and to improve the efficiency of our customer support. Success in our building phase is really about changing our customers' experience on both sides of our marketplace to solve more problems, reduce friction, earn trust, and increase engagement and overall satisfaction with using Groupon. And while progress in transformation is not always linear, we do expect to show improvements in our financial performance along the way. Slide seven.

Speaker Change: Progressing on AI tools to help us create the highest quality deal page copay and to improve the efficiency of our customer support.

Speaker Change: Success in our rebuilding phase, it's really about changing our customers' experience on both sides of our marketplace.

Speaker Change: More programs reduce friction.

Speaker Change: Trust and increase engagement and overall satisfaction with using groupon.

Speaker Change: And while progress in transformation is not always linear or we do expect to show improvements in our financial performance along debate.

Speaker Change: Slide <unk>.

Dusan Senkypl: Our project to re-engineer our front-end stack continues. As of this week, our new front-end is currently at 3% of traffic, which is behind my expectations. After running at 1% for most of Q1, we are reaching the point where we can start ramping our new front end without jeopardizing performance. We have fixed many of the issues that hurt the new front-end conversion and are now focused on resolving two main blockers, search and relevance, and deal page layout. We expect to ramp up traffic significantly for web and touch in North America in the coming weeks. For those interested, next week we will be posting a link to try out the new front end on the company's LinkedIn page. Once North America Web & Touch is fully ramped up, we will turn to North America App, which we expect to launch shortly after.

Speaker Change: Our project to Reengineer, our front end stock continues.

Speaker Change: This week, our new front end is currently at 3% of traffic, which is behind my expectation.

Speaker Change: After running at 1% for most of Q1, we are reaching the point, where we can start ramping our new from without jeopardizing performance.

Speaker Change: We have fixed many of the issues that the heart of the new front end converter chairman and now focused on resolving two main broker search and relevance and deal page layout.

Speaker Change: We expect to ramp ups traffic significant playful and touch in North America, and becoming leaks.

Speaker Change: <unk> interested next week, we will be posting links to try out the new front and on the company's Linkedin page.

Speaker Change: <unk> North America, and touch is fully ramped.

Speaker Change: Turning to North America up would you be expect to launch shortly after.

Dusan Senkypl: After NA App is ramped up, we will turn to roll out the new front-end in international markets to remind investors why we are doing this. Our legacy platform was cobbled together over many years and many acquisitions. As a result, our legacy platform is really several different technology stacks, each with its own challenges and inefficiencies that require different people to manage the different stacks. Other companies who have embarked on similar simplification projects have taken three years to consolidate their spec into one single front-end. We are currently in month 11.

Speaker Change: Often apis ramped rebuilt turned to roll out the new front end in international markets.

Speaker Change: To remind investors that we are doing this our legacy platform was cobbled together over many years and many acquisitions.

Speaker Change: As a result of all the gossip lot for them, it's really several different technology stacks, each with their own challenges and inefficiencies that require different people to manage the different aspects of it.

Speaker Change: Some companies with embarked on Cmos simplification projects have taken three years to consolidate various effects into one single front that we are currently in month 11.

Dusan Senkypl: We expect this project will enable us to launch new features in weeks versus months. We believe that this kind of speed and agility to deliver new capabilities will give us the opportunity to innovate faster for customers and give us an amazing breadth to do testing and learning. We will also get much more visibility into our customer funnel, enabling us to deliver further product enhancements. I would like to thank the team for their tireless efforts, and I am excited to see what we can do with our new platform once it is released. Slide eight, distinct.

Speaker Change: We expect this project will enable us to launch new features in weeks versus months, we believe that this kind of speed and agility to delivering <unk>.

Capabilities will give us the opportunity to innovate faster.

Speaker Change: Customers and gives us amazing breadth to do testing and learning.

Speaker Change: It also gets much more visibility into our customer funnel, enabling us to deliver further product enhancements.

Speaker Change: I would like to thank the team for both Douglas efforts I am excited to see what we can do with our new platform. Once it is released.

Speaker Change: Slide eight gifting.

Dusan Senkypl: Last quarter, I highlighted a gap that Groupon historically had not benefited from the uplift that other marketplaces and retailers typically experience during the big gifting season. Repositioning Groupon to play a bigger role in gifting, and specifically last minute giftable experiences, was a key strategic growth as a series that we wanted to test and validate during the Q4 holiday season. I am happy to report that despite a constrained V1 experience on our legacy front-end platform, the data indicates a significant opportunity for last-minute giftable experiences, with the highest demand for gifting starting approximately three weeks before Christmas and peaking the day before Christmas. Overall, for the month of December, we saw gift orders increase by a very small base 67% versus 2022 and 30% versus 2021. And when looking at gifting across our countries, we observed a wide variance of gifting adoption, with gift orders as a percentage of total orders ranging between 5% and 20%.

Speaker Change: Last quarter I highlighted our Gaba does groupon historically had not been benefited from that not benefited from the uplift that other marketplaces and retailers typically experience during big gifting seasons.

The position and Groupon to play a bigger role in gifting and specifically last minute gift stable experiences.

Speaker Change: Key strategic growth as these species that we wanted to test and validate in the Q4 holiday season.

Speaker Change: I am happy to report that despite a constrained view one experience on a really guess at front end platform. The data indicates a significant opportunity in last minute to get stable experiences you do high as demand for gifting starting approximately three weeks before Christmas and became the day before Christmas.

Speaker Change: Overall for the month of December you saw gift orders increase of a very small base, 6% to 7% versus 2022 and 30% versus 2021.

Speaker Change: And when looking at the gifting across our countries, we observed a wide variety of gifting adoptions and gifts orders as a percentage of total orders ranging between 5% and incentive for SAP.

