Q2 2026 Groupon Inc Earnings Call

August 7, 2026

Operator: Hello, and welcome to Groupon's Q2 2026 financial results conference call. On the call today are Chief Executive Officer, Dušan Šenkypl, and Chief Financial Officer, Rana Kashyap. At this time, all participants are in a listen-only mode. Today's call will be a question and answer session only. The company has posted earnings materials, including earnings commentary, on the company's investor relations website at investor.groupon.com. Today's conference call is being recorded. Before we begin, Groupon would like to remind listeners that the following discussion and responses to the questions reflect management's views as of today, 7 August 2026, only and will include forward-looking statements. Actual results may differ materially from those expressed or implied in the company's forward-looking statements. Groupon undertakes no obligation to update these forward-looking statements as a result of new information or future events.

Speaker #1: Hello, and welcome to Groupon's Q2 2026 financial results conference call. On the call today are Chief Executive Officer Dusan Senkypl and Chief Financial Officer Rana Kashyap.

Speaker #1: At this time, all participants are in listen-only mode. Today's call will be a question-and-answer session only. The company has posted earnings materials, including earnings commentary, on the company's investor relations website at investor.groupon.com.

Speaker #1: Today's conference call is being recorded. Before we begin, Groupon would like to remind listeners that the following discussion and responses to questions reflect management's views as of today, August 7, 2026, only, and will include forward-looking statements.

Speaker #1: Actual results may differ materially from those expressed or implied in the company's forward-looking statements. Groupon undertakes no obligation to update these forward-looking statements as a result of new information or future events.

Speaker #1: Additional information about risks and other factors that could potentially impact the company's financial results is included in its earnings press release and in its filings with the SEC.

Operator: Additional information about risks and other factors that could potentially impact the company's financial results are included in its earnings press release and in its filings with the SEC, including its annual report on Form 10-Q. 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 its website the reports that the company files or furnishes with the SEC, corporate governance information, and select press releases, and social media postings. On the call today, the company will also 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 its investor relations website, you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable measures under US GAAP.

Speaker #1: Including its annual report on Form 10-Q. We encourage investors to use Groupon's investor relations website at investor.groupon.com as a way of easily finding information about the company.

Speaker #1: Groupon promptly makes available on its website the reports that the company files or furnishes with the SEC, corporate governance information, and select press releases and social media postings.

Speaker #1: On the call today, the company will also 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 its investor relations website, you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable measures under US GAAP.

Speaker #1: And with that, I would like to turn it over to CEO Dusan Senkypl to make a few opening remarks before we jump into Q&A.

Operator: With that, I would like to turn it over to CEO Dušan Šenkypl to make a few opening remarks before we jump into Q&A.

Speaker #2: Hello, and thanks for joining us for our second quarter 2026 earnings call. It's great to be with all of you today. Yesterday, after the market close, we released our earnings and posted our shareholder letter on our investor relations website.

Dušan Šenkypl: Hello, and thanks for joining us for our Q2 2026 earnings call. It's great to be with all of you today. Yesterday, after the market closed, we released our earnings and posted our shareholder letter on our investor relations website. Today, I will make opening remarks and then open up the call for your questions. For more details on our quarterly performance, I encourage you to read our full shareholder letter, press release, and 10-Q. We believe the best things in life happen offline. As the world becomes increasingly digitized, we believe demand will grow for analog in-person experiences and for the digital pathways consumers use to identify, discover, and book those experiences. Groupon sits at that intersection of consumer intent and local supply, a natural bridge between the AI economy and the millions of local merchants who power Main Street.

Speaker #2: Today, I will make opening remarks and then open up the call for your questions. For more details on our quarterly performance, I encourage you to read our full shareholder letter, press release, and 10-Q.

Speaker #2: We believe the best things in life happen offline. As the world becomes increasingly digitized, we believe demand will grow for analog, in-person experiences, and for the digital pathways consumers use to identify, discover, and book those experiences.

Speaker #2: Groupon sits at that intersection of consumer intent and local supply—a natural bridge between the AI economy and the millions of local merchants who power Main Street.

Dušan Šenkypl: Q2 fell slightly short on the top line with billings and revenue each down 1% year-over-year, while adjusted EBITDA finished at the high end of our guidance range and free cash flow was strong at +$15 million. The top-line shortfall was concentrated in North America Local, which continued to see pressure in Q2 and came in below our expectations. Looking ahead, we enter Q3 with momentum with our business accelerating to mid-single-digit growth in July, a positive signal for the trajectory of our marketplace in the H2. Project Foundry, introduced last quarter, remains our most consequential initiative as we redesign how Groupon works to be an AI-native company. Our approach is first principles and company-wide. We are rethinking how the entire organization runs across every function with AI at the center of how work gets done.

Speaker #2: Q2 fell slightly short on the top line, with billings and revenue each down 1% year over year, while adjusted EBITDA finished at the high end of our guidance range and free cash flow was strong at a positive $15 million.

Speaker #2: The top-line shortfall was concentrated in North America Local, which continued to see pressure in Q2 and came in below our expectations. Looking ahead, we enter Q3 with momentum, with our business accelerating to mid-single-digit growth in July—a positive signal for the trajectory of our marketplace in the second half.

Speaker #2: Project Foundry, introduced last quarter, remains our most consequential initiative as we redesign how Groupon works to be an AI-native company. Our approach is first principles and company-wide.

Speaker #2: We are rethinking how the entire organization runs, across every function, with AI at the center of how work gets done. Our ambition is that AI handles all repetitive work at Groupon, so our employees spend their time either managing AI agents, or talking to customers and merchants.

Dušan Šenkypl: Our ambition is that AI handles all repetitive work at Groupon, so our employees spend their time either managing AI agents or talking to customers and merchants. The overarching goal is increasing our execution velocity, collapsing the time between recognizing a customer or merchant unmet need, and shipping the solution. We believe operating at AI speed is critical to succeeding in an AI-first world. Just over 4 months in, we are extremely pleased with the progress we have made and the momentum we are building. We are starting to see outcomes delivered faster for our customers and strategic bets moving at an accelerated pace. AI now builds and optimizes tens of thousands of hyperlocal marketing campaigns, a scale no human team could run, and engineering output per developer has more than doubled in the past 6 months.

Speaker #2: The overarching goal is increasing our execution velocity collapsing the time between recognizing a customer or merchant unmet needs and shipping the solution. We believe operating at AI speed is critical to succeeding in an AI-first world.

Speaker #2: Just over four months in, we are extremely pleased with the progress we have made and the momentum we are building. We are starting to see outcomes delivered faster for our customers, and strategic bets moving at an accelerated pace.

Speaker #2: AI now builds and optimizes tens of thousands of hyper-local marketing campaigns at a scale no human team could run, and engineering output per developer has more than doubled in the past six months.

Speaker #2: This progress, and the green shoots we see—while not yet uniform across the entire company—give us confidence we are on the right path.

Dušan Šenkypl: This progress and the green shoots we see, while not yet uniform across the entire company, give us confidence we are on the right path. We are doubling down to accelerate this transformation and expect that our organization will be AI-through-and-through by default by the end of 2026. Turning to our strategic bets. The organic search landscape is being rebuilt around AI-generating answers, and our search foundation work is paying off. Revenue from our organic channels returned to growth in Q2 and accelerated to double-digit growth in July. We are using AI to produce and structure quality local content at a scale that was not previously possible, making our platform more relevant to both traditional search engines and AI systems. Together with our high-performing paid marketing engine, our improving organic channels are strengthening our reach.

Speaker #2: We are doubling down to accelerate this transformation and expect that our organization will be AI through and by default by the end of 2026.

