Hello, and welcome to Groupon's fourth quarter 2024 financial results conference call. On the call today are Chief Executive Officer Dusan Senkypl, Chief Financial Officer Jiri Ponrt, and Senior Vice President of Corporate Development and Investor Relations 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 material, including earnings commentary and earnings slides, 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 12, 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 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 reports that the company files and 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. With that, I'd like to turn it over to Dusan 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 2024 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 and updated slides on our Investor Relations website. In addition, I encourage you to review our press release and 10-K, which contain more detail on our fourth quarter and full year results. 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. I am pleased to share that 2024 was a pivotal year in Groupon's transformation journey, and we are entering 2025 with significant momentum. Groupon today is fundamentally different than it was two years ago when I joined as CEO. While our core mission remains unchanged to be the trusted destination for discovering high-quality local experiences at unbeatable value, how we deliver on this mission has evolved significantly. Our transformation is delivering results across three key areas. First, in marketplace health. We have shifted from chasing volume to building quality, evidenced by North America Local's + 8% billing growth in Q4 after declining 19% in 2022. This improvement stems directly from our focus on curated experiences and strategic merchant partnerships. Second, in our platform modernization, we have completed major migrations, including our fraud detection platform, North America cloud infrastructure, new website, and ERP system. These are not just technical upgrades. They are strategic investments that enable us to innovate faster and create more engaging experiences. Third, in our financial strength, we generated $69 million in adjusted EBITDA and $41 million in free cash flow for the full year. Our first positive free cash flow since exiting the pandemic. This improvement flows directly from our more efficient operations and healthier marketplace dynamics. For Q4 specifically, after a challenging Q3 impacted by technical migrations, we rebounded strongly. We are seeing encouraging signs across the business. North America Local returned to 8% billing growth. International Local, excluding Italy, grew billings by 2% with positive momentum in all four major markets. We saw double-digit growth in key verticals, including Things to Do, enterprise brands, and gifting and seasonal offerings. Looking ahead to 2025, we are confident this will be the year we return Groupon to sustain growth. Our 2025 strategy focuses on winning in key markets through our proven city-by-city approach, prioritizing high-impact categories like Things to Do, Beauty & Wellness, and gifting, enhancing customer retention through improved personalization, boosting merchant success with enhanced tools, and completing our remaining technical migration, including our North America mobile app in Q2. With a much better cash position of $229 million versus the previous year and a clear roadmap for growth, we are well-positioned to create value for all stakeholders as we execute the next chapter in Groupon's transformation. I want to thank the Groupon team for their resilience and commitment, which have been instrumental in our progress. With that, let's open the call for questions. Thanks, Dusan. Our first question comes from Sean McGowan from Roth Capital. Sean, you can now unmute. Thank you. Appreciate that. Yeah, can you talk a little bit about what you think was driving that Local growth in the U.S.? It seemed like it really turned around. I mean, I think when you gave us an update on the third quarter conference call, it was running down through October. So what do you think drove that turnaround in the late part of the quarter? Yeah, thanks for the question. We had a lot of headwinds during last year with technical migrations and platform projects, which were impacting our ability to deliver. It was definitely one of the drivers. As we were either finalizing them or mitigating impact, our platform returned to, let's say, the performance which we are expecting from it. At the same time, during the last several earnings calls, I was talking about our strategy shifting to a curated marketplace with a sales organization focusing on quality. We do not go for quantity, but we really look at what we need on our platform. We are also spending much more time with our merchants to make sure that they have deals which perform. I would say that this is a combination of all these elements, which finally all fit together, and they work, and they are reflected in the results, especially in the later part of Q4. Thank you. Can I ask if you were able to recover any of the lost cohort, that cohort that fell off of more loyal customers? Were you able to get any of those guys back? It's highly related to overall platform stability, which significantly improved. We saw improvement in that cohort. Overall, I would say that the team did a great job, really, on focusing on what's wrong, on what are the issues with every individual customer which we have. It reflected in better results, not only from this cohort, but overall on the platform through higher