Groupon Inc.

03/10/2026 | Press release | Distributed by Public on 03/10/2026 14:15

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read together with our Consolidated Financial Statements and related notes included under Item 8 of this Annual Report on Form 10-K. This discussion contains forward-looking statements about our business and operations. Our actual results may differ materially from those we currently anticipate as a result of many factors, including those we describe under Item 1A. Risk Factors,and elsewhere in this Annual Report. See Part I, Forward-Looking Statements, for additional information. For further discussion regarding operating and financial data for the year ended December 31, 2024 as compared to the year ended December 31, 2023, refer to Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operationsin our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Overview
Groupon is a global scaled two-sided marketplace that connects consumers to merchants. Consumers access our marketplace through our mobile applications and our websites. We operate in two segments, North America and International, and in three categories, Local, Goods and Travel. See Item 8, Note 19, Segment and Geographical Information,for additional information.
We generate service revenue from Local, Goods and Travel categories. Revenue primarily represents the net commissions earned from selling goods or services on behalf of third-party merchants. Revenue is reported on a net basis as the purchase price collected from the customer less the portion of the purchase price that is payable to the third-party merchant. We also earn commissions when customers make purchases with retailers using digital coupons accessed through our websites and mobile applications.
How We Measure Our Business
We use several operating and financial metrics to assess the progress of our business and make strategic decisions. Certain of the financial metrics are reported in accordance with GAAP and certain of those metrics are considered non-GAAP financial measures. As our business evolves, we may make changes to the key financial and operating metrics that we use to measure our business. For further information and reconciliations to the most applicable financial measures under GAAP, refer to our discussion under Non-GAAP Financial Measures in the Results of Operationssection.
Operating Metrics
•Gross billingsis the total dollar value of customer purchases of goods and services. Gross billings is presented net of customer refunds, order discounts and sales and related taxes. The substantial majority of our revenue transactions are comprised of sales of vouchers and similar transactions in which we collect the transaction price from the customer and remit a portion of the transaction price to the third-party merchant who will provide the related goods or services. For these transactions, gross billings differs from Revenue reported in our Consolidated Statements of Operations, which is presented net of the merchant's share of the transaction price. Gross billings is an indicator of our growth and business performance as it measures the dollar volume of transactions generated through our marketplaces. Tracking gross billings also allows us to monitor the percentage of gross billings that we are able to retain after payments to merchants.
•Unitsare the number of purchases during the reporting period, before refunds and cancellations, made either through one of our online marketplaces, a third-party marketplace, or directly with a merchant for which we earn a commission. We do not include purchases with retailers using digital coupons accessed through our websites or mobile applications in our units metric. We consider units to be an important indicator of the total volume of business conducted through our marketplaces.
•Active customersare unique user accounts, identified by a distinct email address, that have made a purchase during the TTM either through one of our online marketplaces or directly with a merchant for which we earned a commission. We consider this metric to be an important indicator of our business performance as it helps us to understand how the number of customers actively purchasing our offerings is trending. Some customers could establish and make purchases from more than one account, so it is possible that our active customer metric may count certain customers more than once in a given period. We
do not include consumers who solely make purchases with retailers using digital coupons accessed through our websites or mobile applications in our active customer metric, nor do we include consumers who solely make purchases of our inventory through third-party marketplaces with which we partner.
Our gross billings, units and TTM active customers for the years ended December 31, 2025 and 2024 were as follows (in thousands):
Year Ended December 31,
2025 2024
Gross billings $ 1,665,755 $ 1,558,203
Units 36,826 36,640
TTM Active customers 16,229 15,432
Financial Metrics
•Revenue is earned through transactions for which we generate commissions by selling goods or services on behalf of third-party merchants. Revenue from those transactions is reported on a net basis as the purchase price collected from the customer for the offering less an agreed upon portion of the purchase price paid to the third-party merchant. Revenue also includes commissions we earn when customers make purchases with retailers using digital coupons accessed through our digital properties.
•Cost of revenue consists of direct and certain indirect costs incurred to generate revenue. Costs incurred to generate revenue, which include credit card processing fees, editorial costs, compensation expense for technology support personnel who are responsible for maintaining the infrastructure of our websites, amortization of internal-use software relating to customer-facing applications, web hosting and other processing fees are attributed to the cost of service.
•Gross profitreflects the net margin we earn after deducting our Cost of revenue from our Revenue.
•Contribution Profitmeasures the amount of marketing investment needed to generate revenue and is defined as net revenues less cost of sales and marketing expense. See Item 8, Note 19, Segment and Geographical Information, for additional information.
•Adjusted EBITDAis a non-GAAP financial measure that we define as Net income (loss) from continuing operations excluding income taxes, interest and other non-operating items, depreciation and amortization, stock-based compensation, and other special charges and credits, including items that are unusual in nature or infrequently occurring. For further information and a reconciliation to Net income (loss) from continuing operations, refer to our discussion under Non-GAAP Financial Measures in the Results of Operationssection.
