Groupon, Inc.

Hello, and welcome to Groupon's first quarter 2025 Financial Results Conference Call. On the call today are Chief Executive Officer Dushanth Sankethal, Chief Financial Officer, and Senior Vice President of Finance 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 your questions reflect management's views as of today, May 8th, 2025 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. 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 quarterly reports on Form 10Q. We encourage investors to use Groupon's investor relations website at investor.groupon.com as a way of easily finding information about the company. Groupon promptly makes available on this website the reports that the company files or 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 U.S. GAAP. And with that, I'd like to turn it over to Dushan to make a few opening remarks before we jump into Q&A.

Hello and thanks for joining us for our first quarter 2025 earnings call. It's a pleasure to be with all of you. Yesterday, after the market closed, we released our earnings and posted our earnings commentary on our investor relationships website. Today, my plan is to make brief opening remarks and then open up the call for questions, both live from our analysts and several that were pre-submitted in advance. For more details on our quarterly performance, I encourage you to read our earnings commentary. In addition, I encourage you to review our press release and 10Q, which contain more detail on our fourth quarter and full year results. I am pleased to report a strong start to the year, with our Q1 results exceeding guidance on both billings and adjusted EBITDA, with a slight beat on revenue. Global billings grew 1.4% year-over-year, marking our continued progress towards sustained growth. This performance was powered by North America Local, which accelerated to 11% year-over-year growth in billings, the first time we've seen double-digit growth in this segment since 2017, excluding the pandemic recovery period. Our hyperlocal strategy is delivering strong results with our top 10 cities in North America growing billings by double digits. Enterprise clients continue to flourish on our platform. Looking at our vertical performance within North America local, things to do grew billings double digits for the fifth straight quarter. We believe our Things2Do franchise is significantly outpacing current industry trends and is poised to continue strong absolute and relative performance as we head into the important summer season. Our international local business, excluding Italy, also showed impressive improvement with approximately 5% year-over-year billings growth. As I start my third year as CEO of Groupon, I believe the time has come and the team is ready to start playing offense. Our mission remains clear to transform from a daily deals platform selling everything to everyone into a trusted destination for quality local experiences at unbeatable value. Our transformation strategy is working across marketplace health, platform modernization and financial strength. We are seeing success in shifting from chasing volume to building quality, migrating from legacy systems to a modern platform, and moving from negative to positive financial performance. While our strong billing growth is encouraging, I want to note that our progress in revenue is currently lagging billings due to compression of take rates in North America local. This evolution intake rate is deliberate and a natural consequence of our focus on building a sustainable foundation for long-term growth. For example, higher redemption rates cause a short-term headwind to revenue, but are a great sign for the long-term health of our marketplace. Over time, as we make progress on delivering these healthy marketplace fundamentals, we expect billings and revenue growth rates will converge. On the leadership front, we've strengthened our team with key appointments, including Josef Burian, our new chief marketing officer, and Aleš Drábek, our new chief technology officer. We've also promoted Barbara Weiss to chief revenue officer and Filip Popovic to chief commercial officer to lead our supply side commercial strategy, and Marie Havlíčková to chief product officer. The business exited Q1 with strong momentum and continues to perform well. Looking ahead to Q2, we expect another quarter of accelerating year-over-year growth in both billings and revenue. For the full year, we raised our guidance for billings growth rate from 2% to 4% to 3% to 5% and kept our revenue and adjusted EBITDA guidance unchanged. I want to emphasize that we maintained our revenue and adjusted EBITDA guidance despite completing the sale of our wholly owned subsidiary gift cloud in early April, which removes approximately 6 million in revenue and 4 million in adjusted EBITDA from our consolidated results for the remainder of the 2025. Effectively, by keeping the overall revenue and adjusted EBITDA target unchanged, we are raising our guidance for the core business, demonstrating our confidence in our core business. It's an exciting time to be at Groupon. We are no longer just stabilizing the business. We see several green shoots of growth across our business, and we are building the foundation for long-term sustained growth. With our platform modernization underway, improving customer experience on both sides of the platform, continued progress in financial performance, and a clear strategic direction, I believe we are positioned for success in 2025 and beyond. I would like to thank our team for their dedication and hard work that have made this progress possible. This journey has not been easy, and our continued commitment to our mission and to our transformation has been really great. With that, let's open the call for questions.

Thank you, Gishan. Our first question comes from Bobby Brooks from Northland Capital. Bobby, you can now unmute your line.