Hello, and welcome to Groupon's Fourth Quarter 2023 Financial Results Conference Call. On the call today are Interim Chief Executive Officer, Dusan Senkypl; Chief Financial Officer, Jiri Ponrt; and Senior Vice President, Corporate Development and Investor Relations, Rana Kashyap. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the Company's formal remarks. [Operator Instructions] Today's conference call is being recorded. Before we begin, Groupon would like me to remind listeners that the following discussion and responses to your questions reflect management's views as of today, March 15, 2024 only and will include forward-looking statements. Actual results may differ materially from those expressed or implied in the company's forward-looking statements. Groupon undertakes no obligation to update these forward-looking statements as a result of new information or future events. Additional information about risks and other factors that could potentially impact the company's financial results are included in their earnings press release and in their filings with the SEC, including their annual report on Form 10-K. We encourage investors to use Groupon's Investor Relations website at investor.groupon.com as a way of easily finding information about the company. Groupon promptly makes available on this website 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, the company will discuss the following non-GAAP financial measures, adjusted EBITDA and free cash flow. In Groupon's press release and their filings with the SEC, each of which is posted on their Investor Relations website, you will find additional disclosures regarding these non-GAAP measures and including reconciliations of these measures to the most comparable measures under the US GAAP. And with that, I am happy to turn the call over to Dusan.

Hello, and thanks for joining us for our fourth quarter and full year 2023 earnings call. It's a pleasure to be with all of you. Today's prepared remarks are posted on our Investor Relations website along with an investor presentation, which I will refer to during my remarks. In addition, I encourage you to review our press release and 10-K, which contain more detail on our Q4 and full year 2023 results. I will start today's call on Slide 5 and cover the key takeaways from the fourth quarter. First, our numbers. I am pleased to deliver another quarter of progress on our reported financial results, as our fourth quarter numbers came in above the high-end of guidance on both revenue and adjusted EBITDA. Our strong performance was driven by our North America segment where revenues in our local and travel categories were down a combined 3% year-over-year, a major improvement compared to the same period last year when these categories were down 31%. It's encouraging to see the progress in our North America local and travel categories, which represent 70% of consolidated revenue. While we are far from declaring victory and clearly have more work to do in our International segment and our Goods category, the improved performance of our main market is a strong positive indicator that our transformation plan is working. In addition to our top-line improvements, we also made progress on the bottom-line, where adjusted EBITDA margins improved 2,400 basis points compared to the last fourth quarter. A combination of better top-line and bottom-line performance resulted in positive $51 million of free cash flow as our negative working capital cycle benefited from both fourth quarter holiday strength and moderating year-over-year declines. From my perspective, robust financial performance is the cornerstone of a thriving organization, fueling innovation,…

Thanks, Dusan, and thank you as well to everyone who is joining us today. It is a pleasure to be speaking with you. I'll use my time today to provide further insights into: our fourth quarter financial results, progress on our cost savings actions, update on our liquidity position, our updated outlook. Turning to Slide 12. So, let's jump into our fourth quarter summary financial results. In the fourth quarter, we delivered global billings of $436 million, a decrease of approximately 7% year-over-year. Revenue was $138 million and declined at 7% year-over-year, a significant improvement in year-over-year trends versus our third quarter results and above the high-end of guidance. Moving on, our gross profit as a percentage of revenues remained stable at 89%. Marketing expense for the fourth quarter was $34 million, or 28% of gross profit. As we have discussed in our last two earning calls, our rebuilt performance marketing campaigns have received increased investment and this trend continued in the fourth quarter, where we increased our marketing spend 19% quarter-over-quarter. As we deliver additional improvements in the efficiency of our performance marketing channels, we will continue to review our marketing spend to ensure we strike the right balance between maintaining sufficient returns on each dollar spent and driving better top-line results. Contribution profit for the fourth quarter was $88 million, or 64% of revenues. Adjusted EBITDA was $27 million, as we recorded the third straight quarter of positive adjusted EBITDA. Turning to cash flow, fourth quarter operating cash flow was positive $55 million and free cash flow was positive $51 million, a strong improvement both sequentially and year-over-year, as our cash flow benefited from both Q4 holiday strengths and moderating year-over-year billing declines. We ended the quarter with $142 million in cash and cash equivalents, including $42.8 million…

Thank you. [Operator Instructions] Your first question comes from the line of Sean McGowan from ROTH MKM. Please go ahead.