•Free cash flowis a non-GAAP liquidity measure that comprises net cash provided by (used in) operating activities from continuing operations less purchases of property and equipment and capitalized software. For further information and a reconciliation to Net cash provided by (used in) operating activities from continuing operations, refer to our discussion in the Liquidity and Capital Resourcessection.
The following table presents the above financial metrics for the years ended December 31, 2025 and 2024 (in thousands):
Year Ended December 31,
2025 2024
Revenue $ 498,422 $ 492,557
Gross profit 452,539 444,306
Contribution profit
286,684 300,099
Adjusted EBITDA 69,332 69,308
Free cash flow 49,874 40,561
Operating Expenses
•Marketingexpense consists primarily of online marketing costs, such as search engine marketing, advertising on social networking sites and affiliate programs, and offline marketing costs, such as television.
Additionally, compensation expense for marketing employees is classified within Marketing expense. We record these costs within Marketing on the Consolidated Statements of Operations when incurred. From time to time, we have offerings from well-known national merchants for customer acquisition and activation purposes, for which the amount we owe the merchant for each voucher sold exceeds the transaction price paid by the customer. Our gross billings from those transactions generate no revenue and our net cost (i.e., the excess of the amount owed to the merchant over the amount paid by the customer) is classified as marketing expense. We evaluate marketing expense as a percentage of gross profit because it gives us an indication of how well our marketing spend is driving gross profit performance.
•SG&Aexpenses include selling expenses such as sales commissions and other compensation expenses for sales representatives, as well as costs associated with supporting the sales function such as technology, telecommunications and travel. General and administrative expenses include compensation expense for employees involved in customer service, operations, technology and product development, as well as general corporate functions, such as finance, legal and human resources. Additional costs in general and administrative include depreciation and amortization, rent, professional fees, litigation costs, travel and entertainment, recruiting, maintenance, certain technology costs and other general corporate costs. We evaluate SG&A expense as a percentage of gross profit because it gives us an indication of our operating efficiency.
•Restructuring and related chargesrepresent severance and benefit costs for workforce reductions, impairments and other facilities-related costs and professional advisory fees. See Item 8, Note 14, Restructuring and Related Charges, for additional information about our restructuring plans.
Factors Affecting Our Performance
Attracting and retaining local merchants.As we focus on our local experiences marketplace, we depend on our ability to attract and retain merchants who are willing to offer their experiences on our platform. Merchants can withdraw their offerings from our marketplace at any time, and their willingness to continue offering services through our marketplace depends on the effectiveness of our marketplace offering. We continue to focus on improving our marketplace offering and merchant value proposition by exploring opportunities to better balance the needs of merchant partners, customers and Groupon.
Acquiring and retaining customers. To acquire and retain customers to drive higher volumes on our platform from new and existing customers, we continue to focus on strengthening our product offerings, improving the attractiveness of our offerings, and enhancing the performance of our marketing campaigns.
Impact of macroeconomic conditions. We have been, and may continue to be, impacted by adverse consequences of the macroeconomic environment, including but not limited to, inflationary pressures, higher labor costs, tariff and other trade policy, labor shortages, supply chain challenges and changes in consumer and merchant behavior. Judicial and executive developments relating to U.S. trade and tariff policies in February 2026 may further increase uncertainty regarding the scope, implementation and potential future direction of such measures, and further changes could occur. In addition, recent and potential future changes to trade and tariff policies may introduce increased pricing volatility and overall uncertainty into our operations. To minimize the impact of macroeconomic conditions on our business, and to create value for our merchants and customers, we are focusing on building long-term relationships with local merchants to enhance our inventory selection, improving the customer experience through inventory curation and expanding convenience in order to drive customer demand and purchase frequency.
Results of Operations
North America
Operating Metrics
North America segment gross billings, units and TTM active customers for the years ended December 31, 2025 and 2024 were as follows (in thousands, except percentages):
Year Ended December 31, % Change
2025 2024 2025 vs 2024
Gross billings
Local $ 1,142,285 $ 999,836 14.2 %
Goods 34,077 53,589 (36.4)
Travel 77,817 79,347 (1.9)
Total gross billings $ 1,254,179 $ 1,132,772 10.7
Units
Local 23,516 21,805 7.8 %
Goods 943 1,882 (49.9)
Travel 302 321 (5.9)
Total units 24,761 24,008 3.1
TTM Active customers 11,051 10,289 7.4 %
Comparison of the Years Ended December 31, 2025 and 2024:
North America gross billings, units and TTM active customers increased by $121.4 million, 0.8 million and 0.8 million, respectively, for the year ended December 31, 2025 compared with the prior year period. Our Local category experienced growth in gross billings and units driven by our continued execution of our hyperlocal marketplace strategy and increased marketing spend, with strength in our core local business supported by improved supply quality and effective category management. The Local category growth is partially offset by a de-emphasis on our Goods category evidenced by a decrease of our Goods active customers that resulted in fewer unit sales and lower gross billings year over year in the Goods category.
