Hello, and welcome to Groupon's first quarter 2025 financial results conference call. On the call today are Chief Executive Officer Dušan Šenkypl, Chief Financial Officer and Senior Vice President of Finance, Rana Kashyap. At this time, all participants are in a listen-only mode. Today's call will be a question-and-answer session only. The company has posted earnings materials, including earnings commentary, on the company's Investor Relations website at investor.groupon.com. Today's conference call is being recorded. Before we begin, Groupon would like to remind listeners that the following discussion and responses to your questions reflect management's views as of today, May 8th, 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 quarterly reports on Form 10-Q. We encourage investors to use Groupon's Investor Relations website at investor.groupon.com as a way of easily finding information about the company. Groupon promptly makes available on this website the reports that the company files or furnishes with the SEC, corporate governance information, and select press releases and social media postings. 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 Dušan to make a few opening remarks before we jump into Q&A. Hello, and thanks for joining us for our first quarter 2025 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 on our Investor Relationships website. 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. For more details on our quarterly performance, I encourage you to read our earnings commentary. In addition, I encourage you to review our press release and 10-Q, which contain more detail on our fourth quarter and full year results. I am pleased to report a strong start to the year, with our Q1 results exceeding guidance on both billings and adjusted EBITDA, with a slight beat on revenue. Global billings grew 1.4% year- over- year, marking our continued progress towards sustained growth. This performance was powered by North America local, which accelerated to 11% year- over- year growth in billings, the first time we've seen double-digit growth in this segment since 2017, excluding the pandemic recovery period. Our hyperlocal strategy is delivering strong results, with our top 10 cities in North America growing billings by double digits. Enterprise clients continue to flourish on our platform. Looking at our vertical performance within North America local, Things to Do grew billings double digits for the fifth straight quarter. We believe our Things to Do franchise is significantly outpacing current industry trends and is poised to continue strong absolute and relative performance as we head into the important summer season. Our international local business, excluding Italy, also showed impressive improvement, with approximately 5% year- over- year billings growth. As I start my third year as CEO of Groupon, I believe the time has come and the team is ready to start playing offense. Our mission remains clear: to transform from a daily deals platform selling everything to everyone into a trusted destination for quality local experiences at unbeatable value. Our transformation strategy is working across marketplace health, platform modernization, and financial strength. We are seeing success in shifting from chasing volume to building quality, migrating from legacy systems to a modern platform, and moving from negative to positive financial performance. While our strong billings growth is encouraging, I want to note that our progress in revenue is currently lagging billings due to compression of take rates in North America local. This evolution in take rates is deliberate and a natural consequence of our focus on building a sustainable foundation for long-term growth. For example, higher redemption rates cause a short-term headwind to revenue but are a great sign for the long-term health of our marketplace. Over time, as we make progress on delivering these healthy marketplace fundamentals, we expect billings and revenue growth rates will converge. On the leadership front, we've strengthened our team with key appointments, including Josef Buryan, our new Chief Marketing Officer, and Aleš Drábek, our new Chief Technology Officer. We've also promoted Barbara Weisz to Chief Revenue Officer and Filip Popovic to Chief Commercial Officer to lead our supply-side commercial strategy and Marie Havlíčková to Chief Product Officer. The business exited Q1 with strong momentum and continues to perform well. Looking ahead to Q2, we expect another quarter of accelerating year-over-year growth in both billings and revenue. For the full year, we raised our guidance for billings growth rate from 2%-4% to 3%-5% and kept our revenue and adjusted EBITDA guidance unchanged. I want to emphasize that we maintained our revenue and adjusted EBITDA guidance despite completing the sale of our wholly-owned subsidiary Giftcloud in early April, which removes approximately $6 million in revenue and $4 million in adjusted EBITDA from our consolidated results for the remainder of 2025. Effectively, by keeping the overall revenue and adjusted EBITDA target unchanged, we are raising our guidance for the core business, demonstrating our confidence in our core business. It's an exciting time to be at Groupon. We are no longer just stabilizing the business; we see several green shoots of growth across our business, and we are building the foundation for long-term sustained growth. With our platform modernization underway, improving customer experience on both sides of the platform, continued progress in financial performance, and a clear strategic direction, I believe we are positioned for success in 2025 and beyond. I would like to thank our team for their dedication and hard work that have made this progress possible. This journey has not