Speaker #2: Turning to our strategic bets: the organic search landscape is being rebuilt around AI-generated answers, and our Search Foundation work is paying off. Revenue from our organic channels returned to growth in Q2 and accelerated to double-digit growth in July.

Speaker #2: We are using AI to produce and structure quality local content at a scale that was not previously possible, making our platform more relevant to both traditional search engines and AI systems.

Speaker #2: Organic is an inherently volatile channel, and there is still work ahead. But together with our high-performing paid marketing engine, our improving organic channels are strengthening our reach.

Speaker #2: Our second focus is making the Groupon experience more personal and more relevant, so that the customers we bring in engage more deeply and purchase more often.

Dušan Šenkypl: Our second focus is making the Groupon experience more personal and more relevant, so that the customers we bring in engage more deeply and purchase more often. Managed channels continued their improving trajectory in Q2 on the customer data platform we scaled last quarter, sending fewer, more effective messages, with revenue percent up strong double digits. Rather than one experience for everyone, we are building a customized one where different customers see a different Groupon experience. Some customers prefer to explore a map, others browse carousels, others a swipe-based interface. Customer signals that arrive in the mornings can now become shipped features the same day, a cycle that previously took months. Trust and quality is our newest bet. We are building a curated experience marketplace where every deal earns its place and no one has to second-guess a purchase.

Speaker #2: Managed channels continued their improving trajectory in Q2 on the customer data platform we scaled last quarter, sending fewer, more effective messages, with revenue percent up strong double digits.

Speaker #2: And rather than one experience for everyone, we are building a customized one where different customers see a different Groupon experience. Some customers prefer to explore a map, others browse carousels, others a swipe-based interface.

Speaker #2: Customers signals that arrive in the morning can now become shipped features the same day, a cycle that previously took months. Trust and quality is our newest bet.

Speaker #2: We are building a curated experience marketplace where every deal earns its place and no one has to second-guess a purchase. We are raising the bar on what appears on Groupon, and have remediated or removed hundreds of deals that did not meet it. AI now resolves the large majority of customer support contacts on its own—roughly three times faster than at the start of the year.

Dušan Šenkypl: We are raising the bar on what appears on Groupon and have remediated or removed hundreds of deals that did not meet it. AI now resolves the large majority of customer support contacts on its own, roughly three times faster than at the start of the year. In H2, we are adding verification before a deal publishes, a redesigned redemption experience including wallet support, and a pilot of a Groupon AI concierge that helps customers answer questions and book experiences. We also continue to rebuild Groupon's technology stack, and we now expect every surface in every geography to be fully migrated to our new platform by the end of Q3. This week, we strengthened our leadership team.

Speaker #2: In the second half, we are adding verification before a deal publishes, a redesigned redemption experience including wallet support, and a pilot of a Groupon AI Concierge that helps customers answer questions and book experiences.

Speaker #2: We also continue to rebuild Groupon's technology stack, and we now expect every surface in every geography to be fully migrated to our new platform by the end of Q3.

Speaker #2: And this week, we strengthened our leadership team. Adi Rajkumar joined Groupon as Chief Operating Officer, and Marc March joined as Vice President of Marketplace Strategy and Operations.

Dušan Šenkypl: Adi Rajkumar joined Groupon as Chief Operating Officer, and Mark March joined as Vice President of Marketplace Strategy and Operations, both with operating experience from some of the most successful local marketplaces. Our North America Local supply engine has been running behind our expectations. We are excited to see the impact Adi and Mark will drive there. Turning to guidance. For Q3, we expect billings growth of 4% to 6%, revenue of $228 to 130 million, adjusted EBITDA of $19 to 21 million, and -free cash flow in the quarter. For the full year, we are maintaining our outlook. Billings growth of 3% to 5%, revenue of $513 to 523 million, adjusted EBITDA of $75 to 80 million, and free cash flow of at least $60 million.

Speaker #2: Both have operating experience from some of the most successful local marketplaces. Our North America local supply engine has been running behind our expectations, and we are excited to see the impact Adi and Marc will drive there.

Speaker #2: Turning to guidance. For the third quarter, we expect billings growth of 4% to 6%. Revenue of 228 to 130 million, adjusted EBITDA of 19 to 21 million, and negative free cash flow in the quarter.

Speaker #2: For the full year, we are maintaining our outlook. Billings growth of 3% to 5%, revenue of 513 to 523 million, adjusted EBITDA of 75 to 80 million.

Speaker #2: And free cash flow of at least $60 million. Our outlook implies second half revenue growth of approximately 6% at the low end, and approximately 10% at the high end.

Dušan Šenkypl: Our outlook implies H2 revenue growth of approximately 6% at the low end and approximately 10% at the high end. We expect the pace of growth to accelerate through the balance of the year, supported by easier year-over-year comparisons, additional marketing investment, and increasing contribution from our strategic bets. The acceleration of our outlook requires ramps ahead of our current pace. A slower ramp across these drivers would affect our ability to reach it. We are confident in achieving our fourth consecutive year of improving revenue growth. Taking a step back, we are building a platform on three compounding capabilities. AI-native experience marketplace builders, a technology stack built for AI speed, and data that makes local commerce legible. As these capabilities compound, so does our ability to deliver on our mission to get people offline through quality local experiences at great value.

Speaker #2: We expect the pace of growth to accelerate through the balance of the year, supported by easier year-over-year comparisons, additional marketing investment, and increasing contribution from our strategic bets.

Speaker #2: The acceleration of our outlook requires runs ahead of our current pace, and a slower run across these drivers would affect our ability to reach it.

Speaker #2: We are confident in achieving our fourth consecutive year of improved revenue growth. Taking a step back, we are building a platform based on three compounding capabilities.

Speaker #2: AI-native experience marketplace builders, a technology stack built for AI speed, and data that makes local commerce legible. As these capabilities compound, so does our ability to deliver on our mission to get people offline through quality local experiences at great value.

Speaker #2: This is a company built by effort, and I want to thank every Groupon employee for the ambition and energy we are bringing to it. With that, let's open the call for questions.

Dušan Šenkypl: This is a company by its efforts. I want to thank every Groupon employee for the ambition and energy they are bringing to it. With that, let's open the call for questions.

Speaker #1: Thank you, Dushan. Our first question comes from Bobby Brooks from Northland Capital Markets. Bobby, you can now unmute your line.

Operator: Thank you, Dušan. Our first question comes from Bobby Brooks from Northland Capital Markets. Bobby, you can now unmute your line.

Bobby Brooks: Hey, good morning, team, and thank you for taking my question. I wanted to get a better understanding of the new UI rollout and the phasing of that. Because just when I check out the website, I still get the classic UI, just was curious to hear more on that on a granular level.

Speaker #3: Hey, good morning, team, and thank you for taking my question. I wanted to get a better understanding of the new UI rollout and the phasing of that, because just when I check out the website, I still get the classic UI, so just was curious to kind of hear more on that on a granular level.

Dušan Šenkypl: Okay. Bobby, thank you for the questions. I will talk about two pieces here. For right now, already several years, we are talking about ramping up a new MobileNext platform. Just a few minutes ago, I was talking about our plan to finish the full migration in Q3. This new interface is right now powering all our countries, all our surfaces, and we are really in the last phases of migration and updating the users who are, some of them are still on the old version, mainly of the application. We are cleaning up the last and least used parts of the interface.

Speaker #2: Okay. Bobby, thank you for the questions. I would talk about two pieces here. For right now, already several years, we are talking about ramping up new mobile next platform, and just a few minutes ago, I was talking about our plan to finish the full migration in Q3.

Speaker #2: This new interface is right now powering all our countries, all our surfaces, and we are really in the last phases of migration and updating the users, some of whom are still on the old version, mainly of the application.