Financial Metrics
North America segment revenue, cost of revenue and gross profit for the years ended December 31, 2025 and 2024 were as follows (in thousands, except percentages):
Year Ended December 31, % Change
2025 2024 2025 vs 2024
Revenue
Local $ 366,787 $ 350,876 4.5 %
Goods 5,484 10,990 (50.1)
Travel 13,560 14,206 (4.5)
Total revenue $ 385,831 $ 376,072 2.6
Cost of revenue
Local $ 31,695 $ 34,070 (7.0) %
Goods 705 1,405 (49.8)
Travel 1,712 2,433 (29.6)
Total cost of revenue $ 34,112 $ 37,908 (10.0)
Gross profit
Local $ 335,092 $ 316,806 5.8 %
Goods 4,779 9,585 (50.1)
Travel 11,848 11,773 0.6
Total gross profit $ 351,719 $ 338,164 4.0
% of Consolidated revenue 77.4 % 76.4 %
% of Consolidated cost of revenue 74.3 78.6
% of Consolidated gross profit 77.7 76.1
Comparison of the Years Ended December 31, 2025 and 2024:
North America revenue and gross profit increased by $9.8 million, and $13.6 million, respectively, while cost of revenue decreased by $3.8 million for the year ended December 31, 2025 compared with the prior year period. Our Local revenue increased by 4.5%, lagging the rate of growth in gross billings as a result of promotional discounts and higher redemption rates. The decrease in cost of revenue is primarily due to a decrease in amortization of internally-developed software relating to customer-facing applications, which is a direct result of our cost savings initiatives. Gross profit increased due to an increase in revenue and decrease in cost of revenue. The decline in our Goods category is primarily attributable to our overall de-emphasis of the Goods category.
Marketing and Contribution Profit
North America marketing and contribution profit for the years ended December 31, 2025 and 2024 were as follows (in thousands, except percentages):
Year Ended December 31, % Change
2025 2024 2025 vs 2024
Marketing $ 127,608 $ 113,096 12.8 %
% of Revenue
33.1 % 30.1 %
Contribution Profit $ 224,111 $ 225,068 (0.4) %
Comparison of the Years Ended December 31, 2025 and 2024:
North America marketing expense increased for the year ended December 31, 2025 compared with the prior year period, primarily due to increased investment in our online marketing spend to drive customer acquisition and demand growth. Marketing expense as a percentage of revenue increased as revenue growth did not keep pace with our marketing investment as strong performance in paid channels was offset by headwinds in non-paid channels.
North America contribution profit remained relatively flat for the year ended December 31, 2025, compared with the prior year period, as the increase in marketing expense was largely offset by the increase in gross profit.
International
Operating Metrics
International segment gross billings, units and TTM active customers for the years ended December 31, 2025 and 2024 were as follows (in thousands, except percentages):
Year Ended December 31, % Change
2025 2024 2025 vs 2024
Gross billings
Local $ 328,964 $ 332,795 (1.2) %
Goods 53,172 60,530 (12.2)
Travel 29,440 32,106 (8.3)
Total gross billings $ 411,576 $ 425,431 (3.3)
Units
Local 10,601 10,764 (1.5) %
Goods 1,290 1,688 (23.6)
Travel 174 180 (3.3)
Total units 12,065 12,632 (4.5)
TTM Active customers 5,178 5,143 0.7 %
Comparison of the Years Ended December 31, 2025 and 2024:
International gross billings and units decreased by $13.9 million and 0.6 million, respectively, while TTM active customers remained flat for the year ended December 31, 2025 compared with the prior year period. The decline in the Local category was mainly due to the divestiture of Giftcloud and, to a lesser extent, our withdrawal from the Italian market in mid-2024. Excluding Giftcloud and Italy, International Local gross billings increased 13%, driven by our continued execution of our hyperlocal marketplace strategy and increased marketing spend, with strength in our core local business supported by improved supply quality and effective category management. The decline in our Goods category is primarily attributable to our overall de-emphasis of the Goods category. In addition, there was a $15.3 million favorable impact on gross billings from year-over-year changes in foreign currency exchange rates.
Financial Metrics
International segment revenue, cost of revenue and gross profit for the years ended December 31, 2025 and 2024 were as follows (in thousands, except percentages):
Year Ended December 31, % Change
2025 2024 2025 vs 2024
Revenue
Local $ 97,506 $ 99,333 (1.8) %
Goods 9,561 10,929 (12.5)
Travel 5,524 6,223 (11.2)
Total revenue $ 112,591 $ 116,485 (3.3)
Cost of revenue
Local $ 9,505 $ 7,889 20.5 %
Goods 1,527 1,691 (9.7)
Travel 739 763 (3.1)
Total cost of revenue $ 11,771 $ 10,343 13.8
Gross profit
Local $ 88,001 $ 91,444 (3.8) %
Goods 8,034 9,238 (13.0)
Travel 4,785 5,460 (12.4)
Total gross profit $ 100,820 $ 106,142 (5.0)
% of Consolidated revenue 22.6 % 23.6 %
% of Consolidated cost of revenue 25.7 21.4
% of Consolidated gross profit 22.3 23.9
Comparison of the Years Ended December 31, 2025 and 2024:
International revenue and gross profit decreased by $3.9 million and $5.3 million, respectively, while cost of revenue increased by $1.4 million for the year ended December 31, 2025 compared with the prior year period. The decline in the Local category was mainly due to the divestiture of Giftcloud and, to a lesser extent, our withdrawal from the Italian market in mid-2024. Excluding Giftcloud and Italy, International Local revenue increased 6%. The decline in our Goods category is primarily attributable to our overall de-emphasis of the Goods category. Revenue and gross profit had favorable impacts of $4.3 million and $3.9 million, respectively, from year-over-year changes in foreign currency exchange rates. The increase in cost of revenue was primarily due to higher credit card processing fees. This was driven by growth in international units excluding Giftcloud, which had no credit card processing fees.
