GRPN - Earnings call transcript Q3 2017

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Operator

Good day, everyone, and welcome to Groupon's Third Quarter 2017 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the company's formal remarks. [Operator Instructions] Today's conference call is being recorded.

For opening remarks, I would like to turn the call over to the Vice President of Investor Relations, Deb Schwartz. ahead. go Please

Deb Schwartz

welcome conference and third XXXX quarter Good to results call. financial morning Groupon's

call CEO, Actual implied to statements. On CFO, are will expressed today, today the our or only XXXX differ The management's as and discussion materially November reflect those X, Mike forward-looking Rich forward-looking following and may questions in responses statements. our your include view of results Randolfi. and Williams from

as results is information the potentially financial website Additional XX-K. risks impact and to release Relations corporate social media promptly factors and SEC, files investors our select the use a the and Form company with in could that about included on governance in about other our press easily We furnishes filings press releases encourage Investor reports company. today's information our with the our including that information, makes or way and SEC, Groupon this of finding postings. available website the

call period And stated, the to comparable comparisons throughout the this the call rates will on free non-GAAP our I'm disclosures against discuss with over press changes following Relations loss our and XXXX US net GAAP. On results the to in regarding website, and the per to that, happy including non-GAAP excluding also of with non-GAAP results. measures, year-over-year for reconciliations additional is all each In the which exchange FX-neutral measures; the find SEC, flow Unless will of call with filings stockholders, non-GAAP common and adjusted quarter. income on attributable share, Rich. or these turn release earnings EBITDA, cash we posted otherwise foreign measures our our are today, be of you'll financial Investor

Rich Williams

Thanks, good everyone. Deb morning, and

North into business posted results, core significant in for forward local some segment, essential devastating America initiatives despite some [indiscernible] and merchants grow. largest Our of that small particularly and our on kind an North solid helping our strategic of progress had and move markets. on in in American effects the our marketplace our a international resource from remaining season disruption both local its showed larger businesses continued and hurricane third quarter customers We

into third our we growing remain focused driving delivering platform, of the in America head formula continued an $XXX while gross profit holiday local and to profit an customer quarter largely local depth in EBITDA driven million and the billings. effective we all acceleration fourth efficient As and growth. adjusted the running consecutive in season, amazing unit by of quarter breadth deliver on strong and experience $XX the results That accelerating North of with gross business, million, and

are We partners and contributed our great of product, and and new which both helped healthy more merchants local marketplace business marketplace Our our added tangible supply in platform our platform. fundamentals results. on our our to gains through to Groupon+ improve expanded

million X spas, fans We million told, than great also retail, to events and as quarter, offers. in than further All for and Groupon salons people sent to quarter X fitness to a X destination restaurants, more than the we people sent national a brands classes. live sent establishing million in had more strong and more

in brand our overall marketing saw and from customer we addition, stronger our campaign growth improvements In ongoing awareness efforts. from offline

$XXX the a in gross after of period million more profit quarter. disruption, international our Importantly, business than in sustained contributing showed improvement

doing work Groupon mode. benefits deepens our from the excited customer competitive to scale profitable. We're satisfied, We're While platform more and headway significant make new results we're never building and product we're experiences been we've real exciting scaling we're and that we're the seeing partnerships making. and efficient and by

areas. the on Mike, the some over strategic turn progress call I'll add color focus more I in to Before our

experience. customer the with start Let's

purchase removing with are our it it. a We intensely of ways now and we is experience that in simple overall enemy this are here it in to We're focused our search site customers indications design believe our driver early and the also make is the investing most and marketplace. on to the satisfying. important we're apps. continue on redemption, our Groupon Groupon in from this the and products area attacking undertaking both and material future merchants to is to and and in our and Groupon+ embracing are for Friction

familiar, to the their of those enjoy benefits none is on voucher our product even free is credit hassle voucher that not cashback card list with physical card-linked a or mobile of to and Groupon+ Customers other For claim redeem. offers seamless a device.

our the Groupon+ offer quarter, with potential inventory scale inventory. the a MasterCard We stage In setting doubled making expanding markets footprint the the more completed was for Groupon last it market more our we which QX available meant the to live focus for and and more and number Groupon+, we millions of since doubled in than to to part Groupon+ rapidly customers. our begin core integration experience, than to beginning our for of call. scale Our making XX also more product

increasing Moving with merchants. XX forward, on energy our scaling we’ll focus direct market new footprint our a on with supply keen within quality

it critical which early investments new believe which It's improved they're for they're transactions, a still customers likely more positive the of product for, the merchant find or stronger regardless in expect and of game retention, When encouraged very what brand a the with we're in a customer matters, of supporting discount, as return. we engagement purchase a helping build seeing focused to by well also ad merchant small We remains Groupon+, experience. and customer is looking picture marketplace. but the portion campaign. category we're our supply as overall part and for because supply the conversion Improved delivers