been easy, and their continued commitment to our mission and to our transformation has been really great. With that, let's open the call for questions. Thank you, Dušan. Our first question comes from Bobby Brooks from Northland Capital. Bobby, you can now unmute your line. Hey, guys. Thank you for taking my question. I guess something that really caught my eye in the prepared remarks that you put out yesterday was the number of North American merchants doing more than $1 million in billings was up 43% year- over- year. Could you just discuss what is driving that strength? Is it the new go-to-market strategy and focusing on higher quality merchants and providing them with better tools to track deal performance, or is it something different and more in-depth? Bobby, I can take the question. Thank you. Thank you for it. How I see it in the last, I would say, over 18 months, we are improving in what we call a hyperlocal approach. That means we are looking in more detail in what inventory we need in every single location. We are improving our category management in terms of understanding what's the inventory we need. By combination of both and focusing on deals which our customers need in a given location and on the quality of deals, we can be a better partner not only to our enterprise partners, but across the board also to local merchants. I believe this is the result of our more focused switching from the number of merchants on the platform to the quality of merchants, quality of deals, quality of service which we are providing to our customers. I would probably also mention that the current macro environment is definitely not hurting us. I see it like quite the opposite. Got it. And then just like a clarifying piece on that, is the greater than $1 million in billings, is that on like a year, like a 12-month trailing basis, I would guess, or is it on like an interquarter basis? I was just curious on that definition. It's based on a trailing 12-month basis. Got it. Thank you. And then just one more for me is something I noticed like kind of browsing the website interquarters, a couple different professional or one professional sports team that I saw specifically was selling tickets through Groupon, and the checkout process was extremely smooth, never having to leave the Groupon website and being able to pick the seat and pay all within the Groupon platform. This seems like something that might be a new integration based off the new platform. Is my assumption right? And maybe just touch on like that, if that's a new ability, touch on like how that's helping grow the business? Bobby, I was commenting on several calls that with the new platform, we will be able to iterate in a faster pace. This is one of the results. Obviously, checkout is one of the key components of the website. The team which is maintaining checkout is pretty much every day looking at what we can improve. There is still a way to go. Comparing where Groupon was two years ago, I believe we made significant progress both in terms of how easy the checkout is, but also in terms of payment methods which our customers can use. Fair enough. I'll return back to the queue. Thank you, Bobby. Our next question comes from Eric Sheridan from Goldman Sachs. Eric, you can now unmute your line. Great. Thank you so much for taking the questions. I did want to follow up on the macro commentary in the prepared remarks. Maybe you could just go a little bit deeper in your own view about how the macro environment could act as a tailwind in the business. More specifically, it sounds like the implication is that the merchant pipeline could be increasing as certain brands and merchants want to go deeper on the platform given the current environment. I want to know if we could get as much detail as we could there about the way you're thinking about the pipeline on the supply side as an output of the macro environment. Maybe after that, I just have one quick follow-up. Thank you, Eric, for the question. You know very well the macro environment is extremely volatile, and it has an impact on consumer spending. Unfortunately, it's also very difficult to predict how customers will behave. What we see in general, we see it as a tailwind for our business. We see it specifically on the supply side, where we see signs of weakening traffic trends from some of our clients. Because Groupon is a great performance-based platform, I believe that in this time, it's simply a great opportunity to work together. We are just trying to figure out what are the best products for clients, how we can help them, how we can together with merchant partners create products for our clients. We see in general in the enterprise segment, but actually the same applies in local, that we are really deepening cooperation with our existing clients. We see also faster inflow of new brands coming to Groupon. At the same time, I would like to mention that these are kind of early signs. The overall situation in macro, but also on our marketplace in this term, is quite fluid. We need to follow very closely what's going on in macro in North America mainly, but Western Europe is very similar, and just adapt. Great. Thank you. Maybe just one quick follow-up. You had a number of comments in the prepared remarks around marketing investments and the ROI you're achieving on those marketing investments. Can you talk a little bit about your own attempts internally to optimize dollars against your return goals for deploying those dollars and/or how the overall marketing environment and pricing and auction density might have helped or acted as different sorts of headwinds to the ROI in the quarter? Just want to understand a little bit of the external versus the internal dynamic on marketing ROI. Thanks. Yeah. In general, last two