Hello, and welcome to Groupon's Fourth Quarter and Full Year 2025 Financial Results Conference Call. On the call today are Chief Executive Officer, Dusan Senkypl; and Chief Financial Officer, Rana Kashyap. [Operator Instructions] The company has posted earnings materials, including earnings commentary on the company's Investor Relations website at investor.groupon.com. Today's conference call is being recorded. Before we begin, Groupon would like to remind listeners that the following discussion and responses to your questions reflect management's views as of today March 11, 2026 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 its earnings press release and in its filings with the SEC, including its 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 report 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. And with that, I'd like to turn it over to Dusan to make a few opening remarks, before we jump into Q&A.

Hello, and thanks for joining us for our fourth quarter and full year 2025 earnings call. It's great to be with all of you today. Yesterday, after the market closed, we released our earnings and posted our earnings commentary on our Investor Relations website. Today I will make opening remarks and then open up the call for your questions. For more details on our quarterly and full year performance, I encourage you to read our full earnings commentary, press release and 10-K. I want to start with what matters most. 2025 was a milestone year for Groupon. For the first time in a decade, we returned to both billings and revenue growth. Full year global billings grew 7% to approximately $1.67 billion. We delivered a second consecutive year of positive free cash flow, and exited the year with approximately $296 million in cash. These are not incremental improvements. This is a fundamentally different company than the one that existed 3 years ago. Our core local marketplace, which represents approximately 90% of billings, grew double digits for the full year in both North America and international, excluding Giftcloud. Global active customers reached 16.2 million, up more than 5% year-over-year, with North America local active customers growing 12%. Now let me be direct about Q4. We did not finish the year the way we planned. Global billings grew 4% year-over-year, but came in below our guidance range, as did revenue and adjusted EBITDA. The shortfall was not broadly distributed. It was concentrated in 2 specific areas: enterprise channel deceleration in North America and underperformance in our organic and owned marketing channels. Both are well understood, both have clear root causes, and both have direct action plans underway which we go into more detail in our earnings commentary that we released last night.…

Thank you, Dusan. Our first question comes from Bobby Brooks from Northland Capital Markets.

So it was excellent to hear how -- the commentary of how conversion rates across every portal and geo improved in the fourth quarter. I just wanted to hear more on what you believe drove that. And do you feel like there's more room to go on improving this further? Or maybe is that a level you'd like to maintain? Just curious to hear more there.

I believe that the conversion results which we have are a result of several different aspects. The first I would like to mention is the platform development, because when you compare what we are running and operating in Groupon versus what we had 2 years ago, the consumer interface is much more consumer-friendly, we are improving the search and relevance experience, just trying to present our customers the products which are relevant. The second dimension of that is also related to our offer, because we are not just trying to get as many merchants on the platform as possible, but we are really discussing the quality of merchants, quality of offerings. And this has also translated to conversion. And at the same time, in our marketing channels, we are trying to buy as relevant traffic as possible. Not just widely get users who may not be really interested in our deals on the platform, but we are trying to improve the marketing. So we are buying in the paid channels the traffic which has the highest possible conversion. This comes also with the fact that we are buying slightly less eyeballs in general, but improving the conversion significantly. I expect that this trend will continue because also part of the like decision-making funnel is moving towards like AI surfaces and interfaces which are informing customers on what's possible. But we will continue with our conversion improvements through the better inventory and better products. So I expect that this trend will continue.

Got it. And then shifting gears, you mentioned how a weak pipeline of new brand adds and some one-off issues with existing enterprise merchants kind of drove that weakness in that segment. But I wanted to get a little bit more in-depth there. Why do you think the pipeline is weak just generally? And it felt like -- because it felt like we turned a corner on winning new merchants as you could kind of go to them with a lot more data supporting, hey, why doing vouchers on Groupon is beneficial. Did something change there? Maybe that was more specific to SMBs? Just wanted to hear more on how that pipeline for enterprise weakened.

