Hello, and welcome to Groupon's First Quarter 2024 Financial Results Conference Call. On the call today are CEO, Dusan Senkypl; CFO, Jiri Ponrt; and SVP, Corporate Development and Investor Relations, Rana Kashyap. [Operator Instructions] Today's conference call is being recorded. Before we begin, we would like to remind listeners that the following discussion and responses to your questions reflects management's views as of today, May 9, 2024, only and will include forward-looking statements. Absolute 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. Additionally, information about risks and other factors that could potentially impact the company's financial results are included in its earnings press release and in its filings with the SEC, including its quarterly report on Form 10-Q. We encourage investors to use Groupon's Investor Relations website at investors.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 also 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 its Investor Relations website, you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable measures under U.S. GAAP. Before we begin, I'd like to apologize for the technical difficulties regarding this call late. And with that, I'm happy to turn the call over ton Dusan.

Hello, and thanks for joining us for our first quarter 2024 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-Q, which contain more detail on our first quarter results. I will start today's call on Slide 5 and cover our first quarter numbers. Our business grew plus 1% year-over-year in the first quarter. While 1% growth is far below my ultimate goal and the opportunity I see ahead, I'm pleased to achieve this milestone. You need to travel back 8 years to 2016 to find the last time that Groupon grew revenue on a consolidated basis. Our strong performance in Q1 was driven by our North America segment, where revenues in our North America local and travel categories were up a combined 8% year-over-year. In addition, our active customers in North America local and travel grew on a sequential basis. As a reminder, these 2 categories represented 74% of our total business in Q1. While we are far from declaring victory and clearly have more work to do in our International segment and our Goods category. We believe the improved performance of our main market is a strong positive indicator that our transformation plan is working. There is no single silver bullet that drove this improved performance. It's a result of many changes aligned with our transformation plan across our business, including but not limited to rebuilding our performance marketing channels, reducing our reliance on promotional spend, improving our productivity through addressing low-hanging fruit across our business and improving supply quality through our sales transformation efforts and returning merchants as the macroeconomy normalizes.…

Thanks, Dusan, and thank you as well to everyone who is joining us today. It's a pleasure to be speaking with you. I'll use my time today to provide further insights into our first quarter financial results, progress on our cost savings actions, update on the other business items and our updated outlook. Turning to Slide 11. Let's jump into our first quarter summary financial results. In the first quarter, we delivered global billings of $381 million, a decrease of approximately 4% year-over-year. Revenue was $123 million, and increased 1% year-over-year, a significant improvement in year-over-year trends versus our fourth quarter results and above the high end of the guidance. Revenue as a percentage of gross billings was 32%, an increase of over 150 basis points year-over-year, and we benefited from favorable variable consideration trends, while other sectors were relatively stable. Moving on, our gross profit as a percentage of revenues was 90%, a slight improvement from the prior quarter. Going forward, we expect the gross profit as a percent of revenue to remain in the 87% to 90% range. Marketing expense for the first quarter was $29 million or 26% of gross profit. Going forward, we expect marketing as a percentage of gross profit to remain within the range we reported over the last 3 quarters. Adjusted EBITDA was positive $20 million, and we recorded the fourth straight quarter of positive adjusted EBITDA. Our last 12-month adjusted EBITDA has now reached $80 million, a $93 million increase versus our previous 12-month adjusted EBITDA a year ago. Turning to cash flow. First quarter operating cash flow was negative $10 million, and free cash flow was negative $14 million, a strong improvement versus last year when we reported free cash flow of negative $86 million. We ended the quarter with $159…

And we will now begin the question-and-answer session. [Operator Instructions] And your first question comes from the line of Sean McGowan with ROTH MKM.

A couple of questions. Can you give us some sense of progress that you've made on a couple of initiatives that you've talked about in the past, specifically increasing the frequency of Groupons as a gift. And I think more generally than the process of making the platform more merchant friendly. I think that may be part of what you're touching on in some of these technical glitches you've had. But taking a step back and say, what kind of progress are you making towards realizing those 2 goals?

