Groupon : Q4 Presentation

GRPN Investor Presentation

4Q20

February 25, 2021

Forward-looking statements and other information

The statements contained in this presentation that refer to plans and expectations for the next quarter, the full year or the future are 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. 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 COVID-19 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 and any potential adverse impact from the United Kingdom's exit from the European Union; global economic uncertainty; retaining and adding high quality merchants; 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 other qualified 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 and regulation of the Internet and e-commerce; classification of our independent contractors or employees; exposure to greater than anticipated tax liabilities; adoption of tax legislation; our ability to raise capital if necessary; risks related to our access to capital and outstanding indebtedness, including our convertible senior notes; our convertible senior notes; our common stock, including volatility in our stock price; our ability to realize the anticipated benefits from the hedge and warrant transactions;; 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, 2020, and our other filings with the Securities and Exchange Commission (the "SEC"), copies of which may be obtained by visiting the company's Investor Relations web site at investor.groupon.com or the SEC's web site atwww.sec.gov. Groupon's actual results could differ materially from those predicted or implied and reported results should not be considered an indication of future performance.

You should not rely upon forward-looking statements as predictions of future events. Although Groupon believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither Groupon nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements reflect our expectations as of February 25, 2021. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this presentation to conform these statements to actual results or to changes in our expectations.

This presentation contains non-GAAP financial measures. See the appendix for reconciliations of non-GAAP financial measures to the most comparable U.S. GAAP measures and our Q4 2020 earnings release press release posted on our Investor Relations website for additional information regarding non-GAAP financial measures.

THE DESTINATION FOR EXPERIENCES

WHERE CUSTOMERS DISCOVER FUN THINGS TO DO & LOCAL BUSINESSES THRIVE

Leading local marketplace with proven profitability and long-term growth opportunity

Beloved global brand that connects millions of customers and merchants, known for providing unbeatable value

A leader in the fragmented $1T Local Market, leveraging our scale and focusing on where we are most differentiated

• ● Strong competitive position with Local merchants and a low/no-risk, transaction-based business model

• ● Uniquely positioned to help SMBs recover from the impact of COVID

Strategy to capture market share and drive profitable revenue growth

• ● Launched inventory products (Deals, Offers and Market Rate) to grow supply and make Groupon an always-on sales channel

• ● Removing barriers to entry for merchants to increase participation in our marketplace

• ● Always-on inventory and reduced friction can deliver experience customers want, unlock marketplace flywheel and drive purchase frequency

Attractive financial model

• ● Flexible, durable business model delivering Adj. EBITDA in down market, growth scenario creates significant upside opportunity

• ● On track to take $225M out of fixed cost base by 2022 through restructuring actions

• ● With new cost structure, if gross profit returns to 80% of pre-COVID levels, believe we can deliver ~$250M of Adj. EBITDA in 2022

• ● 1 incremental purchase from our 2020 global customer base = ~$1B bookings opportunity

Our Large Addressable

Market Opportunity

A leading local marketplace with room to grow

Connecting ~30M1 customers to our global marketplace

1 Million+

Merchants worked with to date

• ● Large and growing addressable market in local

  (1) As of December 31, 2020

  1.5 Billion+

  Groupons sold to date

  $35 Billion+

  Saved to date by NA consumers

  $25 Billion+

  Pumped into local businesses to date

• ● Groupon's two-sided marketplace has massive global scale

• ● Nearly 60% of our customer base has been shopping Groupon for 3+ years1

• ● Beloved brand: inspiration marketplace for Deals

• ● Growth strategy: leverage local offering to become destination for experiences

Positioned to grow wallet share with global consumers

Our customers...

have an average household income of $75K1

live in a city

love new experiences and keeping busy with nearby activities happening now

...and there are millions of untapped consumers who have characteristics similar to our best customers

• (1) North America customers

  • ● We believe there are 80+ Grouponable moments in a single year...

  • ● ...and Groupon is only capturing 4% of those experiences

  • ● Executing on our strategic priorities creates opportunity to increase customer purchase frequency and grow wallet share

  In 2020, 1 more purchase from our global customer base2 was a ~$1B opportunity3

• (2) Active Customers are defined as 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

(3) Represents total value customers spent on our platform before refunds

We are a leader in a $1T+ market…

…yet we are capturing only a fraction of the market opportunity

$1T+ TAM

for local experiences wherewe have a right to win

Top player...

