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What changed in Groupon, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Groupon, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+286 added−328 removedSource: 10-K (2024-03-15) vs 10-K (2023-03-16)

Top changes in Groupon, Inc.'s 2023 10-K

286 paragraphs added · 328 removed · 228 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWithin our human capital strategy, there are five core pillars: Our People & Culture, Diversity, Equity & Inclusion ("DEI"), Compensation & Benefits, Social Responsibility, and Future of Work. Our People & Culture. Groupon helps customers discover experiences that make for a full, fun, and rewarding life.
Biggest changeOther teams, such as engineers, product designers, marketers and editors, power the platform and curate the experiences. Within our human capital management strategy, there are three core pillars: Our People & Culture, Diversity, Equity & Inclusion ("DEI") and Compensation & Benefits. Our People & Culture.
We engage independent third-party Internet security firms to regularly test the security of our websites and identify vulnerabilities. In financial transactions with customers conducted on our websites and mobile applications, we use data encryption protocols to secure information while in transit. See Risk Factors for additional information relating to potential cyber threats.
We engage independent third-party Internet security firms to regularly test the security of our websites and identify vulnerabilities. In financial transactions with customers conducted on our websites and mobile applications, we use data encryption protocols to secure information while in transit. See Risk Factors and Cybersecurity for additional information relating to potential cyber threats.
For instance, non-compliance with the GDPR could result in proceedings against us by governmental entities or others and fines up to the greater of €20 million or 4% of annual global revenue and non-compliance with CPRA could result in fines of up to $7,500 per violation in addition to providing consumers with a private right of action.
For instance, non-compliance with the GDPR could result in proceedings against us by governmental entities or 8 others and fines up to the greater of €20 million or 4% of annual global revenue, and non-compliance with CPRA could result in fines of up to $7,500 per violation in addition to providing consumers with a private right of action.
In addition, certain foreign jurisdictions have laws that govern disclosure and certain product terms and conditions, including restrictions on expiration dates and fees, that may apply to Groupon vouchers. There are also a number of 8 legislative proposals pending before the U.S.
In addition, certain foreign jurisdictions have laws that govern disclosure and certain product terms and conditions, including restrictions on expiration dates and fees, that may apply to Groupon vouchers. There are also a number of legislative proposals pending before the U.S.
The Credit Card Accountability Responsibility and Disclosure Act of 2009 (the "CARD Act"), as well as the laws of most states, contain provisions governing gift cards, gift certificates, stored value or pre-paid cards or coupons ("gift cards"). Groupon vouchers may be included within the definition of "gift cards" under many laws.
The Credit Card Accountability Responsibility and Disclosure Act of 2009 (the "CARD Act"), as well as the laws of most states, contain provisions governing gift cards, gift certificates, stored value or pre-paid cards or coupons (collectively, "gift cards"). Groupon vouchers may be included within the definition of gift cards under many laws.
Our Local category includes experiences and services from local and national merchants, and other revenue sources that are primarily generated through our relationships with local and national merchants. Our local inventory includes, things to do, beauty and wellness and dining, as well as other types of experiences and services. Goods .
Our Categories Local . Our Local category includes experiences and services from local and national merchants, and other revenue sources that are primarily generated through our relationships with local and national merchants. Our local inventory includes, things to do, beauty and wellness and dining, as well as other types of experiences and services. Goods .
For the year ended December 31, 2022, approximately 80% of our global transactions were completed on mobile devices. We use a variety of marketing channels to direct customers to the offerings available through these marketplaces, as described in the Marketing section below. Marketing We use marketing to acquire and retain customers and promote awareness of our marketplaces and brand.
For the year ended December 31, 2023, approximately 80% of our global transactions were completed on mobile devices. We use a variety of marketing channels to direct customers to the offerings available through these marketplaces, as described in the Marketing section below. Marketing We use marketing to acquire and retain customers and promote awareness of our marketplaces and brand.
See Item 1, Note 18, Segment Information, for additional information. Revenue is earned through service revenue transactions, during which we generate commissions by selling goods or services on behalf of third-party merchants. Service revenue also includes commissions we earn when customers make purchases with retailers using digital coupons accessed through our digital properties.
See Item 8, Note 18, Segment Information, for additional information. Revenue is earned through transactions during which we generate commissions by selling goods or services on behalf of third-party merchants. Revenue also includes commissions we earn when customers make purchases with retailers using digital coupons accessed through our digital properties.
We use search engine optimization ("SEO") and search engine marketing ("SEM") to increase the visibility of our offerings in web search results. 5 Email and mobile messaging. We communicate offerings through email and by push notifications to our customers based on their locations and personal preferences.
We use search engine optimization ("SEO") and search engine marketing ("SEM") to increase the visibility of our offerings in web search results. Email and mobile messaging. We communicate offerings through email, push notifications and short messaging services ("SMS") to our customers based on their locations and personal preferences.
In our Goods category, we earn service revenue from transactions in which third-party merchants sell products to customers through our marketplaces. We recognize Goods revenue on a net basis within service revenue. Our Goods category includes merchandise across multiple product lines, such as electronics, sporting goods, jewelry, toys, household items and apparel. Travel .
In our Goods category, we earn revenue from transactions in which third-party merchants sell products to customers through our marketplaces. Our Goods category includes merchandise across multiple product lines, such as electronics, sporting goods, jewelry, toys, household items and apparel. Travel .
Technology In early 2023, we completed the migration of our public-facing websites, internal applications and services, as well as our back-end business intelligence systems from being hosted at our data centers to a multi-cloud infrastructure. We employ security practices and modern tools to try to recognize intrusions to our technology infrastructure.
Technology In early 2023, we completed the migration of our public-facing websites, internal applications and services, as well as our back-end business intelligence systems from being hosted at our data centers to a multi-cloud infrastructure.
A customer who interacts with an email or push notification is directed to our website or mobile application to learn more about the deal and to make a purchase. Additionally, we introduced short message service ("SMS") notifications in 2022. Affiliate channels. We have an affiliate program that uses third parties to promote our offerings online.
A customer who interacts with these communications is directed to our website or mobile application to learn more about the deal and to make a purchase. 5 Affiliate channels. We have an affiliate program that uses third parties to promote our offerings online.
As our business evolves, we may face more claims of infringement, and may experience an adverse result which could impact our business and/or our operating results. 9 We have received in the past, and we anticipate we will receive in the future, communications alleging that items offered or sold through our website infringe third-party copyrights, trademarks, patents and trade names or other intellectual property rights or that we have otherwise infringed third parties’ past, current or future intellectual property rights.
We have received in the past, and we anticipate we will receive in the future, communications alleging that items offered or sold through our website infringe third-party copyrights, trademarks, patents and trade names or other intellectual property rights or that we have otherwise infringed third parties’ past, current or future intellectual property rights.
We plan to grow our revenue by building long-term relationships with local merchants to improve our inventory selection and improving the customer experience through inventory curation and improved convenience in order to drive customer demand and purchase frequency. Our Categories Local .
Our Strategy Our strategy is to be the trusted marketplace where customers go to buy local services and experiences. We plan to grow our revenue by building long-term relationships with local merchants to strengthen our inventory selection and by enhancing the customer experience through inventory curation and improved convenience in order to drive customer demand and purchase frequency.
Schmitz held consulting roles with Price Waterhouse Coopers LLP and 3M Company. Available Information We electronically file reports with the SEC. The SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.
The SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.
Competition Our customers and merchants are at the center of our two-sided marketplace. The quality and stability of both our customers and merchants are key to our business model. We face competition on both sides of our marketplace. We compete with other marketplaces, and some of our competitors have longer operating histories, significantly greater financial, technical, marketing and other resources.
We face competition on both sides of our marketplace. 7 We compete with other marketplaces, and some of our competitors have longer operating histories, significantly greater financial, technical, marketing and other resources.
The Virginia Consumer Data Protection Act (the "CDPA") and the Colorado Privacy Act (the "CPA"), which will both go into effect in 2023, provide new data privacy rights to their respective residents.
The Virginia Consumer Data Protection Act (the "CDPA"), effective as of January 1, 2023, and the Colorado Privacy Act (the "CPA"), effective as of July 1, 2023, provide new data privacy rights to their respective residents.
We are currently subject to, and expect to face in the future, lawsuits and allegations that we have infringed the intellectual property rights of third parties.
We are currently subject to, and expect to face in the future, lawsuits and allegations that we have infringed the intellectual property rights of third parties. As our business evolves, we may face more claims of infringement, and may experience an adverse result which could impact our business and/or our operating results.
Our wellness program includes access to mental health support and services, Global Wellness Week, which is an entire week dedicated to personal wellness programming aimed at boosting all of our physical, nutritional and mental well-being, as well as digital detox days.
We initiated a number of wellness programs this year on top of the existing access to mental health support and services and Global Wellness Week, an entire week dedicated to personal wellness programming aimed at boosting all of our physical, nutritional and mental well-being. We also continued our Groupon Step-a-Thon challenge.
Compensation and Benefits. To attract and retain qualified employees, we offer competitive compensation and comprehensive benefits, which are designed to attract, reward, and engage top talent and include standard health, dental, vision, life and disability insurance benefits as well as a 401(k) plan with company matching for our U.S. employees.
Compensation and Benefits. To bring in and keep the best, we offer a compelling combination of competitive compensation and comprehensive benefits. This includes standard health, dental, vision, life, and disability insurance, along with a 401(k) plan with company matching for our US employees.
Information About Our Executive Officers The following table sets forth information about our executive officers (as of the date of this filing): Name Age Position Kedar Deshpande 44 Chief Executive Officer Damien Schmitz 45 Chief Financial Officer Kedar Deshpande was appointed as our Chief Executive Officer in December 2021.
Information About Our Executive Officers The following table sets forth information about our executive officers (as of the date of this filing): Name Age Position Dusan Senkypl 48 Interim Chief Executive Officer Jiri Ponrt 50 Chief Financial Officer Dusan Senkypl was appointed as our Interim Chief Executive Officer in March 2023 and has served as a member of our Board since June 2022.
Our websites and mobile applications enable consumers to share our offerings with their personal social networks. We also promote our offerings via display advertising across various content publishers. Television and other offline. At times, we use other offline marketing channels such as connected television and traditional television advertising to help build awareness of our offerings and brand.
Our websites and mobile applications enable consumers to share our offerings with their personal social networks. We also promote our offerings via display advertising across various content publishers. Human Capital Management Attracting and securing top-notch talent from around the world is the cornerstone of our future.
To facilitate this, all employees are required to complete the following full-length training courses once every two years: • Global Code of Conduct; • Anti-Corruption; and 6 • Respectful and Harassment Free Workplace. In alternate years, employees are required to complete a Global Code of Conduct Recertification Quiz.
To cultivate this awareness, we mandate bi-annual completion of foundational training courses like our Global Code of Conduct, Anti-Corruption, Respectful and Harassment Free Workplace and unconscious bias training. We also offer a Global Code of Conduct Recertification Quiz in alternate years to ensure constant reinforcement.
As of December 31, 2022, we had employees in the following geographies and roles: Sales Corporate, Operational and Customer Support Total Employees North America 281 518 799 International 502 1,603 2,105 Total (1) 783 2,121 2,904 (1) In January 2023, the board approved the second phase of the 2022 Restructuring Plan, which includes an overall reduction of approximately 500 positions globally.
As of December 31, 2023, we had employees in the following geographies and roles: Sales Corporate, Operational and Customer Support Total Employees North America 218 175 393 International 437 1,383 1,820 Total 655 1,558 2,213 Our sales representatives create partnerships, while our support staff ensures smooth transactions.
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In prior periods, we generated product revenue from direct sales of our first-party Goods inventory. Our product revenue was reported on a gross basis as the purchase price received from the customer. Our Strategy Our strategy is to be the trusted marketplace where customers go to buy local services and experiences.
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Our senior leadership, guided by our Board of Directors (the "Board"), oversees this mission by crafting and implementing our human capital strategy. This involves recruiting, developing and retaining the best minds to fuel our operations and drive our strategic goals and shaping competitive compensation and benefits packages.
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Human Capital Management We believe attracting and retaining global talent is key to our success. Our senior leadership team is responsible for developing and executing our human capital strategy, with oversight from our Board of Directors (the "Board").
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At Groupon, we believe experiences make life richer and that philosophy extends to our work culture as well. We thrive on the strength and diversity of our global teams, where resilient, energized and collaborative individuals bring their unique perspectives to the table.
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This includes the recruitment, development and retention of talent to support our operations and execute our strategy and the design of our employee compensation and benefit programs.
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Our mission is to foster a culture that ignites innovation, empowers smart decision-making and celebrates every success along the way. In 2023, we focused on gathering feedback from peers, colleagues and employees so managers and leaders can actively identify areas for improvement and implement tailored action plans.
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Our sales force consists of merchant sales representatives and sales support staff who acquire and build merchant relationships and provide ongoing consultative expertise. Other key operational functions include engineering, product, marketing and editorial.
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We started with a Transformation Truth survey that collected anonymous responses company-wide and provided employees the opportunity to address ongoing transformations within the organization. We place a high value on collecting and acting upon employee feedback as it provides valuable insights into our team’s overall health.
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We take the same approach to our work culture - we believe that having teams of resilient, energized, diverse, and collaborative people from all over the world make Groupon unique. Our goal is to support a culture that inspires innovation, rewards smart decision-making, and celebrates success.
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We believe maintaining the highest ethical standards is not only a policy, it's a shared responsibility. Every team member plays a crucial role in upholding our commitment to business ethics, safety and integrity.
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In 2022, we conducted quarterly Pulse Engagement Surveys to gain insights into the engagement levels of our team members and to measure the overall health of our culture. These surveys covered a wide range of topics including well-being, engagement, leadership, performance and strategy, and DEI.
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To address any concerns regarding potential policy violations, we have established a secure and confidential internal channel called the Groupon Ethics Reporting Service. To support the career development of our team members, we offer a diverse range of training and development programs that cater to various needs.
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Managers used the responses to identify focus areas for their teams and to implement formal action plans. We had strong employee engagement scores with an 80% response rate. Each of our employees play an important role in ensuring that we maintain a high level of business ethics, safety, and integrity.
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From building a strong foundation in ethics and workplace culture through unconscious bias training for all employees to Respect in the Workplace training for managers. We also initiated Talent Acquisition Spotlight Newsletters that provided teams the update on open roles along with changes and improvements to the recruitment process.
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Additionally, we have established an internal process called Groupon Ethics Reporting Service, which is communicated to employees during the annual ethics training and can be used to bring to management’s attention a wide range of concerns, including violations of our policies.
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Our Internal Talent Mobility process fosters cross-team collaborations and growth opportunities, allowing people to explore their full potential within Groupon. Additionally, we also offer an Employee Referral Program with bonuses for eligible hires to help us hire great talent across the globe. 6 Diversity, Equity and Inclusion .
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To support the career development of our team members, we offer a variety of training and development programs supporting our ethics, workplace culture and manager behaviors. For example, we require all employees to complete unconscious bias training and all managers to complete Respect in the Workplace training.
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Cultivating a diverse workforce and fostering an inclusive workplace isn't only about doing the right thing; it's about building a brighter future for Groupon. Our strength lies in embracing diverse perspectives and experiences, which fuels innovation, creativity and problem-solving.
