Hello, and welcome to Groupon's Fourth Quarter and Full Year 2025 Financial Results Conference Call. On the call today are Chief Executive Officer, Dusan Senkypl; and Chief Financial Officer, Rana Kashyap. The company has posted earnings materials, including earnings commentary on the company's Investor Relations website at investor.groupon.com. Today's conference call is being recorded. Before we begin, Groupon would like to remind listeners that the following discussion and responses to your questions reflect management's views as of today, March 11, 2026 only, and will include forward-looking statements. Actual results may differ materially from those expressed or implied in the company's forward-looking statements. Groupon undertakes no obligation to update these forward-looking statements as a result of new information or future events. Additional information about risks and other factors that could potentially impact the company's financial results are included in its earnings press release and in its filings with the SEC, including its annual report on Form 10-K. We encourage investors to use Groupon's Investor Relations website at investor.groupon.com as a way of easily finding information about the company. Groupon promptly makes available on this website the reports the company files or furnishes with the SEC, corporate governance information, and select press releases and social media postings. On the call today, the company will also discuss the following non-GAAP financial measures: adjusted EBITDA and free cash flow. In Groupon's press release and their filings with the SEC, each of which is posted on its Investor Relations website, you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable measures under U.S. GAAP. And with that, I'd like to turn it over to Dusan to make a few opening remarks before we jump into Q&A.

Hello, and thanks for joining us for our fourth quarter and full year 2025 earnings call. It's great to be with all of you today. Yesterday, after the market closed, we released our earnings and posted our earnings commentary on our Investor Relations website. Today I will make opening remarks and then open up the call for your questions. For more details on our quarterly and full year performance, I encourage you to read our full earnings commentary, press release and 10-K. I want to start with what matters most. 2025 was a milestone year for Groupon. For the first time in a decade, we returned to both billings and revenue growth. Full year global billings grew 7% to approximately $1.67 billion. We delivered a second consecutive year of positive free cash flow, and exited the year with approximately $296 million in cash. These are not incremental improvements. This is a fundamentally different company than the one that existed three years ago. Our core local marketplace, which represents approximately 90% of billings, grew double digits for the full year in both North America and international, excluding Giftcloud. Global active customers reached 16.2 million, up more than 5% year-over-year, with North America local active customers growing 12%. Now let me be direct about Q4. We did not finish the year the way we planned. Global billings grew 4% year-over-year, but came in below our guidance range, as did revenue and adjusted EBITDA. The shortfall was not broadly distributed. It was concentrated in two specific areas: enterprise channel deceleration in North America and underperformance in our organic and owned marketing channels. Both are well understood, both have clear root causes, and both have direct action plans underway which we go into more detail in our earnings commentary that we released last night. On the product side, our product and engineering organization is shipping more, faster and with better quality than at any point in recent memory. Our platform migration reached a significant milestone with 50% of all iOS North America users now on the new mobile app, and we expect all iOS North America app users to be migrated by the end of Q1. Along with our new website, this is a complete rebuild of our core consumer platform, a multiyear undertaking. Completing this ramp-up is meaningful not just as a technical milestone but as the foundation for our next phase of growth. Early results show that the new users on the updated platform are generating stronger monetization per user than on the legacy app. With the new platform in place, we now have the development velocity to move quickly on the opportunities ahead. In 2026, our product agenda shifts from conversion-first to grow-first, with a new search and relevance engine, a customer data platform now live in North America to drive personalized customer journeys, and the infrastructure to make our inventory discoverable and transactable by AI agents and platforms. That last point is central to where we are taking this business. Our number one strategic priority for 2026 is to shift the business towards an AI-native operating model. We believe the next generation of local experience, discovery and transaction will be driven by autonomous agentic systems that can evaluate options and execute transactions on behalf of customers. The platforms that position early for this shift will capture disproportionate value, and we intend to be one of them. We are building our proprietary AI personalization layer, making our inventory discoverable and transactable by AI agents and targeting technical readiness for AI agents initiating transactions by mid-2026. To underscore our commitment, today we announced the formation of a dedicated Artificial Intelligence Committee of the Board of Directors, making Groupon one of the first publicly traded consumer marketplaces to establish a Board-level AI committee. We appointed Amit Shah as a new Independent Director to chair the committee. Shah is the founder and CEO of InstaLILY AI and previously served as the President of 1-800-FLOWERS.COM. His experience at the intersection of commerce platforms and emergent technologies is directly relevant to the work ahead. On 2026 guidance, our full year results delivered our first consecutive year of improving revenue growth, and we expect that trend to continue. That said, the pace of growth improvement will be more moderate than the trajectory we were building towards. The headwinds in organic, owned and enterprise channels are addressable and we have clear plans against each, but the fixes will take time to compound. Our guidance reflects that reality. We are guiding to 3% to 5% billings growth, 3% to 5% revenue growth, $70 million to $75 million in adjusted EBITDA and at least $60 million in free cash flow. We also plan to host an investor event in the second half of 2026 to provide deeper insight into our strategy and our path forward. Taking a step back, the long-term opportunity here remains enormous. The market for online experiences has significant under-penetration compared to categories like hotels and airfare. We believe AI-driven discovery and agentic transactions will accelerate online penetration in local experiences, and Groupon is well positioned to capture that growth. We remain confident in our long-term targets to accelerate global billings growth to over 20%. As we move into our growth phase, we are anchoring the company around a clear mission. We get people offline through quality local experiences at great value. In a market where every platform competes for more screen time, Groupon exists to drive real-world commerce, connecting consumers to local businesses and generating measurable foot traffic and spend. As AI shifts from assistive tool to autonomous agents that can discover, evaluate and transact, Groupon's position at the intersection of consumer intent and local supply makes us a natural bridge between the AI economy and the millions of businesses that power local communities. We are still in the early innings of a massive opportunity to become the trusted destination for discovering high-quality local services and experiences at unbeatable value. We have the cash, the technology and the strategy to win. Our work is far from finished, but the foundation we have built gives me real confidence in what comes next. I want to thank our team. This transformation is not easy. Their dedication, intensity and execution excellence have made this progress possible. With that, let's open the call for questions.

