Good day everyone, and welcome to Groupon’s First Quarter 2014 Financial Results Conference Call. [Audio Gap]

Hello, and welcome to our first quarter 2014 financial results conference call. On the call today are Eric Lefkofsky, CEO; and Jason Child, CFO. Kal Raman, our COO, will be available for questions during the Q&A portion of the call. The following discussion and responses to your questions reflect management’s views as of today, May 6, 2014, only and will include forward-looking statements. Actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in today’s press release and in our filings with the SEC, including our Form 10-Q. Groupon encourages investors to use its Investor Relations website as a way of easily finding information about the company. Groupon promptly makes available on this website, free of charge reports that the company files or furnishes with the SEC, corporate governance information and select press releases and social media postings. Our results for the first quarter reflect the acquisitions of TMON and Ideeli, since their respective dates of close in January. In order to provide added transparency into our performance, we will, at times, discuss performance, including and excluding the impact of the acquisitions. Additional detail regarding the contribution of each to the quarter will be included in our 10-Q. We will also discuss certain non-GAAP financial measures in our press release and our filings with the SEC, each of which is posted on our Investor Relations website. You will find additional disclosures regarding non-GAAP measures, including reconciliations of these measures with U.S. GAAP. Finally, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2013. Now, I will turn the call over to Eric.

Thanks, Genny. We saw continued progress in the first 3 months of 2014. Our Local marketplace of over 200,000 deals is loved by the customers that have discovered it, and it’s just starting to gain broader awareness. Our mobile app that is consistently rated five stars has catapulted us to being one of the only large-scale, e-commerce companies in the world that is predominantly mobile. And our international business is now stable and showing renewed promise after serving as an anchor on our results for several quarters. Strategically, the company has never been in a better place. Q1 was another record quarter for Groupon in terms of demand. Gross billings increased 29% to $1.82 billion, and revenue increased 26% to $758 million, both led by strong growth in the goods business and the addition of TMON. Adjusted EBITDA was $40 million, down from $72 million last quarter, mostly as a result of planned investments in marketing and order discounts. And non-GAAP EPS came in above our expectation at negative $0.01. We also saw strong demand in North America. Our billings growth accelerated from 10% in Q4 to 15% this quarter, coming in at $782 million, led by 47% year-over-year growth in our goods business. North American revenues increased 27% to $431 million, yet gross profit increased only 4% to $180 million given the higher concentration of goods revenue in the quarter and over $15 million in order discounts that we offer to help drive awareness for our new Pull marketplace. Finally, segment operating income was $11 million, down from $26 million in Q4, largely related to losses from our acquisition of Ideeli. We continued to make progress in EMEA as billings increased 4% to $514 million, also led by strength in Goods, which grew 23% year-over-year. Revenues increased 26% to…

Thanks, Eric. With the details available in this afternoon’s press release, I’m going to run through the highlights of our performance and then provide our outlook. Note that all comparisons unless otherwise stated refer to year-over-year growth. Let me run you through the numbers. Gross billings increased 29% to $1.82 billion. North America grew 15%, EMEA grew 4% or 1% excluding FX, and Rest of World increased 123%. The acquisition of TMON contributed just under $300 million to billings, and as Eric mentioned, after stripping out both TMON and FX, we were pleased to see Rest of World return to growth increasing 9% compared to a 11% decline last quarter. Revenue increased 26% to $758 million. North America grew 27%, EMEA grew 26%, and the Rest of World grew 23%, lower than the 123% billings growth as a result of the substantial addition of lower margin TMON billings to the mix. Gross profit increased 2% compared with the prior year to $386 million. Within both North America and EMEA, gross profit growth lagged billings growth due to the greater mix of direct revenues and investments we made in order discounts to drive awareness of our marketplace. Adjusted EBITDA, which as a reminder is a non-GAAP measure defined as operating income excluding stock-based compensation, acquisition related costs, and D&A was $40 million in the quarter compared to $72 million last year. The increase in gross profit was more than offset by a $29 million increase in marketing expense year-over-year, $11 million of which was related to TMON and Ideeli. Compared to last quarter, marketing increased $22 million. I will provide some greater color on our marketing activities in a moment. SG&A increased $17 million in the quarter with $35 million related to acquisitions, including the $3 million negative impact of exiting…