years, our strategy is to be able to acquire our new customers pretty much with ROI 100% in seven-day windows, which pretty much means that the profit margin which we have on the first order is cost of our acquisition. I was commenting in the script, and I see performance of our marketing channels improving, which is allowing us to increase volumes. Because in marketing in general, if you want to increase volume, every incremental dollar and click or traffic or eyeball which you are buying is more expensive. If we are claiming that we are growing and increasing marketing with the same ROI, it means that in general, we are improving conversion rates in our marketing. We actually see some additional opportunities how to continue in this trend going forward. I believe that performance marketing for us will be a tailwind in the near future. At the same time as the team is strengthening, I was mentioning that the new CMO started. We are also exploring new channels in the mid and upper part of the funnel, which is mainly social media influencers. We already have several pilots in place where we can present Groupon to really millions of people on social media and on platforms where Groupon was not active in the past. This is another opportunity which I am extremely happy about, and I'm looking forward to the results. Thank you, Eric. Our next question is from Sean McGowan from Roth Capital Partners. Sean, you can now unmute your line. Thank you. Appreciate that. A couple of questions. Could you give us a little bit more color on international? You've talked in the past about Spain being one of the markets where you initiated some of these fixes earlier, and it was really paying off quite well. Could you just give us an update on some of those markets that have been in that turnaround process longer? Okay. Thank you, Sean, for the question. In general, I would say that the trends across all major markets in international continue to improve. I am personally very happy with the performance of international markets. The leading market in terms of growth is still Spain, which simply has an 18-month head start in terms of when we started the transformation. The process and the framework which we use for transformation in Spain is simply working great. We have very strong double-digit growth in Spain. All other big markets, meaning Germany, U.K., France, are also performing very well. We see that the trend is still improving. The comp is a little bit different going forward in Q2 because last year, we lost Italy as a market. That is why although overall, we were slightly negative last quarter, it will change because we will not be comparing against Italy. When I'm looking really on the performance of every single country, it's going in the right direction. The playbook and the stuff which we do there is pretty similar to what we do in the United States. In every market, we want to have a very strong leader, a strong owner who owns all business. We go hyper-local, meaning we are focusing on the largest cities in international. It's typically the capital city as the first one and then typically second or third largest city in the country. Making sure that we are adding both high-quality local deals. Similar to the United States, we see high importance of high-quality enterprise deals because these are the deals which are driving traffic to Groupon. That traffic is converting not only on these enterprise deals, but also converting to local merchants. Great. Thanks for that color. If you could just give us a quick update on the international website and mobile app updates. I think those are things we were expecting in the first half. Where are we on those? On last earnings call, we mentioned that this year, we will be taking a very cautious approach. We, quite frankly, have slow progress during the quarter. We have very good visibility into each step in the conversion funnel of our Mobile Next application versus legacy application. We see there in that conversion funnel both good and bad guys, meaning that in certain steps, we see that legacy customers are used to something slightly different than what we have in Mobile Next application. Our approach is to make it more similar and closer to legacy because we simply do not want to hurt performance. At the same time, we see in the conversion process several good guys, meaning in certain steps, the Mobile Next approach is showing better conversions. In the long run, we are committed to the project. We believe that it will bring an upside opportunity for Groupon, not only in the website where we have it already implemented, but also in the application. In terms of when and how, we need to finish first NA app. Once we finish NA up, we will continue with international. At this point, I do not want to provide a timeline because our priority is really to make sure that our systems are stable, our customers do not have any issues, and the performance of the whole company, the financial performance, is simply delivered. That is the priority number one for me. Cool. All right. Thank you. I'll get back in the queue as well. Thank you. Thank you, Sean. We'll now pose written questions to management that came in through our investor relations press line. Investors on the line, please raise your hands if you have follow-up questions. Our first written question. You identified product velocity as a key focus area. What specific metrics are you using to measure improvement in this area, and what are your targets for increasing the pace of innovation? Internally, we are looking on the velocity of delivery for engineering and product teams. From the outside, I would say higher-level perspective, it's simply looking on our ability to deliver small weekly changes on our website platform and our application