GRPN - NASDAQ

Hello, and welcome to Groupon's first quarter 2026 financial results conference call. On the call today are Chief Executive Officer, Dušan Šenkypl, 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 material, including its 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, May 8, 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 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 US GAAP.

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

That's great, Karel. Kind of continuing on the AI initiatives, with obviously a clear focus of being AI native company. I think last quarter you mentioned how all business unit leaders kind of had to come and propose how they're gonna integrate AI into the workflow. I think today's call you said that you expect all folks to be using agents later this year. I was just curious to kind of hear more of a deeper update on, like, what some of those initiatives, maybe what some of the more exciting initiatives you heard get proposed by those business leaders.

That's super insightful. Thank you, Dušan. I'll return it to queue.

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

Okay. Thank you. I have two quick questions for Rana, if I can. First, what's up with the taxes? What's the weird thing going on in taxes in the quarter? Second, why would you not add back that severance if that's in fact, you know, something that's boosting that SG&A spending? Why would you not add that back for adjusted EBITDA? Thanks.

Thanks, Sean. I'll take the second question first, then I'll go to the first question. You know, we have a pretty established policy on how we define adjusted EBITDA, consistent with guidance from our regulators and, you know, these severance actions were undertaken on sort of ongoing activities. It was not part of a restructuring action that we put in place in Q1 that was board approved. At the same time we wanted to let investors know that we did have, you know, material severance expenses, so this is why we made sure that, like, it was disclosed in our commentary around SG&A.

This is something that we are, you know, see is in our numbers. We see it is part of the story in Q1 and why we told you. I don't know if that answered your question, Sean? Before I go to the first one.

No, it just seems like you're, you actually didn't miss your. You know, the way most investors would look at it, you know, you didn't come in below. Anyway, I get it's a matter of policy. You know, your adjusted EBITDA is actually better than it looks. Thanks.

That's correct. We are, you know, our role here we wanna be as transparent as we can be, so we wanna make sure you understand the puts and takes of the quarter. That's why we included that note in the letter.

Yeah. Thank you.

Glad you picked up on that. You know, listen, in terms of tax, there's always quite a bit of movements going around quarter to quarter related to how we are planning the business and potential changes we're making. I'm happy to go into a little more detail with you offline, but there's nothing structurally that's changed with our business, Sean, at this point. You know, we have, we do expect to see some benefits on the cash tax side related to some of the legislature that was passed last year. You know, from a cash tax standpoint, we do expect this year to be more efficient.

Structurally our business, there's nothing very different happening from a tax perspective, absent changes in the regulatory environment.

All right. Thank you very much.

Thank you, Dušan. We have a follow-up from Bobby Brooks from Northland Capital. Bobby, you can unmute your line.

Hey, thanks. Thank you guys for taking my follow-up. Just on this, obviously there's been some news bubbling up with SumUp moving towards an IPO. I think you guys have made it clear to the market that when you get a liquidity window you'll use it. Just wanted to hear, it would be a nice cash sum for you. Any thoughts on like what that cash would go to use for? Obviously, the balance sheet's really strong. A lot of like the growth initiatives seem to be like low capital requirements. Just curious to hear maybe how you're thinking about how you might use that, you know, a cash windfall if it were to occur.

Yeah. Thanks, Bobby, for the question. We continue to believe that SumUp is an incredibly valuable asset, and as you noted, we continue to own a small minority stake in it. You know, they are developing well, their performance is strong and as you've noted, there's some public commentary that they're getting ready to be a public company. You know, our view on this is, you know, they have the scale, they have the business model, they have the management team, and they have really, I think the story to be a successful public company. The timing on that and when that, you know, will happen is quite uncertain.

You know, we continue to be a passive shareholder there and we continue to be supportive of the actions and the direction they're headed. In terms of, you know, this is a non-core investment for us and we don't plan to hold this for the long term. If there is opportunities for us to monetize that investment, we will look at it opportunistically. In terms of that, if that asset does turn to cash, we will look to allocate this consistent with how we think about our capital allocation policy right now, where, you know, we are looking opportunistically at share buybacks.

We are looking at what we see in terms of our investment needs, which you've noted, you know, how our business is performing, market conditions and where our stock is trading. You know, we will be opportunistic and, you know, we will see where things go. The only other thing I will tell you, Bobby, is, you know, we've been following SumUp since we've been here for three years. Like, they have definitely improved a lot, but I've never gotten the timing right on that one, and I don't think it would be as smart for us to try to pick timing now.

You know, what is most important to me is that that business is doing well, and has a great position in their market and we are rooting for them to continue on that path.

That's really interesting to hear. I appreciate the color. As always, I'll return it to you.