Good day everyone, and welcome to Groupon's First Quarter 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the company's formal remarks. Today's conference call is being recorded. Now for opening remarks, I would like to turn the call over to Vice President of Investor Relations, Tom Grant. You may proceed, when ready.

Hello, and welcome to our first quarter 2016 financial results conference call. On the call today are Rich Williams and Brian Kayman. The following discussion and responses to your questions reflect management's views as of today, April 28, 2016 only and will include forward-looking statements. Actual results may differ materially from those expressed or implied in our forward-looking statements. Additional information about risks and other 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-K and Form 10-Q. We encourage investors to use our Investor Relations website as a way of easily finding information about the company. Groupon promptly makes available on this website, free of charge, the reports that the company files or furnishes with the SEC, corporate governance information, and select press releases and social media postings. On the call today, we will also discuss the following non-GAAP financial measures: adjusted EBITDA, non-GAAP earnings per share and free cash flow, as well as FX neutral results. 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 the non-GAAP measures, including reconciliations of these measures with U.S. GAAP. Unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2015 and are excluding year-over-year changes in foreign exchange rates throughout the quarter. And, now, I will turn the call over to Rich. Richard Williams - Chief Executive Officer & Director: Thanks, Tom. The first quarter was a strong one for Groupon, as we continued to make progress in becoming a daily habit in local commerce. Once again, we saw the immense promise in connecting customers with amazing small businesses to experience…

Thanks, Rich. We delivered continued progress on our four key priorities during the first quarter. Our focus and strong execution led to solid results, with revenue of $732 million, adjusted EBITDA of $31 million, and non-GAAP earnings per share of negative $0.01. As I walk through our results, all comparisons, unless otherwise stated, will refer to year-over-year growth and are FX-neutral. Let me begin by focusing on our margin improvement initiative. In North America, we delivered the second quarter in a row of services revenue growth in line with gross billings growth. In Q1, North America's services billings grew 5.6% to $643 million, and revenue grew 6.1% to $213 million. We also improved shopping margins to 12.3%, a 390 basis point improvement on a 3.3% increase in gross billings. The net result of our margin focus was a North America gross margin of 23% and a gross profit of $216 million, which is up 11%. To put our work and margins in perspective, $216 million is the second-highest quarterly gross profit we reported outside of the $219 million we reported last quarter, and the $219 million last quarter was generated with $110 million more in gross billings. As Rich mentioned, we believe the results in our international segments continue to reflect execution challenges, largely due to restructuring and earlier stages of marketplace and operational developments. Billings and gross profit declined on an absolute dollar basis. Our decision to close countries and FX were significant contributors. Billings in most remaining key operations such as the UK, France and Germany were largely stable before FX, which was a good result considering that these countries are working though head count actions and remain one years to two years behind North America in terms of marketplace fundamentals. International gross margins slightly declined during the…

Thank you, sir. . Our first question will come from the line of Ralph Schackart. Please go ahead. Your line is now open. Ralph E. Schackart - William Blair & Co. LLC: Good afternoon. Looks like North America and European trends are pretty stable. However, Rest of World continues to sort of decline a little bit. Just curious if that's the wind-down of other markets driving the trend, and when you think Rest of World may stabilize? Richard Williams - Chief Executive Officer & Director: Sure. Thanks, Ralph. I'll start and Brian will probably pile on after. I mean, you're definitely seeing the effects of our streamline and simplify imitative in Rest of World and just restructuring in general. We have made some moves on specific countries in Rest of World, as well as we've exited the shopping business in a number of countries in Rest of World. So, you can see that impact as well. The other thing that I'd add to it is restructuring itself is a significant undertaking, and it's the same folks that have to operate the businesses that have to work through that challenge. And, it's a real challenge, and as fast as we've moved, we put a significant load on the teams. And they're thankfully reacting really well to it and continuing to make progress on it. The other thing that I'd say is you did see actually – once you take out some of the cost of restructuring, actually did see a bit of a step forward in Rest of World profitability, which Brian will add on to.

