QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended March 31, 2016
|
|
OR
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from ________________ to ________________
|
Delaware
|
|
27-0903295
|
(State or other jurisdiction of
|
|
(I.R.S. Employer
|
incorporation or organization)
|
|
Identification No.)
|
|
|
|
600 West Chicago Avenue, Suite 400
Chicago, Illinois
|
|
60654
|
(Address of principal executive offices)
|
|
(Zip Code)
|
PART I. Financial Information
|
Page
|
Forward-Looking Statements
|
|
Item 1. Financial Statements and Supplementary Data
|
|
Condensed Consolidated Balance Sheets as of March 31, 2016 (unaudited) and December 31, 2015
|
|
Condensed Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015 (unaudited)
|
|
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2016 and 2015 (unaudited)
|
|
Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2016 (unaudited)
|
|
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015 (unaudited)
|
|
Notes to Condensed Consolidated Financial Statements (unaudited)
|
|
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
Item 3. Quantitative and Qualitative Disclosure about Market Risk
|
|
Item 4. Controls and Procedures
|
|
PART II. Other Information
|
|
Item 1. Legal Proceedings
|
|
Item 1A. Risk Factors
|
|
Item 2. Unregistered sales of equity securities and use of proceeds
|
|
Item 5. Other Information
|
|
Item 6. Exhibits
|
|
Signatures
|
|
Exhibits
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
688,512
|
|
|
$
|
853,362
|
|
Accounts receivable, net
|
73,471
|
|
|
68,175
|
|
||
Prepaid expenses and other current assets
|
134,831
|
|
|
153,705
|
|
||
Total current assets
|
896,814
|
|
|
1,075,242
|
|
||
Property, equipment and software, net
|
193,036
|
|
|
198,897
|
|
||
Goodwill
|
291,747
|
|
|
287,332
|
|
||
Intangible assets, net
|
32,769
|
|
|
36,483
|
|
||
Investments (including $162.5 million and $163.7 million at March 31, 2016 and December 31, 2015, respectively, at fair value)
|
177,553
|
|
|
178,236
|
|
||
Deferred income taxes
|
4,254
|
|
|
3,454
|
|
||
Other non-current assets
|
22,507
|
|
|
16,620
|
|
||
Total Assets
|
$
|
1,618,680
|
|
|
$
|
1,796,264
|
|
Liabilities and Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
21,970
|
|
|
$
|
24,590
|
|
Accrued merchant and supplier payables
|
674,153
|
|
|
776,211
|
|
||
Accrued expenses and other current liabilities
|
406,578
|
|
|
402,724
|
|
||
Total current liabilities
|
1,102,701
|
|
|
1,203,525
|
|
||
Deferred income taxes
|
6,937
|
|
|
8,612
|
|
||
Other non-current liabilities
|
123,371
|
|
|
113,540
|
|
||
Total Liabilities
|
1,233,009
|
|
|
1,325,677
|
|
||
Commitments and contingencies (see Note 7)
|
|
|
|
||||
Stockholders' Equity
|
|
|
|
||||
Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 720,766,970 shares issued and 573,478,805 shares outstanding at March 31, 2016 and 717,387,446 shares issued and 588,919,281 shares outstanding at December 31, 2015
|
72
|
|
|
72
|
|
||
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, 2016 and December 31, 2015
|
—
|
|
|
—
|
|
||
Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, no shares issued and outstanding at March 31, 2016 and December 31, 2015
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,997,930
|
|
|
1,964,453
|
|
||
Treasury stock, at cost, 147,288,165 shares at March 31, 2016 and 128,468,165 shares at December 31, 2015
|
(708,490
|
)
|
|
(645,041
|
)
|
||
Accumulated deficit
|
(953,542
|
)
|
|
(901,292
|
)
|
||
Accumulated other comprehensive income (loss)
|
48,354
|
|
|
51,206
|
|
||
Total Groupon, Inc. Stockholders' Equity
|
384,324
|
|
|
469,398
|
|
||
Noncontrolling interests
|
1,347
|
|
|
1,189
|
|
||
Total Equity
|
385,671
|
|
|
470,587
|
|
||
Total Liabilities and Equity
|
$
|
1,618,680
|
|
|
$
|
1,796,264
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Revenue:
|
|
|
|
|
||||
Third party and other
|
|
$
|
334,568
|
|
|
$
|
360,121
|
|
Direct
|
|
397,403
|
|
|
390,235
|
|
||
Total revenue
|
|
731,971
|
|
|
750,356
|
|
||
Cost of revenue:
|
|
|
|
|
||||
Third party and other
|
|
46,781
|
|
|
51,697
|
|
||
Direct
|
|
345,862
|
|
|
351,253
|
|
||
Total cost of revenue
|
|
392,643
|
|
|
402,950
|
|
||
Gross profit
|
|
339,328
|
|
|
347,406
|
|
||
Operating expenses:
|
|
|
|
|
||||
Marketing
|
|
89,765
|
|
|
52,533
|
|
||
Selling, general and administrative
|
|
280,988
|
|
|
289,847
|
|
||
Restructuring charges
|
|
12,444
|
|
|
—
|
|
||
Acquisition-related expense (benefit), net
|
|
3,464
|
|
|
(269
|
)
|
||
Total operating expenses
|
|
386,661
|
|
|
342,111
|
|
||
Income (loss) from operations
|
|
(47,333
|
)
|
|
5,295
|
|
||
Other income (expense), net
|
|
3,486
|
|
|
(19,927
|
)
|
||
Income (loss) from continuing operations before provision (benefit) for income taxes
|
|
(43,847
|
)
|
|
(14,632
|
)
|
||
Provision (benefit) for income taxes
|
|
1,749
|
|
|
2,107
|
|
||
Income (loss) from continuing operations
|
|
(45,596
|
)
|
|
(16,739
|
)
|
||
Income (loss) from discontinued operations, net of tax
|
|
—
|
|
|
6,284
|
|
||
Net income (loss)
|
|
(45,596
|
)
|
|
(10,455
|
)
|
||
Net income attributable to noncontrolling interests
|
|
(3,523
|
)
|
|
(3,818
|
)
|
||
Net income (loss) attributable to Groupon, Inc.
|
|
$
|
(49,119
|
)
|
|
$
|
(14,273
|
)
|
|
|
|
|
|
||||
Basic net income (loss) per share:
|
|
|
|
|
||||
Continuing operations
|
|
$
|
(0.08
|
)
|
|
$
|
(0.03
|
)
|
Discontinued operations
|
|
—
|
|
|
0.01
|
|
||
Basic net income (loss) per share
|
|
$
|
(0.08
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
||||
Diluted net income (loss) per share:
|
|
|
|
|
||||
Continuing operations
|
|
$
|
(0.08
|
)
|
|
$
|
(0.03
|
)
|
Discontinued operations
|
|
—
|
|
|
0.01
|
|
||
Diluted net income (loss) per share
|
|
$
|
(0.08
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
||||
Weighted average number of shares outstanding
|
|
|
|
|
||||
Basic
|
|
582,751,678
|
|
|
676,382,937
|
|
||
Diluted
|
|
582,751,678
|
|
|
676,382,937
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Income (loss) from continuing operations
|
|
$
|
(45,596
|
)
|
|
$
|
(16,739
|
)
|
Other comprehensive income (loss) from continuing operations:
|
|
|
|
|
||||
Foreign currency translation adjustments:
|
|
|
|
|
||||
Net unrealized gain (loss) during the period
|
|
(4,225
|
)
|
|
10,707
|
|
||
Reclassification adjustments included in income (loss) from continuing operations
|
|
1,462
|
|
|
—
|
|
||
Net change in unrealized gain (loss)
|
|
(2,763
|
)
|
|
10,707
|
|
||
Amortization of pension net actuarial gain (loss) to earnings (net of tax effect of $4 and $5 for the three months ended March 31, 2016 and 2015, respectively)
|
|
27
|
|
|
26
|
|
||
Net change in unrealized gain (loss) on available-for-sale securities (net of tax effect of $0 and $83 for the three months ended March 31, 2016 and 2015, respectively)
|
|
(116
|
)
|
|
137
|
|
||
Other comprehensive income (loss) from continuing operations
|
|
(2,852
|
)
|
|
10,870
|
|
||
Comprehensive income (loss) from continuing operations
|
|
(48,448
|
)
|
|
(5,869
|
)
|
||
|
|
|
|
|
||||
Income (loss) from discontinued operations
|
|
—
|
|
|
6,284
|
|
||
Other comprehensive income (loss) from discontinued operations - Foreign currency translation adjustments (net of tax effect of $1,428 for the three months ended March 31, 2015)
|
|
—
|
|
|
(2,417
|
)
|
||
Comprehensive income (loss) from discontinued operations
|
|
—
|
|
|
3,867
|
|
||
|
|
|
|
|
||||
Comprehensive income (loss)
|
|
(48,448
|
)
|
|
(2,002
|
)
|
||
Comprehensive income (loss) attributable to noncontrolling interests
|
|
(3,523
|
)
|
|
(3,818
|
)
|
||
Comprehensive income (loss) attributable to Groupon, Inc.