experience. quality connect a On the merchant to searching a a customer offer customer other of hand, failing simply with they're when isn't great

anything exciting with So on relevant delivering a nearly Groupon. obsessed might we're results want for and customer

of want continue marketplace our and Related, of partners to underway to through Grubhub quality our over expect improve top quarters. very customer and is nearly for significant for access add well do our increase eat, XX the and looking added integration offers best the things In tens key categories to by including breadth million to of partnerships neighborhoods. of number potential no customers the effort we see in a and partnerships, platform. We of rate supply partnerships to our new help expanding few partnership that the in in and selling offers. it QX, other coming offers expect experience offers market are see, marketplace thousands their shortage our thousands the significantly buy of to the the who integrations we We to

number purchase convenience experiences on XX,XXX deals We customers in of an continue is more the now Finally, important and we experiences for at bookable continued and bookable to Groupon the investing live on another yield the time to book scaling than plan to bookable with layer ability of merchants. site. increase our important The feature for management marketplace.

the the incredibly and much thousands see we're that to more the and we've engagement the story that terms of particularly to and Next evolution help It's a customer in up programs, success proud billion focusing a Offline directly in education. small success awareness Groupon+ to helping the of. benefits our our a pleased of demonstrates saved been is future. associated and on communities excited consumer businesses it tens brand quarter few neighborhoods. as of and small people more launched We few $XX billion pumped we offline of marketing than companies scale to support with stories grow results the surrounding Groupon we in of true of and from and in our launched of campaign great the from All of merchants our a than strong understand new connecting at we've $XX believe recently We're and merchants. for for business less platform as local customers where I'm have ads people hear our Groupon’s continue for part voucher series role process. in done power told, customers

spend, our of consumer As on experiences. we we fourth into our remain mix expect easily capitalize the popular for products local and and to increased opportunistic marketing looking with giftable head activity unique quarter, to opportunities

our maintain to thresholds with offers efficiency all channels. expect We connect our and best best our marketing customers our across

XX% setting to and very streamlining our our early, year-to-date. of the more EBITDA more productive its efforts we streamline efforts. adjusted a easy our the the business. two years sustained and will simplify be which but characteristics growing its segment enjoyed performance our similar quarter optimistic with of cover see for that our to we're should benefits than business let's improved we're line said, in expect over time, That time It's of have geographic approach focus than to rigorous segment, success growth examples international Next, of long-term the bottom economic still that scale. over that It's our in best more stage most North American in one operational

team, on the which front embraced enthusiastically has our a in word us. Finally, opportunity of

our add our customer Deb track we is and brand focus team, a and announced background in marketing directors, board and Today, leadership to talent at that management. impressive development. to joining both continue great We strong Wahl the record tremendous level strategic already board of and bringing

With and over new color on call leaders Operating Vice as talents and financials. Officer President success. North we experience our the added Carr-Smith turn additional our our local, to that, addition, two very continued Mike operational for our excited bring In they'll of Senior I'm who prospectives bring let plus me some growth about team. skilled, as Chief more A America bear Steve strategic the and and on to to Krenzer these and our Jennifer leverage

Mike Randolfi

Rich. Thanks,

third FX the stated to As I quarter, results and year-over-year neutral. all the that otherwise growth refer are discuss unless note for comparisons

despite with in period negative quarter. third $XX Total were on million, results ahead up EBITDA $XX profit and year-over-year. year gross quarter, million, an on our increase the or meaningfully our that adjusted units from in the adjusted North the late grew local expectations gross hurricanes XX% EBITDA, line the was from For ago we and impact America a $XX of million were XX%. profit million pleased was $XXX

are party product performance and We in are pleased with growing and supply international our third to our our third partners we the Groupon+ quarter.

business, outlook. and we momentum full customer raising the continued in experience are our are as year see off investments in and we paying Our marketing

We are $XXXmillion. gross to America, to $XXX growth. profit to adjusted and to $XXX In was local driven our range $X.XXX million, increasing X% X% $X.XXX we’re guidance year-over-year, raising billion profit EBITDA our by million gross billion North range up

parks driven estimated near the in in for water and our resulted accelerated were fourth the the be been rate unit hurricanes, of like profit impact categories were local is one-time double our parks addition summer just that category, improved unit impact America growth saw by consecutive retail would leisure have addition of America now pleased as our amusement category initiatives. digit. this quarter local These customer premier lower XX% our and the in North teens XX% marketing in experience in coupled Both slightly range. to hurricanes ago. We North growth from local strength brands. growth performed We well, low to from with Excluding gross national to America in and particular margin the supply, the over a customer and the tend North with declining and year take activities

since recover the around levels hurricane from seen period. have take our the rates lower We

