Groupon Earnings Beat Expectations, Stock On The Rise

Groupon just released its first earnings report since CEO Andrew Mason was fired. Unlike last time, Groupon actually beat Wall Street expectations this time, and the stock is currently on the rise.

The company reported gross billings of $1.41 billion, revenue of $601.4 million, and GAAP operating income of $21.2 million.

Active customers are up 13% year-over-year.

Eric Lefkofsky, Chairman and co-CEO, said, “We are encouraged by our results, as our local revenues accelerated and our margins improved over the prior quarter. We had record mobile performance as 45% of our North American transactions came from mobile in March, and more than 7 million people downloaded our apps in the quarter.”

Meanwhile the hunt for Mason’s replacement continues.

Here’s the earnings report in its entirety:

CHICAGO–(BUSINESS WIRE)–Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter ended March 31, 2013:

“Management’s Discussion and Analysis of Financial Condition and Results of Operations”

Gross billings of $1.41 billion

Revenue of $601.4 million

GAAP operating income of $21.2 million, or $51.2 million excluding stock compensation

GAAP loss per share of $0.01, or earnings per share of $0.03 excluding stock compensation

“We are encouraged by our results, as our local revenues accelerated and our margins improved over the prior quarter,” said Eric Lefkofsky, Chairman and co-CEO of Groupon. “We had record mobile performance as 45% of our North American transactions came from mobile in March, and more than 7 million people downloaded our apps in the quarter.”

First Quarter 2013 Summary

Gross billings, which reflect the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds, increased 4% to $1.41 billion in the first quarter 2013, compared with $1.35 billion in the first quarter 2012. North America growth of 23% was offset by a decline of 9% in the International segment on a year-over-year basis.

Revenue increased 8% to $601.4 million in the first quarter 2013, compared with $559.3 million in the first quarter 2012. North America revenue growth of 42% was offset by a decline of 18% in the International segment on a year-over-year basis.

Gross profit was $379.0 million in the first quarter 2013, compared with $439.8 million in the first quarter 2012.

Operating income was $21.2 million in the first quarter 2013, compared with $39.6 million in the first quarter 2012. Operating income increased $34.0 million compared with fourth quarter 2012.

Operating income excluding stock compensation and acquisition-related costs, a non-GAAP financial measure, was $51.2 million in the first quarter 2013, compared with $67.6 million in the first quarter 2012. Operating income excluding stock compensation and acquisition-related costs increased $37.4 million compared with fourth quarter 2012.

First quarter 2013 net loss attributable to common stockholders was $4.0 million, or $0.01 per share, including stock compensation and acquisition-related costs of $30.0 million, or $20.9 million net of tax. Earnings per share excluding stock compensation and acquisition-related costs, net of tax, a non-GAAP financial measure, was $0.03 per share.

Operating cash flow for the trailing twelve months ended March 31, 2013 was $191.9 million. Free cash flow, a non-GAAP financial measure, was negative $5.7 million in the first quarter 2013, bringing free cash flow for the trailing twelve months ended March 31, 2013 to $94.7 million.

At the end of the quarter, Groupon had $1.2 billion in cash and cash equivalents.

Definitions and reconciliations of all non-GAAP financial measures are included below in the section titled “Non-GAAP Financial Measures” and in the accompanying tables.

First Quarter Operating Highlights

Global units: Consolidated units, defined as vouchers and products ordered before cancellations and refunds, increased 4% year-over-year to 45 million. North America units increased 37%, and International units decreased 18%.

Active deals: As of March 31, 2013, the number of active deals in North America increased to nearly 40,000, compared with nearly 37,000 at the end of the fourth quarter 2012.

Active customers: Active customers, or customers that have purchased a Groupon within the last twelve months, grew 13% year-over-year, to 41.7 million as of March 31, 2013, comprising 18.2 million in North America, and 23.5 million in International.

Customer spend: Trailing twelve month billings per average active customer decreased to $138 from $144 in the fourth quarter 2012, related primarily to seasonal strength in the fourth quarter holiday period.

Mobile: In March 2013, 45% of North American transactions were completed on mobile devices, compared with nearly 30% in March 2012. In the first quarter 2013, more than 7 million people downloaded Groupon mobile apps worldwide.

Marketplace: The rollout of Groupon’s marketplace (”Pull”) continued to gain momentum, as email accounted for less than 45% of North American transactions in the first quarter 2013.

Outlook

Groupon anticipates incremental investments of between $15 million and $30 million in customer incentives and marketing in the second quarter 2013. As a result, for the second quarter 2013, revenue is expected to be between $575 million and $625 million, and operating income excluding stock compensation and acquisition-related expenses is expected to be between $20 million and $40 million. Stock compensation is expected to be approximately $30 million, and tax expense is expected to be approximately $25 million. This outlook assumes no acquisitions or investments, or material changes in foreign exchange rates.

Groupon reaffirms its guidance that full year 2013 GAAP operating income will exceed $100 million.

Conference Call

A conference call will be webcast live today at 4:00 p.m. CT / 5:00 p.m. ET, and will be available on Groupon’s investor relations website at http://investor.groupon.com. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.

Non-GAAP Financial Measures

In addition to financial results reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP), we have provided the following non-GAAP financial measures in this release and the accompanying tables: foreign exchange rate neutral operating results, operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net, Adjusted EBITDA, earnings per share excluding stock-based compensation and acquisition-related expense (benefit), net, and free cash flow. These non-GAAP financial measures are presented to aid investors in better understanding Groupon’s performance and to facilitate comparisons to many of our peers who present similar measures. However, these measures are not intended to be a substitute for those reported in accordance with U.S. GAAP. These measures may be different from non-GAAP financial measures used by other companies, even when similar terms are used to identify such measures. For reconciliations of these measures to the most applicable financial measures under U.S. GAAP, see “Non-GAAP Reconciliation Schedules” and “Supplemental Financial Information and Business Metrics” included in the tables accompanying this release.

We exclude the following items from one or more of our non-GAAP financial measures:

Stock-based compensation. We exclude stock-based compensation because it is primarily non-cash in nature and we believe that non-GAAP financial measures excluding this item provide meaningful supplemental information about our operating performance and liquidity.

Acquisition-related expense (benefit), net. Acquisition-related expense (benefit), net represents the change in the fair value of contingent consideration arrangements related to business combinations. The composition of our contingent consideration arrangements and the impact of those arrangements on our operating results vary over time based on a number of factors, including the terms of our business combinations and the timing of those transactions. We exclude acquisition-related expense (benefit), net because we believe that non-GAAP financial measures excluding this item provide meaningful supplemental information about our operating performance and facilitate comparisons to our historical operating results.

Depreciation and amortization. We exclude depreciation and amortization because it is non-cash in nature and we believe that non-GAAP financial measures excluding these items provide meaningful supplemental information about our operating performance and liquidity.