|
|
$
|
(51,971
|
)
|
|
$
|
(5,820
|
)
|
|
Groupon, Inc. Stockholders' Equity
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Treasury Stock
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Groupon Inc. Stockholders' Equity
|
|
Non-controlling Interests
|
|
Total Equity
|
||||||||||||||||||||||
|
Shares
|
|
Amount
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||||||||||
Balance at December 31, 2015
|
719,787,422
|
|
|
$
|
72
|
|
|
$
|
1,964,453
|
|
|
(128,468,165
|
)
|
|
$
|
(645,041
|
)
|
|
$
|
(901,292
|
)
|
|
$
|
51,206
|
|
|
$
|
469,398
|
|
|
$
|
1,189
|
|
|
$
|
470,587
|
|
Cumulative effect of change in accounting principle
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,131
|
)
|
|
—
|
|
|
(3,131
|
)
|
|
—
|
|
|
(3,131
|
)
|
||||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(49,119
|
)
|
|
—
|
|
|
(49,119
|
)
|
|
3,523
|
|
|
(45,596
|
)
|
||||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,763
|
)
|
|
(2,763
|
)
|
|
—
|
|
|
(2,763
|
)
|
||||||||
Amortization of pension net actuarial loss to earnings, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|
27
|
|
|
—
|
|
|
27
|
|
||||||||
Unrealized gain (loss) on available-for-sale securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(116
|
)
|
|
(116
|
)
|
|
—
|
|
|
(116
|
)
|
||||||||
Forfeiture of unvested restricted stock
|
(196,968
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Exercise of stock options
|
253,511
|
|
|
—
|
|
|
319
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
319
|
|
|
—
|
|
|
319
|
|
||||||||
Vesting of restricted stock units
|
4,104,383
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Shares issued under employee stock purchase plan
|
618,319
|
|
|
—
|
|
|
1,614
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,614
|
|
|
—
|
|
|
1,614
|
|
||||||||
Tax withholdings related to net share settlements of stock-based compensation awards
|
(1,399,721
|
)
|
|
—
|
|
|
(4,262
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,262
|
)
|
|
—
|
|
|
(4,262
|
)
|
||||||||
Stock-based compensation on equity-classified awards
|
—
|
|
|
—
|
|
|
35,806
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,806
|
|
|
—
|
|
|
35,806
|
|
||||||||
Purchases of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,820,000
|
)
|
|
(63,449
|
)
|
|
—
|
|
|
—
|
|
|
(63,449
|
)
|
|
—
|
|
|
(63,449
|
)
|
||||||||
Distributions to noncontrolling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,365
|
)
|
|
(3,365
|
)
|
||||||||
Balance at March 31, 2016
|
723,166,946
|
|
|
$
|
72
|
|
|
$
|
1,997,930
|
|
|
(147,288,165
|
)
|
|
$
|
(708,490
|
)
|
|
$
|
(953,542
|
)
|
|
$
|
48,354
|
|
|
$
|
384,324
|
|
|
$
|
1,347
|
|
|
$
|
385,671
|
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
Operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
(45,596
|
)
|
|
$
|
(10,455
|
)
|
Less: Income (loss) from discontinued operations, net of tax
|
—
|
|
|
6,284
|
|
||
Income (loss) from continuing operations
|
(45,596
|
)
|
|
(16,739
|
)
|
||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization of property, equipment and software
|
30,143
|
|
|
26,266
|
|
||
Amortization of acquired intangible assets
|
4,654
|
|
|
5,934
|
|
||
Stock-based compensation
|
30,756
|
|
|
35,144
|
|
||
Restructuring-related long-lived asset impairments
|
45
|
|
|
—
|
|
||
Deferred income taxes
|
(2,310
|
)
|
|
22
|
|
||
(Gain) loss, net from changes in fair value of contingent consideration
|
3,442
|
|
|
(279
|
)
|
||
Loss from changes in fair value of investments
|
1,100
|
|
|
—
|
|
||
Change in assets and liabilities, net of acquisitions:
|
|
|
|
||||
Restricted cash
|
505
|
|
|
3,245
|
|
||
Accounts receivable
|
(3,223
|
)
|
|
(8,901
|
)
|
||
Prepaid expenses and other current assets
|
20,940
|
|
|
(2,513
|
)
|
||
Accounts payable
|
(2,850
|
)
|
|
2,244
|
|
||
Accrued merchant and supplier payables
|
(112,425
|
)
|
|
(17,034
|
)
|
||
Accrued expenses and other current liabilities
|
10,848
|
|
|
(2,470
|
)
|
||
Other, net
|
(12,754
|
)
|
|
18,688
|
|
||
Net cash provided by (used in) operating activities from continuing operations
|
(76,725
|
)
|
|
43,607
|
|
||
Net cash provided by (used in) operating activities from discontinued operations
|
—
|
|
|
(24,355
|
)
|
||
Net cash provided by (used in) operating activities
|
(76,725
|
)
|
|
19,252
|
|
||
Investing activities
|
|
|
|
||||
Purchases of property and equipment and capitalized software
|
(19,952
|
)
|
|
(18,294
|
)
|
||
Acquisitions of businesses, net of acquired cash
|
(40
|
)
|
|
(800
|
)
|
||
Settlement of liabilities related to purchase of additional interest in consolidated subsidiaries
|
—
|
|
|
(349
|
)
|
||
Acquisitions of intangible assets
|
(786
|
)
|
|
—
|
|
||
Net cash provided by (used in) investing activities from continuing operations
|
(20,778
|
)
|
|
(19,443
|
)
|
||
Net cash provided by (used in) investing activities from discontinued operations
|
—
|
|
|
(624
|
)
|
||
Net cash provided by (used in) investing activities
|
(20,778
|
)
|
|
(20,067
|
)
|
||
Financing activities
|
|
|
|
||||
Payments for purchases of treasury stock
|
(64,665
|
)
|
|
(18,006
|
)
|
||
Taxes paid related to net share settlements of stock-based compensation awards
|
(4,964
|
)
|
|
(14,584
|
)
|
||
Proceeds from stock option exercises and employee stock purchase plan
|
1,933
|
|
|
1,946
|
|
||
Distribution to noncontrolling interest holders
|
(3,365
|
)
|
|
(1,558
|
)
|
||
Payments of capital lease obligations
|
(6,954
|
)
|
|
(3,636
|
)
|
||
Net cash provided by (used in) financing activities
|
(78,015
|
)
|
|
(35,838
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents, including cash classified within current assets held for sale
|
10,668
|
|
|
(30,199
|
)
|
||
Net increase (decrease) in cash and cash equivalents, including cash classified within current assets held for sale
|
(164,850
|
)
|
|
(66,852
|
)
|
||
Less: Net increase (decrease) in cash classified within current assets held for sale
|
—
|
|
|
(25,722
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
(164,850
|
)
|
|
(41,130
|
)
|
||
Cash and cash equivalents, beginning of period
|
853,362
|
|
|
1,016,634
|
|
||
Cash and cash equivalents, end of period
|
$
|
688,512
|
|
|
$
|
975,504
|
|
Non-cash investing and financing activities
|
|
|
|
||||
Continuing operations:
|
|
|
|
||||
Equipment acquired under capital lease obligations
|
$
|
1,163
|
|
|
$
|
—
|
|
Leasehold improvements funded by lessor
|
4,809
|
|
|
—
|
|
||
Liability for purchases of treasury stock
|
2,965
|
|
|
901
|
|
||
Liability for purchase consideration
|
250
|
|
|
—
|
|
||
Accounts payable and accrued expenses related to purchases of property and equipment and capitalized software
|
3,928
|
|
|
3,440
|
|
||
Liability for purchase of additional interest in consolidated subsidiaries
|
526
|
|
|
1,249
|
|
||
Discontinued operations:
|
|
|
|
||||
Accounts payable and accrued expenses related to purchases of property and equipment and capitalized software
|
—
|
|
|
415
|
|
|
Three Months Ended March 31, 2015
|
||
Third party and other revenue
|
$
|
17,883
|
|
Direct revenue
|
24,823
|
|
|
Third party and other cost of revenue
|
(9,524
|
)
|
|
Direct cost of revenue
|
(25,949
|
)
|
|
Marketing expense
|
(5,023
|
)
|
|
Selling, general and administrative expense
|
(22,763
|
)
|
|
Other income, net
|
61
|
|
|
Loss from discontinued operations before benefit for income taxes
|
(20,492
|
)
|
|
Benefit for income taxes
|
26,776
|
|
|
Income (loss) from discontinued operations, net of tax
|
$
|
6,284
|
|
|
|
North America
|
|
EMEA
|
|
Rest of World
|
|
Consolidated
|
||||||||
Balance as of December 31, 2015
|
|
$
|
178,746
|
|
|
$
|
92,063
|
|
|
$
|
16,523
|
|
|
$
|
287,332
|
|
Foreign currency translation
|
|
—
|
|
|
3,741
|
|
|
674
|
|
|
4,415
|
|
||||
Balance as of March 31, 2016
|
|
$
|
178,746
|
|
|
$
|
95,804
|
|
|
$
|
17,197
|
|
|
$
|
291,747
|
|
|
|
March 31, 2016
|
||||||||||
Asset Category
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
||||||
Subscriber relationships
|
|
$
|
53,614
|
|
|
$
|
46,227
|
|
|
$
|
7,387
|
|
Merchant relationships
|
|
9,903
|
|
|
8,463
|
|
|
1,440
|
|
|||
Trade names
|
|
11,213
|
|
|
7,862
|
|
|
3,351
|
|
|||
Developed technology
|
|
37,460
|
|
|
27,374
|
|
|
10,086
|
|
|||
Brand relationships
|
|
7,960
|
|
|
3,471
|
|
|
4,489
|
|
|||
Other intangible assets
|
|
21,578
|
|
|
15,562
|
|
|
6,016
|
|
|||
Total
|
|
$
|
141,728
|
|
|
$
|
108,959
|
|
|
$
|
32,769
|
|
|
|
December 31, 2015
|
||||||||||
Asset Category
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
||||||
Subscriber relationships
|
|
$
|
52,204
|
|
|
$
|
43,725
|
|
|
$
|
8,479
|
|
Merchant relationships
|
|
9,648
|
|
|
8,064
|
|
|
1,584
|
|
|||
Trade names
|
|
11,013
|
|
|
7,396
|
|
|
3,617
|
|
|||
Developed technology
|
|
37,103
|
|
|
25,436
|
|
|
11,667
|
|
|||
Brand relationships
|
|
7,960
|
|
|
3,073
|
|
|
4,887
|
|
|||
Other intangible assets
|
|
20,638
|
|
|
14,389
|
|
|
6,249
|
|
|||
Total
|
|
$
|
138,566
|
|
|
$
|
102,083
|
|
|
$
|
36,483
|
|
Remaining amounts in 2016
|
|
$
|
12,015
|
|
2017
|
|
11,470
|
|
|
2018
|
|
7,961
|
|
|
2019
|
|
831
|
|
|
2020
|
|
478
|
|
|
Thereafter
|
|
14
|
|
|
Total
|
|
$
|
32,769
|
|
|
March 31, 2016
|
|
Percent Ownership of Voting Stock
|
|
December 31, 2015
|
|
Percent Ownership of Voting Stock
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Convertible debt securities
|
$
|
10,173
|
|
|
|
|
$
|
10,116
|
|
|
|
||||
Redeemable preferred shares
|
22,699
|
|
|
17%
|
to
|
25%
|
|
22,834
|
|
|
17%
|
to
|
25%
|
||
Total available-for-sale securities
|
32,872
|
|
|
|
|
32,950
|
|
|
|
||||||
Cost method investments
|
15,056
|
|
|
2%
|
to
|
10%
|
|
14,561
|
|
|
2%
|
to
|
10%
|
||
Fair value option investments
|
129,625
|
|
|
43%
|
to
|
45%
|
|
130,725
|
|
|
43%
|
to
|
45%
|
||
Total investments
|
$
|
177,553
|
|
|
|
|
$
|
178,236
|
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||||||||||
|
Amortized Cost
|
|
Gross Unrealized Gain
|
|
Gross Unrealized Loss
(1)
|
|
Fair Value
|
|
Amortized Cost
|
|
Gross Unrealized Gain
|
|
Gross Unrealized Loss
(1)
|
|
Fair Value
|
||||||||||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Convertible debt securities
|
$
|
9,272
|
|
|
$
|
901
|
|
|
$
|
—
|
|
|
$
|
10,173
|
|
|
$
|
9,234
|
|
|
$
|
882
|
|
|
$
|
—
|
|
|
$
|
10,116
|
|
Redeemable preferred shares
|
22,973
|
|
|
—
|
|
|
(274
|
)
|
|
22,699
|
|
|
22,973
|
|
|
—
|
|
|
(139
|
)
|
|
22,834
|
|
||||||||
Total available-for-sale securities
|
$
|
32,245
|
|
|
$
|
901
|
|
|
$
|
(274
|
)
|
|
$
|
32,872
|
|
|
$
|
32,207
|
|
|
$
|
882
|
|
|
$
|
(139
|
)
|
|
$
|
32,950
|
|
(1)
|
Available-for-sale securities with an unrealized loss were in a loss position for less than 12 months.