in hurricanes a the the me September. from and Let take to August minute address impact

everything leading in in the the the million to we impact XX% adverse week around areas. profit. margins gross population. to of on Harvey which million up doing week XX We in markets the this those were Hurricane we're people, of of of after. hurricanes US an purchasing a $X noted support estimate First, each approximately from affected We path customers was through can impact and the the represents our

this reported While basis. cautiously segment, those international local profit international up neutral progress in gross a XX% X% third steady and we have we lot in our on million, and we goods on to Both still Groupon and markets. year double the bringing digit optimistic active an FX work $XXX rollout to year-over-year was made XXX,XXX XX to gross net QX, on profit internationally for to up In basis marketing buying and of friction new The local growth efforts app easing supply earlier unit is customers and in consumers customers the over our returned led positive territory. increased growth a do are as in our quarter, of million. new

a several Turning quarters taken was organization. more our to for to efficient expenses, past by SG&A as lower $XXX have quarter $XX us the and million, build the enabled initiatives over million we've scalable

million we cost which we last up in was $XX some marketing, our the As $XXX reinvested million. discussed quarter, to of savings

campaign in benefit metrics our awareness to local see brand and like and offline the unaided We of continue growth. unit improvements

offline in markets an launched voucher committed and our for of also we radio in XX cities through three home quarter, initiatives. advertising improving out aggregate, across campaign consumer In This advertising. experience Groupon+. now less to and for TV, highly We're Groupon+ we our integrated are

we raising to for are gross guidance, profit adjusted on and full outlook Moving year our EBITDA.

in profit, gross For increasing North $X.XXX range billion our ongoing with $X.XXX billion. we to strength America, to guidance are

For adjusted our progress expected $XXX be we've $XXX to EBITDA, million. cost raising between to with achieved, are the range million we

the $XXX be to Additionally, we fourth will million expect in revenue closer quarter.

million. on $XXX a the $XX cash third XX-month free quarter bringing was total to flow free our basis flow to cash free nearly cash trailing million, Turning flow, in our

continue generate in $XXX addition, full our solid third-party cash, positive I'll in making expanding million sustained adjusted a international Rich. free year flow. We flow deep leading path groundwork on turn laying like we Groupon+ $XXX on partners the over innovative our and growth. we're We to look we believe footing confident meaningful are local expect brands the tangible and million categories to end we national we are with EBITDA cash America back and cash to that, remain in multi-year toward for selection and free progress, core call growth. revolver. With through to the products In and quarter in the marketplace closing, XXXX ended XXXX, with For our to North

Rich Williams

Mike. Thanks,

with merchants. an As we local making pleased traditionally progress Groupon busy we've customers the made into for the season, I'm and a holiday destination in changer head unbeatable for game

to and excited Groupon work small marketplace be path front tool engagement and experience, on us With first the will and push The customer grows, along in on in opportunity consumers habit of customer about continue the further remains some take on operating let's the for a believe focused team becoming local. and daily businesses. that, the As our great stop us an our the business we for to indispensable questions.

Operator

Our Piper [Operator from question Kemp comes Jaffray. Instructions] Sam with first

Sam Kemp

SG&A you Grubhub happen North transition In nice middle $XX in bit. definitely, expect questions. the million in have American line the about SG&A going international. in million to expense we sequentially, that think to that forward we marketing to then about decline two ask like then item there. it region the and intent the see into America, increase XXXX? a talk somewhere I’m helped range in QX Can marketing further head we should acceleration seems your quarter. declined One or international, and on North one a and pleasant of surprise going as looks $XX in the but did how Should little you like like that to your to in It

Mike Randolfi

Sure.

have us to from doesn't I to up way the the relatively the going sale would of or I is is QX with QX into So us. assets QX from order would on from take would sequentially a what to you would Grubhub other. quarter to say say just and I Grubhub, say to what one impact small, an move the is cost account impacted though, SG&A as that QX a I busier for perspective, QX, big regards or

on to the folks costs our use as such in costs seasonal are areas goods that there tend So, customer up. service, staff

quarter. And It’s with is a we first should our the quarter you So what On performance international very quarter the see you international than the that product international, you there. SG&A continued in quarter will certainly, focus see fourth fourth are the several be overall. on things. the higher from pleased expect in the perspective, fourth third

supply on international. in You your also our to continuing have enhanced year focus side, the see marketing last to on that, we marketing and analytics heavily in us building and more to with continued point significantly Sam, we invest the have

your gives is we improves greater could over bit is, would little marketing. as internationally XXXX into is, what expect a to up more conversion over a on I should continue efficiency a improve us end ultimately international what We see time, marketing. of that payback to generate someone So on marketing, opportunity say the we go that time, spending as

what, reflects we view would to how my international. we’re that perspective, pointing with when multi-year as comments path is, growth, think prepared about is say I from in believe So, overall, an which EBITDA EBITDA the do remarks on a it adjusted we we to