Marketing and Contribution Profit
International marketing and contribution profit for the years ended December 31, 2025 and 2024 were as follows (in thousands, except percentages):
Year Ended December 31, % Change
2025 2024 2025 vs 2024
Marketing $ 38,247 $ 31,111 22.9 %
% of Revenue
34.0 % 26.7 %
Contribution Profit $ 62,573 $ 75,031 (16.6) %
Comparison of the Years Ended December 31, 2025 and 2024:
International marketing expense increased for the year ended December 31, 2025 compared to the prior year period, primarily due to increased investment in our online marketing spend to drive customer acquisition and demand growth. Marketing expense as a percentage of revenue increased as revenue growth did not keep pace with our marketing investment as strong performance in paid channels was offset by headwinds in non-paid channels.
International contribution profit decreased for the year ended December 31, 2025 compared with the prior year period, primarily due to a decrease in gross profit and an increase in marketing.
Consolidated Operating Expenses
Operating expenses for the years ended December 31, 2025 and 2024 were as follows (in thousands, except percentages):
Year Ended December 31, % Change
2025 2024 2025 vs 2024
Marketing $ 165,855 $ 144,207 15.0 %
Selling, general and administrative (1)
273,728 295,399 (7.3)
(Gain) on sale of assets
- (5,160) (100.0)
(Gain) on sale of business
(10,650) - 100.0
Restructuring and related charges (credits) (34) 1,066 (103.2)
Total operating expenses
$ 428,899 $ 435,512 (1.5)
% of Revenue:
Marketing 33.3 % 29.3 %
Selling, general and administrative 54.9 % 60.0 %
(1)The years ended December 31, 2025 and 2024include $37.3 millionand $26.6 millionof stock-based compensation expense and $10.6 millionand $17.0 millionof depreciation and amortization expense.
Comparison of the Years ended December 31, 2025 and 2024:
SG&A and SG&A as a percentage of revenue decreased for the year ended December 31, 2025 compared with the prior year period, due to lower technology expenses, partially offset by higher payroll costs.
Gain on sale of assets decreased for the year ended December 31, 2025 compared with the prior year period, primarily due to a gain from the sale of certain intangible assets in 2024. See Item 8, Note 5, Goodwill and Other Intangible Assets, for additional information.
Gain on sale of business increased for the year ended December 31, 2025 compared with the prior year period due to a gain from the sale of Giftcloud in 2025. See Item 8, Note 3, Business Dispositions, for additional information.
Restructuring and related charges (credits) decreased for the year ended December 31, 2025 compared with the prior year period, primarily due to substantially all costs pertaining to the various restructuring plans having been incurred as of the year ended December 31, 2024. See Item 8, Note 14, Restructuring and Related Charges,for additional information.
Consolidated Other Income (Expense), Net
Other income (expense), net includes interest income, interest expense, gains and losses from changes in fair value of investments, gain on sale of investment, and foreign currency gains and losses, primarily resulting from intercompany balances with our subsidiaries that are denominated in foreign currencies.
Other income (expense), net for the years ended December 31, 2025 and 2024 was as follows (in thousands, except percentages):
Year Ended December 31,
2025 2024
Other income (expense), net
$ 30,829 $ (37,554)
Comparison of the Years Ended December 31, 2025 and 2024:
The change in Other income (expense), net for the year ended December 31, 2025 compared with the prior year period is primarily related to a $67.3 million increase in foreign currency gains (losses) which primarily resulted from U.S. dollar-denominated intercompany balances with our foreign subsidiaries. The increase is primarily driven by the Euro appreciation against the U.S. dollar during the year ended December 31, 2025 compared to the year ended December 31, 2024.
Consolidated Provision (Benefit) for Income Taxes
Comparison of the Years Ended December 31, 2025 and 2024:
Provision (benefit) for income taxes for the years ended December 31, 2025 and 2024 was as follows (in thousands, except percentages):
Year Ended December 31, % Change
2025 2024 2025 vs 2024
Provision (benefit) for income taxes $ 35,625 $ 26,123 36.4 %
Effective tax rate (78.4) % (86.0) %
Our U.S. Federal income tax rate was 21% for the years ended December 31, 2025 and 2024.