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
Interest income
|
$
|
395
|
|
|
$
|
227
|
|
Interest expense
|
(849
|
)
|
|
(670
|
)
|
||
Loss on changes in fair value of investments
|
(1,100
|
)
|
|
—
|
|
||
Foreign currency gains (losses), net
(1)
|
6,456
|
|
|
(19,497
|
)
|
||
Other
|
(1,416
|
)
|
|
13
|
|
||
Other income (expense), net
|
$
|
3,486
|
|
|
$
|
(19,927
|
)
|
(1)
|
Foreign currency gains (losses), net for the
three months ended March 31, 2016
includes a
$1.5 million
cumulative translation loss that was reclassified to earnings as a result of the Company's exit from certain countries as part of its restructuring plan. Refer to Note 9, "
Restructuring
," for additional information.
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
Finished goods inventories
|
$
|
39,029
|
|
|
$
|
42,305
|
|
Prepaid expenses
|
41,098
|
|
|
49,134
|
|
||
Income taxes receivable
|
22,249
|
|
|
32,483
|
|
||
VAT receivable
|
14,100
|
|
|
14,305
|
|
||
Other
|
18,355
|
|
|
15,478
|
|
||
Total prepaid expenses and other current assets
|
$
|
134,831
|
|
|
$
|
153,705
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
Accrued merchant payables
|
$
|
458,399
|
|
|
$
|
471,607
|
|
Accrued supplier payables
(1)
|
215,754
|
|
|
304,604
|
|
||
Total accrued merchant and supplier payables
|
$
|
674,153
|
|
|
$
|
776,211
|
|
(1)
|
Amounts include payables to suppliers of inventories and providers of shipping and fulfillment services.
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
Refunds reserve
|
$
|
33,383
|
|
|
$
|
35,297
|
|
Payroll and benefits
|
51,555
|
|
|
50,454
|
|
||
Customer credits
|
34,862
|
|
|
32,293
|
|
||
Restructuring-related liabilities
|
10,158
|
|
|
11,556
|
|
||
Income taxes payable
|
13,453
|
|
|
13,885
|
|
||
Deferred revenue
|
50,410
|
|
|
40,396
|
|
||
Current portion of capital lease obligations
|
26,679
|
|
|
26,776
|
|
||
Other
|
186,078
|
|
|
192,067
|
|
||
Total accrued expenses and other current liabilities
|
$
|
406,578
|
|
|
$
|
402,724
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
Long-term tax liabilities
|
$
|
53,283
|
|
|
$
|
46,506
|
|
Capital lease obligations
|
25,502
|
|
|
30,943
|
|
||
Other
|
44,586
|
|
|
36,091
|
|
||
Total other non-current liabilities
|
$
|
123,371
|
|
|
$
|
113,540
|
|
|
Foreign currency translation adjustments
|
|
Unrealized gain (loss) on available-for-sale securities
|
|
Pension adjustments
|
|
Total
|
||||||||
Balance as of December 31, 2015
|
$
|
52,261
|
|
|
$
|
458
|
|
|
$
|
(1,513
|
)
|
|
$
|
51,206
|
|
Other comprehensive income (loss) before classification adjustments
|
(4,225
|
)
|
|
(116
|
)
|
|
27
|
|
|
(4,314
|
)
|
||||
Reclassification adjustments included in net income (loss)
|
1,462
|
|
|
—
|
|
|
—
|
|
|
1,462
|
|
||||
Other comprehensive income (loss)
|
(2,763
|
)
|
|
(116
|
)
|
|
27
|
|
|
(2,852
|
)
|
||||
Balance at March 31, 2016
|
$
|
49,498
|
|
|
$
|
342
|
|
|
$
|
(1,486
|
)
|
|
$
|
48,354
|
|
|
|
Options
|
|
Weighted- Average Exercise Price
|
|
Weighted- Average Remaining Contractual Term (in years)
|
|
Aggregate Intrinsic Value
(in thousands) (1) |
|||||
Outstanding at December 31, 2015
|
|
1,584,832
|
|
|
$
|
0.95
|
|
|
3.96
|
|
$
|
3,360
|
|
Exercised
|
|
(253,511
|
)
|
|
1.26
|
|
|
|
|
|
|||
Forfeited
|
|
(61,650
|
)
|
|
0.73
|
|
|
|
|
|
|||
Outstanding and exercisable at March 31, 2016
|
|
1,269,671
|
|
|
$
|
0.87
|
|
|
3.64
|
|
$
|
4,071
|
|
(1)
|
The aggregate intrinsic value of options outstanding and exercisable represents the total pretax intrinsic value (the difference between the fair value of the Company's stock on the last day of each period and the exercise price, multiplied by the number of options where the fair value exceeds the exercise price) that would have been received by the option holders had all option holders exercised their options as of
March 31, 2016
and
December 31, 2015
, respectively.
|
|
|
Restricted Stock Units
|
|
Weighted- Average Grant Date Fair Value (per share)
|
|||
Unvested at December 31, 2015
|
|
39,143,509
|
|
|
$
|
6.53
|
|
Granted
|
|
5,175,152
|
|
|
$
|
2.25
|
|
Vested
|
|
(4,104,383
|
)
|
|
$
|
6.93
|
|
Forfeited
|
|
(3,432,215
|
)
|
|
$
|
6.92
|
|
Unvested at March 31, 2016
|
|
36,782,063
|
|
|
$
|
5.86
|
|
|
|
Restricted Stock Awards
|
|
Weighted- Average Grant Date Fair Value (per share)
|
|||
Unvested at December 31, 2015
|
|
1,908,408
|
|
|
$
|
5.72
|
|
Granted
|
|
—
|
|
|
$
|
—
|
|
Vested
|
|
(492,422
|
)
|
|
$
|
7.42
|
|
Forfeited
|
|
(196,968
|
)
|
|
$
|
7.42
|
|
Unvested at March 31, 2016
|
|
1,219,018
|
|
|
$
|
4.76
|
|
|
|
Three Months Ended March 31, 2016
|
||||||||||||||
|
|
Employee Severance and Benefit Costs
(1)
|
|
Asset Impairments
|
|
Other Exit Costs
|
|
Total Restructuring Charges
|
||||||||
North America
|
|
$
|
4,725
|
|
|
$
|
45
|
|
|
$
|
849
|
|
|
$
|
5,619
|
|
EMEA
|
|
3,267
|
|
|
—
|
|
|
208
|
|
|
3,475
|
|
||||
Rest of World
|
|
3,327
|
|
|
—
|
|
|
23
|
|
|
3,350
|
|
||||
Consolidated
|
|
$
|
11,319
|
|
|
$
|
45
|
|
|
$
|
1,080
|
|
|
$
|
12,444
|
|
(1)
|
The employee severance and benefit costs for the
three months ended
March 31, 2016
relates to the termination of approximately
500
employees. Substantially all of the remaining cash payments for those costs are expected to be disbursed through June 30, 2016.
|
|
|
Employee Severance and Benefit Costs
|
|
Other Exit Costs
|
|
Total
|
||||||
Balance as of December 31, 2015
|
|
$
|
9,017
|
|
|
$
|
2,539
|
|
|
$
|
11,556
|
|
Charges payable in cash
(1)
|
|
8,574
|
|
|
1,080
|
|
|
9,654
|
|
|||
Cash payments
|
|
(8,316
|
)
|
|
(3,025
|
)
|
|
(11,341
|
)
|
|||
Foreign currency translation
|
|
280
|
|
|
9
|
|
|
289
|
|
|||
Balance as of March 31, 2016
|
|
$
|
9,555
|
|
|
$
|
603
|
|
|
$
|
10,158
|
|
(1)
|
Excludes stock-based compensation of
$2.6 million
related to accelerated vesting of stock-based compensation awards for certain employees terminated as a result of the Company's restructuring activities for the
three months ended
March 31, 2016
.
|
|
|
|
Fair Value Measurement at Reporting Date Using
|
||||||||||||
Description
|
March 31, 2016
|
|
Quoted Prices in Active Markets for
Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
236,783
|
|
|
$
|
236,783
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fair value option investments
|
129,625
|
|
|
—
|
|
|
—
|
|
|
129,625
|
|
||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Convertible debt securities
|
10,173
|
|
|
—
|
|
|
—
|
|
|
10,173
|
|
||||
Redeemable preferred shares
|
22,699
|
|
|
—
|
|
|
—
|
|
|
22,699
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
13,938
|
|
|
—
|
|
|
—
|
|
|
13,938
|
|
|
|
|
Fair Value Measurement at Reporting Date Using
|
||||||||||||
Description
|
December 31, 2015
|
|
Quoted Prices in Active Markets for
Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
305,179
|
|
|
$
|
305,179
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fair value option investments
|
130,725
|
|
|
—
|
|
|
—
|
|
|
130,725
|
|
||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Convertible debt securities
|
10,116
|
|
|
—
|
|
|
—
|
|
|
10,116
|
|
||||
Redeemable preferred shares
|
22,834
|
|
|
—
|
|
|
—
|
|
|
22,834
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
10,781
|
|
|
—
|
|
|
—
|
|
|
10,781
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
|
||||
Fair value option investments:
|
|
|
|
|
||||
Beginning Balance
|
|
$
|
130,725
|
|
|
$
|
—
|
|
Total gains (losses) included in earnings
|
|
(1,100
|
)
|
|
—
|
|
||
Ending Balance
|
|
$
|
129,625
|
|
|
$
|
—
|
|
Unrealized gains (losses) still held
(1)
|
|
$
|
(1,100
|
)
|
|
$
|
—
|
|
Available-for-sale securities
|
|
|
|
|
||||
Convertible debt securities:
|
|
|
|
|
||||
Beginning Balance
|
|
$
|
10,116
|
|
|
$
|
2,527
|
|
Total gains (losses) included in other comprehensive income
|
|
19
|
|
|
230
|
|
||
Total gains (losses) included in other income (expense), net
(2)
|
|
38
|
|
|
—
|
|
||
Ending Balance
|
|
$
|
10,173
|
|
|
$
|
2,757
|
|
Unrealized gains (losses) still held
(1)
|
|
$
|
57
|
|
|
$
|
230
|
|
Redeemable preferred shares:
|
|
|
|
|
||||
Beginning Balance
|
|
$
|
22,834
|
|
|
$
|
4,910
|
|
Total gains (losses) included in other comprehensive income (loss)
|
|
(135
|
)
|
|
(10
|
)
|
||
Ending Balance
|
|
$
|
22,699
|
|
|
$
|
4,900
|
|
Unrealized (losses) gains still held
(1)
|
|
$
|
(135
|
)
|
|
$
|
(10
|
)
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
||||
Contingent Consideration:
|
|
|
|
|
||||
Beginning Balance
|
|
$
|
10,781
|
|
|
$
|
1,983
|
|
Reclass to non-fair value liabilities when no longer contingent
|
|
(285
|
)
|
|
(331
|
)
|
||
Total losses (gains) included in earnings
(3)
|
|
3,442
|
|
|
(279
|
)
|
||
Ending Balance
|
|
$
|
13,938
|
|
|
$
|
1,373
|
|
Unrealized losses (gains) still held
(1)
|
|
$
|
3,316
|
|
|
$
|
(279
|
)
|
(1)
|
Represents the unrealized losses or gains recorded in earnings and/or other comprehensive income (loss) during the period for assets and liabilities classified as Level 3 that are still held (or outstanding) at the end of the period.
|
(2)
|
Represents accretion of interest income and changes in the fair value of an embedded derivative for the
three months ended March 31, 2016
.
|
(3)
|
Changes in the fair value of contingent consideration liabilities are classified within "Acquisition-related expense (benefit), net" on the condensed consolidated statements of operations.