Operator

Bieber Paul is Suisse. Credit question next from Our with

Paul Bieber

quick current What's excuse acceleration and was just give could footprint XXXX? hoping could Two questions. then, of the you us the me, end organic contribution footprint the we was. the like, in look will by in terms LivingSocial And what that see what example, so coverage category the for is XQ, what I Groupon+ of

Rich Williams

and to I'll about first talk then cover one the hand over on it Groupon+ Mike to LivingSocial.

and really in So from situations, It's some how focused have food average one It’s mechanics it's the don’t that in it’s consumer highly point those highly the rolled fluid relatively voucher that and reservations first, is restaurant space. purposely in view, restaurant today? a variable, as It's is they well. for does complex and space for a it of both all the point so because greeters look of drink used also view, the addressable out in is and a different environments, with highly we've dealing which merchants of some operators’ general the product. challenging

was big critical to that, play and winning of a side, drive product and ease drink for use it's driver us frequency the food in to have it So over know a look, that in also time. high we

of food the be case. expect and next that to would drink and quarters, on couple focused to I remains So Groupon+ continue the for

start, of number at employs. a other kind the suited moving XXXX, that categories, some are Groupon+ we well move there them interaction to throughout I would into As that are the model of expect

would think food start throughout expanding specifics and beyond of expect to drink. I XXXX but I on it that,

Mike Randolfi

And Q, on on we highlight LivingSocial North America quarter year-over-year is local our XX% about that the our in basis contribution, a from points. what billings were I in the was XXX basis would third up highlight contribution LivingSocial and

even double third North LivingSocial, in growth America still quarter. digit we adjust billings if saw the local you So for in

Operator

from next Sameet FBR. with comes question B. Our Riley Sinha

Sameet Sinha

international that talk quarter that dynamics If in about September, you paypack period sense still XX the be we the about would of And of is kind that you months is the weather current a acquisition talk kind you XX cost to previously? marketing, how October that the spoken when about customer there post is target you that progressing? Secondly, there? that what helpful saw you've see giving can in us of inclement

Rich Williams

you you the to part, on $X.X today, between end we to what first So to think And X.XXX the the the said quarter, earnings last call, gross the with on about our billion the last fourth the billion. to and view lower that X.XXX go regards range. would on current to indicated $X.XX earnings in call, is, I we the as be quarter if would billion the with fourth billion so year highlight had to two with that guidance back our profit calls just overall regards of if provided on guidance earnings landing potentially we compared

year. with to us. time we where do of parsing gross busiest landing that just of With year would apart ahead to this wouldn’t for fourth time in at regards reflects the for confidence level that I a I regard the higher that quarter, keeping the is period want mind see highlight what to overall the So profit

is busiest November timeframe. quarter For part that us, the December fourth the of

a regards from of out is month of that would want want any very America. wouldn't international North held than margin different to further it to than payback within That's payback America and not that the from still way terms is that about in threshold on it I it's in that. tax international within We international, to materially With our all payback, to So North XX think threshold. our see objective. marketing perspective for what the you we investments. to to that similar And standpoint, XX same parse be

Operator

comes question Davidson. DA with next Our Thomas from Forte

Thomas Forte

to also On at of more timeframe countries the international you can should with we improvement, countries a sense and I are high many operating now -- how can get you right of then on level North international a performing level about think at the a think give par America. of talk of

Rich Williams

international, performing the collection Thanks, style as there Tom. I'll development. of a across they're you say what what's additional it have their they're and a stages you in comments, if the driving we're of because all feel I'd start better seeing board, improvements out, point countries across board Mike, But mean, and there, our of free. is different broadly we're is are -- improvements lot deployments. I

is just side. So on the one product

mobile countries for an time, a and cases, at a most that XX months to it experience that six to we're was and experience total business and long really behind matters was across the than Our international XX% experience quarters different so close on And user we're a company, North as completely the a in that least running footprint. international mobile is experience. closer American point behind lot, at this was deployed given, mobile in

shared business, also attacking we've you’re more and and centers a and much we've with how across business service again operationally in improvements that strategies. proven as result seeing American management as region things more that. winning with as We're -- seeing winners our of focused is spoke in move that we're proven North the to much hub deploy a So nature everywhere approaches much simplified those central faster broad and operates, so it's way

improve So we're seeing board. the that across really

seeing potential as population and business on relative start we're our relative said, had and in because we early already that but the amount have feel stronger further the markets stronger inventory are see and cautiously the to really Mike of feel the along I’d of the on they variability, and they a that bigger in that and and board we're footprints the GP runway we improvement, given there's to and US base of the lot size Now general, is we're within more that there we're course from, a track. say, performance about and improved a overtime. But there on good future there still optimistic of across stages

