Groupon, Inc. — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This 10-K reports full-year results, not a standalone fourth-quarter income statement. Groupon operates a two-sided marketplace in North America and International, across Local, Goods and Travel; reported revenue is primarily net commissions.
Financial and operating performance
| Metric | 2023 | 2022 | Change |
|---|---|---|---|
| Revenue | $514.9 million | $599.1 million | Down 14.0% |
| Gross profit | $450.7 million | $522.8 million | Down 13.8% |
| Operating loss | $18.3 million | $167.8 million | Improved |
| Net loss attributable to Groupon | $55.4 million | $237.6 million | Improved |
| Adjusted EBITDA (non-GAAP) | $55.5 million | $(15.1) million | Improved |
| Operating cash flow | $(78.0) million | $(136.0) million | Lower cash outflow |
| Free cash flow (non-GAAP) | $(97.3) million | $(172.2) million | Lower cash outflow |
- Gross billings fell 9.8% to $1.645 billion; units declined 18.3% to 41.4 million and trailing-12-month active customers fell 12.1% to 16.5 million.
- Revenue fell in both segments: North America by 12.9% to $380.0 million and International by 17.1% to $135.0 million. Goods was especially weak in both regions.
- Gross margin, measured by Groupon as the share of gross billings retained after merchant payments, was 33.3% in North America and 26.8% in International, down from 35.2% and 27.8%.
- Operating expenses declined 32.1% to $468.9 million, reflecting lower marketing and payroll costs and no repeat of 2022 goodwill and long-lived-asset impairment charges. The 2023 result included $8.0 million of restructuring and related charges.
Liquidity, debt and capital
- At year-end, cash and cash equivalents were $141.6 million, versus $281.3 million a year earlier. Current assets were $255.6 million and current liabilities $369.2 million; stockholders’ equity was a deficit of $40.6 million.
- Debt included $42.8 million outstanding under the revolving credit facility and $230.0 million principal amount of 1.125% convertible notes due March 2026. The notes’ balance-sheet carrying value was $226.5 million.
- After year-end, Groupon closed an $80.0 million fully backstopped rights offering in January 2024, issuing 7.08 million shares at $11.30 each. In February 2024, it used $43.1 million of proceeds to repay and terminate further borrowing commitments under its credit agreement.
- Cash used in investing activities was $1.4 million, including $18.9 million in proceeds from sales of part of its SumUp investment. Financing activities used $35.7 million. Groupon reported $40.4 million of cash held by international subsidiaries.
Outlook, risks and unusual items
- Management’s strategy is to rebuild growth by strengthening local merchant relationships and inventory, curating offers and improving customer convenience and purchase frequency. The filing provides no numerical revenue or earnings guidance.
- Management attributed declining activity to weaker demand, particularly in Goods and Local, and reduced platform engagement. Marketing investment was lowered amid traffic declines. Approximately 80% of 2023 global transactions were completed on mobile devices.
- The 2022 cost-savings and restructuring program targeted approximately 1,150 position reductions globally. Most were completed by March 31, 2023; remaining reductions are expected by the end of 2024. Expected total pre-tax charges are $22.0–$24.1 million; $21.4 million had been incurred to date.
- Management concluded substantial doubt about continuing as a going concern had been alleviated, citing the rights offering, the credit-facility repayment, the SumUp sale proceeds and improved operating cash flow. This conclusion depends on assumptions about future operations and liquidity.
- A material weakness in controls over complex manual month-end calculations remained unremediated at year-end. Management and the auditor concluded internal control over financial reporting was ineffective; the auditor issued an adverse opinion on controls while giving an unqualified opinion on the financial statements.
- A foreign tax authority’s proposed $120.7 million assessment, including estimated interest, received an unfavorable lower-court ruling in December 2023; Groupon appealed and sought suspension of a roughly $76.5 million provisional payment demand. A separate proposed assessment of approximately $31.7 million was received in February 2024. Groupon says it intends to defend both matters.
- Other risks include voucher refund and redemption estimates, gift-card and unclaimed-property rules, privacy and cybersecurity regulation, competition, merchant and customer retention, foreign exchange and inflation. The SumUp remeasurement produced a $25.8 million non-cash loss in 2023. The Uptake lease dispute was settled for $4.25 million, received by year-end.
Key facts for investors to verify
- Whether customer, merchant, gross-billings and revenue trends stabilize, particularly in Local and Goods, and whether reduced marketing spend affects traffic and repeat purchases.
- Cash burn, working-capital requirements and liquidity following the rights offering and credit-facility repayment; separately assess the $230.0 million notes due in 2026.
- Progress and independent validation of remediation of the material weakness, and whether future filings are timely and reliable.
- Developments, potential payment timing and financial-statement treatment of the tax assessments, along with the assumptions used for voucher redemption, refunds and unredeemed-voucher liabilities.
- The extent of dilution and related-party implications of the rights offering, which was backstopped by an entity affiliated with the interim CEO and a director.