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Groupon, Inc. (GRPN)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered modest top-line growth with revenue up 1% YoY to $125.7M and gross billings up 12% YoY, while net income from continuing operations swung to $20.6M (diluted EPS $0.46); North America Local billings rose 20% YoY and Local revenue +3% .
  • Versus estimates, Groupon beat S&P Global consensus on revenue (~$125.7M vs $122.5M*) and on Primary EPS (0.14* vs 0.04*), while company-reported diluted EPS was $0.46 (definitions differ) .
  • Management raised full-year billings growth guidance from 3–5% to 7–9%, citing momentum in core Local and Things to Do, and highlighted a completed $244M 2030 convertible refinancing that simplifies the capital structure and enables potential buybacks/M&A .
  • Key narrative: billings growth outpacing revenue due to deliberate take-rate dynamics and elevated redemption rates, plus mix shift toward enterprise and “Things to Do”; catalysts include raised billings guidance, strengthened liquidity, and leadership changes (COO/CFO transitions effective Sept 1) .

What Went Well and What Went Wrong

What Went Well

  • Core Local momentum: North America Local billings +20% YoY and Local revenue +3%; consolidated Local billings +15.4% YoY with unit sales up 7% sequentially .
  • Cash generation and liquidity: operating cash flow $28.4M and free cash flow $25.2M in Q2; cash and equivalents ended at $262.6M .
  • Strategic progress and raised outlook: “We are raising our full-year billings guidance from 3–5% to 7–9%,” and highlighted accelerating AI-driven traffic and strong Things To Do growth entering peak season .

What Went Wrong

  • International softness: revenue down 2% (7% FX-neutral) and gross billings down 3% (7% FX-neutral); active customers down 11% YoY; FX headwinds and impacts from Italy exit and Giftcloud divestiture (ex-Italy/Giftcloud, Local revenue +7% and Local billings +15%) .
  • Revenue growth lagging billings: management reiterated that take-rate compression and higher redemption rates (which support long-term marketplace health) are causing revenue to trail billings growth .
  • Adjusted EBITDA slightly below prior year: $15.6M vs $16.5M in Q2 2024, reflecting higher marketing intensity and mix effects even as contribution profit held relatively steady .

Financial Results

Quarterly actuals (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$130.4 $117.2 $125.7
Gross Profit ($USD Millions)$118.2 $106.3 $114.4
Net Income - Continuing Ops ($USD Millions)$(50.1) $8.0 $20.6
Diluted EPS ($USD)$(1.20) $0.17 $0.46
Adjusted EBITDA ($USD Millions)$18.7 $15.3 $15.6
Operating Cash Flow ($USD Millions)$66.96 $(0.02) $28.42
Free Cash Flow ($USD Millions)$63.22 $(3.76) $25.19
Cash & Equivalents ($USD Millions)$228.84 $226.81 $262.58

Q2 2025 actual vs S&P Global consensus

MetricActualS&P ConsensusSurprise
Revenue ($USD)$125,702,000 $122,456,000*+$3,246,000 (~+2.7%)*
Primary EPS ($USD)0.14*0.04*+0.10*
  • Values retrieved from S&P Global

Note: Company-reported diluted EPS was $0.46 (differs from S&P “Primary EPS” definition) .

Segment breakdown – Q2 2025

SegmentGross Billings ($USD Millions)Revenue ($USD Millions)Gross Profit ($USD Millions)
North America Local$292.4 $94.5 $86.6
North America Travel$24.0 $4.34 $3.86
North America Goods$8.38 $1.17 $1.01
North America Total$324.8 $100.0 $91.4
International Local$73.0 $22.20 $20.05
International Travel$6.23 $1.25 $1.09
International Goods$12.72 $2.26 $1.86
International Total$91.9 $25.71 $23.0
Consolidated Total$416.7 $125.7 $114.4

KPIs and operating intensity (oldest → newest)

KPIQ4 2024Q1 2025Q2 2025
Active Customers – North America (MM)10.3 10.5 10.8
Active Customers – International (MM)5.1 5.0 5.0
Total Active Customers (MM)15.4 15.5 15.8
Total Consolidated Units (MM)10.27 8.54 9.12
Marketing Expense ($USD Millions; % of GP)$42.6; 36% $34.4; 32% $41.4; 36%
SG&A ($USD Millions)$72.5 $69.8 $70.7

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Billings Growth (YoY)FY 20253–5% (raised from 2–4% in Q1) 7–9% Raised
RevenueFY 2025Maintained in Q1 despite Giftcloud sale No formal update in Q2 press release; refer to earnings commentary Maintained/No update
Adjusted EBITDAFY 2025Maintained in Q1 despite Giftcloud sale No formal update in Q2 press release; refer to earnings commentary Maintained/No update