So, as Rich mentioned, we did see our segment operating loss on an absolute number increase, but if you remove the restructuring charge, segment operating loss in Rest of World actually declined quarter-over-quarter. We still have a bit of an operating loss to focus on, so you'll watch us continue to make progress over the coming quarters to minimize or eliminate that loss. Ralph E. Schackart - William Blair & Co. LLC: Great. One more if I can bolt-on. As you look at sort of the footprint of the countries that you're operating in today, do you think you're sort of operating in the right number or do you think that you may continue to wind down some more countries going forward? Richard Williams - Chief Executive Officer & Director: So, our restructuring process is ongoing. And we're looking to try to wrap it up by September. And, as we go through that process, we're continuing to evaluate our country footprint, where we can win, and we'll continue to make assessments through the end of the process.

I think the only thing that I'd add, Ralph, is that as you've seen us really cover restructuring over the last six months or so, we spent a lot of time focusing on country footprint. Moving forward, you're going to see us do more of what we talked about it a little bit in the earlier remarks around city prioritization that we've actually tackled in a number of countries. And I think the real core for us is to make sure that we're focusing our energies, our resources and our people on the biggest opportunities, and in the international business in particular that means the biggest cites. So, as an example, the vast majority of the GDP in the UK sits in London, last time I checked, it was right around half. So, the real core to win in the UK is to make sure you have London in particular, really well staffed and with all support that it needs to really grow that marketplace. So, you'll see us shift a bit in our conversation from countries to making sure that we're in the right cities and our footprint is optimized around the opportunity in cities in particular. Ralph E. Schackart - William Blair & Co. LLC: Okay. That's helpful. Thank you very much.

Thank you, sir. Our next question will come from Ross Sandler. Please go ahead. Your questions please.

Hi. Thank you. This is Kevin LaBuz on behalf of Ross. You guys did a really good job, adding new customers in North America this quarter. Just wondering if you're seeing any major differences between the customers you added in North America in terms of spend levels and in terms of customer acquisition cost between the new customers and let's say, your typical customers? Richard Williams - Chief Executive Officer & Director: So, thanks for that, Kevin. Yeah, we're really happy with our progress on the marketing side. We started to ramp in Q4 and as we've said there, it was mostly transactionally ramped and the team reacted really nicely in Q1 and quickly moved over to the acquisition marketing and you can see it in the results, adding 1 million customers in the quarter is a really nice step forward. Our customer quality and cohort quality, is in a really good spot. I mean it's right within our historical ranges, it's a couple of percentage points lower than our Q1 specific cohort from last year, but it's nothing that we would see as out of range or that we're really concerned about at this point and they're tracking nicely. The important thing to remember is that, yes, I mean, those cohorts take time to build and when we shared the cohort data in the past, when we look at our annualized cohorts, you can see that they build consistently up into the right over time and they become very predictable. So these cohorts though they're still in various stages throughout the quarter, they have the same basic shape of the curve so far, and we're going to be watching them like hawks to make sure that they stay on there. And our marketing teams – the other part of our marketing teams that's really tacked with customer health is of course really focused on making sure those million customers have a real smooth ramp and introduction into Groupon.

Got it. Thank you. And then, just on the good side of the business again, really nice progress in North America on getting margins up, would you expect that trajectory to continue throughout 2016 or are we going to kind of stabilize at these levels?

Yeah, we're going to continue to focus on margins both from a mix perspective and from a cost perspective looking at things like logistics. And we could see margins move around during the course of the year as we look at different types of mix. So we're very happy with the progress, we'll remain focused on gross profit dollars and we'll keep you updated as we move through the year.

Great. Thank you.

Thank you. Our next question will come from Dean Prissman. Please go ahead with your questions please. Dean J. Prissman - Morgan Stanley & Co. LLC: Thanks for taking my question. So on your newer cohorts in North America when you look at consumer behavior in terms of their mix of goods versus local purchase, how does this compare to your older cohorts or perhaps said another way, are you seeing your newer cohorts increasing their mix of local purchase? Richard Williams - Chief Executive Officer & Director: Thanks for that Dean. Just to make sure I heard correctly, it was a little bit muted, but you're basically asking have we seen any differences in our new cohorts and their mix between the channels, local versus shopping, our services versus shopping change, the answer is not materially, they're spending in a relatively similar way given that you had a little bit – you had slower growth in shopping in North America in particular. And, in Q1, relative to services, you're going to see a little bit of that mix shift reflected in the customer cohort, but we're talking a few hundred bps here and there. So, it hasn't been a material shift at this point, and if anything our cohorts are really consistent in their mix over time. Dean J. Prissman - Morgan Stanley & Co. LLC: Great. That definitely answers my question. And then, just an housekeeping item. Can you discuss how many points of growth came from OrderUp in the quarter, specifically you related to your North America local billings and local gross profit?