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
||||||||
Cost method investments
|
|
$
|
15,056
|
|
|
$
|
16,838
|
|
|
$
|
14,561
|
|
|
$
|
15,922
|
|
|
|
Three Months Ended March 31,
|
||||||||||||||
|
|
2016
|
|
2015
|
||||||||||||
|
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
||||||||
Basic net income (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Numerator
|
|
|
|
|
|
|
|
|
||||||||
Allocation of net income (loss) - continuing operations
|
|
$
|
(45,408
|
)
|
|
$
|
(188
|
)
|
|
$
|
(16,681
|
)
|
|
$
|
(58
|
)
|
Less: Allocation of net income (loss) attributable to noncontrolling interests
|
|
3,508
|
|
|
15
|
|
|
3,804
|
|
|
14
|
|
||||
Allocation of net income (loss) attributable to common stockholders - continuing operations
|
|
$
|
(48,916
|
)
|
|
$
|
(203
|
)
|
|
$
|
(20,485
|
)
|
|
$
|
(72
|
)
|
Allocation of net income (loss) attributable to common stockholders - discontinued operations
|
|
—
|
|
|
—
|
|
|
6,261
|
|
|
23
|
|
||||
Allocation of net income (loss) attributable to common stockholders
|
|
$
|
(48,916
|
)
|
|
$
|
(203
|
)
|
|
$
|
(14,224
|
)
|
|
$
|
(49
|
)
|
Denominator
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding
|
|
580,351,702
|
|
|
2,399,976
|
|
|
673,982,961
|
|
|
2,399,976
|
|
||||
Basic net income (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
(0.08
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.03
|
)
|
Discontinued operations
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
0.01
|
|
||||
Basic net income (loss) per share
|
|
$
|
(0.08
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted net income (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Numerator
|
|
|
|
|
|
|
|
|
||||||||
Allocation of net income (loss) attributable to common stockholders for basic computation - continuing operations
|
|
$
|
(48,916
|
)
|
|
$
|
(203
|
)
|
|
$
|
(20,485
|
)
|
|
$
|
(72
|
)
|
Reallocation of net income (loss) attributable to common stockholders as a result of conversion of Class B
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Allocation of net income (loss) attributable to common stockholders - continuing operations
|
|
$
|
(48,916
|
)
|
|
$
|
(203
|
)
|
|
$
|
(20,485
|
)
|
|
$
|
(72
|
)
|
Allocation of net income (loss) attributable to common stockholders for basic computation - discontinued operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,261
|
|
|
$
|
23
|
|
Reallocation of net income (loss) attributable to common stockholders as a result of conversion of Class B
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Allocation of net income (loss) attributable to common stockholders - discontinued operations
|
|
—
|
|
|
—
|
|
|
6,261
|
|
|
23
|
|
||||
Allocation of net income (loss) attributable to common stockholders
|
|
$
|
(48,916
|
)
|
|
$
|
(203
|
)
|
|
$
|
(14,224
|
)
|
|
$
|
(49
|
)
|
Denominator
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding used in basic computation
|
|
580,351,702
|
|
|
2,399,976
|
|
|
673,982,961
|
|
|
2,399,976
|
|
||||
Conversion of
Class B
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Employee stock options
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Restricted shares and RSUs
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted-average diluted shares outstanding
(1)
|
|
580,351,702
|
|
|
2,399,976
|
|
|
673,982,961
|
|
|
2,399,976
|
|
||||
Diluted net income (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
(0.08
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.03
|
)
|
Discontinued operations
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
0.01
|
|
||||
Diluted net income (loss) per share
|
|
$
|
(0.08
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.02
|
)
|
(1)
|
Conversion of Class B shares into Class A shares and outstanding equity awards have not been reflected in the diluted income (loss) per share calculation for the
three months ended
March 31, 2016
and
2015
because the effect on net income (loss) per share from continuing operations would be antidilutive.
|
|
|
Three Months Ended March 31,
|
||||
|
|
2016
|
|
2015
|
||
Stock options
|
|
1,464,283
|
|
|
2,135,535
|
|
Restricted stock units
|
|
38,260,649
|
|
|
38,057,394
|
|
Restricted stock
|
|
1,693,312
|
|
|
580,796
|
|
ESPP shares
|
|
1,412,199
|
|
|
621,237
|
|
Total
|
|
42,830,443
|
|
|
41,394,962
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2016
|
|
2015
|
||||
North America
|
|
|
|
|
||||
Revenue
(1)
|
|
$
|
500,813
|
|
|
$
|
479,882
|
|
Segment cost of revenue and operating expenses
(3) (4)
|
|
512,261
|
|
|
455,216
|
|
||
Segment operating income (loss)
(3)
|
|
(11,448
|
)
|
|
24,666
|
|
||
EMEA
|
|
|
|
|
||||
Revenue
(1)
|
|
188,970
|
|
|
216,220
|
|
||
Segment cost of revenue and operating expenses
(3) (4)
|
|
183,054
|
|
|
196,568
|
|
||
Segment operating income (loss)
(3)
|
|
5,916
|
|
|
19,652
|
|
||
Rest of World
|
|
|
|
|
||||
Revenue
|
|
42,188
|
|
|
54,254
|
|
||
Segment cost of revenue and operating expenses
(3) (4)
|
|
49,974
|
|
|
58,402
|
|
||
Segment operating income (loss)
(3)
|
|
(7,786
|
)
|
|
(4,148
|
)
|
||
Consolidated
|
|
|
|
|
||||
Revenue
|
|
731,971
|
|
|
750,356
|
|
||
Segment cost of revenue and operating expenses
(3) (4)
|
|
745,289
|
|
|
710,186
|
|
||
Segment operating income (loss)
(3)
|
|
(13,318
|
)
|
|
40,170
|
|
||
Stock-based compensation
(2)
|
|
30,551
|
|
|
35,144
|
|
||
Acquisition-related expense (benefit), net
|
|
3,464
|
|
|
(269
|
)
|
||
Income (loss) from operations
|
|
(47,333
|
)
|
|
5,295
|
|
||
Other income (expense), net
|
|
3,486
|
|
|
(19,927
|
)
|
||
Income (loss) from continuing operations before provision (benefit) for income taxes
|
|
(43,847
|
)
|
|
(14,632
|
)
|
||
Provision (benefit) for income taxes
|
|
1,749
|
|
|
2,107
|
|
||
Income (loss) from continuing operations
|
|
(45,596
|
)
|
|
(16,739
|
)
|
||
Income (loss) from discontinued operations, net of tax
|
|
—
|
|
|
6,284
|
|
||
Net income (loss)
|
|
$
|
(45,596
|
)
|
|
$
|
(10,455
|
)
|
(1)
|
North America includes revenue from the United States of
$492.6 million
and
$473.1 million
for the
three months ended
March 31, 2016
and
2015
, respectively. EMEA includes revenue from Switzerland of
$113.3 million
and
$117.5 million
for the
three months ended
March 31, 2016
and
2015
, respectively. There were no other individual countries that represented more than
10%
of consolidated total revenue for the
three months ended
March 31, 2016
and
2015
.
|
(2)
|
Includes stock-based compensation classified within cost of revenue, marketing expense, selling, general and administrative expense and restructuring charges. Other income (expense), net, includes
$0.2 million
of additional stock-based compensation for the
three months ended
March 31, 2016
.
|
(3)
|
Segment cost of revenue and operating expenses and segment operating income (loss) exclude stock-based compensation and acquisition-related (benefit) expense, net. This presentation corresponds to the measure of segment profit or loss that the Company's chief operating decision-maker uses in assessing segment performance and making resource allocation decisions. The following table summarizes the Company's stock-based compensation expense and acquisition-related expense (benefit), net by reportable segment for the
three months ended
March 31, 2016
and
2015
(in thousands):
|
|
|
Three Months Ended March 31,
|
||||||||||||||
|
|
2016
|
|
2015
|
||||||||||||
|
|
Stock-based compensation
|
|
Acquisition-related
|
|
Stock-based compensation
|
|
Acquisition-related
|
||||||||
North America
|
|
$
|
27,023
|
|
|
$
|
3,464
|
|
|
$
|
31,252
|
|
|
$
|
(269
|
)
|
EMEA
|
|
2,120
|
|
|
—
|
|
|
2,647
|
|
|
—
|
|
||||
Rest of World
|
|
1,613
|
|
|
—
|
|
|
1,245
|
|
|
—
|
|
||||
Consolidated
|
|
$
|
30,756
|
|
|
$
|
3,464
|
|
|
$
|
35,144
|
|
|
$
|
(269
|
)
|
(4)
|
Segment cost of revenue and operating expenses for the
three months ended March 31, 2016
includes restructuring charges of
$2.9 million
in North America (which excludes
$2.6 million
of stock-based compensation),
$3.5 million
in EMEA and
$3.4 million
in Rest of World. See Note 9, "
Restructuring
," for additional information.
