UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2022~~March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 1-35335

Groupon, Inc.

(Exact name of registrant as specified in its charter)

Delaware

27-0903295

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

600 W Chicago Avenue

60654

Suite 400

(Zip Code)

Chicago

Illinois

(312)

334-1579

(Address of principal executive offices)

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.0001 per share

GRPN

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒☐ Accelerated filer ☐☒

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of ~~November 2, 2022,~~May 5, 2023, there were ~~30,437,380~~30,791,587 shares of the registrant's common stock outstanding.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our future results of operations and financial position, business strategy and plans and our objectives for future ~~operations.~~operations and future liquidity. The words "may," "will," "should," "could," "expect," "anticipate," "believe," "estimate," "intend," "continue" and other similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include, but are not limited to, ~~effects of the ongoing COVID-19 pandemic or other pandemics or disease outbreaks on our business;~~ our ability to execute and achieve the expected benefits of our go-forward strategy; execution of our business and marketing strategies; volatility in our operating results; challenges arising from our international operations, including fluctuations in currency exchange rates, legal and regulatory developments in the jurisdictions in which we operate and geopolitical instability resulting from the conflict in Ukraine; global economic uncertainty, including as a result of inflationary pressures; ongoing impacts from the ~~inflationary environment;~~COVID-19 pandemic and labor and supply chain challenges; retaining and adding high quality merchants and third-party business partners; retaining existing customers and adding new customers; competing successfully in our industry; providing a strong mobile experience for our customers; managing refund risks; retaining and attracting members of our executive ~~team~~and management teams and other qualified employees and personnel; customer and merchant fraud; payment-related risks; our reliance on email, internet search engines and mobile application marketplaces to drive traffic to our marketplace; cybersecurity breaches; maintaining and improving our information technology infrastructure; reliance on cloud-based computing platforms; completing and realizing the anticipated benefits from acquisitions, dispositions, joint ventures and strategic investments; lack of control over minority investments; managing inventory and order fulfillment risks; claims related to product and service offerings; protecting our intellectual property; maintaining a strong brand; the impact of future and pending litigation; compliance with domestic and foreign laws and regulations, including the CARD Act, GDPR, CPRA, other privacy-related laws and ~~regulation~~regulations of the Internet and e-commerce; classification of our independent contractors, agency workers, or employees; our ability to remediate our material weakness over internal control over financial reporting; risks relating to information or content published or made available on our websites or service offerings we make available; exposure to greater than anticipated tax liabilities; adoption of tax ~~legislation;~~laws; our ability to use our tax attributes; impacts if we become subject to the Bank Secrecy Act or other anti-money laundering or money transmission laws or regulations; our ability to raise capital if necessary; our ability to continue as a going concern; risks related to our access to capital and outstanding indebtedness, including our convertible senior notes; our common stock, including volatility in our stock price; our ability to realize the anticipated benefits from the capped call transactions relating to our convertible senior notes; difficulties, delays or our inability to successfully complete all or part of the announced restructuring actions or to realize the operating efficiencies and other benefits of such restructuring actions; higher than anticipated restructuring charges or changes in the timing of such restructuring charges; and those risks and other factors discussed in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2021, Part II, Item 1A. Risk Factors of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, Part II, Item 1A. Risk Factors of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 and Part II, Item 1A. Risk Factors of this Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2022,~~March 31, 2023, as well as in our Condensed Consolidated Financial Statements, related notes, and the other financial information appearing elsewhere in this report and our other filings with the Securities and Exchange Commission (the "SEC"). Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. We do not intend, and undertake no obligation, to update any of our forward-looking statements after the date of this report to reflect actual results or future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

As used herein, "Groupon," "the Company," "we," "our," "us" and similar terms include Groupon, Inc. and its subsidiaries, unless the context indicates otherwise.

ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

GROUPON, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)
September 30, 2022 December 31, 2021
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 307,998 $ 498,726
Accounts receivable, net 42,589 36,755
Prepaid expenses and other current assets 52,663 52,570
Total current assets 403,250 588,051
Property, equipment and software, net 61,117 73,581
Right-of-use assets - operating leases, net 18,007 47,958
Goodwill 178,685 216,393
Intangible assets, net 18,795 24,310
Investments 119,541 119,541
Deferred income taxes 60,157 62,945
Other non-current assets 29,419 25,102
Total assets $ 888,971 $ 1,157,881
Liabilities and equity
Current liabilities:
Short-term borrowings $ 110,000 $ 100,000
Accounts payable 35,195 22,165
Accrued merchant and supplier payables 178,627 269,509
Accrued expenses and other current liabilities 198,308 239,313
Total current liabilities 522,130 630,987
Convertible senior notes, net 224,540 223,403
Operating lease obligations 14,636 58,747
Other non-current liabilities 30,551 34,448
Total liabilities 791,857 947,585
Commitments and contingencies (see Note 6)
Stockholders' equity
Common stock, par value $0.0001 per share, 100,500,000 shares authorized; 40,693,600 shares issued and 30,399,483 shares outstanding at September 30, 2022; 40,007,255 shares issued and 29,713,138 shares outstanding at December 31, 2021 4 4
Additional paid-in capital 2,317,003 2,294,215
Treasury stock, at cost, 10,294,117 shares at September 30, 2022 and December 31, 2021 (922,666) (922,666)
Accumulated deficit (1,339,170) (1,156,868)
Accumulated other comprehensive income (loss) 41,657 (4,813)
Total Groupon, Inc. stockholders' equity 96,828 209,872
Noncontrolling interests 286 424
Total equity 97,114 210,296
Total liabilities and equity $ 888,971 $ 1,157,881

(unaudited)


	March 31, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	163,757	$	281,279
Accounts receivable, net	37,263		44,971
Prepaid expenses and other current assets	40,717		41,101
Total current assets	241,737		367,351
Property, equipment and software, net	49,373		56,731
Right-of-use assets - operating leases, net	8,157		12,127
Goodwill	178,685		178,685
Intangible assets, net	16,237		17,641
Investments	119,541		119,541
Deferred income taxes	13,756		13,550
Other non-current assets	23,157		27,491
Total assets	$	650,643	$	793,117
Liabilities and equity
Current liabilities:
Short-term borrowings	$	47,700	$	75,000
Accounts payable	27,537		59,568
Accrued merchant and supplier payables	196,890		225,420
Accrued expenses and other current liabilities	153,678		171,452
Total current liabilities	425,805		531,440
Convertible senior notes, net	225,307		224,923
Operating lease obligations	6,527		9,310
Other non-current liabilities	17,482		18,586
Total liabilities	675,121		784,259
Commitments and contingencies (see Note 6)
Stockholders' equity (deficit)
Common stock, par value $0.0001 per share, 100,500,000 shares authorized; 41,100,451 shares issued and 30,806,334 shares outstanding at March 31, 2023; 40,786,996 shares issued and 30,492,879 shares outstanding at December 31, 2022	4		4
Additional paid-in capital	2,324,434		2,322,672
Treasury stock, at cost, 10,294,117 shares at March 31, 2023 and December 31, 2022	(922,666)		(922,666)
Accumulated deficit	(1,423,624)		(1,394,477)
Accumulated other comprehensive income (loss)	(2,906)		2,942
Total Groupon, Inc. stockholders' equity (deficit)	(24,758)		8,475
Noncontrolling interests	280		383
Total equity (deficit)	(24,478)		8,858
Total liabilities and equity (deficit)	$	650,643	$	793,117

See Notes to Condensed Consolidated Financial Statements.

GROUPON, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except share and per share amounts)

(unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Revenue:
Service		$	144,390	$	198,976	$	450,926	$	577,761
Product		—		15,195		—		166,185
Total revenue		144,390		214,171		450,926		743,946
Cost of revenue:
Service		18,668		19,127		57,231		58,719
Product		—		13,605		—		142,862
Total cost of revenue		18,668		32,732		57,231		201,581
Revenue										Revenue	$	121,611	$	153,320
Cost of revenue										Cost of revenue	16,900		19,319
Gross profit	Gross profit	125,722		181,439		393,695		542,365		Gross profit	104,711		134,001
Operating expenses:	Operating expenses:									Operating expenses:
Marketing	Marketing	37,897		53,159		106,685		130,545		Marketing	24,848		39,416
Selling, general and administrative	Selling, general and administrative	119,243		119,494		369,601		384,606		Selling, general and administrative	101,634		126,420
Goodwill impairment		—		—		35,424		—
Long-lived asset impairment		—		—		8,811		—
Restructuring and related charges	Restructuring and related charges	4,912		12,483		8,163		34,150		Restructuring and related charges	8,794		312
Total operating expenses	Total operating expenses	162,052		185,136		528,684		549,301		Total operating expenses	135,276		166,148
Income (loss) from operations	Income (loss) from operations	(36,330)		(3,697)		(134,989)		(6,936)		Income (loss) from operations	(30,565)		(32,147)
Other income (expense), net	Other income (expense), net	(23,541)		82,533		(49,761)		97,729		Other income (expense), net	3,070		(4,880)
Income (loss) from operations before provision (benefit) for income taxes		(59,871)		78,836		(184,750)		90,793
Income (loss) before provision (benefit) for income taxes										Income (loss) before provision (benefit) for income taxes	(27,495)		(37,027)
Provision (benefit) for income taxes	Provision (benefit) for income taxes	(4,328)		135		(4,605)		773		Provision (benefit) for income taxes	1,118		(2,675)
Net income (loss)	Net income (loss)	(55,543)		78,701		(180,145)		90,020		Net income (loss)	(28,613)		(34,352)
Net (income) loss attributable to noncontrolling interests	Net (income) loss attributable to noncontrolling interests	(680)		(594)		(2,157)		(737)		Net (income) loss attributable to noncontrolling interests	(534)		(500)
Net income (loss) attributable to Groupon, Inc.	Net income (loss) attributable to Groupon, Inc.	$	(56,223)	$	78,107	$	(182,302)	$	89,283	Net income (loss) attributable to Groupon, Inc.	$	(29,147)	$	(34,852)

Net income (loss) per share:
Basic		$	(1.86)	$	2.64	$	(6.06)	$	3.05
Diluted		$	(1.86)	$	2.36	$	(6.06)	$	2.80
Basic and diluted net income (loss) per share:										Basic and diluted net income (loss) per share:	$	(0.95)	$	(1.17)

Weighted average number of shares outstanding:
Basic		30,307,734		29,567,802		30,070,598		29,282,932
Diluted		30,307,734		33,364,538		30,070,598		32,393,891
Basic and diluted weighted average number of shares outstanding:										Basic and diluted weighted average number of shares outstanding:	30,676,145		29,862,879

Comprehensive income (loss):	Comprehensive income (loss):									Comprehensive income (loss):
Net income (loss)	Net income (loss)	$	(55,543)	$	78,701	$	(180,145)	$	90,020	Net income (loss)	$	(28,613)	$	(34,352)
Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Net change in unrealized gain (loss) on foreign currency translation adjustments	Net change in unrealized gain (loss) on foreign currency translation adjustments	22,283		6,770		46,470		(46,353)		Net change in unrealized gain (loss) on foreign currency translation adjustments	(5,848)		3,369
Reclassification of cumulative foreign currency translation adjustments (See Note 9)		—		(16)		—		32,268
Other comprehensive income (loss)	Other comprehensive income (loss)	22,283		6,754		46,470		(14,085)		Other comprehensive income (loss)	(5,848)		3,369

Comprehensive income (loss)	Comprehensive income (loss)	(33,260)		85,455		(133,675)		75,935		Comprehensive income (loss)	(34,461)		(30,983)
Comprehensive (income) loss attributable to noncontrolling interest	Comprehensive (income) loss attributable to noncontrolling interest	(680)		(594)		(2,157)		(737)		Comprehensive (income) loss attributable to noncontrolling interest	(534)		(500)
Comprehensive income (loss) attributable to Groupon, Inc.	Comprehensive income (loss) attributable to Groupon, Inc.	$	(33,940)	$	84,861	$	(135,832)	$	75,198	Comprehensive income (loss) attributable to Groupon, Inc.	$	(34,995)	$	(31,483)

See Notes to Condensed Consolidated Financial Statements.

GROUPON, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(in thousands, except share amounts)

(unaudited)


		Groupon, Inc. Stockholders' Equity																			Groupon, Inc. Stockholders' Equity (Deficit)
		Common Stock			Additional Paid-In Capital		Treasury Stock			Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Groupon, Inc. Stockholders' Equity		Non-controlling Interests		Total Equity			Common Stock			Additional Paid-In Capital		Treasury Stock			Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Groupon, Inc. Stockholders' Equity (Deficit)		Non-controlling Interests		Total Equity (Deficit)
		Shares	Amount				Shares	Amount													Shares	Amount				Shares	Amount
Balance at December 31, 2021		40,007,255	$	4	$	2,294,215	(10,294,117)	$	(922,666)	$	(1,156,868)	$	(4,813)	$	209,872	$	424	$	210,296
Balance at December 31, 2022																				Balance at December 31, 2022	40,786,996	$	4	$	2,322,672	(10,294,117)	$	(922,666)	$	(1,394,477)	$	2,942	$	8,475	$	383	$	8,858
Comprehensive income (loss)	Comprehensive income (loss)	—	—		—		—	—		(34,852)		3,369		(31,483)		500		(30,983)		Comprehensive income (loss)	—	—		—		—	—		(29,147)		(5,848)		(34,995)		534		(34,461)
Vesting of restricted stock units and performance share units	Vesting of restricted stock units and performance share units	308,152	—		—		—	—		—		—		—		—		—		Vesting of restricted stock units and performance share units	420,471	—		—		—	—		—		—		—		—		—
Shares issued under employee stock purchase plan	Shares issued under employee stock purchase plan	30,022	—		591		—	—		—		—		591		—		591		Shares issued under employee stock purchase plan	33,803	—		246		—	—		—		—		246		—		246
Tax withholdings related to net share settlements of stock-based compensation awards	Tax withholdings related to net share settlements of stock-based compensation awards	(118,589)	—		(2,597)		—	—		—		—		(2,597)		—		(2,597)		Tax withholdings related to net share settlements of stock-based compensation awards	(140,819)	—		(1,031)		—	—		—		—		(1,031)		—		(1,031)
Stock-based compensation on equity-classified awards	Stock-based compensation on equity-classified awards	—	—		8,349		—	—		—		—		8,349		—		8,349		Stock-based compensation on equity-classified awards	—	—		2,547		—	—		—		—		2,547		—		2,547
Distributions to noncontrolling interest holders	Distributions to noncontrolling interest holders	—	—		—		—	—		—		—		—		(814)		(814)		Distributions to noncontrolling interest holders	—	—		—		—	—		—		—		—		(637)		(637)
Balance at March 31, 2022		40,226,840	$	4	$	2,300,558	(10,294,117)	$	(922,666)	$	(1,191,720)	$	(1,444)	$	184,732	$	110	$	184,842
Comprehensive income (loss)		—	—		—		—	—		(91,227)		20,818		(70,409)		977		(69,432)
Vesting of restricted stock units and performance share units		407,426	—		—		—	—		—		—		—		—		—
Tax withholdings related to net share settlements of stock-based compensation awards		(151,368)	—		(2,166)		—	—		—		—		(2,166)		—		(2,166)
Stock-based compensation on equity-classified awards		—	—		9,784		—	—		—		—		9,784		—		9,784
Distributions to noncontrolling interest holders		—	—		—		—	—		—		—		—		(943)		(943)
Balance at June 30, 2022		40,482,898	$	4	$	2,308,176	(10,294,117)	$	(922,666)	$	(1,282,947)	$	19,374	$	121,941	$	144	$	122,085
Comprehensive income (loss)		—	—		—		—	—		(56,223)		22,283		(33,940)		680		(33,260)
Vesting of restricted stock units and performance share units		230,186	—		—		—	—		—		—		—		—		—
Shares issued under employee stock purchase plan		53,529	—		514		—	—		—		—		514		—		514
Tax withholdings related to net share settlements of stock-based compensation awards		(73,013)	—		(830)		—	—		—		—		(830)		—		(830)
Stock-based compensation on equity-classified awards		—	—		9,143		—	—		—		—		9,143		—		9,143
Distributions to noncontrolling interest holders		—	—		—		—	—		—		—		—		(538)		(538)
Balance at September 30, 2022		40,693,600	$	4	$	2,317,003	(10,294,117)	$	(922,666)	$	(1,339,170)	$	41,657	$	96,828	$	286	$	97,114
Balance at March 31, 2023																				Balance at March 31, 2023	41,100,451	$	4	$	2,324,434	(10,294,117)	$	(922,666)	$	(1,423,624)	$	(2,906)	$	(24,758)	$	280	$	(24,478)


	Groupon, Inc. Stockholders' Equity (Deficit)
	Common Stock			Additional Paid-In Capital		Treasury Stock			Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Groupon, Inc. Stockholders' Equity (Deficit)		Non-controlling Interests		Total Equity (Deficit)
	Shares	Amount				Shares	Amount
Balance at December 31, 2021	40,007,255	$	4	$	2,294,215	(10,294,117)	$	(922,666)	$	(1,156,868)	$	(4,813)	$	209,872	$	424	$	210,296
Comprehensive income (loss)	—	—		—		—	—		(34,852)		3,369		(31,483)		500		(30,983)
Vesting of restricted stock units and performance share units	308,152	—		—		—	—		—		—		—		—		—
Shares issued under employee stock purchase plan	30,022	—		591		—	—		—		—		591		—		591
Tax withholdings related to net share settlements of stock-based compensation awards	(118,589)	—		(2,597)		—	—		—		—		(2,597)		—		(2,597)
Stock-based compensation on equity-classified awards	—	—		8,349		—	—		—		—		8,349		—		8,349
Distributions to noncontrolling interest holders	—	—		—		—	—		—		—		—		(814)		(814)
Balance at March 31, 2022	40,226,840	$	4	$	2,300,558	(10,294,117)	$	(922,666)	$	(1,191,720)	$	(1,444)	$	184,732	$	110	$	184,842

See Notes to Condensed Consolidated Financial Statements.

~~GROUPON, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY~~

~~(in thousands, except share amounts)~~

~~(unaudited)~~

Groupon, Inc. Stockholders' Equity
Common Stock Additional Paid-In Capital Treasury Stock Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Groupon, Inc. Stockholders' Equity Non-controlling Interests Total Equity
Shares Amount Shares Amount
Balance at December 31, 2020 39,142,896 $ 4 $ 2,348,114 (10,294,117) $ (922,666) $ (1,320,886) $ 3,109 $ 107,675 $ (1) $ 107,674
Cumulative effect of change in accounting principle due to adoption of ASU 2020-06, net of tax (see Note 1) — — (64,319) — — 45,350 — (18,969) — (18,969)
Comprehensive income (loss) — — — — — 14,558 (17,564) (3,006) (110) (3,116)
Vesting of restricted stock units and performance share units 308,954 — — — — — — — — —
Shares issued under employee stock purchase plan 23,418 — 349 — — — — 349 — 349
Tax withholdings related to net share settlements of stock-based compensation awards (122,931) — (4,901) — — — — (4,901) — (4,901)
Purchase of capped call transactions — — (23,840) — — — — (23,840) — (23,840)
Stock-based compensation on equity-classified awards — — 8,387 — — — — 8,387 — 8,387
Receipts from noncontrolling interest holders — — — — — — — — 36 36
Balance at March 31, 2021 39,352,337 $ 4 $ 2,263,790 (10,294,117) $ (922,666) $ (1,260,978) $ (14,455) $ 65,695 $ (75) $ 65,620
Comprehensive income (loss) — — — — — (3,382) (3,275) (6,657) 253 (6,404)
Vesting of restricted stock units and performance share units 707,372 — — — — — — — — —
Tax withholdings related to net share settlements of stock-based compensation awards (254,466) — (11,716) — — — — (11,716) — (11,716)
Settlement of convertible note hedges — — 3,061 — — — — 3,061 — 3,061
Settlement of warrants — — (1,752) — — — — (1,752) — (1,752)
Purchase of capped call transactions — — (3,576) — — — — (3,576) — (3,576)
Stock-based compensation on equity-classified awards — — 10,501 — — — — 10,501 — 10,501
Receipts from noncontrolling interest holders — — — — — — — — 102 102
Balance at June 30, 2021 39,805,243 $ 4 $ 2,260,308 (10,294,117) $ (922,666) $ (1,264,360) $ (17,730) $ 55,556 $ 280 $ 55,836
Comprehensive income (loss) — $ — $ — — $ — $ 78,107 $ 6,754 $ 84,861 $ 594 $ 85,455
Vesting of restricted stock units and performance share units 72,851 — — — — — — — — —
Shares issued under employee stock purchase plan 25,981 — 779 — — — — 779 — 779
Tax withholdings related to net share settlements of stock-based compensation awards (30,820) — (974) — — — — (974) — (974)
Stock-based compensation on equity-classified awards — — 9,071 — — — — 9,071 — 9,071
Distributions to noncontrolling interest holders — — — — — — — — (670) (670)
Balance at September 30, 2021 39,873,255 $ 4 $ 2,269,184 (10,294,117) $ (922,666) $ (1,186,253) $ (10,976) $ 149,293 $ 204 $ 149,497