Descriptions of the non-GAAP financial measures included in this release and the accompanying tables are as follows:

Foreign exchange rate neutral operating results show our current period operating results as if foreign currency exchange rates had remained the same as those in effect in the comparable period.

Operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net is a non-GAAP financial measure that comprises the consolidated total of the segment operating income (loss) of our two segments, North America and International. We use consolidated operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net to allocate resources and evaluate performance internally.

Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) excluding income taxes, interest and other non-operating items, depreciation and amortization, stock-based compensation, and acquisition-related expense (benefit), net. Adjusted EBITDA is similar to Operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net, except Adjusted EBITDA also excludes depreciation and amortization. Our definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. We believe that Adjusted EBITDA is a meaningful measure for evaluating our operating performance and liquidity.

Earnings per share excluding stock-based compensation and acquisition-related expense (benefit), net is a non-GAAP financial measure that adjusts our earnings (loss) per share to exclude the impact of stock-based compensation expense, acquisition-related expense (benefit), net and the income tax effect of those items. We believe that this non-GAAP financial measure provides meaningful supplemental information for evaluating our operating performance.

Free cash flow is a non-GAAP financial measure that comprises net cash provided by operating activities less purchases of property and equipment and capitalized software. We use free cash flow, and ratios based on it, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe that it typically represents a more useful measure of cash flows because purchases of fixed assets, software developed for internal use and website development costs are necessary components of our ongoing operations. Free cash flow is not intended to represent the total increase or decrease in Groupon’s cash balance for the applicable period.

Note on Forward-Looking Statements

The statements contained in this release that refer to plans and expectations for the next quarter or the future are forward-looking statements that involve a number of risks and uncertainties, and actual results could differ materially from those discussed. The risks and uncertainties that could cause our results to differ materially from those included in the forward-looking statements include, but are not limited to, volatility in our revenue and operating results; risks related to our business strategy; responding to changes in the market; effectively dealing with challenges arising from our international operations; retaining existing customers and adding new customers; retaining existing merchant partners and adding new merchant partners; incurring expenses as we expand our business; competing against competitors with more financial resources than us; maintaining favorable terms with our business partners; maintaining a strong brand; managing inventory and order fulfillment; integrating our technology platforms; managing refund risks; retaining our executive team; litigation; regulations, including the CARD Act and regulation of the Internet; tax liabilities; tax legislation; maintaining our information technology infrastructure; security breaches; protecting our intellectual property; handling acquisitions, joint ventures and strategic investments effectively; seasonality; payment-related risks; customer and merchant partner fraud; global economic uncertainty; compliance with rules and regulations associated with being a public company; and our ability to raise capital if necessary. We urge you to refer to the factors included under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, copies of which may be obtained by visiting the company’s Investor Relations web site at http://investor.groupon.com or the SEC’s web site at www.sec.gov. Groupon’s actual results could differ materially from those predicted or implied and reported results should not be considered an indication of future performance.

You should not rely upon forward-looking statements as predictions of future events. Although Groupon believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither the company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements reflect Groupon’s expectations as of May 8, 2013. Groupon undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in its expectations.

Groupon encourages investors to use its investor relations website as a way of easily finding information about the company. Groupon promptly makes available on this website, free of charge, the reports that the company files or furnishes with the SEC, corporate governance information (including Groupon’s Global Code of Conduct), and select press releases and social media postings.

About Groupon

Groupon (NASDAQ: GRPN) is a global leader in local commerce, making it easy for people around the world to search and discover great businesses at unbeatable prices. Groupon is reinventing the traditional small business world by providing merchants with a suite of products and services, including customizable deals, payments processing capabilities and point-of-sale solutions to help them attract more customers and run their operations more effectively. By leveraging the company’s global relationships and scale, Groupon offers consumers incredible deals on the best stuff to eat, see, do, and buy in 48 countries. With Groupon, shoppers discover the best a city has to offer with Groupon Local, enjoy vacations with GrouponGetaways, and find a curated selection of electronics, fashion, home furnishings and more with Groupon Goods. To subscribe to Groupon emails, visit www.Groupon.com. To learn more about the company’s merchant solutions and how to work with Groupon, visit www.GrouponWorks.com.

Groupon, Inc.

Summary Consolidated and Segment Results

(in thousands, except share and per share amounts)

(unaudited)

Three Months Ended
March 31, Y/Y %

Growth

2013 2012 Y/Y %
Growth FX Effect ⁽²⁾ excluding
FX⁽²⁾

Gross Billings ⁽¹⁾

North America $ 681,319 $ 553,557 23.1 % $ (59 ) 23.1 %

International 726,450 801,243 (9.3 ) % (12,460 ) (7.8 ) %

Consolidated gross billings $ 1,407,769 $ 1,354,800 3.9 % $ (12,519 ) 4.8 %

Revenue

North America $ 339,554 $ 238,565 42.3 % $ (27 ) 42.3 %

International 261,848 320,718 (18.4 ) % (4,540 ) (16.9 ) %

Consolidated revenue $ 601,402 $ 559,283 7.5 % $ (4,567 ) 8.3 %

Income from operations $ 21,178 $ 39,639 (46.6 ) % $ 2,377 (52.6 ) %

Net loss attributable to common stockholders $ (3,992 ) $ (11,695 ) 65.9 % $ 2,614 43.5 %

Net loss per share

Basic $ (0.01 ) $ (0.02 )

Diluted $ (0.01 ) $ (0.02 )

Weighted average basic shares outstanding 658,800,417 644,097,375

Weighted average diluted shares outstanding 658,800,417 644,097,375

(1) Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds. Includes direct billings and third party and other billings.

(2) Represents change in financial measures that would have resulted had average exchange rates in the reporting period been the same as those in effect during the three months ended March 31, 2012.