Speaker #2: And we are cleaning up the last and least-used parts of the interface. This is one critical piece of our efforts to improve the user experience, because this new platform unlocks a ton of new opportunities. The pace of development that we have on the new platform is completely different compared to what we had on the old platform.

Dušan Šenkypl: This is one critical piece of our efforts to improve the user experience, because this new platform unlocks a ton of new opportunities and the pace of development which we have on the new platform is completely different versus what we had on the old platform. Second part of that question is about the user experience, which we are improving on this new MobileNext platform. We were talking about personalization, but I was sharing and part of our management team, multiple posts on LinkedIn or X, where we were showing examples of the interface. We are running multiple tests, and we already developed multiple features which we are testing and piloting, and we are identifying user groups who best interact with these features.

Speaker #2: Second part of that question is about the user experience, which we are improving on this new mobile next platform. We were talking about personalization, but I was sharing and part of our management team multiple posts on LinkedIn or X where we were showing examples of the interface.

Speaker #2: And we are running multiple tests, and we have already developed multiple features which we are testing and piloting, and we are identifying user groups who best interact with these features.

Speaker #2: And I see and expect that during the first quarter, it's pretty much every week when we introduce something new to improve the user experience in terms of personalization.

Dušan Šenkypl: I see and expect that during Q1, it's pretty much every week when we introduce something new to improve the user experience in terms of personalization. Last but not least, I was also talking about the quality bet. Here we were talking about it mainly in terms of how we are improving deal quality and making sure that the deals have proper pricing, great customer experience. However, there is also 2nd very important part of this bet, and this is customer experience. You can see on 10s of thousands of deals on Groupon across several countries already much improved customer experience in terms of showing the most important parts of deal and parameters, for example, next to the options. It is very clear when you are buying this option of the deal, this is what you are getting.

Speaker #2: And last but not least, I was also talking about the quality bet, and here we were talking about it mainly in terms of how we are improving deal quality, and making sure that deals have proper pricing, great customer experience, however there is also second very important part of this bet, and this is customer experience.

Speaker #2: You can see on tens of thousands of deals on Groupon across several countries, already much improved customer experience in terms of showing the most important parts of deal and parameters.

Speaker #2: For example, next to the options, but it's very clear when you are buying this option of the deal, this is what you are getting.

Speaker #2: We are also taking most important parts of the fine print from the deals and showing it in very visible way to customers, so that we are very clear on what they are getting and there is no confusion after the purchase.

Dušan Šenkypl: We are also taking most important parts of the fine print from the deals and showing it in very visible way to customers so that they are very clear on what they are getting, and there is no confusion after the purchase. This is combined effort on multiple fronts. For me, my goal is to build a marketplace which brings trust to customers. Customers who will be buying on Groupon, they need to build the trust and know that if I buy something on Groupon, I will get what I was promised to. I will get quality deal at a great price.

Speaker #2: So this is a combined effort on multiple fronts. Because for me, my goal is to build a marketplace which brings trust to customers. Customers who will be buying on Groupon may need to build that trust and know that if I buy something on Groupon, I will get what I was promised, and I will get a quality deal at a great price.

Speaker #3: For sure. I really can appreciate that. On the building the customer trust, and to piggyback on that, it is really encouraging to hear that emphasis today on building the trust and quality.

Bobby Brooks: For sure. I really can appreciate that on building the customer trust. To piggyback on that, it is really encouraging to hear that emphasis today on building the trust and quality. I just wanted to hear what might be some of the KPIs you and the team will be watching to track your progress there?

Speaker #3: So I just wanted to hear, what might be some of the KPIs you will be you and the team will be watching to track your progress there?

Speaker #2: So, the ultimate metric which we are all watching here is purchase frequency. Obviously, this is the key metric which will drive value also for shareholders.

Dušan Šenkypl: Ultimate metric which we are all watching here is purchase frequency, obviously. This is the key metric which will drive value also for shareholders. Internally, this is the metric which more and more teams which are participating on activities which I'm talking about is looking at. Internally, we are going a little bit deeper, and we are really right now with the platform which we built and migrated over really last several years. We cut our customer base into multiple segments, we are really looking on performance of new customers. We are looking on performance of what we call champions, for example, on the platform. Pretty much every week and every month, we are looking on what features we deliver, how they are impacting behavior of these customers. One example of very important metric which we are following is conversion to 2nd purchase.

Speaker #2: But internally, this is the metric which more and more teams which are participating on activities which I am talking about, is looking at. And internally, we are going a little bit deeper, and we are really right now with the platform which we built and migrated over a really last several years, we cut our customer base into multiple segments.

Speaker #2: So we are really looking on performance of new customers. We are looking on performance of what we call champions, for example, on the platform, and pretty much every week and every month, we are looking on what features we delivered how they are impacting behavior of these customers.

Speaker #2: One example of a very important metric that we are following is conversion to second purchase. If we have a new customer on Groupon, we track how many of those customers, within, for example, the next 7 or 30 days after their first purchase, will make a second purchase.

Dušan Šenkypl: If we have new customer on the Groupon, how many of those customers within, for example, next 7 or 30 days after that first purchase, they will do the second purchase. I would maybe slightly jump to the topic which is partially related to it. Initially, when we were rebuilding Groupon and marketing, we were very transactional. We were looking really only on that first transaction. Now with all the capabilities which we have, we start moving in the direction on looking on lifetime value.

Speaker #2: I would maybe slightly jump to a topic which is partially related to this. Initially, when we were rebuilding Groupon and marketing, we were very transactional.

Speaker #2: We were looking really only at that first transaction. But now, with all the capabilities that we have, we are starting to move in the direction of looking at lifetime value.

Speaker #2: So we are optimizing campaigns not only based on what they bring in seven days, but we are looking on the type of customers they are acquiring, and we spend money differently if we see that the profile of customers is this is one and only, one and done type of customer, or whether it is a customer who purchased a product which is typically purchased two, three times a year.

Dušan Šenkypl: We are optimizing campaigns not only based on what they bring in 7 days, we are looking on the type of customers we are acquiring, and we spend money differently if we see that the profile of customers is this is one and only, one and done type of customer, or whether this is a customer who purchased a product which is typically purchased 2, 3 times a year. We are reallocating our resources more towards the campaigns which are bringing the customers with better purchase frequency in general.

Speaker #2: And we are reallocating our resources more towards the campaigns which are bringing the customers with better purchase frequency in general.

Speaker #3: That's terrific to hear. It was also exciting to see, during the quarter, the marketing partnership you did with the McDonald's loyalty app.

Bobby Brooks: That's terrific to hear. It was also just exciting to see during the quarter the marketing partnership you did with the McDonald's loyalty app. I just wanted to ask how you thought that played out. Could we maybe expect similar shorter duration partnerships like that in the future? Maybe just generally, what do you think that should show to investors about. Because it does feel like you probably wouldn't have been able to do that maybe 2 years ago or even 18 months ago. Just wanted to give you the floor there.

Speaker #3: And so I just wanted to ask how you thought that played out. Could we maybe expect similar, shorter-duration partnerships like that in the future?

Speaker #3: And maybe just generally, what do you think that should show to investors? Because it does feel like you probably wouldn't have been able to do that maybe two years ago, or even 18 months ago.

Speaker #3: So, I just wanted to give you the floor there.

Speaker #2: Oh, yes. It was our first partnership of this type with McDonald's, but in the last few months, internally, we have been talking a lot and figuring out ways to expand this.

Dušan Šenkypl: Yes, it was our first partnership of this type with McDonald's. Last few months, internally, we are talking a lot and figuring out ways how to expand this. Again, when you think about how the transformation was evolving, originally, we were really focused just on, I would call it like transactional marketing, which brings revenue immediately because this is what we had to fix. Now, when our marketing engine is on this bottom part of the funnel, it's really working very well, scaling, understands what type of customers we are purchasing. We are expanding the marketing. We started already brand campaign in Q4 last year, and we continue with brand activities during this year.