So last year, we made a bet on a partner to be our channel to acquire new customer acquisition, and simply that deal is going below our expectations. So we were expecting to get more traction and more new partners on our platform through that partnership, which actually we announced last year publicly. At the same time, we see that the market is slightly changing with our -- we need to work on our products to have better product market fit. Because traditionally, we have the coupons or the deal type of product. What we see is that the market is moving towards a closed-loop transaction. When the product price, for example, is not visible directly on the website, you need to register or the offer is app-only. Because it's so easy now to find out what's the pricing and the big brands don't want to see different pricing on Groupon publicly versus what's, for example, on their website. So in this area, we are iterating our product with improvements on this closed-loop proposition so that we can serve more brands in this direction. And then maybe I would mention the reason why we are talking about the fact that it will take some time to compound the results. Enterprise is a long cycle. So when we start talking to the potential partner, the deal is not closed in a few weeks. You should think about it more as a negotiation process which takes several months to close, sometimes even quarters because sometimes they need to include it in their annual planning.

Got it. That's helpful. And just that was something I wanted to double-click on too, is the closed-loop part. So if I'm understanding it correctly, it's essentially kind of not having the -- like the price of the deal listed just blankly, but you would have to like kind of create a Groupon account to then see the deal? Just want to make sure I'm...

Yes.

Okay. So that's -- all right.

Yes. This is it. There will be several levels of the closed-loop because there are different requirements of brands on the market. We already have some experiments up and running in travel and in some other categories. There will be cases where the offer will be visible on the website, but you have to first register, which is pretty much one click right now using the single sign-on technologies. In some cases, we will get an information on the website, that in order to access the price for this deal, you need to install the application and you can get the deal in the application.

Got it. And then just last one for me before going back to the queue, sticking with this enterprise stuff. You mentioned how you kind of reorganized that enterprise channel to align with vertical-focused category structure. Just wanted to get some color on how was the team structured previously. And is this new vertical-focused category structure, is that the same structure that has led to strong success in key cities like Chicago?

It's similar structure. I would not say that it's same structure. But what we see across the board in Groupon, when we look on the -- any segment or category as one product, one Groupon product, it typically doesn't work because there is a lot of color for each category. The go-to-market in Things To Do in local experience is different than go-to-market, for example, in health and beauty categories. So we are doing exactly same stuff. We have the category GMs who have the industry knowledge. They typically also know the people within the industry. And then they are guiding the sales team how we should be approaching the product for a very specific category. In the local segment, we were incorporating this geography-specific know-how, which is not necessarily in enterprise, but the core idea behind it is exactly the same. We simply need to have very targeted, focused go-to-market for each category where we operate. The people who will be talking to our enterprise partners are people who understand the value proposition of Groupon in this specific category, not just some generic one.

Our next question comes from Sean McGowan from ROTH Capital Partners.

Maybe this is related to what you were talking about, but I'm interested in some color on what happened in travel. That seemed to be -- I mean, I know it's not a big category, but it seemed to be developing some positive momentum that was negative in the fourth quarter. Is that related to these enterprise comments you've been making?

I would say that in travel, we have partnerships with very few brands which are making a big share of the travel revenue, which we generate. And travel for us right now is not the top priority and focus. So we still believe that Groupon has a position and play in this category, yet right now it's kind of not a central focus for new product features, new product developments. So this is related.

Okay. Can you comment on what you're seeing in those European markets that you've referenced in previous calls that were kind of early in the adoption of some of the acceleration initiatives you've adopted, that you were seeing very good success in those markets? Can you comment on how those markets did in the fourth quarter?

So we have very good performance across the board in international. On our international markets, we were implementing all the changes, and sometimes we were even frontiers in this, how to run the sales organization, how to be very diligent and the quality of the deal, going to the city level to find out what should be the next deal we sign in any given metro. In terms of technology, actually the U.K. was the first country where we implemented our CDP as a pilot project. And in Q1, we were able to migrate to new web interface, the new mobile next platform, which we are operating in United States, in most countries either fully or with like a high percentage of traffic. So from the perspective of sales organization, the international is running on the same level, in some areas and countries even better than North America. In terms of technology, we don't have the application in international yet. This will be Q2 and Q3 of this year. But we already migrated most countries to the new web interface.

Okay. Last question is, for me for now, is on modeling. Is there anything in the SG&A figure in the fourth quarter that was kind of unusually low? Or is this a level we should expect? I thought it might be higher, which is good, but should we expect it to be at about this level?

Yes, Sean, I'll take this. This is Rana. Yes, SG&A did come in lower than we were expecting in Q4, and I do think there were some onetime benefits in SG&A there. And so I do not expect that would be, let's say, the new level. How we're thinking about SG&A right now, if you take a step back and look at where it was excluding D&A and excluding stock-based compensation, we're really looking for SG&A to be flattish year-over-year. And so we would encourage you to take more of the full year view as you think about SG&A for 2026.