~~See Notes to Condensed Consolidated Financial Statements.~~

GROUPON, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Operating activities	Operating activities					Operating activities
Net income (loss)	Net income (loss)	$	(180,145)	$	90,020	Net income (loss)	$	(28,613)	$	(34,352)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:					Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of property, equipment and software	Depreciation and amortization of property, equipment and software	42,172		46,879		Depreciation and amortization of property, equipment and software	12,387		15,200
Amortization of acquired intangible assets	Amortization of acquired intangible assets	6,397		6,728		Amortization of acquired intangible assets	2,118		2,169
Impairment of goodwill		35,424		—
Impairment of long-lived assets		8,811		—
Restructuring-related impairment		2,949		7,651
Stock-based compensation	Stock-based compensation	24,194		25,121		Stock-based compensation	2,363		7,506
Changes in fair value of investments		—		(95,533)
Foreign currency translation adjustments reclassified into earnings		—		(32,268)
Foreign currency (gains) losses, net						Foreign currency (gains) losses, net	(4,087)		3,358
Change in assets and liabilities:	Change in assets and liabilities:					Change in assets and liabilities:
Accounts receivable	Accounts receivable	(9,321)		7,985		Accounts receivable	8,319		(15,963)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(4,086)		(11,155)		Prepaid expenses and other current assets	3,493		(2,092)
Right-of-use assets - operating leases	Right-of-use assets - operating leases	22,896		16,016		Right-of-use assets - operating leases	4,008		4,609
Accounts payable	Accounts payable	13,222		3,996		Accounts payable	(32,073)		7,088
Accrued merchant and supplier payables	Accrued merchant and supplier payables	(80,436)		(175,079)		Accrued merchant and supplier payables	(29,467)		(35,904)
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	(40,331)		(43,654)		Accrued expenses and other current liabilities	782		(18,366)
Operating lease obligations	Operating lease obligations	(36,671)		(24,614)		Operating lease obligations	(8,239)		(7,648)
Payment for early lease termination						Payment for early lease termination	(9,601)		—
Other, net	Other, net	43,075		22,961		Other, net	2,290		(3,769)
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	(151,850)		(154,946)		Net cash provided by (used in) operating activities	(76,320)		(78,164)
Investing activities	Investing activities					Investing activities
Purchases of property and equipment and capitalized software	Purchases of property and equipment and capitalized software	(30,495)		(37,865)		Purchases of property and equipment and capitalized software	(9,544)		(13,001)
Proceeds from sale or divestment of investment		—		6,859
Proceeds from sale of assets						Proceeds from sale of assets	1,088		—
Acquisitions of intangible assets and other investing activities	Acquisitions of intangible assets and other investing activities	(2,077)		(2,491)		Acquisitions of intangible assets and other investing activities	(557)		(915)
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	(32,572)		(33,497)		Net cash provided by (used in) investing activities	(9,013)		(13,916)
Financing activities	Financing activities					Financing activities
Proceeds from borrowings under revolving credit agreement		50,000		—
Payments of borrowings under revolving credit agreement	Payments of borrowings under revolving credit agreement	(40,000)		(100,000)		Payments of borrowings under revolving credit agreement	(27,300)		—
Proceeds from issuance of 2026 convertible notes		—		230,000
Issuance costs for 2026 convertible notes and revolving credit agreement		—		(7,747)
Purchase of capped call transactions		—		(27,416)
Payments for the repurchase of Atairos convertible notes		—		(254,000)
Proceeds from the settlement of convertible note hedges		—		2,315
Payments for the settlement of warrants		—		(1,345)
Taxes paid related to net share settlements of stock-based compensation awards	Taxes paid related to net share settlements of stock-based compensation awards	(5,601)		(17,591)		Taxes paid related to net share settlements of stock-based compensation awards	(1,007)		(2,523)
Payments of finance lease obligations		(653)		(4,887)
Other financing activities	Other financing activities	(1,238)		203		Other financing activities	(890)		(441)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	2,508		(180,468)		Net cash provided by (used in) financing activities	(29,197)		(2,964)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(9,240)		(4,894)		Effect of exchange rate changes on cash, cash equivalents and restricted cash	(148)		(771)
Net increase (decrease) in cash, cash equivalents and restricted cash	Net increase (decrease) in cash, cash equivalents and restricted cash	(191,154)		(373,805)		Net increase (decrease) in cash, cash equivalents and restricted cash	(114,678)		(95,815)
Cash, cash equivalents and restricted cash, beginning of period (1)	Cash, cash equivalents and restricted cash, beginning of period (1)	499,483		851,085		Cash, cash equivalents and restricted cash, beginning of period (1)	281,696		499,483
Cash, cash equivalents and restricted cash, end of period (1)	Cash, cash equivalents and restricted cash, end of period (1)	$	308,329	$	477,280	Cash, cash equivalents and restricted cash, end of period (1)	$	167,018	$	403,668

Nine Months Ended September 30,
2022 2021
Supplemental disclosure of cash flow information:
Cash paid for interest $ 4,361 $ 13,166
Income tax payments 4,483 9,406
Supplemental cash flow information on our leasing obligations:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 22,640 $ 24,614
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases $ 2,669 $ —


	Three Months Ended March 31,
	2023		2022
Supplemental disclosure of cash flow information:
Cash paid for interest	$	2,578	$	1,721
Income tax payments	1,526		1,597
Increase (decrease) in liabilities related to purchases of property and equipment and capitalized software	(4,552)		(1,352)
Cash paid for amounts included in the measurement of operating lease liabilities	$	18,145	$	7,936

~~GROUPON, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(in thousands)~~

~~(unaudited)~~

(1)The following table provides a reconciliation of Cash, cash equivalents and restricted cash shown above to amounts reported within the Condensed Consolidated Balance Sheets as of ~~September 30,~~March 31, 2023, December 31, 2022, March 31, 2022 and December 31, 2021 ~~September 30, 2021 and December 31, 2020~~ (in thousands):


		September 30, 2022		December 31, 2021		September 30, 2021		December 31, 2020			March 31, 2023		December 31, 2022		March 31, 2022		December 31, 2021
Cash and cash equivalents	Cash and cash equivalents	$	307,998	$	498,726	$	476,782	$	850,587	Cash and cash equivalents	$	163,757	$	281,279	$	403,006	$	498,726
Restricted cash included in prepaid expenses and other current assets	Restricted cash included in prepaid expenses and other current assets	331		757		498		498		Restricted cash included in prepaid expenses and other current assets	3,261		417		662		757
Cash, cash equivalents and restricted cash	Cash, cash equivalents and restricted cash	$	308,329	$	499,483	$	477,280	$	851,085	Cash, cash equivalents and restricted cash	$	167,018	$	281,696	$	403,668	$	499,483

See Notes to Condensed Consolidated Financial Statements.

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Company Information

Groupon, Inc. and its subsidiaries, which commenced operations in October 2008, is a global scaled two-sided marketplace that connects consumers to merchants by offering goods and services, generally at a discount. Consumers access those marketplaces through our mobile applications and our websites.

Our operations are organized into two segments: North America and International. See Note 13, Segment Information.

~~COVID-19 Pandemic and Macroeconomic Conditions~~

The COVID-19 pandemic has changed the environment that our business operates in, which includes changes in consumer behavior and macroeconomic impacts affecting both us and our merchants. Although global economies have begun to recover from the COVID-19 pandemic as many health and safety restrictions have been lifted, certain adverse consequences of the pandemic continue to impact the macroeconomic environment and may persist for some time. Impacts to our operations may be caused by macroeconomic trends such as the ongoing COVID-19 pandemic, inflationary pressures, higher labor costs, labor shortages, supply chain challenges and resulting changes in consumer and merchant behavior. The full extent of the impact of both the COVID-19 pandemic and recent macroeconomic trends on our business, operations and financial results will depend on numerous evolving factors. We continue to monitor the pandemic and other macroeconomic trends and the potential impacts they may have on our future financial position, results of operations and cash flows. See Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.

Unaudited Interim Financial Information

We have prepared the accompanying Condensed Consolidated Financial Statements pursuant to the rules and regulations of the SEC for interim financial reporting. These Condensed Consolidated Financial Statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for a fair presentation of the Condensed Consolidated Balance Sheets, Statements of Operations and Comprehensive Income (Loss), Cash Flows and Stockholders' Equity for the periods presented. These Condensed Consolidated Financial Statements and notes should be read in conjunction with the audited Consolidated Financial Statements and notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Principles of Consolidation

The Condensed Consolidated Financial Statements include the accounts of Groupon, Inc. and its wholly-owned subsidiaries, majority-owned subsidiaries over which we exercise control and variable interest entities for which we are the primary beneficiary. ~~In July 2022, we extended our arrangement through July 2025 with the strategic partner in the variable interest entity that we consolidate.~~ All intercompany accounts and transactions have been eliminated in consolidation. Outside stockholders' interests in subsidiaries are shown on the Condensed Consolidated Financial Statements as Noncontrolling interests. Investments in entities in which we do not have a controlling financial interest are accounted for at fair value as available-for-sale securities or at cost adjusted for observable price changes and impairments, as appropriate.

Going Concern

The accompanying Condensed Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles ("GAAP") applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In accordance with ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the Condensed Consolidated Financial Statements are issued.

Our Net cash used in operating activities was $136.0 million and $124.0 million for the years ended December 31, 2022 and December 31, 2021. Net cash used in operating activities was $76.3 million and $78.2 million for the three months ended March 31, 2023 and 2022. Cash and cash equivalents were $163.8 million as of March 31, 2023. We entered into a fourth amendment to the revolving credit agreement in March 2023, which reduced our borrowing capacity and modified certain financial covenants as described in Note 5, Financing Arrangements. The fourth amendment to the revolving credit agreement matures on May 14, 2024. Continued cash outflows and operating losses indicate that we may not be able to meet our obligations over the next twelve months. These conditions and events, when considered in the aggregate, raised substantial doubt about our ability to continue as a going concern.

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

approximately 1,000 positions globally, of which the majority have been completed with the remaining expected to occur by the end of 2023. Management will also take steps to minimize the risk certain payment processors will require reserves or holdback receivables. We believe management's plans are probable of being achieved to alleviate substantial doubt about our ability to continue as a going concern and we will have sufficient liquidity to meet our obligations as they become due over the next twelve months.

We are also currently evaluating several different strategies to enhance our liquidity position. These strategies may include, but are not limited to, pursuing additional actions under our multi-phase cost savings plan, seeking additional financing from both the public and private markets through the issuance of equity or debt securities, and monetizing certain assets.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles ~~("GAAP")~~ requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Estimates in our financial statements include, but are not limited to, the following: variable consideration from unredeemed vouchers; income taxes; leases; initial valuation and subsequent impairment testing of goodwill, other intangible assets and long-lived assets; investments; receivables; customer refunds and other reserves; contingent liabilities; and the useful lives of property, equipment and software and intangible assets. Actual results could differ materially from those estimates.

Reclassifications

Certain reclassifications have been made to the Condensed Consolidated Financial Statements of prior periods to conform to the current period presentation.

Adoption of New Accounting Standards

~~We early~~There were no new accounting standards adopted during the ~~guidance in ASU 2020-06,~~ Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, on January 1, 2021. The ASU removes the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion feature. Additionally, the ASU removes certain conditions for equity classification related to contracts in an entity’s own equity (e.g., warrants) and amends certain guidance related to the computation of income (loss) per share for convertible instruments and contracts in an entity’s own equity.

Prior to the adoption of ASU 2020-06, we separated the convertible senior notes due 2022 (the "Atairos Notes") into their liability and equity components. Following the adoption of ASU 2020-06, the previously bifurcated equity component of the Atairos Notes was recombined with the liability component, resulting in a single liability-classified instrument. The carrying value of the Atairos Notes at transition was determined by recalculating the basis of the Atairos Notes as if the conversion option had not been bifurcated at issuance. Transaction costs related to the issuance of the Atairos Notes that were allocated to the equity component were reclassified out of Additional paid-in-capital and the amortization and the related debt discount associated with these costs was recalculated through the transition date. The transaction costs were recorded as a debt discount in the Condensed Consolidated Balance Sheets and amortized to interest expense over the remaining term of the Atairos Notes. Together with the cash interest, this resulted in an effective interest rate of 3.76%. As a result of adopting ASU 2020-06, in the first quarter of 2021, we recorded a $67.0 million net reduction to additional paid-in capital, a $19.0 million increase to Convertible senior notes, net and a $48.0 million reduction to our opening accumulated deficit as of January 1, 2021. In the fourth quarter of 2021, we recorded an additional $2.7 million adjustment to our opening accumulated deficit and additional paid-in capital related to tax impacts of our bond hedges.three months ended March 31, 2023.

NOTE 2. GOODWILL AND LONG-LIVED ASSETS

We performed an assessment in the first quarter of 2023 and did not identify a triggering event that would have required us to test for impairment for the period. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022, we ~~evaluated~~determined the impact to our business from the new variant of COVID-19 required us to evaluate our goodwill and long-lived assets for ~~impairment, due to~~impairment. Our interim quantitative assessment for the ~~events described below, which indicated that the carrying amount~~first quarter of ~~our assets~~2022 did not identify any goodwill or long-lived asset ~~groups was not recoverable.~~ impairment.

In order to evaluate goodwill and long-lived assets for impairment, we compared the fair value of our two reporting units, North America and International, and our asset groups to their carrying values. In determining the fair values of our reporting units and asset groups, we used the discounted cash flow method under the income approach that uses Level 3 inputs.

During the third quarter of 2022, we determined that the carrying amount of one of our right-of-use assets related to our 2020 Restructuring Plan may not be fully recoverable due to collectability of sublease income, and recognized impairment within our North America segment. See details in the table below and Note 9, ~~Restructuring and Related Charges, for more information.~~

119

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

~~During~~Goodwill

As of March 31, 2023 and December 31, 2022, the ~~second quarter of 2022, we determined a downward revision~~balance of our ~~forecast required us to evaluate our~~ goodwill ~~and long-lived assets for impairment. As a result of our interim quantitative assessment, we recognized~~was $178.7 million. There was no goodwill impairment within our International reporting unit, representing a full impairment of goodwill for that reporting unit. We also recognized long-lived asset impairment related to certain asset groups within our International segment. We also determined that the carrying amount of certain right-of-use assets within our International segment related to our 2020 Restructuring Plan were not fully recoverable and recognized impairment. See details in the table below and Note 9, ~~Restructuring and Related Charges, for more information.~~

~~During~~activity during the first quarter ~~of 2022, we determined the impact to~~2023. All goodwill is within our ~~business from the new variant of COVID-19 required us to evaluate our goodwill~~North America segment and ~~long-lived assets for impairment. Our interim quantitative assessment for the first quarter of 2022 did not identify any goodwill or long-lived asset impairment.~~

~~During the third quarter of 2021, we recognized impairment for our right-of-use assets~~both North America and ~~leasehold improvements under our 2020 Restructuring Plan. See details in the table below and Note 9,~~ ~~Restructuring and Related Charges,~~ ~~for more information.~~

~~Goodwill~~

~~The following table summarizes goodwill activity by segment for the nine months ended September 30, 2022 (in thousands):~~

North America
International (1)
Consolidated
Balance as of December 31, 2021 $ 178,685 $ 37,708 $ 216,393
Goodwill impairment — (35,424) (35,424)
Foreign currency translation — (2,284) (2,284)
Balance as of September 30, 2022 $ 178,685 $ — $ 178,685

~~(1)As of December 31, 2021, the~~ International ~~reporting unit~~segments had a negative carrying ~~value.~~value as of March 31, 2023 and the International segment had a negative carrying value as of December 31, 2022.

Long-Lived Assets

The following table summarizes impairment charges presented within the following line items on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Long-lived asset impairment
North America $ — $ — $ — $ —
International — — 8,811 —
Total Long-lived asset impairment — — 8,811 —
Restructuring and related charges
North America 1,769 5,430 1,769 5,430
International — 2,221 1,180 2,221
Total Restructuring and related charges 1,769 7,651 2,949 7,651
Total impairment $ 1,769 $ 7,651 $ 11,760 $ 7,651

~~GROUPON, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

~~The following table summarizes impairment for long-lived assets and restructuring and related charges by asset type for the three and nine months ended September 30, 2022 and 2021 (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Property, equipment and software, net
Leasehold improvements $ — $ 870 $ 1,632 $ 870
Computer hardware — — 1,323 —
Other property, equipment and software, net — — 416 —
Total Property, equipment and software, net — 870 3,371 870
Right-of-use assets - operating leases, net 1,769 6,781 8,389 6,781
Total long-lived asset impairment $ 1,769 $ 7,651 $ 11,760 $ 7,651

The following table summarizes intangible assets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (in thousands):


		September 30, 2022						December 31, 2021							March 31, 2023						December 31, 2022
		Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value			Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Merchant relationships	Merchant relationships	$	16,512	$	12,500	$	4,012	$	19,976	$	12,554	$	7,422	Merchant relationships	$	18,305	$	15,426	$	2,879	$	17,912	$	14,327	$	3,585
Trade names	Trade names	9,160		8,211		949		9,604		8,215		1,389		Trade names	9,390		8,484		906		9,340		8,382		958
Patents	Patents	13,303		6,502		6,801		12,455		5,712		6,743		Patents	13,304		6,737		6,567		13,341		6,701		6,640
Other intangible assets	Other intangible assets	17,479		10,446		7,033		17,573		8,817		8,756		Other intangible assets	17,528		11,643		5,885		17,517		11,059		6,458
Total	Total	$	56,454	$	37,659	$	18,795	$	59,608	$	35,298	$	24,310	Total	$	58,527	$	42,290	$	16,237	$	58,110	$	40,469	$	17,641

Amortization of intangible assets is computed using the straight-line method over their estimated useful lives, which range from 1 to 10 years. Amortization expense related to intangible assets was $2.1 million and $2.2 million for the three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021 and $6.4 million and $6.7 million for the nine months ended September 30, 2022 and 2021.~~2022. As of ~~September 30, 2022,~~March 31, 2023, estimated future amortization expense related to intangible assets is as follows (in thousands):

Remaining amounts in 2022 $ 2,047
2023 7,205
2024 3,877
2025 2,469
2026 1,622
Thereafter 1,575
Total $ 18,795


Remaining amounts in 2023	$	5,587
2024	4,226
2025	2,733
2026	1,867
2027	1,191
Thereafter	633
Total	$	16,237

NOTE 3. INVESTMENTS

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, our carrying value in other equity investments was $119.5 million and our available-for-sale securities and fair value option investments had a carrying value of zero. There were no changes in fair value of our investments for the three ~~and nine~~ months ended ~~September 30, 2022.~~

~~GROUPON, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~

March 31, 2023.

The following table summarizes our percentage ownership in our investments as of the dates noted below:


		September 30, 2022 and December 31, 2021				March 31, 2023 and December 31, 2022
Other equity investments	Other equity investments	1%	to	19%	Other equity investments	1%	to	19%
Available-for-sale securities - redeemable preferred shares		1%	to	19%
Available-for-sale securities					Available-for-sale securities	1%	to	19%
Fair value option investments	Fair value option investments	10%	to	19%	Fair value option investments	10%	to	19%

~~Other Equity Investments~~

~~Our non-controlling equity interest in SumUp Holdings S.a.r.l. ("SumUp") was 2.29% as of September 30, 2022.~~

During the third quarter of 2021, we adjusted the carrying value of SumUp due to an observable price change in an orderly transaction, which resulted in an unrealized gain of $89.1 million for the three and nine months ended September 30, 2021. We also sold 100% of our shares in an other equity investment for total cash consideration of $2.6 million and recognized a gain of $2.2 million. During the second quarter 2021, we sold our shares in an other equity investment and recognized a gain and total cash consideration of $4.2 million. The gains on our investments have been presented in Other income (expense), net in the Condensed Consolidated Statement of Operations for the applicable three and nine months ended September 30, 2021

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

NOTE 4. SUPPLEMENTAL CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS INFORMATION

The following table summarizes Other income (expense), net for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Interest income $ 2,626 $ 1,336 $ 5,399 $ 3,818
Interest expense (3,760) (3,534) (9,849) (14,123)
Changes in fair value of investments (1)
— 91,288 — 95,533
Loss on extinguishment of debt — — — (5,090)
Foreign currency gains (losses), net and other (2)
(22,407) (6,557) (45,311) 17,591
Other income (expense), net $ (23,541) $ 82,533 $ (49,761) $ 97,729

~~(1)Includes an $89.1 million unrealized gain due to an upward adjustment for an observable price change of SumUp for the three and nine months ended September 30, 2021.~~

~~(2)~~Includes a $32.3 million cumulative foreign currency translation adjustment gain for the nine months ended September 30, 2021 that was reclassified into earnings as a result of the substantial liquidation of our subsidiary in Japan as part of our restructuring actions.


	Three Months Ended March 31,
	2023		2022
Interest income	$	4,471	$	1,315
Interest expense	(5,621)		(2,883)
Foreign currency gains (losses), net and other	4,220		(3,312)
Other income (expense), net	$	3,070	$	(4,880)

The following table summarizes Prepaid expenses and other current assets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (in thousands):

September 30, 2022 December 31, 2021
Prepaid expenses $ 19,535 $ 28,550
Income taxes receivable 17,448 7,711
Deferred cloud implementation cost 7,420 6,476
Other 8,260 9,833
Total prepaid expenses and other current assets $ 52,663 $ 52,570

~~GROUPON, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~(unaudited)~~


	March 31, 2023		December 31, 2022
Prepaid expenses	$	10,471	$	16,048
Income taxes receivable	7,045		6,691
Deferred cloud implementation cost, net	10,820		9,362
Other	12,381		9,000
Total prepaid expenses and other current assets	$	40,717	$	41,101

The following table summarizes Other non-current assets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Deferred contract acquisition costs		$	5,377	$	7,080
Deferred cloud implementation costs		18,596		11,986
Deferred contract acquisition costs, net						Deferred contract acquisition costs, net	$	4,347	$	4,815
Deferred cloud implementation costs, net						Deferred cloud implementation costs, net	14,337		17,684
Other	Other	5,446		6,036		Other	4,473		4,992
Total other non-current assets	Total other non-current assets	$	29,419	$	25,102	Total other non-current assets	$	23,157	$	27,491

The following table summarizes Accrued expenses and other current liabilities as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Refund reserve	Refund reserve	$	10,701	$	19,601	Refund reserve	$	10,745	$	11,072
Compensation and benefits	Compensation and benefits	16,949		30,367		Compensation and benefits	13,113		15,005
Accrued marketing	Accrued marketing	12,529		37,900		Accrued marketing	11,387		19,596
Restructuring-related liabilities	Restructuring-related liabilities	8,324		11,349		Restructuring-related liabilities	6,808		4,782
Customer credits	Customer credits	45,669		56,558		Customer credits	34,370		36,220
Deferred revenue		814		3,523
Operating lease obligations	Operating lease obligations	38,788		32,062		Operating lease obligations	22,482		37,525
Other (1)	Other (1)	64,534		47,953		Other (1)	54,773		47,252
Total accrued expenses and other current liabilities	Total accrued expenses and other current liabilities	$	198,308	$	239,313	Total accrued expenses and other current liabilities	$	153,678	$	171,452

(1)Includes certain payroll taxes deferred under the Coronavirus Aid, Relief and Economic Security ("CARES") Act of $2.7 million as of ~~September 30, 2022 and December 31, 2021. This amount is due by~~ December 31, 2022. This balance was paid in January 2023.