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We also offer various other training programs to employees, such as Change & Resilience, Managing Through Change, FS90 (a course that reinforces leader habits and manager expectations for new managers), Authentic Allyship Workshops, and a Director Development Program to equip leaders with the tools they need to succeed, We also launched Accelerate, a 7-month program designed and run in partnership with the organization everywoman with the goal to accelerate the development and careers of our top female talent.
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By fostering an inclusive environment where everyone feels valued and respected, we unlock the full potential of our talent, allowing us to navigate challenges and thrive in a competitive marketplace.
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Additionally, we encourage cross-team growth opportunities through our Internal Talent Mobility process. Diversity, Equity and Inclusion .
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In 2023, we focused on: • Creating opportunities for employees to engage in cultural competency workshops and conversations • Creating new programming to build and champion our diverse merchant base • Engaging our employees by launching a monthly DEI newsletter. This is emailed to all employees and details any DEI updates, Employee Resource Group activities, other resources and more.
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Diversity, equity and inclusion is integrated into our business and we believe that attracting and retaining diverse, global talent will create a culture where everyone can feel like they belong, find authentic connections and take part in experiences that connect to their own identities.
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This year we expanded our Annual Bonus Plan to include additional Global Grades in the plan to increase coverage of employees who were not eligible previously. We’re also deeply invested in our people's well-being and why we've significantly expanded our wellness programs to prevent burnout and keep our global teams healthy and thriving.
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We also want the diversity of our internal team to reflect the diversity of the merchants and customers we serve and the communities in which we live and work.
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It was designed to build healthy habits and increase activity levels of our employees. We're cultivating a thriving performance-driven culture and a team committed to our transformation. In line with this we re-vamped our values in 2023 to ensure that they were supporting the culture and behaviors we need to succeed.
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We believe that a global team of employees with diverse experiences, backgrounds, skills and perspectives will allow us to take a more innovative approach to problem solving and lead to better outcomes and higher productivity.
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Our new values are: • Ownership and accountability • High performing • Transparent • Innovative • Customer focused • Respect, integrity and inclusion Together they form the foundations of a culture that embraces speed and agility, relies on data-driven decisions based on measurable results and fosters a culture of ownership and accountability.
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Our company-wide DEI program includes a range of initiatives and programs that have the overarching goal of making our employees, merchants and customers feel seen and valued, including: • Analytics-based approach to provide data-driven insights and increase visibility as we aim to improve workforce diversity, identify inequities and reduce turnover; • Employee Resource Groups; • Diverse merchant self-identification; • Inclusive leadership training program for employees; and • Multiple merchant-facing campaigns and employee-facing celebrations including Asian American Pacific Islander Month, Pride Month, Juneteenth, National Black Business Month, National Hispanic Heritage Awareness Month, Global Diversity Awareness Month and Women’s Small Business Month.
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We believe this fosters a resilient workforce equipped to weather challenges and capitalize on opportunities. Our focus on performance isn't only about numbers; it's about attracting and retaining top talent who thrive in a fast-paced, results-oriented environment. Ultimately, we see this cultural shift as the engine that propels us towards our ambitious vision of becoming the go-to platform for experiences.
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In addition, Groupon is focused on the health and well-being of employees, and we have significantly expanded our wellness programming to combat burnout and support the overall health of global teams.
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Additionally, in the third quarter of 2023, we migrated our Payment Card Information data to a third party provider so that these details are no longer stored within Groupon's cloud environment. We employ security practices and modern tools to try to recognize intrusions to our technology infrastructure.
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We also provide Talkspace, a virtual service that connects employees and family members with licensed mental health providers for counseling and therapy. Social Responsibility . We are committed to empowering our employees to take part in making the communities in which we operate better places to work and live.
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Competition Our customers and merchants are at the center of our two-sided marketplace. The quality and stability of both our customers and merchants are key to our business model.
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We provide numerous opportunities for our employees to volunteer with causes they care about throughout the year and support communities through investment in local and global nonprofits focused on systemic issues like economic opportunity and hunger relief.
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He joined Groupon from Pale Fire Capital SE ("PFC"), a Groupon shareholder and a private equity investment group that invests in e-commerce companies both in Europe and worldwide. He co-founded PFC in 2015 and serves as Chairman and as a partner.
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In 2022, we supported nearly 2,000 small businesses and entrepreneurs globally through social responsibility programming and approximately 43% of our workforce engaged in community activities through the Groupon Volunteers program. Future of Work. We believe it is important for our employees to do their jobs where they feel they can do it best.
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Prior to joining PFC, he served as founder and CEO of NetBrokers Holding (“NBH”), which became the largest insurance and finance marketplace in the Czech Republic and Slovakia, from 2014 to December 2018, when it was sold to German media company, Bauer Media Group.
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Whether that means working remotely from home or in one of our global offices - we want our employees to thrive in a work environment that suits their needs. 7 Following office closures from the COVID-19 pandemic in 2020 and 2021, we launched a test of an approach that we call “@flex.” Flex, which represents our “flexibility” and related hybrid working options, was rolled out incrementally across our 20 offices worldwide.
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Prior to NBH, he co-founded and operated multiple e-commerce projects, including 9 ePojisteni.cz, an insurance technology company, where he served as CEO and a director, from 2009 until February 2019. In conjunction with his appointment as Groupon CEO, he stepped down from his day-to-day responsibilities at PFC. Jiri Ponrt was appointed as our Chief Financial Officer in April 2023.
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Our goal is to nurture a performance-driven culture - one that will be led by our values and focused on agility, results and accountability. We believe that this culture is foundational to our ability to drive our organization toward our long-term vision of being the destination for Local experiences.
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He joined Groupon from PFC where he served as a partner since July 2022 and Group CFO since November 2021. Prior to joining PFC, he served as CFO of Alza.cz, one of the largest e-commerce companies in Central and Eastern Europe, from May 2014 to October 2021.
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We intend to continue to focus on driving measurable results that will "show up" in our ability to attract and retain talent and build a resilient workforce well positioned to help us reach our long-term goals.
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Prior to his time at Alza.cz, he spent 15 years at Nutricia, a Danone brand, in a variety of financial and commercial roles. In conjunction with his appointment to Groupon Chief Financial Officer, he stepped down from day-to-day responsibilities at PFC. Available Information We electronically file reports with the SEC.
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He previously served as the Chief Executive Officer of Zappos.com (“Zappos”) and in various positions at Zappos from March 2011 to August 2020, including as Zappos’ Chief Operating Officer from 2019 to 2020 and senior leadership roles in technology and marketing, as well as project management roles. Prior to that, he was a software engineer at General Electric.
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Damien Schmitz was appointed as our Chief Financial Officer in November 2022. He previously served as the Interim Chief Financial Officer since November 2021, Senior Vice President, Finance since October 2021, and Vice President, Finance since January 2019.
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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 FP&A from September 2016 to December 2017. Prior to joining the company, Mr.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Legal, Regulatory, Privacy and Tax Matters • We are involved in pending litigation and other claims and an adverse resolution of such matters may adversely affect our business, financial condition, results of operations and cash flows. • The application of certain laws and regulations, including, among other laws, the CARD Act and similar state and foreign laws, may harm our business and results of operations. • If we are required to materially increase the liability recorded in our financial statements with respect to unredeemed vouchers our results of operations could be materially and adversely affected. • Government regulation of the Internet and e-commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business and results of operations. • Failure to comply with existing, expanding or newly enacted U.S. federal, state and international privacy laws and regulations, could adversely affect our business. • Misclassification or reclassification of our independent contractors, agency workers or employees could increase our costs and adversely impact our business. • We may suffer liability as a result of information or content retrieved from or transmitted over the Internet and claims related to our service offerings. • We may have exposure to greater than anticipated tax liabilities. • The adoption of tax reform policies, including the enactment of legislation or regulations implementing changes in the tax treatment of companies engaged in Internet commerce and U.S. taxation could materially affect our financial position and results of operations. • Our ability to use our tax attributes to reduce future U.S. income taxes could be subject to certain limitations. • Federal laws and regulations, such as the Bank Secrecy Act and the USA PATRIOT Act and similar foreign laws, could be expanded to include Groupon vouchers or other offerings. • State and foreign laws regulating money transmission could be expanded to include Groupon vouchers or other Groupon products or services. 12 Risks Related to Our Capital Structure • Our access to capital and ability to successfully manage and raise capital in the future may be limited, which could prevent us from growing, adversely impact our liquidity and our existing credit agreement could restrict our business activities. • Our financial statements contain a statement regarding a substantial doubt about the Company’s ability to continue as a going concern. • We may not have the ability to raise the funds necessary to settle conversions of the 2026 Notes in cash, to repurchase the 2026 Notes upon a fundamental change or to repay the 2026 Notes in cash at their maturity (if not earlier converted, redeemed or repurchased), and our current and future debt may contain limitations on our ability to pay cash upon conversions of the 2026 Notes or at their maturity or to repurchase the 2026 Notes. • The terms of the 2026 Notes could delay or prevent an attempt to take over our Company. • The conditional conversion feature of the 2026 Notes, if triggered, may adversely affect our financial condition and operating results.
Biggest changeRisks Related to Legal, Regulatory, Privacy and Tax Matters • We are involved in pending litigation and other claims and an adverse resolution of such matters may adversely affect our business, financial condition, results of operations and cash flows. • The application of certain laws and regulations, including, among other laws, the CARD Act and similar state and foreign laws, may harm our business and results of operations. • If we are required to materially increase the liability recorded in our financial statements with respect to unredeemed vouchers, our results of operations could be materially and adversely affected. • Federal laws and regulations, such as the Bank Secrecy Act and the USA PATRIOT Act and similar foreign laws, could be expanded to include Groupon vouchers or other offerings. • State and foreign laws regulating money transmission could be expanded to include Groupon vouchers or other Groupon products or services. • Failure to comply with existing, expanding or newly enacted U.S. federal, state and international privacy laws and regulations, could adversely affect our business. • Misclassification or reclassification of our independent contractors, agency workers or employees could increase our costs and adversely impact our business. • The adoption of tax reform policies, including the enactment of legislation or regulations implementing changes in the tax treatment of companies engaged in Internet commerce and U.S. taxation could materially affect our financial position and results of operations.
In addition, our competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to build larger customer and/or merchant bases or generate revenue from their customer bases more effectively than we do.
In addition, our competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies than we do, which may allow them to build larger customer and/or merchant bases or generate revenue from their customer bases more effectively than we do.
We are also subject to or voluntarily comply with a number of other laws and regulations relating to money laundering, international money transfers, privacy and information security and electronic fund transfers. If we were found to be in violation of applicable laws or regulations, we could be subject to civil and criminal penalties.
We are also subject to or voluntarily comply with a number of other laws and regulations relating to money laundering, international money transfers, and privacy and information security and electronic fund transfers. If we were found to be in violation of applicable laws or regulations, we could be subject to civil and criminal penalties.
We do not have the ability to exert control over our minority investments, and therefore we are dependent on others in order to realize their potential benefits. We currently hold non-controlling minority investments in entities, including SumUp Holdings S.a.r.l., Monster Holdings LP and Nearby Pte Ltd, and we may make additional strategic minority investments in the future.
We do not have the ability to exert control over our minority investments, and therefore we are dependent on others in order to realize their potential benefits. We currently hold non-controlling minority investments in entities, including SumUp Holdings S.a.r.l. ("SumUp"), Monster Holdings LP and Nearby Pte Ltd, and we may make additional strategic minority investments in the future.
Vouchers may be considered gift cards, gift certificates, stored value cards or prepaid cards and therefore governed by, among other laws, the CARD Act, and state laws governing gift cards, stored value cards and coupons, and, in certain instances, potentially subject to unclaimed and abandoned property laws.
Vouchers may be considered gift cards, gift certificates, stored value cards or prepaid cards and therefore governed by, among other laws, the CARD Act, state laws governing gift cards, stored value cards and coupons, and, in certain instances, potentially subject to unclaimed and abandoned property laws.
The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements, which could potentially increase our worldwide effective tax rate and harm our financial position and results of operations.
The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for valuing developed technology or our intercompany arrangements, which could potentially increase our worldwide effective tax rate and harm our financial position and results of operations.
These provisions include the following: • Our Board of Directors has the right to elect directors to fill a vacancy created by the expansion of the Board of Directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board of Directors. • Special meetings of our stockholders may be called only by our Chairman of the Board of Directors, our Chief Executive Officer, our Board of Directors or holders of not less than the majority of our issued and outstanding common stock.
These provisions include the following: • Our Board has the right to elect directors to fill a vacancy created by the expansion of the Board or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board . • Special meetings of our stockholders may be called only by our Chairman of the Board, our Chief Executive Officer, our Board or holders of not less than the majority of our issued and outstanding Common Stock.
These provisions may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror's own slate of directors or otherwise attempting to obtain control of our company. • Our Board of Directors may issue, without stockholder approval, shares of undesignated preferred stock.
These provisions may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror's own slate of directors or otherwise attempting to obtain control of our company. • Our Board may issue, without stockholder approval, shares of undesignated preferred stock.
Our effective tax rates could be adversely affected by earnings being lower than anticipated in jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, losses incurred in jurisdictions for which we are not able to realize the related tax benefits, changes in foreign currency exchange rates, entry into new businesses and geographies and changes to our existing businesses, acquisitions and investments, changes in our deferred tax assets and liabilities and their valuation and changes in the relevant tax, accounting and other laws, regulations, administrative practices, principles and interpretations, including fundamental changes to the tax laws applicable to corporate multinationals.
Our effective tax rates could be adversely affected by the following: earnings being lower than anticipated in jurisdictions where we have lower statutory rates; earnings being higher than anticipated in jurisdictions where we have higher statutory rates; losses incurred in jurisdictions for which we are not able to realize the related tax benefits; changes in foreign currency exchange rates; entry into new businesses and geographies; changes to our existing businesses; acquisitions and investments; changes in our deferred tax assets and liabilities and their valuation; and changes in the relevant tax, accounting, and other laws, regulations and administrative practices, principles, and interpretations, including fundamental changes to the tax laws applicable to corporate multinationals.
Additionally, if any of our payment processors, who we rely on for processing of credit cards and debit cards, were to become unwilling or unable to provide these services to us, including by terminating its relationship with us, whether as a result of a failure by us to meet our contractual obligations or for other reasons, or if any of them were to refuse to renew or renegotiate its agreement 19 with us on commercially acceptable terms, it could disrupt our business, which could adversely impact our financial condition and reputation.
Additionally, if any of our payment processors, who we rely on for processing of credit cards and debit cards, were to become unwilling or unable to provide these services to us, including by terminating a relationship with us, whether as a result of a failure by us to meet our contractual obligations or for other reasons, or if any of them were to refuse to renew or renegotiate its agreement with us on commercially acceptable terms, it could disrupt our business, which could adversely impact our financial condition and reputation.
If we are found to have misclassified employees including as independent contractors, agency workers or non-exempt employees as exempt, we could face penalties and have additional exposure under U.S. federal and state tax, workers’ compensation, unemployment benefits, labor, employment and tort laws, as well as similar international laws, including for prior periods, as well as potential liability for employee overtime and benefits and tax withholdings.
If we are found to 28 have misclassified employees, including as independent contractors, agency workers or non-exempt employees as exempt, we could face penalties and have additional exposure under U.S. federal and state tax, workers’ compensation, unemployment benefits, labor, employment and tort laws, as well as similar international laws, including for prior periods, as well as potential liability for employee overtime and benefits and tax withholdings.