conversions. Great. Thank you very much. Thank you. Our next question will come from Bobby Brooks from Northland Capital. Bobby, you can now unmute your line. Hey, good morning, guys. Thank you for taking my question. I wanted to ask, on the top in the slide deck, it mentioned that the top five metro areas in North America saw double-digit growth in the fourth quarter. Could you just discuss what drove that strength? Was this, and probably more so, was this a result of your team specifically targeting those top five metros first? If so, is this something that you think you can then roll out and replicate that strategy, something that you can roll out and replicate to other metros? Yeah. Thanks Bobby for the question. Actually, we were also talking about international and Spain as a first sign of the result of the strategy shift which we did some two years ago as a pilot. Actually, in Spain, we have some areas and some metros which are actually hitting 2019 numbers. During the last 18 months, let's say, we started implementing similar measures also in N.A., specifically I was discussing on previous call and explaining that we are building this market management capability within Groupon, which is focusing first on the largest metros where we are defining what we need, what are the deals which should be on the platform, and actually also deals which should not be on the platform. This is the reflection of this strategy. We are still in the middle of it. There is plenty of work ahead of us. The goal is that once this process, this structure will be optimized for the top few metros in N.A., we will be scaling to our locations too. Got it. It is something where, yeah, those top five metros were targeted first and going, and you're still working on figuring out what the optimal or how to optimize it best. It is something that you haven't yet rolled out to all different metros. Yeah, we are still learning the right way how to do it. It's a combination of market management where we are understanding the market dynamics, the specific parameters, and behavior of each location. There is also the category dimension to it where we are digging much deeper and understanding what our category needs because Groupon is not one place fits all. We are developing a strategy for each key vertical which we have on the platform. It's this combination of category in one dimension and geo as a second. Once we will feel comfortable that this is a scalable process which we can have everywhere, we will be rolling that out to more locations. Got it. North American active customers, that grew sequentially after, I mean, I have my data back going back to 2018, and there was all sequential declines on active customers in North America. That was really great to see. Kind of two questions on that is, one, does your guide bake in any continued customer growth? Could you maybe just touch on what you felt drove that? I know you talked about better conversion. If you could just share any more details on that, that would be appreciated. Yeah, I will go back again to platform stability because it was a big topic for us last year. Really in Q4, when all these pieces fit together, we saw performance marketing channels to be really stepping up and improving. We are really driving the acquisition part, which in my opinion, we still have the potential to do more. We have a plan. We improved and strengthened the team in the marketing department. We know that we can grow further. At the same time, we are shifting our focus right now on customer retention, where we are bringing some especially food and drink deals, which we call WOW Deals, which can help us to improve the frequency because I believe we cracked the customer acquisition. Now focus is customer retention, second, third, fourth transaction. Got it. And then just kind of confirm, so does your guide bake in any customer growth, or is that not really a function of it? Our plan expects that we will be doing better and better with customer acquisition. We do not expect that it will be several times better, obviously, but we will be improving. We expect in the plan slight improvement in retention too. Got it. Appreciate it. I'll return back to the queue. Thanks, guys, and congrats on the good quarter. Thank you. Our next question comes from Eric Sheridan from Goldman Sachs. Eric, you can now unmute. You're online. Thanks so much for taking the question. Maybe two, if I could. Just coming back to the point on purchase frequency, can you go a little bit deeper in what you see as the critical investments to drive more purchase frequency and what you might be seeing in terms of different behavior in terms of purchase frequency when you line it on top of vertical-based behavior on the platform, what resonates, and what might be some of the key unlocks to drive increased frequency? The second question would just be, you talked a lot about how enterprises increasingly are using Groupon as a platform to go to market. Can you maybe give a few examples of how enterprises as a strategy continues to evolve and what that might do to broaden out supply on the platform over the longer term? Thanks so much. Okay. Thank you, Eric, for the question. I will start with verticals. Yes, we see different behavior in different verticals on the platform. There are verticals like online retail where customers are not buying really the Local services and experiences, where it's quite often one-off, and it will depend on our marketing performance and on our marketing systems to be typically in Google or Facebook when we are looking for some solutions. If you