Good day everyone, and welcome to Groupon's Second 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 is being recorded. For opening remarks, I would like to turn the call over to the VP of Investor Relations, Tom Grant. Please go ahead.

Hello, and welcome to our second quarter 2016 financial results conference call. On the call today are Rich Williams and Mike Randolfi. The following discussion and responses to your questions reflect management's views as of today, July 27, 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 Forms 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. After three quarters of transition and intense focus on our four strategic priorities, we're improving the core business and seeing sustained progress, evidenced by our strong Q2 results. We are further along our path to becoming the daily habit…

Thanks, Rich. I'm more pleased than ever with my decision to join Rich and the team. My views on the opportunity for Groupon and the ability of the team to capture that opportunity have only been confirmed since my arrival last quarter. I'm excited to be here and report on our progress and executing against our strategy. As Rich articulated, we are seeing tangible progress on our strategic initiatives that are translating into meaningful results. We believe our initiatives offer multiple vectors for unlocking the benefits of scale and increasing returns for shareholders over the long term. The second quarter was encouraging, as we continued to execute well on our key priorities. As, I discuss our results, note that all comparisons unless otherwise stated refer to year-over-year growth and are FX neutral. For the second quarter revenue was $756 million and adjusted EBITDA was $34 million. Gross billings of $1.49 billion, declined 2%, led by an 8% increase in North America while EMEA and rest of world declined 12% and 21% respectively related to our streamlining and footprint reduction efforts. There a few items I want to focus on in our top line results. First, North America local gross billings of $542 million, accelerated to growth of 9%. We acquired our third new customer cohort in the quarter since stepping up our customer acquisition marketing spend in the fourth quarter of 2015. When we acquire a new customer, they generate a very long tail of spending well beyond our 12-month to 18-month payback horizon. These cohorts are now beginning to stack and drive a lift in billings. Second, we've made significant progress in our international segments as we streamline and narrow our country footprint. Following our disposition in Russia, we expect to complete the disposition of Indonesia in the third…

Our first question comes from the line of Tom White from Macquarie. Your question, please. Tom White - Macquarie Capital (USA), Inc.: Great. Thanks for taking my question, and solid quarter guys. I was wondering maybe if you could just give an update on some of the product improvements and innovation you guys have been talking about, kind of that forth of the key initiatives. I feel like the issue of less friction at the time of redemption and kind of better search like time based search. We've been hearing about that for a few quarters but I haven't seen any I guess big changes there. Is it just a question sort of prioritizing that versus all the other things that you guys are doing in the business or is there something kind of sort of structurally kind of delaying that? And then just quickly in the local business. I was just curious about how you think about kind of take rates for kind of local marketplaces over the long-term. How do you guys think about that as sort of the lever to maybe bring a lot more supply and a lot of merchants to the platform over time? Thanks. Richard Williams - Chief Executive Officer & Director: Sure. Thanks Tom. I'll start, it's Rich and then if Mike has some more to add he can jump on. On the product side, look I think the biggest change that you're seeing over time is that, I'm spending less time talking about the things before they're actually live for customers at scale, it's not that we're not making forward progress on the core product. It's just that we're not ready to release anything major on that front yet. But you call out a couple of things, that we are working on…

Thank you. Our next question comes from the line of Douglas Anmuth from JPMorgan. Your question please.

Hi, this is Lina on for Doug. Congratulations on a great quarter, and we were just wondering if you could discuss your TAM opportunity as you see it today, how big you think it is, how it might be different now, versus before and just basically how you define it internally? Thanks. Richard Williams - Chief Executive Officer & Director: Sure. Thanks. Thanks Lina. So, the TAM in this space has always been an interesting point. We've measured it in a bunch of different ways, and we still would say that the TAM in local is – and this is just in local is still measured in the trillions of dollars not in the billions of dollars. So, we obviously we look at the local spend and the local services spend and the categories that we serve and the geographies in which we operate, and those are huge percentages of the GDP of the countries in which we operate. So, it's just a massive TAM profile for the business. Internally though we don't get caught up all that much in that. I think the real core for us is how we think about delivering a great customer experience, which is having great quality of inventory and density of inventory at a neighborhood level in the categories that our customers shop in the most. And that's obviously different than the trillions of dollars, but again neighborhood by neighborhood is where that counts, and that's how we operationalize the business. So, I think the running room is really significant. We are even on a merchant level, say our addressable merchants in a place like North America is well north of 5 million, we're at 475,000 or so active deals. We're so low in the overall penetration of the marketplace in any dimension. So, I think we have just a ton of running room in local, but of course significant amount of work ahead to make sure that we have the operation that can support further scale and that we're doing the things we need to do to set the business up for future success.

Thanks. That's very helpful. Richard Williams - Chief Executive Officer & Director: Thanks Lina.