Okay. Thank you, Sean, for the question. Let me start with the later part. I was mentioning in my script that we released a feature for our merchants with dashboards where they can clearly see the impact of our promotional activities. This was something merchants were asking for several years. and what it provides is that you can clearly see how big additional volume of sales you can get if you provide additional discounts. So our merchants in the past were kind of blind from this perspective? And it has -- may have additional impact on them. They know that if they continue with additional promotions, they can sell more and have like better visibility. So this is one example of what we are doing in terms of improving merchant experience. And now every quarter, every month, we will be adding more and more features to this functionality so that it's much easier to manage the campaign on Groupon and achieve the goals which every specific merchant has. In terms of gifting, I don't have any additional specific information about what I was talking about the last earnings. Last earnings, we covered the Valentine's Day where we see great results. We have Mother's Day ahead of us now. But really the biggest -- main season for gifting is Q4. So our key focus is to make sure that both products and also the offering, meaning the deals which we have for gifting will be much, much better for Q4 season. And then maybe the other initiatives which we are focusing on is the regionalization, which is an important part of it. And we also see very, very positive progress but no specific numbers, which I will be able to report right now.

Okay. And if I can ask another one. The dramatic disparity between the performance of North America travel and International travel. I don't think the economic profiles are -- would explain fully that disparity. Can you talk about what would explain the disparity between these 2 markets?

Between North America and International?

In travel, yes.

Okay. We have better connectivity in North America, which makes it much easier to plug in some of our partners compared to International, some features which are available on main market are simply not yet available in International. However, I mentioned that we implemented SiteMinder and that platform, for example, will be implemented -- or is implemented and right now both in NA and on International markets. So it will allow us to put more inventory on International market and improve the performance of travel also on International markets.

[Operator Instructions] And your next question comes from the line of Eric Sheridan with Goldman Sachs.

Maybe a big picture 1 or 2, if I could. One, in terms of incremental investments on driving platform growth, how would you characterize the opportunity to either be driven by user growth or existing shopper growth and driving more utility or frequency among shoppers on the platform. Which do you think -- you see is a more fertile ground for return on investment over the next 6 to 12 months? And the second question would be, as you get further along in running the business, what do you see as some of the competitive advantages but also some of the challenges facing the company when you think about the competitive landscape for local services and local goods?

Thanks, Eric, for the question. In terms of growth and supply, we don't need to grow supply in terms of number of merchants. Actually, I expect that we will go down, and we are in the process of removing low-quality merchants. What we need to do is grow number of quality merchants and have the right structure of deals with them. So that the deals make sense both for consumers and for merchants. And this is part of our market manager and the sales regionalization activity. I still see Groupon primarily as a supply-driven marketplace. So this is our main focus in terms of growing the marketplace. But obviously, hand in hand, we should be coming with product, which is easier to use, improve the bookability among our deals and do our changes in marketing. To increase the user frequency, I actually believe that we will need to grow some categories which drive frequency, like food and drink and similar categories. And here, it goes back to improvements in terms of how we are doing the sales. We need to really do the -- define the ultimate goal for every deal with the merchant because -- to give you an example, for some deals, when you go to the restaurant and you have some upsells like additional drinks, wine. Our current take rate when you take into account additional revenue is actually pretty low and vice versa. Whereas the yields where upsell is not expected in that case, actually, our take rate should be more comparable [indiscernible] and similar. So in order to move ahead in this area, we need to do some product improvements and prepare ourselves to be able to work in this more like consultative type of sales. And in terms of competitive advantages and challenges, I see personally Groupon is the best platform to start and grow the business. And yes, we have competitors, you can even take Google and Facebook where sponsored products [ AdWords ] as a competition, but Groupon really is performance based, meaning that the merchants are paying Groupon only if we deliver them to customers. I think it's a big advantage. We cover pretty much all verticals. We have some other vertical marketplaces as competitors, but no one is doing the whole scale. And I see this combination of this performance approach, great advantage and being Groupon is great partner to local businesses.

And your next question comes from Sean McGowan with ROTH MKM.

Again for a follow-up opportunity here. I meant to ask earlier on travel. Do you think -- you talked about some of these glitches, maybe not being worked out until the end of the second quarter. I don't know if you're talking specifically about travel, but do you think travel could get back to the Q1 level by Q3?

Yes. I think we have a decent chance to get to similar levels.

Okay. That's helpful. And you mentioned either on this call, I don't think you did or in a filing, how much you've got for the sale of those intangibles?

No. Well, there is confidentiality about this deal and everything what -- about this deal is contained in Note 2 of our earnings disclosure. And sorry, we can't disclose.

Okay. But when you mentioned in the prepared remarks about the $90 million, that does not include what you already got, right?

No. Yes, correct. This is what we still have what we believe we can get from other noncore assets, primarily GiftCloud and some remaining stake.

And there are no further questions at this time. And this will conclude today's call. We thank you so much for your participation, and you may now disconnect.