Earnings call transcript Q1 2023

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Operator

Hello and welcome to Groupon's First Quarter 2023 Financial Results Conference Call.

On the call today are our Interim CEO, Dusan Senkypl; and CFO, Jiří Ponrt. [Operator Instructions] As a reminder, today’s conference 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 10, 2023 only and will include forward-looking statements.

As a result may differ materially from those expressed or implied in the company’s forward-looking statements.

the and is that press included in filings risks our potentially release about our results financial in with information other could factors impact and Additional SEC. our earnings

and SEC, Groupon’s select the We encourage a media of furnishes Company social this promptly files finding easily website Relations press Groupon the at about Company. available investor.groupon.com or way the Investor corporate information makes investors and as website the releases governance use information to on postings. reports with that

disclosures On today, following company free also non-GAAP of on results. and to will our financial and FX each otherwise on is regarding these SG&A, reconciliations SEC, neutral most release measures, the noted, In provided which flow the Investor U.S. measures of including non-GAAP all Relations our posted the call non-GAAP website, the discuss GAAP. additional filings Groupon’s press measures, the an measures basis. adjusted find these under comparable are Unless cash with FX-neutral comparisons EBITDA, you will

that, And over Dusan. call to to the turn happy I'm with

Dusan Senkypl

us our Hello for joining of be call. with pleasure for and all you. earnings first quarter It's thanks a XXXX to

press encourage contain results. to remarks, addition prepared four topics. shareholder XX-Q, cover call key today, to our more On and I today's our review letter, detail In on QX release which you our I will

my learned days Groupon. at during I've first First, what

transformation strategy opportunities. challenges team Second, the our and new our most challenges that a that the of our we face executing and address make on as is to our company

performance. XXXX. And highlights lastly, QX our Third, the for of our outlook

In XXX and and highly than built million products I'm agile my I XXXX. means equity investment introduce of was firm started, Media, that to cofounded used oriented Holding, ownership net Fire value by build several shareholder, largest were billion with XX%. performance marketplace NetBrokers Its to global At employees, fintech development, by I Groupon's in Capital, strategy design, companies. asset Pale I would ecommerce my German as Pale currently portfolio briefly and media almost was get technology myself. and including than leadership, Before approximately XX Bauer effective, XXXX, All and created an users. and trade, has entrepreneur rapidly by $X companies, nature have is approximately to which I for private Pojisteni.cz that more more a bought go-to-market it's includes a in grown group, I companies. served a an CEO. and product several entrepreneurial XXX I which Fire, Chairman development. projects player responsible with And organizational dominant bootstrapped, like

of in really of X.Xx and years track I Central also maintaining proud Fire by record bring and Eastern which healthy transformations, Aukro, while investment increased Fire business I'm developed my three in Ebay.com, we the successful the has Pale am GMV to Groupon. to help which approach Europe at experience drive lead including its a Pale profitability. of version to is excited transformations,

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less conversations, opportunities all our listened our immersed by operate technology, from products as myself first needs. to much I've been my I've XX even market's generate our growth. we us. I and much can same meet future responses proposition, the need we all a on into struck into a or thus efficient focus for lot you to of internally that in these and base CEO, learned productive opportunities to During facing from to we partners. into also looking is We a the more and that for have that initial way. a are employees days solid so output value address and our Through how and the we resources. acknowledge and My these higher execute are have with I we challenges

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strategic transformation plan teams, is organize will drive momentum. that on pillars and eight our focus, built provide Our

These side are of our first, marketplace. fix supply the

experience marketplace raise Second, modern our product to standards.

business assemble Third, tune marketing team lower our structure, performance performance towards high a our funnel processes systems. channels. management rebuild and focus engine on organization operational Fourth, excellence. Fifth, a with

shareholders leverage I structure. efficient to but local one. by one a and Each here, Six, financial on say improve are pillars each create Seven, in words business cost will detailed our an our letter, eight, these lines flexibility. our support of few

the fix supply supply, will vendorize starts Firstly, with demand of If follow. side supply. Everything marketplace. our we

merchant solutions structure needs dynamic current balance merchants side marketplace. supply has for better to deal merchant base. offer churn flexible strike proposition goals. and increased and improve that supply a company individual To to Groupon to marketing involves, Our discounts margin Groupon, returning as focus, of a led meet to of consumers, its merchants plan the to aims needs marketplace between to and expensive approach partnership recommitting proposition, and more value its our Geo our heavy fix value of and partners, driven sale the reinvigorating its