In addition, we may not be able to obtain reimbursement from merchants for refunds that we issue, which could have an adverse effect on our financial results. We primarily use redemption payment terms with our merchants globally, and we are required under the applicable revenue recognition standard to estimate variable consideration from unredeemed vouchers.
In addition, we may not be able to obtain reimbursement from merchants for refunds that we issue, which could have an adverse effect on our financial results. 17 We primarily use redemption payment terms with our merchants globally, and we are required under the applicable revenue recognition standard to estimate variable consideration from unredeemed vouchers.
Some of our competitors have longer operating histories, greater financial, marketing and other resources and larger customer bases than we do. These factors may allow our competitors to benefit from their existing customer base with lower customer acquisition costs or to respond more quickly than we can to new or emerging 17 technologies and changes in consumer habits.
Some of our competitors have longer operating histories, greater financial, marketing and other resources and larger customer bases than we do. These factors may allow our competitors to benefit from their existing customer base with lower customer acquisition costs or to respond more quickly than we can to new or emerging technologies and changes in consumer habits.
In early 2023, we completed the migration of our public-facing websites, internal applications and services, as well as our back-end business intelligence systems from being hosted at our data centers to a multi-cloud infrastructure. If we are not able to realize the anticipated benefits of our migration to this multi-cloud infrastructure, our business could be 23 harmed.
In early 2023, we completed the migration of our public-facing websites, internal applications and services, as well as our back-end business intelligence systems from being hosted at our data centers to a multi-cloud infrastructure. If we are not able to realize the anticipated benefits of our migration to this multi-cloud infrastructure, our business could be harmed.
This activity could also cause or prevent an increase or decrease 35 in the price of our common stock or the 2026 Notes, which could affect holders’ ability to convert the 2026 Notes, and, to the extent the activity occurs during any observation period related to a conversion of the 2026 Notes, it could affect the amount and value of the consideration that holders will receive upon conversion of the 2026 Notes.
This activity could also cause or prevent an increase or decrease in the price of our Common Stock or the 2026 Notes, which could affect holders’ ability to convert the 2026 Notes, and, to the extent the activity occurs during any observation period related to a conversion of the 2026 Notes, it could affect the amount and value of the consideration that holders will receive upon conversion of the 2026 Notes.
The potential effect, if any, of these transactions on the price of our common stock or the 2026 Notes will depend in part on market conditions and cannot be ascertained at this time. Any of these activities could adversely affect the value of our common stock. We are subject to counterparty risk with respect to the capped call transactions.
The potential effect, if any, of these transactions on the price of our Common Stock or the 2026 Notes will depend in 33 part on market conditions and cannot be ascertained at this time. Any of these activities could adversely affect the value of our Common Stock. We are subject to counterparty risk with respect to the capped call transactions.
If these entities seek additional financing, such financing or other transactions may result in further dilution of our ownership stakes and such transactions have and in the future may occur at lower valuations than the investment transactions through which we acquired such interests, which could significantly decrease the fair values 24 of our investments in those entities.
If these entities seek additional financing, such financing or other transactions may result in further dilution of our ownership stakes, and such transactions have, and in the future may, occur at lower valuations than the investment transactions through which we acquired such interests, which could significantly decrease the fair values of our investments in those entities.
If one or more of these analysts ceases coverage of our company or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline. We do not intend to pay dividends for the foreseeable future.
If one or more of these analysts ceases coverage of our company or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline. 32 We do not intend to pay dividends for the foreseeable future.
If we are unable to re-engage and acquire new 16 customers in numbers sufficient to grow our business and offset the number of customers that have ceased to make purchases, or if new customers do not make purchases at expected levels, our revenue may decrease and our operating results may be adversely affected.
If we are unable to re-engage and acquire new customers in numbers sufficient to grow our business and offset the number of customers that have ceased to make purchases, or if new customers do not make purchases at expected levels, our revenue may decrease and our operating results may be adversely affected.
We also rely heavily on Internet search engines to generate traffic to our websites, principally through search engine marketing ("SEM") and SEO. The number of consumers we attract from search engines to our platform is due in large part to how and where information from, and links to, our websites are displayed on search engine results pages.
We also rely heavily on Internet search engines to generate traffic to our websites, principally through SEM and SEO. The number of consumers we attract from search engines to our platform is due in large part to how and where information from, and links to, our websites are displayed on search engine results pages.
The evaluations, assessments and testing identify areas of potential weakness in, and suggested improvements to, the maturity of our systems, processes, and risk management framework as well as vulnerabilities in those systems, processes, and risk management 22 framework that could be attacked and exploited to access and acquire proprietary and confidential information, including information about our customers and merchants.
The evaluations, assessments and testing identify areas of potential weakness in, and suggested improvements to, the maturity of our systems, processes, and risk management framework as well as vulnerabilities in those systems, processes and risk management framework that could be attacked and exploited to access and acquire proprietary and confidential information, including information about our customers and merchants.
There are no assurances that our cybersecurity risk mitigation program or actions and investments to improve the maturity of our systems, processes and risk management framework or remediate vulnerabilities will be sufficient or completed quickly enough to prevent or limit the impact of any cyber intrusion or related attack.
There are no assurances that our cybersecurity risk mitigation program or actions and investments to improve the maturity 21 of our systems, processes and risk management framework or remediate vulnerabilities will be sufficient or completed quickly enough to prevent or limit the impact of any cyber intrusion or related attack.
The ability to authorize undesignated preferred stock makes it possible for our Board of Directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us. The capped call transactions may affect the value of our 2026 Notes and our common stock.
The ability to authorize undesignated preferred stock makes it possible for our Board to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us. The capped call transactions may affect the value of our 2026 Notes and our Common Stock.
In addition, the lack of availability of financing on commercially reasonable terms or a decline in the business performance, financial condition and competitive environment of any of our minority investments could result in lower financial results or forecasted results, which also could significantly decrease the fair values of our investments in those entities.
In addition, the lack of availability of financing on commercially reasonable terms or a decline in the business performance, financial 23 condition and competitive environment of any of our minority investments could result in lower financial results or forecasted results, which also could significantly decrease the fair values of our investments in those entities.
The counterparties to the capped call transactions are financial institutions, and we will be subject to the risk that one or more of the option counterparties may default, fail to perform or may exercise certain termination rights under the capped call transactions. Our exposure to the credit risk of the option counterparties will not be secured by any collateral.
The counterparties to the capped call transactions are financial institutions, and we will be subject to the risk that one or more of the option counterparties may default, fail to perform or may exercise certain termination rights under the capped call transactions. Our exposure to the credit risk of the option counterparties is not secured by any collateral.
However, a successful challenge to our position or expansion of state or foreign laws could subject us to increased compliance costs and delay our ability to offer Groupon vouchers or other products or services in certain jurisdictions pending receipt of any necessary licenses or registrations.
However, a successful challenge to our position or expansion of state or foreign laws could subject us to increased compliance costs and delay our ability to offer 27 Groupon vouchers or other products or services in certain jurisdictions pending receipt of any necessary licenses or registrations.
In addition, current or future competitors may accept lower margins, or negative margins, to secure offers that attract attention and acquire new customers. We also may experience attrition in our merchants resulting from several factors, including losses to competitors and merchant closures or merchant bankruptcies.
In addition, 15 current or future competitors may accept lower margins, or negative margins, to secure offers that attract attention and acquire new customers. We also may experience attrition in our merchants resulting from several factors, including losses to competitors and merchant closures or merchant bankruptcies.
Furthermore, we have experienced continued disruption in our business due to the announcement of our cost savings plan and significant turnover in our senior management team. Reductions in our workforce have led to employees filling certain key roles and we 18 may experience additional changes in key roles in the future.
Furthermore, we have experienced continued disruption in our business due to the announcement of our cost savings plan and 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 future.
This limits the ability of minority stockholders to take certain actions without an annual meeting of stockholders. • Our stockholders may not act by written consent unless the action to be effected and the taking of such action by written consent is approved in advance by our Board of Directors.
This limits the ability of minority stockholders to take certain actions without an annual meeting of stockholders. • Our stockholders may not act by written consent unless the action to be effected and the taking of such action by written consent is approved in advance by our Board.
If our systems and procedures with respect to any such feedback or complaints are determined to be inadequate or any action or inaction is found to be inadequate, including, by way of example, not discontinuing on a timely basis offers of deals with merchants or sellers that have been the subject of material complaints, we could face substantial additional liability and damage to our brand and reputation for the misconduct of such merchants or third-party sellers. 25 We may not be able to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties.
If our systems and procedures with respect to any such feedback or complaints are determined to be inadequate or any action or inaction is found to be inadequate, including, by way of example, not discontinuing on a timely basis offers of deals with merchants or sellers that have been the subject of material complaints, we could face substantial additional liability and damage to our brand and reputation for the misconduct of such merchants or third-party sellers. 24 We may not be able to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties.
This limits the ability of minority stockholders to elect director candidates. • Stockholders must provide timely notice to nominate individuals for election to the Board of Directors or to propose matters that can be acted upon at an annual meeting of stockholders.
This limits the ability of minority stockholders to elect director candidates. • Stockholders must provide timely notice to nominate individuals for election to the Board or to propose matters that can be acted upon at an annual meeting of stockholders.
Dispositions and attempted dispositions also involve significant risks and uncertainties, such as the risk of destabilizing the applicable operations, the loss of key personnel, the terms and timing of any dispositions, the ability to obtain necessary governmental or regulatory approvals, post-disposal disputes and indemnification obligations and risks and uncertainties with respect to the separation of disposed operations, including, for example, transition services, access by purchasers to certain of our systems and tools during transition periods, the migration of data and separation of systems, data privacy matters and misuse of trademarks and intellectual property.
In addition, dispositions and attempted dispositions also involve significant risks and uncertainties, such as the risk of destabilizing the applicable operations, the loss of key personnel, the terms and timing of any dispositions, the ability to obtain necessary governmental or regulatory approvals, post-disposal disputes and indemnification obligations and risks and uncertainties with respect to the separation of disposed operations, including, for example, transition services, access by purchasers to certain of our systems and tools during transition periods, the migration of data and separation of systems, data privacy matters and misuse of trademarks and intellectual property.
Further, there may be unforeseen issues as a result of these migrations that may cause disruptions to the availability of our products due to service outages, downtime or other similar issues that could harm our business.
Further, there may be unforeseen issues as a result of these migrations that may cause disruptions to the 22 availability of our products due to service outages, downtime or other similar issues that could harm our business.
If one or more of the analysts who cover us should downgrade our shares or change their opinion of our shares, industry sector or products, our share price 34 would likely decline.
If one or more of the analysts who cover us should downgrade our shares or change their opinion of our shares, industry sector or products, our share price would likely decline.
We believe that our ability to achieve and maintain revenue growth and profitability will depend, among other factors, on our ability to: • respond to macroeconomic challenges, including but not limited to, certain adverse consequences of the COVID-19 pandemic that continue to impact the macroeconomic environment, inflationary pressures, higher labor costs, labor shortages, supply chain challenges and resulting changes in consumer and merchant behavior and the ability to optimize our supply to take into account consumer preferences at a particular point in time; • acquire new customers, retain existing customers and increase customer purchase frequency; • attract and retain high-quality merchants; • maintain our current relationships with or attract new vendors, suppliers and service providers on agreeable terms; • maintain contracts that are critical to our operations; • attract and retain key employees, including attracting and retaining talent with an appropriate level of skill and experience, including product and technology expertise, cybersecurity expertise, GAAP knowledge and experience to create the proper control environment for effective internal control over financial reporting; • effectively address and respond to challenges in international markets; • increase the variety, quality, density and relevance of supply, including through third party business partners and technology integrations; • deliver a marketplace experience on our website and mobile applications that meets the needs of our customers and merchants; • increase booking capabilities; • increase the awareness of, and evolve, our brand to a local experiences marketplace; • continue to reduce costs and maintain cost discipline to benefit from our reduced cost structure; • performance of our Goods category following transition to a third party marketplace model; • successfully achieve the anticipated benefits of business combinations or acquisitions, strategic investments and divestitures; • complete the multi-phased cost savings plan and achieve the anticipated benefits from the plan; • provide a superior customer service experience for our customers; • avoid interruptions to our services, including as a result of attempted or successful cybersecurity attacks or breaches; 14 • respond to continuous changes in consumer and merchant use of technology; • optimize and diversify our traffic channels; • react to challenges from existing and new competitors; • respond to periodic changes in supply and demand; and • address challenges from existing and new laws and regulations.
We believe that our ability to achieve and maintain revenue growth and profitability will depend, among other factors, on our ability to: • respond to macroeconomic challenges, including but not limited to, inflationary pressures, higher labor costs, labor shortages, supply chain challenges and resulting changes in consumer and merchant behavior and the ability to optimize our supply to take into account consumer preferences at a particular point in time; • acquire new customers, retain existing customers, and increase customer purchase frequency; • attract and retain high-quality merchants; • maintain our current relationships with or attract new vendors, suppliers and service providers on agreeable terms; • maintain contracts that are critical to our operations; • attract and retain key employees, including attracting and retaining talent with an appropriate level of skill and experience, including product and technology expertise, cybersecurity expertise, GAAP knowledge and experience to create the proper control environment for effective internal control over financial reporting; 13 • effectively address and respond to challenges in international markets; • increase the variety, quality, density and relevance of supply, including through third party business partners and technology integrations; • deliver a marketplace experience on our website and mobile applications that meets the needs of our customers and merchants; • increase booking capabilities; • increase the awareness of, and evolve, our brand to a local experiences marketplace; • continue to reduce costs and maintain cost discipline to benefit from our reduced cost structure; • maintain the performance of our Goods category following transition to a third party marketplace model; • successfully achieve the anticipated benefits of business combinations or acquisitions, strategic investments and divestitures; • complete the multi-phased cost savings plan and achieve the anticipated benefits from the plan; • provide a superior customer service experience for our customers; • avoid interruptions to our services, including as a result of attempted or successful cybersecurity attacks or breaches; • respond to continuous changes in consumer and merchant use of technology; • optimize and diversify our traffic channels; • react to challenges from existing and new competitors; • respond to periodic changes in supply and demand; and • address challenges from existing and new laws and regulations.
If we were unable to accept credit cards for payment, we would suffer substantial reductions in revenue, which would cause our business to suffer.
If we were unable to accept credit cards for payment, we would 18 suffer substantial reductions in revenue, which would cause our business to suffer.
These types of incidents continue to be prevalent and pervasive across industries, including in our industry, and such attacks on our systems have occurred in the past and are expected to occur in the future. In addition, we expect the amount and sophistication of the perpetrators of these attacks to continue to expand, which could include nation-state actors.
These types of incidents continue to be prevalent and pervasive across industries, including in our industry, and such attacks on our systems have occurred in the past and are expected to occur in the future. In addition, we expect the amount and sophistication of the perpetrators of these attacks to continue to expand, which could include state-sponsored actors.
We are involved from time to time in litigation regarding, among other matters, patent and other intellectual property claims, consumer claims, contract disputes with merchants and vendors, employment claims, and 26 securities law claims. Litigation, dispute resolution proceedings and investigations can be expensive, time-consuming and disruptive to normal business operations.