GROUPON, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The following table summarizes Other non-current liabilities as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Contingent income tax liabilities	Contingent income tax liabilities	$	23,594	$	24,213	Contingent income tax liabilities	$	11,030	$	11,213
Deferred income taxes	Deferred income taxes	2,346		2,802		Deferred income taxes	3,128		3,100
Other	Other	4,611		7,433		Other	3,324		4,273
Total other non-current liabilities	Total other non-current liabilities	$	30,551	$	34,448	Total other non-current liabilities	$	17,482	$	18,586

NOTE 5. FINANCING ARRANGEMENTS

~~3.25% Convertible Senior Notes due 2022~~

In April 2016, we issued $250.0 million in aggregate principal amount of convertible senior notes (the "Atairos Notes") in a private placement to A-G Holdings, L.P. In May 2021, we repurchased the Atairos Notes for an aggregate purchase price equal to $255.0 million, consisting of the $250.0 million outstanding principal amount, $1.0 million of accrued interest through the repurchase date and a $4.0 million prepayment penalty. In connection with the repurchase of the Atairos Notes, we recognized a $5.1 million loss on the early extinguishment, which is presented in Other income (expense), net in the Condensed Consolidated Statement of Operations.

~~Note Hedges and Warrants~~

In May 2016, we purchased convertible note hedges with respect to our common stock for a cost of $59.1 million from certain bank counterparties. The convertible note hedges were intended to reduce the potential economic dilution upon conversion of the Atairos Notes. In May 2016, we also sold warrants for total cash proceeds of $35.5 million to certain bank counterparties.

In connection with the repurchase of the Atairos Notes, we entered into agreements (collectively "the Unwind Agreements") with each of the bank counterparties in May 2021 to unwind the convertible note hedges and warrants. Pursuant to the terms of the Unwind Agreements, we received cash proceeds of $2.3 million for the settlement of the convertible note hedges and paid cash consideration of $1.3 million for the settlement of the warrants.

~~1.125%~~ Convertible Senior Notes due 2026

~~In March and April 2021, we issued $230.0 million aggregate principal amount of~~The convertible senior notes due 2026 (the ~~"2026 Notes"~~“2026 Notes”) ~~in a private offering to qualified institutional buyers. The net proceeds from this offering were $222.1 million. The 2026 Notes~~ bear interest at a rate of 1.125% per annum, payable semiannually in arrears on March 15 and September 15 of each year, ~~which began on September 15, 2021.~~with an annual effective interest rate of 1.83%. The 2026 Notes will mature on March 15, 2026, subject to earlier repurchase, redemption or conversion.

We used $27.4 million of the net proceeds from the offering to pay the cost of certain related capped call transactions and used the remaining net proceeds, together with cash on hand, to repurchase the Atairos Notes.

We account for the 2026 Notes as a single liability-classified instrument measured at amortized cost due to the adoption of ASU 2020-06. The carrying value of the 2026 Notes was determined by deducting transaction costs incurred in connection with the issuance of the 2026 Notes of $7.8 million from the principal amount. Those transaction costs were recorded as a debt discount in the Condensed Consolidated Balance Sheets and are amortized to interest expense. Together with the cash interest, this results in an effective interest rate of 1.83% over the term of the 2026 Notes. We have presented the 2026 Notes in Convertible senior notes, net in the accompanying Condensed Consolidated Balance Sheets.

The carrying amount of the 2026 Notes consisted of the following as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Principal amount	Principal amount	$	230,000	$	230,000	Principal amount	$	230,000	$	230,000
Less: debt discount	Less: debt discount	(5,460)		(6,597)		Less: debt discount	(4,693)		(5,077)
Net carrying amount of liability	Net carrying amount of liability	$	224,540	$	223,403	Net carrying amount of liability	$	225,307	$	224,923

We classified the fair value of the 2026 Notes as a Level 3 measurement due to the lack of observable market data over fair value inputs such as our stock price volatility over the term of the 2026 Notes and our cost of debt. The estimated fair value of the 2026 Notes as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 was ~~$148.3~~$94.0 million and ~~$183.3~~$133.1 million and was determined using a lattice model.

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ we recognized interest costs on the 2026 Notes ~~and the Atairos Notes~~ as follows (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Contractual interest	Contractual interest	$	646	$	646	$	1,940	$	4,378	Contractual interest	$	647	$	647
Amortization of debt discount	Amortization of debt discount	380		374		1,137		1,226		Amortization of debt discount	384		378
Total	Total	$	1,026	$	1,020	$	3,077	$	5,604	Total	$	1,031	$	1,025

Capped Call Transactions

In ~~March and April 2021, in~~ connection with ~~the offering of~~ the 2026 Notes, we entered into privately-negotiated capped call ~~transactions with each of Barclays Bank PLC, BNP Paribas and Mizuho Markets Americas LLC.~~transactions. The capped call transactions cover, subject to customary adjustments, the number of shares of common stock initially underlying the 2026 Notes. The capped call transactions are expected generally to reduce potential dilution to our common stock upon any conversion of the 2026 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, with such reduction and/or offset subject to a cap initially equal to $104.80 (which represents a premium of 100% over the last reported sale price of our

common stock on The Nasdaq Global Select Market on March 22, 2021), subject to certain adjustments under the terms of the capped call transactions.

The capped call transactions are accounted for as freestanding derivatives and recorded at the initial fair value in Additional paid-in-capital in the Condensed Consolidated Balance Sheets with no recorded subsequent change to fair value as long as they meet the criteria for equity classification.

Under the if-converted method, the shares of common stock underlying the conversion option in the 2026 Notes are included in the diluted income (loss) per share denominator and the interest expense and amortization of the debt discount on the 2026 Notes, net of tax, are added to the numerator. However, upon conversion, there will be minimized economic dilution from the 2026 Notes, as exercise of the capped call transactions reduces dilution from the 2026 Notes that would have otherwise occurred when the price of our common stock exceeds the conversion price. The capped call transactions are intended to offset actual dilution from the conversion of the 2026 Notes and to effectively increase the overall conversion price from $68.12 to $104.80 per share.

Revolving Credit Agreement

In May 2019, we entered into a second amended and restated senior secured revolving credit agreement, which ~~provided for aggregate principal borrowings of up~~matures on May 14, 2024, as amended from time to ~~$400.0 million (prior to the amendments described below) and matures~~time (the "Amended Credit Agreement"). Most recently, in ~~May 2024. In July 2020,~~March 2023, we entered into ana fourth amendment to the revolving credit agreement (the ~~"First~~"Fourth Amendment") which permanently reduced borrowing capacity under our senior secured revolving credit facility from $400.0 million to $225.0 million. In March 2021, we entered into a second amendment (the "Second Amendment") to

and together with the revolving credit agreement (as amended by the First Amendment and the Second Amendment, the “Prior Credit Agreement”) to, among other things, permit the issuance of the 2026 Notes and related capped call transactions. The Second Amendment also permanently removed requirements that we maintain (i) a maximum senior secured indebtedness to Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") ratio and (ii) unrestricted cash of not less than $250.0 million. Further, the Second Amendment changed the requirement to maintain a minimum fixed charge coverage ratio to a requirement to maintain a minimum interest coverage ratio.

~~On September 28, 2022, we entered into a third amendment to the Prior~~Amended Credit Agreement ~~(the "Third Amendment" and~~ the ~~Prior Credit Agreement as amended, the "Amended~~"Existing Credit Agreement") to modify certain financial covenants and provide for additional flexibility in our operations, among other changes, including certain modifications to (i) our ~~requirement~~requirements to maintain ~~(i) a maximum funded indebtedness to EBITDA ratio and (ii) a~~ monthly minimum liquidity ~~balance.~~balance (including any undrawn amounts under the revolving credit facility) of at least $50.0 million, (ii) the calculation of EBITDA under the Existing Credit Agreement, (iii) mandatory prepayment requirements and (iv) certain affirmative covenants. In addition, to the ~~modifications described below, the Third~~Fourth Amendment reduced our borrowing capacity under our senior secured revolving credit facility from ~~$225.0~~$150.0 million to ~~$150.0 million.~~

~~We deferred debt issuance costs of $4.0~~$75.0 million, in aggregate in connection with the Amended Credit Agreement. Deferred debt issuance costs are included within Other non-current assets on the Condensed Consolidated Balance Sheet as of September 30, 2022 and are amortized to interest expense over the term of the respective agreement.

In addition, under the Amended Credit Agreement, we are subject to various covenants, including customary restrictive covenants that limit our ability to, among other things: incur additional indebtedness; make dividend and other restricted payments, including limiting the amount of our share repurchases; enter into sale and leaseback transactions; make investments, loans or advances; grant or incur liens on assets; sell assets; engage in mergers, consolidations, liquidations or dissolutions; and engage in transactions with related parties and other affiliates. The Third Amendment further restricts certain existing negative covenants, including with respect to our ability to make share repurchases, acquisitions, investments and to incur additional indebtedness and liens.

As of September 30, 2022, we were in compliance with the covenants under our Amended Credit Agreement. Non-compliance with the covenants under the Amended Credit Agreement may result in termination of the commitments thereunder and then any outstanding borrowings may be declared due and payable immediately. We have the right to terminate the Amended Credit Agreement or reduce the available commitments at any time.

~~Borrowings under the Prior Credit Agreement bore (a) interest at a rate per annum equal to (i) an adjusted~~

LIBO rate or (ii) a customary base rate (with loans denominated in certain currencies bearing interest at rates specific to such currencies) plus an additional margin ranging between 0.50% and 2.00% and (b) commitment fees ranging from 0.25% to 0.35% on the daily amount of unused commitments. The Prior Credit Agreement also includes a replacement mechanism for the discontinuation of the adjusted LIBO rate.

The Third Amendment replaces LIBOR as a benchmark interest rate under the Prior Credit Agreement with Term Secured Overnight Financing Rate ("SOFR") plus a credit spread adjustment of 10 basis points. The Third Amendment also provides that, from the date of the Third Amendment through the fiscal quarter ending June 30, 2023, the Alternate Base Rate ("ABR") and Canadian prime spreads shall be raised to 1.50%, the fixed rate spreads to 2.50% and the commitment fee to 0.4% on the daily amount of the unused commitments under the Amended Credit Agreement. After June 30, 2023, the applicable spreads and commitment fee will revert to the levels set by the Prior Credit Agreement, with the addition of a new tier that is applicable when the ratio of funded indebtedness to EBITDA exceeds 3.00:1.00 and provides for ABR and Canadian prime spreads of 1.25%, fixed rate spreads of 2.25% and a commitment fee of 0.4% on the daily amount of the unused commitments under the Amended Credit Agreement.

~~In addition, the Amended Credit Agreement~~which provides for the issuance of up to $75.0 million in letters of credit, provided that the sum of outstanding borrowings and letters of credit do not exceed the maximum funding commitment of ~~$150.0~~$75.0 million.

~~The~~We deferred debt issuance costs of $4.6 million in aggregate in connection with the Existing Credit Agreement. Deferred debt issuance costs are included within Other non-current assets on the Condensed Consolidated Balance Sheet as of March 31, 2023 and are amortized to interest expense over the term of the respective agreement.

As of March 31, 2023, we were in compliance with the covenants under our Existing Credit Agreement. Non-compliance with the covenants under the Existing Credit Agreement may result in termination of the commitments thereunder and then any outstanding borrowings may be declared due and payable immediately. We have the right to terminate the Existing Credit Agreement or reduce the available commitments at any time.

Amounts committed to outstanding borrowings and letters of credit under our Existing Credit Agreement as of March 31, 2023 and our Amended Credit Agreement is secured by substantially all of our tangible and intangible assets, including a pledge of 100% of the outstanding capital stock of substantially all of our direct and indirect domestic subsidiaries and 65% of the shares or equity interests of first-tier foreign subsidiaries and each U.S. entity whose assets substantially consist of capital stock and/or intercompany debt of one or more foreign subsidiaries, subject to certain exceptions. Certain of our domestic and foreign subsidiaries are guarantors under the Amended Credit Agreement.

~~As of September 30, 2022, we had $110.0 million of outstanding borrowings and $24.5 million of outstanding letters of credit and~~ as of December 31, ~~2021 we had $100.0 million of outstanding borrowings and $25.8 million of outstanding letters of credit under the Amended Credit Agreement.~~2022 were as follows (in thousands):


	March 31, 2023		December 31, 2022
Borrowings	$	47,700	$	75,000
Letters of credit	24,809		24,900

1512

NOTE 6. COMMITMENTS AND CONTINGENCIES

Our contractual obligations and commitments and future sublease income under our contractually obligated operating subleases as of ~~September 30, 2022~~March 31, 2023 and through the date of this report, did not materially change from the amounts set forth in our ~~2021~~2022 Annual Report on Form 10-K.

~~During~~We sublease a portion of 600 West Chicago to Uptake, Inc. "Uptake." In the ~~third~~first quarter of ~~2022, however,~~2023, we ~~reassessed the term of one of our operating leases in our North America segment and, as~~initiated a result, our expected future minimum lease payments related to that lease have been modified. Our current quarter reassessment included an increase in our Accrued expenses and other current liabilities of $11.6 million, a decrease to our long-term Operating lease obligations of $25.6 million, a decrease to our Right-of-use assets - operating leases, net of $9.5 millionlawsuit against Uptake in the ~~Condensed Consolidated Balance Sheets and a gain~~Circuit Court of ~~$4.5 million in Restructuring and related charges on the Condensed Consolidated Statements of Operations. Refer to Note 9,~~ ~~Restructuring and Related Charges~~Cook County for ~~additional information on the gain recognized. In addition, the collectability~~breach of the ~~sublease payments related to~~lease agreement and that ~~lease is not reasonably assured. Refer to Note 2,~~ ~~Goodwill and Long-Lived Assets~~ ~~for additional information.~~lawsuit remains pending.

Legal Matters and Other Contingencies

From time to time, we are party to various legal proceedings incident to the operation of our business. For example, we currently are involved in proceedings brought by merchants, employment and related matters, intellectual property infringement suits, customer lawsuits, stockholder claims relating to U.S. securities law, consumer class actions and suits alleging, among other things, violations of state consumer protection or privacy laws.

~~On April 28, 2020, an individual plaintiff~~Four shareholders have filed separate shareholder derivative lawsuits (collectively, the "Derivative Lawsuits") in relation to a securities fraud class action complaint in the United States District Court for the Northern District of Illinois, and in July 2020, another individual was appointed as lead plaintiff (the "Securities Lawsuit"). Thepreviously settled lawsuit ~~covers the time period from July 30, 2019 through February 18, 2020. The lead plaintiff alleges~~that alleged that Groupon and certain of its officers made materially false and/or misleading statements or omissions regarding its business, operations and prospects, specifically as it relates to reiterating its full year guidance on November 4, 2019 and the Groupon Select program. On May 6, 2022, the parties reached an agreement to settle this matter in its entirety for $13.5 million and signed a term sheet memorializing preliminary terms. On June 27, 2022, the District Court granted preliminary approval of the settlement. On October 28, 2022, the District Court granted final approval of the settlement class with no class members opting out and no objections. Now that the settlement class has been confirmed and the case is fully resolved with no opt outs, all class members must follow a claims process administered by a third party and will be barred from filing future lawsuits based on these events. The full amount of the $13.5 million settlement is covered under Groupon's insurance policies and was paid into an escrow fund by Groupon’s insurance carriers on July 26, 2022. The settlement accrual and insurance receivable are recorded in Accrued expenses and other current liabilities and Accounts receivable, net on the Condensed Consolidated Balance Sheets as of September 30, 2022.

In addition, four shareholders have filed separate shareholder derivative lawsuits in relation to the same events that are subject to the securities litigation described above (collectively, the "Derivative Lawsuits"program (the "Securities Lawsuit"). First, on September 9, 2021, a shareholder named Jonathan Frankel filed a federal derivative lawsuit in the United States District Court for District of Delaware. Second, on January 19, 2022, a shareholder named Alyssa Estreen filed a derivative lawsuit in the Court of Chancery in the State of Delaware. Third, on January 24, 2022, a shareholder named Saman Khoury filed a derivative lawsuit, also in the Court of Chancery in the State of Delaware. Finally, on May 9, 2022, a shareholder named Moriah Anders filed a lawsuit, also in the Court of Chancery in the State of Delaware. All four lawsuits name Groupon and certain of the Company's former and current officers and directors. The allegations in all four Derivative Lawsuits relate to the same time period and events that are the subject of the Securities Lawsuit and allege that the Company and its shareholders have sustained damages as a result of the conduct of certain current and former officers and directors. The Plaintiffs in each of these Derivative Lawsuits seek unspecified damages they allege were sustained by the Company, injunctive and equitable relief and attorneys’ fees. All four matters ~~are~~have been stayed pending settlement discussions. On February 2, 2023, the ~~outcome~~Parties to all four Derivative Lawsuits executed a Stipulation of Settlement that was filed in Delaware Chancery Court. Under the settlement, Groupon has agreed to undertake certain corporate reforms. The Settlement requires notice to shareholders and Court approval. Counsel for the Plaintiffs will submit a petition to the Court to be awarded attorneys' fees, the amount of which is at the discretion of the ~~Securities Lawsuit. We intend to vigorously defend these matters, which we believe to~~Court. Any attorney fee award will be ~~without merit.~~covered under Groupon's directors and officers insurance policies.

In addition, third parties have from time to time claimed, and others may claim in the future, that we have infringed their intellectual property rights. We are subject to intellectual property disputes, including patent

infringement claims, and expect that we will continue to be subject to intellectual property infringement claims as our services expand in scope and complexity. In the past, we have litigated such claims, and we are presently involved in several patent infringement and other intellectual property-related claims, including pending litigation or trademark disputes relating to, for example, our Goods category, some of which could involve potentially substantial claims for damages or injunctive relief. We may also become more vulnerable to third-party claims as laws such as the Digital Millennium Copyright Act are interpreted by the courts, and we become subject to laws in jurisdictions where the underlying laws with respect to the potential liability of online intermediaries are either unclear or less favorable. We believe that additional lawsuits alleging that we have violated patent, copyright or trademark laws may be filed against us. Intellectual property claims, whether meritorious or not, are time consuming and often costly to resolve, could require expensive changes in our methods of doing business or the goods we sell, or could require us to enter into costly royalty or licensing agreements.

We also are subject to consumer claims or lawsuits relating to alleged violations of consumer protection or privacy rights and statutes, some of which could involve potentially substantial claims for damages, including statutory or punitive damages. Consumer and privacy-related claims or lawsuits, whether meritorious or not, could

be time consuming, result in costly litigation, damage awards, fines and penalties, injunctive relief or increased costs of doing business through adverse judgment or settlement, or require us to change our business practices, sometimes in expensive ways.

We are also subject to, or in the future may become subject to, a variety of regulatory inquiries, audits, and investigations across the jurisdictions where we conduct our business, including, for example, inquiries related to consumer protection, employment matters and/or hiring practices, marketing practices, tax, unclaimed property and privacy rules and regulations. Any regulatory actions against us, whether meritorious or not, could be time consuming, result in costly litigation, damage awards, fines and penalties, injunctive relief or increased costs of doing business through adverse judgment or settlement, require us to change our business practices in expensive ways, require significant amounts of management time, result in the diversion of significant operational resources, materially damage our brand or reputation, or otherwise harm our business.

We establish an accrued liability for loss contingencies related to legal and regulatory matters when the loss is both probable and reasonably estimable. Those accruals represent management's best estimate of probable losses and, in such cases, there may be an exposure to loss in excess of the amounts accrued. For certain of the matters described above, there are inherent and significant uncertainties based on, among other factors, the stage of the proceedings, developments in the applicable facts of law, or the lack of a specific damage claim. However, we believe that the amount of reasonably possible losses in excess of the amounts accrued for those matters would not have a material adverse effect on our business, Condensed Consolidated Financial Statements, results of operations or cash flows. Our accrued liabilities for loss contingencies related to legal and regulatory matters may change in the future as a result of new developments, including, but not limited to, the occurrence of new legal matters, changes in the law or regulatory environment, adverse or favorable rulings, newly discovered facts relevant to the matter, or changes in the strategy for the matter. Regardless of the outcome, litigation and other regulatory matters can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Indemnifications

In connection with the disposition of our operations in Latin America in 2017, we recorded $5.4 million in indemnification liabilities for certain tax and other matters upon the closing of the transactions as an adjustment to the net loss on the dispositions within discontinued operations at their fair value. We estimated the indemnification liabilities using a probability-weighted expected cash flow approach. Our remaining indemnification liabilities were $2.8 million as of ~~September 30, 2022.~~March 31, 2023. We estimate that the total amount of obligations that are reasonably possible to arise under the indemnifications in excess of amounts accrued as of ~~September 30, 2022~~March 31, 2023 is approximately $11.7 million.

In the normal course of business to facilitate transactions related to our operations, we indemnify certain parties, including employees, lessors, service providers, merchants, and counterparties to investment agreements and asset and stock purchase agreements with respect to various matters. We have agreed to hold certain parties harmless against losses arising from a breach of representations or covenants, or other claims made against

those parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. We are also subject to increased exposure to various claims as a result of our divestitures and acquisitions, particularly in cases where we are entering into new businesses in connection with such acquisitions. We may also become more vulnerable to claims as we expand the range and scope of our services and are subject to laws in jurisdictions where the underlying laws with respect to potential liability are either unclear or less favorable. In addition, we have entered into indemnification agreements with our officers, directors and underwriters, and our bylaws contain similar indemnification obligations that cover officers, directors, employees and other agents.

Except as noted above, it is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, any payments that we have made under these agreements have not had a material impact on our operating results, financial position or cash flows.