Similar to last quarter, we have roughly 100 basis points of growth in billings coming from OrderUp. Dean J. Prissman - Morgan Stanley & Co. LLC: Great. Thanks a lot.

Thank you.

Thank you. Our next question comes from Brian Fitzgerald. Please go ahead with your questions please.

Thanks, guys. One high frequency service kind of category – local category that we're focused on food delivery, order and take out. It seems very fragmented with e24 and GrubHub, Delivery.com, DoorDash et cetera. How does your food and drink team factor in there? How does the brands factor in there between OrderUp and Groupon To Go? And then, now that the team is fully integrated for a bunch of months now, how has that transitioned been? Are you seeing any cross-sell opportunities or inventory leverage across the brands there? Richard Williams - Chief Executive Officer & Director: Sure. Thanks for that, Brian. I mean you're exactly right, it is a fragmented category. I think there's opportunity in that fragmentation especially when you think about it from a merchant's perspective or a restaurateur's perspective. The difficulty with fragmentation especially in this phase is that, very few people have real consumer scale. And when we look at that space, it's clearly a space where we feel that we have an advantage coming in with now close to 27 million customers. We also have really significant reach in that space from a merchant point of view. To your point we actually have a food and drink team, it's a big business, it's a big part of our local business here and we have a lot of contact points with merchants overall. So at the very core, we think we have some really solid advantages there with just consumer and merchant reach. And then on top of that, I think now with OrderUp being fully integrated and it is fully integrated at this point, I think we now have a product advantage and this gets a little bit to your question about how does Groupon To Go and OrderUp really mesh in terms…

Great. Thanks, Rich. Richard Williams - Chief Executive Officer & Director: Thanks, Brian.

Thank you. Our next question will come from the line of Arvind Bhatia. Please go ahead. Your line is now open.

Okay. Thank you, guys. Just a couple of questions here. First one, I wondered if you guys can maybe talk about some of the early second quarter trends you might be seeing in terms of the marketing efficiency and customer acquisition trends? And then, there was a time when you guys used to give some color on your email versus non-email channels and the transaction volume. I realize email has become much smaller, but I wonder if you could maybe touch on that a little bit? And then, one question for Brian on free cash flow, if you could maybe touch on what you're expecting for the full year? Thank you.

Sure. Richard Williams - Chief Executive Officer & Director: Thanks, Arvind. Obviously, it's a little early to talk about second quarter, but I would just echo the comments made earlier about, we're really happy with the team's progress in marketing so far, and they've just done nothing but execute within our expectations. And our expectation was for some inefficiency, and our expectation is that they'll work that inefficiency down. So, I haven't seen anything that would have us thinking anything other than them staying on a good track, but it's still early and we'll have to report on 2Q marketing a little bit later this year. So, on email and NA versus non-email, just I think one of the pieces of marketplace fundamentals that we talk a lot about is the percentage of transactions related to search. And we've seen a nice improvement there and I think that has improved roughly 400 basis points year-over-year, was right around 27% in Q1 last year, it's right around 31% this year. So, just continuing to see more and more of our customers and consumers in general coming to the site, searching, browsing and finding what they want on Groupon, which is all good. Email continues to stay at about its share, that's in the 30%-ish range of transactions. So less than what we're seeing from the search related transactions, which while we're building a marketplace, is exactly what we want to see.

Arvind, on the free cash flow, we don't forecast for the year, but I will give a little bit of color on Q1. Our four key priorities do require investment. So you'll watch us have to spend money on our marketing expense as we increase it roughly $150 million to $200 million. We're paying severance under our restructuring and with our negative working capital cycle, we do have to fund as we exit countries and shrink goods. Outside of these investments, our traditional cash flow cycle continues and we don't really see that changing. So I would also point that in Q2 we funded our escrow for securities litigation. So we do have a one-time event in Q2. Our 3/31/2016 cash balance of roughly $688 million, if you add that to our $250 million that we received on our convertible note plus our availability under a line of credit, we have over $1 billion in availability and our balance sheet remains very strong and we're very comfortable with where that sits.