We are involved from time to time in litigation regarding, among other matters, patent and other intellectual property claims, consumer claims, contract disputes with merchants and vendors, employment claims, and 25 securities law claims. Litigation, dispute resolution proceedings and investigations can be expensive, time-consuming and disruptive to normal business operations.
We believe that our ability to compete successfully depends upon many factors both within and beyond our control, including the following: • the continued consequences of the macroeconomic environment, including but not limited to, certain adverse consequences of the COVID-19 pandemic that continue to impact the macroeconomic environment, inflationary pressures, higher labor costs, labor shortages, supply chain challenges and resulting changes in consumer and merchant behavior; • the size, composition and retention of our customer and merchant bases; • density and quality of our inventory; • delivery of a modern user experience for customers and modern experience and tools for merchants; • mobile penetration; • understanding local business trends; • our ability to structure deals to generate positive return on investment for merchants; • the timing and market acceptance of deals we offer, including the developments and enhancements to those deals offered by us or our competitors; • our customer and merchant service and support efforts; • our ability to maintain our current relationships with or attract new vendors, suppliers and service providers on agreeable terms; • our ability to maintain contracts that are critical to our operations; • selling and marketing efforts; • ease of use, performance, price and reliability of services offered either by us or our competitors; • our ability to improve customer purchase frequency and customer lifetime value; • our ability to drive traffic to our marketplace; • the number, quality and reliability of the digital coupons that can be accessed through our platform; • the quality and performance of our merchants; • our ability to cost-effectively manage our operations and to complete the multi-phased cost savings plan and achieve the anticipated benefits from the plan; and • our reputation and brand strength relative to our competitors.
We believe that our ability to compete successfully depends upon many factors both within and beyond our control, including the following: • the continued 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; • the size, composition and retention of our customer and merchant bases; • density and quality of our inventory; • delivery of a modern user experience for customers and modern experience and tools for merchants; • mobile penetration; • understanding local business trends; • our ability to structure deals to generate positive return on investment for merchants; • the timing and market acceptance of deals we offer, including the developments and enhancements to those deals offered by us or our competitors; • our customer and merchant service and support efforts; 16 • our ability to maintain our current relationships with or attract new vendors, suppliers and service providers on agreeable terms; • our ability to maintain contracts that are critical to our operations; • selling and marketing efforts; • ease of use, performance, price and reliability of services offered either by us or our competitors; • our ability to improve customer purchase frequency and customer lifetime value; • our ability to drive traffic to our marketplace; • the number, quality and reliability of the digital coupons that can be accessed through our platform; • the quality and performance of our merchants; • our ability to cost-effectively manage our operations and to complete the multi-phased cost savings plan and achieve the anticipated benefits from the plan; and • our reputation and brand strength relative to our competitors.
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.
If we cannot access the full capacity of any existing 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.
Our international operations are subject to numerous risks, including the following: • our ability to maintain merchant and customer satisfaction such that our marketplace will continue to attract high quality merchants; • our ability to successfully respond to macroeconomic challenges, including but not limited to, certain adverse consequences of the COVID-19 pandemic that continue to impact the macroeconomic environment, inflationary pressures, higher labor costs, labor shortages, supply chain challenges and resulting changes in consumer and merchant behavior and the ability to optimize our supply to take into account consumer preferences at a particular point in time; • political, economic and civil instability and uncertainty (including acts of terrorism, civil unrest, labor unrest, violence and outbreaks of war and pandemics or other disease outbreaks); • disruptions and instability in the international markets in which we operate, including Poland, as a result of the ongoing conflict in Ukraine; • currency exchange rate fluctuations; • strong local competitors, who may better understand the local market and/or have greater resources in the local market; • different regulatory or other legal requirements (including potential fines and penalties that may be imposed for failure to comply with those requirements), such as regulation of gift cards and coupon terms, Internet services, professional selling, distance selling, bulk emailing, privacy and data protection (including GDPR), cybersecurity, business licenses and certifications, taxation (including the European Union's voucher directive, digital service tax and similar regulations and any audits), consumer protection laws including those restricting the types of services we may offer (e.g., medical-related services), banking and money transmitting, that may limit or prevent the offering of our services in some jurisdictions, cause unanticipated compliance expenses or limit our ability to enforce contractual obligations; • our ability to use a common technology platform in our North America and International segments to operate our business without significant business interruptions or delays; • difficulties in integrating with local payment providers, including banks, credit and debit card networks and electronic funds transfer systems; • the ability to quickly and effectively consult with, negotiate and seek the consent or opinion of, various employee groups, our international workers' councils and trade unions that represent our international employees on various matters including restructuring actions, strategic decisions, any changes to our activities or employee benefits and other business critical matters, which could result in the delay of executing key actions or product delivery and increase costs; • the local legal restrictions relating to employment and staffing; 15 • difficulty in staffing, including attracting and retaining talent with an appropriate level of skill and experience, including product and technology expertise, cybersecurity expertise, GAAP knowledge and experience to create the proper control environment for effective internal control over financial reporting, developing and managing foreign operations, including through centralized shared service centers, as a result of distance, language barriers and cultural differences; • periodic reductions in business activity; • expenses associated with localizing our products; and • differing intellectual property laws.
Our international operations are subject to numerous risks, including the following: • our ability to maintain merchant and customer satisfaction such that our marketplace will continue to attract high quality merchants; • our ability to successfully respond to macroeconomic challenges, including but not limited to, inflationary pressures, higher labor costs, labor shortages, supply chain challenges and resulting changes in consumer and merchant behavior and the ability to optimize our supply to take into account consumer preferences at a particular point in time; • political, economic and civil instability and uncertainty (including macroeconomic conditions impacting us, our customers, merchants, or our vendors, acts of terrorism, civil unrest, labor unrest, violence and outbreaks of war and pandemics or other disease outbreaks); • disruptions and instability in the international markets in which we operate, including Poland, as a result of the ongoing conflict in Ukraine and the Middle East; • currency exchange rate fluctuations; • strong local competitors who may better understand the local market and/or have greater resources in the local market; 14 • different regulatory or other legal requirements (including potential fines and penalties that may be imposed for failure to comply with those requirements), such as regulation of gift cards and coupon terms, Internet services, professional selling, distance selling, bulk emailing, privacy and data protection (including GDPR), cybersecurity, business licenses and certifications, taxation (including the European Union's voucher directive, digital service tax and similar regulations and any audits), consumer protection laws including those restricting the types of services we may offer (e.g., medical-related services), banking and money transmitting, that may limit or prevent the offering of our services in some jurisdictions, cause unanticipated compliance expenses or limit our ability to enforce contractual obligations; • our ability to use a common technology platform in our North America and International segments to operate our business without significant business interruptions or delays; • difficulties in integrating with local payment providers, including banks, credit and debit card networks and electronic funds transfer systems; • the ability to quickly and effectively consult with, negotiate and seek the consent or opinion of, various employee groups, our international workers' councils and trade unions that represent our international employees on various matters including restructuring actions, strategic decisions, any changes to our activities or employee benefits and other business critical matters, which could result in the delay of executing key actions or product delivery and increase costs; • the local legal restrictions relating to employment and staffing; • difficulty in staffing, including attracting and retaining talent with an appropriate level of skill and experience, including product and technology expertise, cybersecurity expertise, GAAP knowledge and experience to create the proper control environment for effective internal control over financial reporting, developing and managing foreign operations, including through centralized shared service centers, as a result of distance, language barriers and cultural differences; • periodic reductions in business activity; • expenses associated with localizing our products; and • differing intellectual property laws.
Our competitors may offer deals that are similar to the deals we offer or that achieve greater market acceptance than the deals we offer. This could attract customers away from our websites and mobile applications, reduce our market share and adversely impact our gross profit.
Our competitors may offer deals that are similar to the deals we offer or that achieve greater market acceptance than the deals we offer. This could divert customers away from our websites and mobile applications, reduce our market share and adversely impact our gross profit.
They are likely to do so on each exercise date for the capped call transactions, which are expected to occur during each 20 trading day period beginning on the 21st scheduled trading day prior to the maturity date of the 2026 Notes, or following any termination of any portion of the capped call transactions in connection with any repurchase, redemption or early conversion of the 2026 Notes.
They are likely to do so on each exercise date for the capped call transactions, which are expected to occur during each 20 trading day period beginning on the 21 st scheduled trading day prior to the maturity date of the 2026 Notes, or following any termination of any portion of the capped call transactions in connection with any repurchase, redemption or early conversion of the 2026 Notes.
In addition, events affecting our third-party payment processors or our integration with them, including cyber-attacks, Internet or other infrastructure or communications impairment or other events that could interrupt the normal operation of our payment processors or our integration with them, or result in unauthorized access to customer information, could have a material adverse effect on our business.
In addition, events affecting our third-party payment processors or our integrations with them, including cyber-attacks, Internet or other infrastructure or communications impairment or other events that could interrupt the normal operation of our payment processors or our integrations with them, could result in unauthorized access to customer information and could have a material adverse effect on our business.
If we encounter unforeseen circumstances that place further constraints on our capital resources, including our access to funding under our Amended Credit Agreement, management will be required to take various additional measures to conserve liquidity, which could include, but not necessarily be limited to, reducing capital expenditures, controlling overhead expenses and raising additional sources of capital, such as monetizing certain existing assets.
If we encounter unforeseen circumstances that place further constraints on our capital resources, including our access to funding, management will be required to take various additional measures to conserve liquidity, which could include, but not necessarily be limited to, reducing capital expenditures, controlling overhead expenses and raising additional sources of capital, such as monetizing certain existing assets.
Any such incident could lead to interruptions, delays or website outages, causing loss of critical data or the unauthorized disclosure or use of personally identifiable or other confidential information.
Any such attack could lead to interruptions, delays or website outages, causing loss of critical data or the unauthorized disclosure or use of personally identifiable or other confidential information.
This risk is enhanced in certain jurisdictions outside the United States, where our liability for such third-party actions may be less clear. In addition, we could incur significant costs in investigating and defending such claims, even if we ultimately are not found liable. If any of these events occur, our business could be materially and adversely affected.
This risk is enhanced in certain jurisdictions outside the U.S., where our liability for such third-party actions may be less clear. In addition, we could incur significant costs in investigating and defending such claims, even if we ultimately are not found liable. If any of these events occur, our business could be materially and adversely affected.
Some of these states and foreign jurisdictions include gift cards under their unclaimed and abandoned property laws which require 27 companies to remit to the government the full value or a portion of the value of the unredeemed balance on the gift cards after a specified period of time (generally between one and five years) and impose certain reporting and record-keeping obligations.
Some of these states and foreign jurisdictions include gift cards under their unclaimed and abandoned property laws that require companies to remit to the government the full value or a portion of the value of the unredeemed balance on the gift cards after a specified period of time (generally between one and five years) and impose certain reporting and 26 record-keeping obligations.
We compete against e-commerce sites that attempt to replicate our business model, companies that offer other types of advertising and promotional services to local businesses and companies who address only specific verticals in the local experiences market.
We compete against e-commerce sites that attempt to replicate our business model by offering other types of advertising and promotional services to local businesses and companies who address only specific verticals in the local experiences market.
United States, certain foreign regulatory authorities and private parties have recently asserted within several industries that some non-employee classified individuals should be classified as employees and that some exempt employees, including those in sales-related positions, should be classified as non-exempt based upon the applicable facts and circumstances and their interpretations of existing rules and regulations.
The U.S., certain foreign regulatory authorities, and private parties have recently asserted within several industries that some non-employee classified individuals should be classified as employees and that some exempt employees, including those in sales-related positions, should be classified as non-exempt based upon the applicable facts and circumstances and their interpretations of existing rules and regulations.
Further, we have made an irrevocable election to account for our investments in Monster Holdings LP and Nearby Pte Ltd at fair value with changes in fair value reported in earnings. Our other equity method investments, including SumUp Holdings S.a.r.l, are accounted for at cost adjusted for observable price changes and impairments.
Further, we have made an irrevocable election to account for our investments in Monster Holdings LP and Nearby Pte Ltd at fair value with changes in fair value reported in earnings. Our other equity method investments, including SumUp, are accounted for at cost adjusted for observable price changes and impairments.
Our income tax obligations are based on our corporate operating structure, including the manner in which we develop, value and use our intellectual property and the scope of our international operations. The tax laws applicable to our domestic and international business activities, including the laws of the United States and other jurisdictions, are subject to interpretation.
Our income tax obligations are based on our corporate operating structure, including the manner in which we develop, value and use our intellectual property and the scope of our international operations. The tax laws applicable to our domestic and international business activities, including the laws of the U.S. and other jurisdictions, are subject to interpretation.
Our success is dependent upon our ability to provide a superior mobile experience for our customers and our customers' continued ability to access our offerings through mobile devices. In the year ended December 31, 2022, over 80% of our global transactions were completed on mobile devices.
Our success is dependent upon our ability to provide a superior mobile experience for our customers and our customers' continued ability to access our offerings through mobile devices. In the year ended December 31, 2023, approximately 80% of our global transactions were completed on mobile devices.
Risks Related to Technology and Cybersecurity • We rely on email, Internet search engines and mobile application marketplaces to drive traffic to our marketplace. • We may be subject to breaches of our information technology systems, which could harm our relationships with our customers, merchants, employees and third-party business partners, subject us to negative publicity and litigation, and cause substantial harm to our business or brand. 11 • Our business depends on our ability to maintain and improve the technology infrastructure necessary to send our emails and operate our websites, mobile applications and transaction processing systems, and any significant disruption in service on our email network infrastructure, websites, mobile applications or transaction processing systems could result in a loss of customers or merchants. • As we increase our reliance on cloud-based applications and platforms to operate and deliver our products and services, any disruption or interference with these platforms could adversely affect our financial condition and results of operations.
Risks Related to Technology and Cybersecurity • We may be subject to breaches of our information technology systems, which could harm our relationships with our customers, merchants, employees and third-party business partners, subject us to negative publicity and litigation, and cause substantial harm to our business or brand. • Our business depends on our ability to maintain and improve the technology infrastructure necessary to send our emails and operate our websites, mobile applications and transaction processing systems, and any significant disruption in service on our email network infrastructure, websites, mobile applications or transaction processing systems could result in a loss of customers or merchants. • As we increase our reliance on cloud-based applications and platforms to operate and deliver our products and services, any disruption or interference with these platforms could adversely affect our financial condition and results of operations.
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. We have outstanding $230.0 million in aggregate principal amount of 1.125% convertible senior notes (the "2026 Notes") due March 2026.
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. We have outstanding $230.0 million in aggregate principal amount of our 2026 Notes due March 2026.
In operating a global online business, we and our third-party service providers maintain significant proprietary information and maintain large amounts of personal data and confidential information about our employees, customers and merchants.
In operating a global online business, with operations in thirteen countries, we and our third-party service providers maintain significant proprietary information and maintain large amounts of personal data and confidential information about our employees, customers and merchants.
Any failure to prevent or mitigate cybersecurity breaches or other improper access to, or disclosure of, our data or confidential information, including non-public financial information, could result in the loss or misuse of such data or information, negatively impacting customers’, merchants’, employees’ and third-party business partners' confidence in the security of our services and potentially resulting in significant customer or merchant attrition, a decline in customer purchase frequency, litigation and/or regulatory investigations, and/or damage to our brand and reputation.
