Groupon, Inc.

Hello, and welcome to Groupon's third quarter 2025 financial results conference call. On the call today are Chief Executive Officer Dushan Sankful 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 questions reflect management's views as of today, November 7th, 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 its filings with the SEC, including its quarterly 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 this website the reports that the company files or furnishes with the SEC, corporate governance information, and select press releases and social media postings. In 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. And with that, I'd like to turn it over to Dusan to make a few opening remarks before we jump into Q&A. Dusan?

Hello and thanks for joining us for our third quarter 2025 earnings call. It's great to be with all of you today. Yesterday, after the market closed, we released our earnings and posted our earnings commentary on our investor relations website. Today, I will make brief 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 earnings commentary press release and thank you. I am pleased to report another strong quarter that demonstrates continued momentum in our transformation journey. Global billings grew 11% year-over-year, making our second straight quarter of double-digit growth. Our core local category continues to be the engine driving this growth, with North America local up 18% and international local, excluding gift cloud, up 15% year-over-year. Combined, Our core local category now represents 89% of billings and grew 18%, reinforcing the scalability of our hyperlocal marketplace playbook. We delivered adjusted EBITDA of $18 million ahead of our expectations, and our trailing 12-month pre-cash flow reached $60 million. This demonstrates our ability to generate strong profitability and cash flow while continuing to invest strategically to accelerate our deployment. On the demand side, Q3 reflect the compounding benefits of systematic improvements across our marketing engine. We drove healthy growth in our paid mark performance channels, supported by a modest increase in marketing spend and improving ROI. We added nearly 300K net new active customers quarter over quarter and 1 million plus over the last four quarters, excluding Italy, a strong signal for the overall health of our marketplace. On the supply side, our hyperlocal focus is working. All four major international markets delivered a second consecutive quarter of double-digit growth. In North America, our focused hyperlocal city strategy is paying off. Chicago is now our biggest city and growing at nearly double the rate of North America local overall. Things to do had an exceptional summer season with its seventh consecutive quarters of strong double-digit growth. On the technology front, our platform velocity is accelerating meaningfully. Deal page conversion rates improved 13% year-over-year in North America, and we are seeing faster development cycles and higher quality releases as our modernization efforts translate into tangible business capabilities. Looking ahead, our strategic priorities remain clear. Accelerate to plan growth toward our goal of over 20% billings growth while generating strong adjusted EBITDA and free cash flow. The momentum we are seeing across customer growth, category performance, and platform capability gives me confidence that we are building the foundation to become the trusted destination for quality local experiences at unbeatable value. We are still in the early innings of a large opportunity to build a hyperlocal experience marketplace that combines trust, curation, quality, and unbeatable value with the network effects and unit economics of modern marketplaces. I would like to thank our team. This is not an easy journey, and their continued commitment to our mission and to our transformation has been really great. With that, let's open the call for questions.

Thanks, Dusan. Our first question comes from Bobby Brooks from Northland Capital. Bobby, you may now unmute your line.