Thanks Jason. We believe Groupon has an opportunity to become the starting point of Local commerce. People use Groupon to book their hotels, order their meals, buy concert tickets, discover amazing things to do with their families and more. All of these offerings are delivered to them seamlessly through their Smartphones allowing them to access the world around them, the very definition of Local on the fly. We are in the midst of a mobile commerce revolution that not only affects Local merchants, but every supplier across all of our categories, and Local is at the epicenter of that revolution. Five years ago, Groupon was a one-dimensional tool for merchants to use it as a means of attracting new customers. We had one tool on our tool box, the daily deal e-mail. Today, we are a radically different company having built the foundation for Groupon to become a Local commerce platform, connecting millions of customers and merchants in real time. Our deep knowledge of Local, coupled with the vast mobile presence has us uniquely positioned to be the place people start when they want to do or buy just about anything, anywhere, anytime. And with that, let’s take some questions.

(Operator Instructions) Our first question comes from the line of Paul Bieber from Bank of America Merrill Lynch. Your question please. Paul Judd Bieber – Bank of America Merrill Lynch: Hi guys. Thanks for taking my questions. I was hoping, first off, what gives you confidence that North America Local can accelerate in the second half. And then secondly on a geographic basis, how should we think about the segment margins just as the year unfolds?

So, I’ll take the Local piece and Jason can take the next piece. In our Local business, as we said a few quarters ago, started to experience some headwind, but our plans are on track. I mean, if you look at the business, we’re in the midst of this migration from being a predominately email-oriented daily deal business to really building a mobile marketplace, and that migration has positives and negatives. On the negatives is that it will remove the sense of urgency that used to be in that daily deal email business, and so redemptions overall are up. Our unused Groupons are down and that’s created some headwinds, but the positive is that searchers, people who use our marketplace spend more. That used to be – used to represent about 6% of our business a few quarters ago, it is 9% of our business now, and the trends we’re seeing are positive. We are starting to see those redemptions leveling, which is critical, because those unused Groupons that people have basically dampens future demand. And when we see them leveling, we know we kind of – well, we believe we’ve hit the bottom. So as soon as the benefit from people who search and they spend more and their lifetime value is greater, as soon as those benefits outweigh the negatives, we expect to see a lift, and we’re seeing those trends today, so we would expect in the back half of the year the Local business begins to kind of reaccelerate, and as a result we believe we will deliver double-digit growth in Local toward the end of the year.

Let’s see on the second question about the segment operating margin. So there is something kind of unique to each segment. So in Q1 North America had the Ideeli acquisition which added some SG&A and some marketing expense that had a downward impact in the quarter. EMEA had some step up. I think in particular had a step up in marketing expenses relative to the previous quarter. And then in the rest of world segment the TMON and Korea shutdown costs had disproportionate impact. So, you should expect to see all the segments improve in operating margin or I am sorry in segment operating margin next quarter along with the overall improvement in EBITDA and then in the back half of the year also fairly consistently with what you saw kind of as the ratio, I would say what you saw last quarter. Paul Judd Bieber – Bank of America Merrill Lynch: Okay, thanks a lot.

Thank you. (Operator Instructions) Our next question comes from the line of Ross Sandler from Deutsche Bank. Your question please. Ross A. Sandler – Deutsche Bank Securities, Inc.: Thanks, guys. Just two questions, one the follow-up from the last one. Eric, so you are pretty clear with anyone who over you over the past couple of months that you expected North America Local billings to re-accelerate once you’re [confident] take the issues from 4Q, that didn’t happen despite what appears to be the greater frequency in email sent out in 1Q. So can you tell us I guess what happened versus your prior bullish comments and how you believe that you could get to the 20% growth by the back half? And then I guess for Jason, you guys have been ramping up the marketing now for three quarters in a row. It looks like organic growth is decelerating in most regions, I guess goods is looking decent. So can you just help us reconcile where the marketing is going, why is it not driving billings growth acceleration? Thanks.

Yes. So, on the first part if you look at, we are in the midst of a big migration, right. This fundamental shift from being are predominantly push daily deal business to this building a marketplace that people come to has positives and negatives, that tailwind and headwind. And it has been the awareness that the people using the marketplace searching, spending more with that higher lifetime value, that awareness has been – has taken us a bit longer to generate than we would have thought. And so and we’ve also been watching these redemptions go up and this kind of unused bank of Groupons come down. And these things counterbalance each other. So it’s not a perfect science. We believe our Local growth rate is going to reaccelerate. I think we – from our standpoint, every quarter that goes by, we have more data and we can get more clarity on when it’s going to reaccelerate. The good news from our standpoint is that those redemptions have now leveled off. And so we feel like we’ve seen the bottom in terms of us chewing away at some of that headwind. But there is no question that the awareness has not been as fast as we’d have liked. It’s been slow and steady progress from 6% to 8% to 9% and up and the marketplace has huge benefits. So we are absolutely on the right track. I wish it was quicker. It would be nice if those benefits showed up sooner, but we are absolutely on the right track. And from all the data we see, the headwind showed up in Q3 of last year and from all the data we see as we begin to lap it and get into the back half of the year, we’ll deliver double-digit growth. We didn’t call for the 20% growth, we called for double-digit growth by year end in Local.