Groupon, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended

March 31,

2013 2012

Operating activities

Net loss $ (3,242 ) $ (3,593 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 20,700 11,716

Stock-based compensation 29,907 28,003

Deferred income taxes (258 ) (876 )

Excess tax benefits on stock-based compensation (832 ) (2,881 )

Loss on equity method investments 19 5,128

Acquisition-related expense (benefit), net 68 (52 )

Change in assets and liabilities, net of acquisitions:

Restricted cash 2,523 (1,357 )

Accounts receivable (7,684 ) (11,878 )

Prepaid expenses and other current assets 12,527 (4,121 )

Accounts payable (19,606 ) (1,821 )

Accrued merchant and supplier payables (39,417 ) 46,000

Accrued expenses and other current liabilities 13,302 13,420

Other, net 753 6,026

Net cash provided by operating activities 8,760 83,714

Net cash used in investing activities (30,679 ) (46,444 )

Net cash used in financing activities (9,342 ) (8,275 )

Effect of exchange rate changes on cash and cash equivalents (12,378 ) 9,059

Net (decrease) increase in cash and cash equivalents (43,639 ) 38,054

Cash and cash equivalents, beginning of period 1,209,289 1,122,935

Cash and cash equivalents, end of period $ 1,165,650 $ 1,160,989

Groupon, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

Three Months Ended March 31,

2013 2012

Revenue:

Third party and other $ 439,108 $ 540,053

Direct 162,294 19,230

Total revenue 601,402 559,283

Cost of revenue:

Third party and other 70,016 102,629

Direct 152,377 16,869

Total cost of revenue 222,393 119,498

Gross Profit 379,009 439,785

Operating expenses:

Marketing 49,557 116,615

Selling, general and administrative 308,206 283,583

Acquisition-related expense (benefit), net 68 (52 )

Total operating expenses 357,831 400,146

Income from operations 21,178 39,639

Interest and other expense, net (5,064 ) (3,539 )

Loss on equity method investments (19 ) (5,128 )

Income before provision for income taxes 16,095 30,972

Provision for income taxes 19,337 34,565

Net loss (3,242 ) (3,593 )

Less: Net income attributable to noncontrolling interests (750 ) (880 )

Net loss attributable to Groupon, Inc. (3,992 ) (4,473 )

Adjustment of redeemable noncontrolling interests to redemption value – (7,222 )

Net loss attributable to common stockholders $ (3,992 ) $ (11,695 )

Net loss per share

Basic $ (0.01 ) $ (0.02 )

Diluted $ (0.01 ) $ (0.02 )

Weighted average number of shares outstanding

Basic 658,800,417 644,097,375

Diluted 658,800,417 644,097,375

Groupon, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(unaudited)

March 31, December 31,

2013 2012

Assets

Current assets:

Cash and cash equivalents $ 1,165,650 $ 1,209,289

Accounts receivable, net 102,717 96,713

Deferred income taxes 30,679 31,211

Prepaid expenses and other current assets 132,324 150,573

Total current assets 1,431,370 1,487,786

Property, equipment and software, net of accumulated depreciation and amortization of $60,291 and $46,236, respectively 128,773 121,072

Goodwill 205,466 206,684

Intangible assets, net 36,838 42,597

Investments 97,245 84,209

Deferred income taxes, non-current 29,710 29,916

Other non-current assets 52,855 59,210

Total Assets $ 1,982,257 $ 2,031,474

Liabilities and Equity

Current liabilities:

Accounts payable $ 40,898 $ 59,865

Accrued merchant and supplier payables 620,485 671,305

Accrued expenses 245,889 246,924

Deferred income taxes 52,875 53,700

Other current liabilities 140,433 136,647

Total current liabilities 1,100,580 1,168,441

Deferred income taxes, non-current 19,917 20,860

Other non-current liabilities 97,791 100,072

Total Liabilities 1,218,288 1,289,373

Commitments and contingencies

Stockholders’ Equity

Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 657,774,882 and 654,523,706 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively 66 65

Class B common stock, par value $0.0001 per share, 10,000,000 shares authorized, 2,399,976 shares issued and outstanding at March 31, 2013 and December 31, 2012 – –

Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, no shares issued and outstanding at March 31, 2013, and December 31, 2012 – –

Additional paid-in capital 1,508,972 1,485,006

Accumulated deficit (757,469 ) (753,477 )

Accumulated other comprehensive income 14,787 12,446

Total Groupon, Inc. Stockholders’ Equity 766,356 744,040

Noncontrolling interests (2,387 ) (1,939 )

Total Equity 763,969 742,101

Total Liabilities and Equity $ 1,982,257 $ 2,031,474

Groupon, Inc.

Segment Information

(in thousands)

(unaudited)

Three Months Ended March 31,

2013 2012

North America

Gross Billings⁽¹⁾ $ 681,319 $ 553,557

Revenue $ 339,554 $ 238,565

Segment cost of revenue and operating expenses⁽²⁾ 298,188 198,393

Segment operating income $ 41,366 $ 40,172

Segment operating income as a percent of segment revenue 12.2 % 16.8 %

International

Gross Billings ⁽¹⁾ $ 726,450 $ 801,243

Revenue $ 261,848 $ 320,718

Segment cost of revenue and operating expenses⁽²⁾ 252,061 293,300

Segment operating income $ 9,787 $ 27,418

Segment operating income as a percent of segment revenue 3.7 % 8.5 %

Consolidated

Gross Billings ⁽¹⁾ $ 1,407,769 $ 1,354,800

Revenue $ 601,402 $ 559,283

Segment cost of revenue and operating expenses⁽²⁾ 550,249 491,693

Segment operating income $ 51,153 $ 67,590

Segment operating income as a percent of segment revenue 8.5 % 12.1 %

Stock-based compensation 29,907 28,003

Acquisition-related expense (benefit), net 68 (52 )

Income from operations 21,178 39,639

Interest and other expense, net 5,064 3,539

Loss on equity method investments 19 5,128

Income before provision for income taxes 16,095 30,972

Provision for income taxes 19,337 34,565

Net loss $ (3,242 ) $ (3,593 )

(1) Represents the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds. Includes direct billings and third party and other billings.

(2) Represents cost of revenue and operating expenses, excluding stock-based compensation and acquisition-related expense (benefit), net.

Groupon, Inc.

Non-GAAP Reconciliation Schedules

(in thousands, except share and per share amounts)

(unaudited)

The following are reconciliations of earnings per share excluding stock-based compensation and acquisition-related expense (benefit), net and foreign exchange rate neutral operating results to the most comparable U.S. GAAP financial measures. See “Supplemental Financial Information and Business Metrics” for reconciliations of Adjusted EBITDA, operating income (loss), excluding stock-based compensation and acquisition-related benefit (expense), net and free cash flow to the most comparable U.S. GAAP financial measures.

The following is a reconciliation of net loss per share to earnings per share excluding stock-based compensation and acquisition-related expense, net for the three months ended March 31, 2013:

Three Months Ended

March 31, 2013

Net loss attributable to common stockholders $ (3,992 )

Stock-based compensation 29,907

Acquisition-related expense, net 68

Income tax effect of adjustments (9,113 )

Net income attributable to common stockholders excluding stock-based

compensation and acquisition-related expense, net $ 16,870

Diluted shares 658,800,417

Incremental diluted shares ⁽¹⁾ 12,175,734

Adjusted diluted shares 670,976,151

Diluted net loss per share $ (0.01 )

Impact of stock-based compensation and acquisition-related

expense, net and the related income tax effects 0.04

Diluted earnings per share excluding stock-based compensation and

acquisition-related expense, net $ 0.03

(1) Outstanding equity awards are not reflected in the diluted loss per share calculation for the three months ended March 31, 2013 because the effect would be antidilutive. However, those awards have been reflected in the calculation of diluted earnings per share excluding stock-based compensation and acquisition-related expense, net for the three months ended March 31, 2013 because they have a dilutive effect on that calculation.