1814

NOTE 7. STOCKHOLDERS' EQUITY (DEFICIT) AND COMPENSATION ARRANGEMENTS

Groupon, Inc. Incentive Plan

In August 2011, we established the Groupon, Inc. 2011 Incentive Plan, as amended and restated (the "2011 Plan"), under which options, ~~RSUs~~restricted stock units and performance stock units for up to 11,875,000 shares of common stock are authorized for future issuance to employees, consultants and directors. The 2011 Plan is administered by the Compensation Committee of the Board. As of ~~September 30, 2022, 3,203,455~~March 31, 2023, 464,968 shares of common stock were available for future issuance under the 2011 Plan.

Restricted Stock Units

The restricted stock units granted under the ~~Groupon, Inc. Stock Plans (the "Plans")~~2011 Plan generally have vesting periods between one and four years and are amortized on a straight-line basis over their requisite service period.

The table below summarizes restricted stock unit activity for employees and nonemployees under the ~~Plans~~2011 Plan for the ~~nine~~three months ended ~~September 30, 2022:~~March 31, 2023:


		Restricted Stock Units	Weighted-Average Grant Date Fair Value (per unit)			Restricted Stock Units	Weighted-Average Grant Date Fair Value (per unit)
Unvested at December 31, 2021		2,205,235	$	31.06
Unvested at December 31, 2022					Unvested at December 31, 2022	2,876,089	$	19.33
Granted	Granted	2,233,380	19.14		Granted	125,486	8.74
Vested	Vested	(915,272)	33.25		Vested	(403,202)	18.09
Forfeited	Forfeited	(514,350)	26.94		Forfeited	(683,337)	14.70
Unvested at September 30, 2022		3,008,993	$	22.20
Unvested at March 31, 2023					Unvested at March 31, 2023	1,915,036	$	18.64

As of ~~September 30, 2022, $52.2~~March 31, 2023, $22.6 million of unrecognized compensation costs related to unvested restricted stock units, excluding any impact of forfeitures, are expected to be recognized over a remaining weighted-average period of ~~1.19~~0.91 years.

Stock Options

On March 30, 2023, we issued 3,500,000 units of stock options with a per share value of $0.95, a strike price of $6.00 and vesting over two years. The exercise price of stock options granted is equal to the fair market value of the underlying stock on the date of grant. The contractual term for these stock options expires 3 years from the grant date. The fair value of stock options on the grant date is amortized on a straight-line basis over the requisite service period.

The fair value of stock options granted is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. Expected volatility is based on Groupon's historical volatility over the estimated expected life of the stock options. The expected term that represents the period of time the stock options are expected to be outstanding. The risk-free interest rate is based on yields on U.S. Treasury STRIPS with maturity similar to the estimated expected life of the stock options. The weighted-average assumptions for stock options granted during the three months ended March 31, 2023 are outlined in the following table:


	Three Months Ended March 31, 2023
Dividend yield	0.0	%
Risk-free interest rate	4.1	%
Expected term (in years)	2
Expected volatility	78.2	%

Performance ~~Share~~Shares Units

We have previously granted performance share units under the ~~Plans~~2011 Plan that vest in shares of our common stock upon the achievement of financial and operational targets specified in the respective award agreement ("Performance Share Units"). ~~We have also granted performance share units subject to a market condition ("Market-based Performance Share Units").~~ Our existing ~~Performance Share Units and Market-based~~ Performance Share Units are subject to continued employment through the performance period dictated by the award and certification by the Compensation Committee of the Board that the specified performance conditions have been achieved.

~~During~~The table below summarizes Performance Share Unit activity under the ~~nine~~2011 Plan for the three months ended September 30, 2022, 20,494 shares of our common stock were issued upon vesting of Performance Share Units granted in 2020 and prior based on the Board's certification of our financial and operational metrics for the year ended DecemberMarch 31, 2020. The weighted average grant date fair value of those shares was $31.97 per share. As of September 30, 2022, we have recognized substantially all expense related to the 17,269 unvested Performance Share Units and the 33,333 unvested Market-based Performance Share Units.2023:


	Performance Share Units	Weighted-Average Grant Date Fair Value (per unit)
Unvested at December 31, 2022	17,269	$	24.13
Granted	—	—
Vested	(17,269)	24.13
Forfeited	—	—
Unvested at March 31, 2023	—	$	—

NOTE 8. REVENUE RECOGNITION

Refer to Note 13, Segment Information, for revenue summarized by reportable segment and category for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

Customer Credits

We issue credits to customers that can be applied to future purchases through our online marketplaces. Credits are primarily issued as consideration for refunds. To a lesser extent, credits are issued for customer relationship purposes. The following table summarizes the activity in the liability for customer credits for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 (in thousands):


	Customer Credits
Balance as of December 31, ~~2021~~2022	$	~~56,558~~36,220
Credits issued	~~105,044~~26,921
Credits redeemed (1)	~~(98,160)~~(25,856)
Breakage revenue recognized	~~(16,459)~~(2,995)
Foreign currency translation	~~(1,314)~~80
Balance as of ~~September 30, 2022~~March 31, 2023	$	~~45,669~~34,370

(1)Customer credits can be redeemed through our online marketplaces for goods or services provided by a third-party merchant and service revenue is recognized on a net basis as the difference between the carrying amount of the customer credit liability derecognized and the amount due to the merchant for the related transaction. ~~Historically, customer~~Customer credits ~~have primarily been~~are typically used within one year of ~~issuance; however, usage patterns have been impacted from changes in customer behavior due to COVID-19.~~issuance.

Costs of Obtaining Contracts

Incremental costs to obtain contracts with third-party merchants, such as sales commissions, are deferred and recognized over the expected period of the merchant arrangement, generally from 12 to 18 months. Deferred contract acquisition costs are presented in Prepaid expenses and other current assets and Other non-current assets on the Condensed Consolidated Balance Sheets. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, deferred contract acquisition costs were ~~$6.2~~$5.3 million and ~~$8.0~~$5.9 million.

The amortization of deferred contract acquisition costs is classified within Selling, general and administrative expense in the Condensed Consolidated Statements of Operations. We amortized ~~$2.7~~$2.3 million and ~~$2.6~~$2.9 million of deferred contract acquisition costs for the three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021, and $8.3 million and $7.8 million for the nine months ended September 30, 2022 and 2021.~~2022.

Allowance for Expected Credit Losses on Accounts Receivable

Accounts receivable primarily represents the net cash due from credit card and other payment processors and from merchants and performance marketing networks for commissions earned on consumer purchases. We establish an allowance for expected credit losses on accounts ~~receivables~~receivable based on identifying the following customer risk characteristics: size, type of customer, and payment terms offered in the normal course of business. Receivables with similar risk characteristics are grouped into pools. For each pool, we consider the historical credit loss experience, current economic conditions, bankruptcy filings, published or estimated credit default rates, age of the receivable and any recoveries in assessing the lifetime expected credit losses.

The following table summarizes the activity in the allowance for expected credit losses on accounts receivable for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 (in thousands):


	Allowance for Expected Credit Losses
Balance as of December 31, ~~2021~~2022	$	~~7,974~~4,538
Change in provision	~~(896)~~(639)
Write-offs	~~(1,254)~~(115)
Foreign currency translation	~~(674)~~34
Balance as of ~~September 30, 2022~~March 31, 2023	$	~~5,150~~3,818

Variable Consideration for Unredeemed Vouchers

For merchant agreements with redemption payment terms, the merchant is not paid its share of the sale price for a voucher sold through one of our online marketplaces until the customer redeems the related voucher. If the customer does not redeem a voucher with such merchant payment terms, we retain all of the gross billings for that voucher, rather than retaining only our net commission. We estimate the variable consideration from vouchers that will not ultimately be redeemed using our historical voucher redemption experience and recognize that amount as revenue at the time of sale. We apply a constraint to ensure it is probable that a significant reversal of revenue will not occur in future periods. We recognized variable consideration from unredeemed vouchers that were sold in a prior period of $7.4 million and $19.1 million for the three months ended September 30, 2022 and 2021, and $9.4 million and $31.8 million for the nine months ended September 30, 2022 and 2021. During the year ended December 31, 2021, the substantial majority of vouchers sold at the onset of the COVID-19 pandemic reached expiration at redemption rates lower than our historical estimates. Although redemption rates for vouchers sold in more recent periods have improved, the impact of COVID-19 on redemption behavior in future periods is still uncertain. When actual redemptions differ from our estimates, the effects could be material to the Condensed Consolidated Financial Statements. During the three months ended March 31, 2023 and 2022, we recognized an immaterial amount of variable consideration from unredeemed vouchers that were sold in a prior period.

NOTE 9. RESTRUCTURING AND RELATED CHARGES

In August 2022 and April 2020, we initiated Board-approved restructuring plans. Costs incurred related to the restructuring ~~plan~~plans are classified as Restructuring and related charges on the Condensed Consolidated Statements of Operations. The restructuring activities are summarized by plan in the sections below.

2022 Restructuring Plan

In August 2022, we initiated a multi-phase cost savings plan designed to reduce our expense structure to align with our go-forward business and financial objectives (the “2022 Cost Savings Plan”). The 2022 Cost Savings Plan included a restructuring plan, approved by our Board on August 5, 2022 (the “2022 Restructuring Plan”). The ~~first phase of the~~ 2022 Restructuring Plan, including the first phase initiated August 2022 and second phase initiated January 2023, is expected to include an overall reduction of approximately ~~500~~1,000 positions globally, with the majority of these reductions completed as of March 31, 2023 and the remainder expected to occur by the end of ~~2022 and the remainder in early~~ 2023. In connection with these actions, we expect to record total pre-tax charges of ~~$10.0~~$20.0 million to ~~$20.0~~$27.0 million. ~~Substantially all~~A majority of the pre-tax charges are expected to be paid in cash and ~~will~~ relate to employee severance and compensation benefits, with an immaterial amount of charges related to other exit costs. We expect to begin the next phase of our restructuring actions under this plan in 2023, and we anticipate these actions will include a focus on reducing our technology platform costs following the completion of our transition to the cloud. We have incurred total pretax charges of ~~$6.2~~$18.6 million since the inception of the 2022 Restructuring Plan.

2117

The following ~~tables summarize~~table summarizes costs incurred by segment related to the 2022 Restructuring Plan for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 (in thousands):


		Three and Nine Months Ended September 30, 2022							Three Months Ended March 31, 2023
		Employee Severance and Benefit Costs (Credits) (1)		Other Exit Costs		Total Restructuring Charges (Credits)			Employee Severance and Benefit Costs (Credits) (1)		Other Exit Costs		Total Restructuring Charges (Credits)
North America	North America	$	4,600	$	158	$	4,758	North America	$	4,440	$	808	$	5,248
International	International	1,436		—		1,436		International	3,733		—		3,733
Consolidated	Consolidated	$	6,036	$	158	$	6,194	Consolidated	$	8,173	$	808	$	8,981

(1)The employee severance and benefits costs for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 are related to the termination of approximately ~~380~~700 employees, of which ~~318~~8 are still completing their notice period and legally-required severance and benefits have been recognized as of ~~September 30, 2022.~~March 31, 2023. Additional severance and benefits costs related to the remaining ~~318~~8 employees may be incurred in future periods.

The following table summarizes restructuring liability activity for the 2022 Restructuring Plan (in thousands):


		Employee Severance and Benefit Costs		Other Exit Costs		Total			Employee Severance and Benefit Costs		Other Exit Costs		Total
Balance as of December 31, 2021		$	—	$	—	$	—
Balance as of December 31, 2022								Balance as of December 31, 2022	$	175	$	—	$	175
Charges payable in cash	Charges payable in cash	6,036		158		6,194		Charges payable in cash	8,173		808		8,981
Cash payments	Cash payments	(3,167)		—		(3,167)		Cash payments	(5,114)		(206)		(5,320)
Foreign currency translation	Foreign currency translation	(29)		—		(29)		Foreign currency translation	47		—		47
Balance as of September 30, 2022 (1)		$	2,840	$	158	$	2,998
Balance as of March 31, 2023 (1)								Balance as of March 31, 2023 (1)	$	3,281	$	602	$	3,883

(1)Substantially all of the remaining cash payments for the 2022 Restructuring Plan costs are expected to be disbursed through 2023.

2020 Restructuring Plan

In April 2020, the Board approved a multi-phase restructuring plan related to our previously-announced strategic shift and as part of the cost cutting measures implemented in response to the impact of COVID-19 on our business (the "2020 Restructuring Plan"). We have incurred total pretax charges of ~~$108.7~~$109.2 million since the inception of the 2020 Restructuring Plan. Our actions under this plan were substantially completed by December 31, 2021, and our current and future charges or credits will be from changes in estimates. Our 2020 Restructuring Plan included workforce reductions of approximately 1,600 positions globally, the exit or discontinuation of the use of certain leases and other assets, impairments of our right-of-use and other long-lived assets, and the exit of our operations in New Zealand and Japan. In the first quarter 2021, we substantially liquidated our subsidiary in Japan and reclassified $32.3 million of cumulative foreign currency translation gains into earnings, which is presented in Other income (expense), net on the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2021.

2218

The following tables summarize costs incurred by segment related to the 2020 Restructuring Plan for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (in thousands):


		Three Months Ended September 30, 2022											Three Months Ended March 31, 2023
		Employee Severance and Benefit Costs (Credits)		Legal and Advisory Costs		Property, Equipment and Software Impairments		Right-of-Use Asset Impairments and Lease-related Charges (Credits)		Total Restructuring Charges (Credits)			Employee Severance and Benefit Costs (Credits)		Legal and Advisory Costs		Lease-related Charges (Credits)		Total Restructuring Charges (Credits)
North America	North America	$	—	$	(1)	$	—	$	(1,578)	$	(1,579)	North America	$	—	$	1	$	607	$	608
International	International	121		28		—		148		297		International	(1,046)		(56)		307		(795)
Consolidated	Consolidated	$	121	$	27	$	—	$	(1,430)	$	(1,282)	Consolidated	$	(1,046)	$	(55)	$	914	$	(187)


		Three Months Ended September 30, 2021											Three Months Ended March 31, 2022
		Employee Severance and Benefit Costs (Credits)		Legal and Advisory Costs		Property, Equipment and Software Impairments		Right-of-Use Asset Impairments and Lease-related Charges (Credits)		Total Restructuring Charges (Credits)			Employee Severance and Benefit Costs (Credits)		Legal and Advisory Costs		Lease-related Charges (Credits)		Total Restructuring Charges (Credits)
North America	North America	$	26	$	251	$	602	$	5,610	$	6,489	North America	$	1	$	44	$	356	$	401
International	International	2,600		571		268		2,555		5,994		International	(289)		37		163		(89)
Consolidated	Consolidated	$	2,626	$	822	$	870	$	8,165	$	12,483	Consolidated	$	(288)	$	81	$	519	$	312

Nine Months Ended September 30, 2022
Employee Severance and Benefit Costs (Credits) Legal and Advisory Costs Property, Equipment and Software Impairments Right-of-Use Asset Impairments and Lease-related Charges (Credits) Total Restructuring Charges (Credits)
North America $ 1 $ 129 $ — $ (404) $ (274)
International 305 89 — 1,849 2,243
Consolidated $ 306 $ 218 $ — $ 1,445 $ 1,969

Nine Months Ended September 30, 2021
Employee Severance and Benefit Costs (Credits) Legal and Advisory Costs Property, Equipment and Software Impairments Right-of-Use Asset Impairments and Lease-related Charges (Credits) Total Restructuring Charges (Credits)
North America $ 458 $ 1,482 $ 602 $ 6,974 $ 9,516
International 21,665 599 268 2,102 24,634
Consolidated $ 22,123 $ 2,081 $ 870 $ 9,076 $ 34,150

As a part of our 2020 Restructuring Plan, we terminated or modified several of our leases. In other cases we vacated our leased facilities, and some of those facilities are being actively marketed for sublease or we are in negotiations with the landlord to potentially terminate or modify those leases. ~~We recognized impairment related~~In January 2023, we exercised our option to ~~those leases for $1.8~~early terminate our lease at 600 West Chicago, now expiring on January 31, 2024, which required us to pay a penalty of $9.6 million ~~and $2.9 million during~~with our early termination notice. Prior to exercising our option to early terminate, the ~~three and nine months ended September 30, 2022 and $7.7 million during the three and nine months ended September 30, 2021. See Note 2,~~ ~~Goodwill and Long-Lived Assets,~~ ~~for additional information. In addition, during the three and nine months ended September 30, 2022, we recognized a gain~~expiration of ~~$4.5 million in Restructuring and related charges for one of our previously-impaired leases in our North America segment due to a reassessment of the term.~~600 West Chicago was January 31, 2026. Rent expense, including amortization of the right-of-use asset and accretion of the operating lease liability, sublease income, termination and modification gains and losses, and other variable lease costs related to the leased facilities vacated as part of our restructuring plan are presented within Restructuring and related charges in the Condensed Consolidated Statements of Operations. The current and non-current liabilities associated with these leases continue to be presented within ~~Other~~Accrued expenses and other current liabilities and Operating lease obligations in the Condensed Consolidated Balance Sheets.

The following table summarizes restructuring liability activity for the 2020 Restructuring Plan (in thousands):

Employee Severance and Benefit Costs Legal and Advisory Costs Total
Balance as of December 31, 2021 $ 11,038 $ 311 $ 11,349
Charges payable in cash 306 218 524
Cash payments (5,390) (170) (5,560)
Foreign currency translation (921) (66) (987)
Balance as of September 30, 2022 (1)
$ 5,033 $ 293 $ 5,326


	Employee Severance and Benefit Costs		Other Exit Costs		Total
Balance as of December 31, 2022	$	4,306	$	301	$	4,607
Charges payable in cash and changes in estimate	(1,046)		(55)		(1,101)
Cash payments	(529)		(95)		(624)
Foreign currency translation	41		2		43
Balance as of March 31, 2023 (1)	$	2,772	$	153	$	2,925

(1)Substantially all of the remaining cash payments for the 2020 Restructuring Plan costs are expected to be disbursed by the end of 2023.

NOTE 10. INCOME TAXES

Our income tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items.

Provision (benefit) for income taxes and ~~income~~Income (loss) from operations before provision (benefit) for income taxes for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Provision (benefit) for income taxes	Provision (benefit) for income taxes	$	(4,328)	$	135	$	(4,605)	$	773	Provision (benefit) for income taxes	$	1,118	$	(2,675)
Income (loss) from operations before provision (benefit) for income taxes		(59,871)		78,836		(184,750)		90,793
Income (loss) before provision (benefit) for income taxes										Income (loss) before provision (benefit) for income taxes	(27,495)		(37,027)

Our U.S. Federal income tax rate is 21%. The primary factor impacting the effective tax rate for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ was the pretax losses incurred in jurisdictions that have valuation allowances against their net deferred tax assets. The three and nine months ended September 30, 2022 were also impacted by the reduction to our estimated annual tax rate due to an increase in expected annual losses. The three and nine months ended September 30, 2021 were also impacted by the benefit of non-taxable items, including the unrealized gain on the observable price change recorded in an other equity investment duringFor the three months ended September 30, 2021, the U.S. research and development tax credit, and reversals of reserves for uncertain tax positions due to closing of applicable statutes of limitations. For the three and nine months ended September 30, 2021,March 31, 2022, we had a full valuation allowance recorded against the U.S. federal and state deferred tax assets. We recorded a partial valuation allowance release in Q4 2021. For the three and nine months ended September 30, 2022, we continue to maintain a valuation allowance in the U.S. against capital losses, deferred tax assets that will convert into capital losses upon reversal, and state credits that we ~~are~~were not expecting to be able to realize. We recorded a valuation allowance against the remaining U.S. federal and state deferred tax assets in Q4 2022. For the three months ended March 31, 2023, we continue to maintain a full valuation allowance against all U.S. federal and state deferred tax assets. We expect that our consolidated effective tax rate in future periods will continue to differ significantly from the U.S. federal income tax rate as a result of our tax obligations in jurisdictions with profits and valuation allowances in jurisdictions with losses.

We are currently undergoing income tax audits in multiple jurisdictions. It is likely that the examination phase of some of those audits will conclude in the next 12 months. There are many factors, including factors outside of our control, which influence the progress and completion of those audits. We are subject to claims for tax assessments by foreign jurisdictions, including a proposed assessment for ~~$105.7~~$115.3 million, inclusive of estimated incremental interest from the original assessment. We believe that the assessment, which primarily relates to transfer pricing on transactions occurring in 2011, is without merit and we intend to vigorously defend ourselves in that matter. There could be potential increases in our liabilities for uncertain tax positions from the ultimate resolution of that assessment. We believe it is reasonably possible that reductions of up to ~~$26.2~~$7.1 million in unrecognized tax benefits may occur within the 12 months following ~~September 30, 2022~~March 31, 2023 upon closing of income tax audits or the expiration of applicable statutes of limitations.

In general, it is our practice and intention to reinvest the earnings of our non-U.S. subsidiaries in those ~~operations.~~operations or remit such earnings in a tax-efficient manner. An actual repatriation from our non-U.S. subsidiaries could be subject to foreign and U.S. state income taxes. Aside from limited exceptions for which the related deferred tax liabilities recognized as of

~~September 30, 2022~~ March 31, 2023 and December 31, ~~2021~~2022 are immaterial, we do not intend to distribute earnings of foreign subsidiaries for which we have an excess of the financial reporting basis over the tax basis of our investments and therefore have not recorded any deferred taxes related to such amounts. The actual tax cost resulting from a distribution would depend on income tax laws and circumstances at the time of distribution. Determination of the amount of unrecognized deferred tax liability related to the excess of the financial reporting basis over the tax basis of our foreign subsidiaries is not practical due to the complexities associated with the calculation.

NOTE 11. FAIR VALUE MEASUREMENTS

Fair value is defined under U.S. GAAP as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability.

