GRPN

• Core Strategic Positioning

  • Groupon is positioned at the intersection of consumer demand for in-person local experiences and digital discovery/booking tools, bridging the AI economy and small local Main Street merchants. Its core value proposition is providing quality experiences at a value price point, which management believes is resilient amid consumer wallet pressure.

• AI Transformation (Project Foundry)

  • Project Foundry, the company-wide initiative to become an AI-native organization, is the firm's most consequential strategic priority. The goal is to have AI handle all repetitive work, freeing employees to focus on AI management and stakeholder engagement, while increasing execution velocity to meet customer/merchant needs faster.
  • After just over four months, progress has been strong: AI now builds and optimizes tens of thousands of hyper-local marketing campaigns at a scale impossible for human teams, and engineering output per developer has more than doubled in the last six months. Management expects the entire organization to be AI-fluent by default by the end of 2026.

• Key Strategic Bets

  • Organic Search: AI-enabled scalable production of structured local content has returned organic channel revenue to growth in Q2, accelerating to double-digit growth in July. Combined with the high-performing paid marketing engine, this improves overall platform reach.
  • Personalized Customer Experience: Leveraging the scaled customer data platform, Groupon now sends fewer, more targeted marketing messages, with revenue up strong double-digits. The company is rolling out custom experiences aligned with different user preferences, and can implement customer-requested feature updates the same day they are identified, a cycle that previously took months.
  • Trust & Quality: Groupon is building a curated marketplace where all deals meet updated quality standards, having already removed or remediated hundreds of non-compliant deals. AI now resolves the majority of customer support contacts three times faster than at the start of 2026. Upcoming H2 2026 improvements include pre-publication deal verification, a redesigned redemption experience with wallet support, and a Groupon AI concierge pilot.

• Operational & Leadership Updates

  • The full migration of all regional and user platform surfaces to the new MobileNex technology stack is on track to complete by the end of Q3 2026. Adi Rajkumar joined as new Chief Operating Officer and Mark Marge joined as Vice President of Marketplace Strategy and Operations to improve underperforming North America local supply operations.

• Q3 2026 Guidance: Expects billings growth of 4% to 6% year-over-year, revenue of 228 to 230 million, adjusted EBITDA of 19 to 21 million, and negative free cash flow for the quarter.
• Full Year 2026 Guidance: Maintains the prior outlook, calling for billings growth of 3% to 5%, full-year revenue of 513 to 523 million, adjusted EBITDA of 75 to 80 million, and free cash flow of at least 60 million.
• The full-year outlook implies second half 2026 revenue growth of approximately 6% at the low end and approximately 10% at the high end, with acceleration expected through the second half, supported by easier year-over-year comparisons, incremental marketing investment, and growing contributions from the company's strategic bets. Management remains confident in achieving its fourth consecutive year of improving revenue growth.

Overall Q2 2026 billings and revenue were each down 1% year-over-year. The top-line shortfall was concentrated entirely in the North America Local segment, which continued to face performance pressure and came in below management expectations. As of July 2026, the entire business accelerated to mid-single-digit growth, with broad-based strength across both North America and international segments. Strength was specifically reported in the things to do, tours and attractions, beauty and wellness, and North America Travel segments, with new small-format tour packages showing strong early year-over-year growth despite still being a small portion of overall revenue. No formal absolute revenue figures or explicit revenue contribution percentages for individual segments were provided in the call.

• The top-line shortfall in Q2 was driven by ongoing underperformance of the North America local segment, which has fallen short of expectations for multiple consecutive quarters. New leadership has been brought in to address this, but results have not yet been realized.
• Organic search revenue is inherently volatile, and continued improvement is not guaranteed despite recent double-digit growth.
• Achieving the projected second half 2026 growth acceleration depends on continued progress across multiple strategic and operational drivers; slower-than-expected progress on these initiatives would prevent the company from hitting its outlook targets.
• The AI and platform transformation is a large, company-wide change that creates internal operational disruption and pain, and full financial benefits are still emerging rather than fully realized.

Q: What is the timeline and goals for the new UI rollout, and what KPIs are tracked to measure progress on the trust and quality initiative? / A: Full migration of all users and surfaces to the new MobileNex platform will complete by the end of Q3 2026. The new platform unlocks much faster development speed for personalized features, which are being rolled out and tested weekly. The ultimate core KPI for trust and quality improvement is overall purchase frequency; internally, management also tracks conversion to a second purchase for new customers, and optimizes marketing for customer lifetime value rather than just first-transaction performance, reallocating budget toward campaigns that acquire customers with higher repeat purchase rates.

Q: How has the AI-powered merchant outreach initiative progressed, and how is it changing merchant acquisition strategy? / A: The pilot AI voice agent program for cold outreach to set sales meetings has expanded to a full end-to-end AI-driven merchant acquisition engine. The AI identifies what types of merchants are needed in specific neighborhoods, orchestrates outreach across email, paid ads, and calls, and decides next best actions based on response. Management still targets having the majority of new merchant initial outreach meetings set by AI by the end of 2026, freeing sales teams to focus only on qualified conversations. An internal AI sales support tool also provides salespeople with data-backed recommendations for specific merchant actions that improve deal performance, such as adding gifting options or fixing quality issues, making the entire supply process more efficient.

Q: What has driven the July 2026 growth acceleration, and how much of this is attributable to Project Foundry versus other factors? / A: Easier year-over-year comparisons, completion of most of the MobileNex platform migration, double-digit organic search growth, deployed personalization capabilities, and incremental planned marketing investment with improving returns all contributed to acceleration. Project Foundry has already delivered major internal operational changes: smaller, faster cross-functional teams, pre-configured data access for all employees, and AI-enabled speed that has cut development time dramatically. Most of the financial impact from Foundry will come after these internal changes are fully in place, but the faster delivery of new customer and merchant features already would not have been possible without the transformation. Macro demand for local experiences remains resilient overall, and Groupon's value proposition actually benefits from consumer wallet pressure.

Q: What is Groupon's plan to attract first-time users from younger generations that have never used the platform, and what early progress has been seen? / A: The company is improving organic and paid traffic acquisition, doubling down on influencer marketing to reach new audiences, and building a customized onboarding experience specifically for new users that will fully roll out in Q3 2026. It is also testing new deal formats that appeal to younger users, such as tour packages that have already gained organic viral traction with customers who did not engage with traditional Groupon deals. Early results show active customer growth and improved conversion on newly launched platform surfaces.