Thank you, Dusan. Our first question comes from Bobby Brooks from Northland Capital Markets.

So it was excellent to hear the commentary of how conversion rates across every portal and geography improved in the fourth quarter. I just wanted to hear more on what you believe drove that. And do you feel like there's more room to go on improving this further? Or is that a level you'd like to maintain? Just curious to hear more there.

I believe that the conversion results we have are the result of several different aspects. The first is platform development, because when you compare what we are running and operating in Groupon versus what we had two years ago, the consumer interface is much more consumer-friendly. We are improving the search and relevance experience and presenting our customers products that are relevant. The second dimension is related to our offers. We are not just trying to get as many merchants on the platform as possible; we are focusing on the quality of merchants and quality of offerings. This has translated to higher conversion. At the same time, in our marketing channels, we are trying to buy the most relevant traffic possible—not just broadly reaching users who may not be truly interested in our deals. We are buying in the paid channels the traffic that has the highest possible conversion. This comes with buying slightly fewer eyeballs in general but improving conversion significantly. I expect that this trend will continue because part of the decision-making funnel is moving toward AI surfaces and interfaces which inform customers about what's possible. We will continue our conversion improvements through better inventory and better products. So I expect the trend to continue.

Got it. And then shifting gears, you mentioned how a weak pipeline of new brand adds and some one-off issues with existing enterprise merchants drove that weakness in that segment. I wanted to get a little more detail there. Why do you think the pipeline is weak generally? It felt like we had turned a corner on winning new merchants because you could go to them with a lot more data supporting why doing vouchers on Groupon is beneficial. Did something change there? Maybe that was more specific to SMBs? Just wanted to hear more on how that pipeline for enterprise weakened.