Ross, on your second question, I think first, so we actually saw overall organic growth accelerate from about 4% year-on-year globally a year ago to about 9%, if you exclude the acquisitions, so over doubling, and that’s actually up also from about 5% last quarter. So our organic growth is there. Second, in terms of the marketing spend, the ramp up really occurred in Q1. The absolute dollar spent really across the last few quarters was actually very consistent and it’s kind of the mid $50-ish million range, and then stepped up, of course, to the 79 that we had in Q1 of this last quarter. And so, the reason why you haven’t seen a lot of step up in growth is, because we spend marketing in a variety of ways. As Eric was mentioning, we’re trying to drive awareness for the Pull marketplace. So in North America, you see us driving marketing that’s more about awareness building. In EMEA, we are still trying to grow that customer base, you saw solid customer growth. In EMEA the strongest growth we’ve had in over a year in the quarter, so we thought that was successful. And then, in the Rest of World region, we’re really moving to more of a transactional model. So in all of those spends you should expect to return sometime in Q2 and beyond. That’s the way those activities work and that’s the way they’re being measured, and that looks like how they are performing for us. So I would say stay tuned.

Thank you. Our next question comes from the line of Ralph Schackart from William Blair. Your question please. Ralph E. Schackart – William Blair & Co. LLC: Good afternoon. Even after stripping out the effect of acquisitions, just curious what drove the stronger than anticipated customer demand in the quarter, was that marketing driven? And second question, is there any major differences, I mean the purchasing habits of these customers, so the redemption rates as the Pull message gets communicated broader to your customers? Thanks.

Yes. And so, really quickly we drove in and again we’re – this is – we’re on track, we’re executing against our plan, and I feel like in Q1 we’ve moved in the right direction. A lot of the growth we generated that lifted our North American growth rate from 10% in Q4 to 15% in Q1, came from goods, which had a very strong quarter at about 47% year-over-year growth. The rest of it was driven by activations, which were up, we added, I think 1.3 million new customers in the quarter not related to the acquisitions, but it was one of the strongest new customer acquisition quarters we’ve had. It’s up almost double from a year ago. So, certainly more people are activating on Groupon than ever before. And a big part of that is, as we said last quarter, we are just starting to really invest in mobile and getting people to activate on mobile and some of that early work has started to pay dividends. And finally, people who use Pull continue to spend more. I mean, the good news for us and again I wish things were quicker. But the good news for us is, people who use Pull, spend more, their lifetime value is higher. We just need more people using it, right. It only represents 9% of our transaction, which means the other 90% aren’t using it. And this is the same thing in mobile, people who buy on mobile are worth more to us. So we just need more people activating on mobile, but the ingredients are there. Ralph E. Schackart – William Blair & Co. LLC: Okay. Thank you.

Thank you. Our next question comes from the line of Heath Terry from Goldman Sachs. Your question please. Heath P. Terry – Goldman Sachs & Co.: Great, thanks. Eric, I was wondering if you could give us a sense sort of what stage you see the efforts that it is rationalizing and optimizing your international operations or whether it’s innings or quarters or 90% that you would suggest that we think about it in terms of getting them to the footprint and expense base that you think is optimal. And then with the efforts that you have made in terms of sales force efficiency in the Local business, what kind of improvements are you seeing either from more recurring revenues from Local businesses that are running persistent deals versus the technology investments that you have made at the improving sales force optimization?