Operator

you. Thank

with Matthew Company. question & next comes from Gabelli Our Trusz

may begin. You

Matthew Trusz

we So up look billings local, the just gross at NA if XX XX with up and up margin X. and revenue

Given the bit and from them that just specifically the impact, and a in can sense and noise NA settling hurricane the retail from us leisure a parse time give little evolving over see you local. and of out where you

Rich Williams

A products. pleased gross we're then the hurricanes, where and couple platform up I'll mean families where profit your would. at purchase typically less trended, to the was to of the was get differences hurricane consumers billing safety, highlight, I local. like you differently in those the velocity overall sell don't North into things the little overall inclined I that and were couple they very a and things XX%, saw you XX% went we one that they their units is point, are period, with between as a in primary time take our behave of and up mean services America rate the massages types themselves of what items spa things some if rate individuals to as to around looking higher same did obviously about think

what also XX, some our shifted the quarter. week gross quality differential But as afterwards within and well our of kind we hurricanes the billings a platform, is, velocity hurricane to some would brands national that some back. mix after terms the overall both the on but XX days high in say impact really were of in we so plausible patterns on on profit overall impact patterns And in quickly terms we saw the between as I of created had had But some platform. shifting which clearly ran

Mike Randolfi

course some the especially there story. I of think add where that Matthew be our it is just a on throughout the part that for would flows of way to spa times we year that The approach think general, we as to expect gifting categorically only what us year that don't is try times it's and in ebbs to there's want the and This really I generally and a the really are continue the it's deliver I the being time any tell people period, going end one moving platform, forward. retail thing historically in about stronger don't something And you, normalize to for way I’d to of those of business. year been - one to it up bigger in services try that of take

Operator

Thank you.

Our next from comes Raymond question Justin with Patterson James.

You may begin.

Justin Patterson

changes coming then could how how merchants. nature of you're existing lapped in discuss a from merchants more process versus from Two I markets. Groupon+ have question, seeing changes I you and drink increase the today. merchants that that of to any there food supply on could, Groupon+ in thought or was much given that on is thought curious And secondly marketing see new just expense, surprised coming rollout sequentially. timing would I if or end. fairly flat either would of is through year the more Where there I’m much

Mike Randolfi

Groupon+. marketing on I’ll will then take Rich the one first touch and

On us marketing events. specifically marketing weather the little impacted spending and less anticipated what the originally in were resulted a than bit we

intentionally So their not we focus that that during the doing degree to be realize necessarily individuals we weather would those scaled not things affect that same we're events knew demand, period. on and were to back keywords because as bidding like time we in to going started markets

spending we So marketing probably the of driver that than being was a perspective. from originally primary a where anticipated little lower bit

Rich Williams

we’re The you we around to to was an changing is was example channels side going to but that do in those testing Groupon+ that - our I'd we to queue. learn thought in promoting the marketing one would've how active on things down product. It coming offline in were of that not just in the or we it. markets, other really our - to thing efforts, been And going how period some as stop where know, the add process on market. Justin, really are some was markets efforts really double we We actually Groupon+ that our promote continued are saw with some toward our doubled

saw So we which started to we Groupon+ to fluid the York just maintain Chicago, you We did. you an were really or ability New were different if we promotion channels. learn wanted still but in in probably places period like in some

going on expect to We all. to off back at that's front so And continue. don’t that

help the some us pivots to continue learn existing less as respect a on converting a new experience we product. well the of see merchants lot to saw nature With to voucher quarter in of supply merchants. Groupon+, of You the voucher that both as some to it's that Groupon mix around specifically

a we And is the where the that more of learned more voucher experience, the and lot that purposeful we as areas about we've also Groupon+ product can some of - doesn't is as some work where again well. recognize of

of a casual lunch where So and value more Groupon+ dining our and in lot an a not spot it's food drink that's space not or most of voucher can fast consumers. finer it's example, add the and is really for

a have whatever like at sense. Taco of types know, something you offers someone of makes seeing still been going lunch XX% food of mix a say a, place aren’t But you're product. or a four as drink and get to in having a voucher that Taco at for pay lunch $X that a lot Most you’re mix bucks that. of merchants addressable people to different different wouldn't and So

moving testing really the of So some to different voucher product adding approach continue fine well to with as that core have the do layers of forward. that experience. to that's Groupon+ And more we'll we inventory dining to that into we're expect as

Operator

Thank you.