Thank you. Our next question comes from the line of Heath Terry from Goldman Sachs. Your question, please. Heath Terry - Goldman Sachs & Co.: Great, thanks. There was obviously a sharp change in customer acquisition trajectory here. Curious what channels you are seeing success in and how much leverage you feel like there is in those channels? And then to the extent that we're seeing this strong growth in local, can you give us a sense of what categories you're seeing the most traction in and what the ROI math that those advertisers are seeing, that's driving them to return to Groupon at the rate that they seem to be? Richard Williams - Chief Executive Officer & Director: Sure. Thanks for that Heath. On the channel side, we're seeing strong performance really across the program, I'd say this is the spot where the team is just absolutely cranking and it's multidimensional, it's not just marketing side. I think the team is doing great work on that front, but you also have to have great inventory to convert that traffic into buyers. So, we're doing a lot of work and good work to add quality inventory and then supply to the marketplace. But specifically in marketing we're seeing continued strong performance in our online channels we're a big customers obviously of Google and Facebook and we've done a lot of work on our own proprietary systems there to continue to optimize and find new spaces of opportunity and to get shaper in targeting. We've now moved in into the offline space while still very, very early in that space, we're excited by the early market response and by the kind of traffic that we're seeing coming into site and just the engagement overall on the site that really good positive…

Thank you. Our next question comes from the line of Ross Sandler from Deutsche Bank. Your question please.

Hi. Thank you very much. It's Kevin LaBuz on behalf of Ross. Looking at your Rest of World business, given the streamline footprint, why is the CSOI there deteriorating? And I've got a follow-up. Thanks.

Sure. So, thanks for that question and I'll talk about international just in general. Our goal on our international business is stability. And if you look at our international revenue on a FX neutral basis, same country basis, we're actually up slightly in the second quarter year-over-year. And looking at segment operating income, it's a similar story. If we look at our international business, if you adjust for the restructuring cost, it would be up slightly or would have positive segment operating income for the second quarter. But overall, our goal internationally is stability. Our primary focus has been on North America. In terms of our level of investment, we're roughly one to two years behind on EMEA, a little further than that behind on Rest of the World. But as we continue to execute in North America over time, we're going to translate that to the international portion of our business. The second thing I would just highlight is, is we're continuing to evaluate our footprint, we've made a lot of progress, we've eliminated or we've closed 20 countries in the last year and we will continue to evaluate that and have more to share on the upcoming call.

Great. Thanks for that. And then just thinking about the progress that you've made acquiring new customers in North America and how, is that buying behavior starting to be layered on? Do you think it's unreasonable to expect that you could exit the year growing North America services billings double-digits?

Thanks for that question. What I would say with regards to North America local billings growth is, first we're very pleased with the progress we've made, and we're pleased with the growth we saw in the second quarter, up 9% year-over-year. What I would just say though is that's not a metric we provide guidance on. And the other thing is as I just think about the phasing of that, what I would keep in mind is our total absolute revenue guidance for Q3 relative to Q2, where we would expect based on historical trends, Q3 revenue to be a little lower than Q2, so something to keep in mind. But that's not a metric we provide guidance on.

All right. Thanks very much.

Thank you. Our next question is from the line of Sam Kemp from Piper Jaffray. Your question, please. Samuel James Kemp - Piper Jaffray & Co. (Broker): Hey, thanks for taking the question. And congrats on the quarter. Can you characterize any changes you've been seeing in the cohorts you've been acquiring over the past couple of quarters? And I know it's early for your TV campaign at this point, but are you seeing any impact to your historical cohorts? And then Mike, can you give us an update on the marketing spend by region please? Thanks. Richard Williams - Chief Executive Officer & Director: So, I'll start Sam. Thanks for the question. There is no major changes to call out in the cohorts. We obviously track them very, very closely. It's a huge piece of our strategy to invest in customer growth, but we've also held ourselves to a high bar of ROI there. So, lots in those cohorts like hawks and so far, it's really steady as she goes, they're right in plan, they're right on target with our ROI thresholds in 12 months to 18 months payback, and our customer acquisition costs are right in range as well. So, they continue to track, but again, we're watching them closely, because we're making an investment over time. With a threshold to 12-month to 18-month range, we need to watch them over longer stretches of time. Our oldest cohorts since starting this are eight months old. So, while they're trending in a great spot, we have time between now and their full paybacks to watch. So, nothing major on that front. The only thing that I'll call out on our historical cohorts is really, if you look at spend per customer, I think we're really happy that spend per customer as it stable as it is. We're adding obviously a large volume of new customers. And as a trailing 12-month metric, there's an inherent drag on something like spend per customer, because we're adding millions of people who have only had literally handful of months to spend on the platform and to see that number is stable as it is, I think that's very, very encouraging for us. The relationship with that to television, I'd say has nothing to do with it. I mean, it's just TV, while we're excited about the early response in returns, we really launched that moving into June. So, it only had a couple of weeks of runtime in June, so I wouldn't have expected that to have any material impact in Q2, or either that frequency overall of the customer cohorts or our spend per customer. That's something that obviously we're hopeful that it does reengage existing or previous Groupon buyers and that puts us more top-of-mind with more, but I think we're going to need a couple of quarters of time and performance and messaging with those customers in order to see that kind of thing play out.