In determining fair value, we use ~~various~~ valuation approaches within the fair value measurement framework. ~~The valuation methodologies used for our assets and liabilities measured at fair value and their classification in the valuation hierarchy are summarized below:~~

~~Fair value option investments and available-for-sale securities.~~ We have fair value option investments and available-for-sale securities that we measure using the income approach. We have classified these investments as Level 3 due to the lack of observable market data over fair value inputs such as cash flow projections and discount rates.

~~Contingent consideration.~~ During the first quarter 2021, we settled a contingent consideration arrangement to the former owners of a business previously acquired in 2018. We use the income approach to value contingent consideration obligations based on future financial performance. We have previously classified our contingent consideration as Level 3 due to the lack of relevant observable market data over fair value inputs such as probability-weighting of payment outcomes.

There was no material activity in the fair value of recurring Level 3 fair value measurements for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis, including assets that are written down to fair value as a result of an impairment or ~~increased~~modified due to an observable price change in an orderly transaction.

We recognized $35.4 million in non-cash impairment charges related to goodwill for the nine months ended September 30, 2022. We recognized $1.8 million and $11.8 million in non-cash impairment charges related to long-lived assets for the three and nine months ended September 30, 2022, of which $1.8 million and $2.9 million are included in Restructuring and related charges on our Condensed Consolidated Statements of Operations. We recognized $7.7 million in non-cash impairment charges related to long-lived assets during the three and nine months ended September 30, 2021, which is included in Restructuring and related charges on our Condensed Consolidated Statements of Operations. See Note 2, ~~Goodwill and Long-Lived Assets,~~ ~~and Note 9, Restructuring and Related Charges,~~ ~~for additional information.~~

We adjusted the carrying value of an other equity investment, which resulted in an unrealized gain of $89.1 million, and sold shares in an other equity investment for a gain of $2.2 million for the three and nine months ended September 30, 2021. During the second quarter 2021, we sold our shares in an other equity investment and recognized a gain of $4.2 million. See Note 3, ~~Investments, for additional information.~~

We did not record any ~~other~~ significant nonrecurring fair value measurements for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~

2022.

Estimated Fair Value of Financial Assets and Liabilities Not Measured at Fair Value

Our financial instruments not carried at fair value consist primarily of accounts receivable, restricted cash, short-term borrowings, accounts payable, accrued merchant and supplier payables and accrued expenses. The carrying values of those assets and liabilities approximate their respective fair values as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 due to their short-term nature.

NOTE 12. INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted-average number of common shares and the effect of potentially dilutive securities outstanding during the period. Potentially dilutive securities include restricted stock units, performance share units, ESPP shares, warrants, capped call transactions and convertible senior notes. If dilutive, those potentially dilutive securities are reflected in diluted net income (loss) per share using the treasury stock method, except for the convertible senior notes, which are subject to the if-converted method.

The following table sets forth the computation of basic and diluted net income (loss) per share of common stock for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (in thousands, except share amounts and per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Basic and diluted net income (loss) per share:
Numerator
Net income (loss) $ (55,543) $ 78,701 $ (180,145) $ 90,020
Less: Net income (loss) attributable to noncontrolling interests 680 594 2,157 737
Basic net income (loss) attributable to common stockholders (56,223) 78,107 (182,302) 89,283
Diluted net income (loss) attributable to common stockholders (56,223) 78,107 (182,302) 89,283
Plus: Interest expense from assumed conversion of convertible senior notes — 700 — 1,392
Net income (loss) attributable to common stockholders plus assumed conversions (56,223) 78,807 (182,302) 90,675
Denominator
Shares used in computation of basic net income (loss) per share 30,307,734 29,567,802 30,070,598 29,282,932
Weighted-average effect of diluted securities
Restricted stock units — 351,720 — 712,866
Performance share units and other stock-based compensation awards — 68,616 — 89,981
Convertible senior notes due 2026 — 3,376,400 — 2,308,112
Shares used in computation of diluted net income (loss) per share 30,307,734 33,364,538 30,070,598 32,393,891
Basic net income (loss) per share: $ (1.86) $ 2.64 $ (6.06) $ 3.05
Diluted net income (loss) per share: $ (1.86) $ 2.36 $ (6.06) $ 2.80


	Three Months Ended March 31,
	2023		2022
Basic and diluted net income (loss) per share:

Numerator
Net income (loss)	$	(28,613)	$	(34,352)
Less: Net income (loss) attributable to noncontrolling interests	534		500
Net income (loss) attributable to common stockholders	(29,147)		(34,852)

Denominator
Weighted-average common shares outstanding	30,676,145		29,862,879

Basic and diluted net income (loss) per share:	$	(0.95)	$	(1.17)

2520

The following weighted-average potentially dilutive instruments are not included in the diluted net income (loss) per share calculations above because they would have had an antidilutive effect on the net income (loss) per share:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended March 31,
		2022	2021	2022	2021		2023	2022
Restricted stock units	Restricted stock units	2,223,826	854,304	2,448,348	410,856	Restricted stock units	2,353,393	2,047,783
Performance share units and other stock-based compensation awards		94,690	—	102,406	—
Convertible Senior notes due 2022 (1)		—	—	—	1,144,689
Other stock-based compensation awards						Other stock-based compensation awards	101,118	54,182
Convertible Senior notes due 2026 (1)	Convertible Senior notes due 2026 (1)	3,376,400	—	3,376,400	—	Convertible Senior notes due 2026 (1)	3,376,400	3,376,400
Warrants		—	—	—	1,170,126
Capped call transactions	Capped call transactions	3,376,400	3,376,400	3,376,400	2,308,112	Capped call transactions	3,376,400	3,376,400
Total	Total	9,071,316	4,230,704	9,303,554	5,033,783	Total	9,207,311	8,854,765

(1)We apply the if-converted method in computing the effect of our convertible senior notes on diluted net income (loss) per share, whereby the numerator of our diluted net income (loss) per share computations is adjusted for interest expense, net of tax, and the denominator is adjusted for the number of shares into which the convertible senior notes could be converted. The effect is only included in the calculation of income (loss) per share for those instruments for which it would reduce income (loss) per share. See Note 5, Financing Arrangements, for additional information.

We had outstanding Market-based Performance Share Units as of September 30, 2022 and 2021 that were eligible to vest into shares of common stock subject to the achievement of specified performance or market conditions. Contingently-issuable shares are excluded from the computation of diluted income (loss) per share if, based on current period results, the shares would not be issuable if the end of the reporting period were the end of the contingency period. As of September 30, 2022, there were up to 33,333 shares of common stock issuable upon vesting of outstanding Market-based Performance Share Units that were excluded from the table above as the performance or market conditions were not satisfied as of the end of the period.

2621

NOTE 13. SEGMENT INFORMATION

The segment information reported in the tables below reflects the operating results that are regularly reviewed by our chief operating decision maker to assess performance and make resource allocation decisions. Our operations are organized into two segments: North America and International. Our measure of segment profitability is contribution profit, defined as gross profit less marketing expense, which is consistent with how management reviews the operating results of the segments. Contribution profit measures the amount of marketing investment needed to generate gross profit. Other operating expenses are excluded from contribution profit as management does not review those expenses by segment. We completed a transition to a third-party goods marketplace in International in 2021, and therefore we no longer generate product revenue in our Goods category. For the three and nine months ended September 30, 2022, adjustments to accruals previously established in our Goods category related to product are presented within service.

The following table summarizes revenue by reportable segment and category for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
North America
Service revenue:
North America revenue:										North America revenue:
Local	Local	$	97,843	$	129,131	$	296,233	$	394,358	Local	$	81,379	$	96,921
Goods	Goods	5,978		9,189		20,476		37,266		Goods	5,065		8,294
Travel	Travel	4,065		4,791		13,465		18,893		Travel	2,815		4,949
Total service revenue		107,886		143,111		330,174		450,517
Product revenue - Goods		—		—		—		626
Total North America revenue (1)	Total North America revenue (1)	107,886		143,111		330,174		451,143		Total North America revenue (1)	89,259		110,164

International
Service revenue:
International revenue:										International revenue:
Local	Local	30,089		46,071		95,350		109,589		Local	25,265		33,150
Goods	Goods	4,459		5,879		16,986		9,429		Goods	4,246		6,779
Travel	Travel	1,956		3,915		8,416		8,226		Travel	2,841		3,227
Total service revenue		36,504		55,865		120,752		127,244
Product revenue - Goods		—		15,195		—		165,559
Total International revenue (1)	Total International revenue (1)	$	36,504	$	71,060	$	120,752	$	292,803	Total International revenue (1)	$	32,352	$	43,156

(1)North America includes revenue from the United States of ~~$105.0~~$87.7 million and ~~$140.2~~$108.8 million for the three months ended ~~September 30, 2022~~March 31, 2023 and 2021, and $323.9 million and $444.2 million for the nine months ended September 30, 2022 and 2021. International includes revenue from the United Kingdom of $21.4 million and $100.4 million for the three and nine months ended September 30, 2021.2022. There were no other individual countries that represented more than 10% of consolidated total revenue for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022. Revenue is attributed to individual countries based on the location of the customer.

The following table summarizes cost of revenue by reportable segment and category for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
North America
Service cost of revenue:
North America cost of revenue:										North America cost of revenue:
Local	Local	$	13,388	$	13,947	$	40,428	$	41,927	Local	$	11,387	$	13,163
Goods	Goods	1,142		1,325		3,849		5,577		Goods	945		1,459
Travel	Travel	1,008		1,029		3,399		3,801		Travel	985		1,295
Total service cost of revenue		15,538		16,301		47,676		51,305
Product cost of revenue - Goods		—		—		—		458
Total North America cost of revenue	Total North America cost of revenue	15,538		16,301		47,676		51,763		Total North America cost of revenue	13,317		15,917

International
Service cost of revenue:
International cost of revenue:										International cost of revenue:
Local	Local	2,674		2,195		7,946		6,094		Local	2,623		2,596
Goods	Goods	125		292		521		537		Goods	588		396
Travel	Travel	331		339		1,088		783		Travel	372		410
Total service cost of revenue		3,130		2,826		9,555		7,414
Product cost of revenue - Goods		—		13,605		—		142,404
Total International cost of revenue	Total International cost of revenue	$	3,130	$	16,431	$	9,555	$	149,818	Total International cost of revenue	$	3,583	$	3,402

2822

The following table summarizes contribution profit by reportable segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
North America	North America									North America
Revenue	Revenue	$	107,886	$	143,111	$	330,174	$	451,143	Revenue	$	89,259	$	110,164
Cost of revenue	Cost of revenue	15,538		16,301		47,676		51,763		Cost of revenue	13,317		15,917
Marketing	Marketing	26,376		38,302		73,996		94,247		Marketing	15,303		27,991
Contribution profit	Contribution profit	65,972		88,508		208,502		305,133		Contribution profit	60,639		66,256

International	International									International
Revenue	Revenue	36,504		71,060		120,752		292,803		Revenue	32,352		43,156
Cost of revenue	Cost of revenue	3,130		16,431		9,555		149,818		Cost of revenue	3,583		3,402
Marketing	Marketing	11,521		14,857		32,689		36,298		Marketing	9,545		11,425
Contribution profit	Contribution profit	21,853		39,772		78,508		106,687		Contribution profit	19,224		28,329

Consolidated	Consolidated									Consolidated
Revenue	Revenue	144,390		214,171		450,926		743,946		Revenue	121,611		153,320
Cost of revenue	Cost of revenue	18,668		32,732		57,231		201,581		Cost of revenue	16,900		19,319
Marketing	Marketing	37,897		53,159		106,685		130,545		Marketing	24,848		39,416
Contribution profit	Contribution profit	87,825		128,280		287,010		411,820		Contribution profit	79,863		94,585
Selling, general and administrative	Selling, general and administrative	119,243		119,494		369,601		384,606		Selling, general and administrative	101,634		126,420
Goodwill impairment		—		—		35,424		—
Long-lived asset impairment		—		—		8,811		—
Restructuring and related charges	Restructuring and related charges	4,912		12,483		8,163		34,150		Restructuring and related charges	8,794		312
Income (loss) from operations	Income (loss) from operations	$	(36,330)	$	(3,697)	$	(134,989)	$	(6,936)	Income (loss) from operations	$	(30,565)	$	(32,147)

The following table summarizes total assets by reportable segment as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Total assets:	Total assets:					Total assets:
North America (1)	North America (1)	$	763,838	$	964,523	North America (1)	$	526,953	$	669,336
International (1)	International (1)	125,133		193,358		International (1)	123,690		123,781
Consolidated total assets	Consolidated total assets	$	888,971	$	1,157,881	Consolidated total assets	$	650,643	$	793,117

(1)North America contains assets from the United States of ~~$751.7~~$520.9 million and ~~$951.8~~$661.3 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022. International ~~contained~~contains assets from the ~~United Kingdom~~Netherlands of ~~$126.0~~$65.1 million as of ~~December~~March 31, ~~2021.~~2023. There were no other individual countries that represented more than 10% of consolidated total assets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.

2923

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with our Condensed Consolidated Financial Statements and related notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements about our business and operations. Our actual results may differ materially from those we currently anticipate as a result of many factors, including those we describe under Part II, Item 1A, Risk Factors, and elsewhere in this Quarterly Report. See Part I, Forward-Looking Statements, for additional information.

Overview

Groupon is a global scaled two-sided marketplace that connects consumers to merchants. Consumers access our marketplace through our mobile applications and our websites. We operate in two segments, North America and International, and operate in three categories, Local, Goods and Travel. See Item 1, Note 13, Segment Information, for additional information.

Our strategy is to be the trusted marketplace where customers go to buy local services and experiences. We plan to ~~unlock value~~grow our revenue by ~~improving~~building long-term relationships with local merchants to strengthen our ~~expense structure~~inventory selection and ~~offering more differentiated~~by enhancing the customer experience through inventory curation and improved convenience in order to ~~stimulate~~drive customer ~~engagement~~demand and ~~demand. Our inventory efforts include testing of curated collections and our intention to launch a test concept for a new Beauty platform.~~purchase frequency.

~~Currently, we~~We generate service revenue from Local, ~~Travel,~~Goods, and ~~Goods~~Travel categories. ~~Service revenue~~Revenue primarily represents the net commissions earned from selling goods or services on behalf of third-party merchants. ~~Service revenue~~Revenue is reported on a net basis as the purchase price collected from the customer less the portion of the purchase price that is payable to the third-party merchant. We also earn commissions when customers make purchases with retailers using digital coupons accessed through our websites and mobile applications.

~~In prior periods~~, we also generated product revenue from sales of our first-party Goods merchandise inventory. For product revenue transactions, we were the primary party responsible for providing the merchandise to the customer, we had inventory risk and we had discretion in establishing prices. As such, product revenue was reported on a gross basis as the purchase price received from the customer. Product revenue, including associated shipping revenue, was recognized when the merchandise was delivered to the customer. We completed the transition to a third-party marketplace in North America in 2020, and in International in 2021.

~~COVID-19 Pandemic and Macroeconomic Conditions~~

2022 Cost Savings Plan

In August 2022, we initiated ~~a multi-phase cost savings plan~~the 2022 Cost Savings Plan, including the first phase initiated August 2022 and the second phase initiated January 2023, which is designed to reduce our expense structure to align with our go-forward business and financial ~~objectives (the “2022 Cost Savings Plan”).~~objectives. The 2022 Cost Savings Plan included ~~a restructuring plan, approved by our Board on August 5,~~the 2022 ~~(the “2022~~ Restructuring ~~Plan”),~~Plan, as well as other planned savings to be achieved through other actions, such as future reductions in our facilities footprint at natural lease terminations (or by exercising existing options in leases) and elective decisions to eliminate vacant positions rather than rehire. ~~We estimate that the first phase~~Between restructuring and other cost actions, we intend to reduce our expense structure by a combined total of ~~the 2022 Cost Savings Plan could result in approximately $150 million in run-rate cost savings by the end of 2023.~~$250.0 million.

The ~~first phase of the~~ 2022 Restructuring Plan is expected to include an overall reduction of approximately ~~500~~1,000 positions ~~globally, with the~~globally. The majority of these reductions are complete as of March 31, 2023 and the remainder are expected to occur byduring the ~~end of 2022 and the remainder in early~~second quarter 2023. In connection with these actions, we expect to record total pre-tax charges of ~~$10.0~~$20.0 million to ~~$20.0~~$27.0 million. ~~Substantially all~~A majority of the pre-tax charges are expected to be paid in cash and will relate to employee severance and compensation benefits, with an immaterial amount of charges related to other exit costs. We ~~expect to begin~~have incurred total pretax charges of $18.6 million since the ~~next phase~~inception of ~~our restructuring actions under this plan in 2023, and we anticipate these actions will include a focus on reducing our technology platform costs following~~ the ~~completion of our transition to the cloud.~~2022 Restructuring Plan.

3024

How We Measure Our Business

We use several operating and financial metrics to assess the progress of our business and make decisions on where to allocate capital, time and technology investments. Certain of the financial metrics are reported in accordance with U.S. GAAP and certain of those metrics are considered non-GAAP financial measures. As our business evolves, we may make changes to the key financial and operating metrics that we use to measure our business. For further information and reconciliations to the most applicable financial measures under U.S. GAAP, refer to our discussion under Non-GAAP Financial Measures in the Results of Operations section.

Operating Metrics

•Gross billings is the total dollar value of customer purchases of goods and services. Gross billings is presented net of customer refunds, order discounts and sales and related taxes. The substantial majority of our ~~service~~ revenue transactions are comprised of sales of vouchers and similar transactions in which we collect the transaction price from the customer and remit a portion of the transaction price to the third-party merchant who will provide the related goods or services. For these transactions, gross billings differs from ~~revenue~~Revenue reported in our Condensed Consolidated Statements of Operations, which is presented net of the merchant's share of the transaction price. ~~As noted above in~~ ~~Overview, beginning in 2021 for our North America segment and 2022 for our International segment, gross billings from our Goods category is primarily reported on a net basis within service revenue.~~ Gross billings is an indicator of our growth and business performance as it measures the dollar volume of transactions generated through our marketplaces. Tracking gross billings ~~on service revenue transactions~~ also allows us to monitor the percentage of gross billings that we are able to retain after payments to merchants. However, we are focused on achieving long-term gross profit and Adjusted ~~EBITDA~~Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") growth.

•Units are the number of purchases during the reporting period, before refunds and cancellations, made either through one of our online marketplaces, a third-party marketplace, or directly with a merchant for which we earn a commission. We do not include purchases with retailers using digital coupons accessed through our websites or mobile applications in our units metric. We consider units to be an important indicator of the total volume of business conducted through our marketplaces. We report units on a gross basis prior to the consideration of customer refunds and therefore units are not always a good proxy for gross billings.

•Active customers are unique user accounts that have made a purchase during the trailing twelve months ("TTM") either through one of our online marketplaces or directly with a merchant for which we earned a commission. We consider this metric to be an important indicator of our business performance as it helps us to understand how the number of customers actively purchasing our offerings is trending. Some customers could establish and make purchases from more than one account, so it is possible that our active customer metric may count certain customers more than once in a given period. We do not include consumers who solely make purchases with retailers using digital coupons accessed through our websites or mobile applications in our active customer metric, nor do we include consumers who solely make purchases of our inventory through third-party marketplaces with which we partner.

Our gross billings and units for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Gross billings	Gross billings	$	433,856	$	552,990	$	1,354,705	$	1,714,551	Gross billings	$	396,425	$	460,684
Units	Units	12,278		15,746		36,996		50,227		Units	10,459		12,666

Our active customers for the trailing twelve months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows (in thousands):
Trailing Twelve Months Ended September 30,
2022 2021
TTM Active Customers (in thousands) 20,184 24,006


	Trailing Twelve Months Ended March 31,
	2023	2022
TTM Active Customers (in thousands)	18,225	22,159

3125

Financial Metrics

•Revenue is ~~currently~~ earned through ~~service revenue~~ transactions which we generate commissions by selling goods or services on behalf of third-party merchants. ~~Service revenue~~Revenue from those transactions is reported on a net basis as the purchase price collected from the customer for the offering less an agreed upon portion of the purchase price paid to the third-party merchant. ~~Service revenue~~Revenue also includes commissions we earn when customers make purchases with retailers using digital coupons accessed through our digital properties. In prior periods, we generated product revenue from our sales of first-party Goods inventory. Our product revenue from these first-party transactions, which were direct sales of merchandise inventory, was the purchase price received from the customer. As noted above in ~~Overview, beginning in 2021 for our North America segment and 2022 for our International segment, revenue from our Goods category is primarily reported on a net basis within service revenue.~~

•Gross profit reflects the net margin we earn after deducting our cost of revenue from our revenue. In prior periods for our International segment, there is a lack of comparability between product revenue, which is reported on a gross basis, and service revenue, which primarily consists of transactions reported on a net basis. Due to the lack of comparability of revenue generated from our Goods category in prior periods, we believe that gross profit is an important measure for evaluating our performance.

•Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) from operations excluding income taxes, interest and other non-operating items, depreciation and amortization, stock-based compensation ~~acquisition-related expense (benefit), net~~ and other special charges and credits, including items that are unusual in nature or infrequently occurring. For further information and a reconciliation to net income (loss), refer to our discussion under Non-GAAP Financial Measures in the Results of Operations section.

•Free cash flow is a non-GAAP financial measure that comprises net cash provided by (used in) operating activities from operations less purchases of property and equipment and capitalized software. For further information and a reconciliation to Net cash provided by (used in) operating activities, refer to our discussion in the Liquidity and Capital Resources section.

The following table presents the above financial metrics for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Revenue	Revenue	$	144,390	$	214,171	$	450,926	$	743,946	Revenue	$	121,611	$	153,320
Gross profit	Gross profit	125,722		181,439		393,695		542,365		Gross profit	104,711		134,001
Adjusted EBITDA	Adjusted EBITDA	(8,596)		34,607		(9,828)		105,942		Adjusted EBITDA	(4,903)		(6,960)
Free cash flow	Free cash flow	(51,840)		(87,581)		(182,345)		(192,811)		Free cash flow	(85,864)		(91,165)

Operating Expenses

•Marketing expense consists primarily of online marketing costs, such as search engine marketing and advertising on social networking sites and affiliate ~~programs, and offline marketing costs, such as television and radio advertising.~~programs. Additionally, compensation expense for marketing employees is classified within marketing expense. We record these costs within Marketing on the Condensed Consolidated Statements of Operations when incurred. From time to time, we have offerings from well-known national merchants for customer acquisition and activation purposes, for which the amount we owe the merchant for each voucher sold exceeds the transaction price paid by the customer. Our gross billings from those transactions generate no ~~service~~ revenue and our net cost (i.e., the excess of the amount owed to the merchant over the amount paid by the customer) is classified as marketing expense. We evaluate marketing expense as a percentage of gross profit because it gives us an indication of how well our marketing spend is driving gross profit performance.