Any failure to prevent or mitigate cybersecurity breaches or other improper access to, or disclosure of, our data or confidential information, including non-public financial information, could result in: the loss or misuse of such data or information; significant reputational harm, including a negative impact on customers’, merchants’, employees’ and third-party business partners' confidence in the security of our services which could potentially result in significant customer or merchant attrition; a decline in customer purchase frequency; litigation and/or regulatory investigations; and/or damage to our brand and reputation.
We are subject to income taxes in the United States (federal, state, and local) and numerous foreign jurisdictions. Tax laws, regulations, and administrative practices in various jurisdictions may be subject to significant change due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes.
(federal, state, and local) and numerous foreign jurisdictions. Tax laws, regulations, and administrative practices in various jurisdictions may be subject to significant change due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes.
A default under the Indenture governing the 2026 Notes could also lead to a default under agreements governing our existing and future indebtedness, including our Amended Credit Agreement. Moreover, the occurrence of a fundamental change under the Indenture governing the 2026 Notes could constitute an event of default under our Amended Credit Agreement or any other such future agreement.
A default under the Indenture governing the 2026 Notes could also lead to a default under agreements governing our existing and future indebtedness. Moreover, the occurrence of a fundamental change under the Indenture governing the 2026 Notes could constitute an event of default under any such future agreement.
As part of our cybersecurity risk management program, we employ security practices to protect and maintain the systems located at our hosting providers, invest in intrusion, anomaly, and vulnerability detection tools and engage third-party security firms to test the security of our websites and systems.
We also conduct an annual cybersecurity review with our Board. As part of our cybersecurity risk management program, we employ security practices to protect and maintain the systems located at our hosting providers, invest in intrusion, anomaly, and vulnerability detection tools and engage third-party security firms to test the security of our websites and systems.
Risks Related to Our Capital Structure Our access to capital and ability to successfully manage and raise capital in the future may be limited, which could prevent us from growing, adversely impact our liquidity 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.
Risks Related to Our Capital Structure Our access to capital may be limited and our ability to successfully manage and raise capital in the future may fail, which could prevent us from growing and adversely impact our liquidity . We may need additional capital in the future and to seek additional financing or covenant relief.
In addition, as we implement our strategy, the macroeconomic environment, including but not limited to, certain adverse consequences of the COVID-19 pandemic that continue to impact the macroeconomic environment, inflationary pressures, higher labor costs, labor shortages, supply chain challenges and resulting changes in consumer and merchant behavior may make it more difficult to effectively execute our strategy, including to quickly test, learn and scale initiatives relating to improving inventory selection or improving customer experience.
In addition, as we implement our strategy, 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 may make it more difficult to effectively execute our strategy, including to quickly test, learn and scale initiatives relating to improving inventory selection or improving customer experience.
Such information, whether accurate or inaccurate, may result in our being sued by our merchants, subscribers or third parties and as a result our results of operations and our financial position could be materially and adversely affected. 29 We may have exposure to greater than anticipated tax liabilities.
Such information, whether accurate or inaccurate, may result in us being sued by our merchants, subscribers or third parties and as a result our results of operations and our financial position could be materially and adversely affected. We may have exposure to greater than anticipated tax liabilities. We are subject to income taxes in the U.S.
If one or more holders 33 elect to convert their 2026 Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity.
Unless we elect to satisfy our conversion obligation by delivering solely shares of our Common Stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity.
Further, the sophistication of potential attacks or the capabilities of our systems and processes may not permit us to detect the occurrence of cyber incidents until significant data loss has occurred.
These improvements, modifications and enhancements may take significant time to implement. Further, the sophistication of potential attacks or the capabilities of our systems and processes may not permit us to detect the occurrence of cyber incidents until significant data loss has occurred.
In addition, even if holders of the 2026 Notes do not elect to convert their 2026 Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2026 Notes, as a current rather than long-term liability, which would result in a material reduction of our net working capital.
Even if holders of the 2026 Notes do not elect to convert their 2026 Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2026 Notes, as a current rather than long-term liability, which would result in a material reduction of our net working capital. 31 Risks Related to Ownership of Our Common Stock The trading price of our Common Stock is highly volatile.
Further, we believe that we are a compelling target for such attacks as a result of the high profile of our brand and the amount and type of information we maintain relating to our customers and merchants.
Further, we believe that our websites and mobile applications are attractive targets for such attacks as a result of the high profile of our brand and the amount and type of information we maintain relating to our customers and merchants.
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.
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.
Email continues to be a significant source of organic traffic for us. If email providers or Internet service providers implement new or more restrictive email or content delivery or accessibility policies, including with respect to net neutrality, it may become more difficult to deliver emails to our customers or for customers to access our site and services.
If email providers or Internet service providers implement new or more restrictive email or content delivery or accessibility policies, including with respect to net neutrality, it may become more difficult to deliver emails to our customers or for customers to access our site and services.
For example, digital service taxes adopted by certain countries or similar regulations could adversely affect our financial results. New taxes or the 30 enactment of new tax laws could also create significant increases in internal costs necessary to capture data, and collect and remit taxes.
For example, digital service taxes adopted by certain countries, or similar regulations, could adversely affect our financial results. New taxes or the enactment of new tax laws could also create significant increases in internal costs necessary to capture data and collect and remit taxes. Any of these events could have an adverse effect on our business and results of operations.
Further, developments in an audit, litigation or the relevant laws, regulations, administrative practices, principles and interpretations could have a material effect on our financial position, operating results and cash flows in the period or periods for which that development occurs, as well as for prior and subsequent periods. We also are subject to regular review and audit by both U.S.
Further, developments in an audit, litigation or the relevant laws, regulations, administrative practices, principles and 29 interpretations could have a material effect on our financial position, operating results and cash flows in the period or periods for which that development occurs, as well as for prior and subsequent periods.
If our strategy does not achieve its expected benefits, there could be negative impacts to our business, financial condition and results of operations. • Our restructuring plan could be disruptive to our operations and adversely affect our results of operations and financial condition, and we may not realize some or all of the anticipated benefits of this plan in the time frame anticipated or at all. • Our operating results may vary significantly from quarter to quarter. • Our international operations are subject to varied and evolving sociopolitical conditions as well as commercial, employment and regulatory challenges, and our inability to adapt to the diverse and changing landscapes of our international markets may adversely affect our business. • Our future success depends upon our ability to attract and retain high quality merchants and third-party business partners. • If we fail to retain our existing customers or acquire new customers, our operating results and business will be harmed. • We operate in a highly competitive industry with relatively low barriers to entry and must compete successfully in order to grow our business. • Our success is dependent upon our ability to provide a superior mobile experience for our customers and our customers' continued ability to access our offerings through mobile devices. • An increase in our refund rates or estimated liabilities with respect to unredeemed vouchers could adversely affect our financial results. • The loss of key executives, members of our management team and employees across our organization, or our failure to attract and retain other highly qualified personnel in the future could harm our business. • Failure to deal effectively with fraudulent transactions and customer disputes would increase our loss rate and harm our business. • We are subject to payments-related risks. • We have identified a material weakness in our internal control over financial reporting, which could, if not remediated or if we identify additional material weaknesses or other adverse findings in the future, impair our ability to report accurate and timely financial information, adversely affect investor confidence and have a material and adverse effect on our financial condition and results of operations.
If our strategy does not achieve its expected benefits, there could be negative impacts to our business, financial condition and results of operations. • Our restructuring plan could be disruptive to our operations and adversely affect our results of operations and financial condition, and we may not realize some or all of the anticipated benefits of this plan in the time frame anticipated or at all. • Our operating results may vary significantly from quarter to quarter. • Our international operations are subject to varied and evolving sociopolitical conditions as well as commercial, employment and regulatory challenges, and our inability to adapt to the diverse and changing landscapes of our international markets may adversely affect our business. • Our success is dependent upon our ability to provide a superior mobile experience for our customers and our customers' continued ability to access our offerings through mobile devices. • An increase in our refund rates or estimated liabilities with respect to unredeemed vouchers could adversely affect our financial results. • The loss of key executives, members of our management team and employees across our organization, or our failure to attract and retain other highly qualified personnel in the future could harm our business. • Our material weakness in internal control over financial reporting could impair our ability to report accurate and timely financial information and have a material and adverse effect on our financial condition and results of operations.
Our workers are classified as either employees or non-employees (including as independent contractors or agency workers), and if employees in the U.S., as either exempt from overtime or non-exempt (and therefore overtime eligible).
Misclassification or reclassification of our independent contractors, agency workers or employees could increase our costs and adversely impact our business. Our workers are classified as either employees or non-employees (including as independent contractors or agency workers), and if employees in the U.S., as either exempt from overtime or non-exempt (and therefore overtime eligible).
Further, COVID-19 negatively impacted many of our merchants, including through staffing shortages and supply chain issues, and in some cases we have not been, and may not be able to retain or re-acquire these merchants in the future.
Further, when the macroeconomic environment negatively impacts our merchants, including through staffing shortages and supply chain issues, we have not been, and may not be able to retain or re-acquire these merchants in the future.
If we are unable to effectively execute our strategy and realize its anticipated benefits, it could negatively impact our business, financial condition and results of operations. 13 Our restructuring plan could be disruptive to our operations and adversely affect our results of operations and financial condition, and we may not realize some or all of the anticipated benefits of this plan in the time frame anticipated or at all.
Our restructuring plan could be disruptive to our operations and adversely affect our results of operations and financial condition, and we may not realize some or all of the anticipated benefits of this plan in the time frame anticipated or at all.
Even if fully implemented, our strategy may not result in a return to growth or the other anticipated benefits to our business, financial condition and results of operations.
Even if fully implemented, our strategy may not result in a return to growth or the other anticipated benefits to our business, financial condition and results of operations. If we are unable to effectively execute our strategy and realize its anticipated benefits, it could negatively impact our business, financial condition and results of operations.
We maintain a cybersecurity risk management program that is overseen by our IT and Information Security teams. A member of our IT and Information Security teams regularly reports to the Audit Committee on the state of our cybersecurity program and provides updates on cybersecurity matters. We also conduct an annual cybersecurity review with our Board .
As described in Item 1.C - Cybersecurity , we maintain a cybersecurity risk management program that is overseen by our IT and Information Security teams. A member of our IT and Information Security teams regularly reports to the Audit Committee on the state of our cybersecurity program and provides updates on cybersecurity matters.
For example, member states in the European Union are working to align on a draft of the “ePrivacy Regulation,” which could be implemented in 2023, that would govern data privacy and the protection of personal data in electronic communications, in particular for direct marketing purposes.
For example, member states in the European Union are working to align on a draft of the “ePrivacy Regulation,” that would govern data privacy and the protection of personal data in electronic communications, in particular for direct marketing purposes. The regulation of web trackers and other current online advertising practices could adversely affect our business.
Risks Related to Ownership of Our Common Stock The trading price of our common stock is highly volatile. The trading price of our common stock has fluctuated significantly since our initial listing on NASDAQ.
The trading price of our Common Stock has fluctuated significantly since our initial listing on NASDAQ.
Executive leadership and senior management transitions, reductions in workforce and significant employee turnover can be time consuming, difficult to manage, create instability, cause disruption to our business, impede our day-to-day operations and our ability to fully implement our business and growth strategy. These impacts also make it more difficult to attract and retain talent.
Executive leadership and senior management transitions, reductions in workforce and significant employee turnover can be time consuming, difficult to manage, create instability, cause disruption to our business and the loss of institutional knowledge, and any of these issues could impede the execution of our day-to-day operations and our ability to fully implement our business and growth strategy.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES As of December 31, 2022, we owned no property and leased 24 facilities throughout the world. Our corporate headquarters is located in Chicago, Illinois. We believe that our properties are in good condition and meet the needs of our business, and that suitable additional or alternative space will be available as needed to accommodate our business operations.
Biggest changeWe believe that our leased properties are in good condition and meet the needs of our business, and that suitable additional or alternative space will be available as needed to accommodate our business operations.
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ITEM 2. PROPERTIES As of December 31, 2023, we owned no property and leased 16 facilities throughout the world. Our corporate headquarters is located in Chicago, Illinois.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of December 31, 2022, up to $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, limitations under the Amended Credit Agreement, share price, available cash and other factors, and the share repurchase program may be terminated at any time.
Biggest changeThe timing and amount of share repurchases, if any, will be determined based on market conditions, limitations under the amended and restated credit agreement, dated May 14, 2019, as amended from time to time, (the "Credit Agreement"), share price, available cash and other factors, and the share repurchase program may be terminated at any time.
Issuer Purchases of Equity Securities In May 2018, the Board authorized us to repurchase up to $300.0 million of our common stock under our share repurchase program. During the year ended December 31, 2022, we did not purchase any shares under the repurchase program.
Issuer Purchases of Equity Securities In May 2018, the Board authorized us to repurchase up to $300.0 million of our Common Stock under our share repurchase program. During the year ended December 31, 2023, we did not purchase any shares under the repurchase program.
Since the inception of our share repurchase programs in August 2013 through December 31, 2022, we have repurchased 10,294,117 shares of our common stock for an aggregate purchase price of $922.7 million (including fees and commissions).
Since the inception of our share repurchase programs in August 2013 through December 31, 2023, we have repurchased 10,294,117 shares of our Common Stock for an aggregate purchase price of $922.7 million (including fees and commissions).
The graph set forth below compares the cumulative total return on our common stock with the cumulative total return of the Nasdaq Composite Index and the Nasdaq 100 Index, resulting from an initial investment of $100 in each and assuming the reinvestment of any dividends, based on closing prices on the last trading day of each year end period for 2018, 2019, 2020, 2021, and 2022. 38
The graph set forth below compares the cumulative total return on our Common Stock with the cumulative total return of the Nasdaq Composite Index and the Nasdaq 100 Index, resulting from an initial investment of $100 in each and assuming the reinvestment of any dividends, based on closing prices on the last trading day of each year end period for 2019, 2020, 2021, 2022, and 2023. 37
The following table provides information about purchases of shares of our common stock during the three months ended December 31, 2022 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 October 1-31, 2022 16,853 $ 6.82 — — November 1-30, 2022 9,768 8.19 — — December 1-31, 2022 35,594 7.16 — — Total 62,215 $ 7.23 — — (1) Total number of shares delivered to us by employees to satisfy the mandatory tax withholding requirement upon vesting of stock-based compensation awards. 37 Stock Performance Graph This performance graph shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference into any filing of Groupon, Inc. under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
The following table provides information about purchases of shares of our Common Stock during the three months ended December 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 October 1-31, 2023 9,280 $ 12.61 — — November 1-30, 2023 1,472 9.51 — — December 1-31, 2023 381 10.50 — — Total 11,133 $ 12.13 — — (1) Total number of shares delivered to us by employees to satisfy the mandatory tax withholding requirement upon vesting of stock-based compensation awards. 36 Stock Performance Graph This performance graph shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference into any filing of Groupon, Inc. under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Each holder of our common stock is entitled to one vote per share on any matter that is submitted to a vote of stockholders. Recent Sales of Unregistered Securities During the year ended December 31, 2022, we did not issue any unregistered equity securities.
Holders As of March 12, 2024, there were 93 holders of record of our Common Stock. Each holder of our Common Stock is entitled to one vote per share on any matter that is submitted to a vote of stockholders. Recent Sales of Unregistered Securities During the year ended December 31, 2023, we did not issue any unregistered equity securities.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock has been listed on the NASDAQ Global Select Market under the symbol "GRPN" since November 4, 2011. Holders As of March 13, 2023, there were 93 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Common Stock has been listed on the NASDAQ Global Select Market under the symbol "GRPN" since November 4, 2011. We do not anticipate to pay cash dividends in the foreseeable future.