The primary factors impacting the effective tax rate for the years ended December 31, 2025 and 2024 were the pretax losses incurred in jurisdictions that have valuation allowances against their net deferred tax assets, including U.S. pre-tax losses due to a loss on extinguishment of debt and the tax settlement expense for the Italy 2012 and 2017 Assessments. For the years ended December 31, 2025 and 2024, we continue to maintain a full valuation allowance against all U.S. federal and state deferred tax assets. We expect that our consolidated effective tax rate in future periods may continue to differ significantly from the U.S. federal income tax rate as a result of our tax obligations in jurisdictions with profits and valuation allowances in jurisdictions with losses.
See Item 8, Note 15, Income Taxes, for additional information relating to tax audits and assessments and regulatory and legal developments that may impact our business and results of operations in the future.
Non-GAAP Financial Measures
In addition to financial results reported in accordance with GAAP, we have provided the following non-GAAP financial measures: Adjusted EBITDA, free cash flow and foreign currency exchange rate neutral operating results. Those non-GAAP financial measures, which are presented on a continuing operations basis, are intended to aid investors in better understanding our current financial performance and prospects for the future as seen through the eyes of management. We believe that those non-GAAP financial measures facilitate comparisons with our historical results and with the results of peer companies who present similar measures (although other companies may define non-GAAP measures differently than we define them, even when similar terms are used to identify such measures). However, those non-GAAP financial measures are not intended to be a substitute for those reported in accordance with GAAP.
Adjusted EBITDA. Adjusted EBITDA is a non-GAAP performance measure that we define as Net income (loss) from continuing operations excluding income taxes, interest and other non-operating items, depreciation and amortization, stock-based compensation and other special charges and credits, including items that are unusual in nature or infrequently occurring. Our definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Adjusted EBITDA is a key measure used by our management and Board to evaluate operating performance, generate future operating plans and make
strategic decisions. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board. However, Adjusted EBITDA is not intended to be a substitute for Net income (loss) from continuing operations.
We exclude stock-based compensation expense and depreciation and amortization because they are primarily non-cash in nature and we believe that non-GAAP financial measures excluding those items provide meaningful supplemental information about our operating performance and liquidity. For the years ended December 31, 2025 and 2024, special charges and credits included charges related to our Italy Restructuring Plan, 2022 Restructuring Plan and 2020 Restructuring Plan, as well as gain on sale of assets, gain on sale of business, loss on extinguishment of debt and foreign VAT assessments. We exclude special charges and credits from Adjusted EBITDA because we believe that excluding those items provides meaningful supplemental information about our core operating performance and facilitates comparisons with our historical results. For the foreign VAT assessments, we also considered the fact that we ceased operations in Portugal in 2016 and it is not part of our ongoing business. We have not engaged in any revenue-generating or payroll-related activity in Portugal since ceasing those operations nor do we intend to engage in these activities in that jurisdiction in the future.
The following is a reconciliation of Adjusted EBITDA to the most comparable GAAP financial measure, Net income (loss) for the years ended December 31, 2025 and 2024 (in thousands):
Year Ended December 31,
2025 2024
Income (loss) from continuing operations
$ (81,081) $ (56,514)
Adjustments:
Stock-based compensation(1)
37,774 26,734
Depreciation and amortization 18,602 30,900
Restructuring and related charges (credits) (34) 1,066
(Gain) on sale of assets
- (5,160)
(Gain) on sale of business (10,650) -
Foreign VAT assessments (2)
- 6,974
Loss on extinguishment of debt 99,925 1,631
Other (income) expense, net (3)
(30,829) 37,554
Provision (benefit) for income taxes 35,625 26,123
Total adjustments 150,413 125,822
Adjusted EBITDA $ 69,332 $ 69,308
(1)Stock-based compensation excludes expense related to the liability-classified 2024 Executive PSUs. Refer to Item 8, Note 12, Compensation Arrangements,for additional information.
(2)The Foreign VAT assessments adjustment excludes related interest expense of $1.8 million for the year ended December 31, 2024 as the interest expense is included within Other (income) expense, net. Refer to Item 8, Note 10, Commitments and Contingenciesfor additional information.
(3)Includes $6.0 million gain on sale related to proceeds received in the sale of the Company's minority investment in TodayTix. Refer to Item 8, Note 6, Investments, for additional information.
Free cash flow. Free cash flow is a non-GAAP liquidity measure that comprises Net cash provided by (used in) operating activities from continuing operations less purchases of property and equipment and capitalized software. We use free cash flow to conduct and evaluate our business because, although it is similar to Net cash provided by (used in) from continuing operations, we believe that it typically represents a more useful measure of cash flows because purchases of fixed assets, software developed for internal use and website development costs are necessary components of our ongoing operations. Free cash flow is not intended to represent the total increase or decrease in our cash balance for the applicable period.
Free cash flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. Therefore, we believe it is important to view free cash flow as a complement to our Consolidated Statements of Cash Flows. For a reconciliation of free cash flow to the most comparable GAAP financial measure, see Liquidity and Capital Resourcesbelow.