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
North America
(1)
|
$
|
911,882
|
|
|
$
|
1,063,595
|
|
EMEA
|
486,928
|
|
|
508,353
|
|
||
Rest of World
|
219,870
|
|
|
224,316
|
|
||
Consolidated total assets
|
$
|
1,618,680
|
|
|
$
|
1,796,264
|
|
(1)
|
North America contains assets from the United States of
$874.3 million
and
$1,018.2 million
as of
March 31, 2016
and
December 31, 2015
, respectively. There were no other individual countries that represented more than
10%
of consolidated total assets as of
March 31, 2016
and
December 31, 2015
.
|
|
North America
|
|
EMEA
|
|
Rest of World
|
|
Consolidated
|
||||||||||||||||||||||||
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||
Local
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party and other
|
$
|
192,153
|
|
|
$
|
180,864
|
|
|
$
|
61,886
|
|
|
$
|
82,536
|
|
|
$
|
22,082
|
|
|
$
|
30,281
|
|
|
$
|
276,121
|
|
|
$
|
293,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Travel:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party
|
20,914
|
|
|
19,989
|
|
|
11,178
|
|
|
14,717
|
|
|
5,049
|
|
|
6,495
|
|
|
37,141
|
|
|
41,201
|
|
||||||||
Total services
|
213,067
|
|
|
200,853
|
|
|
73,064
|
|
|
97,253
|
|
|
27,131
|
|
|
36,776
|
|
|
313,262
|
|
|
334,882
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Goods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party
|
1,990
|
|
|
648
|
|
|
10,686
|
|
|
11,978
|
|
|
8,630
|
|
|
12,613
|
|
|
21,306
|
|
|
25,239
|
|
||||||||
Direct
|
285,756
|
|
|
278,381
|
|
|
105,220
|
|
|
106,989
|
|
|
6,427
|
|
|
4,865
|
|
|
397,403
|
|
|
390,235
|
|
||||||||
Total
|
287,746
|
|
|
279,029
|
|
|
115,906
|
|
|
118,967
|
|
|
15,057
|
|
|
17,478
|
|
|
418,709
|
|
|
415,474
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total revenue
|
$
|
500,813
|
|
|
$
|
479,882
|
|
|
$
|
188,970
|
|
|
$
|
216,220
|
|
|
$
|
42,188
|
|
|
$
|
54,254
|
|
|
$
|
731,971
|
|
|
$
|
750,356
|
|
(1)
|
Includes revenue from deals with local and national merchants and through local events.
|
|
North America
|
|
EMEA
|
|
Rest of World
|
|
Consolidated
|
||||||||||||||||||||||||
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||
Local
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party and other
|
$
|
164,018
|
|
|
$
|
154,776
|
|
|
$
|
58,263
|
|
|
$
|
77,356
|
|
|
$
|
18,771
|
|
|
$
|
26,161
|
|
|
$
|
241,052
|
|
|
$
|
258,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Travel:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party
|
15,712
|
|
|
15,791
|
|
|
10,215
|
|
|
12,400
|
|
|
3,997
|
|
|
4,906
|
|
|
29,924
|
|
|
33,097
|
|
||||||||
Total services
|
179,730
|
|
|
170,567
|
|
|
68,478
|
|
|
89,756
|
|
|
22,768
|
|
|
31,067
|
|
|
270,976
|
|
|
291,390
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Goods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party
|
1,673
|
|
|
434
|
|
|
9,445
|
|
|
10,193
|
|
|
5,693
|
|
|
6,407
|
|
|
16,811
|
|
|
17,034
|
|
||||||||
Direct
|
34,540
|
|
|
23,489
|
|
|
16,967
|
|
|
15,288
|
|
|
34
|
|
|
205
|
|
|
51,541
|
|
|
38,982
|
|
||||||||
Total
|
36,213
|
|
|
23,923
|
|
|
26,412
|
|
|
25,481
|
|
|
5,727
|
|
|
6,612
|
|
|
68,352
|
|
|
56,016
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total gross profit
|
$
|
215,943
|
|
|
$
|
194,490
|
|
|
$
|
94,890
|
|
|
$
|
115,237
|
|
|
$
|
28,495
|
|
|
$
|
37,679
|
|
|
$
|
339,328
|
|
|
$
|
347,406
|
|
(1)
|
Includes gross profit from deals with local and national merchants and through local events.
|
•
|
Gross billings.
This metric represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds. For third party revenue transactions, gross billings differs from third party revenue reported in our consolidated statements of operations, which is presented net of the merchant's share of the transaction price. For direct revenue transactions, gross billings are equivalent to direct revenue reported in our consolidated statements of operations. We consider this metric to be an important indicator of our growth and business performance as it is a proxy for the dollar volume of transactions generated through our marketplaces. Tracking gross billings on third party revenue transactions also allows us to track changes in the percentage of gross billings that we are able to retain after payments to our merchants.
|
•
|
Revenue.
Third party revenue, which is earned from transactions in which we act as the marketing agent, is reported on a net basis as the purchase price received from the customer for a voucher less an agreed upon portion of the purchase price paid to the featured merchant, excluding applicable taxes and net of estimated refunds for which the merchant's share is recoverable. Direct revenue, which is earned from sales of merchandise inventory directly to customers through our online marketplaces, is reported on a gross basis as the purchase price received from the customer, excluding applicable taxes and net of estimated refunds.
|
•
|
Gross profit
. Gross profit reflects the net margin earned after deducting our cost of revenue from our revenue. Due to the lack of comparability between third party revenue, which is presented net of the merchant's share of the transaction price, and direct revenue, which is reported on a gross basis, we believe that gross profit is an important measure for evaluating our performance.
|
•
|
Adjusted EBITDA
. Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) from continuing operations excluding income taxes, interest and non-operating items, depreciation and amortization, stock-based compensation, acquisition-related expense, net and items that are unusual in nature or infrequently occurring. For further information and a reconciliation to the most applicable financial measure under U.S. GAAP, refer to our discussion under Non-GAAP Financial Measures in the "
Results of Operations
" section.
|
•
|
Free cash flow.
Free cash flow is a non-GAAP financial measure that comprises net cash provided by (used in) operating activities from continuing operations less purchases of property and equipment and capitalized software from continuing operations. For further information and a reconciliation to the most applicable financial measure under U.S. GAAP, refer to our discussion under Non-GAAP Financial Measures in the "
Results of Operations
" section.
|
(1)
|
We adopted the guidance in ASU 2016-09 on January 1, 2016. ASU 2016-09 requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. Previously, income tax benefits at settlement of an award were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award's vesting period. We elected to apply that change in cash flow classification on a retrospective basis, which has resulted in an increase of
$2.9 million
to free cash flow for the three-month period ended March 31, 2015.
|
•
|
Active customers.
We define active customers as unique user accounts that have purchased a voucher or product from us during the trailing twelve months. We consider this metric to be an important indicator of our business performance as it helps us to understand how the number of customers actively purchasing our deals is trending.
|
•
|
Gross billings per average active customer.
This metric represents the trailing twelve months gross billings generated per average active customer. This metric is calculated as the total gross billings generated in the trailing twelve months, divided by the average number of active customers in such time period. Although we believe total gross billings, not trailing twelve months gross billings per average active customer, is a better indication of the overall growth of our marketplaces over time, trailing twelve months gross billings per average active customer provides an opportunity to evaluate whether our growth is primarily driven by growth in active customers or in spend per customer in any given period.
|
•
|
Units
. This metric represents the number of vouchers and products purchased from us by our customers, before refunds and cancellations. We consider unit growth to be an important indicator of the total volume of business conducted through our marketplaces.
|
|
|
Trailing twelve months ended March 31,
|
||||||
|
|
2016
|
|
2015
|
||||
TTM Active customers (in thousands)
|
|
49,365
|
|
|
48,062
|
|
||
TTM Gross billings per average active customer
|
|
$
|
126.77
|
|
|
$
|
134.62
|
|
|
|
Three Months Ended March 31,
|
||||
|
|
2016
|
|
2015
|
||
Units (in thousands)
|
|
52,197
|
|
|
53,653
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
|
(in thousands)
|
|||||||||||||
Gross billings:
|
|
|
|
|
|
|
|
|||||||
Third party
|
$
|
1,056,752
|
|
|
$
|
1,152,979
|
|
|
$
|
(96,227
|
)
|
|
(8.3
|
)%
|
Direct
|
397,403
|
|
|
390,235
|
|
|
7,168
|
|
|
1.8
|
|
|||
Other
|
17,855
|
|
|
8,787
|
|
|
9,068
|
|
|
103.2
|
|
|||
Total gross billings
|
$
|
1,472,010
|
|
|
$
|
1,552,001
|
|
|
$
|
(79,991
|
)
|
|
(5.2
|
)
|
|
Three Months Ended March 31, 2016
|
||||||||||
|
At Avg. Q1 2015 Rates
(1)
|
|
Exchange Rate Effect
(2)
|
|
As Reported
|
||||||
|
(in thousands)
|
||||||||||
Gross billings
|
$
|
1,507,711
|
|
|
$
|
(35,701
|
)
|
|
$
|
1,472,010
|
|
(1)
|
Represents the financial statement balance that would have resulted had exchange rates in the reporting period been the same as those in effect in the prior year period.
|
(2)
|
Represents the increase or decrease in the reported amount resulting from changes in exchange rates from those in effect in the prior year period.
|
•
|
a
$44.0 million
reduction related to countries that we operated in the prior year period and have subsequently exited as part of our restructuring plan and due to the disposition of a controlling stake in our operations in India; and
|
•
|
a
$35.7 million
unfavorable impact from year-over-year changes in foreign currency exchange rates.
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Gross billings:
|
|
|
|
|
|
|
|
|
|||||||
North America
|
|
$
|
937,074
|
|
|
$
|
893,977
|
|
|
$
|
43,097
|
|
|
4.8
|
%
|
EMEA
|
|
392,227
|
|
|
459,189
|
|
|
(66,962
|
)
|
|
(14.6
|
)
|
|||
Rest of World
|
|
142,709
|
|
|
198,835
|
|
|
(56,126
|
)
|
|
(28.2
|
)
|
|||
Total gross billings
|
|
$
|
1,472,010
|
|
|
$
|
1,552,001
|
|
|
$
|
(79,991
|
)
|
|
(5.2
|
)
|
Q1 2016
|
|
Q1 2015
|
|
North America
|
|
|
EMEA
|
|
|
Rest of World
|
|
North America
|
|
EMEA
|
|
Rest of World
|
|
Consolidated
|
||||||||||||||||||||||||
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Local
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party and other
|
$
|
539,623
|
|
|
$
|
512,558
|
|
|
$
|
174,033
|
|
|
$
|
217,598
|
|
|
$
|
75,294
|
|
|
$
|
99,735
|
|
|
$
|
788,950
|
|
|
$
|
829,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Travel:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party
|
103,390
|
|
|
96,678
|
|
|
57,201
|
|
|
65,065
|
|
|
23,928
|
|
|
32,946
|
|
|
184,519
|
|
|
194,689
|
|
||||||||
Total services
|
643,013
|
|
|
609,236
|
|
|
231,234
|
|
|
282,663
|
|
|
99,222
|
|
|
132,681
|
|
|
973,469
|
|
|
1,024,580
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Goods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party
|
8,305
|
|
|
6,360
|
|
|
55,773
|
|
|
69,537
|
|
|
37,060
|
|
|
61,289
|
|
|
101,138
|
|
|
137,186
|
|
||||||||
Direct
|
285,756
|
|
|
278,381
|
|
|
105,220
|
|
|
106,989
|
|
|
6,427
|
|
|
4,865
|
|
|
397,403
|
|
|
390,235
|
|
||||||||
Total
|
294,061
|
|
|
284,741
|
|
|
160,993
|
|
|
176,526
|
|
|
43,487
|
|
|
66,154
|
|
|
498,541
|
|
|
527,421
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total gross billings
|
$
|
937,074
|
|
|
$
|
893,977
|
|
|
$
|
392,227
|
|
|
$
|
459,189
|
|
|
$
|
142,709
|
|
|
$
|
198,835
|
|
|
$
|
1,472,010
|
|
|
$
|
1,552,001
|
|
(1)
|
Includes gross billings from deals with local and national merchants and through local events.
