Groupon, Inc. Q4 FY2025 earnings call

• 2025 was a milestone year with return to billings and revenue growth, second consecutive year of positive free cash flow, and core local marketplace growth. - Q4 had shortfall in billings, revenue, and adjusted EBITDA, concentrated in specific areas with action plans. - Product and engineering organization shipping more, faster, better quality; platform migration reached 50% of iOS North America users on new mobile app with stronger monetization, expect all iOS North America users migrated by end of Q1. - 2026 product agenda shifts to grow first with new search and relevance engine, customer data platform live in North America, and infrastructure for AI agents. - Number one strategic priority is shift to AI native operating model, building proprietary AI personalization layer, targeting technical readiness for AI agent - initiated transactions by mid - 2026, formed AI committee with Amit Shah as chair. - Appointed new independent director to chair AI committee. - Product and engineering team capacity to focus on improved user experience and purchase frequency after platform migration. - Hired new talent, including chief people officer and SVP of operations and consumer AI, to drive growth. - Started brand campaign 'Turn Your Life On' in Q4 2025, running and improving it in Q1 2026, analyzing geo - level data for better brand marketing spend.

Full year global billings grew 7% to approximately 1.67 billion. Core local marketplace, representing approximately 90% of billings, grew double digits in North America and international (excluding gift cloud). Global active customers reached 16.2 million, up over 5% year over year, with North America local active customers growing 12%. Q4 global billings grew 4% year-over-year but were below guidance range, with shortfall concentrated in enterprise channel deceleration in North America and underperformance in organic and owned marketing channels.

• Guiding to 3 - 5% billings growth, 3 - 5% revenue growth, 70 - 75 million in adjusted EBITDA, and at least 60 million in free cash flow. - Pace of growth improvement will be more moderate as fixes take time to compound. - Plan to host investor event in second half of 2026.

• Uncertainties in organic and owned marketing channels due to algorithm changes, SEO dynamics, and macro - driven factors like Google algorithm changes affecting search rankings. - Long sales cycle in enterprise segment, making it take time to see results from efforts. - Timing of benefits from new CDP and AI - related initiatives is hard to predict.

Q: Bobby Brooks from Northland Capital Markets asked about what drove conversion rate improvement in Q4 and if there's more room to improve.

A: Conversion results are due to platform development, better offer quality, relevant marketing. Expect trend to continue with AI surfaces and better inventory.

Q: Bobby asked about weak enterprise pipeline.

A: Bet on a partner for customer acquisition went below expectations, market changing towards closed - loop transactions, enterprise is long cycle.

Q: Bobby asked about closed loop.

A: There are different levels of closed loop, with experiments in travel and other categories.

Q: Bobby asked about enterprise team structure.

A: Similar to vertical focus category structure, with category GMs having industry knowledge to guide sales.

Q: Sean McGowan from Roth Capital Partners asked about travel category.

A: Travel has few partnerships, not top focus.

Q: Sean asked about European markets.

A: International has good performance, UK was pilot for CDP, most countries migrated to new web interface.

Q: Sean asked about SG&A in Q4.

A: SG&A was lower than expected with one - time benefits, expect SG&A to be flattish year over year excluding certain items.

Q: Eric Sheridan from Goldman Sachs asked about AI committee and headwinds timing.

A: AI committee is heavily integrated, enterprise sales cycle long, CDP will help in earned channels, timing of benefits hard to comment.

Q: Bobby Brooks asked about new customers' purchase frequency.

A: Purchase frequency related to category and CDP, working on improving communication and targeting.

Q: Bobby asked about CDP examples and timeline.

A: CDP allows drag - and - drop campaigns, helps with retargeting and paid channels, SEO affected by Google changes, focusing on user - generated content.

Q: Bobby asked about headwinds in organic channels.

A: Macro - driven, related to algorithm changes, but Groupon has user - generated content for AI.

Q: Written question about AI - first leadership.

A: AI is project number one, goal to have 100% code written by AI by end of year, shift to generalists, improve product delivery.

Q: Sean McGowan asked about redemption rates.

A: Redemption rates stable, product teams working on improving deals.

Q: Sean asked about marketing spending.

A: Marketing expected to grow high single digits year over year, brand campaign 'Turn Your Life On' run with geo - level analysis.

Q: Written question about new mobile app migration.

A: After migration, product and engineering team capacity to focus on improved user experience and purchase frequency.

Q: Written question about new talent additions.

A: Hired new talent to drive growth, raising bar within organization.