Our next question comes from Eric Sheridan from Goldman Sachs.

Great. Maybe 2, if I can. The first, a big picture one. With this new committee of the Board that's aimed broadly at AI as a theme, could you talk a little bit about how the management team, this committee and the broader Board will sort of work together in terms of formulating strategy, and then more importantly, implementing and investing against AI strategy looking out over the next couple of years? That would be the big picture one. And then the more model oriented one would be, you talked about some of the headwinds you saw in Q4 persisting into the front half of the year. Is there any way you can give us a sense of a bit of the pace and cadence of the headwinds dissipating as we get deeper into the year and how to think about some of the sequential dynamics as we progress through 2026?

On the AI piece or AI Committee question, AI is right now number one topic for me personally as a CEO in Groupon. I see it as a huge opportunity for us on all possible surfaces and areas. We need to start internally with the team and then translate this also to our product and how we operate on the market. So I am personally very heavily invested in AI. I am meeting multiple people. And we formed a partnership with Amit, which is very close, in terms -- let's say, in the depth how we are cooperating. So Amit will be participating on discussions with management, sharing his vision, but also providing feedback on what we are creating. He will be providing feedback also on the level of management team AI fluency. And he will be participating on building the future AI-driven products and revenue streams for Groupon. So this is not just like a formal AI Committee which is a meeting once a quarter, but this is like a heavy focus, deep integration with Groupon management team. On the second question, the timing of those headwinds. We were talking on this call about the enterprise segment where the sales cycle is long. So it may take up to several quarters to get us to the same speed as we were in the past. At the same time, I would like to mention that when we are looking on the comps, it's mainly Q1 and Q2 where we have very challenging comps in enterprise segment. And then we don't have such tough comps in the second half of the year. In other areas of the headwind which we have which are owned channels, SEO and the managed channels, we implemented already the new CDP, which will help us fundamentally change the way how we are talking to our customers. And I expect that the benefits will start coming very soon. In SEO, it's a question on the timing because Google is under a lot of pressure from AI-generated content. So we are doing plenty of changes. I believe that long-term Groupon is positioned very well because we are one of very few players who own user-generated content because we have so many customers who are coming back to Groupon providing feedback about local merchants, about their experiences. So the content which we are collecting, but not yet fully using it, is very valuable. It will be very variable content for AI future because all this is extremely relevant for AI-generated answers on AI agents. But the timing is very hard to comment.

We have a follow-up question from Bobby Brooks.

So you guys have done a really good job of winning new customers, and that's been a trend over the last 4 quarters or so. And I understand that these new customers initially won't have -- don't have the same purchase frequency as legacy ones. But what I was curious to hear on is those cohorts of new customers that you won, say, in the first half '25, have you seen those purchase frequencies start to tick up? Or you've kind of found a way through kind of managed marketing to spur those purchase frequencies higher? Just curious to hear more on there.

Yes. So my goal during this year is to improve the way how we are talking and communicating about the customers, cohorts and purchase frequency to our shareholders. We were mentioning in the script that we will have investors conference. And I believe that at that moment, we will be able to present much more simple and easier to understand the model for Groupon marketplace, including the consumer segments. But going back to your question, the purchase frequency is not related only to new and active customers and the structure of our portfolio, but it's also related to the category where the customer is buying. So for example, historically, the goods were quite a big and important channel for Groupon and the purchase frequency in this category is much higher versus purchase frequency in other categories. And as the goods, for example, is still declining, it's in a negative way, let's say, impacting our purchase frequency. We internally see some cohorts of customers, of loyal customers, who -- where we see the improved performance. We see in some segments improved conversion from first to second purchase. And this is internally one of the top priority areas for us. And with new CDP, we are finally having the tools to really target small individual segments and deliver them the deals and offers which are highly relevant for them. But like more consistent and more detailed communication on numbers and structure, my goal is to bring it to you in -- during this year.

Got it. And then kind of piggybacking on that, the CDP and the retargeting managements that you're taking, could you maybe give -- provide a couple of examples of what that might look like? And secondly, I think some might hear the commentary on this and think it's something that has kind of occurred as the headwinds popped up in the fourth quarter. But this is something that you've just kind of been under -- that you guys have been working on for a couple of quarters, right? Like it's not just a response to the drop-off in organic traffic in the fourth quarter, right?