|
•
|
our significant incremental marketing spending, consistent with our strategic initiative to invest in marketing to accelerate customer growth. North America marketing expense increased by
$39.0 million
, or
133.6%
, for the
three months ended March 31, 2016
, as compared to the prior year period; and
|
•
|
our focus on increasing deal coverage and improving the quality of active deals available through our marketplaces.
|
•
|
a reduction related to countries that we operated in the prior year period and have subsequently exited as part of our restructuring plan; and
|
•
|
a
$13.1 million
unfavorable impact from year-over-year changes in foreign currency exchange rates; and
|
•
|
our strategic initiative to de-emphasize lower margin product offerings in our Goods category.
|
•
|
a
$21.9 million
unfavorable impact from year-over-year changes in foreign currency exchange rates; and
|
•
|
a reduction related to countries that we operated in the prior year period and have subsequently exited as part of our restructuring plan and due to the disposition of a controlling stake in our operations in India.
|
|
Three Months Ended March 31, 2016
|
||||||||||
|
At Avg. Q1 2015 Rates
(1)
|
|
Exchange Rate Effect
(2)
|
|
As Reported
|
||||||
|
(in thousands)
|
||||||||||
Revenue
|
$
|
746,095
|
|
|
$
|
(14,124
|
)
|
|
$
|
731,971
|
|
(1)
|
Represents the financial statement balance that would have resulted had exchange rates in the reporting period been the same as those in effect in the prior year period.
|
(2)
|
Represents the increase or decrease in the reported amount resulting from changes in exchange rates from those in effect in the prior year period.
|
•
|
a
$14.4 million
reduction related to countries that we operated in the prior year period and have subsequently exited as part of our restructuring plan and due to the disposition of a controlling stake in our operations in India; and
|
•
|
a
$14.1 million
unfavorable impact from year-over-year changes in foreign currency exchange rates.
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
North America:
|
|
|
|
|
|
|
|
|
|||||||
Third party and other
|
|
$
|
215,057
|
|
|
$
|
201,501
|
|
|
$
|
13,556
|
|
|
6.7
|
%
|
Direct
|
|
285,756
|
|
|
278,381
|
|
|
7,375
|
|
|
2.6
|
|
|||
Total segment revenue
|
|
500,813
|
|
|
479,882
|
|
|
20,931
|
|
|
4.4
|
|
|||
EMEA:
|
|
|
|
|
|
|
|
|
|||||||
Third party
|
|
83,750
|
|
|
109,231
|
|
|
(25,481
|
)
|
|
(23.3
|
)
|
|||
Direct
|
|
105,220
|
|
|
106,989
|
|
|
(1,769
|
)
|
|
(1.7
|
)
|
|||
Total segment revenue
|
|
188,970
|
|
|
216,220
|
|
|
(27,250
|
)
|
|
(12.6
|
)
|
|||
Rest of World:
|
|
|
|
|
|
|
|
|
|||||||
Third party
|
|
35,761
|
|
|
49,389
|
|
|
(13,628
|
)
|
|
(27.6
|
)
|
|||
Direct
|
|
6,427
|
|
|
4,865
|
|
|
1,562
|
|
|
32.1
|
|
|||
Total segment revenue
|
|
42,188
|
|
|
54,254
|
|
|
(12,066
|
)
|
|
(22.2
|
)
|
|||
Total revenue
|
|
$
|
731,971
|
|
|
$
|
750,356
|
|
|
$
|
(18,385
|
)
|
|
(2.5
|
)
|
Q1 2016
|
|
Q1 2015
|
|
North America
|
|
|
EMEA
|
|
|
Rest of World
|
North America
|
|
EMEA
|
|
Rest of World
|
|
North America
|
|
EMEA
|
|
Rest of World
|
|
Consolidated
|
||||||||||||||||||||||||
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Local
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party and other
|
$
|
192,153
|
|
|
$
|
180,864
|
|
|
$
|
61,886
|
|
|
$
|
82,536
|
|
|
$
|
22,082
|
|
|
$
|
30,281
|
|
|
$
|
276,121
|
|
|
$
|
293,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Travel:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party
|
20,914
|
|
|
19,989
|
|
|
11,178
|
|
|
14,717
|
|
|
5,049
|
|
|
6,495
|
|
|
37,141
|
|
|
41,201
|
|
||||||||
Total services
|
213,067
|
|
|
200,853
|
|
|
73,064
|
|
|
97,253
|
|
|
27,131
|
|
|
36,776
|
|
|
313,262
|
|
|
334,882
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Goods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party
|
1,990
|
|
|
648
|
|
|
10,686
|
|
|
11,978
|
|
|
8,630
|
|
|
12,613
|
|
|
21,306
|
|
|
25,239
|
|
||||||||
Direct revenue
|
285,756
|
|
|
278,381
|
|
|
105,220
|
|
|
106,989
|
|
|
6,427
|
|
|
4,865
|
|
|
397,403
|
|
|
390,235
|
|
||||||||
Total
|
287,746
|
|
|
279,029
|
|
|
115,906
|
|
|
118,967
|
|
|
15,057
|
|
|
17,478
|
|
|
418,709
|
|
|
415,474
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total revenue
|
$
|
500,813
|
|
|
$
|
479,882
|
|
|
$
|
188,970
|
|
|
$
|
216,220
|
|
|
$
|
42,188
|
|
|
$
|
54,254
|
|
|
$
|
731,971
|
|
|
$
|
750,356
|
|
(1)
|
Includes revenue from deals with local and national merchants and through local events.
|
•
|
the increases in gross billings as discussed above. Those increases were primarily attributable to our significant incremental marketing spending, consistent with our strategic initiative to invest in marketing to accelerate customer growth, and our focus on increasing deal coverage and improving the quality of active deals available through our marketplaces; and
|
•
|
a
$9.1 million
increase in other revenue, which includes commission revenue, payment processing revenue and advertising revenue.
|
•
|
the decreases in gross billings as discussed above;
|
•
|
decreases in the percentage of gross billings that we retained after deducting the merchant’s share for third party revenue transactions in our Local and Travel categories. For the
three months ended March 31, 2016
, those percentages decreased to
35.6%
in our Local category and
19.5%
in our Travel category, as compared to
37.9%
and
22.6%
respectively, in the prior year period. We have been willing to accept lower deal margins in order to improve the quality and increase the number of deals offered to our customers by offering more attractive terms to merchants;
|
•
|
a reduction related to countries that we operated in the prior year period and have subsequently exited as part of our restructuring plan; and
|
•
|
a
$6.3 million
unfavorable impact from year-over-year changes in foreign exchange rates.
|
•
|
the decreases in gross billings as discussed above;
|
•
|
a decrease in the percentage of gross billings that we retained after deducting the merchant’s share in our Local category to
29.3%
, as compared to
30.4%
in the prior year period. We have been willing to accept lower deal margins in order to improve the quality and increase the number of deals offered to our customers by offering more attractive terms to merchants;
|
•
|
a
$7.7 million
unfavorable impact from year-over-year changes in foreign exchange rates; and
|
•
|
a reduction related to countries that we operated in the prior year period and have subsequently exited as part of our restructuring plan and due to the disposition of a controlling stake in our operations in India.
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
|
|
(in thousands)
|
|||||||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|||||||
Third party
|
|
$
|
42,402
|
|
|
$
|
47,423
|
|
|
$
|
(5,021
|
)
|
|
(10.6
|
)%
|
Direct
|
|
345,862
|
|
|
351,253
|
|
|
(5,391
|
)
|
|
(1.5
|
)
|
|||
Other
|
|
4,379
|
|
|
4,274
|
|
|
105
|
|
|
2.5
|
|
|||
Total cost of revenue
|
|
$
|
392,643
|
|
|
$
|
402,950
|
|
|
$
|
(10,307
|
)
|
|
(2.6
|
)
|
|
Three Months Ended March 31, 2016
|
||||||||||
|
At Avg. Q1 2015 Rates
(1)
|
|
Exchange Rate Effect
(2)
|
|
As Reported
|
||||||
|
(in thousands)
|
||||||||||
Cost of revenue
|
$
|
398,904
|
|
|
$
|
(6,261
|
)
|
|
$
|
392,643
|
|
(1)
|
Represents the financial statement balance that would have resulted had exchange rates in the reporting period been the same as those in effect in the prior year period.
|
(2)
|
Represents the increase or decrease in the reported amount resulting from changes in exchange rates from those in effect in the prior year period.
|
•
|
our strategic initiative to de-emphasize lower margin product offerings in our Goods category and our continued focus on reducing shipping and fulfillment costs;
|
•
|
a
$6.8 million
reduction related to countries that we operated in the prior year period and have subsequently exited as part of our restructuring plan and due to the disposition of a controlling stake in our operations in India; and
|
•
|
a
$6.3 million
favorable impact from year-over-year changes in foreign currency exchange rates.
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
North America:
|
|
|
|
|
|
|
|
|
|||||||
Third party and other
|
|
$
|
33,654
|
|
|
$
|
30,500
|
|
|
$
|
3,154
|
|
|
10.3
|
%
|
Direct
|
|
251,216
|
|
|
254,892
|
|
|
(3,676
|
)
|
|
(1.4
|
)
|
|||
Total segment cost of revenue
|
|
284,870
|
|
|
285,392
|
|
|
(522
|
)
|
|
(0.2
|
)
|
|||
EMEA:
|
|
|
|
|
|
|
|
|
|||||||
Third party
|
|
5,827
|
|
|
9,282
|
|
|
(3,455
|
)
|
|
(37.2
|
)
|
|||
Direct
|
|
88,253
|
|
|
91,701
|
|
|
(3,448
|
)
|
|
(3.8
|
)
|
|||
Total segment cost of revenue
|
|
94,080
|
|
|
100,983
|
|
|
(6,903
|
)
|
|
(6.8
|
)
|
|||
Rest of World:
|
|
|
|
|
|
|
|
|
|||||||
Third party
|
|
7,300
|
|
|
11,915
|
|
|
(4,615
|
)
|
|
(38.7
|
)
|
|||
Direct
|
|
6,393
|
|
|
4,660
|
|
|
1,733
|
|
|
37.2
|
|
|||
Total segment cost of revenue
|
|
13,693
|
|
|
16,575
|
|
|
(2,882
|
)
|
|
(17.4
|
)
|
|||
Total cost of revenue
|
|
$
|
392,643
|
|
|
$
|
402,950
|
|
|
$
|
(10,307
|
)
|
|
(2.6
|
)
|
Q1 2016
|
|
Q1 2015
|
|
North America
|
|
|
EMEA
|
|
|
Rest of World
|
|
North America
|
|
EMEA
|
|
Rest of World
|
|
Consolidated
|
||||||||||||||||||||||||
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Local
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party and other
|
$
|
28,135
|
|
|
$
|
26,088
|
|
|
$
|
3,623
|
|
|
$
|
5,180
|
|
|
$
|
3,311
|
|
|
$
|
4,120
|
|
|
$
|
35,069
|
|
|
$
|
35,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Travel:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party
|
5,202
|
|
|
4,198
|
|
|
963
|
|
|
2,317
|
|
|
1,052
|
|
|
1,589
|
|
|
7,217
|
|
|
8,104
|
|
||||||||
Total services
|
33,337
|
|
|
30,286
|
|
|
4,586
|
|
|
7,497
|
|
|
4,363
|
|
|
5,709
|
|
|
42,286
|
|
|
43,492
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Goods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party
|
317
|
|
|
214
|
|
|
1,241
|
|
|
1,785
|
|
|
2,937
|
|
|
6,206
|
|
|
4,495
|
|
|
8,205
|
|
||||||||
Direct
|
251,216
|
|
|
254,892
|
|
|
88,253
|
|
|
91,701
|
|
|
6,393
|
|
|
4,660
|
|
|
345,862
|
|
|
351,253
|
|
||||||||
Total
|
251,533
|
|
|
255,106
|
|
|
89,494
|
|
|
93,486
|
|
|
9,330
|
|
|
10,866
|
|
|
350,357
|
|
|
359,458
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total cost of revenue
|
$
|
284,870
|
|
|
$
|
285,392
|
|
|
$
|
94,080
|
|
|
$
|
100,983
|
|
|
$
|
13,693
|
|
|
$
|
16,575
|
|
|
$
|
392,643
|
|
|
$
|
402,950
|
|
(1)
|
Includes cost of revenue from deals with local and national merchants and through local events.