Dusan Senkypl: Going forward, on the marketing side, we will continue our efforts to educate customers about the benefits of experiential gifting at Groupon, and we see numerous gifting opportunities throughout the year with a focus on the U.S. market. On the product side, we have a long list of improvements we are making to gifting on our legacy platform and are also taking our learnings to iterate on our new gifting proposition for our new front end. On the supply side, we are expanding our work with merchants to highlight liftable products. These are just a few examples of the initiatives underway to make Groupon more giftable. We believe giftable experiences are a large, untapped market for Groupon, and we are excited to build a great gifting offering not just for the traditional Q4 holiday season but an option that consumers can turn to all year round for very special occasions.

Speaker Change: Going forward on the marketing side, we will continue our efforts to educate customers about the benefits of experiential gifting at Groupon, and we see numerals gifting opportunities throughout the year with a focus on the U S market.

Speaker Change: On the product side, we have a long list of improvements we are making to gifting on our legacy platform and.

Speaker Change: And also taking our learnings to iterate on our new distinct proposition for our new frontline.

On the supply side, we are expanding our overhead with merchants to highlight the giftable products.

These are just a few examples of the initiatives underway to make groupon mortgage book.

Speaker Change: We believe giftable experiences a large untapped market for Google and we are excited to build a great gifting offerings not just for the traditional Q4 holiday season with an option that consumers concern to all year round for various special locations.

Dusan Senkypl: Over time, I believe that gifting can become a big business for us, and Groupon can become a leading destination for last-minute giftable experiences. Gifting also showcases the ability of our team to move quickly and execute on a market opportunity. Going forward, there are significant opportunities across our business, so this is a nice case study of what the team can deliver. Slide nine.

Speaker Change: Overtime I believe that gifting can become a big business for us and Groupon can become a leading destination for last minute to get stable experiences.

Speaker Change: <unk> also showcases the ability of our team to move quickly and execute on our market opportunity.

Speaker Change: Going forward.

Speaker Change: Without significant opportunities across our business. So this is a nice case study of what the team can deliver.

Speaker Change: Slide nine.

Dusan Senkypl: Marketplace Management. Overall, I am pleased with our daily execution during the holiday season as we connected and improved our assortment of deals with a performance marketing push and active management of how we distribute our impressions. Our customers responded, and we saw an uplift in our business and improving trends throughout the quarter. On the demand side of the marketplace, we saw improving trends in the number of unique visitors visiting our website driven by growth in page channels and an improved rate of decline in direct traffic. Within Pace Channels, we delivered on our desired ROI targets while continuing to grow in SCM and display. And while it is very early, we saw success in our revamped affiliate channels, including early traction in the influencer market. Search and relevance continue to be an important priority for us as we improve our algorithm and actively manage the distribution of impressions.

Speaker Change: Marketplace management.

Speaker Change: Overall, I am pleased with our daily execution during the holiday season, as we collected an improved assortment of deals with a performance marketing push.

Speaker Change: Active management of how we distribute our impressions.

Speaker Change: Our customers responded and we saw uplift in our business and improving trends throughout the quarter.

Speaker Change: On the demand side of the marketplace, we saw improving trends in the newmar of AR in the number of unique visitors visiting our website.

Speaker Change: By growth in paid channels.

Speaker Change: And improved rate of decline of direct traffic, we've been faced channels, we delivered on our desired ROI targets, while continuing to grow in SCM and despite.

Speaker Change: And while it is very early we saw success in our revamped affiliate channels, including early traction in the influenza market.

Speaker Change: Search and relevance continues to be an important priority for us as we improve our algorithm and actively manage the distribution of impressions.

Dusan Senkypl: Finally, we continue with our initiative to reduce our reliance on promotional spend. As we have discussed before, improving the mix between paid marketing and promotional spend is a key step towards improving the health of our marketplace. On the supply side of the marketplace, we continue to see strength in our things-to-do vertical and our enterprise accounts, where we see companies return to our platform after a long hiatus and existing companies increase the amount of business they want to do with Groupon. Both are encouraging signals.

Speaker Change: Finally, we continue on our initiative to reduce our reliance on promotional spend as.

Speaker Change: As we have discussed before improving the mix between based marketing and promotional spend is a key step towards improving the health of our marketplace.

Speaker Change: On the supply side of the marketplace, we continue to see strength in our things to do vertical in our enterprise accounts, where we see companies return to our platform. After a long hot tools and existing companies increase the amount of business they want to do with Groupon.

Speaker Change: Both are encouraging signals.

Dusan Senkypl: Last year, as part of our transformation, we reimagined the original city planner model for modern needs and local nuances. Our effort on this initiative is beginning to pay off, as we are seeing strength in local micro-markets where this approach was rolled out. We are planning to double down on our focus to manage our marketplace at a local level. Earlier this week, I was in Chicago with our sales leadership, where we announced a plan to shift our go-to market in the U.S. into eight local regions with dedicated sales reps and regional managers responsible for driving assortment strategy and deal quality. Finally, as I mentioned last quarter, we have rolled out a new merchant partner success organization focused on actively managing our top 80% of business.

Speaker Change: Last year as part of our transformation, we are imaging the original city planner model for a modern meats and local nuances.

Speaker Change: Our efforts on this initiative is beginning to pay off as we are seeing strength in local micro markets.

Speaker Change: Approach was rolled out.

Speaker Change: We are planning to double down on our focus to manage our marketplace at a local level.

Speaker Change: Earlier this week I was in Chicago with our sales leadership, right or we announced a plan to shift our go to market in the U S into eight locally germs with dedicated sales reps and regional managers responsible for driving assortment strategy and deal quality.

Speaker Change: Finally, as I mentioned last quarter, we have rolled out a new merchant partner success organization focused on actively managing our top 80% of business.