Our with question Tom Champion from Cowen. next comes

begin. may You

Tom Champion

cohorts early adopters talked the In quarters, I prior some new older of like about customer Groupon+. think being you of products

if meaningful any any whether results of any curious Beauty become curious will mind adoption if Just Thank there should topline contributor we there's there? Now and Groupon+ change any and a in on new you're implications keep And then from also customers. and you. have you getting when kind better accounting comment to

Rich Williams

topline the about pieces or keep impacts in as talk in Tom, So thanks will start and Mike accounting of we jump I’ll to some mind.

as we're adoption, we marketing up we're just strategy. start what and to far as our around of that scale, this As scales as our expand I product it and they not seeing the practices - change marketing course think

better are Groupon think as We style and both existing and then I are customers between as adopter new customers place Groupon+ which a Groupon to overall. balance getting early new far to into new

continue is either our exciting new more been to and I be user focus and a to a or I compelling people while and the think that brand on will to ours proposition a value haven't platform to that use entirely. So new platform just on think very prop as what in a more of Groupon

on side, that and we importantly just a and see to we a new really good place product see It's folks. existing I folks that’s think use. So that behavior in good similar between easy

so this front. expect come And I'd more that to on

US a enough still It's to ripple in where customers at we're customers our active we're our cards big rate we and still early product. exciting. that's high that XX impact million relative the far but well see of on yet not through the of million I add and excited over it’s in early, it's their is what’s just a have we that there to an gaining and a in are have example really with what product than fast level just in to effects as P&L. think traffic, very significant that now n acceleration terms And as ground Groupon+ As lot the super how I'll but more really linked early is,

Mike Randolfi

impacts and In as extended period an of for we ultimately over think to the it, accounting consider, gross about terms business things time. you manage profit first, of

impact thing that relative to gets Groupon+ is billings. it's into reported with a has into voucher utilizing consider is one to purchases gets recorded so billings. voucher particular voucher, different in someone a just of value commission someone the When on full Groupon+, And When the a that billings.

per billings with gross similar the to that Groupon+ relative profit, get profit a on So a has product gross voucher. traditional less you

gross as a will additive you it it on scale profit, time but Groupon+ over create ultimately should So be to to headwind billings. we expect

Operator

Thank you.

Our Mark next Citigroup. with Kelley question comes from

may You begin.

Mark Kelley

local impacted more brand than are still about we high to businesses. are the supply at aimed if aimed to increase look is they that then a of here on more your I'm for a the same doing The many in we maybe to you how at in campaigns If what do first you're hurricanes sense marketing all. wondering businesses merchants the Mike, know the efforts, domestically look offline. similar kind level talk little supply at main how by driver question. newer for was one the see what rather there. Curious can consumer, else Groupon+ at the And of and is bit And Rich, being terms international of local then

Rich Williams

hurricane for want Mike Thanks on cover supply? that you impact Mark,

Mike Randolfi

hurricane our definitely hurricane both say local in sales what if are resilient the saw But XXX%. a impact days pretty I they the was, a in bunch. XX dip supply, experience they got coming would and but a you our the mean after Texas, with back back were a definitely from on Florida period coming working period were saw out, certainly back and leading you started from close not own to got I in saw up to they to they XXX%, they hard merchants, and week hurricane. is, at So what and patterns we you hit coming maybe to in

a strong So it's quickly. back pretty bunch. they're coming And

Rich Williams

benefits we to lot And folks and when of is side. open come been see. do more on the I merchants we've have of, we the there to had focus a what here do think with ready interactions, high is touch it's as our and we sales do right that they're to for best And online those one business, them good of get what that's business. want back and they're really

focused something been merchants, more it's the on there's with of merchants consumer you'll And brand years, yeah, us if campaign, our place critical in last to focus on get that going heavily, real that see us it's to that relationships I'm see you're have seven helpful case. to heavily We over is for a and more celebrate everyone the and over I your been balance or that's our this and eight Mark, that. really strategy question marketing think

us, merchants brand to a They more spend course that time the that's become and of communities. of lot a it's of to apparent. but as and externally their a Not that, Consumers just benefit care think haven't their small a spending care great way about And to in I a us about and trust. that our brand at Groupon in their that and small they and because about supply about also to as consumers. apparent as their success of business from have they meaningful company, neighborhoods. accelerate really inside see think help it's be and the from come to celebrate I at time their we for that businesses. it's not been And those good company think for I thinking dollars picture and business folks feel component that that communities but people coming they

the I we’ve resonates a is to to And similar So have our think markets. that's question consumers I’d international. across not very in generally is thing international. world-class We've well It needs but more do think something That say learn deployed of everywhere. I’d however and just campaign, it's kind resonates guess necessary I the your side, resonate adapt early merchants marketing think a that. great seen everywhere. really of with and on does We messaging I that. team response authentic. what's markets. here, they on response, very marketing their That that and is that really to It's but marketing seen US as we I internationally great overall expect for And

very are or edges, on you So the going effort drivers the you'll question the similar of spear see tweaks scaling know, on big, approach. answer big G+ of most a supply. around To Groupon+ part up the is for supply, your you a but to tip see

really the it. side We merchant from to see continue strong responsiveness on

close in Our Xx, sales are rates team. the our still voucher close rate traditional Xx to

uptick accelerate. is helping in So really good which adoption there,

on piece So think that that’s access we're forward. doing third-party of and customer, bringing piece, Whether about side having if to impact our piece announcements Viator third-party the think and folks immediately seen reach you a - is, platform when an thousands be Grubhub expect quarter inventory with may our larger in thousands there on I the one work even big supply think shot. the over a great what have moving it’s the or that's offers we're - going where you one last folks scale and come to there the big to of of technically thousands is adding the like story we integrations. supply And on but a it’s some and I those its

Operator

Thank you.