Yes. And for the quarter we incurred $92 million of marketing expense; that was $35 million higher than last year. The majority, $32 million of that was applied to our North American businesses. As Richard indicated, we've had a little bit of shift in this past quarter from marketing dedicated towards online channels versus offline. And as we look to the back part of the year, we'd expect to continue to build into our offline marketing campaign that we're quite excited about. Samuel James Kemp - Piper Jaffray & Co. (Broker): Okay, thanks.

Thank you. Our next question comes from the line of Brian Nowak from Morgan Stanley. Your question please. Jonathan P. Lanterman - Morgan Stanley & Co. LLC: Hi, this is Jon Lanterman on for Brian. I just had a question on order discounts. Looks like they're still continuing to grow. Is this about the right level where it is today, and where you're concentrating these discounts at? Is it still North American local? Thanks.

Thanks for the question. So, yes, order discounts were up roughly $12 million year-over-year and it was concentrated disproportionately on local. And the way we think about order – I'm sorry – on North America, the way we think about order discounts is we think about it as another tool similar to marketing. And we think about it in the context of payback threshold, particularly as we're working to acquire customers and then also maintain the frequency of our existing customer base. So if you look at the portion of order discounts attributable to North America was roughly 4%. We would expect order discounts to remain roughly in that range going forward. Jonathan P. Lanterman - Morgan Stanley & Co. LLC: And just a quick follow-up on that. Since you kind of think of these in tandem with marketing, if you look at your marketing spend up $35 million year-over-year, which is slightly less than that $150 million to $200 million guided to before. Do you kind of lump these two together or is that $150 million to $200 million directly attributable to marketing spend? Thanks.

The $150 million to $200 million is directly attributable to marketing. Jonathan P. Lanterman - Morgan Stanley & Co. LLC: Got it. Thank you.

Thank you. Our next question comes from the line of Brian Fitzgerald from Jefferies. Your question, please.

Thanks, guys. Can you give us maybe a little bit more color on your recent delivery partnership with Qdoba? How many of their 600 national locations are covered at the start? Maybe do you plan to cover all the remaining locations? And then what metrics should we look at or do you look at to determine how successful that initiative is? Richard Williams - Chief Executive Officer & Director: Thanks for that, Brian. Look, that's something that is a very new partnership. We've just announced that not too long ago. What I can tell you about that partnership right now is that we're currently active in nine markets with Qdoba. And we have the opportunity to expand as far as our market footprint and their market footprint overlaps. We still have room in our footprint to do that. But we want to make sure that we get the partnership off to a great start; that we're delivering the kind of food experience and delivery experience that we built that business on and that our customers expect and also that Qdoba's customers expect. So we want to make sure that we get that in a great spot before we start to roll it out. Overall, the OrderUp business is one that's it's integrated into Groupon at this point. It is a single team and a single technology platform that's powering our delivery across the board, and we're really happy with how the team and technology is performing. So they're being part of the overall local business, it's not a specific business that we'll call out and share specific performance measures on. But all I can tell you is we're very happy with the traction in the team and how we're competing in the marketplace because it's a very good customer experience and product.

Maybe one follow-up on that same point then. Do you find it's a differentiated strategy or leverage point that helps you enter new or more crowded markets? Richard Williams - Chief Executive Officer & Director: You mean food delivery in general or are you talking about a partnership with folks like Qdoba?

Just the partnership with Qdoba. Richard Williams - Chief Executive Officer & Director: Yes. Look, we think about that market I guess, apply on both sides. We're in the food delivery business because food is core to the local experience, and now delivery is an expected piece of that experience. And when we enter that market, we want to make sure that we have a great offering for customers, and I think that great offering for us has meant a couple things. One, it's meant predictable delivery and you have trackable delivery in our application. You've had it for some time, and it works really well. It also means a good mix of inventory, and that means folks that typically don't offer delivery, and that can be people like Qdoba and even very, very high-end restaurants, but also I think it does mean having really trusted brands and national brands like Qdoba that folks can get a great delivery experience with. So it does allow us to compete more effectively with our customers on that front, and I'd expect that we'll continue to do more of it.