|
•
|
decreases in our Local and Travel categories, resulting from the gross billings decreases in those categories;
|
•
|
the improvement in gross profit margins on direct revenue transactions in our Goods category as discussed above;
|
•
|
a reduction related to countries that we operated in the prior year period and have subsequently exited as part of our restructuring plan; and
|
•
|
a
$3.0 million
favorable impact from year-over-year changes in foreign currency exchange rates.
|
•
|
a
$3.2 million
favorable impact from year-over-year changes in foreign currency exchange rates; and
|
•
|
a reduction related to countries that we operated in the prior year period and have subsequently exited as part of our restructuring plan and due to the disposition of a controlling stake in our operations in India.
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Gross profit:
|
|
|
|
|
|
|
|
|
|||||||
Third party
|
|
$
|
274,311
|
|
|
$
|
303,911
|
|
|
$
|
(29,600
|
)
|
|
(9.7
|
)%
|
Direct
|
|
51,541
|
|
|
38,982
|
|
|
12,559
|
|
|
32.2
|
|
|||
Other
|
|
13,476
|
|
|
4,513
|
|
|
8,963
|
|
|
198.6
|
|
|||
Total gross profit
|
|
$
|
339,328
|
|
|
$
|
347,406
|
|
|
$
|
(8,078
|
)
|
|
(2.3
|
)
|
|
Three Months Ended March 31, 2016
|
||||||||||
|
At Avg. Q1 2015 Rates
(1)
|
|
Exchange Rate Effect
(2)
|
|
As Reported
|
||||||
|
(in thousands)
|
||||||||||
Gross profit
|
$
|
347,191
|
|
|
$
|
(7,863
|
)
|
|
$
|
339,328
|
|
(1)
|
Represents the financial statement balance that would have resulted had exchange rates in the reporting period been the same as those in effect in the prior year period.
|
(2)
|
Represents the increase or decrease in the reported amount resulting from changes in exchange rates from those in effect in the prior year period.
|
•
|
the decreases in third party and other revenue from our EMEA and Rest of World segments as discussed above;
|
•
|
a
$7.9 million
unfavorable impact from year-over-year changes in foreign currency exchange rates; and
|
•
|
a
$7.7 million
reduction related to countries that we operated in the prior year period and have subsequently exited as part of our restructuring plan and due to the disposition of a controlling stake in our operations in India.
|
•
|
the improvement in gross profit margins on direct revenue transactions in our Goods category as discussed above; and
|
•
|
the increase in third party and other revenue from our North America segment.
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
North America:
|
|
|
|
|
|
|
|
|
|||||||
Third party and other
|
|
$
|
181,403
|
|
|
$
|
171,001
|
|
|
$
|
10,402
|
|
|
6.1
|
%
|
% of gross billings
|
|
27.9
|
%
|
|
27.8
|
%
|
|
|
|
|
|||||
% of revenue
|
|
84.4
|
%
|
|
84.9
|
%
|
|
|
|
|
|||||
Direct
|
|
$
|
34,540
|
|
|
$
|
23,489
|
|
|
11,051
|
|
|
47.0
|
|
|
% of gross billings and revenue
|
|
12.1
|
%
|
|
8.4
|
%
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
EMEA:
|
|
|
|
|
|
|
|
|
|||||||
Third party
|
|
$
|
77,923
|
|
|
$
|
99,949
|
|
|
(22,026
|
)
|
|
(22.0
|
)
|
|
% of gross billings
|
|
27.2
|
%
|
|
28.4
|
%
|
|
|
|
|
|||||
% of revenue
|
|
93.0
|
%
|
|
91.5
|
%
|
|
|
|
|
|||||
Direct
|
|
$
|
16,967
|
|
|
$
|
15,288
|
|
|
1,679
|
|
|
11.0
|
|
|
% of gross billings and revenue
|
|
16.1
|
%
|
|
14.3
|
%
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
Rest of World:
|
|
|
|
|
|
|
|
|
|||||||
Third party
|
|
$
|
28,461
|
|
|
$
|
37,474
|
|
|
(9,013
|
)
|
|
(24.1
|
)
|
|
% of gross billings
|
|
20.9
|
%
|
|
19.3
|
%
|
|
|
|
|
|||||
% of revenue
|
|
79.6
|
%
|
|
75.9
|
%
|
|
|
|
|
|||||
Direct
|
|
$
|
34
|
|
|
$
|
205
|
|
|
(171
|
)
|
|
(83.4
|
)
|
|
% of gross billings and revenue
|
|
0.5
|
%
|
|
4.2
|
%
|
|
|
|
|
Q1 2016
|
|
Q1 2015
|
|
North America
|
|
|
EMEA
|
|
|
Rest of World
|
|
North America
|
|
EMEA
|
|
Rest of World
|
|
Consolidated
|
||||||||||||||||||||||||
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
|
Three Months Ended
March 31, |
||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Local
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party and other
|
$
|
164,018
|
|
|
$
|
154,776
|
|
|
$
|
58,263
|
|
|
$
|
77,356
|
|
|
$
|
18,771
|
|
|
$
|
26,161
|
|
|
$
|
241,052
|
|
|
$
|
258,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Travel:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party
|
15,712
|
|
|
15,791
|
|
|
10,215
|
|
|
12,400
|
|
|
3,997
|
|
|
4,906
|
|
|
29,924
|
|
|
33,097
|
|
||||||||
Total services
|
179,730
|
|
|
170,567
|
|
|
68,478
|
|
|
89,756
|
|
|
22,768
|
|
|
31,067
|
|
|
270,976
|
|
|
291,390
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Goods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Third party
|
1,673
|
|
|
434
|
|
|
9,445
|
|
|
10,193
|
|
|
5,693
|
|
|
6,407
|
|
|
16,811
|
|
|
17,034
|
|
||||||||
Direct
|
34,540
|
|
|
23,489
|
|
|
16,967
|
|
|
15,288
|
|
|
34
|
|
|
205
|
|
|
51,541
|
|
|
38,982
|
|
||||||||
Total
|
36,213
|
|
|
23,923
|
|
|
26,412
|
|
|
25,481
|
|
|
5,727
|
|
|
6,612
|
|
|
68,352
|
|
|
56,016
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total gross profit
|
$
|
215,943
|
|
|
$
|
194,490
|
|
|
$
|
94,890
|
|
|
$
|
115,237
|
|
|
$
|
28,495
|
|
|
$
|
37,679
|
|
|
$
|
339,328
|
|
|
$
|
347,406
|
|
(1)
|
Includes gross profit from deals with local and national merchants and through local events.
|
•
|
the improvement in gross profit margins on direct revenue transactions in our Goods category as discussed above; and
|
•
|
the increase in third party and other revenue in our Local category.
|
•
|
the decreases in third party and other revenue across all three of our categories;
|
•
|
a reduction related to countries that we operated in the prior year period and have subsequently exited as part of our restructuring plan; and
|
•
|
a
$3.3 million
unfavorable impact from year-over-year changes in foreign currency exchange rates.
|
•
|
the decreases in third party and other revenue across all three of our categories;
|
•
|
a
$4.5 million
unfavorable impact from year-over-year changes in foreign currency exchange rates; and
|
•
|
a reduction related to countries that we operated in the prior year period and have subsequently exited as part of our restructuring plan and due to the disposition of a controlling stake in our operations in India.
|
|
|
Three Months Ended March 31,
|
|||||||||||||||||||||||||
|
|
2016
|
|
% of Gross Billings
|
|
% of Segment Revenue
|
|
2015
|
|
% of Gross Billings
|
|
% of Segment Revenue
|
|
$ Change
|
|
% Change
|
|||||||||||
|
|
(dollars in thousands)
|
|||||||||||||||||||||||||
North America
|
|
$
|
68,195
|
|
|
7.3
|
%
|
|
13.6
|
%
|
|
$
|
29,197
|
|
|
3.3
|
%
|
|
6.1
|
%
|
|
$
|
38,998
|
|
|
133.6
|
%
|
EMEA
|
|
18,025
|
|
|
4.6
|
|
|
9.5
|
|
|
17,177
|
|
|
3.7
|
|
|
7.9
|
|
|
848
|
|
|
4.9
|
|
|||
Rest of World
|
|
3,545
|
|
|
2.5
|
|
|
8.4
|
|
|
6,159
|
|
|
3.1
|
|
|
11.4
|
|
|
(2,614
|
)
|
|
(42.4
|
)
|
|||
Total marketing
|
|
$
|
89,765
|
|
|
6.1
|
|
|
12.3
|
|
|
$
|
52,533
|
|
|
3.4
|
|
|
7.0
|
|
|
$
|
37,232
|
|
|
70.9
|
|
Q1 2016
|
|
Q1 2015
|
|
North America
|
|
|
EMEA
|
|
|
Rest of World
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Selling, general and administrative
|
|
$
|
280,988
|
|
|
$
|
289,847
|
|
|
$
|
(8,859
|
)
|
|
(3.1
|
)%
|
% of gross billings
|
|
19.1
|
%
|
|
18.7
|
%
|
|
|
|
|
|||||
% of revenue
|
|
38.4
|
%
|
|
38.6
|
%
|
|
|
|
|
•
|
a
$9.9 million
reduction related to countries that we operated in the prior year period and have subsequently exited as part of our restructuring plan and due to the disposition of a controlling stake in our operations in India; and
|
•
|
a
$7.0 million
decrease in compensation-related costs in the ongoing markets of our international segments due to headcount reductions as part of our restructuring program.