are buying some stuff, which is kind of commodity, and it's still in Groupon, then it's very different behavior. When we move to categories which are more local, that behavior is different. We see a huge potential to increase purchase frequency. What we are, and we started already late Q4, are doing is we are adding something which we call WOW Deals, which are typically food and drinks, really great offer with top brands on the market. Our main intention is to offer those ASAP after the first purchase. In the past, we quite often focused after the purchase just to deliver the voucher, then do nothing for the next few days, and then come back again to customer. Right now, we are improving, shortening that period of time when we communicate with customer. Based on our tests, we see very positive reactions from customers. We believe that these WOW Deals will be one of the important elements to drive purchase frequency higher. In terms of enterprise partners, you see overall market that many companies are really looking for consumer demand, and some of them are struggling. Groupon is a great platform for them. When you are advertising on Google, on Facebook, you are typically paying for clicks. Yes, you are optimizing for performance. Groupon is really the only, I would say, big platform where you can make campaigns which are pure performance-based. They make a lot of sense. If we dig into categories where typically these businesses have fixed costs or they are selling memberships, suddenly the economics of these deals work great for them. Groupon is really a top platform for them which they really want to scale. I would say most limitations which are there are still on the technical integration part, which is our focus to be more open, more accessible to these enterprises which have their own issues with their own quite often legacy platforms. We need to be able to connect them. In general, when I'm meeting with these partners on every meeting, I have a feeling that we can do much, much bigger business with them versus what we do right now. All right. We'll now pose written questions to management that came in through our investor relations press line. Our first written question is for Dusan. Can you share what the December Christmas period looked like from a growth perspective? North America Local was running in the low single digits positive during Black Friday, Cyber Monday, and was likely down negative high single digits to negative low double digits in October based on your commentary at that time around guidance framing. Though, would this imply the business was running up positive double digits in December Christmas based on reported North American Local growth of + 8% year over year? December was very good. However, what we have to take into account is that year-over-year compare was impacted by timing of Black Friday and Cyber Monday. It is not really apples to apples. Even said that, on a like-for-like basis, comparing holiday 2024 to holiday 2023, we believe we had a very successful year in N.A. Local, including some great numbers in the lead-up to Christmas and period between Christmas and New Year. What is important, in the past, we have mentioned that we have observed that our platform tends to perform better during the key buying seasons, and Q4 was really no exception to that. For our Q1 outlook, as mentioned in earnings commentary, we lost some of the excitement from the Q4 season as we started Q1. We have been pleased with the momentum in North America Local and see continued growth in billings. While we commented that our first quarter outlook assumes better performance in Local versus Q4, at this time, we don't believe it will be double-digit growth in billings. Great. We have a few more questions from our analysts on the call, it looks like. Bobby, you had your hand up first. Hey, thanks, guys. Thanks for taking the question again. Bringing higher quality supply onto the platform is a strategy you've talked about a lot since Dusan took over and specifically on this call. I was just interested on really how you are getting these higher quality merchants onto the Groupon platform. Maybe some examples of wins. What is typically the selling point that wins these guys over? Is it the improved tracking you can provide merchants on the deals progress, or is it something different? Actually, it starts with us and with our sales force and the consultative approach, which we were talking about in the past. Let me give you one example. When we started, and we were reviewing what we call deal books internally, which is like, let's say, a document which describes what deals we should be getting for the platform. For massage, the most preferred massage type of deal was like with 50%+ discount and $40 per hour. When we are doing the analytics, we see that really the massages which we sell most are actually something completely else. They are quite often above $100. It's a couple massage with nice merchants. We have to convince our sales force first that we don't go by the deepest discount. We go for something which is a value for customers because Groupon is always a place where we will not be selling the most expensive stuff. We will be selling high-quality stuff, which will be a good deal for customers. Now we don't go to the lowest quality merchants. We go to good quality and high-quality merchants. We don't go there with like $40 per hour massage, but we go there with massage, which makes them more money, which makes also more money to Groupon. Actually, customers love it more. It's actually combined with the gifting