The following is a reconciliation of foreign exchange rate neutral operating results to the most comparable U.S. GAAP financial measures, “Gross Billings,” “Revenue” and “Income from operations,” for the three months ended March 31, 2013. The effect on the Company’s gross billings, revenue and income from operations from changes in exchange rates versus the U.S. Dollar for the three months ended March 31, 2013 was as follows:

Three Months Ended March 31, 2013 Three Months Ended March 31, 2013

At Avg. Exchange At Avg. Exchange

Q1 2012
Rates ⁽¹⁾ Rate
Effect ⁽²⁾ As
Reported Q4 2012
Rates ⁽³⁾ Rate
Effect ⁽²⁾ As
Reported

Gross billings $ 1,420,288 $ (12,519 ) $ 1,407,769 $ 1,408,597 $ (828 ) $ 1,407,769

Revenue $ 605,969 $ (4,567 ) $ 601,402 $ 601,584 $ (182 ) $ 601,402

Income from operations $ 18,801 $ 2,377 $ 21,178 $ 21,698 $ (520 ) $ 21,178

(1) Represents the outcome that would have resulted had average exchange rates in the reported period been the same as those in effect during the three months ended March 31, 2012.

(2) Represents the increase or decrease in reported amounts resulting from changes in exchange rates from those in effect in the comparable period.

(3) Represents the outcome that would have resulted had average exchange rates in the reported period been the same as those in effect during the three months ended December 31, 2012.

Groupon, Inc.

Supplemental Financial Information and Business Metrics⁽¹³⁾

(financial data in thousands, except per share data; active customers in millions)

(unaudited)

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013

Segments

North America Segment

Gross Billings ⁽¹⁾

Local ⁽²⁾ Gross Billings

Third Party and Other $ 424,124 $ 412,348 $ 349,293 $ 430,255 $ 450,140

Direct 5,299 288 6,450 – –

Total Local Gross Billings $ 429,423 $ 412,636 $ 355,743 $ 430,255 $ 450,140

Goods Gross Billings

Third Party and Other $ 75,908 $ 40,173 $ 25,508 $ 31,270 $ 17,294

Direct 2,282 52,773 126,608 209,575 148,065

Total Goods Gross Billings $ 78,190 $ 92,946 $ 152,116 $ 240,845 $ 165,359

Travel and Other Gross Billings

Third Party and Other $ 45,944 $ 42,693 $ 44,510 $ 47,852 $ 65,820

Direct – – – – –

Total Travel and Other Gross Billings $ 45,944 $ 42,693 $ 44,510 $ 47,852 $ 65,820

Total Gross Billings

Third Party and Other $ 545,976 $ 495,214 $ 419,311 $ 509,377 $ 533,254

Direct 7,581 53,061 133,058 209,575 148,065

Total Gross Billings $ 553,557 $ 548,275 $ 552,369 $ 718,952 $ 681,319

Year-over-year growth 76 % 48 % 38 % 51 % 23 %

% of Consolidated Gross Billings 41 % 43 % 45 % 47 % 48 %

Gross Billings Trailing Twelve Months (TTM) $ 1,800,332 $ 1,978,617 $ 2,130,008 $ 2,373,153 $ 2,500,915

Revenue ⁽³⁾

Local Revenue

Third Party and Other $ 191,128 $ 184,189 $ 134,993 $ 142,454 $ 171,593

Direct 5,299 288 6,450 – –

Total Local Revenue $ 196,427 $ 184,477 $ 141,443 $ 142,454 $ 171,593

Goods Revenue

Third Party and Other $ 24,941 $ 10,387 $ 13,064 $ 11,877 $ 3,144

Direct 2,282 52,774 126,608 209,575 148,065

Total Goods Revenue $ 27,223 $ 63,161 $ 139,672 $ 221,452 $ 151,209

Travel and Other Revenue

Third Party and Other $ 14,915 $ 12,543 $ 10,488 $ 11,445 $ 16,752

Direct – – – – –

Total Travel and Other Revenue $ 14,915 $ 12,543 $ 10,488 $ 11,445 $ 16,752

Total Revenue

Third Party and Other $ 230,984 $ 207,119 $ 158,545 $ 165,776 $ 191,489

Direct 7,581 53,062 133,058 209,575 148,065

Total Revenue $ 238,565 $ 260,181 $ 291,603 $ 375,351 $ 339,554

Year-over-year growth 75 % 66 % 81 % 109 % 42 %

% of Consolidated Revenue 43 % 46 % 51 % 59 % 56 %

Revenue TTM $ 736,933 $ 839,909 $ 969,987 $ 1,165,700 $ 1,266,689

Cost of Revenue ⁽⁴⁾

Local Cost of Revenue

Third Party and Other $ 51,782 $ 35,710 $ 13,176 $ 23,203 $ 25,915

Direct 4,663 234 5,231 – –

Total Local Cost of Revenue $ 56,445 $ 35,944 $ 18,407 $ 23,203 $ 25,915

Goods Cost of Revenue

Third Party and Other $ 6,757 $ 2,014 $ 1,275 $ 1,935 $ 475

Direct 2,008 45,925 110,329 196,789 138,278

Total Goods Cost of Revenue $ 8,765 $ 47,939 $ 111,604 $ 198,724 $ 138,753

Travel and Other Cost of Revenue

Third Party and Other $ 4,041 $ 2,431 $ 1,024 $ 1,864 $ 2,530

Direct – – – – –

Total Travel and Other Cost of Revenue $ 4,041 $ 2,431 $ 1,024 $ 1,864 $ 2,530

Total Cost of Revenue

Third Party and Other $ 62,580 $ 40,155 $ 15,475 $ 27,002 $ 28,920

Direct 6,671 46,159 115,560 196,789 138,278

Total Cost of Revenue $ 69,251 $ 86,314 $ 131,035 $ 223,791 $ 167,198

% of North America Total Revenue 29 % 33 % 45 % 60 % 49 %

Gross Profit

Local Gross Profit

Third Party and Other $ 139,346 $ 148,479 $ 121,817 $ 119,251 $ 145,678

Direct 636 54 1,219 – –

Total Local Gross Profit $ 139,982 $ 148,533 $ 123,036 $ 119,251 $ 145,678

% of North America Total Local Revenue 71.3 % % 80.5 % % 87.0 % % 83.7 % % 84.9 % %

% of North America Total Local Gross Billings 32.6 % % 36.0 % % 34.6 % % 27.7 % % 32.4 % %