Hey, Heath. Thanks for the question, this is Kal, I’ll take the first one and Eric will take the second one. If you look at our international segment, we need to split it into two, one is the EMEA and the other one is the rest of the world. EMEA, we feel very good with the basics, because we have four consecutive quarters of growth in billings, growth in net customers, growth in units sold, across all channels. We are in the right direction and we will continue to rationalize the SG&A there to increase and improve our leverage. And we are making very good progress on that and we feel very good about the path we are in. So that I would say definitely at a far more advanced stage than the rest of the world. With respect to rest of the world, we have made significant progress in the last quarter. For the first time ever even excluding Ticket Monster and foreign exchange, we grew our billings 9% year-over-year and we reduced our losses by greater than 50%. So, the business is healthy, but we are in an earlier innings like we always told in the earlier calls in that APEC. Rest of the APEC in Latin America that will continue to focus on (inaudible) overall SG&A reduction. But do it in such a way that we continue to improve the merchant and customer satisfaction. And we are in a earlier innings on that but we have complete faith that by the end of the year, the rest of the world region would be segment operating income breakeven while it will continue to grow.

And in terms of sales force efficiency, we have added a significant numbers of deals to our marketplace over the past year, I mean, in North America alone over a 95,000 deals and over 200,000 deals worldwide. And we’ve done this without adding a significant number of headcount to our sales force, I mean, its 5,000 people deep. So it’s a very large sales force, but supply is up 4x or 5x over the last year and the sales forces remained fairly constant. We have been able to do that by building, I think the most sophisticated suite of back office local commerce sales tools that have ever existed and by getting most of our merchants now it’s well over 75% of our merchants that opt to be on Groupon in a perpetual manner their deals are all up all time. That being said for the market place to thrive, we are going to have to continue to add supply and add demand. And it is a big shift and so we are kind of mindful and to how we do that and we have been releasing a series of tools like for example deal builder, which improve automation and help us get more merchants on the platform. Heath P. Terry – Goldman Sachs & Co.: Great, thank you.

Thank you. Our next question comes from the line of Mark Mahaney from RBC Capital Markets. With your question please.

Hey guys. This is Brian on for Mark, thanks for talking the question. Wondering when can you expect to see an inflection point in terms of US shipping efficiencies, and also what is your strategy for international shipping looks like relative to the U.S. I guess, in terms of [shift to] direct over time and also drop ship capability?

Yes. I’ll take your question and Jason may want to add in few points. We are very much in the process of rationalizing our warehouse and fulfillment costs. Like Jason and Eric mentioned in the script. We are adjusting our drop ship mix to direct fulfillment. We are also planning to get more queues into one box by utilizing the distribution center we have built and we have increased our shipping threshold from 1999 to 2499, while we are rationalizing the outbound freight cost by renegotiating deals of the carrier. And we are doing it both in the United States as well as in the rest of the world. Like Jason and Eric mentioned, we expect to see significant progress starting Q2 and we expect that to really be in the double-digit by the end of the year.

Yes. The only thing I would add in terms of outside of the U.S. is that, while Kal said lot of the same approaches are being taken. I mean, if you look at the margins for the direct business outside the U.S., they are already much higher at about 13% in EMEA in particular. You have to keep in mind that there having their own facility is not as urgent, because you have much shorter geographies to ship to, and therefore the use of three fields and drop shippers actually is very efficient, and as you can actually see that has already manifested in the financials today. So that’s something where you shouldn’t expect to see any build out in fulfillment centers probably anytime this year.

Okay. Thank you.

Thank you. Our next question comes from the line of Gene Munster from Piper Jaffray. Your question please. Gene E. Munster – Piper Jaffray & Co.: Hey, good afternoon. If we could kind of revisit the take rate you mentioned some of the one-time impact from TMON, but how should we think, it’s still in that 30% to 40% range, and any sort of thoughts on how you expect that to play out, how it’s been used as a tool that kind of motivate some merchants to participate more in the marketplace? Thanks.

So this is Jason, I will just add sort of mathematically the take rates I think you alluded to it. The take rate if you exclude TMON is very consistent with where it was last quarter and where it’s been on the past. It’s the TMON business, which has a low double-digit take rate, which is very unique. Outside of that, we’re still in that same 30% to 40% range for Q1.

And what I think – I’m sorry. Gene E. Munster – Piper Jaffray & Co.: No. Have you been needing to, I guess, it’s been relatively consistent, but you see going forward to try to continue to build the marketplace, do you use take rate as a tool or a lever to do that, or should we kind of think of it as becoming more consistent?