Speaker #2: Again, when you think about how the transformation was evolving, originally we were really focused just on—I would call it—transactional marketing, which brings revenue immediately, because this is what we had to fix.

Speaker #2: Now, when our marketing engine is on this bottom part of the funnel, it's really working very well—scaling, and it understands what type of customers we are purchasing.

Speaker #2: We are expanding the marketing. We started already with the brand campaign in Q4 last year, and we continue with brand activities during this year. We are getting knowledge and experience in influencer marketing, where we will need to double down, and this will be one area where we will be visible and investing more and more in the coming months and quarters.

Dušan Šenkypl: We are getting knowledge and experience in the influencer marketing, where we will need to double down, this will be one area where we will be visible and investing more and more in coming months and quarters. McDonald's, this type of partnership which we will be bringing more and more with like-Recognized brands. It's definitely not just McDonald's. You can see many other great top companies on the platform. Internally, right now, we have an initiative to bring them more because it simply brings Groupon visibility, it brings huge amounts of customers exposed to Groupon brand going forward. My plan is to show more of these.

Speaker #2: And McDonald's is the type of partnership which we will be bringing more and more with recognized brands. And it's definitely not just McDonald's—you can see many other great, top companies on the platform.

Speaker #2: But internally, right now, we have an initiative to bring them more because it simply brings Groupon visibility. It brings huge amounts of customers exposed to the Groupon brand going forward.

Speaker #2: So my plan is to show more of these.

Speaker #3: Awesome to hear. I'll turn it back I'll jump back in the queue.

Bobby Brooks: Awesome to hear. I'll turn it back in the queue.

Speaker #1: Thank you, Bobby. Our next question comes from Eric Sheridan from Goldman Sachs. Eric, you can now unmute your line.

Operator: Thank you, Bobby. Our next question comes from Eric Sheridan from Goldman Sachs. Eric, you can now unmute your line.

Speaker #3: Thanks so much for taking the questions. I'll just give you two. First, can you go a little bit deeper into what you're seeing in June and July that increasingly gives you some confidence around the way you're framing the back part of the year versus the front part of the year?

Eric Sheridan: Thanks so much for taking the questions. I'll just give you two. First, can you go a little bit deeper in what you're seeing in June and July that increasingly gives you some confidence around the way you're framing the back part of the year versus the front part of the year? Is there a way to tease out sort of maybe macroeconomic relative to some of the things inside your control and structural on the product development side? Then the second question would just be, when you think about aligning your strategy over the medium term, how do you think about the strategy evolving towards more frequency of behavior among buyers? You're not only seeing the buyer growth, but you're also seeing some of the elements of frequency. Really appreciate it. Thanks so much.

Speaker #3: And is there a way to tease out, sort of, maybe macroeconomic factors relative to some of the things inside of your control and structural on the product development side?

Speaker #3: And then the second question would just be, when you think about aligning your strategy over the medium term, how do you think about the strategy evolving towards more frequency of behavior among buyers?

Speaker #3: So you're not only seeing the buyer growth, but you're also seeing some of the elements of frequency. Really appreciate it. Thanks so much.

Speaker #2: Great. Thank you, Eric, for your questions. On June and July, first of all, for the rest of the year, I expect that not expect, we know that the comparisons will ease from here.

Dušan Šenkypl: Thank you, Eric, for your questions. June and July, first of all, for the rest of the year, we know that the comparisons will ease from here. Really, July wasn't an easy month for us in terms of compare. We are happy with where we are standing right now. A few drivers, which are very important for the further acceleration in the rest of the year. We finished majority of the platform rollout, which was a huge drag and huge project for us last few years, really. The last outstanding pieces will be finished in Q3, but really, vast majority of Groupon customers is now using new platform, so it gives us the seed.

Speaker #2: Really, July wasn't an easy month for us in terms of comparison. So we are happy with where we are standing right now. And then, a few drivers, which are very important for further acceleration in the rest of the year.

Speaker #2: We finished majority of the platform rollout, which was a huge drag and huge project for us last few years really. The last outstanding PCs will be finished in Q3, but really vast majority of Groupon customers is now using new platform.

Speaker #2: So it gives us the speed. We progressed significantly also with organic revenue, which is especially in SEO growing double digits, and we are in much better position with managed channels which are responsible for sending push notification emails to our customers.

Dušan Šenkypl: We progress significantly also with organic revenue, which is especially in SEO, growing double digits, and we are in much better position with managed channels, which are responsible for sending push notification emails to our customers. We should be improving our customer life cycle. The personalization capabilities which we developed and which we are testing, and we have multiple of them in production, are giving us a tools which we will need to accelerate the growth. This piece is very important for purchase frequency, because by delivering what customers are expecting, not generic offer of the deals on the website, but based on the signals which we have about the customer previous behavior, what they are looking at, what they are clicking at, what device they are working with, we can improve purchase frequency.

Speaker #2: So we should be improving our customer lifecycle. The personalization capabilities which we developed and which we are testing and we have multiple of them in production are giving us a tools which we will need to accelerate the growth and also this piece is very important for purchase frequency because by delivering what customers are expecting, not generic offer of the deals on the website, but based on the signals which we have about the customer previous behavior, they are looking at what they are clicking at, what device they are working with, we can improve purchase frequency.

Speaker #2: And then we will also allocate more marketing to the second half, and we see improving returns on marketing. And, last but not least, we were going through, and are still going through, a quite complex transformation to Foundry, making the company AI native.

Dušan Šenkypl: We will also allocate more marketing to the second half, and we see improving returns of marketing. Last but not least, we were going through, and still going through quite complex transformation to Foundry, making the company AI native. While it's very painful for us and people on one side, on the other side, I can already see results and I see acceleration of delivery of bats where teams which are AI native, the pace, how they are able to develop and come with features is really uncomparable to anything that I saw in the past year. On the macro piece of this question, in general, demand for local experiences remains resilient.

Speaker #2: And while it's very painful for us and people on one side, on the other side, I can already see results. And I see acceleration of delivery of bads where teams which are AI native, the pace how they are able to develop and come with features is really uncomparable to anything what I saw in the past year.

Speaker #2: And on the macro piece of this question, in general, demand for local experiences remains resilient. Yes, I fully agree and see that very pressure on wallets and it's probably increasing.

Dušan Šenkypl: Yes, I fully agree and see that there is a pressure on wallets, and it's probably increasing, but at the same time, it also increases the appeal of value, which is our core consumer proposition. What we see, and when I'm talking to our sales team, it increases merchants need for demand, which is our supply proposition. We are not counting on macro in both direction. Let's say all our numbers, everything is execution driven. I don't see macro as a headwind to us. On the frequency part, it's mainly about that enablement which we got with new platform and with AI development in terms of features. We are releasing so many new features for customers where we measure how they appeal and how they change their behavior. I was talking here about the personalization.

Speaker #2: But at the same time, it also increases the appeal of value, which is our core consumer proposition. And what we see, when I'm talking to our sales team, is that it increases merchants' need for demand, which is our supply proposition.

Speaker #2: So we are not counting on macro in any direction. Let's say all our numbers, everything is execution-driven. But I don't see macro as a headwind to us.

Speaker #2: And then, on the frequency part, it's mainly about the enablement that we got with the new platform and with AI development in terms of features.

Speaker #2: We are releasing so many new features for customers, where we measure how they appeal and how they change their behavior. I was talking here about the personalization.

Speaker #2: I can give here another example of how we are doing personalization. We now have a much better understanding of what people are searching for and expecting on Groupon.