Earnings Call Themes & Trends

TopicQ4 2024 (Previous)Q1 2025 (Previous)Q2 2025 (Current)Trend
AI/Technology InitiativesPlatform migrations largely completed; new website/ERP enable faster innovation New platform (“mobile next”) powering traffic; marketing engine improvements; pilots for influencer/social AI traffic growing off small base; SEO holding; investing to be a “good partner” to AI platforms; targeting OpenAI pilot; AI-driven traffic growing ~50% MoM Strengthening
Things To Do performanceDouble-digit growth in Q4; holiday strength Fifth straight quarter of double-digit billings growth in NA Things To Do entering summer Strong double-digit growth for sixth consecutive quarter; leadership in summer season (parks/tour passes) Sustained momentum
Regional/City focusTop 5 NA metros up double digits; scaling market management Top 10 NA metros up double digits; hyperlocal (“microcategories”) strategy expanding Hyperlocal strategy delivering; enterprise brands growth; customer acquisition accelerating Scaling breadth
Tariffs/MacroCounter-cyclical potential; goods line small Macro tailwind for supply; enterprise demand rising Tariff impact minimal (goods <5% of 2024 revenue); value-seeking consumer behavior supportive Neutral-to-positive
Italy/RegulatoryItaly exit created tough comps; VAT assessments detail International ex-Italy showing improvement (Spain strongest) Verbal tax settlement in Italy pending approvals; considering reopening Italy after settlement De-risking
Capital Structure & BuybacksRights offering; 2027 converts; cash improving Giftcloud sale proceeds; constraints under 2027 notes $244M 2030 converts; released 2027 liens/covenants; buyback authorization (~$245M) considered alongside M&A, with disciplined capital deployment Improved flexibility

Management Commentary

  • “Our Q2 results demonstrate that Groupon’s transformation is gaining real momentum, with 20% Billings growth in North America Local and accelerating customer acquisition across our core local category.” – CEO Dusan Senkypl .
  • “We are raising our full-year billings guidance from 3–5% to 7–9%… We see multiple levers driving accelerating growth and remain confident we are building the foundation for sustained long-term value creation.” – CEO .
  • On AI: “We plan to be part of pilot programs, for example with OpenAI… it will be even possible to book Groupon experiences and deals directly through AI agents.” – CEO .
  • On capital returns/M&A: “We have an existing share buyback authorization… we will deploy capital only when it represents highly attractive use of funds… we will remain open to strategically aligned acquisitions.” – CEO .
  • Leadership changes: “Effective September 1, 2025, Jiri Ponrt will assume COO, and Rana Kashyap will become CFO… both have played critical roles in advancing the Company’s transformation.” – CEO .

Q&A Highlights

  • AI search/traffic: Management views AI-sourced traffic as incremental and accelerating; investments aim to make Groupon inventory and booking “AI-ready” (OpenAI pilot, connectors), while SEO remains steady amid Google changes .
  • Merchant engagement/microcategories: Salesforce transformation toward consultative partnerships across ~200 microcategories; tailoring UI/UX by category to boost conversion; focus on quality merchants and higher-value deals .
  • Billings vs revenue dynamics: Gap driven by higher redemption (good for LTV) and category/enterprise mix with lower take rates (e.g., Things To Do), implying revenue lags billings near term .
  • Capital allocation: Buybacks have ~$245M authorization; will be used opportunistically; disciplined approach to M&A; stronger balance sheet post-convert refinancing .
  • Italy resolution: Verbal settlement pending formal approvals; reopening Italy is under consideration post-resolution .

Estimates Context

  • Q2 2025 beat S&P Global revenue consensus by ~$3.25M (~2.7%), and beat S&P Primary EPS by ~$0.10; company’s diluted EPS of $0.46 reflects different definition than S&P’s “Primary EPS” .
  • With raised full-year billings guidance to 7–9%, and continued Things To Do strength, Street models may need to lift billings trajectories and reassess revenue/take-rate assumptions given management’s emphasis on redemption-driven LTV and enterprise mix .
  • Values retrieved from S&P Global

Key Takeaways for Investors

  • Billings growth is robust and accelerating in core Local; the revenue/take-rate gap is deliberate and should narrow as marketplace health improves and mix normalizes .
  • Guidance lift to 7–9% FY25 billings growth is a positive signal; expect potential estimate revisions focused on billings and perhaps revenue as conversion gains persist .
  • Liquidity and capital structure flexibility improved meaningfully via $244M 2030 converts and release of 2027 liens/covenants; optionality for buybacks/M&A exists but will be deployed with discipline .
  • AI and platform modernization are strategic levers: growing AI-driven traffic, planned OpenAI booking pilots, and category-specific UX enhancements can support conversion and frequency over 6–12 months .
  • International ex-Italy is stabilizing/improving; pending Italy tax settlement and possible reopening could add optional upside to 2026 trajectories .
  • Near-term trading: catalysts include any formal guidance updates in earnings commentary, continued Things To Do momentum into late summer/holiday, and clarity on buyback/M&A actions .
  • Medium-term thesis: if hyperlocal and enterprise strategies sustain billings > revenue trends while LTV rises, free cash flow durability and valuation re-rating could follow as take-rate dynamics normalize .