Dusan Senkypl: This full-lifecycle sales team is responsible for the revenue and retention of our highest-value accounts. Based on the success we have seen with merchant partners in this program, we have expanded our one-on-one account management and continue to build tools, processes, and culture around shifting our support to more proactive partner success. Over time, we expect this team will help our existing merchant partners drive more business with Groupon. Slide 10.

Speaker Change: This full lifecycle sales team responsible for the revenue and the retention of our highest value accounts.

Speaker Change: Based on the success, we have seen with merchant partners. In this program. We have expanded our one on one account management and continue to build tools processes and culture around shifting our support to more productive partner success.

Speaker Change: Overtime, we expect this theme bill help our existing merchant partners drive more business with Groupon.

Speaker Change: Slide 10.

Dusan Senkypl: Let me close with a few thoughts on why I continue to be excited about the prospects for Groupon to create value for shareholders. Groupon is a 15-year-old company, but we see ourselves as day zero. The market for local experiences and services is massive, rivaling other large service markets such as ride-sharing, delivery, and hotels. In those other markets, there are scaled marketplaces and OTAs with combined market capitalization in the hundreds of billions of dollars.

Speaker Change: Let me close with a few thoughts on why I continue to be excited about the prospects for groupon to create value for shareholders.

Speaker Change: Groupon is a 15 year old company, but we see ourselves of the day zero.

Speaker Change: The market for local experiences and services is massive rivaling overall, our service markets such as ride sharing delivery in hotels.

Speaker Change: And those other markets, but I'll scale marketplaces, and Otas with a combined market capitalization in the hundreds of billions of dollars.

Dusan Senkypl: It's still relatively early days for the experience market to go online, and we expect an increasing percentage of this market to be transacted online in the future, fueling a secure growth opportunity. Our business model is a two-sided horizontal marketplace that operates at a local level. It has attractive gross margins and a fixed cost base that can be leveraged with growth and proper execution. As shown in our categories, when done right, the internet marketplace can be an extremely attractive business model, benefiting from network effects, economies of scale, and low capital requirements. And given our local dimension, it will not be easy to replicate our supply side.

It's still relatively early days and we experienced market going online and we expect an increasing percentage of this market to be transacted online in the future fueling a secular growth opportunity.

Speaker Change: Our business model, it's a two sided horizontal marketplace with Oprah.

Speaker Change: It's at a local level.

Speaker Change: It is attractive gross margins on our fixed cost base that can be leveraged with growth and appropriate execution.

Speaker Change: As shown in other categories when done right. The internet marketplace can be an extremely attractive business model benefiting from network effects economies of scale and low capital requirements.

Speaker Change: And given our local dimension it will not be easy to replicate our supply side assets.

Dusan Senkypl: Groupon has a global scale, operating in 13 countries with over 1.6 billion in billing, 75 million visitor sessions per month, and over 16 million active customers. We have an underleveraged asset in our brand that has been used over a billion times. Once we improve the customer value proposition, we believe we can leverage our brand recognition to engage and re-engage consumers to come back with Groupon. We are drawing inspiration from a successful transformation playbook that starts with a supply-first approach and strategically shifts towards emphasizing quality, the value proposition, and developing a functional economic model for merchant partners. We are rebuilding the consumer experience with trust and convenience at the center. There are multiple opportunities to improve our marketplace proposition for both consumers and merchant partners. Today, we have more opportunities than our ability to execute.

Groupon is global scale operating in 13 countries with over $1 6 billion in billings 75 million visitors sessions per month.

Speaker Change: And over 16 million active customers.

Speaker Change: We have an under leverage effect and our brand that hasn't been used over 1 billion times.

Speaker Change: Once we improve the customer value proposition, we believe we can leverage our brand recognition to engage in a re engage consumers to come by with Groupon.

Speaker Change: We are drawing inspiration from our successful transformation playbook, let's start with our supply first approach.

Strategically shifts towards emphasizing quality.

Speaker Change: <unk> proposition and developing a functional economic model for our merchant partners.

Speaker Change: We are rebuilding the consumer experience with trust and convenience at the center.

Speaker Change: There are multiple opportunities to improve our market price for position for both consumers and merchant partners.

Speaker Change: Today, we have more opportunities than our ability to execute.

Dusan Senkypl: We are assembling an A-plus management team with skin in the game and a mindset of ambition, drive, passion, intensity, no egos, partnership first, continuous growth mindset, and love for our work. We are building a humble, meritocratic, high-performance culture that values execution excellence, first-principle reasoning, totally hands-on, toughness to tackle the hard problems, and extreme ownership. We see ourselves as a sports team, and we are playing to win.

Speaker Change: We are assembling an a plus management team with skin in the game and a mindset of ambition drive passion intensity no egos partnership first continuous growth mindset and loft for Oliver we are building a humble murrysville could I think a high performance culture that values execution excellence.

Speaker Change: First principle reasoning.

Speaker Change: Hence on toughness to tackle the hard problems and extreme ownership.

Speaker Change: See ourselves as the sports theme and we are playing to win them.

Dusan Senkypl: We believe we are providing an environment where talented people with drive can get 10 years of experience in two years. For those interested in understanding the mentality and culture we are building, I recommend reading my personal assessment, which you can find in the appendix of our earnings slide. If you or anyone you know aligns with this mindset and approach, and you are ready to dedicate yourself to the mission, please reach out regardless of the positions you see open.

Speaker Change: We believe we are providing an environment by the talented people that drive in guest spending yourself experienced in two years.

Speaker Change: What I'm most interested to understand the mentality and culture. We are building I recommend reading my personal assessment, which you can find in the appendix of our earnings slides.

Speaker Change: If you or anybody you know aligns with the mindset and approach and you already to dedicate yourself to the MS. Shannon Please reach out regardless of the positions to see open.

Dusan Senkypl: We are building Groupon to perform in a variety of economic conditions. In both growing and shrinking economies, people love getting good deals and experiences that they love, and we want to be a place for them. Our merchant partners have historically used Groupon's platform as a yield management tool, a use case which can increase when demand slows.