Dušan Šenkypl: I can give here another example how we are doing the personalization. We now have much better understanding what people are searching and expecting on Groupon every single day of the week. We see very different behavior, for example, during the weekdays and even within weekdays versus on the weekends. We are customizing the whole engine and whole platform so that it is simply serving the need of the customer at that moment by analyzing previous behavior, previous data, supply structure. All this will be helping us to improve the purchase frequency, which is one of our top priorities. Then I would mention once more the changes which we announced just recently on the supply side, which was a little bit dragging us last quarter with new leadership with Adi and Mark joining.

Speaker #2: Every single day of the week. And we see very different behavior. For example, during the weekdays and even within weekdays, versus on the weekends.

Speaker #2: And we are customizing the whole engine and the whole platform so that it simply serves the needs of the customer. At that moment, by analyzing previous behavior, previous data, supply structure—all of this will help us to improve the purchase frequency, which is one of our top priorities.

Speaker #2: And then I would mention once more the changes which we announced just recently on the supply side, which was a little bit dragging us last quarter, with new leadership from—with Adi and Mark joining.

Speaker #2: We have very high expectations and very high ambitions on improving significantly also the start of the marketplace.

Dušan Šenkypl: We have very high expectations and very high ambitions on improving significantly also this part of the marketplace.

Speaker #1: Thank you, Dushan. And thank you, Eric. We'll continue to take questions from the investors on the line, but the company would like to now take written questions that they've received via X and Reddit from their retail investor community.

Operator: Thank you, Dušan, and thank you, Eric. We will continue to take questions from the investors on the line, but the company would like to now take written questions that they have received via X and Reddit from their retail investor community. The first written question comes from LoneWolfV on Reddit. A reoccurring perception is that buying a Groupon can be a gamble because the quality of the merchant or redemption experience is inconsistent. What is management doing to raise merchant quality and rebuild trust in the marketplace? Which metrics would demonstrate the customer experience is actually improving? Also, to Dušan directly, you mentioned ElevenLabs on the last call. Is there any supply side agentic initiative?

Speaker #1: The first written question comes from LoanWolfV on Reddit. A reoccurring perception is that buying a Groupon can be a gamble because the quality of the merchant or redemption experience is inconsistent.

Speaker #1: What is management doing to raise merchant quality and rebuild trust in the marketplace? And which metrics would demonstrate the customer experience is actually improving?

Speaker #1: Also, to Dushan directly, you mentioned 11 Labs on the last call. Is there any supply side agentic initiative?

Speaker #2: So these are two questions I will take them one by one. On the first one, on the trust question, we were internally talking about customers and merchants and quality and trust a lot.

Dušan Šenkypl: These are two questions. I will take them one by one. On the first one, on the trust question, we were internally talking about customers and merchants and quality and trust a lot. However, we didn't have tools ready to make some impact. This has changed, and this is the reason why we launched this trust and quality bet inside the company. This is one of our top priority bets inside. We are building curated marketplace where every deal earns its place. We are raising the bar on what appears on Groupon, and we are removing deals that do not meet this criteria. With AI, we are building also capability to be pricing expert. We are analyzing the pricing of the merchant.

Speaker #2: However, we didn't have tools ready to make some impact. But this has changed. And this is the reason why we launched this trust and quality bet inside the company.

Speaker #2: This is one of our top priority bets inside. We are building curated marketplace where every deal earns its place. We are raising the bar on what appears on Groupon.

Speaker #2: And we are removing deals that do not meet this criteria. With AI, we are also building the capability to be pricing experts. We are analyzing the pricing of the merchant.

Speaker #2: We are analyzing what are the prices in the neighborhood of that merchant. So that we can become really a place where customers can come and rely that they will get great quality deals at an amazing value.

Dušan Šenkypl: We are analyzing what are the prices in the neighborhood of that merchant, so that we can become really a place where customers can come and rely that they will get great quality deals at an amazing value. Our AI is daily going through all the feedbacks and customer conversations. We can immediately, on the fly, improving the deals on the platform. It may happen that merchants may do some edit or change the content of the deal, which makes it not so easy to understand for customers what they get. When we get first one or two complaints from customers, our AI is able to detect it and just resolve it or escalate it so that our sales team can go and discuss with merchant how to make it better for the customers. We are changing the user experience.

Speaker #2: Our AI is continuously going through all the feedback and customer conversations, so we can immediately, on the fly, improve the deals on the platform.

Speaker #2: And it may happen that merchants may edit or change the content of the deal, which makes it not so easy for customers to understand what they get.

Speaker #2: When we get first one or two complaints from customers, our AI is able to detect it and just resolve it or escalate it so that our sales team can go and discuss with merchant how to make it better for the customers.

Speaker #2: We are changing the user experience when you go to the website. On most of the deals, you will see for each option what is included and what is not included.

Dušan Šenkypl: When you go to the website and on most of the deals, you will see for each option what is included, what is not included. In the past, it was not very clear. We had fine print, which was not easy to read. Now on plenty of deals already, and it will be on 100% of deals in near future. Most important elements which are impacting customers are visible and presented, which will increase the customer satisfaction. Obviously, it's a trade-off with slightly lower, but typically statistically not significant lower conversion. Much better customer experience with much lower refunds versus previous status, with increased purchase frequency. We are bringing also visibility of merchants' availability. We are looking into their booking systems, even if they are not integrated on Groupon.

Speaker #2: In the past, this is not—we were not very clear. We had fine print, which was not easy to read. Now, on plenty of deals already—and it will be on 100% of deals in the near future—the most important elements which are impacting customers are visible and presented, which will increase customer satisfaction.

Speaker #2: Obviously, it's a trade-off with slightly lower but typically statistically not significant lower conversion, but then much better customer experience. With much lower refunds versus previous status and then with increased purchase frequency.

Speaker #2: We are also bringing visibility to merchants' availability. We are looking into where booking systems, even if they are not integrated on Groupon, but we already have quite a lot of deals where we are showing the visibility—which otherwise customers had to go to the merchant website, click on their booking system, and find it.

Dušan Šenkypl: We already have quite a lot of deals where we are showing the visibility, which otherwise customers have to go to merchant website, click on their booking system and find it. It's all increasing the trust, and it's all increasing customer experience. The main metric, and we have 10 metrics behind this internal, the main metric is repeat purchase, because this is the most important metric for all of us and for our shareholders and one of our biggest focuses right now. The second part of the question about the supply piece. The AI voice agent program for merchant outreach continues, and our objective stands. The majority of new merchant meetings set by AI agents by the end of this year, with our sales team really focused on qualified conversations.

Speaker #2: So it's all increasing the trust and it's all increasing customer experience. And the main metric, and we have like 10 metrics behind this internal, the main metric is repeat purchase because this is the most important metric for all of us and for our shareholders and one of our biggest focuses right now.

Speaker #2: The second part of the question about the supply piece—the AI voice agent program for merchant outreach—continues. And our objective stands: the majority of new merchant meetings set by AI agents by the end of this year with our sales team really focus on qualified conversations.

Speaker #2: And we are expanding, actually, this voice pilot, which was originally just an AI SDR calling merchants to try to book a meeting, to a very broad, integrated, AI-driven acquisition engine, which starts with better understanding of the opportunity for each category and neighborhood—meaning, like, in this neighborhood, we need a deal like this.

Dušan Šenkypl: We are expanding actually this voice pilot, which was originally just AI SDR, calling to merchants, try to book a meeting, to very broad integrated AI-driven acquisition engine, which starts with better understanding of the opportunity for each category and neighborhood. Meaning like in this neighborhood, we need deal like this, and the AI orchestrating all the channels advance. Meaning, yes, we will send email, we will launch a paid campaign in that area to acquire merchant. We will launch also AI call. Based on the results, we will define what's the next best approach. I really believe that supply will benefit from this fact, because with AI and with access to all information which we are collecting about merchant communication, it can make whole go-to-market and sales process much more efficient, but also much better experience for merchants.