Brian comes question next Our from with Fitzgerald Jefferies.

begin. may You

Brian Fitzgerald

this just proof inventory you maybe or this, addressed when drive building guess at but showing point you on or put consumer consumer experience. lever view And a and the your see point embracing do accelerating. your and cards the and different of on points to usage the G+ the you platform inventory adoption pull, and finer vendor to G+ or you consumer an the adding a or a look on at I adoption data that it, high efficacy, to easier coming level linking what's as

Rich Williams

in one, hand. hand they I move would say,

go go - us generally that. and customer product attractive then the market to expect I’d for the the a we and side, the - try we we general have launch product So The doing merchants is we consumers. sweet how on to attractive more is vice the we for more I to spot. we and versa. we first the And customers find have, more scale keep merchants then more the is merchant think the

learning linking pace. a having amazing grow that those their supply. a groove But customers customers in how we’re for linchpin certain to continue we're on really good to cards is think at a I great for and

well. on-boarding to do process, expect learning sales really and merchants that in We there. we grow continue to keep approaches our So, and tune and easier that to make easier to continue how for to how

in again every seeing still in great front, So we're we’re but performance. early yet we're stages,

Brian Fitzgerald

you've integrations, in third And party got as finding mentioned getting do toolsets mentioned these of with you the easier maybe third-party integrations about are you that parties as you place, talked you Viator, kind then experience, easier Rich, got you you've go? integrations and out Grubhub, the you the helping are third there,

Rich Williams

probably kind us time mobile For Groupon platform And just what a that more website heard we where sure, we're us talk the a know over or a I a side to you've building be think on to be able it’s piece I app. mean for really it's linkage you that's considerations about - truly as There's to our than ownership Grubhub, of getting we product. always there. in integrate experience partners a have for of being And given we order lot how every time. that the about easier they trivial integrate thoughtful our deeply of that easier And really and of we’re See and on platform. case onto are side. is

take APIs spot So instead to talk there in will can which it's the exactly bring work more inventory getting inevitably. be to some teams just is teams time, that a it's But of the to to and lot it's where custom general big very of easy meetings you on need on through that platform, where know partner be. side we our

Operator

you. Thank

Nowak Morgan comes Our Stanley. next from with question Brian

begin. may You

Jon Lanterman

of bigger questions. picture Jon on for Brain, is this guys Hi Lanterman kind two

really product. local, and gross how very good update got in growth term, quarter, growth. now last kind do CEO. the longer other years an strong international. When on hurricane this the get [indiscernible] profit explaining these in of And Mike Rich, some of billing growth revenue digits and job America each For with versus North you North kind gross two the and low And two, match think was a of margin as then gross of on consistently quarter you’re double that gaps didn't double-digit kind billings, you did billing you with but America you profit.

we versus North and that like five If of in innings of inning inning four Are one. say to are you we for would America America two kind years just what and the gauge international, goals North have some established in international you accomplishing you in is and inning ago.

Just try Thanks. the in to gauge progress kind of runway for the international.

Mike Randolfi

made billings long on referring earlier. the the term, comments North to think profit. about America over We versus I that gross back a just So the bit

the we're period I of gross extended foremost profit. Groupon+ over business an new relative as to say time less been products rolling gross and for time. and we’ve what is And would generate profit also out focused such First billings some emphasizing basically on over of that managing the

headwind we should one to a Groupon+ that profit. so billings, will thing scales but just will move to And color. create think additive a it about gross is XXXX as expect And into the other I be on as as provide little

believe lot we look that flow a we've we've are actions Within at of growth. is, cash free the stage believe things the are and we of we one As XXXX, multi-year talked at that this on cost also talked adjusted path about a about to EBITDA behind us. we big that

comment that will faster in that EBITDA. implicit of that driver than marketing the we will so a And adjusted is time and ultimately pace grow over that expect be at gross profit

Rich Williams

time first inning innings a tell to look what And international. I we’re And for truly in the through first you in I would the plate the the bat of that that kind a if model the the try for got break because first in I'm America. North at at this question batter - I space, working thinker on inning first think is John, lineup but just we’re we've in

really existed past. we're we generally in think I space hasn't and it’s have to a think we're be how constantly because to that innovating the wired way and building that developing in