Goods Gross Profit

Third Party and Other $ 18,184 $ 8,373 $ 11,789 $ 9,942 $ 2,669

Direct 274 6,849 16,279 12,786 9,787

Total Goods Gross Profit $ 18,458 $ 15,222 $ 28,068 $ 22,728 $ 12,456

% of North America Total Goods Revenue 67.8 % % 24.1 % % 20.1 % % 10.3 % % 8.2 % %

% of North America Total Goods Gross Billings 23.6 % % 16.4 % % 18.5 % % 9.4 % % 7.5 % %

Travel and Other Gross Profit

Third Party and Other $ 10,874 $ 10,112 $ 9,464 $ 9,581 $ 14,222

Direct – – – – –

Total Travel and Other Gross Profit $ 10,874 $ 10,112 $ 9,464 $ 9,581 $ 14,222

% of North America Total Travel and Other Revenue 72.9 % % 80.6 % % 90.2 % % 83.7 % % 84.9 % %

% of North America Total Travel and Other Gross Billings 23.7 % % 23.7 % % 21.3 % % 20.0 % % 21.6 % %

Total Gross Profit

Third Party and Other $ 168,404 $ 166,964 $ 143,070 $ 138,774 $ 162,569

Direct 910 6,903 17,498 12,786 9,787

Total Gross Profit $ 169,314 $ 173,867 $ 160,568 $ 151,560 $ 172,356

% of North America Total Revenue 71.0 % % 66.8 % % 55.1 % % 40.4 % % 50.8 % %

% of North America Total Gross Billings 30.6 % % 31.7 % % 29.1 % % 21.1 % % 25.3 % %

Operating Income Excl Stock-Based Compensation (SBC), Acquisition-Related Expenses $ 40,172 $ 43,429 $ 39,093 $ 17,032 $ 41,366

Year-over-year growth N/A N/A 108 % (7 ) % 3 %

% of Consolidated Operating Income Excl SBC, Acq-Related 59 % 60 % 77 % 124 % 81 %

Operating Margin Excl SBC, Acq-Related (% of North America Total revenue) 16.8 % 16.7 % 13.4 % 4.5 % 12.2 %

Year-over-year growth (bps) 3,278 2,337 170 (570 ) (460 )

Operating Income TTM Excl SBC, Acq-Related $ 66,746 $ 120,676 $ 140,933 $ 139,726 $ 140,920

Operating Margin TTM Excl SBC, Acq-Related (% of North America Total TTM revenue) 9.1 % 14.4 % 14.5 % 12.0 % 11.1 %

Year-over-year growth (bps) 2,197 2,601 2,100 1,120 200

International Segment Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013

Gross Billings

Local Gross Billings

Third Party and Other $ 465,879 $ 423,313 $ 328,044 $ 368,898 $ 379,413

Direct – – – – –

Total Local Gross Billings $ 465,879 $ 423,313 $ 328,044 $ 368,898 $ 379,413

Goods Gross Billings

Third Party and Other $ 199,988 $ 186,899 $ 211,464 $ 285,057 $ 212,736

Direct 7,396 12,288 11,930 15,601 14,229

Total Goods Gross Billings $ 207,384 $ 199,187 $ 223,394 $ 300,658 $ 226,965

Travel and Other Gross Billings

Third Party and Other $ 123,727 $ 115,901 $ 114,449 $ 131,944 $ 120,072

Direct 4,253 – – – –

Total Travel and Other Gross Billings $ 127,980 $ 115,901 $ 114,449 $ 131,944 $ 120,072

Total Gross Billings

Third Party and Other $ 789,594 $ 726,113 $ 653,957 $ 785,899 $ 712,221

Direct 11,649 12,288 11,930 15,601 14,229

Total Gross Billings $ 801,243 $ 738,401 $ 665,887 $ 801,500 $ 726,450

Year-over-year growth 127 % 32 % (12 ) % 6 % (9 ) %

Year-over-year growth, excluding FX⁽⁵⁾ 138 % 45 % (4 ) % 9 % (8 ) %

% of Consolidated Gross Billings 59 % 57 % 55 % 53 % 52 %

Gross Billings TTM $ 2,871,795 $ 3,050,937 $ 2,960,592 $ 3,007,031 $ 2,932,238

Revenue

Local Revenue

Third Party and Other $ 213,166 $ 193,861 $ 164,184 $ 144,834 $ 155,800

Direct – – – – –

Total Local Revenue $ 213,166 $ 193,861 $ 164,184 $ 144,834 $ 155,800

Goods Revenue

Third Party and Other $ 60,365 $ 67,864 $ 71,310 $ 74,702 $ 63,937

Direct 7,396 12,288 11,930 15,600 14,229

Total Goods Revenue $ 67,761 $ 80,152 $ 83,240 $ 90,302 $ 78,166

Travel and Other Revenue

Third Party and Other $ 35,538 $ 34,141 $ 29,525 $ 27,815 $ 27,882

Direct 4,253 – – – –

Total Travel and Other Revenue $ 39,791 $ 34,141 $ 29,525 $ 27,815 $ 27,882

Total Revenue

Third Party and Other $ 309,069 $ 295,866 $ 265,019 $ 247,351 $ 247,619

Direct 11,649 12,288 11,930 15,600 14,229

Total Revenue $ 320,718 $ 308,154 $ 276,949 $ 262,951 $ 261,848

Year-over-year growth 102 % 31 % 3 % (16 ) % (18 ) %

Year-over-year growth, excluding FX 112 % 44 % 13 % (14 ) % (17 ) %

% of Consolidated Revenue 57 % 54 % 49 % 41 % 44 %

Revenue TTM $ 1,137,257 $ 1,210,034 $ 1,218,347 $ 1,168,772 $ 1,109,902

Cost of Revenue

Local Cost of Revenue

Third Party and Other $ 27,622 $ 24,162 $ 23,729 $ 20,423 $ 20,115

Direct – – – – –

Total Local Cost of Revenue $ 27,622 $ 24,162 $ 23,729 $ 20,423 $ 20,115

Goods Cost of Revenue

Third Party and Other $ 7,822 $ 8,459 $ 10,702 $ 12,558 $ 17,381

Direct 6,474 11,993 12,053 21,778 14,099

Total Goods Cost of Revenue $ 14,296 $ 20,452 $ 22,755 $ 34,336 $ 31,480

Travel and Other Cost of Revenue

Third Party and Other $ 4,605 $ 4,256 $ 4,267 $ 3,922 $ 3,600

Direct 3,724 – – – –

Total Travel and Other Cost of Revenue $ 8,329 $ 4,256 $ 4,267 $ 3,922 $ 3,600

Total Cost of Revenue

Third Party and Other $ 40,049 $ 36,877 $ 38,698 $ 36,903 $ 41,096

Direct 10,198 11,993 12,053 21,778 14,099

Total Cost of Revenue $ 50,247 $ 48,870 $ 50,751 $ 58,681 $ 55,195

% of International Total Revenue 16 % 16 % 18 % 22 % 21 %

Gross Profit

Local Gross Profit

Third Party and Other $ 185,544 $ 169,699 $ 140,455 $ 124,411 $ 135,685

Direct – – – – –

Total Local Gross Profit $ 185,544 $ 169,699 $ 140,455 $ 124,411 $ 135,685

% of International Total Local Revenue 87.0 % % 87.5 % % 85.5 % % 85.9 % % 87.1 % %