strategy, which works very well. These are the types of deals which you can buy and give as a gift because you see the quality immediately. This is the main strategy, really starting on our side, deciding what are the good deals which we need, identify right merchants, and negotiate a deal which makes sense for merchants and Groupon. Awesome. That's terrific. That makes a lot of sense. This is the last one for me. Obviously, you guys give a lot of value to the consumers. Like you just mentioned, there's obviously some pressure on the consumers here with more macro-related stuff. I was just curious if you could just maybe talk about high level. Would you guys actually see a kind of countercyclical tailwinds as the consumer sees more pressure? Or I should say, would you expect that? I mean, that's kind of historically, I think, has been the case. Is that something that you think will continue to be the case going forward if we start to see pressure on the consumer? Jiri, you do want to take this one? Yeah. Thank you, Bobby. I think this will be headwinds and tailwinds. Definitely, we will be the business which will be interesting for merchants in terms of if they will have empty capacity, they will be looking for the options, how they can bring the customers in. I think Groupon is a great place for that. For sure, there will be also tailwinds because the people might have a little bit deeper pockets. It might have impacted the categories like travel or goods or high value. I believe the customers will be looking for the value. I think that Groupon is a good place for that. Really appreciate the call, guys. I'll turn back to the queue. Thank you. Thanks, Bobby. We'll move back to Sean McGowan from Roth Capital. Sean, please unmute your line. Yeah, thank you. I was wondering, Dusan, if you could give any metrics around the improvement in gifting. This seems to have been a big priority of the company. You set some goals of improving that as a percentage of total business. Can you give us some sense of that progress? We did not disclose any specific numbers yet, but I can share some top-level view. I mentioned that gifting is gaining importance. What I can share with you is that during the peak holiday season, the gifting was in double digits share of our orders, very low double digits, obviously, but a significant improvement versus last year. We see a very strong trend and strong growth there, and especially in some categories because some categories are simply more suitable for gifting than others. It is all interconnected. It will take us time to get. I believe in the past, we were mentioning that the benchmark which we had was 50% for holiday season. We are very far from that. For that, we need to improve inventory. I was answering the previous question with more luxurious, let's say, massage deals. We need to have enough deals like this because these are the deals which are bought as gifts more often. I would also stress what we mentioned several times, that Groupon is performing very well as a platform during season. There are many seasonal occasions where gifting will be helping us because people can be self-gifting, gifting to others. This is all a big project which will take us time. I see that we are on a very good path in delivering it. Great. Thank you. Thank you, Sean. We'll move back to some written questions. Another one for you, Dusan. Can you talk about the drivers of growth within international, excluding Italy? Which geographies are you seeing strength in, in addition to Spain running up to 2019 levels? I was actually mentioning in previous answer that we have some cities in Spain which are already near 2019 levels, which is extremely encouraging. We see very positive signals and trends in all our big countries, which is Spain, U.K., France, and Germany. These four make approximately 80% of our International Local. In Spain, as I mentioned, we started two years ago by strengthening the sales force, by focusing more on market management, on really deciding what's needed on the platform. We are following same steps in other countries. It starts with strong leadership. We are strengthening, and we did strengthen teams in every single country which I mentioned. We are holistically looking on performance of the country, what deals we should be bringing, but then also rebuilding the cooperation with marketing to make sure that we are promoting right stuff. Although we did not migrate those countries to a new platform yet, just by optimizing supply and marketing, we were able to get them to growth. We are very optimistic going forward there. Another written question for you, Dusan. There appears to be a lot of employee turnover, assuming this is just potentially to make sure the go-to-market is top-notch. How are you keeping your top salespeople around? How variable is their comp structure? Is sales productivity improving? I have a very good feeling about strengthening our management team in sales in general. I think we are on a very good path there. Yes, in sales, there is and there will be always much higher turnover. We pretty much went back to the original way how Groupon, but also many other companies I was working with in the past, were working. We are hiring a lot of junior people. Quite often, it's their first job or second job after college. They go through training, and some of them realize this is not for them, this type of job. Some of them fell in love and became great salespeople. This is simply the way how we are working and there will be high turnover, especially during the initial stage of hiring. In terms of