•Selling, general and administrative ("SG&A") expenses include selling expenses such as sales commissions and other compensation expenses for sales representatives, as well as costs associated with supporting the sales function such as technology, telecommunications and travel. General and administrative expenses include compensation expense for employees involved in customer service, operations, technology and product development, as well as general corporate functions, such as finance,

legal and human resources. Additional costs in general and administrative include depreciation and amortization, rent, professional fees, litigation costs, travel and entertainment, recruiting, ~~office supplies,~~ maintenance, certain technology costs and other general corporate costs. We evaluate SG&A expense as a percentage of gross profit because it gives us an indication of our operating efficiency.

•Restructuring and related charges represent severance and benefit costs for workforce reductions, impairments and other facilities-related costs and professional advisory fees. See Item 1, Note 9, Restructuring and Related Charges, for additional information about our restructuring plan.

Factors Affecting Our Performance

~~Impact of macroeconomic conditions~~.We have been, and may continue to be, impacted by adverse consequences of the macroeconomic environment, including but not limited to, the ongoing COVID-19 pandemic, inflationary pressures, higher labor costs, labor shortages, supply chain challenges and resulting changes in consumer and merchant behavior. We will continue to monitor the impact of macroeconomic conditions on our business.

Attracting and retaining local merchants. As we focus on our local experiences marketplace, we depend on our ability to attract and retain merchants who are willing to offer their experiences on our platform. Merchants can withdraw their offerings from our marketplace at any time, and their willingness to continue offering services through our marketplace depends on the effectiveness of our marketplace offering. We are focused on improving our marketplace offering and merchant value proposition by exploring opportunities to better balance the needs of merchant partners, customers, and Groupon, for example by offering flexible deal structures.

Re-engaging and retaining customers to drive purchase frequency. To re-engage and retain customers to drive purchase frequency, we are focused on strengthening our core marketplace by improving inventory density, the customer experience and trust. In addition to our efforts to improve our inventory density, we are exploring opportunities to differentiate our inventory.

Impact of macroeconomic conditions.We have been, and may continue to be, impacted by adverse consequences of the macroeconomic environment, including but not limited to, inflationary pressures, higher labor costs, labor shortages, supply chain challenges and resulting changes in consumer and merchant behavior. We will continue to monitor the impact of macroeconomic conditions on our business.

Results of Operations

North America

Operating Metrics

North America segment gross billings and units for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows (dollars in thousands):


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2022		2021		% Change		2022		2021		% Change			2023		2022		% Change
Gross billings	Gross billings													Gross billings
Service gross billings:
Local	Local	$	248,929	$	318,825	(21.9)	%	$	763,333	$	937,313	(18.6)	%	Local	$	221,746	$	249,290	(11.0)	%
Goods	Goods	28,334		43,096		(34.3)		95,404		168,881		(43.5)		Goods	23,759		36,608		(35.1)
Travel	Travel	21,118		23,519		(10.2)		66,824		94,211		(29.1)		Travel	20,649		24,014		(14.0)
Total service gross billings		298,381		385,440		(22.6)		925,561		1,200,405		(22.9)
Product gross billings - Goods		—		—		—		—		626		(100.0)
Total gross billings	Total gross billings	$	298,381	$	385,440	(22.6)		$	925,561	$	1,201,031	(22.9)		Total gross billings	$	266,154	$	309,912	(14.1)

Units	Units													Units
Local	Local	6,043		8,196		(26.3)	%	18,579		25,335		(26.7)	%	Local	5,142		6,181		(16.8)	%
Goods	Goods	1,119		1,849		(39.5)		3,710		7,260		(48.9)		Goods	933		1,450		(35.7)
Travel	Travel	91		128		(28.9)		305		512		(40.4)		Travel	86		123		(30.1)
Total units	Total units	7,253		10,173		(28.7)		22,594		33,107		(31.8)		Total units	6,161		7,754		(20.5)

North America TTM active customers for the trailing twelve months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows (in thousands):

Trailing Twelve Months Ended September 30,
2022 2021 % Change
TTM Active customers 12,287 14,976 (18.0) %


	Trailing Twelve Months Ended March 31,
	2023	2022	% Change
TTM Active customers	10,928	13,991	(21.9)	%

Comparison of the Three Months Ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

North America gross billings, units, and TTM active customers decreased by ~~$87.1~~$43.8 million, ~~2.9~~1.6 million and ~~2.7~~3.1 million for the three months ended ~~September 30, 2022~~March 31, 2023 compared with the prior year period. These decreases were primarily attributable to adecline in demand for our Goods and Local categories and an overall decline in engagement on our platform that resulted in fewer unit sales and lower gross billings.

~~Comparison of the Nine Months Ended September 30, 2022 and 2021:~~

North America gross billings and units decreased by $275.5 million and 10.5 million for the nine months ended September 30, 2022 compared with the prior year period. These decreases were primarily attributable to a decline in engagement on our platform that resulted in fewer unit sales and lower gross billings.

3428

Financial Metrics

North America segment revenue, cost of revenue and gross profit for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows (dollars in thousands):


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended March 31,
		2022			2021			% Change		2022			2021			% Change			2023			2022			% Change
Revenue	Revenue																	Revenue
Service revenue
Local	Local	$	97,843		$	129,131		(24.2)	%	$	296,233		$	394,358		(24.9)	%	Local	$	81,379		$	96,921		(16.0)	%
Goods	Goods	5,978			9,189			(34.9)		20,476			37,266			(45.1)		Goods	5,065			8,294			(38.9)
Travel	Travel	4,065			4,791			(15.2)		13,465			18,893			(28.7)		Travel	2,815			4,949			(43.1)
Total service revenue		107,886			143,111			(24.6)		330,174			450,517			(26.7)
Product revenue - Goods		—			—			—		—			626			(100.0)
Total revenue	Total revenue	$	107,886		$	143,111		(24.6)		$	330,174		$	451,143		(26.8)		Total revenue	$	89,259		$	110,164		(19.0)

Cost of revenue	Cost of revenue																	Cost of revenue
Service cost of revenue
Local	Local	$	13,388		$	13,947		(4.0)	%	$	40,428		$	41,927		(3.6)	%	Local	$	11,387		$	13,163		(13.5)	%
Goods	Goods	1,142			1,325			(13.8)		3,849			5,577			(31.0)		Goods	945			1,459			(35.2)
Travel	Travel	1,008			1,029			(2.0)		3,399			3,801			(10.6)		Travel	985			1,295			(23.9)
Total service cost of revenue		15,538			16,301			(4.7)		47,676			51,305			(7.1)
Product cost of revenue - Goods		—			—			—		—			458			(100.0)
Total cost of revenue	Total cost of revenue	$	15,538		$	16,301		(4.7)		$	47,676		$	51,763		(7.9)		Total cost of revenue	$	13,317		$	15,917		(16.3)

Gross profit	Gross profit																	Gross profit
Service gross profit
Local	Local	$	84,455		$	115,184		(26.7)	%	$	255,805		$	352,431		(27.4)	%	Local	$	69,992		$	83,758		(16.4)	%
Goods	Goods	4,836			7,864			(38.5)		16,627			31,689			(47.5)		Goods	4,120			6,835			(39.7)
Travel	Travel	3,057			3,762			(18.7)		10,066			15,092			(33.3)		Travel	1,830			3,654			(49.9)
Total service gross profit		92,348			126,810			(27.2)		282,498			399,212			(29.2)
Product gross profit - Goods		—			—			—		—			168			(100.0)
Total gross profit	Total gross profit	$	92,348		$	126,810		(27.2)		$	282,498		$	399,380		(29.3)		Total gross profit	$	75,942		$	94,247		(19.4)

Service margin (1)		36.2		%	37.1		%			35.7		%	37.5		%
Gross margin (1)																		Gross margin (1)	33.5		%	35.5		%

% of Consolidated revenue	% of Consolidated revenue	74.7		%	66.8		%			73.2		%	60.6		%			% of Consolidated revenue	73.4		%	71.9		%
% of Consolidated cost of revenue	% of Consolidated cost of revenue	83.2			49.8					83.3			25.7					% of Consolidated cost of revenue	78.8			82.4
% of Consolidated gross profit	% of Consolidated gross profit	73.5			69.9					71.8			73.6					% of Consolidated gross profit	72.5			70.3

(1)Represents the percentage of ~~service~~ gross billings that we retained after deducting the merchant's share from revenue.

Comparison of the Three Months Ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

North America revenue, cost of revenue and gross profit decreased by ~~$35.2~~$20.9 million, ~~$0.8~~$2.6 million and ~~$34.5~~$18.3 million for the three months ended ~~September 30, 2022~~March 31, 2023 compared with the prior year period. The revenue and gross profit declines were primarily attributable to aan overall decline in engagement on our platform that resulted in fewer unit sales and lower gross billings.

~~Comparison of the Nine Months Ended September 30, 2022 and 2021:~~

North America revenue, cost of revenue and gross profit decreased by $121.0 million, $4.1 million and $116.9 million for the nine months ended September 30, 2022 compared with the prior year period. The revenue and gross profit declines were primarily attributable to a decline in engagement on our platform that resulted in fewer unit sales and lower gross billings.

3529

Marketing and Contribution Profit

We define contribution profit as gross profit less marketing expense. North America contribution profit for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ was as follows (dollars in thousands):


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended March 31,
		2022			2021			% Change		2022			2021			% Change			2023			2022			% Change
Marketing	Marketing	$	26,376		$	38,302		(31.1)	%	$	73,996		$	94,247		(21.5)	%	Marketing	$	15,303		$	27,991		(45.3)	%
% of Gross profit	% of Gross profit	28.6		%	30.2		%			26.2		%	23.6		%			% of Gross profit	20.2		%	29.7		%

Contribution profit	Contribution profit	$	65,972		$	88,508		(25.5)	%	$	208,502		$	305,133		(31.7)	%	Contribution profit	$	60,639		$	66,256		(8.5)	%

Comparison of the Three Months Ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

North America marketing expense and marketing expense as a percentage of gross profit decreased for the three months ended ~~September 30, 2022~~March 31, 2023 compared with the prior year period driven primarily by ~~accelerated~~ traffic declines and a lower investment in our online marketing spend.

North America contribution profit decreased for the three months ended ~~September 30, 2022 compared with the prior year period primarily due to a decrease in gross profit.~~

~~Comparison of the Nine Months Ended September 30, 2022 and 2021:~~

North America marketing expense decreased for the nine months ended September 30, 2022 compared with the prior year period driven primarily by accelerated traffic declines and a lower investment in our online marketing spend. North America marketing expense as a percentage of gross profit increased for the nine months ended September 30, 2022 compared with the prior year period driven primarily by a decrease in gross profit.

~~North America contribution profit decreased for the nine months ended September 30, 2022~~March 31, 2023 compared with the prior year period primarily due to a decrease in gross profit.

International

Operating Metrics

International segment gross billings and units for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 % Change 2022 2021 % Change
Gross billings
Service gross billings:
Local $ 96,592 $ 103,984 (7.1) % $ 293,036 $ 263,535 11.2 %
Goods 25,509 28,217 (9.6) 91,720 44,418 106.5
Travel 13,374 20,154 (33.6) 44,388 40,008 10.9
Total service gross billings 135,475 152,355 (11.1) 429,144 347,961 23.3
Product gross billings - Goods — 15,195 (100.0) — 165,559 (100.0)
Total gross billings $ 135,475 $ 167,550 (19.1) $ 429,144 $ 513,520 (16.4)
Units
Local 3,900 3,683 5.9 % 10,410 8,357 24.6 %
Goods 1,046 1,770 (40.9) 3,722 8,489 (56.2)
Travel 79 120 (34.2) 270 274 (1.5)
Total units 5,025 5,573 (9.8) 14,402 17,120 (15.9)


	Three Months Ended March 31,
	2023		2022		% Change
Gross billings
Local	$	93,800	$	99,660	(5.9)	%
Goods	22,256		35,350		(37.0)
Travel	14,215		15,762		(9.8)
Total gross billings	$	130,271	$	150,772	(13.6)

Units
Local	3,328		3,329		—	%
Goods	886		1,471		(39.8)
Travel	84		112		(25.0)
Total units	4,298		4,912		(12.5)

International TTM active customers for the trailing twelve months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows (in thousands):

Trailing Twelve Months Ended September 30,
2022 2021 % Change
TTM Active customers 7,897 9,030 (12.5) %


	Trailing Twelve Months Ended March 31,
	2023	2022	% Change
TTM Active customers	7,297	8,168	(10.7)	%

Comparison of the Three Months Ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

International gross billings, units and TTM active customers decreased by ~~$32.1~~$20.5 million, ~~0.5~~0.6 million and ~~1.1~~0.9 million for the three months ended ~~September 30, 2022~~March 31, 2023 compared with the prior year period. These declines were primarily attributable to a ~~de-emphasis on~~decrease in demand for our Goods ~~category, partially offset by improved customer refund levels.~~category. In addition, there was a ~~$21.4 million unfavorable impact on gross billings from year-over-year changes in foreign currency exchange rates.~~

~~Comparison of the Nine Months Ended September 30, 2022 and 2021:~~

International gross billings and units decreased by $84.4 million and 2.7 million for the nine months ended September 30, 2022 compared with the prior year period. These declines were primarily attributable to a de-emphasis on our Goods category, partially offset by higher demand in our Local category and improved customer refund levels. In addition, there was a $47.6$7.6 million unfavorable impact on gross billings from year-over-year changes in foreign currency exchange rates.

3730

Financial Metrics

International segment revenue, cost of revenue and gross profit for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows (dollars in thousands):


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended March 31,
		2022			2021			% Change		2022			2021			% Change			2023			2022			% Change
Revenue	Revenue																	Revenue
Service revenue:
Local	Local	$	30,089		$	46,071		(34.7)	%	$	95,350		$	109,589		(13.0)	%	Local	$	25,265		$	33,150		(23.8)	%
Goods	Goods	4,459			5,879			(24.2)		16,986			9,429			80.1		Goods	4,246			6,779			(37.4)
Travel	Travel	1,956			3,915			(50.0)		8,416			8,226			2.3		Travel	2,841			3,227			(12.0)
Total service revenue		36,504			55,865			(34.7)		120,752			127,244			(5.1)
Product revenue - Goods		—			15,195			(100.0)		—			165,559			(100.0)
Total revenue	Total revenue	$	36,504		$	71,060		(48.6)		$	120,752		$	292,803		(58.8)		Total revenue	$	32,352		$	43,156		(25.0)

Cost of revenue	Cost of revenue																	Cost of revenue
Service cost of revenue:
Local	Local	$	2,674		$	2,195		21.8	%	$	7,946		$	6,094		30.4	%	Local	$	2,623		$	2,596		1.0	%
Goods	Goods	125			292			(57.2)		521			537			(3.0)		Goods	588			396			48.5
Travel	Travel	331			339			(2.4)		1,088			783			39.0		Travel	372			410			(9.3)
Total service cost of revenue		3,130			2,826			10.8		9,555			7,414			28.9
Product cost of revenue - Goods		—			13,605			(100.0)		—			142,404			(100.0)
Total cost of revenue	Total cost of revenue	$	3,130		$	16,431		(81.0)		$	9,555		$	149,818		(93.6)		Total cost of revenue	$	3,583		$	3,402		5.3

Gross profit	Gross profit																	Gross profit
Service gross profit:
Local	Local	$	27,415		$	43,876		(37.5)	%	$	87,404		$	103,495		(15.5)	%	Local	$	22,642		$	30,554		(25.9)	%
Goods	Goods	4,334			5,587			(22.4)		16,465			8,892			85.2		Goods	3,658			6,383			(42.7)
Travel	Travel	1,625			3,576			(54.6)		7,328			7,443			(1.5)		Travel	2,469			2,817			(12.4)
Total service gross profit		33,374			53,039			(37.1)		111,197			119,830			(7.2)
Product gross profit - Goods		—			1,590			(100.0)		—			23,155			(100.0)
Total gross profit	Total gross profit	$	33,374		$	54,629		(38.9)		$	111,197		$	142,985		(22.2)		Total gross profit	$	28,769		$	39,754		(27.6)

Service margin (1)		26.9		%	36.7		%			28.1		%	36.6		%
Gross margin (1)																		Gross margin (1)	24.8		%	28.6		%

% of Consolidated revenue	% of Consolidated revenue	25.3		%	33.2		%			26.8		%	39.4		%			% of Consolidated revenue	26.6		%	28.1		%
% of Consolidated cost of revenue	% of Consolidated cost of revenue	16.8			50.2					16.7			74.3					% of Consolidated cost of revenue	21.2			17.6
% of Consolidated gross profit	% of Consolidated gross profit	26.5			30.1					28.2			26.4					% of Consolidated gross profit	27.5			29.7

(1)Represents the percentage of ~~service~~ gross billings that we retained after deducting the merchant's share from revenue.

Comparison of the Three Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~

International ~~revenue, cost of~~ revenue and gross profit decreased by ~~$34.6 million, $13.3~~$10.8 million and ~~$21.3~~$11.0 million for the three months ended ~~September 30, 2022~~March 31, 2023 compared with the prior year period. Those decreases were primarily due to a shift in mix to lower margin offerings, as well as the ~~transition of Goods to a third-party marketplace model, a decline in engagement~~de-emphasis on our ~~platform in our~~ Goods ~~category and lower variable consideration from unredeemed vouchers, partially offset by improved customer refund levels.~~category. Revenue and gross profit also had an unfavorable impact of ~~$5.8~~$1.9 million and ~~$5.3 million from year-over-year changes in foreign currency exchange rates.~~

~~Comparison of the Nine Months Ended September 30, 2022 and 2021~~

International revenue, cost of revenue and gross profit decreased by $172.1 million, $140.3 million and $31.8 million for the nine months ended September 30, 2022 compared with the prior year period. Those decreases were primarily due to the transition of Goods to a third-party marketplace model and lower variable consideration from unredeemed vouchers, partially offset by an increase in Local gross billings and improved

~~customer refund levels. Revenue and gross profit also had unfavorable impacts of $13.3 million and $12.3~~$1.8 million from year-over-year changes in foreign currency exchange rates.

Marketing and Contribution Profit

International marketing and contribution profit for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows (dollars in thousands):


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended March 31,
		2022			2021			% Change		2022			2021			% Change			2023			2022			% Change
Marketing	Marketing	$	11,521		$	14,857		(22.5)	%	$	32,689		$	36,298		(9.9)	%	Marketing	$	9,545		$	11,425		(16.5)	%
% of Gross profit	% of Gross profit	34.5		%	27.2		%			29.4		%	25.4		%			% of Gross profit	33.2		%	28.7		%

Contribution profit	Contribution profit	$	21,853		$	39,772		(45.1)	%	$	78,508		$	106,687		(26.4)	%	Contribution profit	$	19,224		$	28,329		(32.1)	%

Comparison of the Three Months Ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

International marketing expense decreased for the three months ended ~~September 30, 2022~~March 31, 2023 compared with the prior year period primarily due to ~~accelerated~~ traffic declines and a lower investment in our online marketing spend. Marketing expense as a percentage of gross profit increased for the three months ended ~~September 30, 2022~~March 31, 2023 compared with the prior year period primarily due to a decrease in gross profit.

The decrease in International contribution profit for the three months ended ~~September 30, 2022 compared with the prior year period was primarily attributable to a decrease in gross profit.~~

~~Comparison of the Nine Months Ended September 30, 2022 and 2021:~~

International marketing expense decreased for the nine months ended September 30, 2022 compared with the prior year period primarily due to accelerated traffic declines and a lower investment in our online marketing spend. Marketing expense as a percentage of gross profit increased for the nine months ended September 30, 2022 compared with the prior year period due to a decrease in gross profit.

~~The decrease in International contribution profit for the nine months ended September 30, 2022~~March 31, 2023 compared with the prior year period was primarily attributable to a decrease in gross profit.

Consolidated Operating Expenses

Operating expenses for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows (dollars in thousands):


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended March 31,
		2022			2021			% Change		2022			2021			% Change			2023			2022			% Change
Marketing	Marketing	$	37,897		$	53,159		(28.7)	%	$	106,685		$	130,545		(18.3)	%	Marketing	$	24,848		$	39,416		(37.0)	%
Selling, general and administrative	Selling, general and administrative	119,243			119,494			(0.2)		369,601			384,606			(3.9)		Selling, general and administrative	101,634			126,420			(19.6)
Goodwill impairment		—			—			—		35,424			—			NM
Long-lived asset impairment		—			—			—		8,811			—			NM
Restructuring and related charges	Restructuring and related charges	4,912			12,483��			(60.7)		8,163			34,150			(76.1)		Restructuring and related charges	8,794			312			NM
Total operating expenses	Total operating expenses	$	162,052		$	185,136		(12.5)		$	528,684		$	549,301		(3.8)		Total operating expenses	$	135,276		$	166,148		(18.6)

% of Gross profit:	% of Gross profit:																	% of Gross profit:
Marketing	Marketing	30.1		%	29.3		%			27.1		%	24.1		%			Marketing	23.7		%	29.4		%
Selling, general and administrative	Selling, general and administrative	94.8		%	65.9		%			93.9		%	70.9		%			Selling, general and administrative	97.1		%	94.3		%

Comparison of the Three Months Ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

Marketing expense and marketing expense as a percentage of gross profit decreased for the three months ended ~~September 30, 2022~~March 31, 2023 compared with the prior year period due to ~~accelerated~~ traffic declines and a lower investment in our online marketing spend. ~~Marketing expense~~

SG&A decreased for the three months ended March 31, 2023 compared with the prior year period primarily due to a decrease in payroll costs. SG&A as a percentage of gross profit increased for the three months ended ~~September 30, 2022~~March 31, 2023 compared with the prior year period ~~driven primarily by~~due to a decrease in gross profit.