No. The CDP is one of the foundational projects which we have in Groupon. And we were not really talking about it a lot. However, I see it one of the -- as one of the most important projects because it allows us completely a different level of flexibility. Groupon originally had the platform, which was in-house developed, it was 10-plus years old. And if our team decided we want to test some campaign, like for example, if you buy, I don't know, spa in your area, that we will send you a push notification 2 weeks, 3 weeks after, offering you something relevant as an upsell, let's say. It took weeks to implement it to our engineering team, and everything was done really very manually. With the new platform, it's all user interface. We can -- it's a drag-and-drop, we can decide what to do. And we could be running like 10-plus different campaigns every week or new campaigns and new experiments. And we can go much more granular in really user stories, what's relevant at which situation, meaning based on how you behaved on the website. If you visited the deal several times and didn't decide to buy it, then we can provide some specific better offer for the customer in terms of cases. It will also help us improve our paid marketing channels, because with new CDP, we know whether the consumer, for example, is reading our messaging. At that moment, we don't have a reason to spend money on Google, Meta and other paid channels to get that customer back and we can really target our retargeting campaigns only to customers where we see the customer is not communicating through our channel. So it really opens a lot of opportunities for us. And definitely, this is not a project which is just a reflection of what's happening in Q4. On SEO, it's similar story. That area is highly dynamic because with such a high availability of AI-generated content, there are many, many, many websites and projects which are just generating content and then trying to be presented on Google and visible on Google. Google obviously doesn't want it. So we are changing the rules. And all other websites which have highly relevant content, including Groupon, we just need to react to new rules and change the behavior. And what's very important for me, that underlying trend that Google is putting more and more focus on the user-generated content, on the original content. That's why the Reddit is, for example, ranking very well in SEO. And that's why we are doubling down on our reviews, which were kind of hidden in the past on Groupon, but now we are producing user-generated content for AI reviews, meaning like the AI summaries for reviews. We are generating FAQs and additional information, which is based on what our real customers told us about the merchants, which means this is the content which no one else has.

That's super helpful color, Dusan. And maybe just the last one for me is on the kind of headwinds in the managed and organic channels. It seems like it's more kind of macro driven, like stuff, it's not like you were trying things and they didn't work. It's the SEO algorithms changing, and then when you go to Google, instead of seeing 2 ads, you're seeing 8, right? Am I thinking about that more or are there some -- was there something internally that you felt you could have done better with that piece?

Yes. So I think we always can do our work better, and you can ask me about any area and I will have exactly the same answer everywhere. However, this is driven originally by the macro situation and the change in this landscape, which is happening for everyone. And I just consider Groupon to be lucky that we have an answer which fits into AI world with this user-generated content.

Congrats on the Entrepreneur of the Year from EY. That's awesome.

Appreciate it. Thank you.

We'll now pose written questions to management that came in through the company's Investor Relations press line. Analysts who are live on the call, we will continue to move back to you. Our first written question, you talked about setting a new baseline for agentic AI first leadership across the company. Can you talk about what that means concretely for how your teams are working today? And what kind of productivity gains are you seeing, specifically in engineering?

Okay. So I'm very closely following and having meetings with people who I consider AI frontiers in terms of what AI enables across the board. And I see major shift happening last few months where originally most of us, including me, were using AI as a chatting tool, let's say, and I was discussing all my projects, I was asking for feedback. However, I see that this is changing fundamentally. And we right now are seeing much more use cases in the agentic-based approach, which is driven by Claude Code and similar solutions. And I am personally very heavy involved in this. I have my own agentic setup, which is reading all my data, which is doing all the preparations for the meeting. When I'm -- new topic, it's like really deeply analyzing the market opportunities, coming with solutions. And all that using all the data which we have available. So I think it's a complete mindset shift. And this is what we are trying to -- or not trying, this is what we are doing right now and implementing in Groupon. I want to have all the teams here to be AI-first. In engineering, for example, my goal is that we have 100% of the code written by AI by the end of the year. I want to make Groupon a company where all our employees are managers because we will be managing AI agents or orchestrating them, deciding how and where we will improve. So it's a big change. I see that it can bring, obviously, higher efficiency, but it will allow us to do much more in the product, in engineering; in sales, provide completely new tools and interfaces to merchants. So I'm extremely excited about this. This is really the project number one for me right…

We'll go back to Sean McGowan from ROTH Capital.