Foreign currency exchange rate neutral operating results. Foreign currency exchange rate neutral operating results show current period operating results as if foreign currency exchange rates had remained the same as those in effect in the prior year period. Those measures are intended to facilitate comparisons to our historical performance.
The following table represents the effect on our Consolidated Statements of Operations from changes in exchange rates versus the U.S. dollar for the years ended December 31, 2025 and 2024 (in thousands):
Year Ended December 31, 2025 Year Ended December 31, 2024
At Avg. 2024 Rates (1)
Exchange Rate Effect (2)
As Reported
At Avg. 2023 Rates (1)
Exchange Rate Effect (2)
As Reported
Gross billings $ 1,650,458 $ 15,297 $ 1,665,755 $ 1,554,825 $ 3,378 $ 1,558,203
Revenue 494,118 4,304 498,422 491,600 957 492,557
Cost of revenue 45,424 459 45,883 48,201 50 48,251
Gross profit 448,694 3,845 452,539 443,399 907 444,306
Marketing 164,054 1,801 165,855 144,144 63 144,207
Selling, general and administrative 271,341 2,387 273,728 294,628 771 295,399
Long-lived asset impairment 2 (2) - - - -
(Gain) on sale of assets - - - (5,160) - (5,160)
(Gain) on sale of business (10,176) (474) (10,650) - - -
Restructuring and related charges (credits) (19) (15) (34) 959 107 1,066
Income (loss) from operations $ 23,492 $ 148 $ 23,640 $ 8,828 $ (34) $ 8,794
(1)Represents the financial statement balances that would have resulted had exchange rates in the reporting period been the same as those in effect in the prior year period.
(2)Represents the increase or decrease in the reported amount resulting from changes in exchange rates from those in effect in the prior year period.
Liquidity and Capital Resources
Our principal source of liquidity is our cash balance totaling $296.1 million as of December 31, 2025. The Company's cash requirements are subject to change as business conditions warrant and opportunities arise. Additionally, with the execution of the Exchange and Subscription Agreements in November 2024 and Exchange Agreement in July 2025, we believe that the Company has sufficient liquidity to support its overall ongoing operational needs within the next 12 months, including the repayment of the remaining outstanding $33.7 million principal of the 2026 Notes upon maturity in March 2026.
We are subject to claims for tax assessments by foreign jurisdictions. On August 5, 2025, Groupon S.r.l. and the Italian Tax Authority reached an agreement in principle to resolve the Italy 2012 and 2017 Assessments. On December 29, 2025, Groupon S.r.l. and the Italian tax authorities entered into a binding framework agreement that definitively resolved all outstanding tax disputes involving Groupon S.r.l.. Pursuant to the framework agreement, Groupon S.r.l. agreed to pay a total of approximately $25.3 million (€21.5 million), inclusive of amounts previously paid through installment plans of $10.4 million (€8.9 million) to resolve all disputes. Groupon S.r.l. paid a net amount of approximately $14.8 million (€12.6 million) in the fourth quarter of 2025 and an immaterial additional amount in the first quarter of 2026. Following these payments, the Company considers the matters covered by the Italian tax assessments to be effectively settled as of December 31, 2025. See Item 1, Note 15, Income Taxes,for additional information.
Our net cash flows from operating, investing and financing activities from continuing operations for the years ended December 31, 2025 and 2024 were as follows (in thousands):
Year Ended December 31,
2025 2024
Cash provided by (used in):
Operating activities $ 64,498 $ 55,894
Investing activities 6,423 (6,812)
Financing activities $ (7,510) $ 47,790
Free cash flow is a non-GAAP liquidity measure that comprises net cash provided by operating activities, less purchases of property and equipment and capitalized software. Our free cash flow for the years ended December 31, 2025 and 2024 and reconciliations to the most comparable GAAP financial measure, Net cash provided by (used in) operating activities from continuing operations, for those periods are as follows (in thousands):
Year Ended December 31,
2025 2024
Net cash provided by (used in) operating activities from continuing operations $ 64,498 $ 55,894
Purchases of property and equipment and capitalized software from continuing operations (14,624) (15,333)
Free cash flow $ 49,874 $ 40,561
Our revenue-generating transactions are primarily structured such that we collect cash up-front from customers and pay third-party merchants at a later date, either based upon the customer's redemption of the related voucher or fixed payment terms, which are generally weekly, throughout the term of the merchant's offering.
Our cash balances fluctuate significantly throughout the year based on many variables, including changes in gross billings and the timing of payments to merchants and suppliers.
Net cash provided by (used in) operating activities
For the year ended December 31, 2025, our net cash provided by operating activities from continuing operations was $64.5 million as compared with net cash provided by operating activities from continuing operations of $55.9 million in the prior period. The improved cash flow from operating activities is primarily due to timing of merchant payments. Strategic supplier payments in late 2024 decreased merchant payable entering into 2025, resulting in a lower beginning merchant payable balance for the current period and improved cash flow over the comparable period. We resumed regular payment cycles during the year ended December 31, 2025. Further we have seen increased revenue and billings growth year-over-year.