platform. There were multiple improvements we were touching in previous questions today, for example, the checkout. There are many other parts of the website where we released improvements, being it merchant pages, being it location or search. We will simply continue. I believe as we will be moving more and more technology to Mobile Next, we will see improvements in the face. From a shareholder and user customer perspective, both on the side of merchant and consumer, simply we want to make sure that they see that Groupon is changing and we will be seeing more and more features. We are working, for example, also on new maps because that's the functionality where we believe that we can provide much more value to our customers. There are a few more interesting projects. One more of which I can actually mention is search because search is one of key drivers of revenue and conversion. We believe that it's possible to do much more with search versus what we have right now. Thank you, Dušan. Looks like we have a follow-up question from Bobby Brooks from Northland Capital. Bobby, you can now unmute your line. Hey, guys. Thanks for taking the follow-up question. In Q4, kind of a key point was how the top five metros in North America were up double digits on billings. Now in the first quarter, that's expanded to the top 10 metros up double digits. I was curious, was this expansion of the number of cities seeing double-digit growth a result of you expanding that go-to-market strategy to the new cities? Or is it maybe something where it was already happening in the other cities, that new go-to-market, but now it's just starting to kind of take hold, right? Yeah. Bobby, this is something which is mainly about the timing because when we were deciding where and how we will focus our sales capacities, which are unfortunately not unlimited, we were simply deciding what percentage of our workforce will be focusing on top five, what percentage will be focusing on top 10. On top five, we simply had more capacity, we were able to see the growth faster. The growth in other 10 cities simply came later. In general, we are not limiting new deals and our sales just to be stopped in cities. We simply target all big cities in the United States. Unfortunately, due to the lack of capacity, it simply takes longer with some cities. At the same time, with our one of key projects which we are running in sales, we are doubling down mainly on the biggest locations because there is that compounding effect when you have enough customers. At the same time, good density of high-quality deals, the pace of improvement is accelerating. I do not expect that we would be kind of covering top 50 cities in the United States with the, let's say, similar per capita sales force. I still expect that we will be pushing these top locations. I would say top 10 is a good number more than the rest of the country. We expect and we see performance improvement in all big cities being ahead of performance in smaller cities and smaller locations. Got it. Just kind of piggybacking on that, I think it's clear that you're switching from kind of a defense to offense. Is it right for me to think on the last call, it was mentioned that, hey, we're still kind of tweaking the go-to-market strategy? Taking those two things into account, it seems like you've kind of figured out the, you've kind of unlocked the right go-to-market strategy and kind of your response the last time. Is it right for me to think now this improved? I was mentioning in opening remarks also some organizational changes, which we did. Mainly in this regard, this is about Barbara Weisz being promoted and Filip Popovic being promoted. This deal will create a very powerful team where Filip is bringing category management and very deep and high analytical skills, helping our hyper-geo approach to add also not only where we need deals, but what exactly are the deals, what should be the profit margin structure, what should be the pricing structure. Yeah, we are doubling down on this. I believe that the approach which we took since early last year is the right one. We are improving every quarter. Right now, the structure which we have is a combination of local understanding or hyper-geo understanding with also understanding and people who understand categories because the massage is performing differently versus Botox or some other product. Now we have people who understand what are the issues for merchants in this category so that we can prepare a better product, which is a win-win for both Groupon and the merchants. Got it. So it's fair to say pedal to the metal. Now it's not kind of just focusing on a couple of different cities. Obviously, the bigger cities are the more focused, but it's taking this go-to-market strategy everywhere Groupon is now. That's true. At the same time, there is still plenty of work ahead of us. We are definitely not in the finish line. I believe that we are progressing very well. The trajectory which we are on is a really good one. I would agree with that. Congrats on the great quarter and looking forward to the continued progress. I'll return to the queue. Thanks, guys. Thank you very much. Thank you, Bobby. We'll go back to another written question. Many companies are integrating AI into their operations and product offerings. How is Groupon leveraging AI, and what impact do you expect to have on your business over the next 12- 24 months? AI is one of my favorite topics. I see for Groupon many, many opportunities going forward. It can definitely help us in our sales part where going forward, I believe that at least the initial communication with our merchant partners can be done by AI. We are heavily investing also into the AI tool, which is analyzing which deals are working in certain environments. The