Okay. Thanks guys.

Thank you.

Thanks.

And presenters we have one last question in the queue. And it comes from the line of Ken Sena. Please go ahead. Your line is now open.

Hi guys. This is Matt filing in for Ken. I was just wondering if you have any updates on how order discounts are trending for you guys, and how you see that shaping up for the rest of the year? Richard Williams - Chief Executive Officer & Director: So, I'll start and Brian will probably pile on, so thanks for that Matt, the easy way to think about order discounts, just as a percentage of billings, they're in the range from last year, roughly the same as Q3 in 2015. The only outlier really last year was in Q4 and that was really just a sign of strong seasonality. More than anything, I think our order discount changes quarter-on-quarter and year-on-year, which is about $9 million globally year-on-year, $7 million in NA, just reflecting increased testing to tune and refine the program, which the team is doing a great job on. Increasingly, the program is focused on continuing to introduce customers to new channels, to new features, to new offerings. And we think that's fertile ground, and we'll continue to explore in that space.

Order discounts globally were $50 million, order discounts in North America were $39 million, and so order discounts in North America up roughly $7 million and $9 million globally. We'll look at order discounts for selective items. In the first quarter, we used order discounts as an example to help activate customers. And as we look toward the year, we would continue to think about order discounts as roughly around a similar percentage of billings. And we'll also continue to experiment in different quarters on activation techniques, which could cause the order discounts to move around a little bit in each quarter.

Great. Thank you. Richard Williams - Chief Executive Officer & Director: Thanks, Matt.

Thank you, sir. We do have another question in queue, comes from the line of Blake Harper. Please go ahead. Your question please.

Yeah. Thanks. I had a question for Rich. Could you discuss significantly SEO, (37:09) if there's any traffic or transactions that you've seen from there that have materially increased either from TGS or through Groupon content or from anything else? Richard Williams - Chief Executive Officer & Director: There hasn't been anything really material there, Blake. I mean we continue to make improvements in that space, on the pages front we've more than doubled the amount of indexed pages year-over-year. I think we're right around 2 million or so this time last year, we're up over 4 million indexed now. And we continue to build content on those pages from our customers. We're roughly 60 million pieces of review content which we're adding something in the neighborhood of call it 5 million to 15 million depending on the quarter just sequentially. So we're getting traction there and as you know, unique content matters a ton in that space. But there isn't anything major that I would point to. We're just seeing continued progress, you're seeing I think the continued development of the Groupon brand and the equity that we have, and the reputation of the URL and domain. In particular, it's really strong and it's only getting better, the more that we generate unique content both in local and in things like coupons, et cetera. So just good steady progress there and nothing specific to highlight.

Okay. Great. And then, if I could ask one more, if you could maybe update us with, has your relationship with Alibaba changed at all since they filed a stake and made the investment in your company. And does that investment that they've made change your Rest of World strategy as far as Asia is concerned. Richard Williams - Chief Executive Officer & Director: So, I would say the relationship has changed and just more that we're staying in closer contact. I mean they are now a large investor and we stay in touch with all of our large investors. And we more than anything have spent time with Alibaba so far just to make sure they understand where we're going. We want to make sure that all of our large investors understand our strategy and how we think about the future and the potential of the business. And we've done that, but it's still in the very early stages of getting to know you and all that sort of fun stuff, and we'll continue to build that relationship over time. It's far too early to have any one investor relationship change our Rest of World strategy. I mean, our strategy for Rest of World is well locked at this point, and it's streamline it and simplify it and we're going to continue to do that and continue to make progress on it like we have been for the last couple of quarters.

Got it. Thanks a lot. Richard Williams - Chief Executive Officer & Director: You bet.

Thank you. And presenters at this time, I'm currently showing no additional questioners in the queue. This will close our Q&A time, and this will also end today's conference. Thank you everyone for participating. This does conclude today's call. You may now disconnect, and have a wonderful day.