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part is product offering merchant standards. enhance marketplace standards, pillar Groupon's strategic of our to Improving a modern strategy to and of experience. transformation The short falls is key experience current resulting second raising partner customer Our marketplace technology the infrastructure modern in Groupon product gamification, taken steps tech and generative allocation, assisted improvements size resource increase high as despite initiative ROI AI organization to to focus on such creation. product quickly unattractive hackathon the ambitious has right personalization an launch development, an deal including and product

Our marketing our on channels. third performance strategic to funnel tuning engine is pillar lower focus

marketing resulted In Groupon of away our spend decrease improved by QX, the This from shifting performance ROI Groupon focusing marketing targets. efficiency funnel to spend a on channels incrementality in in lower and up gains is engine mid channels upper to in channels. efficiency, a search funnel and percentage profits, especially before performance of as marketing. in improving now returning returns gross focused on in

top the the Groupon's Groupon's high and Groupon operational proactive excellence. also passionate is recently seeking a outside strategic are team focused. who a committed and fourth is recruiting about detail to Republic oriented, hired through customer focus with and Pale success, talent performance is in on and assemble and Capital's actively both mission Attracting crucial a Our Network talent is goal a to individuals driving Fire company. team company inside to has change. create the Czech The winning pillar,

operating organization The with strong Groupon KPIs. pillar, systems and becoming is is implementing high our breaking rebuild silos and operational a and structure, fifth to priority ensure of prioritizing faster culture processes and team systems. to is are strategic in place. management down enable execution flatter a projects, making metrics performance and business organization leaner Our excellence changes management and

reducing implementing meetings modern and our We have project a management also system tool. improved management by

Our an small company is of AI categories and cost reduce simplification costs. to implementation sees Xth efficiencies tools through structure. to automation, efficient strategic reviewing large Groupon The improve pillar, create and opportunities spend implementing proper by and the a with million. SG&A and $XXX of line year improve structure to rate is run bottom of We exit track believe organization frugality. of non-GAAP our on mindset we can

services. and packages offer we for our goods, while to and that pursue experiential ultimate trends In experiences instructions will complement Our other our and leverage to experiential Xth to strategic to pillar, and value merchandising categories the inspirational be destination seasonal plan travel We local accommodations. mission gifts, in travel by proposition curating local. and strategy travel shift our categories goods include support will

and Our acquisition, margin model. experience goal offerings a synergy to create business that engagement marketplace to the of unlock of potential balance is portfolio our horizontal retention,

and Xth strategic announcement has Our plans. assets. January sufficient credit through and additional enhance potential company The believes financial as financial and noncore a is to savings, of to to our in restructuring year March it among flexibility. foundation further taken steps amendment facility exploring to financing cost improving monetization will other improve liquidity next such have obligation pillar, its Groupon meet its strategies its the position its liquidity

Jiří had revenue look for disappointing while Let's EBITDA, We at details more now quarter later. both a adjusted QX. back and provide will

generated and cash negative revenue serious indicate significant free XX% million business down address billings and XXXX quarter, facing is of We $X that the underscore first implement and the in adjusted million. were a need we must outflow as urgent a and year-over-year. transformation. company to and $XX XX% These results EBITDA Our challenges

and outlook an our important be Lastly, XXXX for year. beyond. XXXX will

transform the in laid time. work long-term the and lot a for sure have of XXXX we take our We foundation success. and I will will make results company the do that to

with we long-term a side our As merchant will fix more make the business the the view key to right for our healthy took the term is of I a over Finding the supply on this about partners business marketplace. spoke earlier, health XXXX and time. sustainable our context, realistic balance long Within objective business. of

a I third a expect improvement quarter see revenues observed expect the I As decline year-over-year our expect what the of in to quarter decline at each quarter. rate slight while year-over-year, a to would in in result, our first we to rate we declines second fourth similar quarter. And to and

an and depending see early hold, by our strategy of of increase our to on though trends may expect in our local billing As takes the other strategy. billings growth categories from our XXXX, timing transformation local our diverge the year-over-year revenue trajectory we trends, transformation

be to to in I monitor stakeholders. all strive with and communicate we I what strategic, believer I our we our next of provide more all to progress updates provide to I in operational delivering a intend our on and with doing our and therefore open believe you am details strongly commitment priorities. towards in dialogue finance as XX When firm regular I days, help communication our about will as you transparent possible say goals. towards do. will on progress discussions in