Speaker Change: We are building groupon to perform in a variety of economic conditions in both a growing and shrinking economies people off of getting good deals and experiences the debenture and we want to be a place for them.

Speaker Change: Our merchant partners have historically use groupon spot pharmacy management tool, a use case, which can increase when demand slows.

Speaker Change: And finally, we have taken steps to strengthen our balance sheet and address our going concern issue, which usually they will go into more details.

Dusan Senkypl: And finally, we have taken steps to strengthen our balance sheet and address our ongoing concerns, which Jiri will go into more detail. For these and other reasons, it's my belief that Groupon has the ability to drive superior value creation through a successful transformation. Before I turn the call over to Jiri, I want to take the opportunity to thank the Groupon team.

Speaker Change: For both for these and other reasons. It's my belief that Groupon has the ability to drive superior value creation through a successful transformation.

Speaker Change: Before I turn the call over to easy I want to take the opportunity to fund the Groupon team.

Speaker Change: Transformations are not easy we have asked and continuing to ask our teams to drive significant changes across our business.

Speaker Change: Our team has responded with energy and passion to deliver on our mission.

Easy: I am proud of the dedication and resilience of our team has shown are excited to work together.

Dusan Senkypl: We have asked and continue to ask our teams to drive significant changes across our business. Our teams have responded with energy and passion to deliver on our mission. I am proud of the dedication and resilience of our team as shown and excited to work together as we focus on innovating faster for our users and merchant partners. With that, I will turn it over to Jiri. Thank you, Dusan, and thank you as well to everyone who is joining us today. It's a pleasure to be speaking with you.

Speaker Change: Focus on innovating faster for our users and merchant partners with that I will turn it over to you.

Speaker Change: Thank you, Sean and thank you as well to everyone who is joining us today, it's a pleasure to be speaking with you.

Speaker Change: I believe my time today to provide further insight into our fourth corporate financial results.

Speaker Change: Progress on our cost savings actions.

Based on our liquidity position.

Speaker Change: Our updated outlook.

Jiri Ponrt: I will use my time today to provide further insight into our fourth quarter financial results. Progress on our cost savings actions, and an update on our liquidity position are updated out. Turning the slides to both.

Speaker Change: Turning to slide 12.

Speaker Change: So let's jump into our fourth quarter summary financial results.

Speaker Change: The fourth quarter, we delivered global billings of 405 to 6 million a day.

Jiri Ponrt: So let's jump into our fourth quarter summary financial results. In the fourth quarter, we delivered global billings of $436 million, a decrease of approximately 7% year over year. Revenue was $138 million and declined by 7% year over year. However, a significant improvement in year-over-year trends versus our third quarter results and above the high end of our guidance. Moving on.

Speaker Change: Rates of approximately 7% year over year.

Speaker Change: Revenue was 100 and sort of the 8 million and declined 7% year over year.

Speaker Change: Significant improvement in year over year trends versus our first quarter results above the high end of our guidance.

Speaker Change: Moving on.

Speaker Change: Our girls perfect as a percentage of revenues remained stable at 89 person.

Speaker Change: Marketing expense for the first quarter was $34 million or 28% of girls perfect.

Jiri Ponrt: Our gross profit as a percentage of revenues remains stable at 89%. Marketing expense for the first quarter was $34 million, or 28% of gross profit, as we discussed in our last two earnings calls. Our Wearable Beugelmans marketing campaigns have received increased investment, and this trend continues in the fourth quarter, where we increased our marketing spend 19% quarter over quarter, as we deliver additional improvements in the efficiency of our performance marketing channels. We will continue to review our marketing spend to ensure we strike the right balance between maintaining sufficient returns on each dollar spent and driving better customer engagement. Contributing profit for the first quarter was $88 million, or 64% of revenue. Adjusted EBITDA was $27 million, as we recorded the third straight quarter of positive adjustments. Turning to Kishfu,

Speaker Change: As we have discussed in our last two earnings calls.

Speaker Change: I'll worry both performance marketing campaigns are pretty steep increase investment.

Speaker Change: This trend continue into the fourth quarter really increase our marketing spend 19% quarter over quarter.

Speaker Change: As we deliver additional improvements in the efficiency of our performance marketing channels.

Speaker Change: We will continue to review our marketing spend to ensure it's bags or ice bonds between maintaining sufficient returns on each book spend and driving better for final yourselves.

Speaker Change: Contributing perfect for the first quarter was 88 million.

Speaker Change: 64 person are afraid to use it.

Speaker Change: EBITDA was 27 million.

Speaker Change: We recorded the third straight quarter.

Speaker Change: Adjusted EBITDA.

Speaker Change: Turning to cash flow.

Speaker Change: Fourth quarter operating cash flow.

Jiri Ponrt: Fourth quarter operating cash flow was positive $55 million, and free cash flow was positive $51 million. This was a strong improvement both sequentially and year-over-year, as our cash flow benefited from both Q4 holiday strengths and moderating year-over-year billing details. We ended the quarter with 142 million in cash and cash equivalents, including 42.8 million drawn on the revolver.

Speaker Change: 55 million and free cash flow was positive 51 of them.

Speaker Change: Strong improvement both sequentially and year over here.

Speaker Change: Cash flow benefited from both Q4 holidays things.

Speaker Change: And moderating year over year billings declines.

Speaker Change: We ended the quarter with 142 million in cash and cash equivalents, Inc.

Speaker Change: Including $42 8 million drawn on the revolver.

Speaker Change: Please note that our cash position excludes $26 million with respect to this case.

Speaker Change: We're supposed to go up against our outstanding letters of credit.