Speaker #2: And the AI orchestrating all the channels advance, meaning yes, we will send email, we will launch paid campaign in that area to acquire merchants.

Speaker #2: We will also launch AI calls. Based on the results, we will define what's the next best approach. I really believe that supply will benefit from this, because with AI and with access to all the information we are collecting about merchant communication, we can make the whole go-to-market and sales process much more efficient, but also provide a much better experience for merchants.

Speaker #2: And last but not least, you can see that we are doubling down with announcing Adi and Mark joining Groupon.

Dušan Šenkypl: Last but not least, you can see that we are doubling down with announcing Adi and Mark joining Groupon.

Speaker #1: Thank you, Dushan. We'll move back to investors on the line. Our next question comes from Sean McGowan from Roth Capital Partners. Sean, please unmute your line.

Operator: Thank you, Dušan. We'll move back to investors on the line. Our next question comes from Sean McGowan from ROTH Capital Partners. Sean, please unmute your line.

Speaker #3: Yeah, thank you very much. Hi, guys. A couple of questions. On that trust and quality issue, how are you communicating that shift and that goal to the consumer?

Sean McGowan: Yeah, thank you very much. Hi, guys. Couple of questions. On that trust and quality issue, how are you communicating that shift and that goal to the consumer? You've talked in the past about We're doing brand marketing for Groupon, but other than the consumer having a good experience and being maybe positively surprised or whatever, or pleased, how are you communicating that this is an important strategy or goal for the company?

Speaker #3: You've talked in the past about doing brand marketing for Groupon, but other than the consumer having a good experience and being maybe positively surprised or whatever, or pleased, how are you communicating that this is an important strategy or goal for the company?

Speaker #2: So Sean, thanks for the question. Similar to many other areas, we are trying to do the work first, and then we want to let the results speak for themselves.

Dušan Šenkypl: Sean, thanks for the question. Similar to many other areas, we are trying to do the work first, and then we want to let the results speak for ourselves. I don't think that if we would start communicating this, as long as we can't stand for 100% of deals on Groupon and 100% of experience, that it would do us good in the long run. This is internal focus right now, which is running already for several months. You can see the change in the user interface on the website. When we will ramp this up to 100% of deals and we will be internally happy, then we should be expanding this into more marketing and more promotional communication, which we can do through some types of guarantees which Groupon can be providing to customers.

Speaker #2: I don't think that if we would start communicating this, as long as we can't stand for 100% of deals on Groupon and 100% of experience, that it would do us good in the long run.

Speaker #2: So this is internal focus right now, which is running already for several months. You can see the change in the user interface on the website.

Speaker #2: And when we will ramp this up to 100% of deals and we will be internally happy, then we should be expanding this into like more marketing and more promotional communication, which we can do through some types of guarantees which Groupon can be providing to customers.

Sean McGowan: Okay, that's helpful. Shifting gears, you talked about July seeing, I think, a return to mid-single digit. I assume that's across the whole company. Can you parse that out a bit more? What are the implications for North America Local, international local? What are you seeing on a more detailed level?

Speaker #3: Yeah, that's helpful. Shifting gears, you talked about July seeing, I think, a return to mid-single digits. I assume that's across the whole company.

Speaker #3: So can you parse that out a bit more? Like what are the implications for North American local and international local? What are you seeing in more detailed level?

Speaker #2: We're unable to take this question?

Dušan Šenkypl: Rana, do you want to take this question?

Speaker #1: Sure. Sean, great to hear from you. Thanks so much for the question. We are seeing, I would say, broad-based strength across the platform. So if you look at it, North America, and international, we saw strength in July.

Rana Kashyap: Sure. Sean, great to hear from you. Thanks so much for the question. We are seeing, I would say, broad-based strength across the platform. If you look at it, North America and international, we saw strength in July. We are also seeing a strong presence in our Things to Do business and our beauty and wellness business. It is the season for Things to Do right now, and our Things to Do portfolio is really doing very strongly, and we're quite pleased, specifically in the tours and attractions space, but also in the local activity space. We've got great assortment. We're executing well in the season, and our customers are really responding. We are seeing strength. North America has picked up. Really, the comment we made was for the whole company. Thank you, Sean.

Speaker #1: We are also seeing a strong presence in our things to do business and our beauty and wellness business. It is the season for things to do right now.

Speaker #1: And our Things To Do portfolio is really doing very strongly, and we're quite pleased—specifically in the tours and attraction space, but also in the local activity space.

Speaker #1: We've got a great assortment. We're executing well in the season, and our customers are really responding. So we are seeing strength—North America has picked up—but really, the comment we made was for the whole company.

Speaker #1: Thank you, Sean.

Sean McGowan: Okay, thanks. My last question is, you've got so many initiatives that you've talked about over the last, I don't know, couple of years, and Foundry being very important, but a very recent one. Are you able to identify any of the improvement that you've seen so far? I know it's early days, but is there anything you could point to in this uptick that you're seeing recently that you would say is directly attributable to Foundry, or is it still too early to start to see any benefit from that in those numbers?

Speaker #3: Okay, thanks. And then my last question is, you've got so many initiatives that you've talked about over the last, I don't know, a couple of years, and foundry being very important, but very recent one.

Speaker #3: So are you able to identify any of the improvement that you've seen so far? And I know it's early days, but is there anything you could point to in this uptake that you're seeing recently that you would say is directly attributable to foundry?

Speaker #3: Or is it still too early to start to see any benefit from that in those numbers?

Speaker #2: So the way we were talking externally about Foundry—and this is also how we do it internally—is that the sequencing, that the operating engine needs to be changed first.

Dušan Šenkypl: The way how we were talking externally about Foundry, but this is also how we do it internally, is the sequencing that the operating engine needs to be changed first. We are really not trying to build some shiny stuff visible from outside. I just want to make sure that we operate internally with AI pace, that we have all the data, all the harnesses. When a new person comes, the AI support which they will immediately get will help them understand all pieces of Groupon, and I see significant results here internally. Even when Mark was joining and providing me feedback on what he got, it was super positive feedback.

Speaker #2: I'm like we are really not trying to build some shiny stuff visible from outside. I just want to make sure that we operate internally with AI pace, that we have all the data, all the harnesses.

Speaker #2: When a new person comes, the AI support, which will which they will immediately get, will help them understand all pieces of Groupon. And I see significant results here internally.

Speaker #2: Even when I when Mark was joining and providing me feedback on what he got, it was super positive feedback. And the way how the data are available for all teams, how we share scales, how we have the data packages for everyone who wants to understand some segment, how it's pre-configured, so that they can talk to AI about all the data.

Dušan Šenkypl: The way how the data are available for all teams, how we share scales, how we have the data packages for everyone who wants to understand some segment, how it's pre-configured so that they can talk to AI about all the data. We can already see it, and this is behind the internal acceleration of the bets and seeing how teams are speeding up. Also, the Foundry and the way how we are really based on first principles, rebuilding the company, it goes towards the way that teams are smaller. We call them speedboats. Much less people, two, three people working on fairly big initiatives means much less meetings. Internally, we already see that pace. We would not be able to have all the personalization features implemented if we would not do it in AI.

Speaker #2: We can already see it and this is behind the internal acceleration of the bets and seeing how teams are speeding up. Also, the foundry and the way how we are really based on first principles rebuilding the company.

Speaker #2: It goes towards the way that teams are smaller. We call them speed boats—much fewer people, two or three people working on fairly big initiatives—which means much fewer meetings.

Speaker #2: So internally, we already see that pace. We would not be able to have all the personalization features implemented if we did not do it in AI.