remuneration, we are a highly performance-motivated company and comp structure, I would say. Our top salespeople are making money which they simply deserve for what they are bringing. I believe they are happy with the remuneration system. Thanks, Dusan. A written question for you, Jiri. What do you believe, if any, will be the impact on Groupon of recent U.S. tariffs? Yeah. As we understand the current discussions about tariff policies, they are targeted mostly to the goods or consumer products. If I look on Groupon business, most of our business is local experience, meaning local merchants, local products, and impact from tariffs is minimal. Mostly, where we will see some impact to our business would be goods. Let's be clear, this line of business was less than 5% of our revenues in 2024. We do not expect the growth in 2025. It will be a smaller and smaller part of our marketplace. Therefore, I would say that potential impact of tariffs implications would be minimal and would not be material to our 2025 outlook. Thank you, Jiri. We have one more question, it looks like, from Sean McGowan. Sean, go ahead and unmute your line. Thanks. I want to circle back on something. I think in your prepared remarks, you talked about user engagement maybe something that could see some improvement, and yet you got the 8% increase in North American Local. Can you give us a little bit more color on the relationship between user engagement and that growth? We have, in general, better conversion on the platform, which is helping us. In our comments, we mentioned that our marketing platform is really working very well, the acquisition marketing platform. This is the primary source of this growth. We are able to approach customers in N.A. I would say internationally, it's a very similar story. We are able to present them a compelling offering. We see increased conversion in the sales process, which is something we were expecting when we were talking about the new platform which we are releasing, but also just coming together with higher quality supply. It's driving also higher AOV, not only gifting, but in general, higher quality deals. Now, what needs to be coming and what's our focus is retention, meaning we need to increase the number of transactions our customers are doing with Groupon. Okay. I think we've talked in the past that each incremental or each turn of user engagement adds tremendously to incremental EBITDA, like $100 million for each turn or something like that. Is that still your expectation? When do you think we start to inflect to that? What do you expect over the next couple of years? I'm not able to be exactly specific about the numbers, but just to give you an idea, when we are talking internally about strategy 2025, the first line, the North Star for the whole company is customer and merchant retention. As you see, it's becoming the priority number one for Groupon in general. We are already experimenting with plenty of not only deals, but different approaches how to tackle it. I'm optimistic that we will be able to improve it. We are not ready yet to share specific numbers. I expect improvements this year, and then it will gradually continue in next years. Perfect. Thank you. Thank you, Sean. We have one more written question for Jiri. Jiri, can you comment on the trends underpinning the guide? Yes, for sure. The trends on that are we left Q4 in definitely better position than we entered Q4 after a very turmoil Q3. We are continuing in Q1. We expect in Q1 still a slightly negative trend in billings. This is what we put there. We continue, and we still see the lower take rates. It means year over year. It means that our revenues impact will be more negative versus trends of the billings. We believe we will be, as we were last year, positive in adjusted EBITDA. About the cash flow, these are things which we have to take into account. Our business is seasonal in terms of we have strong holiday season in Q4, which is redempted by our customers in Q1, which resulted naturally in negative cash flow in Q1. This is about Q1. For full year, we actually expect that we will be growing billings. We expect we will be growing revenues. We will be adjusted EBITDA and free cash flow definitely better than we were in 2024. What is probably good to mention here? We expect some forex impact roughly 100 basis points. It is maybe good to mention that last year, we left Italy beginning of Q2, and I meaning not fully a Local market. This is all the things which we should probably mention. We also believe, and I think it was mentioned here already today, that we continue and we will continue to invest in our marketing and in our sales force. We expect that our SG&A will be flattish year over year. It might be a little bit different each quarter, but we see some pockets where we can still have savings in our SG&A. On the other hand, we are hiring, we are hiring especially to our sales force. This is a place where we would like to take our savings, which we will deliver during the year 2025 and bring it back to the business and definitely strengthen our capacities in sales force. About marketing, we expect, and it was also said here, we expect to be stable spending roughly 30%-35% of our gross profit on marketing, assuming and being conditioned that we are positive in ROI. If we will be positive ROI, we would be able to spend even more, which will certainly impact our outlook positively. Thank you, Jiri. There are no other questions. This concludes our call for today. Thank you everyone for joining. For additional information, please go to investor.groupon.com.