Last year, we made a bet on a partner to be our channel to acquire new customer acquisition, and that deal is performing below our expectations. We expected to get more traction and more new partners on our platform through that partnership, which we announced last year publicly. At the same time, we see market changes that require product adjustments to achieve better product-market fit. Traditionally, we have had coupons or deal-type products. The market is moving toward closed-loop transactions. When the product price is not visible directly on the website, customers need to register or the offer is app-only. It's easy now to find pricing, and big brands don't want different pricing on Groupon publicly versus on their own website. In this area, we are iterating our product with improvements on the closed-loop proposition to serve more brands. Also, enterprise sales is a long cycle. When we start talking to a potential partner, the deal is not closed in a few weeks. It can take several months or even quarters, as sometimes they need to include the initiative in their annual planning. So while the issues are clear and addressable, it will take time to compound the results.

Got it. That was something I wanted to double-click on too, the closed-loop part. If I understand correctly, it's essentially not listing the price of the deal publicly; you would have to create a Groupon account to see the deal? Just want to make sure I'm understanding.

Yes. There will be several levels of the closed-loop approach because different brands have different requirements. We already have experiments up and running in travel and other categories. There will be cases where the offer will be visible on the website but you must first register, which is essentially one click using single sign-on technologies. In some cases, we will indicate on the website that to access the price for a deal you need to install the application and you can get the deal in the app.

Got it. And then just one more before I go back to the queue: you mentioned you reorganized the enterprise channel to align with a vertical-focused category structure. How was the team structured previously? Is this new vertical-focused category structure the same structure that led to strong success in key cities like Chicago?

It's a similar structure but not identical. Across Groupon, when we look at any segment or category as one product, it typically doesn't work because each category has different characteristics. The go-to-market for Things To Do in local experiences is different than the go-to-market in health and beauty. We have category GMs who have industry knowledge and know the people in the industry; they guide the sales team on how to approach the product for a specific category. In the local segment, we incorporated geography-specific know-how, which is not necessarily in enterprise, but the core idea is the same. We need very targeted, focused go-to-market teams for each category. The people talking to enterprise partners should understand Groupon's value proposition in that specific category, not a generic approach.

Our next question comes from Sean McGowan from ROTH Capital Partners.

Maybe this is related to what you were talking about, but I'm interested in some color on what happened in travel. That seemed to be developing some positive momentum but was negative in the fourth quarter. Is that related to these enterprise comments you've been making?

In travel, we have partnerships with a few brands that contribute a large share of travel revenue. Travel is not a top priority right now, and we still believe Groupon has a role in this category, yet it's not a central focus for new product features or product development at the moment. So yes, it's related.

Can you comment on what you're seeing in those European markets that you referenced in previous calls that were early in the adoption of some acceleration initiatives? You said you were seeing very good success in those markets. How did those markets perform in the fourth quarter?

We had very good performance across international. In those markets we implemented many of the changes and sometimes were even frontiers in how to run the sales organization, emphasizing deal quality and going to the city level to find the next deals to sign in any metro. In terms of technology, the U.K. was the first country where we implemented our CDP as a pilot. In Q1, we migrated to the new web interface and the new mobile-next platform in the United States and in most countries either fully or with a high percentage of traffic. From the perspective of sales, international is running at the same level or in some areas even better than North America. In terms of technology, we do not yet have the application in international; that will be Q2 and Q3 of this year. But we already migrated most countries to the new web interface.

Last question: for modeling, is there anything in the SG&A figure in the fourth quarter that was unusually low? Or is this a level we should expect going forward? I thought it might be higher, which is good, but should we expect it to be at about this level?

Yes, Sean. SG&A came in lower than we were expecting in Q4, and there were some one-time benefits in SG&A. I would not expect this to be the new baseline. If you take a step back and look at SG&A excluding depreciation and amortization and excluding stock-based compensation, we're really looking for SG&A to be flattish year-over-year. We encourage you to take more of a full year view when thinking about SG&A for 2026.

Our next question comes from Eric Sheridan from Goldman Sachs.

Great. Maybe two questions, if I can. First, a big-picture one: with this new committee of the Board aimed broadly at AI as a theme, could you talk a little about how the management team, this committee and the broader Board will work together in formulating strategy and then, importantly, implementing and investing against AI strategy over the next couple of years? Second, you talked about some headwinds in Q4 persisting into the front half of the year. Can you give a sense of the pace and cadence of those headwinds dissipating as we get deeper into the year and how to think about sequential dynamics as we progress through 2026?