% of International Total Local Gross Billings 39.8 % % 40.1 % % 42.8 % % 33.7 % % 35.8 % %

Goods Gross Profit

Third Party and Other $ 52,543 $ 59,405 $ 60,608 $ 62,144 $ 46,556

Direct 922 295 (123 ) (6,178 ) 130

Total Goods Gross Profit $ 53,465 $ 59,700 $ 60,485 $ 55,966 $ 46,686

% of International Total Goods Revenue 78.9 % % 74.5 % % 72.7 % % 62.0 % % 59.7 % %

% of International Total Goods Gross Billings 25.8 % % 30.0 % % 27.1 % % 18.6 % % 20.6 % %

Travel and Other Gross Profit

Third Party and Other $ 30,933 $ 29,885 $ 25,258 $ 23,893 $ 24,282

Direct 529 – – – –

Total Travel and Other Gross Profit $ 31,462 $ 29,885 $ 25,258 $ 23,893 $ 24,282

% of International Total Travel and Other Revenue 79.1 % % 87.5 % % 85.5 % % 85.9 % % 87.1 % %

% of International Total Travel and Other Gross Billings 24.6 % % 25.8 % % 22.1 % % 18.1 % % 20.2 % %

Total Gross Profit

Third Party and Other $ 269,020 $ 258,989 $ 226,321 $ 210,448 $ 206,523

Direct 1,451 295 (123 ) (6,178 ) 130

Total Gross Profit $ 270,471 $ 259,284 $ 226,198 $ 204,270 $ 206,653

% of International Total Revenue 84.3 % % 84.1 % % 81.7 % % 77.7 % % 78.9 % %

% of International Total Gross Billings 33.8 % % 35.1 % % 34.0 % % 25.5 % % 28.4 % %

Operating Income (Loss) Excl SBC, Acq-Related $ 27,418 $ 28,505 $ 11,395 $ (3,329 ) $ 9,787

Year-over-year growth N/A 155 N/A (1,060 ) % (64 ) %

% of Consolidated Operating Income Excl SBC, Acq-Related 41 % 40 % 23 % (24 ) % 19 %

Operating Margin Excl SBC, Acq-Related (% of International Total revenue) 8.5 % 9.3 % 4.1 % (1.3 ) % 3.7 %

Year-over-year growth (bps) 5,669 3,126 1,170 (120 ) (480 )

Operating (Loss) Income TTM Excl SBC, Acq-Related $ (45,205 ) $ 35,108 $ 67,031 $ 63,989 $ 46,358

Operating Margin TTM Excl SBC, Acq-Related (% of International Total TTM revenue) (4.0 ) % 2.9 % 5.5 % 5.5 % 4.2 %

Year-over-year growth (bps) 8,704 5,765 4,170 2,080 820

Consolidated Results of Operations Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013

Gross Billings

Local Gross Billings

Third Party and Other $ 890,003 $ 835,661 $ 677,337 $ 799,153 $ 829,533

Direct 5,299 288 6,450 – –

Total Local Gross Billings $ 895,302 $ 835,949 $ 683,787 $ 799,153 $ 829,533

Goods Gross Billings

Third Party and Other $ 275,896 $ 227,072 $ 236,972 $ 316,327 $ 230,030

Direct 9,678 65,061 138,538 225,176 162,294

Total Goods Gross Billings $ 285,574 $ 292,133 $ 375,510 $ 541,503 $ 392,324

Travel and Other Gross Billings

Third Party and Other $ 169,671 $ 158,594 $ 158,959 $ 179,796 $ 185,892

Direct 4,253 – – – –

Total Travel and Other Gross Billings $ 173,924 $ 158,594 $ 158,959 $ 179,796 $ 185,892

Total Gross Billings

Third Party and Other $ 1,335,570 $ 1,221,327 $ 1,073,268 $ 1,295,276 $ 1,245,475

Direct 19,230 65,349 144,988 225,176 162,294

Total Gross Billings $ 1,354,800 $ 1,286,676 $ 1,218,256 $ 1,520,452 $ 1,407,769

Year-over-year growth 103 % 38 % 5 % 24 % 4 %

Year-over-year growth, excluding FX 108 % 47 % 11 % 25 % 5 %

Gross Billings (TTM) $ 4,672,127 $ 5,029,554 $ 5,090,600 $ 5,380,184 $ 5,433,153

Year-over-year growth 241 % 128 % 61 % 35 % 16 %

Revenue

Local Revenue

Third Party and Other $ 404,294 $ 378,050 $ 299,177 $ 287,288 $ 327,393

Direct 5,299 288 6,450 – –

Total Local Revenue $ 409,593 $ 378,338 $ 305,627 $ 287,288 $ 327,393

Goods Revenue

Third Party and Other $ 85,306 $ 78,251 $ 84,374 $ 86,579 $ 67,081

Direct 9,678 65,062 138,538 225,175 162,294

Total Goods Revenue $ 94,984 $ 143,313 $ 222,912 $ 311,754 $ 229,375

Travel and Other Revenue

Third Party and Other $ 50,453 $ 46,684 $ 40,013 $ 39,260 $ 44,634

Direct 4,253 – – – –

Total Travel and Other Revenue $ 54,706 $ 46,684 $ 40,013 $ 39,260 $ 44,634

Total Revenue

Third Party and Other $ 540,053 $ 502,985 $ 423,564 $ 413,127 $ 439,108

Direct 19,230 65,350 144,988 225,175 162,294

Total Revenue $ 559,283 $ 568,335 $ 568,552 $ 638,302 $ 601,402

Year-over-year growth 89 % 45 % 32 % 30 % 8 %

Year-over-year growth, excluding FX 95 % 53 % 38 % 31 % 8 %

Total Consolidated Revenue TTM $ 1,874,190 $ 2,049,943 $ 2,188,334 $ 2,334,472 $ 2,376,591