Jiri Ponrt: Please note that our cash position excludes 26 million of cash which is posted as a collateral against our own spending letters of credit and reported in our balance sheet as prepay expenses and other current, Slide, sir. We had approximately 16.5 million customers worldwide at quarter end, down half a million from the prior quarter. Connect to our local category.

Speaker Change: And I broke it in our balance sheet and prepaid expenses and other current assets.

Speaker Change: Slight starting.

Speaker Change: With approximately 16 in the high 16, and a half million customers worried about it except with a N Don Hoffman from the prior quarter.

Speaker Change: Turning to our local category.

Jiri Ponrt: Consolidated local billings were $363 million, down 1% compared to the prior year. Within Northern America, we delivered local billings of $257 million, flat compared with the prior year. It's international.

Consolidated Luca billings, but for 863 million down one person.

Speaker Change: Prior to the prior year.

Speaker Change: It's in Latin America, we deliver Luca billings of 257 million.

Speaker Change: Compared with the prior year.

Speaker Change: In fact, I shouldn't we deliver local billings of 106 million down 3% year over year.

Jiri Ponrt: We deliver local buildings of 106 million, down 30% year-over-year. Similar to the third quarter, our fourth quarter performance in local benefited from the strong performance in our SYNC2DO execution and our enterprise customers. Moving to our favorite category, and for the fourth quarter, Consolidated Payable Billing was $28 million, down 12% year over year. In North America, we can see our transformation strategy taking hold, with travel billing growth of 4% year over year. It's international travel, but it still has more work to do with buildings down 33% year-over-year. Moving to our goods category. Consolidated goods billings were $45 million, down 36% year-over-year in the fall quarter.

Speaker Change: Similar to the third quarter, our fourth quarter performance in local benefited from the strong performance in our things to do ethically.

Speaker Change: And our enterprise customers.

Speaker Change: Moving to our favorite category.

Speaker Change: In the fourth quarter comp.

Speaker Change: Consolidated turbo billings.

Speaker Change: $28 million down 12% year over year with North America, we can see our transformation strategy. They can go with favorable deliberating billing growth of 4% year over year.

Speaker Change: It's an international flavor.

Speaker Change: There is more work to do with billings down circa safe person year over here.

Speaker Change: Moving to our goods category.

Speaker Change: Consolidated <unk> billings was $45 million down circa 6% year over year in the fourth quarter.

Jiri Ponrt: Our current group business is struggling, and we do not see any near-term change in the negative. At 6% of forced quota revenues and declining capital, goods are becoming a smaller and smaller part of our business, which is linked to our operating expenses. Forced quota at GNA was $72 million, down 35% year-over-year and down 9% quarter-over-quarter, as we continue to see the benefits of our recent cross-training experience, reflected in our past.

Speaker Change: Our current business is struggling.

We do not see any near term change in the makeup experience.

Speaker Change: It's six person fourth quarter revenues and declining rapidly.

Speaker Change: <unk> is becoming smaller and smaller part of our business.

Speaker Change: Slide 14.

Speaker Change: Turning to operating expenses.

Speaker Change: Fourth quarter, SG&A was 72 million down, 35% year over year and down 9% quarter over quarter as.

Speaker Change: We continue to see the benefits of our cost saving actions reflected in our financials.

Jiri Ponrt: SG&A includes $0.7 million in stock-based compensation and $6 million in depreciation and amortization. Creating an efficient infrastructure is a key pillar of our transformation. And as you can see, we've made significant progress by using our fixed cost base. Going forward, while we continue to see opportunities to further reduce costs, we expect to see smaller declines than we saw in 2020. Many of our projects underway to further reduce costs will take multiple quarters to deliver, such as our cloud cost optimization project or our ERP simplification. In addition, we are still evaluating investments in our self-organization. Slide, please. Turning to Frakesh Goel.

SG&A improved 0.7 million in stock based compensation 6 million and depreciation and amortization.

Speaker Change: Crazy.

Speaker Change: Spectrum is a key pillar of our transformation plan and as you can see we've made significant progress reducing our fixed cost base.

Speaker Change: Going forward are they.

Speaker Change: Continue to see opportunities to further reduce costs.

Speaker Change: To see smaller declines than we saw in 2000 and Tennessee.

Speaker Change: Many of our projects underway.

Speaker Change: As a regular course will take multiple quarters to deliver.

Speaker Change: Such as our cloud cost optimization perfect.

Speaker Change: Our ERP simplification project in.

Speaker Change: In addition, we are still evaluating investments into our sales organization.

Speaker Change: Slide 15.

Speaker Change: Turning to free cash flow.

Jiri Ponrt: In the fourth quarter, we generated positive $27 million of Adjusted EBITDA and positive $51 million of break-even. In order to better help investors to understand the conversion from Adjusted EBITDA to Free Cash Flow, we've prepared a bridge that reconciles Adjusted EBITDA to Free Cash Flow. I would like to point your attention to five drivers.

Speaker Change: And so first quarter, we generated positive 27 million.

Speaker Change: Adjusted EBITDA and positive $1 million of free cash flow.

Speaker Change: In order to better help investors to understand the conversion from adjusted EBITDA to free dish group display bridge reconciles adjusted EBITDA to free cash flow.

Speaker Change: I'd like to point your attention to five <unk>.

Jiri Ponrt: 1. CapEx is primarily driven by capitalized labor. Change in merchant and supplier payables is driven by the annual change in bling, along with a quarter over quarter change in billing.

Speaker Change: One.

Speaker Change: Capex is primarily driven by capitalized labor.

Speaker Change: Two.

Speaker Change: Change in merchant and supplier payables is driven by the annual change in billings.

Speaker Change: Along with the quarter over quarter change in billings.

Speaker Change: For example.

Jiri Ponrt: Our December-ending Merchants' Table balance benefited both from improving year-over-year trends and the timing of Q4 holidays. Great. Change in paid account payable is primarily driven by A, how much non-payroll SG&A and marketing via expenses we have, and b, any changes in our accounts payable cycle. Our accounts payable cycle has reduced significantly, and we do not expect further compression.