On the AI Committee question: AI is the number one topic for me personally as CEO. I see it as a huge opportunity for us across all surfaces and areas. We need to start internally with the team and then translate this to product and market operations. I am personally heavily invested in AI. We formed a close partnership with Amit Shah. Amit will participate in discussions with management, share his vision, provide feedback on what we are creating, and provide feedback on management team AI fluency. He will participate in building future AI-driven products and revenue streams for Groupon. This is not just a formal committee that meets quarterly; it's deep integration with management. On the timing of the headwinds: the enterprise segment has long sales cycles, so it may take up to several quarters to return to prior speed. We have difficult comps in enterprise in Q1 and Q2, and those comps ease in the second half of the year. In owned channels like SEO and managed channels, we've already implemented the new CDP, which will fundamentally change how we communicate with customers, and I expect benefits to start coming soon. SEO timing is more uncertain because Google is under pressure from AI-generated content. We are making many changes. Long term, Groupon is well positioned because we own user-generated content from many returning customers who provide feedback on local merchants and experiences. That content will be valuable for AI-driven responses and agents. The timing, however, is hard to predict.

We have a follow-up question from Bobby Brooks.

You have done a good job of winning new customers, and that's been a trend over the last four quarters. I understand new customers initially won't have the same purchase frequency as legacy ones. For the cohorts of new customers that you won in the first half of 2025, have you seen their purchase frequencies start to tick up? Or have you found ways through managed marketing to spur those purchase frequencies higher? Curious to hear more.

My goal this year is to improve how we communicate customer cohorts and purchase frequency to shareholders. We plan to present a clearer model at our investor event this year. Purchase frequency relates not only to new and active customers but also to category mix. Historically, goods were an important channel with higher purchase frequency compared to other categories, and goods decline has negatively impacted purchase frequency. Internally, we see some cohorts of loyal customers with improved performance and some segments with better conversion from first to second purchase. This is a top priority, and with the new CDP we now have the tools to target small segments and deliver highly relevant deals. I'll provide more detailed and consistent communication on these metrics during the year.

On the CDP and retargeting management, could you provide a couple of examples of what that looks like? Also, some might think this is a response to the drop-off in organic traffic in Q4, but this is something you've been working on for a couple of quarters, right? It's not just reactive?

The CDP is foundational and we've been building it for some time; it's not just a reaction to Q4. Groupon originally had a platform that was in-house developed and more manual. If the team wanted to test a campaign—say, send a push notification two or three weeks after a spa purchase offering an upsell—it previously took weeks to implement. With the new platform, it's mostly UI-driven. We can drag-and-drop and run ten or more campaigns weekly, and go much more granular in user journeys based on on-site behavior. For example, if a customer visited a deal several times and didn't buy, we can provide a specific targeted offer. The CDP will also help us improve paid marketing efficiency because we will better know whether the consumer has seen our messaging; if they have, we won't spend money to reacquire them on Google or Meta unnecessarily. It opens many opportunities and is a multi-quarter build. On SEO, the landscape is dynamic with AI-generated content proliferation. Google is changing the rules and prioritizing original, user-generated content. That's why Reddit ranks well. We are doubling down on reviews, which were previously hidden, and are producing AI summaries of reviews, FAQs and derivative content that reflect what our real customers say about merchants, content that is unique to Groupon.

That's helpful. Lastly on the headwinds in managed and organic channels, it seems more macro-driven—SEO algorithm changes and more AI content—rather than something internal you did wrong. Is that accurate, or were there internal areas you could have done better?

We can always do our work better—I'll say that for any area. But the issues were primarily driven by macro changes in the landscape that affect everyone. I consider Groupon fortunate because we have an answer that fits into the AI world, given our user-generated content.

Congrats on the Entrepreneur of the Year from EY. That's awesome.

Appreciate it. Thank you.

We'll now pose written questions to management that came in through the company's Investor Relations press line. Analysts who are live on the call, we will continue to move back to you. Our first written question: you talked about setting a new baseline for agentic AI-first leadership across the company. Can you talk about what that means concretely for how your teams are working today? And what kind of productivity gains are you seeing, specifically in engineering?