A couple of follow-ups. Could you comment on what you're seeing -- what trends you're seeing in the redemption rates? You made that effort last year to kind of remind people when they had Groupons expiring, and that had an effect on the redemption rate. What are you seeing currently year-over-year and what do you expect?

So I don't right now have the exact specific numbers in mind, but the overall trend in redemption was continuing in the same pace. So this is one of the numbers where the product teams are making sure that the deals have good redemption rate, that customers really get the experience. We are trying not only to send these reminders, which we were talking about, but now we are much more actively also asking for feedback, so where we can improve the deals or even provide the feedback to merchants. So it's part of the core marketplace proposition. We don't see any like significant changes there. It's just going in the right direction.

And Sean, this is Rana. Just to echo what Dusan said, we see trends very stable-ish. And so like in terms of how it was impacting take rates in 2025, we expect the impact to take rates from higher redemption rates to be very modest. It's mostly through our numbers now.

Okay. That's what I thought. And then on marketing plans, I think you had talked last year about leaning in a bit more to marketing Groupon as a brand. So can you talk about your expectations for marketing spending as a percentage of revenue or as a percentage of whatever metric you want?

Dusan, do you want to talk about the brand and I can talk about the number?

You can start with numbers and then I can follow up with brand.

Yes. So in terms of numbers, Sean, we have -- we are -- our expectation is that marketing will grow year-over-year, call it, in the high single-digit range. So we are expecting marketing to -- we do want to support the business with marketing spend, and we are expecting that marketing spend growth will be a little faster than revenue growth. However, this -- the relationship between our marketing spend growth and our revenue growth, that relationship will improve versus what we had in '25. Our focus here over time is to grow contribution profit dollars. And this year, we expect to make progress against that. So in terms of your model, I would expect that marketing will grow high single digits year-over-year.

And I would follow up in terms of our brand campaign, which we started in the second half of Q4 last year. The main motto is Turn Your Life On, which is like highly relevant to the mission which we have as Groupon to get as much people off-line. And we see some really interesting results, which are different based on the location when we were running the campaign, because we were making sure that we will be able to collect the data on the geo levels. So we still run the campaign in -- not in huge numbers, but we are still running the brand campaign in Q1, and I expect that we will continue. But we are processing and improving our density commercial model to understand the behavior of customers in individual locations. Because in some cities, we saw some incredible response on the brand campaign versus in some cities we got pretty much what is the baseline on the baseline expectation of the marketing campaign on the market. So we want to double down and understand better where and how to spend the brand marketing dollars or where and what is the driver of that behavior, so that we can replicate the offers and inventory which we have in cities where the response to the Groupon brand campaign looks like super positive.

Another written question that came in. Can you talk about the new mobile app migration? You're now at 50% of iOS in North America for users on the new platform with stronger monetization. What should we expect as you complete that rollout?

So right now, the migration on a new platform takes a lot of resources within the product and engineering team. And as we are very close to finalizing this migration, all that capacity will be focused on improved user experience, focused on improving purchase frequency for our customers. And this will be delivered through new functionality. We were, however, talking here on this call that we have the bets around search and relevance, about personalization. The team is really digging deep into behavior of customers, splitting the customers into multiple groups based on how they behave in the app and on the website. And we will be building the features which will be specifically targeting these customer groups, so where we provide better offers, better, easier interface. So I'm really looking forward to this space. Some demos and prototypes which I saw are really incredible and I believe that it will improve significantly customer experience, and this will be one of the drivers for improved purchase frequency for us.

Another written question that came in. You've made a number of leadership additions recently, including a new Chief People Officer and an SVP of Operations and Consumer AI. Any commentary on the additions? And how are you thinking about the team and talent you need for the next phase of growth?

So when I joined Groupon, one of our main problems and issues which we had, excluding the internal financial situation, was that we were not able to attract new talent. And I'm very happy right now to state that I see that we are able to hire, that we are able to attract really talented people from great companies. I see that we are really raising the bar not only within the management team, but overall within the Groupon organization, on what's expected. And I was talking about the AI expectations a few minutes ago, but this is across the board. And this is thanks to the new joiners who are really challenging us, like asking us to try different ways, move faster, move with higher quality at the same time. So overall, I see great progress and I really see Groupon in a very different situation versus just a few years ago -- even just 12 months ago.

Thank you, Dusan. There are no other questions. This concludes our call for today. Thank you, everyone, for joining. For additional information, please go to investor.groupon.com.