Speaker Change: Our December and bank of America payable bonds benefited both improving year over year trends and the timing of Q4 holidays.

Speaker Change: That's great.

Speaker Change: Change in paid accounts payable is primarily driven by a.

Speaker Change: How much non payroll G&A and marketing expenses.

Speaker Change: And any changes in our accounts payable cycle.

Speaker Change: Stable cycle is trading significantly and we do not expect further compression.

Jiri Ponrt: The change in our accrued SG&A and other current liabilities is primarily driven by the trajectory of our SG&A and others. In the fourth quarter, we had an increase in accrued expenses for marketing and several other current liabilities. Bye.

Speaker Change: Cool.

Speaker Change: Change in our accrued SG&A and other current liabilities is primarily driven by the perfect.

Speaker Change: And operating expenses.

Speaker Change: In the fourth quarter, we had.

Speaker Change: An increase in activity in a cruise or marketing and several other current liabilities.

Jiri Ponrt: Cash outflow from the change in net operating increases is driven by remaining increased payment obligations in our entire economy in Q1 2023. The outflow included a one-time payment associated with the early lease termination of our Chicago family home, as we resize our real estate footprint to meet our current needs, either through the expiration of our current leases or negotiating early lease exits. We expect the working capital outflow from this item to trend towards zero.

Speaker Change: Five.

Cash outflow from change in net of price increases is driven by remaining increase payment obligations in our impaired leases.

Speaker Change: In Q1 2023.

Speaker Change: Outflows included a one time payment associated with the early lease termination with Chicago facility.

As theory size, our real estate footprint in our current needs.

Speaker Change: Is this sort of the expiration of our current leases for negotiating early lease exits.

Speaker Change: The working capital outflow from this item the brands the words here.

Jiri Ponrt: Going forward, our ability to convert positive adjusted EBITDA generation to positive free cash flow will depend on these drivers, the timing of our working capital cycle, and other cash expenditures, beginning in the fourth quarter of 2022. We discuss conditions and events and consider, in the aggregate, that there is substantial doubt about our ability to continue as a growing community. Since then, we've taken the following actions to improve our economy. Our operating cash flow performance has improved for full year 2023 compared to full year 2022 and for Q423 compared to Q423. In the fourth quarter 2030, we received $18.9 million in proceeds from the sale of a portion of our stake in Samhain on January 24th. He closed a fully-backspent price offering that was significantly oversubscribed and raised $18 million in February 2017.

Speaker Change: Going forward.

Speaker Change: Our ability to convert those at adjusted EBITDA generation to positive free cash flow will be spent on these drivers.

Speaker Change: <unk> of our working capital cycle and obligation expenses.

Speaker Change: Slide 16.

Beginning in the fourth quarter 2022.

Speaker Change: We disclosed conditions and even when considered in the aggregate.

Speaker Change: Is there a substantial doubt about our ability to continue as a going concern.

Speaker Change: And then.

Speaker Change: He's taken the following actions to improve our liquidity.

Speaker Change: Our operating cash flow performance has improved.

Speaker Change: Full year 2020 feet compared to full year 2023.

Speaker Change: And for Q4 compared to Q4 printed too.

Speaker Change: In the first quarter 'twenty free.

Speaker Change: We received $18 9 million and proceeds from the sale of portion of our stake in some of them.

Speaker Change: In January of 'twenty four.

Speaker Change: Because a full indexed book rights offering that was significantly oversubscribed and raised 80 million.

Speaker Change: In February it didn't before.

Jiri Ponrt: We prepaid $43.1 million and terminated our credit facility in advance of its maturity in May 2024. Accordingly, management has concluded that the substantial doubt about our ability to continue as a growing company has been alleviated, in addition to the completed transaction. Management continues to evaluate the monetization of certain non-core assets, including the company's remaining stake in Summit, Giftcard, and its portfolio of IntelliTrooper. However, there can be no assurances as to whether or when the sales of these non-core assets will be consummated. Management currently believes these future non-core asset cells could generate proceeds of approximately $100 million. Slide 17.

Speaker Change: We prepaid $48 1 million and terminated our credit facility in advance of its maturity in May 2024.

Speaker Change: Accordingly.

Speaker Change: Management has concluded that the substantial doubt about our ability to continue as a going concern is.

Speaker Change: L O.

Speaker Change: In addition to the completed transactions management continues to evaluate the monetization of certain noncore assets.

Speaker Change: Including the company's remaining stake in somewhat difficult and in sports.

Speaker Change: Actual birthday.

Speaker Change: Well, it's it can be no assurances as to Redbird <unk> south of these noncore assets will be consummated.

Speaker Change: Management currently believes these future noncore asset sales will generate proceeds of approximately 100 million.

Speaker Change: Slide 17.

Jiri Ponrt: Now turning to Gaiden. As of March 15th, 2024, management is issuing guidance for the first quarter of 2024 as follows. Revenues between $113 million and $118 million all declined year-over-year between minus 7% and minus 3%.

Speaker Change: Now turning to guidance.

Speaker Change: As of March 15, 2024.

Speaker Change: Management is issuing guidance for the first quarter of 2024, our spokes.

Speaker Change: Our revenues between 115.

Speaker Change: $13 million and $118 million or decline year over year between minus 7% and minus eight person.

Jiri Ponrt: Adjusted EBITDA between $7 million and $12 million, and they got this freakish. Management would also like to reiterate, it's 2024 out. Year-over-year revenue change at minus 5%, zero percent. Adjusted EBITDA between $80 million and $100 million. Positive Frankish for the two years.

Speaker Change: Adjusted EBITDA between 7 million and two both Milan makeup is free cash flow.