Yes. The take rates in Local have been relatively consistent over a long horizon of times. So I mean, and I don’t – there is nothing we see in the short horizon that would materially affect our local take rates. What we do see is meaning on incentives and discounts more and more to drive awareness of our marketplace and to drive awareness in mobile. So, for example, in North America in Q1, we spend a significant amount of money to drive – on incentives to drive awareness of our marketplace. We would actually, you can see it up on the site today, I think if you go to the site today, you’ll see something like 10% off, great hotel deals that you can go shop for and you would go to getaways and you go into the search box and you type New York Hotel and Chicago Hotel, and you would see various deals and this is driving awareness for our marketplace. It’s been a very effective form of advertising for us, and we intend to continue to do it until we get the awareness in the marketplace where we wanted to be such that it’s counterbalancing some of the headwind we talked about earlier. Gene E. Munster – Piper Jaffray & Co.: Okay. And then my final questions just in terms of total deals you mentioned 200,000 deals globally on the network and what is that optimal numbers do you think over the next few years?

I have been asked this question a lot. I wish I had a perfect answer. Local is the long tail. We are solving problems that has never been solved it’s one of the reasons that when you think about all the variables we have to forecast and manage, if you look within all the microscopic elements of our results, you’re always going to see some variability, but we’ve done a pretty good job of managing the results in the aggregate. It’s still complicated and you have to piece it together. What was the first part of your question, second part of your question? Gene E. Munster – Piper Jaffray & Co.: Just what was that number is it the $0.5 million deals do you think or 700,000 now?

So, I mean, in terms of the total number, which bounces around a bit, I used to think it was probably in the neighborhood of maybe a quarter million or half a million might be the optimal number, but because it’s the long tail and because it is a complicated problem, you are trying to solve all of these different pairing combinations like flower shops in Topeka, Kansas or whatever the pairing combination might be in Local. And so it is impossible to know for sure, I would say this that we still deliver far too many no search results and we don’t yet have an experience where people can pull out their mobile app go to search box type something in and get an amazing deal right around them. And so I think, we are going to continue to invest until we get to that point, maybe its $0.5 million deals, I would be guessing to tell you the exact number, what I do know is that we been able to add a significant number of deals without materially increasing the size of our sales force, because of the tools, because of the automation. We have new stuff hitting the market that’s going to just enhance that and so we feel comfortable that whatever that number is. We are going to be able to get there without making an outsized investments. Gene E. Munster – Piper Jaffray & Co.: Final quick question, you said that the deal growth was number of deals on market price was 42% growth in the March quarter. Can you remind me what that was in the December quarter?

I believe it was over 65,000 in North America. Gene E. Munster – Piper Jaffray & Co.: Great, thank you.

Thank you. Our next question comes from the line of Tom White from Macquarie. Your question please. Tom White – Macquarie Capital Inc.: Thanks for taking my question. My question is on consumer awareness of the poll marketplace in North America. I apologize if I missed this, but I believe you guys tested some brand TV advertising in the U.S. recently that sort of touts the search ability on the site. Did that launch early enough in order to affect that 9% of searcher’s number or if not are there any early findings or performance metrics that you guys can talk about relative to that and maybe just comments on how you are approaching TV advertising for consumers and Pull in the U.S. thanks ?

The short answer is that as it launched very late in the quarter or at the beginning of the April, I can’t tell on the exact date. It launched in a few cities. We are testing it before we roll it out. And the results are far too early to have conclusive results of the campaign, but if you saw you’re clearly getting the message we are trying to convey, which is we want to be that starting point of Local commerce. We want people opening up that app and searching when they are out and about to find amazing deals right around them. And we’ve got to just increase that awareness. So all the things we’re dealing whether it’s discounts and incentives on the website or in mobile, whether it’s TV ads that we are running whether its national deals that can only be found in search all these things are meant to drive awareness for the ultimate experience we know people want to have which is when I have a need I go to Groupon and I find a deal nearby and I buy it and I use it right away. When people do that redemptions are -- same day redemptions or short-term redemptions are way up that’s the perfect experience to have. That’s when you get people increasing their spend and using Groupon as making part of their daily life. Tom White – Macquarie Capital Inc.: Thank you.