< 1% share

• (1) Estimated market share of top competitors as of December 31, 2019

• (2) Groupon's estimated market share based on 2019 billings

$1T+ addressable marketTotal captured market1Groupon 2019 share2

Our Strategy for Growth

Groupon: the destination for experiences

• ● In mid-2020 we reimagined our merchant and customer value propositions and launched a targeted strategy to strengthen our local marketplace offering

• ● By putting our new customer and merchant value propositions front and center we believe we can build a new destination marketplace experience to complement our inspiration marketplace

• ● Strategy is laser-focused on addressing disconnect between our large market opportunity and our business performance

• ● To succeed and grow long-term, we need to execute on 2 strategic priorities:

  • ○ Expand inventory

  • ○ Modernize the marketplace by improving merchant and customer experiences

Groupon can unlock a powerful marketplace flywheel

Expand Inventory

Growing high-quality inventory is our #1 priority

Expanding inventory is critical to our growth

3 key inventory products: Deals, Offers, and Market Rate

Our goal is to provide value to merchants at any stage of their growth cycle and encourage them to list more inventory with Groupon

• ● Deals: remove restrictions on deeply-discounted inventory to drive customer acquisition, customer growth, and engagement

• ● Offers: launch new inventory product with lower discounts to improve merchant ROI, provide "always-on" inventory, and drive purchase frequency

• ● Market Rate: position Groupon as the customer destination for high-quality, local experiences and "always-on" merchant sales channel

By providing a full catalog offering to our customers, we believe we can unlock customer purchase frequency and drive billings growth

Deals: removing restrictions to drive customer engagement

Groupon is known for great deals, part of our core customer value proposition

By relaxing restrictions on Deals we expect to drive purchase frequency and billings growth

We know our customers want to...

• ● Purchase the same Deal more than once

• ● Redeem when they want

• ● Use their Groupons with friends or family ...and our current Deals have too many restrictions

Deals should function as an important customer acquisition tool for merchants

2021 goal: increase percent of Deal inventory available for repeat purchase to 80%+

Offers: inventory product to drive purchase frequency

Offers will provide customers with a ~15% discount and merchants with a lower cost listing option

Why Offers? Not every merchant wants to run a deeply-discounted Deal and even for those who do, a deeply-discounted Deal may not make sense at all times

We believe Offers provide value for all stakeholders

• ● Groupon can offer a fuller catalog of high quality, always-on inventory

• ● More inventory for customers, albeit at lower discounts vs. Deals, to drive purchase frequency and loyalty

• ● Merchants earn a higher margin and still only pay for performance

• ● Deeper partnership with our existing merchants

• ● Attract new merchants that are on the fence about joining our marketplace

2021 goal: increase the average number of listings per Beauty & Wellness merchant

Market Rate: accelerate quality inventory growth

Market rate inventory gives customers access to a broader variety of merchants

Helps position Groupon as the customer destination for high-quality, local experiences and an "always-on", pay-for-performance merchant sales channel

Will continue to acquire new Market Rate inventory through partnerships and future new products

We are accelerating 3rd-party partner integrations with our new self-service API tool

• ● Launched in 2Q20, allows partners to join our marketplace up to 50% faster

• ● Integrations give customers access to new quality inventory, reduce purchase friction and improve customer experience

• ● Partnerships can further accelerate growth of bookable hyper-local supply

Portfolio of complementary, inventory listing options

MARKET RATE

Expanding Inventory: 6-month, 4-market inventory test

Test Goal: Grow inventory, units and billings by unrestricting Deals and launching Offers in our most important Local categories -- Things To Do and Beauty & Wellness

(1) As of December 31, 2020. These results refer only to the test markets, are vs control markets, and represent a starting point for growth

Expanding Inventory: next steps

Scaling now in North America

Remove repeat purchase restrictions on Deals in all verticals

• ● Will increase amount of purchasable inventory

• ● 2021: increase the percent of Deal inventory available for repeat purchase to 80%+

Launch Offers to Beauty & Wellness merchants

• ● 2021 goal: increase average listings per Beauty & Wellness merchants

Continuing to learn

• ● Encouraged by initial increases in units in Things to Do and Dining

• ● Gathering more insights on COVID recovery

Improve the Merchant & Customer Experiences

Prioritize our merchants' success

Partner with our merchants to help them grow their businesses

Roadmap focused on merchant tools that allow them to build, grow and scale their businesses on the Groupon marketplace