~~SG&A remained largely flat~~Restructuring and related charges increased for the three months ended ~~September 30, 2022 compared with the prior year period. SG&A as a percentage of gross profit increased~~March 31, 2023 compared with the prior year period primarily due to ~~a decrease in consolidated gross profit, as discussed above.~~

~~Restructuring~~severance and related charges decreased for the three months ended September 30, 2022 compared with the prior year period primarily due to the substantial completion of our 2020 restructuring plan, partially offset bybenefit costs incurred onfor the 2022 Restructuring ~~Plan. See Item 1, Note 9,~~ ~~Restructuring and Related Charges, for additional information.~~

~~Comparison of the Nine Months Ended September 30, 2022 and 2021:~~

~~Marketing expense decreased for the nine months ended September 30, 2022 compared with the prior year period due to accelerated traffic declines and a lower investment~~Plan, which was approved by our Board in our online marketing spend. Marketing expense as a percentage of gross profit increased for the nine months ended September 30, 2022 compared to the prior year period due to a decrease in consolidated gross profit.

SG&A decreased for the nine months ended September 30, 2022 compared with the prior year period due to lower payroll, partially offset by higher cloud costs. SG&A as a percentage of gross profit increased for the nine months ended September 30, 2022 compared with the prior year period primarily due to a decrease in consolidated gross profit, as discussed above.

~~During the nine months ended September 30, 2022, we recognized goodwill impairment of $35.4 million and long-lived asset impairment of $8.8 million. See Item 1, Note 2,~~ ~~Goodwill and Long-Lived Assets,~~ ~~for additional information. We had no similar activity in the prior year period.~~

Restructuring and related charges decreased for the nine months ended September 30, 2022 compared to the prior year period primarily due to the substantial completion of our 2020 restructuring plan, partially offset by costs incurred on the 2022 Restructuring Plan.August 2022. See Item 1, Note 9, Restructuring and Related Charges, for additional information.

Consolidated Other Income (Expense), Net

Other income (expense), net includes interest ~~income, interest~~ expense ~~gains and losses on fair value option investments, impairments of investments, loss on extinguishment of debt~~ and foreign currency gains and losses, primarily resulting from intercompany balances with our subsidiaries that are denominated in foreign currencies.

Other income (expense), net for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ was as follows (dollars in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Other income (expense), net $ (23,541) $ 82,533 $ (49,761) $ 97,729


	Three Months Ended March 31,
	2023		2022
Other income (expense), net	$	3,070	$	(4,880)

Comparison of the Three Months Ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

The change in Other income (expense), net for the three months ended ~~September 30, 2022~~March 31, 2023 as compared with the prior year period is primarily related to ~~an unrealized gain of $89.1 million recorded in 2021 as~~ a ~~result of an upward adjustment for an observable price change on an other equity investment, as well as a $15.9~~$7.5 million change in foreign currency gains and losses.

~~Comparison of the Nine Months Ended September 30, 2022 and 2021:~~

The change in Other income (expense), net for the nine months ended September 30, 2022 as compared with the prior year period is primarily related to an unrealized gain of $89.1 million recorded in 2021 as a result of an upward adjustment for an observable price change on an other equity investment, as well as a $62.9 million change in foreign currency gains and losses.

Consolidated Provision (Benefit) for Income Taxes

Provision (benefit) for income taxes for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows (dollars in thousands):


		Three Months Ended September 30,							Nine Months Ended September 30,								Three Months Ended March 31,
		2022			2021			% Change	2022			2021			% Change		2023			2022			% Change
Provision (benefit) for income taxes	Provision (benefit) for income taxes	$	(4,328)		$	135		NM	$	(4,605)		$	773		NM	Provision (benefit) for income taxes	$	1,118		$	(2,675)		(141.8)	%
Effective tax rate	Effective tax rate	7.2		%	0.2		%		2.5		%	0.9		%		Effective tax rate	(4.1)		%	7.2		%

Comparison of the Three Months Ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

The effective tax rates for the three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were impacted by pretax losses incurred in jurisdictions that have valuation allowances against their net deferred tax assets. The three months ended September 30, 2022 were also impacted by the reduction to our estimated annual tax rate due to an increase in expected annual losses. The three months ended September 30, 2021 were also impacted by the benefit of non-taxable items including the unrealized gain on the observable price change recorded for an other equity method investment during the three months ended September 30, 2021, the U.S. research and development tax credit, and reversals of reserves for uncertain tax positions due to the closing of applicable statutes of limitations. For the three months ended ~~September 30, 2021,~~March 31, 2022, we had a full valuation recorded against the U.S. federal and state deferred tax assets. We recorded a partial valuation allowance release in Q4 2021. For the three months ended September 30, 2022, we continue to maintain a valuation allowance in the U.S. against capital losses, deferred tax assets that will convert into capital losses upon reversal, and state credits that we ~~are~~were not expecting to be able to realize. We recorded a valuation allowance against the remaining U.S. federal and state deferred tax assets in Q4 2022. For the three months ended March 31, 2023, we continue to maintain a full valuation allowance against all U.S. federal and state deferred tax assets. We expect that our consolidated effective tax rate in future periods will continue to differ significantly from the U.S. federal income tax rate as a result of our tax obligations in jurisdictions with profits and valuation allowances in jurisdictions with losses. See Item 1, Note 10, Income Taxes, for additional information relating to tax audits and assessments and regulatory and legal developments that may impact our business and results of operations in the future.

~~Comparison of the Nine Months Ended September 30, 2022 and 2021:~~

The effective tax rates for the nine months ended September 30, 2022 and 2021 were impacted by pretax losses incurred in jurisdictions that have valuation allowances against their net deferred tax assets. The nine months ended September 30, 2022 were also impacted by the reduction to our estimated annual tax rate due to an increase in expected annual losses. The nine months ended September 30, 2021 were also impacted by the benefit of non-taxable items including the unrealized gain on the observable price change recorded for an other equity method investment during the nine months ended September 30, 2021, the U.S. research and development tax credit, and reversals of reserves for uncertain tax positions due to the closing of applicable statutes of limitations. For the nine months ended September 30, 2021, we had a full valuation recorded against the U.S. federal and state deferred tax assets. We recorded a partial valuation allowance release in Q4 2021. For the nine months ended September 30, 2022, we continue to maintain a valuation allowance in the U.S. against capital losses, deferred tax assets that will convert into capital losses upon reversal, and state credits that we are not expecting to be able to realize. We expect that our consolidated effective tax rate in future periods will continue to differ significantly from the U.S. federal income tax rate as a result of our tax obligations in jurisdictions with profits and valuation allowances in jurisdictions with losses. See Item 1, Note 10, ~~Income Taxes, for additional information relating to tax audits and assessments and regulatory and legal developments that may impact our business and results of operations in the future.~~

4133

Non-GAAP Financial Measures

In addition to financial results reported in accordance with U.S. GAAP, we have provided the following non-GAAP financial measures: Adjusted EBITDA, free cash flow and foreign currency exchange rate neutral operating results. Those non-GAAP financial measures are intended to aid investors in better understanding our current financial performance and prospects for the future as seen through the eyes of management. We believe that those non-GAAP financial measures facilitate comparisons with our historical results and with the results of peer companies who present similar measures (although other companies may define non-GAAP measures differently than we define them, even when similar terms are used to identify such measures). However, those non-GAAP financial measures are not intended to be a substitute for those reported in accordance with U.S. GAAP.

Adjusted EBITDA. Adjusted EBITDA is a non-GAAP performance measure that we define as Net income (loss) excluding income taxes, interest and other non-operating items, depreciation and amortization, stock-based compensation and other special charges and credits, including items that are unusual in nature or infrequently occurring. Our definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Adjusted EBITDA is a key measure used by our management and Board of Directors to evaluate operating performance, generate future operating plans and make strategic decisions for the allocation of capital. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors. However, Adjusted EBITDA is not intended to be a substitute for Net income (loss).

We exclude stock-based compensation expense and depreciation and amortization because they are primarily non-cash in nature and we believe that non-GAAP financial measures excluding those items provide meaningful supplemental information about our operating performance and liquidity. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ special charges and credits included charges related to our 2022 and 2020 ~~and 2022~~ restructuring ~~plans, and for the nine months ended September 30, 2022, special charges and credits included impairments of goodwill and long-lived assets.~~plans. We exclude special charges and credits from Adjusted EBITDA because we believe that excluding those items provides meaningful supplemental information about our core operating performance and facilitates comparisons with our historical results.

The following is a reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, Net income (loss), for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Net income (loss) $ (55,543) $ 78,701 $ (180,145) $ 90,020
Adjustments:
Stock-based compensation 8,116 8,204 24,194 25,121
Depreciation and amortization 14,706 17,617 48,569 53,607
Goodwill impairment — — 35,424 —
Long-lived asset impairment — — 8,811 —
Restructuring and related charges (1)
4,912 12,483 8,163 34,150
Other (income) expense, net (2)
23,541 (82,533) 49,761 (97,729)
Provision (benefit) for income taxes (4,328) 135 (4,605) 773
Total adjustments 46,947 (44,094) 170,317 15,922
Adjusted EBITDA $ (8,596) $ 34,607 $ (9,828) $ 105,942

~~(1)~~Includes right-of-use assets - operating leases impairment of $1.8 million and $2.9 million during the three and nine months ended September 30, 2022 and right-of-use assets - operating leases and leasehold improvement impairments of $7.7 million for the three and nine months ended September 30, 2021. See Note 9, ~~Restructuring and Related Charges, for more information.~~

~~(2)~~Includes a $32.3 million cumulative foreign currency translation adjustment gain that was reclassified into earnings for the nine months ended September 30, 2021 as a result of the substantial liquidation of our subsidiary in Japan as part of our restructuring actions and an $89.1 million unrealized gain due to an upward adjustment for an observable price change of an other equity investment for the three and nine months ended September 30, 2021. Refer to Item 1, Note 9, ~~Restructuring and Related Charges~~ ~~and Note 3,~~ ~~Investments, for additional information.~~.


	Three Months Ended March 31,
	2023		2022
Net income (loss)	$	(28,613)	$	(34,352)
Adjustments:
Stock-based compensation	2,363		7,506
Depreciation and amortization	14,505		17,369
Restructuring and related charges	8,794		312
Other (income) expense, net	(3,070)		4,880
Provision (benefit) for income taxes	1,118		(2,675)
Total adjustments	23,710		27,392
Adjusted EBITDA	$	(4,903)	$	(6,960)

Free cash flow. Free cash flow is a non-GAAP liquidity measure that comprises net cash provided by operating activities less purchases of property and equipment and capitalized software. We use free cash flow to conduct and evaluate our business because we believe that it typically represents a more useful measure of cash flows because purchases of fixed assets, software developed for internal use and website development costs are necessary components of our ongoing operations. Free cash flow is not intended to represent the total increase or decrease in our cash balance for the applicable period.

Free cash flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. In addition, free cash flow reflects the impact of the timing difference between when we are paid by customers and when we pay merchants and suppliers. Therefore, we believe it is important to view free cash flow as a complement to our Condensed Consolidated Statements of Cash Flows. For a reconciliation of free cash flow to the most comparable U.S. GAAP financial measure, see Liquidity and Capital Resources below.

Foreign currency exchange rate neutral operating results. Foreign currency exchange rate neutral operating results show current period operating results as if foreign currency exchange rates had remained the same as those in effect in the prior year period. Those measures are intended to facilitate comparisons to our historical performance.

The following tables represent the effect on our Condensed Consolidated Statements of Operations from changes in exchange rates versus the U.S. dollar for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 (in thousands):


		Three Months Ended September 30, 2022							Three Months Ended March 31, 2023
		At Avg. Q3 2021 Rates (1)		Exchange Rate Effect (2)		As Reported			At Avg. Q1 2022 Rates (1)		Exchange Rate Effect (2)		As Reported
Gross billings	Gross billings	$	455,252	$	(21,396)	$	433,856	Gross billings	$	404,079	$	(7,654)	$	396,425
Revenue	Revenue	150,222		(5,832)		144,390		Revenue	123,560		(1,949)		121,611
Cost of revenue	Cost of revenue	19,155		(487)		18,668		Cost of revenue	17,086		(186)		16,900
Gross profit	Gross profit	131,067		(5,345)		125,722		Gross profit	106,474		(1,763)		104,711
Marketing	Marketing	39,870		(1,973)		37,897		Marketing	25,366		(518)		24,848
Selling, general and administrative	Selling, general and administrative	125,817		(6,574)		119,243		Selling, general and administrative	103,148		(1,514)		101,634
Restructuring and related charges	Restructuring and related charges	5,185		(273)		4,912		Restructuring and related charges	9,052		(258)		8,794
Income (loss) from operations	Income (loss) from operations	(39,805)		3,475		(36,330)		Income (loss) from operations	(31,092)		527		(30,565)

Nine Months Ended September 30, 2022
At Avg. Q3 2021 Rates (1)
Exchange Rate Effect (2)
As Reported
Gross billings $ 1,402,361 $ (47,656) $ 1,354,705
Revenue 464,300 (13,374) 450,926
Cost of revenue 58,285 (1,054) 57,231
Gross profit 406,015 (12,320) 393,695
Marketing 110,684 (3,999) 106,685
Selling, general and administrative 383,944 (14,343) 369,601
Goodwill impairment 39,518 (4,094) 35,424
Long-lived asset impairment 10,074 (1,263) 8,811
Restructuring and related charges 8,685 (522) 8,163
Income (loss) from operations (146,890) 11,901 (134,989)

(1) Represents the financial statement balances that would have resulted had exchange rates in the reporting period been the same as those in effect in the prior year period.

(2) Represents the increase or decrease in the reported amount resulting from changes in exchange rates from those in effect in the prior year period.

Liquidity and Capital Resources

Our principal ~~sources~~source of liquidity ~~are~~is our cash ~~flows from operations and cash balances,~~balance, which includes outstanding borrowings under the ~~Amended~~Existing Credit Agreement, totaling ~~$308.0~~$163.8 million as of ~~September 30, 2022.~~March 31, 2023.

Our net cash flows from operating, investing and financing activities for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Cash provided by (used in):	Cash provided by (used in):									Cash provided by (used in):
Operating activities	Operating activities	$	(43,494)	$	(74,176)	$	(151,850)	$	(154,946)	Operating activities		$	(76,320)	$	(78,164)
Investing activities	Investing activities	(8,877)		(11,530)		(32,572)		(33,497)		Investing activities		(9,013)		(13,916)
Financing activities	Financing activities	48,811		(2,047)		2,508		(180,468)		Financing activities		(29,197)		(2,964)

Our free cash flow for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ and a reconciliation to the most comparable U.S. GAAP financial measure, Net cash provided by (used in) operating activities, for those periods were as follows (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	$	(43,494)	$	(74,176)	$	(151,850)	$	(154,946)	Net cash provided by (used in) operating activities		$	(76,320)	$	(78,164)
Purchases of property and equipment and capitalized software	Purchases of property and equipment and capitalized software	(8,346)		(13,405)		(30,495)		(37,865)		Purchases of property and equipment and capitalized software		(9,544)		(13,001)
Free cash flow	Free cash flow	$	(51,840)	$	(87,581)	$	(182,345)	$	(192,811)	Free cash flow		$	(85,864)	$	(91,165)

Our revenue-generating transactions are primarily structured such that we collect cash up-front from customers and pay third-party merchants at a later date, either based upon the customer's redemption of the related voucher or fixed payment terms, which are generally biweekly throughout the term of the merchant's offering.

Our cash balances fluctuate significantly throughout the year based on many variables, including changes in gross billings, ~~growth rates,~~ the timing of payments to merchants and suppliers and the mix of transactions between Goods and Local.

Net cash provided by (used in) operating activities

For the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, our net cash used in operating activities was ~~$151.9~~$76.3 million as compared with ~~$180.1 million~~the prior year period of $78.2 million. Both periods have similar cash outflows in correlation with similar net ~~loss. That difference~~losses. The net loss and cash outflow in the three months ended March 31, 2023 is ~~primarily attributable non-cash items of $119.9 million, including goodwill~~slightly lower than the three months ended March 31, 2022 as there have been additional cost savings actions that have resulted in decreased spend in Marketing and ~~long-lived asset impairment, depreciation and amortization and stock-based compensation partially~~SG&A which have been offset by a ~~$91.7~~decrease in gross profit due to the further contraction of the business and additional cash outflows related to the $9.6 million ~~net decrease~~payment to early terminate our lease at 600 West Chicago and timing of payment of accounts payable and accrued expenses for the three months ended March 31, 2023. We expect to see additional cash cost savings in subsequent quarters as we will benefit from ~~changes~~the additional actions taken in ~~working capital and other non-current assets and liabilities. We have a cyclical business where, typically,~~Phase II for the ~~Accrued merchant and supplier payables balance is highest~~full quarter, beginning in the fourth quarter of the year and lowest in the third quarter of the year which results in the highest merchant cash outflows during the first nine months of the year. The cyclical nature of the balances of our merchant payables, in addition to reduced cash inflows from lower bookings during the nine months ended September 30, 2022, resulted in an $80.4 million cash outflow within changes in working capital for the nine months ended September 30, 2022.

For the nine months ended September 30, 2021, our net cash used in operating activities was $154.9 million, as compared with $90.0 million net income. That difference is primarily due to a $204.8 million net decrease from changes in working capital and other non-current assets and liabilities. The working capital impact was related to seasonal timing of payments to inventory suppliers, mid-year bonus payments and a shortening of the purchase to redemption cycle relative to the year-end 2020 when redemption patterns were more heavily impacted by COVID-19, resulting in higher merchant payment outflows for the year-to-date period. The difference between our net cash used in operating activities and our net income was also due to $40.2 million of non-cash items, including $95.5 million of changes in fair value of our investments and a $32.3 million foreign currency translation adjustment gain that was reclassified into earnings as a result of the substantial liquidation of our subsidiary in Japan, partially offset by depreciation and amortization and stock-based compensation.

second quarter.

Net cash provided by (used in) investing activities

For the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, our net cash used in investing activities was ~~$32.6~~$9.0 million ~~which included~~as compared with the prior year period of $13.9 million. The year-over-year change was primarily driven by fewer purchases of property and equipment and capitalized software ~~of $30.5 million.~~

~~For~~during the ~~nine~~three months ended September 30, 2021, our net cash used in investing activities was $33.5 million, which included purchases of property and equipment and capitalized software of $37.9 million, partially offset by proceeds from the sale of other equity investments of $6.9 million.March 31, 2023.

Net cash provided by (used in) financing activities

For the ~~nine~~three months ended September 30, 2022, our net cash provided by financing activities was $2.5 million, which included $50.0 million in proceeds under our revolving credit agreement, $40.0 million in payments under our revolving credit agreement and $5.6 million in taxes paid related to net share settlements of stock-based compensation awards.

~~For the nine months ended September 30, 2021,~~March 31, 2023, our net cash used in financing activities was ~~$180.5~~$29.2 million as compared with the prior year period of $3.0 million. ~~Our net cash used~~The year-over-year change was primarily driven by $27.3 million in ~~financing activities included~~ payments ~~of $254.0 million for the repurchase of the Atairos Notes, $100.0 million of repayments~~ of borrowings under our revolving credit facility ~~$27.4 million related~~during the three months ended March 31, 2023.

In March 2023, we entered into the Fourth Amendment to the purchase of capped call transactions, $17.6 million in taxes paid related to net share settlements of stock based compensation awards and $7.7 million in cash paid for issuance costs for the 2026 Notes and the Amended Credit Agreement ~~partially offset by $230.0 million of proceeds received from the issuance of the 2026 Notes.~~

~~In July 2020, we entered into an amendment to the revolving credit agreement (the "First Amendment")~~ which ~~permanently~~ reduced borrowing capacity under our senior secured revolving credit facility from ~~$400.0~~$150.0 million to ~~$225.0~~$75.0 million. In ~~March 2021,~~connection with the Fourth Amendment, we ~~entered~~repaid $27.3 million of outstanding borrowing. Prior to entering into ~~a second amendment~~the Fourth Amendment, our access to the ~~revolving credit agreement (the "Second Amendment") to, among other things, permit the issuance~~full capacity of the 2026 Notes and related capped call transactions. In September 2022, we entered into a third amendment to the Prior Credit Agreement (the "Third Amendment" and the Prior Credit Agreement as amended, the "Amended Credit Agreement") which reduces borrowing capacity under our senior secured revolving credit facility from $225.0 million to $150.0 million. We remained in compliance with the applicable covenants as of September 30, 2022 under our Amended Credit ~~Agreement.~~Agreement was partially restricted and our liquidity impacted accordingly. There are no assurances that we will be able to continue to have access to the full capacity of our Existing Credit Agreement and our liquidity could be impacted accordingly. See Item 1, Note 5, Financing Arrangements for additional information. Any material increase in receivable holdbacks or reserve requirements could have a material impact on our cash flow and available liquidity.

~~We believe~~The accompanying Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In accordance with ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the Condensed Consolidated Financial Statements are issued.

Our Net cash ~~balances, excluding borrowings under~~used in operating activities was $136.0 million and $124.0 million for the ~~Amended Credit Agreement,~~years ended December 31, 2022 and December 31, 2021. Net cash used in operating activities was $76.3 million and $78.2 million for the three months ended March 31, 2023 and 2022. Cash and cash ~~generated from operations will~~equivalents were $163.8 million as of March 31, 2023. As described above, we entered into a fourth amendment to the revolving credit agreement in March 2023, which matures on May 14, 2024. Continued cash outflows and operating losses indicate that we may not be ~~sufficient~~able to meet our ~~working capital requirements and capital expenditures for at least~~obligations over the next 12twelve months. ~~Primarily~~These conditions and events, when considered in the aggregate, raised substantial doubt about our ability to continue as a going concern.