Good morning. Thank you very much. I have a couple of questions, if you don't mind. One is, can you give us some thoughts on your capital allocation priorities? The balance sheet seen great improvements. You've eliminated that going concern. You've got some cash. Looks like cash flow prospects are good. Can you give us an idea of what the priorities are for capital allocation?

Yeah. I think, currently, we are here to make it sustainable. And, frankly, we had one positive quarter, and we still have to work on making long-term sustainable growth and positive cash flow of this company.

Okay. On user engagement, can you give us some thoughts there on what are you seeing currently in terms of the number of occasions that a user engages, and what's your goal for growing that?

Yeah. Thanks, Sean, for the question. We are focusing right now on the next-generation website, which will bring us many new opportunities. The one very positive signal which we have overall is the gifting, which opens another set of opportunities several times a year. But we have, like, many additional use cases, which we will start unlocking once we have the new website launched, and we will have that highly increased cadence of new features coming into the platform. So, this will be an area of our focus for later part of this year.

Okay. Great. I would imagine as you get that engagement up, it really has a significant impact on your cash flow and EBITDA. So, how big do you think gifting can get as a percentage of total revenue?

Yeah. I can't really comment any numbers, but, clearly, the current use cases on the platform are fairly limited. And as I said, there will be new features coming, but we are also focusing a lot on the curation of deals and bringing the right deals so that when the customers come to the website, there will be always something new and something extremely engaging for them. So, I think it should be another driver. This is by far to bring customers more often to the platform.

Great. Thank you very much.

Welcome. Thank you.

Your next question comes from the line of Eric Sheridan from Goldman Sachs. Please go ahead.

Thanks so much for taking the questions. Maybe two just on the supply side of the marketplace. How should we be thinking about elements of both gross additions on the supply side building as we go through 2024? And where you're most focused on reducing friction from the onboarding side for supply? And then in terms of supply retention, conversion, delivering ROI, how should we be thinking about elements of once that supply is where you want it to be, how that then would possibly translate into more marketing spend to drive growth? Thank you.

Okay. So, in terms of -- thanks. Eric, thanks for the question. And I will start from the backwards. So, in terms of marketing spend, I believe that directionally, we are on the level where we would like to stay. We still believe that we can grow the marketing in volume, but not in a percentage of gross revenues or -- of our gross billings. This is on one side. Then in terms of what we have on our website, we saw in last quarters that, plenty of suppliers who were working in the past, big merchants, national merchants who were working with Groupon, are coming back and we are doing more and more business. So, we are very confident that as our sales process, which is very consultative nowadays, is improving. We will be also able to grow the business with our existing merchants, which will have a very positive impact on overall Groupon results. And then, in terms of, like, supply proposition, which we have on the website, we have a lot of focus on the [top end] (ph) of the inventory. In the past, past management was focusing more on the automated process on an onboarding process for merchants through online acquisition. What we see is that we -- if we really support our merchants in the way how we are structuring the deals, it brings much better results. So, this is our focus. So, I expect that together with this regionalization where we will have real experts on the individual geographies, we will be able to optimize the marketplace coverage, and with the deals and with supply proposition so that we generate optimal results not only for Groupon, but the same will apply for merchant partners and for customers.

Thank you.

We have no further questions in our queue at this time. And with that, that does conclude today's conference call. Thank you for your participation, and you may now disconnect.