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

Thank you. Our next question comes from the line of Tom Forte from Maxim Group. Your question, please.

Great. Thank you. Two questions. So, first off, I think you indicated that, by the time of the next earnings call, you're going to have a good sense of what your international footprint is going to look like. So on a percentage basis, how do you rate your North America, EMEA and Rest of World business as far as how far long are you in getting the businesses to where you want to be on a percent basis? And then, second, on mobile, you talked about making some changes there and some upgrades there. You already have a large number of downloads for the app. At a high level, what sorts of things you're going to try to do to improve your mobile offerings? Thank you.

Thanks for that question. And just to touch, I'll touch first on the international footprint, and Rich will address the mobile question. With regards to our international footprint, first and foremost what I would say is our focus is and will continue to be on our top markets, which we're investing in, particularly in North America, and we'll continue to think about our focus on that going forward, so that we continue to invest and drive business in those large markets. Second, what I would indicate is that, to-date, we've exited 20 countries. So we're a good bit along the way with regards to our country closures and moving on our footprint. The other point is, what I would just highlight is, if I were to look at the smallest country in our portfolio, our 27 countries, it's 0.1% of billings, so it's relatively small. So we'll provide a more fuller update with regards to our decisions on the upcoming quarter. But just to give you a little bit of context there, the other thing I would highlight is, our current guidance already incorporates or contemplates a range of potential footprint outcomes as you're looking forward. Richard Williams - Chief Executive Officer & Director: And I'll just add a little bit of color before diving on to the mobile side, Tom. And thanks for the question. On the percentage completion I guess, we just don't think about it really that way. And we've talked about just a relative maturation of the marketplaces in terms of really a place like Europe is one year to two years behind North America. And that means a couple of things specifically. If you just look in the basics of the inventory, the deal density and supply that we have is anywhere from one year…

Great. Thank you very much. Richard Williams - Chief Executive Officer & Director: Thanks, Tom.

Thank you. Our next question comes from the line of Aaron Turner from Wedbush Securities. Your question please.

Great. Thanks for taking my question and congrats on the quarter. Two questions, if I may. The first, and this may be a little early, but given the strength that you've seen in the marketing program in the first half of this year, do you expect a similar level of marketing spend in 2017 or maybe do we drop back to pre-2016 levels? Any thoughts there would be helpful. And then regarding the new cohorts that are coming in, are those coming in predominantly in the local channel or the goods channel, or is it more mixed? Thank you.

Thanks for that question. With regards to marketing and how I think about marketing, for this year we've indicated previously and still believe we'll be in the range of a $150 million to $200 million. We see our marketing expenditures building throughout the year, particularly with the ramp up of our offline campaign that we're very excited about. With regards to 2017, what I would say is on this call is we're providing revenue guidance and adjusted EBITDA guidance, but with regard to any metric or guidance beyond that on any measure, we wouldn't be providing any guidance at this time. Richard Williams - Chief Executive Officer & Director: Yes. And hey, Aaron, it's Rich. Just on the new cohorts, we're acquiring customers across the business. Our core focus is to acquire Groupon customers and that means shopping customers, that means local customers, travel customers, OrderUp customers. Our focus is on bringing new customers onto the platform across our properties and to drive lifetime value for those customers, maximize lifetime value for those customers. So we're doing a lot of work, of course, across local, but we want customers coming into Groupon, because ultimately we want to have those customers cross shopping. The real unlocking this business, as we said before, comes with frequency and over time, and the only way you get that is by having customers in your ecosystem buying from lots of different categories. So we're more and more focused on getting people in the door, so we have that opportunity in the future.

Okay. Got it. Thank you.

Thanks, Aaron.

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

Hey, good afternoon, guys. This is Jim Shaughnessy filling in for Mark today. Just a quick one for me. Couple quarters ago you said something along the lines of until you boost your new customer adds and have data behind those new cohorts, that you expect North America local growth to stay mid-single digits. We have the new customer adds. We have the data. You guys put up a high-single digit number. Is it reasonable to assume that we should expect this as a new run rate for North America local gross billings? Thanks.

With regard to North America gross billings, we're really excited about the progress we've made. And what I would say is in terms of what we'd look at going forward. You have some sense based on our revenue guide in terms of what we think overall P&L shape would look like. But what I would say is, as we're looking at the individual cohorts, what we've essentially seen is a lift that we believe has occurred a little earlier than we would've expected, but we still believe the overall value of the cohorts are going to be relatively similar. They're trending very much in line with the ROI thresholds that we had laid out at 12 months to 18 months. And so they're progressing nicely along that. But that's the way we're thinking about it.

Thank you.

Thank you. And this does conclude the question-and-answer session as well as today's program. Thank you, ladies and gentlemen, for your participation. You may now disconnect. Good day.