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As of December 31, 2023, up to $245.0 million of Common Stock remained available for purchase under our program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeNorth America contribution profit decreased for the year ended December 31, 2022 compared with the prior year primarily due to a decrease in gross profit. 46 International Operating Metrics International segment gross billings, units and TTM active customers for the years ended December 31, 2022 and 2021 were as follows (in thousands, except percentages and gross billings per unit): Year Ended December 31, % Change 2022 2021 2022 vs 2021 Gross billings Service gross billings: Local $ 402,192 $ 393,495 2.2 % Goods 123,863 96,524 28.3 Travel 58,637 59,591 (1.6) Total service gross billings 584,692 549,610 6.4 Product gross billings - Goods — 171,687 (100.0) Total gross billings $ 584,692 $ 721,297 (18.9) Units Local 14,381 12,640 13.8 % Goods 5,210 11,332 (54.0) Travel 361 389 (7.2) Total units 19,952 24,361 (18.1) TTM Active customers 7,503 8,474 (11.5) % Comparison of the Years Ended December 31, 2022 and 2021: International gross billings, units and TTM active customers decreased by $136.6 million, 4.4 million and 1.0 million for the year ended December 31, 2022 compared with the prior year.
Biggest changeNorth America marketing and contribution profit for the years ended December 31, 2023 and 2022 were as follows (dollars in thousands): Year Ended December 31, % Change 2023 2022 2023 vs 2022 Marketing $ 73,178 $ 103,862 (29.5) % % of Gross Profit 22.2 % 27.8 % Contribution Profit $ 255,815 $ 270,292 (5.4) % Comparison of the Years Ended December 31, 2023 and 2022: North America marketing expense and marketing expense as a percentage of gross profit decreased for the year ended December 31, 2023 compared with the prior year primarily driven by a decrease in marketing-related payroll, traffic declines, and a lower investment in our online marketing spend. 43 North America contribution profit decreased for the year ended December 31, 2023 compared with the prior year primarily due to a decrease in gross profit. 44 International Operating Metrics International segment gross billings, units and TTM active customers for the years ended December 31, 2023 and 2022 were as follows (in thousands, except percentages): Year Ended December 31, % Change 2023 2022 2023 vs 2022 Gross billings Local $ 380,797 $ 402,192 (5.3) % Goods 80,062 123,863 (35.4) Travel 42,953 58,637 (26.7) Total gross billings $ 503,812 $ 584,692 (13.8) Units Local 13,032 14,381 (9.4) % Goods 2,866 5,210 (45.0) Travel 241 361 (33.2) Total units 16,139 19,952 (19.1) TTM Active customers 6,210 7,503 (17.2) % Comparison of the Years Ended December 31, 2023 and 2022: International gross billings, units and TTM active customers decreased by $80.9 million, 3.8 million and 1.3 million for the year ended December 31, 2023 compared with the prior year.
See Item 8, Note 2, Summary of Significant Accounting Policies for information about our accounting policies relating to impairment of goodwill and long-lived assets. Income Taxes We account for income taxes using the asset and liability method and assess whether it is more likely than not that the deferred tax assets will be realized.
See Item 8, Note 2, Summary of Significant Accounting Policies for information about our accounting policies relating to impairment of goodwill and long-lived assets. 53 Income Taxes We account for income taxes using the asset and liability method and assess whether it is more likely than not that the deferred tax assets will be realized.
For further information and a reconciliation to Income (loss) from continuing operations, 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 continuing operations less purchases of property and equipment and capitalized software.
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.
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.
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 to evaluate operating performance, generate future operating plans and make strategic decisions for the allocation of capital.
Currently, we generate service revenue from Local, Travel, and Goods categories. Service revenue primarily represents the net commissions earned from selling goods or services on behalf of third-party merchants. Service 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 generate service revenue from Local, Goods and Travel categories. Revenue primarily represents the net commissions earned from selling goods or services on behalf of third-party merchants. 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 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. 51 The following is a reconciliation of Adjusted EBITDA to the most comparable U.S.
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.
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.
The substantial majority of our 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.
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.
Our gross billings from those transactions generate no 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.
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 42 paid by the customer.
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.
Further, when measuring fair value based on discounted cash flows, we make assumptions about risk-adjusted discount rates; rates of increase in revenue, cost of revenue and operating expenses; weighted average cost of capital; rates of long-term growth; working capital levels; and income tax rates. Valuations are performed by management or third-party valuation specialists under management's supervision, where appropriate.
Further, when measuring fair value based on discounted cash flows, we make assumptions about risk-adjusted discount rates, including the weighted average cost of capital; rates of increase in revenue, cost of revenue and operating expenses; rates of long-term growth; working capital levels; and income tax rates. Valuations are performed by management or third-party valuation specialists under management's supervision, where appropriate.
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 certain facilities-related costs and professional advisory fees. See Item 8, Note 13, Restructuring and Related Charges , for additional information about our restructuring plans.
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 8, Note 13, Restructuring and Related Charges , for additional information about our restructuring plans.
We use free cash flow to conduct and evaluate our business because, although it is similar to cash flow from continuing operations, 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.
We use free cash flow to conduct and evaluate our business because, although it is similar to cash flow, 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.
For further discussion regarding operating and financial data for the year ended December 31, 2021 as compared to the year ended December 31, 2020, refer to 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 fiscal year ended December 31, 2021.
For further discussion regarding operating and financial data for the year ended December 31, 2022 as compared to the year ended December 31, 2021, refer to 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 fiscal year ended December 31, 2022.
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 December 31, 2022, up to $245.0 million of common stock remained available for purchase under our program.
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 December 31, 2023, up to $245.0 million of Common Stock remained available for purchase under our program.
Adjusted EBITDA is a non-GAAP performance measure that we define as Income (loss) from continuing operations 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.
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 free cash flow for the years ended December 31, 2022 and 2021 and reconciliations to the most comparable U.S.
Our free cash flow for the years ended December 31, 2023 and 2022 and reconciliations to the most comparable U.S.
See Item 8, Note 2, Summary of Significant Accounting Policies , and Note 14, Income Taxes , for information about our income tax accounting policies. 57 Recently Issued Accounting Standards For a description of recently issued accounting standards, please see Item 8, Note 2, Summary of Significant Accounting Policies. 58
See Item 8, Note 2, Summary of Significant Accounting Policies , and Note 14, Income Taxes , for information about our income tax accounting policies. Recently Issued Accounting Standards For a description of recently issued accounting standards, please see Item 8, Note 2, Summary of Significant Accounting Policies. 54
When determining fair values in impairment tests, we use the income approach (including discounted cash flows). Our significant estimates in those fair value measurements may include identifying business factors such as size, growth, profitability, risk and return on investment and assessing comparable revenue and earnings multiples.
When determining fair values in impairment tests, we use the income approach (including discounted cash flows). Our significant estimates in those fair value measurements may include identifying business factors such as size, growth, profitability and risk and return on investment.
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 Income (loss) from continuing operations.
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. However, Adjusted EBITDA is not intended to be a substitute for Net income (loss).
For further information and a reconciliation to Net cash provided by (used in) operating activities from continuing operations, refer to our discussion in the Liquidity and Capital Resources section.
For further 40 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 timing and amount of share repurchases, if any, will be determined based on market conditions, limitations under the Amended Credit Agreement, share price, available cash and other factors, and the share repurchase program may be terminated at any time.
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.
GAAP financial measure, Net cash provided by (used in) operating activities from continuing operations, for those periods are as follows (in thousands): Year Ended December 31, 2022 2021 Net cash provided by (used in) operating activities from continuing operations $ (135,987) $ (123,958) Purchases of property and equipment and capitalized software from continuing operations (36,168) (49,630) Free cash flow $ (172,155) $ (173,588) 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.
GAAP financial measure, Net cash provided by (used in) operating activities, for those periods are as follows (in thousands): Year Ended December 31, 2023 2022 Net cash provided by (used in) operating activities $ (77,985) $ (135,987) Purchases of property and equipment and capitalized software (19,285) (36,168) Free cash flow $ (97,270) $ (172,155) 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.
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.
Tracking gross billings also allows us to monitor the percentage of gross billings that we are able to retain after payments to merchants.
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.
Consolidated Other Income (Expense), Net Other income (expense), net includes interest income, interest expense, gains and losses from changes in fair value of investments and foreign currency gains and losses, primarily resulting from intercompany balances with our subsidiaries that are denominated in foreign currencies.
Our cash balances fluctuate significantly throughout the year based on many variables, including gross billings growth rates, the timing of payments to merchants and suppliers and the mix of transactions between Goods and Local. 53 Net cash provided by (used in) operating activities For the year ended December 31, 2022, our net cash used in operating activities from continuing operations was $136.0 million as compared with the prior year period of $124.0 million.
Our cash balances fluctuate significantly throughout the year based on many variables, including changes in gross billings, the timing of payments to merchants and suppliers and the mix of transactions between Goods and Local. 50 Net cash provided by (used in) operating activities For the year ended December 31, 2023, our net cash used in operating activities was $78.0 million as compared with the prior year period of $136.0 million.
These declines were primarily attributable to a decline in engagement on our platform that resulted in fewer unit sales and lower gross billings. 45 Marketing and Contribution Profit We define contribution profit as gross profit less marketing expense.
These declines were primarily attributable to a decline 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. Marketing and Contribution Profit We define contribution profit as gross profit less marketing expense.
See Item I, Note 13, Restructuring and Related Charges , for additional information.
See Item 8, Note 8, Leases and Note 13, Restructuring and Related Charges , for additional information.
For the year ended December 31, 2022, special charges and credits included charges related to our 2022 and 2020 restructuring plans and goodwill and long-lived asset impairments. For the year ended December 31, 2021, special charges and credits included charges related to our 2020 restructuring plan.
For the years ended December 31, 2023 and 2022, special charges and credits included charges related to our 2022 and 2020 restructuring plans 48 and goodwill and long-lived asset impairments.
Marketing expense as a percentage of gross profit increased for the year ended December 31, 2022 compared with the prior year due to a decrease in gross profit. International contribution profit decreased for the year ended December 31, 2022 compared with the prior year primarily due to a decrease in gross profit.
Marketing expense as a percentage of gross profit remained relatively flat for the year ended December 31, 2023 compared with the prior year. 46 International contribution profit decreased for the year ended December 31, 2023 compared with the prior year primarily due to a decrease in gross profit.
In connection with the Fourth Amendment, we repaid $25.0 million of 54 outstanding borrowing. Prior to entering into the Fourth Amendment, our access to the full capacity of our Third Amendment Credit Agreement was partially restricted and our liquidity impacted accordingly.
In connection with the Fourth Amendment, we repaid $27.3 million of outstanding borrowings. Prior to entering into the Fourth Amendment, our access to the full capacity of our Credit Agreement was partially restricted and our liquidity impacted accordingly.
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. Re-engaging and retaining customers to drive purchase frequency .
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.
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.
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.
Our net cash flows from operating, investing and financing activities from continuing operations for the years ended December 31, 2022 and 2021 were as follows (in thousands): Year Ended December 31, 2022 2021 Cash provided by (used in): Operating activities $ (135,987) $ (123,958) Investing activities (38,845) (45,811) Financing activities $ (34,407) $ (183,850) Free cash flow is a non-GAAP liquidity measure that comprises net cash provided by operating activities from continuing operations, less purchases of property and equipment and capitalized software from continuing operations.
Our net cash flows from operating, investing and financing activities for the years ended December 31, 2023 and 2022 were as follows (in thousands): Year Ended December 31, 2023 2022 Cash provided by (used in): Operating activities $ (77,985) $ (135,987) Investing activities (1,397) (38,845) Financing activities $ (35,690) $ (34,407) 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.
The following table presents the above financial metrics for the years ended December 31, 2022 and 2021 (in thousands): Year Ended December 31, 2022 2021 Revenue $ 599,085 $ 967,108 Gross profit 522,824 737,116 Adjusted EBITDA (15,113) 143,228 Free cash flow (172,155) (173,588) Operating Expenses • Marketing expense consists primarily of online marketing costs, such as search engine marketing, advertising on social networking sites and affiliate programs, and offline marketing costs, such as television.
The following table presents the above financial metrics for the years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, 2023 2022 Revenue $ 514,910 $ 599,085 Gross profit 450,664 522,824 Adjusted EBITDA 55,453 (15,113) Free cash flow (97,270) (172,155) Operating Expenses • Marketing expense consists primarily of online marketing costs, such as search engine marketing, advertising on social networking sites and affiliate programs, and offline marketing costs, such as television.
We also consider trends, such as changes to our policies or in general economic conditions that may impact customer behavior, when making those estimates. We reevaluate our estimate as facts and circumstances change. These estimates rely on judgments regarding future expectations of customer behavior. While the basis of our estimates is historical data, customer behavior may not always be predictable.
We also consider trends when making those estimates that could be driven by changes to our policies, or in general, economic conditions that may impact customer behavior. We reevaluate our estimate as facts and circumstances change. These estimates rely on judgments regarding future expectations of customer behavior.
Provision (Benefit) for Income Taxes Comparison of the Years Ended December 31, 2022 and 2021: Provision (benefit) for income taxes for the years ended December 31, 2022 and 2021 was as follows (dollars in thousands): Year Ended December 31, % Change 2022 2021 2022 vs 2021 Provision (benefit) for income taxes $ 42,410 $ (32,323) NM Effective tax rate (22.1) % (36.7) % Our U.S.
Consolidated Provision (Benefit) for Income Taxes Comparison of the Years Ended December 31, 2023 and 2022: Provision (benefit) for income taxes for the years ended December 31, 2023 and 2022 was as follows (dollars in thousands): Year Ended December 31, % Change 2023 2022 2023 vs 2022 Provision (benefit) for income taxes $ 9,508 $ 42,410 (77.6) % Effective tax rate (21.9) % (22.1) % Our U.S.
The 2022 Cost Savings Plan included a restructuring plan, approved by our Board on August 5, 2022 (the “2022 Restructuring 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.
The 2022 Cost Savings Plan included the 2022 Restructuring 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), renegotiating contractual arrangements with certain service providers and continuing to make elective decisions to eliminate vacant positions rather than rehire.
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 Consolidated Financial Statements are issued.
In accordance with this guidance, we have evaluated 52 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 Consolidated Financial Statements are issued.
Comparison of the Years Ended December 31, 2022 and 2021: North America revenue, cost of revenue and gross profit decreased by $170.8 million, $9.3 million and $161.5 million for the year ended December 31, 2022 compared with the prior year.
Comparison of the Years Ended December 31, 2023 and 2022: North America revenue, cost of revenue and gross profit decreased by $56.3 million, $11.2 million and $45.2 million for the year ended December 31, 2023 compared with the prior year.
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.
See Item 8, Note 13, Restructuring and Related Charges , for additional information. 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.
We believe that the estimated values used in our going concern analysis are based on reasonable assumptions. However, such assumptions are inherently uncertain and actual results could differ materially from those estimates. See Item 8, Note 2, Summary of Significant Accounting Policies, for more information about our going concern assessment.