Speaker Change: Management a lot.

Speaker Change: So like to reiterate its 2024 outlets.

Speaker Change: Year over year revenue change at minus 5% zero person.

Speaker Change: Adjusted EBITDA between $80 million and 100 million.

Speaker Change: Well the free cash flow for the full year.

Jiri Ponrt: Finally, I would like to provide some additional commentary to assist you with your model. While we expect to generate negative free cash flow for the first quarter, given the timing of our accrued merchant payables as we exit the Q4 holidays, we expect to report a significant improvement in the level of outfalls compared to the same period last year. There are many drivers that influence revenue as a percentage of gross billings, including merchant margins, segment mix, category mix, local article mix, breakage, points utilization, and several other factors, given the number of the driver, with some acting as a headwinds and others as a tailwinds. It's hard to predict with precision where we will land each and every course.

Speaker Change: Finally, I would like to provide some additional commentary to assist you with your models.

Speaker Change: While we expect to generate negative free cash flow for the first quarter, given the timing of our accrued to merchant Fabulous as we exit Q4 holidays.

Speaker Change: Expect to report a significant improvement in the level of outflows compared to the same period last year.

Speaker Change: There are many drivers of influenza revenue as a percentage of gross billings, including merchant margins segment mix category mix local Arctic comex breakage points utilization and several other factors.

Speaker Change: Given the number of the drivers.

Speaker Change: We had some exiting Pennsylvania and the evidence is hard to predict with precision, but evo lens, each and every quarter.

Jiri Ponrt: That's it for 2024. We do not see consolidated consolidated revenue as a percentage of gross billings, varying significantly compared to the range reported over the last five books, as Dusan commented in the last quarter's earnings call. One area of focus for us has been the checkout process; we see many opportunities to improve the experience for customers who have made it all the way through our funnel and added items to their cart. This includes... promoting some payment options ahead of others depending on the local customer program. We continue to expect our menus in the first half of 2024 to decline year over year, and Diamond News in the second half of 2024 to grow year over year. However, the trajectory of the year will depend on a variety of factors, including the delivery of certain projects, such as our new consumer front.

Speaker Change: Right.

Speaker Change: 2010, before we do not see consolidated.

Speaker Change: For the fifth Avenue as a percentage of gross billings.

Speaker Change: Varying significantly contracted syringe airports it over the last five brokers.

Speaker Change: As Sean commented in the last quarter's earnings call.

Speaker Change: One area of focus for US has been the check out process that we see many opportunities to improve the experience for customers.

Speaker Change: Who have made it made it all the way through our funnel and added.

Speaker Change: Items through our power to out.

Speaker Change: To their car.

Speaker Change: This includes.

Speaker Change: Promoting some payment options ahead of us depending on the local customer preferences.

Speaker Change: We continue to expect revenues in the first half of 2024 to decline year over year.

Speaker Change: And Brian venues in the second half of 2024 grow year over year.

Speaker Change: Patrick three of the year.

Speaker Change: Various factors, including the delivery of certain projects, such as <unk>, such as our new consumer from them.

Jiri Ponrt: focusing our operating plan on driving profitable top-line growth through the value of our non-core assets. We believe we can create increased value for all of our stakeholders as we continue to execute our transformation strategy. Thank you for your time today. With that, I would like to open the call to your questions. Thank you.

Speaker Change: Do you think pricing plan focus in driving profitable top line growth.

Speaker Change: <unk> of our noncore assets, we believe we can create and increase value for all of our stakeholders as we continue to execute our transformation strategy.

Speaker Change: Thank you for your time today is that I would like to open the call up for your questions operator.

Operator: As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. Your first question comes from the line of Sean McGowan from Roth MKM. Good morning, thank you very much.

Speaker Change: Thank you Hazard reminder, if you'd like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Your first question comes from the line of Sean Mcgowan from Ross M km. Please go ahead.

Sean McGowan: Good morning, Thank you very much.

Sean McGowan: A couple of questions, if you don't mind. One is, can you give us some thoughts on your capital allocation priorities? The balance sheets seem to show a great improvement; you've eliminated that going concern. We've got some cash.

Sean McGowan: A couple of questions. If you don't mind. One is can you give us some thoughts on your capital allocation priorities. The balance sheet has seen great improvements you've eliminated a going concern.

Sean McGowan: Got some cash looks like cash flow prospects include can you give us an idea of what the what the priorities are for capital allocation.

Jiri Ponrt: Cash Flow Prospects. Can you give us an idea of what the priorities are for capital allocation? Yeah, I think currently we are here to make it sustainable.

Sean McGowan: Yeah.

Speaker Change: I think currently.

Speaker Change: We are here to make it sustainable.

Dusan Senkypl: And frankly, we have had one positive quarter, and we still have to work on making long-term sustainable growth and positive cash flow from this. Okay, on user engagement, can you give us some thoughts there on, you know, what are you seeing currently in terms of, you know, the number of occasions that a user engages with it, and what's your goal for growing that? Yeah, thanks, Sean, for the question. We are focusing right now on the Next Generation website, which will bring us many, many new opportunities. The one very positive signal which we have overall is gifting, which opens another set of opportunities several times a year.

Speaker Change: And frankly.

Speaker Change: Frankly, we had one positive quarter and we still have to work on.

Speaker Change: I'm, making a long term sustainable.

Speaker Change: Growth and positive cash flow of this company.

Speaker Change: Okay.

User engagement can you give us some thoughts there on.

Speaker Change: What are you seeing currently in terms of the number of occasions that a user engages and what's your goal for growing that.

Speaker Change: Yes, Thanks, John for the gross churn.

Speaker Change: Sure.

Speaker Change: We are focusing right now on the next generation side.

Speaker Change: Side, which will bring us many new opportunities.

Speaker Change: One very positive signal, which we have overall is the gifting, which opens another set of opportunities several several times a year.