In January 2023, our Board approved the second phase of the 2022 Restructuring Plan which we estimate will result in approximately $100.0 million in annualized cost savings as described in Note 9, Restructuring and Related Charges. The 2022 Restructuring Plan is expected to include an overall reduction of ~~net losses, we~~approximately 1,000 positions globally, of which the majority have ~~experienced net cash outflows from operating activities for each annual and interim period since March 31, 2020 other than~~been completed with the ~~quarters ended December 31, 2020 and 2021.~~remaining expected to occur by the end of 2023. Management will also take steps to minimize the risk certain payment processors will

require reserves or holdback receivables. We ~~plan~~believe management's plans are probable of being achieved to alleviate substantial doubt about our ability to continue ~~to actively manage~~as a going concern and ~~optimize our cash balances and liquidity, working capital and operating expenses, although there can be no assurances that~~ we will ~~be able~~have sufficient liquidity to ~~do so.~~ meet our obligations as they become due over the next twelve months.

We ~~have historically seen cash inflow~~are also currently evaluating several different strategies to enhance our liquidity position. These strategies may include, but are not limited to, pursuing additional actions under our multi-phase cost savings plan, seeking additional financing from ~~operating activities in~~both the ~~fourth quarter from seasonally higher volume~~public and ~~we expect that pattern to continue in 2022. Additionally, we initiated our actions on~~private markets through the ~~2022 Cost Savings Plan in the third quarter 2022 which we expect will reduce operating expenses~~issuance of equity or debt securities, and ~~cash outflow from operating activities in future periods. See the~~ ~~Overview~~ ~~section for further discussion on the 2022 Cost Savings Plan.~~monetizing certain assets.

As of ~~September 30, 2022,~~March 31, 2023, we had ~~$55.0~~$51.5 million in cash held by our international subsidiaries, which is primarily denominated in Euros, British Pounds Sterling, Canadian dollars, and, to a lesser extent, Australian dollars. In general, it is our practice and intention to re-invest the earnings of our non-U.S. subsidiaries in those ~~operations.~~operations or remit such earnings in a tax-efficient manner. We have not, nor do we anticipate the need to, repatriate funds to the United States to satisfy domestic liquidity needs arising in the ordinary course of business.

~~In May 2018, the Board authorized us to repurchase up to $300.0 million of our common stock under our share repurchase program. As of September 30, 2022, $245.0 million~~of common stock remained available for purchase under our program. The timing and amount of share repurchases, if any, will be determined based on market conditions, share price, available cash and other factors, and the share repurchase program may be terminated at any time. Repurchases will be made in compliance with SEC rules and other legal requirements and may be made, in part, under a Rule 10b5-1 plan, which permits share repurchases when we might otherwise be precluded from doing so.

4537

Contractual Obligations and Commitments

Our contractual obligations and commitments as of ~~September 30, 2022~~March 31, 2023 did not materially change from the amounts set forth in our ~~2021~~2022 Annual Report on Form ~~10-K, except as disclosed in Item 1, Note 6,~~ ~~Commitments and Contingencies~~.10-K.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of ~~September 30, 2022.~~March 31, 2023.

Significant Accounting Policies and Critical Accounting Estimates

The preparation of Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts and classifications of assets and liabilities, revenue and expenses, and related disclosure of contingent liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. Our significant accounting policies are discussed in Part II, Item 8, Note 2, Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. In addition, refer to the critical accounting estimates under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

4638

Recently Issued Accounting Standards

There are no accounting standards that have been issued but not yet adopted that are expected to have a material impact on our Condensed Consolidated Financial Statements.

4739

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business, including the effect of foreign currency fluctuations, interest rate changes and inflation. Information relating to quantitative and qualitative disclosures about these market risks is set forth below.

Foreign Currency Exchange Risk

We transact business in various foreign currencies other than the U.S. dollar, principally the Euro, British pound sterling, Canadian dollar and Australian dollar, which exposes us to foreign currency risk. For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, we derived approximately ~~25.3% and 26.8%~~26.6% of our revenue from our International segment. Revenue and related expenses generated from our international operations are generally denominated in the local currencies of the corresponding countries. The functional currencies of our subsidiaries that either operate or support these markets are generally the same as the corresponding local currencies. However, the results of operations of, and certain of our intercompany balances associated with, our international operations are exposed to foreign currency exchange rate fluctuations. Upon consolidation, as exchange rates vary, our revenue and other operating results may differ materially from expectations, and we may record significant gains or losses on the re-measurement of intercompany balances.

We assess our foreign currency exchange risk based on hypothetical changes in rates utilizing a sensitivity analysis that measures the potential impact on working capital based on a 10% change (increase and decrease) in currency rates. We use a current market pricing model to assess the changes in the value of the U.S. dollar on foreign currency denominated monetary assets and liabilities. The primary assumption used in this model is a hypothetical 10% weakening or strengthening of the U.S. dollar against those currency exposures as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.

As of ~~September 30, 2022,~~March 31, 2023, our net working capital deficit (defined as current assets less current liabilities) from subsidiaries that are subject to foreign currency translation risk was ~~$26.3~~$92.2 million. The potential increase in this working capital deficit from a hypothetical 10% adverse change in quoted foreign currency exchange rates would be ~~$2.6~~$9.2 million. This compares with a ~~$69.2~~$111.9 million working capital deficit subject to foreign currency exposure as of December 31, ~~2021,~~2022, for which a 10% adverse change would have resulted in a potential increase in this working capital deficit of ~~$6.9~~$11.2 million.

Interest Rate Risk

Our cash balance as of ~~September 30, 2022~~March 31, 2023 consists of bank deposits so exposure to market risk for changes in interest rates is limited. ~~In March and April 2021, we issued the~~The 2026 Notes ~~with~~have an aggregate principal amount of $230.0 million ~~(see Item 1, Note 5,~~ ~~Financing Arrangements). The 2026 Notes~~and bear interest at a fixed rate, so we have no financial statement impact from changes in interest rates. However, changes in market interest rates impact the fair value of the 2026 Notes along with other variables such as our credit spreads and the market price and volatility of our common stock. Our ~~Amended~~Existing Credit Agreement provides for aggregate principal borrowings of up to ~~$150.0~~$75.0 million. As of ~~September 30, 2022,~~March 31, 2023, we had ~~$110.0~~$47.7 million of borrowings outstanding and ~~$24.5~~$24.8 million of outstanding letters of credit under the ~~Amended~~Existing Credit Agreement. See Item 2, Liquidity and Capital Resources, for additional information. Because borrowings under the ~~Amended~~Existing Credit Agreement bear interest at a variable rate, we are exposed to market risk relating to changes in interest rates if we borrow under the ~~Amended~~Existing Credit Agreement. We have ~~$53.4~~$29.0 million of lease obligations as of ~~September 30, 2022.~~March 31, 2023. Interest rates on existing leases typically do not change unless there is a modification to a lease agreement and as such, we do not believe that the interest rate risk on the lease obligations is significant.

Inflation Risk

In light of the current inflationary environment, our business is being affected by changes to our merchants' and customers' discretionary spend. We expect such discretionary spend limitations to continue, and if we do not see increased overall demand for discounted goods and services to help offset these limitations on individual merchants and customers, our business, financial condition and results of operations could be adversely impacted. Additionally, increased inflation could negatively impact our business by driving up our operating costs. Our costs are subject to inflationary pressures, and if those pressures become significant, we may not be able to offset such higher costs through price increases or other cost efficiency measures. Our inability or failure to do so could harm our business, financial condition and results of operations.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Interim Chief Executive Officer and our Chief Financial Officer, ~~has~~ evaluated the effectiveness ~~of the design and operation~~ of our disclosure controls and procedures ~~pursuant to Rule~~as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, ~~as amended~~ (the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q.

Based on this evaluation and because of the previously-reported material weaknesses in internal control over financial reporting, our ~~management~~Interim Chief Executive Officer and our Chief Financial Officer concluded that ~~as of September 30, 2022,~~ our disclosure controls and procedures ~~are~~were not effective ~~to provide reasonable assurance that information we are required to disclose~~as of March 31, 2023.

Notwithstanding the material weakness in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our ~~management, including~~internal control over financial reporting, our Interim Chief Executive Officer and our Chief Financial Officer ~~as appropriate,~~have concluded that the Condensed Consolidated Financial Statements present fairly, in all material respects, our financial position, results of operations and cash flows in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP).

Remediation Plan and Status

As of March 31, 2023, the material weakness previously disclosed has not yet been fully remediated. In response to ~~allow timely decisions regarding required disclosure.~~the material weakness in our internal control over financial reporting, management has designed and implemented control activities related to complex manual calculations used to record certain month-end balances. We will continue to work towards full remediation of this material weakness to improve our internal control over financial reporting.

The material weakness cannot be considered remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are designed and operating effectively. Accordingly, we will continue to monitor and evaluate the effectiveness of our internal control over financial reporting in the areas affected by the material weakness described above.

Changes in Internal Control over Financial Reporting

There ~~was~~were no ~~change~~changes in our internal control over financial reporting identified in ~~connection with the~~management’s evaluation ~~required by Rule~~pursuant to Rules 13a-15(d) ~~and~~or 15d-15(d) of the Exchange Act ~~that occurred~~ during the quarter ended ~~September 30, 2022~~March 31, 2023 that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

5041

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For a description of our material pending legal proceedings, please see Item 1, Note 6, Commitments and Contingencies, to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors previously disclosed in Part I, Item 1A, Risk Factors of our Annual Report on Form 10-K for the year ended December 31, ~~2021, and Part II, Item 1A, Risk Factors of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022 and June 30,~~ 2022, except as supplemented and updated below:

~~Our access~~The loss of key executives, members of our management team and employees across our organization, or our failure to ~~capital~~attract and ~~ability to raise capital~~retain other highly qualified personnel in the future ~~may be limited, which could prevent us from growing, and our existing credit agreement could restrict our business activities.~~

We may need additional capital in the future and to seek additional financing or covenant relief. Any such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business.

In order to be successful, we must attract, retain and motivate executives and other key employees, including those in managerial, technical, accounting and sales positions. Hiring and retaining qualified executives, engineers, sales representatives and other key personnel are critical to our success, and competition can be intense for experienced and well qualified executives and employees, particularly in recent periods. In 2021 and 2022, we experienced significant leadership changes, including the appointment of a new Chief Executive Officer in December 2021, as well as appointing our Interim Chief Financial Officer and Interim Chief Accounting Officer into such roles permanently in November 2022 and May 2022, respectively. Additionally, in February 2023, our Chief Administrative Officer, General Counsel and Corporate Secretary resigned, but is continuing to provide legal services to the Company as outside general counsel. Furthermore, we appointed a new Interim Chief Executive Officer, new Chief Financial Officer and Interim Chief Accounting Officer in March and April 2023, respectively. We have ~~outstanding $230.0 million~~experienced continued disruption in ~~aggregate principal amount of 1.125% convertible senior notes (the "2026 Notes")~~our business due March 2026. In addition, we are party to a $150.0 million amended and restated credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, dated as of May 14, 2019, as amended by the First Amendment to the ~~Second Amended~~announcement of our cost savings plan and ~~Restated Credit Agreement, dated as of July 17, 2020 (the "First Amendment"), as further amended by~~significant turnover in our senior management team. Reductions in our workforce have led to employees filling certain key roles and we may experience additional changes in key roles in the ~~Second Amendment~~future. Executive leadership and senior management transitions, reductions in workforce and significant employee turnover can be time consuming, difficult to ~~the Second Amended and Restated Credit Agreement, dated as of March 22, 2021 (the "Second Amendment"), and as further amended by the Third Amendment~~manage, create instability, cause disruption to the Second Amended and Restated Credit Agreement, dated as of September 28, 2022 (the "Third Amendment" and the revolving credit agreement, as amended the "Amended Credit Agreement"), which matures in May 2024.

~~The Amended Credit Agreement contains financial and other covenants that may restrict~~ our business, ~~activities or~~impede our day-to-day operations and our ability to ~~execute our strategic objectives. Due to the impact of COVID-19 on~~fully implement our business and growth strategy. These impacts also make it more difficult to attract and retain talent. In addition, such transitions, reductions in workforce and turnover cause the loss of institutional knowledge, which can negatively impact the execution of our day-to-day operations and the ability to carry out our business strategy.

In order to attract and retain key executives and employees in a competitive marketplace, we ~~entered into~~must provide a competitive compensation package, including cash and equity-based compensation. If the ~~First Amendment and Second Amendment~~anticipated value of such equity-based compensation does not materialize, if our equity-based compensation otherwise ceases to ~~provide, among other things, covenant relief through the fourth quarter of 2021. We voluntarily elected to early terminate this covenant relief period~~be viewed as of the third quarter of 2021 and became subject to the ordinary course covenants under the Amended Credit Agreement (beginning in the third quarter of 2021). On September 28, 2022 we entered into the Third Amendment to modify certain financial covenants and provide for additional flexibility ina valuable benefit or if our ~~operations. In the future, these covenants could restrict~~total compensation package is not viewed as competitive, our ability to ~~access~~attract, retain and motivate key executives and employees could be weakened. The failure to successfully hire and retain key executives and employees or the ~~full capacity~~further loss of our credit facility or require us to repay amounts borrowed. In addition, if we are not able to comply with these covenants, we may need to seek additional covenant relief or modifications in the future. Failure to comply with the covenants contained in our Amended Credit Agreement (if not waived or further amended)any key executives, senior management and employees could give rise to an event of default and, if not cured, entitle the lenders to accelerate the indebtedness outstanding thereunder and terminate our ability to borrow in the future under the Amended Credit Agreement. Further, acceleration of indebtedness under the Amended Credit Agreement could result in an event of default under the indenture (the "Indenture") governing our 2026 Notes. Any termination of our ability to borrow or event of default under our Amended Credit Agreement would have a ~~material adverse~~significant impact on our ~~liquidity.~~operations, including declining product identity and competitive differentiation, eroding employee morale and productivity or an inability to maintain internal controls, regulatory or other compliance related requirements.

Additionally, other general economic conditions and our future operating performance, could ultimately limit our access to funding under our Amended Credit Agreement. Furthermore, additional equity financing may dilute the interests of our common stockholders, and debt financing, if available, may involve restrictive covenants that could further restrict our business activities or our ability to execute our strategic objectives and could reduce our profitability. If we cannot access the full capacity of our credit facility or raise or borrow funds on acceptable terms or at all, it could adversely affect our liquidity, and we may not be able to grow our business or respond to competitive pressures.

5243

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

During the three months ended ~~September 30, 2022,~~March 31, 2023, we did not issue any unregistered equity securities.

Issuer Purchases of Equity Securities

As of ~~September 30, 2022,~~March 31, 2023, there have been no changes to our Board authorized share repurchase program. For additional information, please refer to Part II, Item 5, Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

The following table provides information about purchases of shares of our common stock during the three months ended ~~September 30, 2022~~March 31, 2023 related to shares withheld upon vesting of restricted stock units for minimum tax withholding obligations:

Date
Total Number of Shares Purchased (1)
Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under Program
July 1-31, 2022 18,384 $ 11.59 — —
August 1-31, 2022 18,717 11.43 — —
September 1-30, 2022 35,912 11.22 — —
Total 73,013 $ 11.37 — —


Date	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under Program
January 1-31, 2023	48,767	$	8.24	—	—
February 1-28, 2023	49,387	7.51		—	—
March 1-31, 2023	42,665	6.05		—	—
Total	140,819	$	7.32	—	—

(1)Total number of shares delivered to us by employees to satisfy the mandatory tax withholding requirement upon vesting of stock-based compensation awards.

ITEM 5. OTHER INFORMATION

~~Appointment of Director~~

On November 7, 2022, the Board of the Company announced that it has decreased the size of the Board to eight directors, effective immediately, and pursuant to the Cooperation Agreement, dated June 13, 2022, by and among the Company, Pale Fire Capital SE, Dusan Senkypl and Jan Barta (the “Cooperation Agreement”), appointed Jan Barta to the Board, effective November 7, 2022.

Other than the Cooperation Agreement, there are no arrangements or understandings between Mr. Barta or any other persons pursuant to which Mr. Barta was named a director of the Company. Neither Mr. Barta nor his immediate family members have any direct or indirect material interest in any transaction or proposed transaction required to be reported under Item 404(a) of Regulation S-K.

~~Mr. Barta has elected to forego any compensation for serving as a director of the Board.~~

~~Appointment of Chief Financial Officer~~

~~On November 7, 2022, the Company announced that Damien Schmitz has been appointed as the Company’s Chief Financial Officer, effective immediately.~~

Mr. Schmitz, age 45, has served as the Company’s Interim Chief Financial Officer since October 2021. Mr. Schmitz previously led the Company’s global commercial finance function as Senior Vice President, Finance since October 2021, and Vice President, Finance since January 2019. Prior to that he served as Vice President, Finance and Chief Financial Officer, International from January 2018 to January 2019 and in various finance leadership roles at the Company since October 2012, including Senior Director, Global Financial Planning and Analysis since September 2016. Prior to joining the Company, Mr. Schmitz held consulting roles with PwC and 3M.

None.

5344

On November 3, 2022, the Compensation Committee of the Board approved compensation in connection with Mr. Schmitz appointment as Chief Financial Officer. Mr. Schmitz will receive an annual base salary of $550,000 and he will be eligible for an annual performance bonus with a target amount of $550,000 and will otherwise be entitled to the same benefits, including severance benefits, as previously disclosed in connection with his appointment as Interim Chief Financial Officer. Mr. Schmitz will no longer receive the separate monthly stipend amount that was initially awarded in connection with his appointment as Interim Chief Financial Officer.

There are no family relationships between Mr. Schmitz and any of the directors or executive officers of the Company, and there are no transactions in which Mr. Schmitz has an interest requiring disclosure under Item 404(a) of Regulation S-K. There is no arrangement or understanding between Mr. Schmitz and any other person pursuant to which he was appointed as an officer of the Company.

ITEM 6. EXHIBITS


Exhibit Number						Description
10.1						~~Third Amendment, dated as~~Notice of ~~September 28, 2022, among the Company, the subsidiaries~~Grant of ~~the Company party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent,~~Stock Option and ~~the lenders party thereto, to the Second Amended and Restated Credit~~Nonqualified Stock Option Agreement, dated ~~as of May 14, 2019 (and as amended by the First Amendment, dated as of July 17, 2020 and the Second Amendment, dated as of~~ March ~~22, 2021), among the Company, JPMorgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto~~30, 2023 (incorporated by reference to the Company's Current Report on Form 8-K filed on ~~September 29, 2022)~~March 31, 2023).*
10.2						Employment Agreement, dated March 30, 2023 (incorporated by reference to the Company's Current Report on Form 8-K filed on March 31, 2023).*
10.3						Severance Benefit Agreement, dated March 30, 2023.(incorporated by reference to the Company's Current Report on Form 8-K filed on March 31, 2023).*
10.4						Agreement, dated March 30, 2023 (incorporated by reference to the Company's Current Report on Form 8-K filed on March 31, 2023).
10.2*10.5						~~Non-Employee Directors' Compensation Plan.~~Employment Agreement, dated April 13, 2023 (incorporated by reference to the Company's Current Report on Form 8-K filed on April 13, 2023).*.
10.6						Equity Side Letter, dated April 13, 2023 (incorporated by reference to the Company's Current Report on Form 8-K filed on April 13, 2023).*.
10.7						Severance Benefit Agreement, dated April 13, 2023 (incorporated by reference to the Company's Current Report on Form 8-K filed on April 13, 2023).*.
31.1						Certification of Interim Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2						Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1						Certifications of Interim Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS**						XBRL Instance Document
101.SCH						XBRL Taxonomy Extension Schema Document
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						XBRL Taxonomy Extension Label Linkbase Document
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document
104 **						Cover Page Interactive Data File

____________________________________

* Management contract of compensatory plan or arrangement.

** The XBRL Instance Document and Cover Page Interactive Data File do not appear in the Interactive Data File because their XBRL tags are embedded within the Inline XBRL document

5445

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this ~~7th~~10th day of ~~November 2022.~~May 2023.


GROUPON, INC.
By:	/s/ ~~Damien Schmitz~~Jiri Ponrt
	Name:	~~Damien Schmitz~~Jiri Ponrt
	Title:	Chief Financial Officer

5546


PART I. Financial Information			Page
Forward-Looking Statements			3
Item 1. Financial Statements and Supplementary Data			4
Condensed Consolidated Balance Sheets			4
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)			5
Condensed Consolidated Statements of Stockholders' Equity (Deficit)			6
Condensed Consolidated Statements of Cash Flows			87
Notes to Condensed Consolidated Financial Statements (unaudited)			108
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			3024
Item 3. Quantitative and Qualitative Disclosures about Market Risk			4840
Item 4. Controls and Procedures			5041
PART II. Other Information
Item 1. Legal Proceedings			5142
Item 1A. Risk Factors			5243
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			5344
Item 5. Other Information			5344
Item 6. Exhibits			5445
Signatures			5546


Remaining amounts in 2022	$	2,047
2023	7,205
2024	3,877
2025	2,469
2026	1,622
Thereafter	1,575
Total	$	18,795


	Nine Months Ended September 30, 2022
	Employee Severance and Benefit Costs (Credits)		Legal and Advisory Costs		Property, Equipment and Software Impairments		Right-of-Use Asset Impairments and Lease-related Charges (Credits)		Total Restructuring Charges (Credits)
North America	$	1	$	129	$	—	$	(404)	$	(274)
International	305		89		—		1,849		2,243
Consolidated	$	306	$	218	$	—	$	1,445	$	1,969


	Nine Months Ended September 30, 2021
	Employee Severance and Benefit Costs (Credits)		Legal and Advisory Costs		Property, Equipment and Software Impairments		Right-of-Use Asset Impairments and Lease-related Charges (Credits)		Total Restructuring Charges (Credits)
North America	$	458	$	1,482	$	602	$	6,974	$	9,516
International	21,665		599		268		2,102		24,634
Consolidated	$	22,123	$	2,081	$	870	$	9,076	$	34,150