Net cash provided by (used in) investing activities
For the year ended December 31, 2025, our net cash provided by investing activities from continuing operations was $6.4 million as compared with net cash used in investing activities from continuing operations of $6.8 million in the prior period. The improvement in investing cash flow is driven by $15.0 million of proceeds earned on the sale of Giftcloud and $6.0 million of proceeds from the sale of our minority investment in TodayTix in the current year, partially offset by $9.1 million of proceeds from the sale of certain intangible assets in the prior year.
Net cash provided by (used in) financing activities
For the year ended December 31, 2025, our net cash used in financing activities from continuing operations was $7.5 million as compared with net cash provided by financing activities from continuing operations of $47.8 million in the prior period. The reduced cash flow from financing activities is primarily due to $79.6 million of proceeds received from the Rights Offering and partially offsetting repayments of borrowings under our revolving credit agreement of $42.8 million during the year ended December 31, 2024. To a lesser extent, the reduced cash flow was impacted by an increase in taxes paid for net share settlements of stock-based compensation awards of $6.2 million during the year ended December 31, 2025 compared with $2.3 million in the prior year period.
Matters related to the Rights Offering and Credit Agreement
On January 22, 2024, we announced the closing of our $80.0 million fully backstopped Rights Offering for shares of our Common Stock. Pursuant to the terms of the Rights Offering, 7,079,646 shares of Common Stock were purchased at $11.30 per share, generating $80.0 million in gross proceeds to the Company.
On February 12, 2024, we prepaid the Payoff Amount to terminate all commitments to extend further credit under the Credit Agreement using our $80.0 million in proceeds received from the Rights Offering. The terms of the Rights Offering permit the Company to use the proceeds for general corporate purposes, including the repayment of debt. We were not subject to any early termination penalties under the Credit Agreement. The payment of the Payoff Amount terminated our obligations under the Credit Agreement, except for ordinary and customary survival terms. In addition, we retained access to letters of credit, originally available under the Credit Agreement.
See Item 8, Note 8,Financing Arrangements,for additional information regarding the Credit Agreement and Item 8, Note 11, Stockholders' Equity (Deficit),for additional information regarding the Rights Offering.
Matters related to the Notes
In 2021, the Company issued the 2026 Notes in the principal amount of $230.0 million.
The 2026 Notes bear interest at a rate of 1.125% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, and will mature March 15, 2026, subject to earlier repurchase or conversion.
On November 19, 2024, we issued $197.3 million aggregate principal amount of 2027 Notes. From the issuance, we (i) exchanged $176.3 million aggregate principal amount of the 2026 Notes and (ii) issued and sold to certain 2027 Notes Offering Participants $21.0 million additional principal amount of the 2027 Notes for gross cash proceeds of $20.0 million. We used the $20.0 million of the cash proceeds to offset the cash outflows associated with the debt issuance costs as well as general corporate purposes.
The 2027 Notes bear interest at a rate of 6.25% per annum, payable semi-annually March 15 and September 15 of each year, and will mature March 15, 2027, subject to earlier repurchase or conversion.
On July 2, 2025, the Company issued $244.1 millionaggregate principal amount of the 2030 Notes, consisting of (i) $20.0 millionaggregate principal amount of 2030 Notes issued in exchange for $20.0 millionaggregate principal amount of the Company's outstanding 2026 Notes and (ii) $224.1 millionaggregate principal amount of 2030 Notes issued in exchange for $150.0 millionaggregate principal amount of the Company's outstanding 2027 Notes with certain 2030 Notes Offering Participants.
The 2030 Notes are senior, unsecured obligations of the Company and accrue interest at a rate of 4.875% per annum, payable semi-annually in arrears on each June 30 and December 30, commencing December 30, 2025, and will mature on June 30, 2030, unless earlier converted, redeemed or repurchased.
See Item 8, Note 8,Financing Arrangements,for additional information regarding the Notes.
Other Liquidity and Capital Resource matters
As of December 31, 2025, we had $72.7 million in cash held by our international subsidiaries, which is primarily denominated in British Pounds Sterling, Euros, Indian Rupees and Australian dollars. In general, it is our practice and intention to re-invest the earnings of our non-U.S. subsidiaries in those operations or remit such earnings in a tax-efficient manner. We have not, nor do we anticipate the need to, repatriate funds to the United States to satisfy domestic liquidity needs arising in the ordinary course of business.
In May 2018, the Board authorized us to repurchase up to $300.0 million of our Common Stock under our share repurchase program. As of December 31, 2025, up to $245.0 million of Common Stock remained available for purchase under our program. The timing and amount of share repurchases, if any, will be determined based on market conditions, share price, available cash and other factors, and the share repurchase program may be terminated at any time. Repurchases will be made in compliance with SEC rules and other legal requirements and may be made, in part, under a Rule 10b5-1 plan, which permits share repurchases when we might otherwise be precluded from doing so.
Contractual Obligations and Commitments
For additional information on our commitments for other financing arrangements and purchase obligations, see Item 8, Note 8, Financing Arrangements, Note 9, Leases, Note 10, Commitments and Contingencies and Note 15, Income Taxes, for additional information.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of December 31, 2025.