Dusan Senkypl: But we have many, many additional use cases, which we will start unlocking once we have the new website launched, and we will have a highly increased cadence of new features coming into the platform. So, this will be an area of our focus for the later part of this. Great, I would imagine as you get that engagement up, it really has a significant impact on your cashflow. You know, how big do you think gifting can get?

But via for like many many additional use cases would you be able to start unlocking bumps, we havent been you've upsized launched and people have really.

Speaker Change: Clearly increased cadence of.

Speaker Change: New features coming.

Speaker Change: Going into the platform.

Speaker Change: So this will be an area of our focus for later part of this year.

Great I would I would imagine as you get that engagement up it really has a significant impact on your cash flow and EBITDA. So I'll.

Do you think gifting can get.

Dusan Senkypl: as a percentage of total. I can't really comment on any numbers, but clearly, the current use cases on the platform are fairly limited. And as I said, there will be new features coming, but we are also focusing a lot on the curation of deals and bringing the right deals. So when customers come to the website, there will always be something new and something extremely engaging for them. So I think it should be another driver to bring customers more often to the platform. Great, thank you very much. Your next question comes from the line of Eric Sheridan from Goldman Sachs. Please go ahead.

Speaker Change: As a percentage of total revenue.

Speaker Change: I can't really comment comment in a number of about the clearly the current use cases on the platform are fairly limited and as I said, but it will be new features coming but we are also.

Speaker Change: Focusing a lot on the curation of deals and bringing the right deals with vendor customers come to the website, there will be always something new and something extremely engaging for them. So I think it should be another driver byproduct to bring customers more of them to the platform.

Speaker Change: Okay.

Speaker Change: Great. Thank you very much.

Speaker Change: They will come quicker.

Speaker Change: Your next question comes from the line of Eric Sheridan from Goldman Sachs. Please go ahead.

Eric James Sheridan: Thanks so much for taking the questions. Maybe on the supply side of the marketplace, you know, how should we be thinking about elements of both gross additions on the supply side, building as we go through 2024, and where you're most focused on reducing friction from the onboarding side for supply? And then, in terms of supply retention, conversion, delivering ROI, how should we be thinking about elements of once that supply is where you want it to be, how that then would possibly translate into more marketing spend to drive growth? Thank you. Okay, so, in terms of, thanks, Eric, thanks for the question. And I will start from backwards.

Eric James Sheridan: Thanks, so much for taking the questions maybe two just on the supply side of the marketplace. How should we be thinking about elements of both gross additions on the supply side building as we go through 2024, and where you're most focused on reducing friction from the onboarding side for supply and then in terms of <unk>.

Eric James Sheridan: <unk> retention conversion delivering ROI, how should we be thinking about elements of once that supply is where you want it to be how that would possibly translate into more marketing spend to drive growth. Thank you.

Speaker Change: Okay. So in terms so thanks, Alex Thanks for the question.

Speaker Change: And I will start from the class in terms of marketing spend I believe that Directionally you are on the level, where we would like to say, we still believe that we can grow the marketing in volume, but not in a percentage of gross debt.

Jiri Ponrt: In terms of marketing spend, I believe that, directionally, we are on the level where we would like to stay. We still believe that we can grow marketing in volume, but not as a percentage of gross revenues or of our gross billing, on the one side. Then, in terms of what we have on our website, we saw in the last quarters that plenty of suppliers who were working in the past, big merchants, national merchants who were working with Groupon are coming back, and we are doing more and more business. So we are very confident that our sales process, which is very consultative nowadays, is improving, and we will also be able to grow business with our existing merchants, which will have a very positive And then in terms of the supply proposition, which we have on the website, we have a lot of focus on the top half of the inventory. In the past, past management was focusing more on the automated process and onboarding process for merchants through online acquisition.

Speaker Change: Revenues are up.

Speaker Change: Our gross billings.

Speaker Change: One month's alongside.

Speaker Change: Then in terms of both the V half an hour of upside we saw in last quarters.

Speaker Change: Plenty of suppliers, we've ever broken into Boston Big merchants National merchants with Warburg Pincus Groupon.

Speaker Change: <unk> are coming back and we are doing more and more business. So we are very confident that our sales approach.

Speaker Change: <unk> says, which is very consultative nowadays.

Speaker Change: It's improving we will be also also able to grow the business with our existing merchants, which will have a positive impact on overall groupon.

Speaker Change: And then in terms of like supply proposition, which we have on the website.

Speaker Change: We have a lot of focus on the top of the inventory.

Speaker Change: In the past past management was focusing more on automated.

Speaker Change: Our process and on boarding process for merchants through online acquisition.

Jiri Ponrt: What we see is that if we really support our merchants in the way we are structuring the deals, it brings much, much better results. So this is our focus. So I expect that together with this regionalization, where we will have real experts in the individual geographics, we will be able to optimize the marketplace coverage with the deals and with the supply proposition. So when we generate optimal results, not only for Groupon, but the same will apply for merchant partners and for Groupon.

Speaker Change: What we see is that we if we really support our merchants and debate how we are structuring the deals.

Speaker Change: It brings much much better results. So because this is our focus so I expect that to develop this regionalization whatever you don't have to go to experts on the individual geographies, we will be able to optimize the marketplace coverage.

Speaker Change: The deals and with supply for a position so when we generate ophthalmology results not only for groupon.

Speaker Change: The single apply for our merchant partners and for customers.

Operator: Thank you. We have no further questions in our queue at this time. And with that, that does conclude today's conference call. Thank you for your participation, and you may now disconnect.

Speaker Change: Thank you.

Speaker Change: We have no further questions in our queue at this time and with that that does conclude today's conference call. Thank you for your participation and you may now disconnect.

Okay.

Speaker Change: Okay.

Speaker Change: And we have no firm.