We believe that the estimated values used in our going concern analysis are based on reasonable assumptions. However, such assumptions are inherently uncertain and actual results could differ materially from those estimates.
Our significant accounting policies are discussed in Item 8, Note 2, Summary of Significant Accounting Policies , in the notes to the Consolidated Financial Statements. The preparation of 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.
The preparation of 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.
See Item 8, Note 4, Goodwill and Other Intangible Assets, Note 3, Property, Equipment and Software, Net and Note 8, Leases for additional information. We had no similar activity in the prior year period.
See Item 8, Note 4, Goodwill and Other Intangible Assets, Note 3, Property, Equipment and Software, Net and Note 8, Leases for additional information.
Net cash provided by (used in) financing activities For the year ended December 31, 2022, our net cash used in financing activities was $34.4 million.
Net cash provided by (used in) financing activities For the year ended December 31, 2023, our net cash used in financing activities was $35.7 million as compared with the prior year period of $34.4 million.
Those measures are intended to facilitate comparisons to our historical performance. 52 The following table represents the effect on our Consolidated Statements of Operations from changes in exchange rates versus the U.S. dollar for the years ended December 31, 2022 and 2021 (in thousands): Year Ended December 31, 2022 Year Ended December 31, 2021 At Avg. 2021 Rates (1) Exchange Rate Effect (2) As Reported At Avg. 2020 Rates (1) Exchange Rate Effect (2) As Reported Gross billings $ 1,888,919 $ (66,017) $ 1,822,902 $ 2,306,416 $ 28,732 $ 2,335,148 Revenue 617,559 (18,474) 599,085 948,096 19,012 967,108 Cost of revenue 77,813 (1,552) 76,261 218,439 11,553 229,992 Gross profit 539,746 (16,922) 522,824 729,657 7,459 737,116 Marketing 154,803 (5,572) 149,231 187,293 1,487 188,780 Selling, general and administrative 499,905 (18,530) 481,375 502,697 8,399 511,096 Goodwill impairment 39,518 (4,094) 35,424 — — — Long-lived asset impairment 13,704 (1,445) 12,259 — — — Restructuring charges 12,884 (534) 12,350 40,845 1,050 41,895 Income (loss) from operations $ (181,068) $ 13,253 $ (167,815) $ (1,178) $ (3,477) $ (4,655) (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.
Those measures are intended to facilitate comparisons to our historical performance. 49 The following table represents the effect on our Consolidated Statements of Operations from changes in exchange rates versus the U.S. dollar for the years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, 2023 Year Ended December 31, 2022 At Avg. 2022 Rates (1) Exchange Rate Effect (2) As Reported At Avg. 2021 Rates (1) Exchange Rate Effect (2) As Reported Gross billings $ 1,637,091 $ 7,967 $ 1,645,058 $ 1,888,919 $ (66,017) $ 1,822,902 Revenue 512,576 2,334 514,910 617,559 (18,474) 599,085 Cost of revenue 64,014 232 64,246 77,813 (1,552) 76,261 Gross profit 448,562 2,102 450,664 539,746 (16,922) 522,824 Marketing 109,600 905 110,505 154,803 (5,572) 149,231 Selling, general and administrative 347,683 2,722 350,405 499,905 (18,530) 481,375 Goodwill impairment — — — 39,518 (4,094) 35,424 Long-lived asset impairment — — — 13,704 (1,445) 12,259 Restructuring charges 8,183 (177) 8,006 12,884 (534) 12,350 Income (loss) from operations $ (16,904) $ (1,348) $ (18,252) $ (181,068) $ 13,253 $ (167,815) (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.
For these transactions, gross billings differs from revenue reported in our Consolidated Statements of Operations, which is presented net of the merchant's share of the transaction price.
For these transactions, gross billings differs from Revenue reported in our Consolidated Statements of Operations, which is presented net of the merchant's share of the transaction price. Gross billings is an indicator of our growth and business performance as it measures the dollar volume of transactions generated through our marketplaces.
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.
GAAP, refer to our discussion under Non-GAAP Financial Measures in the Results of Operations section. 39 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.
Service 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 also includes commissions we earn when customers make purchases with retailers using digital coupons accessed through our digital properties.
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.
If actual refunds or redemptions differ from our estimates, the effects could be material to the Consolidated Financial Statements. See Item 8, Note 2, Summary of Significant Accounting Policies and Item 8, Note 12, Revenue Recognition , 56 for information about our revenue recognition accounting policies. Impairment Assessments Impairment assessment estimates apply to goodwill, long-lived assets, right-of-use assets and investments.
While the basis of our estimates is historical data, customer behavior may not always be predictable. If actual refunds or redemptions differ from our estimates, the effects could be material to the Consolidated Financial Statements. See Item 8, Note 2, Summary of Significant Accounting Policies and Note 12, Revenue Recognition , for information about our revenue recognition accounting policies.
We will continue to monitor the impact of macroeconomic conditions on our business. 43 Results of Operations North America Operating Metrics North America segment gross billings, units and TTM active customers for the years ended December 31, 2022 and 2021 were as follows (in thousands, except percentages): Year Ended December 31, % Change 2022 2021 2022 vs 2021 Gross billings Service gross billings: Local $ 1,019,960 $ 1,264,581 (19.3) % Goods 133,262 230,129 (42.1) Travel 84,988 118,515 (28.3) Total service gross billings 1,238,210 1,613,225 (23.2) Product gross billings - Goods — 626 (100.0) Total gross billings $ 1,238,210 $ 1,613,851 (23.3) Units Local 24,986 34,146 (26.8) % Goods 5,289 9,891 (46.5) Travel 387 642 (39.7) Total units 30,662 44,679 (31.4) TTM Active customers 11,277 14,785 (23.7) % Comparison of the Years Ended December 31, 2022 and 2021: North America gross billings, units and TTM active customers decreased by $375.6 million, 14.0 million and 3.5 million for the year ended December 31, 2022 compared with the prior year.
We will continue to monitor the impact of macroeconomic conditions on our business. 41 Results of Operations North America Operating Metrics North America segment gross billings, units and TTM active customers for the years ended December 31, 2023 and 2022 were as follows (in thousands, except percentages): Year Ended December 31, % Change 2023 2022 2023 vs 2022 Gross billings Local $ 971,313 $ 1,019,960 (4.8) % Goods 88,987 133,262 (33.2) Travel 80,946 84,988 (4.8) Total gross billings $ 1,141,246 $ 1,238,210 (7.8) Units Local 21,483 24,986 (14.0) % Goods 3,412 5,289 (35.5) Travel 334 387 (13.6) Total units 25,229 30,662 (17.7) TTM Active customers 10,291 11,277 (8.7) % Comparison of the Years Ended December 31, 2023 and 2022: North America gross billings, units and TTM active customers decreased by $97.0 million, 5.4 million and 1.0 million for the year ended December 31, 2023 compared with the prior year.
Refer to Item 8, Note 13, Restructuring and Related Charges and Note 5, Investments, for additional information. Free cash flow . Free cash flow is a non-GAAP liquidity measure that comprises net cash provided by operating activities from continuing operations less purchases of property and equipment and capitalized software.
(2) Includes a $25.8 million remeasurement of our investment in SumUp during the year ended December 31, 2023. Refer to Item 8, Note 5, Investments, for additional information. 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.
In addition, there was a $65.9 million unfavorable impact on gross billings from year-over-year changes in foreign currency exchange rates. 47 Financial Metrics International segment revenue, cost of revenue and gross profit for the years ended December 31, 2022 and 2021 were as follows (dollars in thousands): Year Ended December 31, % Change 2022 2021 2022 vs 2021 Revenue Service revenue: Local $ 128,295 $ 155,866 (17.7) % Goods 23,742 19,477 21.9 Travel 10,779 13,023 (17.2) Total service revenue 162,816 188,366 (13.6) Product revenue - Goods — 171,687 (100.0) Total revenue $ 162,816 $ 360,053 (54.8) Cost of revenue Service cost of revenue: Local $ 10,647 $ 8,962 18.8 % Goods 2,080 986 111.0 Travel 1,419 1,138 24.7 Total service cost of revenue 14,146 11,086 27.6 Product cost of revenue - Goods — 147,514 (100.0) Total cost of revenue $ 14,146 $ 158,600 (91.1) Gross profit Service gross profit: Local $ 117,648 $ 146,904 (19.9) % Goods 21,662 18,491 17.1 Travel 9,360 11,885 (21.2) Total service gross profit 148,670 177,280 (16.1) Product gross profit - Goods — 24,173 (100.0) Total gross profit $ 148,670 $ 201,453 (26.2) Service margin (1) 27.8 % 34.3 % % of Consolidated revenue 27.2 % 37.2 % % of Consolidated cost of revenue 18.5 69.0 % of Consolidated gross profit 28.4 27.3 (1) Represents the percentage of service gross billings that we retained after deducting the merchant's share from revenue.
In addition, there was an $8.0 million favorable impact on gross billings from year-over-year changes in foreign currency exchange rates. 45 Financial Metrics International segment revenue, cost of revenue and gross profit for the years ended December 31, 2023 and 2022 were as follows (dollars in thousands): Year Ended December 31, % Change 2023 2022 2023 vs 2022 Revenue Local $ 111,543 $ 128,295 (13.1) % Goods 14,961 23,742 (37.0) Travel 8,454 10,779 (21.6) Total revenue $ 134,958 $ 162,816 (17.1) Cost of revenue Local $ 9,903 $ 10,647 (7.0) % Goods 2,305 2,080 10.8 Travel 1,079 1,419 (24.0) Total cost of revenue $ 13,287 $ 14,146 (6.1) Gross profit Local $ 101,640 $ 117,648 (13.6) % Goods 12,656 21,662 (41.6) Travel 7,375 9,360 (21.2) Total gross profit $ 121,671 $ 148,670 (18.2) Gross margin (1) 26.8 % 27.8 % % of Consolidated revenue 26.2 % 27.2 % % of Consolidated cost of revenue 20.7 18.5 % of Consolidated gross profit 27.0 28.4 (1) Represents the percentage of gross billings that we retained after deducting the merchant's share from gross billings.
These declines were primarily attributable to a decline in engagement on our platform that resulted in fewer unit sales and lower gross billings. 44 Financial Metrics North America segment revenue, cost of revenue and gross profit for the years ended December 31, 2022 and 2021 were as follows (dollars in thousands): Year Ended December 31, % Change 2022 2021 2022 vs 2021 Revenue Service revenue: Local $ 390,449 $ 530,468 (26.4) % Goods 28,785 51,568 (44.2) Travel 17,035 24,393 (30.2) Total service revenue 436,269 606,429 (28.1) Product revenue - Goods — 626 (100.0) Total revenue $ 436,269 $ 607,055 (28.1) Cost of revenue Service cost of revenue: Local $ 52,693 $ 58,192 (9.4) % Goods 5,249 7,790 (32.6) Travel 4,173 4,952 (15.7) Total service cost of revenue 62,115 70,934 (12.4) Product cost of revenue - Goods — 458 (100.0) Total cost of revenue $ 62,115 $ 71,392 (13.0) Gross profit Service gross profit: Local $ 337,756 $ 472,276 (28.5) % Goods 23,536 43,778 (46.2) Travel 12,862 19,441 (33.8) Total service gross profit 374,154 535,495 (30.1) Product gross profit - Goods — 168 (100.0) Total gross profit $ 374,154 $ 535,663 (30.2) Service margin (1) 35.2 % 37.6 % % of Consolidated revenue 72.8 62.8 % of Consolidated cost of revenue 81.5 31.0 % of Consolidated gross profit 71.6 72.7 (1) Represents the percentage of service gross billings that we retained after deducting the merchant's share.
These decreases were primarily attributable to a decline 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. 42 Financial Metrics North America segment revenue, cost of revenue and gross profit for the years ended December 31, 2023 and 2022 were as follows (dollars in thousands): Year Ended December 31, % Change 2023 2022 2023 vs 2022 Revenue Local $ 346,962 $ 390,449 (11.1) % Goods 18,436 28,785 (36.0) Travel 14,554 17,035 (14.6) Total revenue $ 379,952 $ 436,269 (12.9) Cost of revenue Local $ 44,199 $ 52,693 (16.1) % Goods 3,276 5,249 (37.6) Travel 3,484 4,173 (16.5) Total cost of revenue $ 50,959 $ 62,115 (18.0) Gross profit Local $ 302,763 $ 337,756 (10.4) % Goods 15,160 23,536 (35.6) Travel 11,070 12,862 (13.9) Total gross profit $ 328,993 $ 374,154 (12.1) Gross margin (1) 33.3 % 35.2 % % of Consolidated revenue 73.8 72.8 % of Consolidated cost of revenue 79.3 81.5 % of Consolidated gross profit 73.0 71.6 (1) Represents the percentage of gross billings that we retained after deducting the merchant's share from gross billings.
SG&A as a percentage of gross profit increased for the year ended December 31, 2022 compared with the prior year primarily due to a decrease in consolidated gross profit. During the year ended December 31, 2022, we recognized goodwill and long-lived asset impairment.
SG&A and SG&A as a percentage of gross profit decreased for the year ended December 31, 2023 compared with the prior year primarily due to lower payroll-related expenses. During the year ended December 31, 2022, we recognized goodwill and long-lived asset impairment of $35.4 million and $12.3 million, respectively. We had no similar activity in the current year period.
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. 55 Contractual Obligations and Commitments For additional information on our commitments for other financing arrangements, future lease payments and purchase obligations, see Item 8, Note 7, Financing Arrangements , Note 8, Leases and Note 9, Commitments and Contingencies for additional information.
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.
Goodwill is allocated to our reporting units at the date the goodwill is initially recorded. We evaluate goodwill for impairment annually on October 1 or more frequently when an event occurs or circumstances change that indicates the carrying value may not be recoverable.
We evaluate goodwill for impairment annually on October 1 or more frequently when an event occurs or circumstances change that indicates the carrying value of a reporting unit may exceed its fair value.
Marketing expense as a percentage of gross profit increased for the year ended December 31, 2022 compared to the prior year due to a decrease in consolidated gross profit. SG&A decreased for the year ended December 31, 2022 compared with the prior year primarily due to lower payroll-related expenses, partially offset by higher cloud costs.
Comparison of the Years ended December 31, 2023 and 2022: Marketing expense and marketing expense as a percentage of gross profit decreased for the year ended December 31, 2023 compared with the prior year due to a decrease in marketing-related payroll costs, traffic declines, and a lower investment in our online marketing spend.
In connection with these actions, we expect to record total pre-tax charges of $10.0 million to $20.0 million. 40 In January 2023, the Board approved the second phase of the 2022 Restructuring Plan, which includes an overall reduction of approximately 500 positions globally, with the majority of these reductions expected to occur by the end of the second quarter 2023.
The 2022 Restructuring Plan is expected to include an overall reduction of approximately 1,150 positions globally, with the majority of these reductions completed as of March 31, 2023 and the remainder expected to occur by the end of 2024. In connection with these actions, we expect to record total pre-tax charges of $22.0 million to $24.1 million.
Our significant estimates related to this analysis may include identifying business factors such as size, growth and profitability used in the forecasted financial results and liquidity. Further, we make assumptions about the probability that management's plans will be effectively implemented and alleviate substantial doubt and our ability to continue as a going concern.