I amazing inning ultimately great now we products. to our And behind we picking of I really were try it to stage to get it we into a we - are good clean that if businesses of the shoots is that. I how mattered. think and reassess ourselves innovation operational right everywhere. say think the in that general, of that place and inning to the the some in So where the in building stages it's think company and general way. I business, is [indiscernible] very in great largely second XX really down for forward. some - out of and of innings have I there just with And early company. business see first third the of in their up where kicking that exciting inning expanded fast, and and about an battles the work we're third and our the fundamentals early efficiency it platform get set just signs showing us and of Groupon+. enter building to horsepower to that it scale And that, we was had to seeing potential both of through up growth I But like kind country, coming earliest think you we and that going able felt really still break then battle we’re this I'd off green fighting in we're up of to that are was be kind in inning about that then in Groupon second that that that lines think phase But get to international that just had And

Operator

you. Thank

question next with Mathivanan the Barclays. Our Deepak comes from

begin. may You

Deepak Mathivanan

significantly churn you talk start gross can churn, G+. And the it know better again. in for given quarter Thanks customers frequent been me, once that few I don't with its gross Two the believe a But just America to broadly the flat $XX of solid the quarters. grow improving you about the purchase to last but product TTM function should see report growth customer being first you questions from some has Is in we profit to saw. cycle. trends and early in in profit so over experience per during North guys. at life that expect when customers I customer close

Mike Randolfi

would really Within is consistent the in international to XXX,XXX per this healthy say you would that customer I pretty your added new out over America net that and quarter. point were been I spike profit pointed is, has customer North both growth customers. quarters. what several What XXX,XXX say that last And We the gross correctly North America.

quarter is from lost in we big a and third international I actually customers thing we we The gained saw XXX,XXX. where would other change the in highlight quarter second in inflection actually the

customer. per weighs GP that your clearly on So

to mature. bit our to specifics profit newer objective would mean those to say going But of certainly provide we're to grow objective our not I think be. our What that are those little it's your going a customers is, take metrics on per be about focused of is units time Some is specifics product both to tend I as campaign, what what on them. whether the our is to offline - specific customer. all and you gross we're it company international branding whether a and per supply, Groupon+ whether grow And parity. it initiatives in and building customer if bookability in on bringing

All of what earlier, profit expect that our XXXX, I marketing. we focused gross would goal. we the per as customer. increasing And grow gross That's faster look is the to will mentioned profit than on

that's what it so would forward. With to about terms the we I churn, way consistent. the is overall And say churn, think going been of regards in rates pretty

redeem we on that's core product, our big and particular that is rate rate. a change merchant also they that to or The a other. the that at see standpoint engaging haven't We see a redeeming able that sell higher only once with very find we merchants seen I way a in say product would one that do we’re start at thing higher from is a Groupon+ customers and

So both positive indicators. of are those

Operator

you. Thank

of Our Akshay Bhatia comes from Merrill with question America next Bank Lynch.

You may begin.

Akshay Bhatia

of it have past. some talk brands of seems the engage or some about like reengage about I guys the efforts think to talking in I national merchants more wonder are the more on more could your you if platform, than you specifically you

in So or is going shift how should change there that anything in the about maybe think call out there forward. and focus, mix we

Rich Williams

merchant relationships and Groupon+ bit sure and through just little here - side that of nothing the thinking partner. our always of ways we that's even on in changes connectivity really on changed an we merchants things with that would good But our to integrated approach make say that there's nothing in like integration We're obviously major have exception that level, to changes general. connect different have with a a with I there's

that if a way problem a that have those manage to an we a customer or merchant easy a has has situations. challenge So

really So new us I the that's in and more environmental some anything that place put changes more think product else. to of than we adapting development

what So know I - of second was your question? the part don't

Akshay Bhatia

more just about talking guys national the more about you was It that. brands are

those And sort of local the maybe. of versus mix

Rich Williams

general ways wouldn’t is more on seen pretty I student and more and recognize folks think for no to I that folks the a have what traditional know look to be through platform that's in the a think build to - And customers shock as anyone in are help reach new reach and scaled needed to we're everyone is of that as it's – the brands it retail looking as call it's programs their well and much And have customers. well, space both different been advertising retail through well. our we've it Groupon different is. I some retail ways. coupons that that starting as big And product voucher platform brands

there's strategies, folks marketing lot hard and some benefits retail challenges that having that really And there their anything So space over have quarters, are platform the on we to a don't case share are I the brands see we there to expect think time coming fact the be our about great would our it that hope the and coming in to front. over more I platform. on I that specific and but think

Operator

your a Thanks have gentlemen and Thank participation and conference. concludes you. Ladies today's wonderful day. for this

Groupon (GRPN) 1 Nov 172017 Q3 Earnings call transcript