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Jiří Ponrt

saving factors joining I And you. is here our who as financial Thanks, to today. progress the time to for insight into, operating consider thank and well quarter be provide results, and speaking will our us a everyone the cost on today Dusan. to to further with of pleasure year. use first remainder It's my you actions,

briefly business. Before and a would I I to joined have few our a than myself Groupon ago. I less I share like on begin, introduce month observations initial

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seven with board the of to a finance players than US of is myself function, its CFO had scope more Alza.cz, of to of QX, European turnover Groupon major as to Central one orient so me, our familiar XXXX, finance for some the ecommerce CFO a to as opportunity active $X about During A big oversight the with helped I I I part department. Groupon billion. the years

Groupon, the with further I've are believe legacy time company's from there system its onset During and my learned purchases quick growth, acquisitive streamlined. that that at can and I be

of cash decision on as automatization alignment departments making, on across liquidity priorities, apart management, flow and management and more will as purchases, So my structure and be and from simplification focus the purchases. focus well our of

let's global first profit, billings, results. $X revenues, million and We adjusted deliver of $XXX quarter $XXX jump negative into gross million million consolidated of So EBITDA. the of $XXX of million

First on revolver. million. ended customers we $XX free XX was with drawn And $XX had active outflow the $XXX worldwide. quarter over million in million cash, million And cash quarter including we

X% Turning local local of and million we local local compared consolidated XX% $XXX billings XX%, prior the category, $XXX up America, local million XXXX, active million as deliver compared to were year-over-year. X with sequentially $XX year, active International, March flat had deliver X down our the flat XX, down X% million, billing North of we and had and billings and with year. X% year-over-year. down million, sequentially customers local prior of customers

billings and travel the XX%. in million, Travel million, Goods were was category, goods $XX and $XX our to billings down first down Consolidated XX% quarter, Moving consolidated

operating compared saving Turning down year to we the GAAP reflected was prior in to see actions financials. our quarter and SG&A begin our of as our first million expenses, $XXX recent the cost with benefits XX%

and year-over-year. stock-based down compensation and was million, XX% non-GAAP which amortization, depreciation SG&A Our excludes $XX

remain by to a cloud be cloud XXXX lower our actions over resulting of As complemented the will expenses we in quarter which we saving reducing time, payroll first the January. our completed in to we from migration cost cost significantly announced the and reminder, committed

was our $XX charges incurred expense XX% the restructuring in of During quarter the we related million or for quarter first XXXX, profit. onetime first million, Marketing plan. $X to gross pretax

we our we improvements out experience, to we of to can believe get deliver As fundamental marketplace our dollars. more continue marketing

in marketing Our profit to to XXXX. is goal sustain expense our XX% below gross of

$XX net ended revolver. cash quarter office $XX drawn including payment $XXX the had the our of outflows cash, termination million, operating quarter, for under we lease. we first In onetime cash to of million million including $XX Turning with position, Chicago [inaudible] in our million

networking experience As first a of payment quarter abnormal we reminder, and the to merchant the typically due year output in seasonality cycles.

borrowings our facility under We revolving during also of $XX million quarter. credit repay the

the of $XXX actions remove In cost begin million actions QX. $XXX executing actions plan, our phase restructuring to of is expenditure completed we a which business. substantially half to by the related phase total, the expected and we on earlier second we one of of our end expect our this And XXXX, of complete of to majority year from by these million. plan second are cost the of In track to these reduce cost

our taken financial These cost had actions facility as well as Groupon year. our March standard our examples improving its foundation support amendment credit this towards to to of transformation

With meet the liquidity we we become due hold equity XX SumUp. months. they in obligations believe and a stake have provider these X.XX% management will global additional next to continues Groupon the as plans, our privately payment sufficient held actions to over

approximately this well as a As on reminder, investment current this for the stakes The is value we of as sheet. investments million. $XXX balance our other reflect value minority

market this arises we sale While are at $XXX to non-GAAP how consider expected time, this P&L approximately To asset, estimate securities XXXX. these to during monetize this first our walk these XXXX quarter to translate of during savings We savings see me million. you opportunity help through there let possibility year be began to XXXX SumUp with the cost full is for SG&A if no models, and too. to an would you public

able million. to our be lower expenses run Beyond to XXXX, we be will SG&A approximately non-GAAP annual rate $XXX

this formal of not Given the providing our we in we turnaround executing guidance strategy, at are time. midst are

for are light expectations providing year. details the on In we more this, of our

