Groupon, Inc.

Hello, and welcome to Groupon's fourth quarter and full year 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 your questions reflect management's views as of today, March 11, 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. 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-K. 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 report 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 fourth quarter and full year 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 opening remarks and then open up the call for your questions. For more details on our quarterly and full year performance, I encourage you to read our full earnings commentary, press release, and 10K. I want to start with what matters most. 2025 was a milestone year for Groupon. For the first time in a decade, we returned to both billings and revenue growth. Full year global billings grew 7% to approximately 1.67 billion. We delivered a second consecutive year of positive free cash flow and exited the year with approximately 296 million in cash. These are not incremental improvements. This is a fundamentally different company than the one that existed three years ago. Our core local marketplace, which represents approximately 90% of billings, grew double digits for the full year in both North America and international, excluding gift cloud. Global active customers reached 16.2 million, up more than 5% year over year, with North America local active customers growing 12%. Now, let me be direct about Q4. We did not finish the year the way we planned. Global billings grew 4% year-over-year, but came in below our guidance range, as did revenue and adjusted EBITDA. The shortfall was not broadly distributed. It was concentrated in two specific areas, enterprise channel deceleration in North America and underperformance in our organic and owned marketing channels. Both are well understood, both have clear root causes, and both have direct action plans underway, which we go into more detail in our earnings commentary that we released last night. On the product side, our product and engineering organization is shipping more, faster, and with better quality than at any point in recent memory. Our platform migration reached a significant milestone with 50% of all iOS North America users now on the new mobile app, and we expect all iOS North America users to be migrated by the end of Q1. Along with our new website, this is a complete rebuild of our core consumer platform, a multi-year undertaking, and completing this ramp-up is meaningful not just as a technical milestone, but as the foundation for our next phase of growth. Early results show that the new users on the updated platform are generating stronger monetization per user than on the legacy app. With the new platform in place, we now have the development velocity to move quickly on the opportunities ahead. In 2026, our product agenda shifts from conversion first to grow first with a new search and relevance engine. A customer data platform now live life in North America to drive personalized customer journeys and the infrastructure to make our inventory discoverable and transactable by AI agents and platforms. That last point is central to where we are taking this business. Our number one strategic priority for 2026 is to shift the business towards an AI native operating model. We believe the next generation of local experience discovery and transaction will be driven by autonomous agentic systems that can evaluate options and execute transactions on behalf of customers. The platforms that position early for this shift will capture disproportionate value and we intend to be one of them. We are building our proprietary AI personalization layer, making our inventory discoverable and transactable by AI agents, and targeting technical readiness for AI agent-initiated transactions by mid-2026. To underscore our commitment, today we announced the formation of a dedicated artificial intelligence committee of the board of directors, making Groupon one of the first publicly traded consumer marketplaces to establish a board-level AI committee. We appointed Amit Shah as a new independent director to chair the committee. Shah is the founder and CEO of InstaLily AI and previously served as a president of 1800flowers.com. His experience and the intersection of commerce, platforms, and emerging technologies is directly relevant to the work ahead. On 2026 guidance, our full year results delivered our first consecutive year of improving revenue growth, and we expect that trend to continue. That said, the pace of growth improvement will be more moderate than the trajectory we were building towards. The headwinds in organic, owned, and enterprise channels are addressable, and we have clear plans against each, but the fixes will take time to compound. Our guidance reflects that reality. We are guiding to 3-5% billings growth, 3-5% revenue growth, 70-75 million in adjusted EBITDA, and at least 60 million in free cash flow. We also plan to host an investor event in the second half of 2026 to provide deeper insight into our strategy and our path forward. Taking a step back, the long-term opportunity here remains enormous. The market for online experiences has significant underpenetration compared to categories like hotels and airfare. We believe AI-driven discovery and agentic transactions will accelerate online penetration in local experiences, and Groupon is well positioned to capture that growth. We remain confident in our long-term targets to accelerate global billings growth to over 20%. As we move into our growth phase, we are anchoring the company around a clear mission. We get people offline through quality local experiences at great value. In a market where every platform competes for more screen time, Groupon exists to drive real-world commerce, connecting consumers to local businesses, and generating measurable food traffic and spend. As AI shifts from assistive tool to autonomous agents that can discover, evaluate, and transact, Groupon's position at the intersection of consumer intent and local supply makes us natural bridge between the AI economy and the millions of businesses that power local communities. We are still in the early innings of a massive opportunity to become the trusted destination for discovering high-quality local services and experiences at unbeatable value. We have the cash, the technology, and the strategy to win. Our work is far from finished, but the foundation we have built gives me real confidence in what comes next. I want to thank our team. This transformation is not easy, and their dedication, intensity, and execution excellence have made this progress possible. With that, let's open the call for questions.

Thank you, Dushan. Our first question comes from Bobby Brooks from Northland Capital Markets. Bobby, you can now unmute your line. Good morning, Keenan. Thank you for taking my question.