Shift Groupon from high-touch, costly model to one where merchants use proven self-serve tools to grow their businesses

Position Groupon as a unique, valuable always-on sales channel

Then vs Now: being a better partner to our merchants

THEN

NOW

• ● Phone interaction required to join the marketplace

• ● Launching a deal? Another labor intensive interaction required

• ● Just want to change content? Another labor intensive interaction required

• ● You can only sell "Deals" through Groupon; relationships between Groupon and merchants are very limited

• ● It's difficult to offer a bookable deal in the Groupon marketplace

• ● Merchants can join Groupon via self-service

• ● Launching a deal? Do it in less than 24 hours via self-service Campaign Builder

• ● Just want to change content? You can also do this via self-service Campaign Builder

• ● Need more listing options? Now scaling flexible inventory and discount options

• ● Merchants can create a seamless customer experience by offering fully bookable inventory

• ● Worried about customer double booking? Use Groupon's two-way Google calendar sync

• ● Want to promote your business more? We're bringing a new Sponsored Listings marketing tool to our merchants

Deliver an amazing customer experience

Improve customer journey from discovery to purchase to redemption

Product roadmap focuses on increasing customer purchase frequency

Leverage machine learning to produce rapid insights that power curation, search relevance and other UX improvements

Position Groupon as a destination where consumers go to discover fun and memorable experiences through a frictionless customer experience

From discovery to search to purchase to redemption, we have to make it easier for our customers to find, buy and redeem a Groupon and interact with our merchants

2021 Goal: Launch new customer experience that highlights new inventory and ways to use Groupon

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Reimagining the customer experience

2Q21: Launching new customer experience in North America app, mobile web, and desktop

New customer experience intended to leverage and amplify our expanded inventory base and drive purchase frequency

Personalized homepage: make it easier and more engaging as customers search, browse, and discover experiences

Improved search and relevance capabilities: better match our customer's intent to search results

"Buy it again": New features to encourage and make it easier for customers to repeat purchase

Product roadmap

Steady cadence of new features will improve the customer and merchant experiences

Recap of 2020 Launches

Customer Experience

Map-based search

✔

Curated Results

✔

Add to Cart vs Buy Now

✔

Search, relevance, and navigation

✔

improvements

Future personalization engine pilot

Merchant Experience

COVID-19 safety program

✔

Self-service offer creation

✔

Self-service support revamp

✔

Self-service API for booking partnerships

✔

Multi-location booking

✔

Booker integration

✔

✔

Self-service campaign builder

✔

enhancements

Google two-way calendar sync

✔

Sponsored Listings MVP

✔

Self-service personalized

✔

recommendations

Mindbody wellness services

✔

2021 Roadmap Q1 2021

Merchant Experience

•Groupon Connect for Beauty & Wellness •Self-service Intl expansion

•Self-service recommendations

Q2 2021

Customer Experience

• • Reimagined NA consumer experience, including homepage redesign and optimized search & relevance

Merchant Experience

• • Self-service sponsored listings

• • Embedded self-service

  H2 2021

  Customer Experience

  • • Additional personalization feature

  • • Full menu optimization

  Merchant Experience

  • • Additional self-service tools

  • • Ads on Groupon

  • • More connectivity & booking

  Moving to best-in-class infrastructure on the cloud and simplifying and modernizing ourplatform will power and accelerate innovation over the next several years

• • Offers/Full menu optimization

Resetting our cost structure

Committed to operational rigor: lower costs, improve speed and leverage

Initiated phase one of our restructuring plan in April 2020 and implemented other cost savings and liquidity preservation measures

Began executing phase two of our restructuring plan in August 2020, which includes additional layoffs and exits of New Zealand & Japan

• ● Achieved our $140 million payroll savings target in 2020

• ● On track to take $225M out of fixed cost base by 2022 vs 2019 cost base through restructuring actions

• ● Reduced cost structure expected to drive greater flow-through to Adjusted EBITDA

Fourth Quarter Results

Key fourth quarter results

Active Customers130M

Units25M

Billings

$633M

Revenue$343M

Gross Profit$179MAdjusted EBITDA2

Cash (as of 12/31)

$40M $851M3

• (1) Fourth quarter purchasers declined at a faster rate y/y than active customers; purchasers down 41% & 39% in NA and Int'l, respectively