Year-over-year growth 219 % 118 % 70 % 45 % 27 %

Cost of Revenue

Local Cost of Revenue

Third Party and Other $ 79,404 $ 59,872 $ 36,905 $ 43,626 $ 46,030

Direct 4,663 234 5,231 – –

Total Local Cost of Revenue $ 84,067 $ 60,106 $ 42,136 $ 43,626 $ 46,030

Goods Cost of Revenue

Third Party and Other $ 14,579 $ 10,473 $ 11,977 $ 14,493 $ 17,856

Direct 8,482 57,918 122,382 218,567 152,377

Total Goods Cost of Revenue $ 23,061 $ 68,391 $ 134,359 $ 233,060 $ 170,233

Travel and Other Cost of Revenue

Third Party and Other $ 8,646 $ 6,687 $ 5,291 $ 5,786 $ 6,130

Direct 3,724 – – – –

Total Travel and Other Cost of Revenue $ 12,370 $ 6,687 $ 5,291 $ 5,786 $ 6,130

Total Cost of Revenue

Third Party and Other $ 102,629 $ 77,032 $ 54,173 $ 63,905 $ 70,016

Direct 16,869 58,152 127,613 218,567 152,377

Total Cost of Revenue $ 119,498 $ 135,184 $ 181,786 $ 282,472 $ 222,393

% of Total Consolidated Revenue 21 % 24 % 32 % 44 % 37 %

Gross Profit

Local Gross Profit

Third Party and Other $ 324,890 $ 318,178 $ 262,272 $ 243,662 $ 281,363

Direct 636 54 1,219 – –

Total Local Gross Profit $ 325,526 $ 318,232 $ 263,491 $ 243,662 $ 281,363

% of Total Consolidated Local Revenue 79.5 % % 84.1 % % 86.2 % % 84.8 % % 85.9 % %

% of Total Consolidated Local Gross Billings 36.4 % % 38.1 % % 38.5 % % 30.5 % % 33.9 % %

Goods Gross Profit

Third Party and Other $ 70,727 $ 67,778 $ 72,397 $ 72,086 $ 49,225

Direct 1,196 7,144 16,156 6,608 9,917

Total Goods Gross Profit $ 71,923 $ 74,922 $ 88,553 $ 78,694 $ 59,142

% of Total Consolidated Goods Revenue 75.7 % % 52.3 % % 39.7 % % 25.2 % % 25.8 % %

% of Total Consolidated Goods Gross Billings 25.2 % % 25.6 % % 23.6 % % 14.5 % % 15.1 % %

Travel and Other Gross Profit

Third Party and Other $ 41,807 $ 39,997 $ 34,722 $ 33,474 $ 38,504

Direct 529 – – – –

Total Travel and Other Gross Profit $ 42,336 $ 39,997 $ 34,722 $ 33,474 $ 38,504

% of Total Consolidated Travel and Other Revenue 77.4 % % 85.7 % % 86.8 % % 85.3 % % 86.3 % %

% of Total Consolidated Travel and Other Gross Billings 24.3 % % 25.2 % % 21.8 % % 18.6 % % 20.7 % %

Total Gross Profit

Third Party and Other $ 437,424 $ 425,953 $ 369,391 $ 349,222 $ 369,092

Direct 2,361 7,198 17,375 6,608 9,917

Total Gross Profit $ 439,785 $ 433,151 $ 386,766 $ 355,830 $ 379,009

% of Total Consolidated Revenue 78.6 % % 76.2 % % 68.0 % % 55.7 % % 63.0 % %

% of Total Consolidated Gross Billings 32.5 % % 33.7 % % 31.7 % % 23.4 % % 26.9 % %

Operating Income Excl SBC, Acq-Related $ 67,590 $ 71,934 $ 50,488 $ 13,703 $ 51,153

Year-over-year growth N/A N/A N/A (24 ) % (24 ) %

Operating Margin Excl SBC, Acq-Related (% of Total Consolidated revenue) 12.1 % 12.7 % 8.9 % 2.1 % 8.5 %

Year-over-year growth (bps) 4,534 2,853 930 (150 ) (360 )

Operating Income TTM Excl SBC, Acq-Related $ 21,541 $ 155,784 $ 207,964 $ 203,715 $ 187,278

Operating Margin TTM Excl SBC, Acq-Related (% of Total Consolidated TTM revenue) 1.1 % 7.6 % 9.5 % 8.7 % 7.9 %

Year-over-year growth (bps) 5,011 4,229 3,320 1,770 680

Operating Income (Loss) $ 39,639 $ 46,485 $ 25,438 $ (12,861 ) $ 21,178

Year-over-year growth N/A N/A N/A 14 % (47 ) %

Operating Margin (% of Total Consolidated revenue) 7.1 % 8.2 % 4.5 % (2.0 ) % 3.5 %

Year-over-year growth (bps) 4,673 3,391 457 100 (360 )

Operating (Loss) Income TTM $ (76,599 ) $ 70,913 $ 96,590 $ 98,701 $ 80,240

Operating Margin TTM (% of Total Consolidated TTM revenue) (4.1 ) % 3.5 % 4.4 % 4.2 % 3.4 %

Year-over-year growth (bps) 8,875 6,824 4,740 1,870 750

Net (Loss) Income Attributable to Common Stockholders (11,695 ) 28,386 (2,979 ) (81,089 ) (3,992 )

Weighted Average Basic Shares Outstanding 644,097 647,150 653,224 655,678 658,800

Weighted Average Diluted Shares Outstanding ⁽⁶⁾ 644,097 663,123 653,224 655,678 658,800

Net (Loss) Earnings per Share

Basic $ (0.02 ) $ 0.04 $ (0.00 ) $ (0.12 ) $ (0.01 )

Diluted $ (0.02 ) $ 0.04 $ (0.00 ) $ (0.12 ) $ (0.01 )

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013

The following is a quarterly reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net (loss) income” and a quarterly reconciliation of operating income, excluding stock-based compensation and acquisition-related benefit (expense), net, to the most comparable U.S. GAAP financial measure, “Operating income (loss).” ⁽⁷⁾

Adjusted EBITDA $ 79,306 $ 84,744 $ 65,798 $ 29,668 $ 71,853

Depreciation and amortization (11,716 ) (12,810 ) (15,310 ) (15,965 ) (20,700 )

Operating income, excluding stock-based compensation and acquisition-related benefit (expense), net 67,590 71,934 50,488 13,703 51,153

Stock-based compensation (28,003 ) (27,084 ) (22,619 ) (26,411 ) (29,907 )

Acquisition-related benefit (expense), net 52 1,635 (2,431 ) (153 ) (68 )

Operating income (loss) 39,639 46,485 25,438 (12,861 ) 21,178

Non Operating Items

Interest and other (expense) income, net (3,539 ) 57,367 617 (48,279 ) (5,064 )

Loss on equity method investments (5,128 ) (3,428 ) (138 ) (1,231 ) (19 )

Provision for income taxes (34,565 ) (66,875 ) (26,857 ) (17,676 ) (19,337 )

Net (loss) income $ (3,593 ) $ 33,549 $ (940 ) $ (80,047 ) $ (3,242 )