Dušan Šenkypl: The financial impact, it's coming after that, we believe that it will be coming through better features, reaching customers faster, seeing better results from marketing, building, identifying needs of customers, and same-day week delivering and solving them. I'm not able right now to share the expected numbers. Internally, I am really pleased because this initiative started at the end of March, and this is by far the biggest impact of what I saw in the last three years on Groupon, how we operate, and most importantly, how we are able to deliver results.

Speaker #2: The financial impact it's coming after that and we believe that it will be coming through better features, reaching customers faster, seeing better results from marketing.

Speaker #2: Building identifying needs of customers and same day, week delivering and solving them. But I will I'm not able right now to share the expected numbers.

Speaker #2: Internally, I'm really pleased because this initiative started at the end of March. This is by far the biggest impact I have seen in the last three years at Groupon—how we operate and, most importantly, how we are able to deliver results.

Sean McGowan: Great. Thank you.

Speaker #3: Okay, thank you.

Speaker #1: Thank you, Sean. We'll take one more written question from X from Evan Louiselle. What is the plan to get a generation that has never really used Groupon to try it for the first time?

Operator: Thank you, Sean. We'll take one more written question from X. From Evan Luizel. What is the plan to get a generation that has never really used Groupon to try it for the first time, and what early evidence would you point to that it's working? Specifically, are you seeing changes in first-time purchases, customer age mix, acquisition costs, or repeat purchase rates among newer cohorts?

Speaker #1: And what early evidence would you point to that it's working? Specifically, are you seeing changes in first-time purchases, customer age mix, acquisition costs, or repeat purchase rates among newer cohorts?

Speaker #2: So I would cover this from a free different perspectives. First is the reach. We are rebuilding the organic part of our traffic acquisition. And at the same time, paid marketing engine, we will be doubling down also on influencer marketing.

Dušan Šenkypl: I would cover this from three different perspectives. First is the reach. We are rebuilding the organic parts of our traffic acquisition and at the same time paid marketing engine. We will be doubling down also on influencer marketing. We see improving returns, we see more traffic actually on the website because we have unique content which is and will be valuable in the future. We have much better granularity in understanding what is the traffic and what are the customers coming. Within these groups, with the personalization project I was talking about here multiple times, we will be able to provide a different Groupon experience for younger generation, show the product which are more appealing to them. That product piece is very important. It's new app experience, different onboarding, and this is built for people who never used Groupon.

Speaker #2: We see improving returns. We see more traffic actually on the website because we have unique content, which is and will be valuable in the future.

Speaker #2: We have much better granularity in understanding what is the traffic and what are the customers coming. So within these groups, with the personalization project, I was talking about here multiple times, we will be able to provide different Groupon experience for younger generation, show the product which are more appealing to them.

Speaker #2: That product piece is very important. It's new up experience. Different onboarding and this is built for people who never used Groupon. And I expect that we will see very, very different onboarding experience rolled out completely in Q3.

Dušan Šenkypl: I expect that we will see very different onboarding experience rolled out completely in Q3. It will make easier for new joiners to understand what Groupon can bring, what is the product proposition. On inventory side, we have new formats. We are really thinking like what can be appealing to younger generation, for example. I can mention our tour packages that found viral organic traction, who reach customers who never responded to the classic deal format. You can see that active customers grew again this quarter and our conversion on new surfaces, which we released recently, is improving.

Speaker #2: So it will make easier for new joiners to understand what Groupon can bring, what is the product proposition. And then on inventory side, we have new formats.

Speaker #2: We are really thinking like what can be appealing to younger generation, for example. I can mention our tours packages that found viral organic traction, who reach customers who never responded to the classic deal format.

Speaker #2: And you can see that active customers grew again this quarter and our conversion on new surfaces, which we released recently is improving.

Speaker #1: Thank you, Dusan. We have a follow-up from Bobby Brooks on the line. Bobby, you can unmute your line.

Operator: Thank you, Dušan. We have a follow-up from Bobby Brooks on the line. Bobby, you can unmute your line.

Speaker #4: Hey, thanks, guys, for taking the follow-up. On the onboarding of high-quality merchants, obviously that's been a key goal during this whole transformation in the marketplace, and I just wanted to ask about your approach.

Bobby Brooks: Hey, thanks guys for taking the follow-up. On the onboarding high quality merchants, obviously that's been a key goal during this whole transformation in the marketplace, and I just wanted to ask on your approach to win these new merchants. It's kind of shifted the last couple quarters and last quarter, I think you specifically called out using some AI voice agents to make those broader base calls and with the goal of just setting up that first follow-up with one of your actual sales agents. Just wanted to hear how that has progressed and what you've seen there.

Speaker #4: Ask your on your approach to win these new merchants. It's kind of shifted the last couple of quarters and last quarter, I think you specifically called out using some AI voice agents to make those broader-based calls and just with the goal of just setting up that first follow-up with one of your actual sales agents.

Speaker #4: So, I just wanted to hear how that has progressed and what you've seen there.

Dušan Šenkypl: Okay. Thank you for the question. There is an overlap of what I was talking about with that question coming from X. We have internal pilots on AI voice engine who is able to call to merchants and discuss with them the Groupon value proposition and set up a meeting with our agents. Right now we see the future of this segment really to be like multi-touch AI engine, which will be customized to understand what we need where, and then run the complete communication and marketing channels to approach right merchants in the right location and AI piece is part of it. I still believe that by the end of this year, a majority of these cold calls to small merchants and the marketing approaches, emails, SMS messages, paid campaigns will be done by AI.

Speaker #2: Okay, thank you. Thank you for the question. That is an overlap of what I was talking about with that question coming from X. We have internal pilots on AI voice engine who is able to call to merchant and discuss with them the value Groupon value proposition and set up a meeting with our agents.

Speaker #2: Right now, we see the future of this segment really to be a multi-touch AI engine, which will be customized to understand what we need, where, and then run the complete communication and marketing channels to approach the right merchants in the right locations. And the AI piece is part of it.

Speaker #2: I still believe that by the end of this year, majority of these cold calls to small merchants and the marketing approaches emails SMS messages paid campaigns will be done by AI with AI really understanding what's happening on each channel and deciding what's the next best action to bring that merchant on board.

Dušan Šenkypl: This AI really understanding what's happening on each channel and deciding what's the next best action to bring that merchant on board. This is like go to market from technical point of view, how to get merchants. Second, in how we are running sales and what I see as new initiatives. We are already running the internal sales brain, which is digesting all information which we have about merchants, about our communications with them, about performance of deals, about performance of other deals in that neighborhood. That AI-driven engine is building recommendation what are the next actions which we should take on our product portfolio.

Speaker #2: So, this is like go-to-market from a technical point of view—how to get merchants. Then, second, in how we are running sales and what I see as new initiatives, we are already running an internal sales brain, which is digesting all the information we have about merchants, about our communication with them, about the performance of deals, and about the performance of other deals in that neighborhood.

Speaker #2: And that AI-driven engine is building recommendation what are the next actions which we should take on our product portfolio. And the impact is that if you are a salesperson, you get amazing support by this engine because like every day it tells you like your next action which you should do is to call to this merchant because if that merchant adds a gifting option to the deal, they can expect that we will do 50% more, for example.

Dušan Šenkypl: The impact is that if you are a salesperson, you get amazing support by this engine because every day it tells you your next action which you should do is to call to this merchant, because if that merchant adds a gifting option to the deal, they can expect that we will do 50% more, for example. Based on this quality that I was talking about, the same engine can come and say, Please call to this merchant, and if you fix this on the deal, we can expect that the refund rate would go from whatever, from 10% to 2%, for example. Really it will be understanding, and it already understands the value delivered by each action, which will make whole supply engine more efficient.