I'm closely following and meeting with people who I consider AI frontiers in terms of what AI enables across the board. A major shift has happened in the last few months: we moved beyond using AI as a chat tool into more agentic-based approaches driven by tools like Claude Code and similar solutions. I use an agentic setup that reads my data and prepares for meetings, deeply analyzing market opportunities and proposing solutions using all available data. It's a complete mindset shift. We are implementing this across Groupon. I want everyone here to be AI-first. In engineering, my goal is that we have 100% of the code written with AI assistance by the end of the year. I want to make Groupon a company where employees manage and orchestrate AI agents. This will allow us to do far more in product and engineering; in sales it will provide new tools for merchants. People who have switched to AI-first workflows are far more productive and generate better ideas because they do not have to do repetitive tasks. I expect the organization to become more fluid: fewer rigid handoffs between product and engineering and more builders who can start from design and deliver features end-to-end. We expect a step-change in delivery velocity and quality that will let us ship many more product features and improvements to customers. This is the number one project for me right now.

We'll go back to Sean McGowan from ROTH Capital.

A couple of follow-ups. Could you comment on what trends you're seeing in redemption rates? You made an effort last year to remind customers when their Groupons were expiring, which had an effect on redemption. What are you seeing currently year-over-year and what do you expect?

I don't have the exact numbers at hand, but the overall redemption trend continued at a positive pace. Product teams work to ensure deals have good redemption rates and that customers get the experience. We are not only sending reminders but are also actively asking for feedback to improve deals and to provide feedback to merchants. We don't see significant negative changes; the trend is moving in the right direction.

To echo what Dusan said, we see trends that are relatively stable. In terms of the impact on take rates in 2025, we expect the effect from higher redemption rates to be modest.

Okay. On marketing plans: you talked last year about leaning more into marketing Groupon as a brand. Can you talk about expectations for marketing spending as a percentage of revenue or another metric?

Dusan, do you want to speak to the brand and I will address the numbers?

You can start with numbers and I'll follow up with brand.

In terms of numbers, Sean, we expect marketing to grow year-over-year in the high single-digit range. We intend to support the business with marketing spend and expect marketing growth to be a little faster than revenue growth. However, the relationship between marketing spend growth and revenue growth should improve versus 2025. Our focus over time is to grow contribution profit dollars, and this year we expect to make progress against that. For modeling, expect marketing to grow high single digits year-over-year.

On the brand campaign, which began in the second half of Q4 last year, the main theme is 'Turn Your Life On,' which aligns with Groupon's mission to get people offline. We saw different responses based on location since we collected geo-level data. We are continuing the brand campaign in Q1 and expect to continue beyond that, but we are refining our model to understand customer behavior at the city level. In some cities we saw an incredible response; in others we saw baseline response. We want to double down where the response is strong and replicate inventory and offers where the campaign performs well.

Another written question: can you talk about the new mobile app migration? You're now at 50% of iOS in North America on the new platform with stronger monetization. What should we expect as you complete that rollout?

Migration to the new platform required substantial engineering resources. As we finish migration, that capacity will shift to improving user experience and increasing purchase frequency via new functionality. We are focused on search and relevance and personalization. The team is analyzing customer behavior and segmenting customers to build features that target specific groups with better offers and interfaces. Some demos and prototypes I have seen are compelling and should meaningfully improve customer experience and purchase frequency.

Another written question: you've made a number of leadership additions recently, including a new Chief People Officer and an SVP of Operations and Consumer AI. Any commentary on the additions? How are you thinking about the team and talent needed for the next phase of growth?

When I joined Groupon, one of our main issues, in addition to financials, was attracting new talent. I'm happy to say we are now able to hire and attract talented people from strong companies. We are raising the bar across the organization. New hires are challenging us to move faster and with higher quality. This is true across the management team and the company, especially with the AI expectations I described earlier. Overall, I see great progress and Groupon in a very different situation versus a year ago and even 12 months ago.

Thank you, Dusan. There are no other questions. This concludes our call for today. Thank you, everyone, for joining. For additional information, please go to investor.groupon.com.