Critical Accounting Estimates
Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with GAAP. Our significant accounting policies are discussed in Item 8, Note 2, Summary of Significant Accounting Policies, in the notes to the Consolidated Financial Statements.
The preparation of Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts and classifications of assets and liabilities, revenue and expenses, and related disclosure of contingent liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from those estimates under different assumptions or conditions.
We believe that the estimates and assumptions related to revenue recognition, impairment assessments, and income taxes have the greatest potential impact on our Consolidated Financial Statements. Therefore, we consider these to be our critical accounting estimates.
Revenue Recognition
We make significant estimates related to revenue recognition including estimates for refund reserve, variable consideration from vouchers that will not ultimately be redeemed, and breakage income from customer credits that are not expected to be used. We estimate future refunds, voucher redemptions, and customer credit redemptions using historical refund and redemption experience. We also consider trends when making those estimates that could be driven by changes to our policies, or in general, economic conditions that may impact customer behavior. We reevaluate our estimate as facts and circumstances change.
These estimates rely on judgments regarding future expectations of customer behavior. While the basis of our estimates is historical data, customer behavior may not always be predictable. If actual refunds or redemptions differ from our estimates, the effects could be material to the Consolidated Financial Statements.
See Item 8, Note 2, Summary of Significant Accounting Policiesand Note 13, Revenue Recognition, for information about our revenue recognition accounting policies.
Impairment Assessments
Impairment assessment estimates apply to goodwill, long-lived assets, right-of-use assets and investments.
Goodwill is allocated to our reporting units at the date the goodwill is initially recorded. We evaluate goodwill for impairment annually on October 1 or more frequently when an event occurs or circumstances change that indicates the carrying value of a reporting unit may exceed its fair value. We review our long-lived assets, such as property, equipment and software, intangible assets, right-of-use assets and investments for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Significant judgment and estimates are required when determining the fair value of these assets for impairment tests.
When determining fair values in impairment tests, we use the income approach (including discounted cash flows). Our significant estimates in those fair value measurements may include identifying business factors such as size, growth, profitability and risk and return on investment. Further, when measuring fair value based on discounted
cash flows, we make assumptions about risk-adjusted discount rates, including the weighted average cost of capital; rates of increase in revenue, cost of revenue and operating expenses; rates of long-term growth; working capital levels; and income tax rates. Valuations are performed by management or third-party valuation specialists under management's supervision, where appropriate. We believe that the estimated fair values used in impairment tests are based on reasonable assumptions that marketplace participants would use. However, such assumptions are inherently uncertain and actual results could differ materially from those estimates. See Item 8, Note 4, Property, Equipment and Software, Net, Note 5, Goodwill and Other Intangible Assets, Note 6, Investments and Note 9, Leasesfor more information about our impairment assessments.
Future changes in our assumptions or the interrelationship of the assumptions described above may negatively impact future valuations. In future measurements of fair value, adverse changes in assumptions could result in impairments of goodwill or long-lived assets that would require non-cash charges to the Consolidated Statements of Operations and those charges could have a material effect on our financial condition and operating results.
See Item 8, Note 2, Summary of Significant Accounting Policiesfor information about our accounting policies relating to impairment of goodwill, long-lived assets, right-of-use assets and investments.
Income Taxes
We account for income taxes using the asset and liability method and assess whether it is more likely than not that the deferred tax assets will be realized. We are also subject to taxation in the United States, various states and foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes and recording the related income tax assets and liabilities.
To assess whether it is more likely than not that deferred tax assets will be realized and whether a valuation allowance needs to be recorded against them, we consider the following four sources of taxable income for each tax jurisdiction: (a) future reversals of existing taxable temporary differences, (b) projected future earnings, (c) taxable income in carryback years, and (d) tax planning strategies.
Our ability to realize deferred tax assets depends on future taxable income, the reversal of taxable temporary differences, and feasible tax planning strategies. Given the Company's recent history of U.S. taxable earnings, a future release of the U.S. valuation allowance could occur if we achieve sustained profitability in the U.S. The timing and amount of any release will depend on the weight of positive evidence relative to negative evidence, including recent results and likelihood of future utilization of attributes. A release would reduce income tax expense in the period of release and could materially affect our effective tax rate.
During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. For example, our effective tax rate could be adversely affected by earnings being lower than anticipated in countries where it has lower statutory rates and higher than anticipated in countries where it has higher statutory rates, by changes in foreign currency exchange rates, by changes in the valuation of deferred tax assets and liabilities, by changes in the measurement of uncertain tax positions, by changes affecting transfer pricing or by changes in the relevant laws, regulations, principles and interpretations.
See Item 8, Note 2, Summary of Significant Accounting Policies, and Note 15,Income Taxes, for information about our income tax accounting policies.
Recently Issued Accounting Standards
For a description of recently issued accounting standards, please see Item 8, Note 2, Summary of Significant Accounting Policies.
Groupon Inc. published this content on March 10, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on March 10, 2026 at 20:15 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]