GRPN - NASDAQ

Hello, and welcome to Groupon's Q4 and full year 2025 financial results conference call. On the call today are Chief Executive Officer Dušan Senkypl and Chief Financial Officer Rana Kashyap. At this time, all participants are in a listen-only mode. Today's call will be a question and answer session only. 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 US GAAP.

Thank you, Dušan. Our first question comes from Robert Brooks from Northland Capital Markets. Bobby, you can now unmute your line.

Thank you, Bobby. Our next question comes from Sean McGowan from ROTH Capital Partners. Sean, you can now unmute your line.

Okay. Thank you. Excuse me. Last question for me for now is on modeling. Is there anything in the SG&A figure in the Q4 that was kind of unusually low, or is this a level we should expect? I thought it might be higher, which is, you know, which is good, but should we expect it to be at about this level?

Yeah, Sean, I'll take this. This is Rana.

Hi, Rana.

Yeah, SG&A did come in lower than we were expecting in Q4, and I do think there were some one-time benefits in SG&A there. 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. We would encourage you to take more of a full year view as you think about SG&A for 2026.

Okay. Thank you very much.

Thank you, Sean. Our next question comes from Eric Sheridan from Goldman Sachs. Eric, you can now unmute your line.

Great. Thank you very much. Maybe two, 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'd be the big picture one. 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.

We have a follow-up question from Robert Brooks. Bobby, you can unmute your line.

Thank you, Dušan. We'll go back to Sean McGowan from Roth Capital Partners. Sean, you can now unmute your line.

Sean, this is Rana. Like, just to echo what Dušan said, we see trends very stable-ish. 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. Thank you. On marketing plans, I think you had talked last year about leaning in a bit more to marketing, Groupon, you know, as a brand. Can you talk about your expectations for marketing spending as a percentage of revenue or as a percentage of whatever metric you want?

Yeah. In terms of numbers, Sean, our expectation is that marketing will grow year-over-year, call it in high single-digit range. We do wanna support the business with marketing spend, and we are expecting that marketing spend growth will be a little faster than revenue growth. However, the relationship between our marketing spend growth and our revenue growth, that relationship will improve versus what we had in 2025. You know, our focus here over time is to grow contribution profit dollars. And this year we're expecting to make progress against that. In terms of your model, I would expect that marketing will grow high single digits year-over-year.

Okay. Thank you.