Speaker #2: Or they based on this quality that I was talking about, the same engine can come and say, please call to this merchant and if you fix this, this, this on the deal, we can expect that the refund rate would go from whatever from 10% to 2%, for example.

Speaker #2: So really it will be understanding and it already understands the value delivered by each action, which will make whole supply engine more efficient.

Speaker #4: That's super helpful color. And then just maybe another follow-up for Ron is just it seems like so the rebound in July it would seem like North American local is at least high single digits.

Bobby Brooks: That's super helpful color. Maybe another follow-up for Rana is, it seems like the rebound in July, it would seem like North America Local is at least high single digits. Is that accurate? Is that a fair logic? Could you maybe quantify it? I was under the impression that it was still a pretty tough comp for you guys in July.

Speaker #4: Is that accurate? Is that fair logic? And could you maybe quantify it—with, it's definitely... I was under the impression that it was still kind of, it was still a pretty tough comp for you guys in July.

Speaker #4: Just any color there.

Speaker #2: Yeah. Yeah. So we're

Rana Kashyap: We're not going to start getting into the exact numbers for more of our business beyond what we've said. I will give more color, though. North America Local did improve versus Q2. We did also see strength in North America travel. Dušan mentioned it's also in the script. We've had some really interesting progress with a new format that we've been developing on tour packages. Obviously, this is very small. From a year-over-year basis point standpoint, it also does help a little bit because we're seeing some strong strength there. In terms of international, if you look at it, let's say it maintained the level that we were saying. Yes, the strength is coming from a pickup in North America Local, North America travel. I don't think we will go into more specifics than that.

Speaker #3: not going to start getting into like the exact numbers for more of our business. Beyond what we've said, I will give more color though.

Speaker #3: North America local did improve versus Q2. We did also see a strength in North America travel. We Dishan mentioned it. It's also in the script.

Speaker #3: We've had some really interesting progress with a new format that we've been developing on tour packages. Obviously, this is very small. But just from a your basis point standpoint, it also does help a little bit because that we're seeing some strong strength there.

Speaker #3: And then in terms of international, international, if you look at it, let's say it maintained the level that we were saying. So yes, the strength is coming from a pickup in North America local North America travel.

Speaker #3: But I don't think we will go into more specifics than that.

Bobby Brooks: Fair. Appreciate the color, thank you guys for the time.

Speaker #4: Fair. Appreciate the color and thank you guys for the time.

Speaker #1: Thank you, Bobby. We have another question from the company's retail investor community from outlier capital on X. Management has highlighted the importance of increasing customer lifetime value, session frequency, and platform stickiness as a part of the shift to an AI native operating model.

Operator: Thank you, Bobby. We have another question from the company's retail investor community. From Outlier Capital on X: Management has highlighted the importance of increasing customer lifetime value, session frequency, and platform stickiness as a part of the shift to an AI-native operating model. Have you evaluated or considered launching a subscription product that could deliver exclusive deals, enhanced personalization, priority access, or other benefits in exchange for a recurring fee?

Speaker #1: Have you evaluated or considered launching a subscription product? That could deliver exclusive deals, enhance personalization, priority access, or other benefits in exchange for a reoccurring fee.

Speaker #2: Yes, we did and we are. And my answer here will be very similar to the question I got regarding the quality and how we communicate it to our customers.

Dušan Šenkypl: Yes, we did, and we are. My answer here will be very similar to the question I got regarding the quality and how we communicate it to our customers. We obviously evaluate models that deepen the customer relationship, and membership economics are very well understood in our space, and I fully agree that there is huge potential there. At the same time, the sequencing, how I see it, first, we have to make the marketplace model relevant, build this quality and trust piece that people who are using Groupon will trust Groupon and will be coming back more often. At that moment, we should be introducing more stuff, the stuff I was talking about, maybe some guarantees. At the same time, it will be a right moment also to introduce, again, membership, because that membership would be worth paying for.

Speaker #2: We obviously evaluate models that deepen the customer relationship, and membership economies are very well understood in our space, and I fully agree that there is huge potential there.

Speaker #2: At the same time, the sequencing, how I see it, first, we have to make the marketplace model relevant, build this quality and trust piece that people who are using Groupon will trust Groupon and will be coming back more often.

Speaker #2: At that moment, we should be introducing more stuff—the stuff I was talking about—maybe some guarantees. But at the same time, it will be the right moment also to introduce again membership, because that membership would be worth paying for.

Speaker #2: The capabilities which we are building, personalization, the platform which we have for managed channels, the trust and quality bet are all the pieces and assets which would unlock us the future membership product in the future.

Dušan Šenkypl: The capabilities which we are building, personalization, the platform which we have for managed channels, the trust and quality bet, are all the pieces and assets which would unlock us the future membership product in the future. At this moment, we have really nothing to announce.

Speaker #2: But at this moment, we have really nothing to announce.

Speaker #1: Thank you, Dishan. One more question from Compute Alpha on X. I would love to have management address if they are working to implement the UGC marketing that you have mentioned you should start doing.

Operator: Thank you, Dušan. One more question from Alpha Compute on X. I would love to have management address if they are working to implement the UGC marketing that you have mentioned you should start doing. I think it's an amazing idea. So many influencers who document local activities should be making more Groupon UGC. Seems like a no-brainer and would love to hear management's thoughts on this.

Speaker #1: I think it's an amazing idea. So many influencers who document local activities should be making more on UGC. Seems like a no-brainer, and would love to hear management's thoughts on this.

Speaker #2: So I fully agree. I was mentioning earlier on the call that we started rebuilding the really the bottom of the funnel marketing initially and now we are really moving up in the food chain here, let's say.

Dušan Šenkypl: I fully agree. I was mentioning earlier on the call that we started rebuilding the bottom of the funnel marketing initially, and now we are really moving up in the food chain here, I would say, towards the upper funnel marketing. UGC is an area where, yes, we are already running some experiments. We have some influencers who are generating really tens of millions of impressions for us. I think that the opportunity is much bigger versus what we do right now. We are still in the phase that we are building internal toolings for this. With all the AI development and unlock through Foundry, this is now possible, and we want to be ready to really be a place where influencers can come, they can select their deals.

Speaker #2: Towards the upper funnel marketing and UGC is an area where yes, we are already running some experiments. We have some influencers who are generating really like tens of millions of impressions for us.

Speaker #2: But I think that the opportunity is much, much, much bigger compared to what we are doing right now. We are still in the phase where we are building internal toolings for this.

Speaker #2: With all the AI development and unlock through Foundry, this is now possible and we want to be ready to really be like a place where influencers can come, they can select their deals.

Speaker #2: We would even provide an interface where they can ask AI to build them their own like influencer mini website with their selection. We will even build a functionality which would allow anyone who is, for example, running some local community to have their set of deals there run just for their community, even under their own name and promote it.

Dušan Šenkypl: We would even provide an interface where they can ask AI to build them their own influencer mini website with their selection. We will even build a functionality which would allow anyone who is, for example, running some local community to have their set of deals there around just for their community, even under their own name and promote it. With this functionality, we will be approaching mainly the micro and smaller influencers, local influencers. I would like to expand this also to local communities, because we can share the portion of the revenue and make it as a part of even like self-funding of smaller local communities.

Speaker #2: With this functionality, we will be approaching mainly the micro and smaller influencers, local influencers, but I would like to expand this also to local communities because we can share the portion of the revenue and make it as a part of even like self-funding of small local communities.

Speaker #1: Thank you, Dishan. There are no other questions, so this will conclude our call for today. Thank you everyone for joining us. For additional information, please go to investor.groupon.com.

Operator: Thank you, Dušan. There are no other questions, this will conclude our call for today. Thank you everyone for joining us. For additional information, please go to investor.groupon.com.

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