• (2) Adjusted EBITDA (AEBITDA) is a non-GAAP financial measure. See the appendix for a reconciliation to the most comparable U.S. GAAP financial measure, "Income (loss) from continuing operations"

• (3) Includes $200M of outstanding borrowings under our revolving credit facility

tions"

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Additional insights on fourth quarter results

Sold 25+ million units in the fourth quarter, demonstrating our scale and durability in the midst of a global pandemic

NA Beauty & Wellness bookings >75% recovered in Oct and certain categories, such as high-end cosmetic services ~90% recovered

Local revenue improved 7% sequentially and gross profit improved 6% sequentially

Goods gross profit improved 42% sequentially

Watching trends closely:

NA Local unit y/y% performance worsened in Dec due to worsening pandemic conditions

Int'l Local began to pull back in late Oct/early Nov as restrictions increased; restrictions continued, and increased in some cases, throughout remainder of fourth quarter

1Q21 and FY21 Perspective

1Q21 perspective

Q1 QTD Trends1

• ● North America Local billings are down ~49% year-over-year quarter-to-date, tracking at ~51% of 2019 levels

• ● International Local billings are down ~63% year-over-year quarter-to-date, tracking at ~37% of 2019 levels

Factors to Consider

• ● Seasonality: Q1 gross profit and Adjusted EBITDA are typically lower than Q4

• ● NA Goods: Vast majority of NA Goods Revenue will be recognized on net basis with transition to third-party marketplace

  • ○ International transition will begin in second quarter 2021; expected to be largely complete by end of 3Q21

• ● Marketing expense: Expect to remain disciplined

• ● SG&A: Expect to be $3 to $5 million above Q4 levels

(1) 1Q21 quarter-to-date as of February 22, 2021; year-over-year and % of 2019 are day of week adjusted

FY21 outlook and perspective

Outlook

• ● Revenue expected to range from $930 to $980 million

• ● Adjusted EBITDA expected to range from $100 to $110 million

Factors to Consider

• ● Reflects our current expectation for Local recovery and our Goods revenue being largely reflected on a net basis; does not assume a material contribution from the success of our growth strategy

• ● Expect recovery to gain momentum throughout the year and be significantly weighted to 2H 2021

• ● Given TTM nature of our active customer metric, expect Q1 customer balance to decrease as we lap first impact of COVID; expect active customer balance to stabilize mid-year

• ● Expect to increase marketing as a % of gross profit in 2021 as consumer demand returns

• ● Expect our 2021 fixed cost base (ex SBC/D&A) to be $200 million lower vs. our 2019 cost base

Unlocking the power of our financial model

• ● Durable business model and strong balance sheet provide a foundation for growth

• ● Strengthening our marketplace offering and closing the gap between our large market opportunity and business performance

• ● Executing on our priorities to Expand Inventory and Modernize the Marketplace by improving merchant and customer experiences

• ● Substantially reduced fixed cost base is allowing us to deliver strong Adjusted EBITDA even in a challenging operating environment

  • ○ Actions underway to reduce fixed cost base by $225 million vs 2019

  • ○ Believe we can grow while sustaining our reduced cost structure

  • ○ If we grow GP to 80% of pre-COVID levels while maintaining our lower fixed cost base, believe we can deliver ~$250M of Adjusted EBITDA in 2022, and at 90% of pre-COVID GP levels = ~$300M of Adjusted EBITDA

• ● Success means returning Groupon to top-line growth and stronger profitability

Appendix

Goods revenue recognition 1P vs. 3P example1: $100 customer purchase

First Party Goods	Third Party Goods
Billings	$100	$100	Billings don't change; this is what our customer pays to Groupon
Revenue	$100	$17	In 3P model, Groupon revenue is the commission from the sale (net of merchant payment)
Gross Profit	$15	$15	Gross Profit dollars are not impacted

• ● NA transition completed in 4Q 2020

• ● Expect to begin Int'l transition to 3P model in 2Q 2021 and to be largely complete by end of 3Q 2021

• ● 3P revenue take rate is lower because it is accounted for on a net basis

(1) Example is for illustrative purposes only and does not reflect any forward looking perspective on Goods margins or volume

Non-GAAP Reconciliations*

Adjusted EBITDA - Quarterly (in thousands)

Non-GAAP Reconciliations*

Free Cash Flow (in thousands)