Thank you, our next question comes from the line of Arvind Bhatia from Sterne Agee. Your question please. Arvind Bhatia – Sterne, Agee & Leach, Inc.: Yes, thanks for taking my question. (inaudible) to on the shorter-term or same day redemption. I am sorry if I had miss this, but could you update us on how that is trending, I think last quarter you had said it is sort of doubling in the early part of the year. And then on mobile activations, Eric, wondering if the trajectory there, I think you had said those guys think about 30% longer. Anything materially changing their as you have been pushing more of that and just generally on the acquisitions, has there been any surprises that also for positive or negative that you would like to share with us? Thank you

So let me take the first and the third, but maybe the second you can repeat because I missed part of it. So, redemptions continue to outpace our billings growth, unused Groupon are still down with, materially down over 30%. So, we are still seeing a similar trend that we saw. That being said over the last several weeks, you know, we started to see redemptions really leveling out and the number of unused Groupons per user has begun to the level. And that’s what you want to see and that’s when you know you kind of shoot through or used up bank of unused Groupon or that backlog of unused Groupon. In terms of acquisitions, we (inaudible) has there been any really surprise us – ideally is doing exactly what we had expected and still very new, we required it only few months same with TMON. I would say there’s anything to call out it simply that the opportunity in Korea is truly amazing that market is growing quite a bit. And the billings growth has been a fairly exceptional for TMON and we’ve been investing in that growth. We dialed up our marketing spend in the first quarter in TMON, in fact most of these spend in Asia was transactional marketing for TMON. And we expect this spend to be a fairly significant again in Q2. And then I’ll start to taper in to back half of the year as Kal mentioned that we will be able to generate positive EBITDA. And then your second question was…. Arvind Bhatia – Sterne, Agee & Leach, Inc.: Yes, my second question is on mobile activations, I think that was one of the areas where you’re spending, making some marketing investments to get people who’ve downloaded the app to become active sooner. And I think you shared with us that mobile customers take about 30% longer to activate. Just wondering if that’s changing at all in anyway resulting from your push.

It’s certainly it is one of the areas of we’re doing a very good job. And if you look at our activations they’re up from roughly 700,000 a year ago in Q1 to $1.3 million excluding TMON and ideally this quarter. A lot of that’s mobile and a lot of that is us investing in some form of discounts, you know, say $5, if you download the app and buy something right now we save 10% off a restaurant if you buy a deal right now. So there is a certainly lot of incentives that are being used to try to dial up that those activations in mobile. And when you dial it up as this we have when you get the kind of customer growth that we got, you spend per customer will look a bit flat as ours does. Because you’ve added a ton of new customers that who continue to spend in our lifetime value will go up over the next several quarters, so it’s part of that. We said we were going to invest in marketing to drive billings growth and we did just that. We dialed up our marketing, which brought EBITDA down a bit, but we still feel comfortable that we’re going to deliver roughly $300 million in EBITDA for the year and $300 million EBITDA for the year, which is obviously a raise from last quarter. And we still invested pretty heavily this quarter, up $30 million in marketing and still delivered over $40 million in EBITDA. So we are exactly where we thought we would be in that regard. Arvind Bhatia – Sterne, Agee & Leach, Inc.: Great. Thank you.

Thank you. Our next question comes from the line of Tom Forte from Telsey Advisory Group. Your question please. Tom Forte – Telsey Advisory Group: Thank you for taking my questions. What I wanted to know is when you think about entering new opportunities, which is that Groupon Basics, how do you make a decision on what opportunities with this Groupon basics. How do you make a decision on what opportunities to enter? And then towards that initiative to what extent can you leverage the current infrastructure and to what extent you have to make changes down the line adding fulfillment pertained to that nature (indiscernible) that business? Thank you.

So I will – Kalyan I will take it. The first part is, I mean, look, our – the vast – we’re highly focused on Local, it’s obviously what drives our business, it’s where our main strategic focus is. That being said, we built these incredible categories. Our foods business in North America alone is now – faced over $1 billion dollars. And world-wide, it’s 2.5 plus billion or whatever the run rate is. So we are very mindful of making sure that our goods business and our getaways businesses and our lives business are all driving. And from time to time we do add categories, basics for us is one of those categories, and we think it fits right in, in large part, because it just fits the value prop that we offer, which is highly curated, unbeatable deals that our customers love and want to buy and can consumer in all the above.

That’s a great point, Eric. And also basics is going to help us a lot with customer retention, because these are products you want to buy very regularly and then if Groupon offers them at unbeatable value in a very curated way, we believe it is going to help us with our customer loyalty and also our ability to get our order size, a number of order units you will have in a shipment go up. So in that way if it’s very much into the core value proposition of Groupon goods business.

And then just to add on it all get -- as Kal mentioned earlier how much really it all get distributed out of – there was renewed focus on distribution for own performance center and basics, these are items that are shipped in bulk , which keeps the freight and logistics cost very low, and they get shipped out of our distribution center. We are utilizing our infrastructure. Tom Forte – Telsey Advisory Group: Thanks.