Determining the extent to which conditions or events raise substantial doubt about our ability to continue as a going concern requires significant judgement and estimation by us. Our significant estimates related to this analysis may include identifying business factors such as size, growth and profitability used in the forecasted financial results and liquidity.
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. 41 Our gross billings, units and TTM active customers for the years ended December 31, 2022 and 2021 were as follows (in thousands): Year Ended December 31, 2022 2021 Gross billings $ 1,822,902 $ 2,335,148 Units 50,614 69,040 TTM Active customers 18,780 23,259 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.
Our gross billings, units and TTM active customers for the years ended December 31, 2023 and 2022 were as follows (in thousands): Year Ended December 31, 2023 2022 Gross billings $ 1,645,058 $ 1,822,902 Units 41,368 50,614 TTM Active customers 16,501 18,780 Financial Metrics • Revenue is earned through transactions which we generate commissions by selling goods or services on behalf of third-party merchants.
Revenue and gross profit also had unfavorable impacts of $18.4 million and $16.9 million from year-over-year changes in foreign currency exchange rates. 48 Marketing and Contribution Profit International contribution profit for the years ended December 31, 2022 and 2021 were as follows (dollars in thousands): Year Ended December 31, % Change 2022 2021 2022 vs 2021 Marketing $ 45,369 $ 50,755 (10.6) % % of Gross Profit 30.5 % 25.2 % Contribution Profit $ 103,301 $ 150,698 (31.5) % Comparison of the Years Ended December 31, 2022 and 2021: International marketing expense decreased for the year ended December 31, 2022 compared with the prior year primarily due to accelerated traffic declines, a lower spend in our online marketing and a favorable impact of $5.6 million from year-over-year changes in foreign currency exchange rates.
Marketing and Contribution Profit International marketing and contribution profit for the years ended December 31, 2023 and 2022 were as follows (dollars in thousands): Year Ended December 31, % Change 2023 2022 2023 vs 2022 Marketing $ 37,327 $ 45,369 (17.7) % % of Gross Profit 30.7 % 30.5 % Contribution Profit $ 84,344 $ 103,301 (18.4) % Comparison of the Years Ended December 31, 2023 and 2022: International marketing expense decreased for the year ended December 31, 2023 compared with the prior year primarily due to traffic declines and a lower investment in our online marketing spend.
Federal income tax rate was 21% for the years ended December 31, 2022 and 2021. 50 The primary factors impacting the effective tax rate for the year ended December 31, 2022 were the pretax losses incurred in jurisdictions that have a valuation allowance against their net deferred tax assets, the reversal of reserves for uncertain tax positions due to closure of applicable statutes of limitations, the non-deductible goodwill impairment, and the valuation allowance recorded against our federal and state deferred tax assets.
Federal income tax rate was 21% for the years ended December 31, 2023 and 2022. The primary factors impacting the effective tax rate for the years ended December 31, 2023 and 2022 were the pretax losses incurred in jurisdictions that have valuation allowances against their net deferred tax assets.
GAAP financial measure, Income (loss) from continuing operations for the years ended December 31, 2022 and 2021 (dollars in thousands): Year Ended December 31, 2022 2021 Income (loss) from continuing operations $ (234,380) $ 120,348 Adjustments: Stock-based compensation 30,006 33,169 Depreciation and amortization 62,663 72,819 Restructuring and related charges (1) 12,350 41,895 Goodwill impairment 35,424 — Long-lived asset impairment 12,259 — Other (income) expense, net (2) 24,155 (92,680) Provision (benefit) for income taxes 42,410 (32,323) Total adjustments 219,267 22,880 Adjusted EBITDA $ (15,113) $ 143,228 (1) Includes $3.0 million of right-of-use assets - operating leases impairment for the year ended December 31, 2022 and $7.7 million of right-of-use assets - operating leases and leasehold improvement impairments for the year ended December 31, 2021.
GAAP financial measure, Net income (loss) for the years ended December 31, 2023 and 2022 (dollars in thousands): Year Ended December 31, 2023 2022 Net income (loss) $ (52,934) $ (234,380) Adjustments: Stock-based compensation 14,481 30,006 Depreciation and amortization 51,218 62,663 Restructuring and related charges (1) 8,006 12,350 Goodwill impairment — 35,424 Long-lived asset impairment — 12,259 Other (income) expense, net (2) 25,174 24,155 Provision (benefit) for income taxes 9,508 42,410 Total adjustments 108,387 219,267 Adjusted EBITDA $ 55,453 $ (15,113) (1) Includes a settlement of $4.25 million related to Uptake for the year ended December 31, 2023.
See Item 8, Note 14, 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. Non-GAAP Financial Measures In addition to financial results reported in accordance with U.S.
We expect that our consolidated effective tax rate in future periods may 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 8, Note 14, 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.
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, which are presented on a continuing operations basis, are intended to aid investors in better understanding our current financial performance and prospects for the future as seen through the eyes of management.
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.
Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements as of December 31, 2022. Critical Accounting Estimates Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP.
Critical Accounting Estimates Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. Our significant accounting policies are discussed in Item 8, Note 2, Summary of Significant Accounting Policies , in the notes to the Consolidated Financial Statements.
As of December 31, 2022, we had $44.2 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.
Accordingly, management has concluded that there is no longer substantial doubt about our ability to continue as a going concern. As of December 31, 2023, we had $40.4 million in cash held by our international subsidiaries, which is primarily denominated in Euros, British Pounds Sterling, Canadian dollars, Indian Rupees, Polish Zloty, Swiss Franc, and, to a lesser extent, Australian dollars.
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 continuing 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.
Revenue also includes commissions we earn when customers make purchases with retailers using digital coupons accessed through our digital properties. • Gross profit reflects the net margin we earn after deducting our Cost of revenue from our Revenue. • Adjusted EBITDA is a non-GAAP financial 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.
We plan to grow our revenue by building long-term relationships with local merchants to improve our inventory selection and improving the customer experience through inventory curation and improved convenience in order to drive customer demand and purchase frequency.
We plan to grow our revenue by building long-term relationships with local merchants to strengthen our inventory selection and by enhancing the customer experience through inventory curation and improved convenience in order to drive customer demand and purchase frequency. 2022 Cost Savings Plan In August 2022, we initiated the 2022 Cost Savings Plan, including the first phase initiated August 2022, the second January 2023 and the third July 2023, which is designed to reduce our expense structure and align with our go-forward business and financial objectives.
Consolidated Operating Expenses Operating expenses for the years ended December 31, 2022 and 2021 were as follows (dollars in thousands): Year Ended December 31, % Change 2022 2021 2022 vs 2021 Marketing $ 149,231 $ 188,780 (20.9) % Selling, general and administrative 481,375 511,096 (5.8) Goodwill impairment 35,424 — NM Long-lived asset impairment 12,259 — NM Restructuring and related charges 12,350 41,895 (70.5) Total Operating expenses $ 690,639 $ 741,771 (6.9) % of Gross profit: Marketing 28.5 % 25.6 % Selling, general and administrative 92.1 % 69.3 % 49 Comparison of the Years ended December 31, 2022 and 2021: Marketing expense decreased for the year ended December 31, 2022 compared with the prior year due to accelerated traffic declines and a lower spend in our online marketing.
Consolidated Operating Expenses Operating expenses for the years ended December 31, 2023 and 2022 were as follows (dollars in thousands): Year Ended December 31, % Change 2023 2022 2023 vs 2022 Marketing $ 110,505 $ 149,231 (26.0) % Selling, general and administrative (1) 350,405 481,375 (27.2) Goodwill impairment — 35,424 (100.0) Long-lived asset impairment — 12,259 (100.0) Restructuring and related charges 8,006 12,350 (35.2) Total Operating expenses $ 468,916 $ 690,639 (32.1) % of Gross profit: Marketing 24.5 % 28.5 % Selling, general and administrative 77.8 % 92.1 % (1) The years ended December 31, 2023 and 2022 includes $14.3 million and $28.6 million of stock-based compensation expense and $26.2 million and $30.1 million of dep reciation and amortization expense.
In March 2023, we entered into a fourth amendment to the Third Amendment Credit Agreement (the "Fourth Amendment" and the Third Amendment Credit Agreement as amended, the "Amended Credit Agreement"), which reduces borrowing capacity under our senior secured revolving credit facility from $150.0 million to $75.0 million.
The year-over-year change was primarily driven by $32.2 million in payments of borrowings under our revolving credit facility during the year ended December 31, 2023 compared with $40.0 million in proceeds and $65.0 million in payments during the year ended December 31, 2022, In March 2023, we entered into the Fourth Amendment to the Credit Agreement, which reduced borrowing capacity under our senior secured revolving credit facility from $150.0 million to $75.0 million.
We also earn commissions when customers make purchases with retailers using digital coupons accessed through our websites and mobile applications. We fully transitioned to a third-party Goods marketplace in North America in 2020 and in International in 2021.
We also earn commissions when customers make purchases with retailers using digital coupons accessed through our websites and mobile applications. Strategy Our strategy is to be the trusted marketplace where customers go to buy local services and experiences.
Other income (expense), net for the years ended December 31, 2022 and 2021 was as follows (dollars in thousands): Year Ended December 31, 2022 2021 Other income (expense), net $ (24,155) $ 92,680 Comparison of the Years Ended December 31, 2022 and 2021: The change in Other income (expense), net for the year ended December 31, 2022 compared with the prior year 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 and changes in foreign currency gains and losses.
Other income (expense), net for the years ended December 31, 2023 and 2022 was as follows (dollars in thousands): Year Ended December 31, 2023 2022 Other income (expense), net $ (25,174) $ (24,155) 47 Comparison of the Years Ended December 31, 2023 and 2022: The change in Other income (expense), net for the year ended December 31, 2023 compared with the prior year is related to a remeasurement of our investment in SumUp of $25.8 million in the year ended December 31, 2023, We had no similar activity in the prior year period.
Comparison of the Years Ended December 31, 2022 and 2021: International revenue, cost of revenue and gross profit decreased by $197.2 million, $144.5 million and $52.8 million for the year ended December 31, 2022 compared with the prior year.
Comparison of the Years Ended December 31, 2023 and 2022: International revenue, cost of revenue and gross profit decreased by $27.9 million, $0.9 million and $27.0 million for the year ended December 31, 2023 compared with the prior year. These decreases were primarily due to a decline in our Goods category and an overall decrease in demand.
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.
These declines were primarily attributable to a decline in our Goods category and an overall decrease in demand.
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. Cash and cash equivalents were $281.3 million as of December 31, 2022.
Our net cash used in operating activities has improved year-over-year, from $78.0 million and $136.0 million for the years ended December 31, 2023 and December 31, 2022, with net cash provided by operating activities of $54.5 million and $15.9 million for the three months ended December 31, 2023 and December 31, 2022.
Restructuring and related charges decreased for the year ended December 31, 2022 compared with the prior year due to the substantial completion of the actions of our Board approved multi-phase restructuring plan ("2020 Restructuring Plan") in the year 2021, partially offset by the costs incurred on the 2022 Restructuring Plan.
Restructuring and related charges decreased for the year ended December 31, 2023 compared with the prior year, primarily due to impairment recognized in the year ended December 31, 2022 related to our right-of-use assets - operating leases for our 2020 Restructuring Plan. We had no similar activity in the current year period.
Net cash provided by (used in) investing activities For the year ended December 31, 2022, our net cash used in investing activities from continuing operations was $38.8 million, which included purchases of property and equipment and capitalized software of $36.2 million.
The favorable impacts from our 2022 Restructuring Plan were partially offset by improved days payable outstanding from December 31, 2022 to December 31, 2023. Net cash provided by (used in) investing activities For the year ended December 31, 2023, our net cash used in investing activities was $1.4 million as compared with the prior year period of $38.8 million.
(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 source of liquidity is our cash balance, which includes outstanding borrowings under the Third Amendment Credit Agreement, totaling $281.3 million as of December 31, 2022.
(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.
Refer to Item 2, Note 8, Leases and Note 13, Restructuring and Related Charges, for additional information.
See note 9, Commitments and Contingencies and Note 13, Restructuring and Related Charges for additional information. Includes $3.0 million of right-of-use assets - operating leases impairment for the year ended December 31, 2022. Refer to Item 8, Note 8, Leases and Note 13, Restructuring and Related Charges, for additional information.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+1 added−1 removed4 unchanged
Biggest changeIn connection with entering into the Fourth Amendment to our Third Amendment Credit Agreement in March 2023, our borrowing capacity under the Amended Credit Agreement was reduced from $150.0 million to $75.0 million and consequently we repaid $25.0 million of these outstanding amounts in connection with the Fourth Amendment. See Item 7, Liquidity and Capital Resources, for additional information.
Biggest changeAs of December 31, 2023, we had $42.8 million of borrowings outstanding and $25.2 million of outstanding letters of credit under the Credit Agreement. See Item 7, Liquidity and Capital Resources, for additional information.
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. 59 Inflation Risk In light of the current inflationary environment, our business is being affected by changes to our merchants' and customers' discretionary spend.
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 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 December 31, 2022 and 2021.
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 December 31, 2023 and 2022.
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. 60
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. 55
As of December 31, 2022, our net working capital deficit (defined as current assets less current liabilities) from subsidiaries that are subject to foreign currency translation risk was $111.9 million. The potential increase in this working capital deficit from a hypothetical 10% adverse change in quoted foreign currency exchange rates would be $11.2 million.
As of December 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 $21.7 million. The potential increase in this working capital deficit from a hypothetical 10% adverse change in quoted foreign currency exchange rates would be $2.2 million.
This compares with a $69.2 million working capital deficit subject to foreign currency exposure as of December 31, 2021, for which a 10% adverse change would have resulted in a potential increase in this working capital deficit of $6.9 million.
This compares with a $111.9 million working capital deficit subject to foreign currency exposure as of December 31, 2022, for which a 10% adverse change would have resulted in a potential increase in this working capital deficit of $11.2 million.
Because borrowings under the Amended 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 Credit Agreement. We also have $46.8 million of lease obligations as of December 31, 2022.
Because borrowings under the 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 Credit Agreement. We have $9.5 million of lease obligations as of December 31, 2023.
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.
For the year ended December 31, 2023, we derived approximately 26.2% 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.
The 2026 Notes 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.
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 Credit Agreement provided for aggregate principal borrowings of up to $75.0 million.
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 year ended December 31, 2022, we derived approximately 27.2% of our revenue from our International segment.
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, Indian Rupee, Polish Zloty, Swiss Franc, and, to a lesser extent, Australian dollar, which exposes us to foreign currency risk.
Interest Rate Risk Our cash balance as of December 31, 2022 consists of bank deposits, so exposure to market risk for changes in interest rates is limited. In March and April 2021, we issued the 2026 Notes with an aggregate principal amount of $230.0 million (see Item 8, Note 7, Financing Arrangements ).
Interest Rate Risk Our cash balance as of December 31, 2023 consists of bank deposits so exposure to market risk for changes in interest rates is limited.
Removed
Our Third Amendment Credit Agreement provided for aggregate principal borrowings of up to $150.0 million. As of December 31, 2022, we had $75.0 million of borrowings outstanding and $24.9 million of outstanding letters of credit under the Third Amendment Credit Agreement.
Added
The 2026 Notes have an aggregate principal amount of $230.0 million (see Item 8, Note 7, Financing Arrangements ) and bear interest at a fixed rate, so we have no financial statement impact from changes in interest rates.

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