The following is a trailing twelve months reconciliation of Operating income, excluding stock-based compensation and acquisition-related benefit (expense), net, to the most comparable U.S. GAAP financial measure, “Operating (loss) Income.” ⁽⁷⁾

Operating income, excluding stock-based compensation and acquisition-related benefit (expense), net TTM $ 21,541 $ 155,784 $ 207,964 $ 203,715 $ 187,278

Stock-based compensation (102,729 ) (91,095 ) (110,374 ) (104,117 ) (106,021 )

Acquisition-related benefit (expense), net 4,589 6,224 (1,000 ) (897 ) (1,017 )

Operating (loss) income TTM $ (76,599 ) $ 70,913 $ 96,590 $ 98,701 $ 80,240

The following is a quarterly reconciliation of foreign exchange rate neutral Gross Billings growth from the comparable quarterly periods of the prior year to reported Gross billings growth from the comparable quarterly periods of the prior year.⁽⁸⁾

International Gross Billings growth, excluding FX 138 % 45 % (4 ) % 9 % (8 ) %

FX Effect (11 ) % (13 ) % (8 ) % (3 ) % (1 ) %

International Gross Billings growth 127 % 32 % (12 ) % 6 % (9 ) %

Consolidated Gross Billings growth, excluding FX 108 % 47 % 11 % 25 % 5 %

FX Effect (5 ) % (9 ) % (6 ) % (1 ) % (1 ) %

Consolidated Gross Billings growth 103 % 38 % 5 % 24 % 4 %

The following is a quarterly reconciliation of foreign exchange rate neutral Revenue growth from the comparable quarterly periods of the prior year to reported Revenue growth from the comparable quarterly periods of the prior year.⁽⁸⁾

International Revenue growth, excluding FX 112 % 44 % 13 % (14 ) % (17 ) %

FX Effect (10 ) % (13 ) % (10 ) % (2 ) % (1 ) %

International Revenue growth 102 % 31 % 3 % (16 ) % (18 ) %

Consolidated Revenue growth, excluding FX 95 % 53 % 38 % 31 % 8 %

FX Effect (6 ) % (8 ) % (6 ) % (1 ) % – %

Consolidated Revenue growth 89 % 45 % 32 % 30 % 8 %

The following is a reconciliation of free cash flow to the most comparable U.S. GAAP financial measure, “Net cash provided by operating activities.”

Net cash provided by operating activities $ 83,714 $ 75,315 $ 42,088 $ 65,717 $ 8,760

Purchases of property, equipment and capitalized software (13,083 ) (26,709 ) (16,010 ) (40,034 ) (14,468 )

Free cash flow ⁽⁹⁾ $ 70,631 $ 48,606 $ 26,078 $ 25,683 $ (5,708 )

Net cash provided by operating activities (TTM) $ 356,221 $ 392,517 $ 370,194 $ 266,834 $ 191,880

Purchases of property, equipment and capitalized software (TTM) (45,932 ) (62,401 ) (69,788 ) (95,836 ) (97,221 )

Free cash flow (TTM) $ 310,289 $ 330,116 $ 300,406 $ 170,998 $ 94,659

Net cash used in investing activities $ (46,444 ) $ (60,153 ) $ (35,629 ) $ (52,753 ) $ (30,679 )

Net cash (used in) provided by financing activities $ (8,275 ) $ 24,158 $ 2,707 $ (6,495 ) $ (9,432 )

Net cash used in investing activities (TTM) $ (149,583 ) $ (184,552 ) $ (177,133 ) $ (194,979 ) $ (179,214 )

Net cash provided by financing activities (TTM) $ 746,824 $ 771,404 $ 765,503 $ 12,095 $ 11,028

Other Metrics

Active Customers⁽¹⁰⁾

North America 14.9 15.1 16.0 17.2 18.2

International 22.0 22.9 23.5 23.8 23.5

Total Active Customers 36.9 38.0 39.5 41.0 41.7

TTM Gross Billings / Average Active Customer ⁽¹¹⁾

North America $ 156 $ 151 $ 148 $ 152 $ 151

International $ 197 $ 175 $ 149 $ 138 $ 129

Consolidated $ 179 $ 165 $ 149 $ 144 $ 138

Headcount

Sales ⁽¹²⁾ 5,735 5,587 5,087 4,677 4,566

% North America 21 % 20 % 24 % 25 % 28 %

% International 79 % 80 % 76 % 75 % 72 %

Other 6,813 7,233 6,779 6,717 6,433

Total Headcount 12,548 12,820 11,866 11,394 10,999

(1) Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds. Includes direct billings and third party and other billings.

(2) Local represents deals from local merchants, deals with national merchants, and through local events (i.e., GrouponLive deals).

(3) Third party revenue is related to sales for which the company acts as a marketing agent for the merchant. This revenue is recorded on a net basis. Direct revenue is primarily related to the sale of products for which the Company is the merchant of record. These revenues are accounted for on a gross basis, with the cost of inventory included in cost of revenue.

(4) Cost of revenue is comprised of direct and indirect costs incurred to generate revenue. Direct cost of revenue includes the purchase price of consumer products, warehousing, shipping costs and inventory markdowns. Third party cost of revenue includes estimated refunds for which the merchant’s share is not recoverable. Other costs incurred to generate revenue are allocated to cost of third party revenue, direct revenue and other revenue for each of our categories (Local, Goods, and Travel and Other) in proportion to relative gross billings during the period.

(5) Represents change in financial measures that would have resulted had average exchange rates in the reporting period been the same as those in effect in the prior year period.

(6) The weighted-average diluted shares outstanding is calculated using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and vesting of restricted stock units and restricted shares, as calculated using the treasury stock method.

(7) Adjusted EBITDA and Operating income excluding stock-based compensation and acquisition-related expense (benefit), net are non-GAAP financial measures. The Company reconciles Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net (loss) income” for the periods presented, and the Company reconciles Operating income excluding stock-based compensation and acquisition-related expense (benefit), net to the most comparable U.S. GAAP financial measure, “Operating income (loss),” for the periods presented.

(8) Foreign Exchange Rate neutral operating results are non-GAAP financial measures. The Company reconciles these measures to the most comparable U.S. GAAP financial measures, ‘‘Gross Billings” and “Revenue,” for the periods presented.

(9) Free cash flow is a non-GAAP financial measure. The Company reconciles this measure to the most comparable U.S. GAAP financial measure, ‘‘Net cash provided by operating activities,” for the periods presented.

(10) Reflects the total number of unique accounts who have purchased Groupons during the trailing twelve months.

(11) Reflects the total gross billings generated in the trailing twelve months per average active customer over that period.

(12) Includes inside and outside merchant sales representatives, as well as sales support.

(13) The definition, methodology, and appropriateness of each of our supplemental metrics is reviewed periodically. As a result, metrics are subject to removal and/or change.

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