output of this, which should be coming in the next one or two quarters, will be a significant improvement of our capability to help merchants to design the right deal, right pricing, which will be working on Groupon for them. In engineering, in technology, we can expect with AI and the push into AI, we can see significantly improved efficiency. In terms of business, we actually see a move on Google and other search engines using what they call AI snippets. We are making sure that our website and platform is ready so that when customers will be searching on whatever location it will be in the future, Groupon will be able to provide information compatible with AI-driven search so that they can directly go to Groupon and finalize the transaction. In the future, most likely, it will be possible that agents will finalize the transaction. Even in this, we see very interesting trends where in some areas, AI is really picking up very quickly. We see some drop in traffic. On the other hand, we see dramatic improvement in conversions, meaning that customers who are using AI and who see these AI snippets presenting the deal features, price, if they come to Groupon, it's much more likely that they will finalize the transaction. Maybe just one last touch over the next 12- 24 months. We just want to make sure that Groupon will be compatible with all major AI platforms, that it will be possible to have some kind of MCP connectors or something like that, whatever technology or standard will be in the future, so that it will be easy for AI engines to connect to Groupon and provide Groupon inventory to customers who are using AI. Thank you, Dušan. Let's go back to our queue. We have a follow-up from Sean McGowan. Sean, you can now unmute your line. Thank you. I wanted to ask a couple of questions about the Giftcloud sale. Specifically, how did the price that you got compare to what you had expected when you first identified it as an encore asset that you would look to sell? Should we expect a one-time gain? Was it significantly higher than the cost basis? Then related to that sale, do the terms of the recent convert offering restrict what you can do with those proceeds, or was that restriction limited to sum up? Yeah. I can take the first part. Jiri, if you can take the second part. On the first part, when we were first doing estimations of how much we can make or gain from these non-core assets, our estimation was in line, actually, with what we got from Giftcloud. At the same time, I would like to mention that what we got was on the very high end of the range which we had for the sale. Stating that, I am very happy with the deal itself. I think it's a good and great deal for Giftcloud and Giftcloud employees. I think it's a great deal also for Groupon because Giftcloud was simply a completely different business to what Groupon is doing. It will allow part of the management to focus on other growth opportunities. Jiri, if you can please be on the partner. If I will, Sean, if I will comment about our proceeds versus our 2027 bonds, we are allowed to use up to $20 million of proceeds from any non-core asset sale. It means those money will strengthen our position of cash position at the end of Q2. Okay, great. Would there be a one-time gain then booked in the second quarter? It's a discontinued operation. So it will not be EBITDA if you are asking for this question. No, I was wondering if there would be in the EBITDA add-back, would there be a one-time gain, like a couple of million bucks or whatever? I don't know what the cost basis was of it. So I'm just trying to anticipate what we might do. The transaction happens in Q2. So we will still under consideration, and we will report it in Q2 with Q2 earnings. Sorry. All right. Thank you. Yeah. Thank you, Sean. We'll go back to written questions. You've highlighted a shift in marketing focus from acquisition to lifetime value. Can you discuss this shift more and what early results are you seeing from initiatives like your WOW Deal pilot? Yeah. So my view of where we stand with Groupon is that we are extremely successful in terms of customer acquisition, which is actually a must-have if we want to build a marketplace which is sustainable and growing in the long run. At the same time, we are simply not happy with purchase frequency, which we see for customers on Groupon. That is why our internal priority for the whole company, number one priority, is retention. It is retention also on merchant side to make cooperation with Groupon sustainable. It is definitely retention also for customers, meaning we want to find a way how to deliver more value to them and have more offers. One of the projects which we are running under this strategy umbrella is WOW Deal pilot, where we took a very popular food and drink brand. We were promoting gift cards for this food and drink brand to several customer segments within Groupon. In some cases, we saw even over 25% take rate of that offer, which was extremely encouraging. At the same time, it makes complete sense because food and drink is an area where you can expect the highest purchase frequency. Based on the results of this initial pilot, which started already in Q4 2024, right now, we are expanding it so that we build a set or a couple of these WOW top-grade deals, which we will be offering to our customers to just create a habit that they will do two or three transactions on Groupon. They will simply start coming to Groupon for certain types of services. It will be an initiative which will take a long time. The early results which we are seeing, and especially the initial first pilot, is extremely encouraging for me. The results were above what at least I was personally expecting. Thank you, Dušan. 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.