rate revenues in first our the third while each our rate expect And strategy to expect year-over-year mentioned, what see to improvement a quarter second declines we I observed decline at slight Dusan quarter. and the takes our transformation as year-over-year, a expect quarter we decline similar As to fourth quarter we to would hold. of in

revenue early our our We on see billings the XXXX, trajectory by other spend the so growth to diverge our local might strategy. expect billing of for depending trends our and categories increase year-over-year transformation in timing local of an

generate On adjusted actions flow, for free remainder ability cash timing to will cycle flow to our cash adjusted the benefits expect do of Turning to on positive other capital working the EBITDA we year our positive to EBITDA positive cash of the convert we of the profitability, restructuring realize start depend meaningfully. as to free more our expenses. and

impact generally As impacted our a first large our reminder, quarter capital working seasonality, negative working experiencing with capital. working capital our been has quarter historically fourth experiencing positive by and a

savings, our like growth unlocking up With Operator? can our for strategy our create line you of Given questions. current to open top time SumUp we and today. believe valuation, Thank the would focus that, all we transformation. on plan stakeholders operating expense as your for to market continue our your we of stake, and we value call both our equity execute for

Operator

Instructions] Operator

We'll with take our from first Barclays. question Young Trevor

Trevor Young

Great, I thanks. may. Two, if

First into one color and local billings XQ. North America just so international far March in and on any

I there. that think XXXX FX that but were data last it looks print February points trending than the like in that, of were was bit little And softer XX% noise a levels. around and had we some quarter maybe full January results

So deteriorated we and trying are April. to March far so understand in just in where trends whether

three from if monetizing restrictions a would Investors realize there's Appreciate And the can But that or that. from impediments bid letter for And market us the were question. comments the help then prevent in that sufficient just to active next stake. party? liquidity. months second to naturally you there's that evaluating some SumUp there no understand and if to you strategies migrate enhance any six I

Jiří Ponrt

America, can intellectual way your SumUp and question our for quarter-over-quarter $XXX potential about the down Hi, including we from the million cost of Jiří. of private. same in XX% ownership was public XX% in the year-over-year. have And pursuing sheet assets balance on. about we or QX, SumUp, monetization and North second so is US additional which Yes, property of actions we certain to and as seeking this so financing imagine card Okay, billings stake and additional both noncore or our portfolio gift are local

Operator

Sheridan We'll Goldman Sachs. from our Eric question next take with

Eric Sheridan

if for number eight wanted the to in you just questions. pillars strategic out, I two laid so back to hone Thanks and number taking coming the Two, on much could, I three.

want change love might go I'd standards. to see some how or little align what with attack spaces of it white deeper possibly you of areas pursue. terms to to as market in to you invest product place there modern arc and experience key to So a of the the investment on or

changing would inside your be we and How some think to to or then How the made terms the channels? engine more of second we user over about that lower so third much. investments align funnel with of arcing thinking performance need sort possibly be that the conversion changing of either closely the And marketplace marketing the should should has pillar. user Thanks or that about pathways in get company had funnel time?

Dusan Senkypl

the for question. Thanks

team we modern raising major all which be to have first have Groupon standards, now. that product smooth which one part I user processes a making much of experience the our engineering Project, is Groupon pretty marketplace friction is right Regarding and to sure And we first started changes Hackathon experience that on joined launched our part which of are big have the we which with which than we the includes on less our will developing our we and website. we initiatives when several

categories developing for generated several AI self-service of of from based much generate and to and similar are are are from we the be lower the in the Right experience for which dataset of similar self-service able are the own process which humans our of the our we our are through quality, campaigns some similarly, requires for change our for created sales comparing more website. using And and the say the merchants be let's deals AI generative examples output whole on And quality general of will to but on it's one performing we deals merchants website and merchant page have means of agents checkout up and that will they by higher experience the or achieve team. simple. which also example whole customers will set on for much which more the example use like many we now which in be the using is which lower development the

So the first this pillar. is

towards as spend and The are geo the a that setup we and trying second channels and channel, have measurements on higher a more rest. a engine to of performance which question of focus the little the PC, and marketing the small kind we are there the marketing of tuning performance funnel say put the are locations all in, small engine up so deals lower performance revisiting can of bit more bit versus performing spend towards little adjust which higher spend, and we let’s we campaigns

conclude And may presentation. for And this disconnect. conc session. now question-and-answer you. the Thank today's And your participation. Thank does you you

Groupon (GRPN) 10 May 232023 Q1 Earnings call transcript