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Income (loss) from operations
|
|
$
|
(47,333
|
)
|
|
$
|
5,295
|
|
|
$
|
(52,628
|
)
|
|
(993.9
|
)%
|
•
|
a
$37.2 million
increase in marketing expense; and
|
•
|
a
$12.4 million
increase in restructuring charges.
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Other income (expense), net
|
|
$
|
3,486
|
|
|
$
|
(19,927
|
)
|
|
$
|
23,413
|
|
|
117.5
|
%
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Provision (benefit) for income taxes
|
|
$
|
1,749
|
|
|
$
|
2,107
|
|
|
$
|
(358
|
)
|
|
(17.0
|
)%
|
Effective tax rate
|
|
(4.0
|
)%
|
|
(14.4
|
)%
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Income (loss) from continuing operations
|
|
$
|
(45,596
|
)
|
|
$
|
(16,739
|
)
|
Adjustments:
|
|
|
|
|
||||
Stock-based compensation
(1)
|
|
27,976
|
|
|
35,144
|
|
||
Depreciation and amortization
|
|
34,797
|
|
|
32,200
|
|
||
Acquisition-related expense, net
|
|
3,464
|
|
|
(269
|
)
|
||
Restructuring charges
(1)
|
|
12,444
|
|
|
—
|
|
||
Other (income) expense, net
(1)
|
|
(3,486
|
)
|
|
19,927
|
|
||
Provision (benefit) for income taxes
|
|
1,749
|
|
|
2,107
|
|
||
Total adjustments
|
|
76,944
|
|
|
89,109
|
|
||
Adjusted EBITDA
|
|
$
|
31,348
|
|
|
$
|
72,370
|
|
(1)
|
Represents stock-based compensation expense recorded within "Selling, general and administrative," "Cost of revenue," and "Marketing." "Restructuring charges" and "Other (income) expense, net," includes
$2.6 million
and
$0.2 million
, respectively, of additional stock-based compensation for the
three months ended
March 31, 2016
.
|
|
|
Three Months Ended
March 31, |
|
Trailing Twelve Months Ended March 31,
|
||||||||||||
|
|
2016
|
|
2015
(1)
|
|
2016
|
|
2015
(1)
|
||||||||
Net cash provided by (used in) operating activities from continuing operations
|
|
$
|
(76,725
|
)
|
|
$
|
43,607
|
|
|
$
|
179,415
|
|
|
$
|
320,803
|
|
Purchases of property and equipment and capitalized software from continuing operations
|
|
(19,952
|
)
|
|
(18,294
|
)
|
|
(85,646
|
)
|
|
(85,761
|
)
|
||||
Free cash flow
|
|
$
|
(96,677
|
)
|
|
$
|
25,313
|
|
|
$
|
93,769
|
|
|
$
|
235,042
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net cash provided by (used in) investing activities from continuing operations
|
|
$
|
(20,778
|
)
|
|
$
|
(19,443
|
)
|
|
$
|
(178,585
|
)
|
|
$
|
(105,821
|
)
|
Net cash provided by (used in) financing activities
|
|
$
|
(78,015
|
)
|
|
$
|
(35,838
|
)
|
|
$
|
(557,962
|
)
|
|
$
|
(198,627
|
)
|
(1)
|
We adopted the guidance in ASU 2016-09 on January 1, 2016. ASU 2016-09 requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. Previously, income tax benefits at settlement of an award were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award's vesting period. We elected to apply that change in cash flow classification on a retrospective basis, which has resulted in increases to net cash provided by operating activities, net cash used in financing activities and free cash flow of
$2.9 million
and
$13.0 million
, respectively, for the three-month and trailing twelve-month periods ended March 31, 2015.
|
|
|
Three Months Ended March 31,
|
||||||||||
|
|
2016
|
|
2015
(1)
|
|
$ Change
|
||||||
|
|
(in thousands)
|
||||||||||
Cash provided by (used in):
|
|
|
|
|
|
|
||||||
Operating activities from continuing operations
|
|
$
|
(76,725
|
)
|
|
$
|
43,607
|
|
|
$
|
(120,332
|
)
|
Operating activities from discontinued operations
|
|
—
|
|
|
(24,355
|
)
|
|
24,355
|
|
|||
Operating activities
|
|
(76,725
|
)
|
|
19,252
|
|
|
(95,977
|
)
|
|||
Investing activities from continuing operations
|
|
(20,778
|
)
|
|
(19,443
|
)
|
|
(1,335
|
)
|
|||
Investing activities from discontinued operations
|
|
—
|
|
|
(624
|
)
|
|
624
|
|
|||
Investing activities
|
|
(20,778
|
)
|
|
(20,067
|
)
|
|
(711
|
)
|
|||
Financing activities
|
|
(78,015
|
)
|
|
(35,838
|
)
|
|
(42,177
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents, including cash classified within current assets held for sale
|
|
10,668
|
|
|
(30,199
|
)
|
|
40,867
|
|
|||
Net increase (decrease) in cash and cash equivalents, including cash classified within current assets held for sale
|
|
(164,850
|
)
|
|
(66,852
|
)
|
|
(97,998
|
)
|
|||
Less: Net increase (decrease) in cash classified within current assets held for sale
|
|
—
|
|
|
(25,722
|
)
|
|
25,722
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
(164,850
|
)
|
|
$
|
(41,130
|
)
|
|
$
|
(123,720
|
)
|
(1)
|
We adopted the guidance in ASU 2016-09 on January 1, 2016. ASU 2016-09 requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. Previously, income tax benefits at settlement of an award were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award's vesting period. We elected to apply that change in cash flow classification on a retrospective basis, which has resulted in an increase of
$2.9 million
to net cash provided by operating activities and net cash used in financing activities for the three-month period ended March 31, 2015.
|
•
|
a
$99.0 million
net decrease related to changes in working capital and other assets and liabilities that primarily resulted from a
$112.4 million
decrease in accrued merchant and supplier payables due to the timing of payments to suppliers of merchandise and the seasonally high levels of Goods transactions in the fourth quarter of 2015; and
|
•
|
a
$45.6 million
net loss from continuing operations.
|
•
|
an
$18.6 million
net decrease for certain non-cash items, primarily consisting of a
$26.8 million
deferred tax benefit, partially offset by $6.3 million of amortization relating to acquired intangible assets; and
|
•
|
a
$12.1 million
net decrease related to changes in working capital.
|
•
|
purchases of treasury stock under our share repurchase programs of
$64.7 million
;
|
•
|
payments of capital lease obligations of
$7.0 million
; and
|
•
|
taxes paid related to net share settlements of stock-based compensation awards of
$5.0 million
.
|
•
|
purchases of treasury stock under our share repurchase program of
$18.0 million
;
|
•
|
taxes paid related to net share settlements of stock-based compensation awards of
$14.6 million
; and
|
•
|
payments of capital lease obligations of
$3.6 million
.
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
2016
|
|
2015
(1)
|
|
$ Change
|
|
% Change
|
|||||||
|
|
(dollars in thousands)
|
|||||||||||||
Free cash flow
|
|
$
|
(96,677
|
)
|
|
$
|
25,313
|
|
|
$
|
(121,990
|
)
|
|
(481.9
|
)%
|
Free cash flow TTM
|
|
$
|
93,769
|
|
|
$
|
235,042
|
|
|
$
|
(141,273
|
)
|
|
(60.1
|
)%
|
(1)
|
We adopted the guidance in ASU 2016-09 on January 1, 2016. ASU 2016-09 requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. Previously, income tax benefits at settlement of an award were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award's vesting period. We elected to apply that change in cash flow classification on a retrospective basis, which has resulted in increases of
$2.9 million
and
$13.0 million
, respectively, to free cash flow for the three-month and trailing twelve-month periods ended March 31, 2015.
|
Date
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under Program
(1)
|
||||||
January 1-31, 2016
|
|
6,650,000
|
|
|
$
|
2.74
|
|
|
6,650,000
|
|
|
$
|
138,664,848
|
|
February 1-29, 2016
|
|
6,670,000
|
|
|
3.28
|
|
|
6,670,000
|
|
|
$
|
116,882,717
|
|
|
March 1-31, 2016
|
|
5,500,000
|
|
|
4.25
|
|
|
5,500,000
|
|
|
$
|
93,593,892
|
|
|
Total
|
|
18,820,000
|
|
|
$
|
3.37
|
|
|
18,820,000
|
|
|
$
|
93,593,892
|
|
(1)
|
Amount reported as of March 31, 2016 and excludes shares that may be purchased under our share repurchase program following the Board's approval of a $200.0 million increase to the program effective April 4, 2016.
|
Date
|
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under Program
|
||||||
January 1-31, 2016
|
|
489,535
|
|
|
$
|
2.48
|
|
|
—
|
|
|
$
|
—
|
|
February 1-29, 2016
|
|
400,511
|
|
|
2.76
|
|
|
—
|
|
|
$
|
—
|
|
|
March 1-31, 2016
(1)
|
|
509,675
|
|
|
3.81
|
|
|
—
|
|
|
$
|
—
|
|
|
Total
|
|
1,399,721
|
|
|
$
|
3.04
|
|
|
—
|
|
|
$
|
—
|
|
(1)
|
Total number of shares delivered to us by employees to satisfy the mandatory tax withholding requirement upon vesting of stock-based compensation awards.
|
GROUPON, INC.
|
||||
By:
|
|
/s/ Brian A. Kayman
|
||
|
|
Name:
|
|
Brian A. Kayman
|
|
|
Title:
|
|
Interim Chief Financial Officer
|
Exhibit
Number
|
|
Description
|
|
4.1
|
|
|
Indenture, dated April 4, 2016, between the Company and U.S. Bank, National Association, as trustee (incorporated by reference to the Company’s Current Report on Form 8-K filed on April 4, 2016).
|
10.1
|
|
|
Investment Agreement, dated April 3, 2016, between the Company and A-G Holdings, L.P. (incorporated by reference to the Company’s Current Report on Form 8-K filed on April 4, 2016).
|
10.2
|
|
|
Voting Agreement, dated April 4, 2016, among the Company, A-G Holdings, L.P. and the stockholders party thereto (incorporated by reference to the Company’s Current Report on Form 8-K filed on April 4, 2016).
|
10.3
|
|
|
Second Amendment to Credit Agreement, effective April 4, 2016, among the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, National Association, as administrative agent (incorporated by reference to the Company’s Current Report on Form 8-K filed on April 4, 2016).
|
10.4
|
|
|
Severance Benefit Agreement, dated April 26, 2016, between the Company and Rich Williams.*
|
23.1
|
|
|
Consent of Ernst & Young LLP
|
31.1
|
|
|
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2
|
|
|
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
|
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101
|
|
|
Interactive data file
|
1.
|
Definitions
.
As used in this Agreement, the following terms shall have the respective meanings set forth below:
|
A.
|
“
Board
”
means the Board of Directors of the Company.
|
B.
|
“
Cause
” means:
|
i.
|
the Executive’s material failure to perform his or her reasonably assigned duties as an employee (other than a failure resulting from the Executive’s disability) after written notice of such failure from the Company describing the failure to perform such duties and a reasonable time to cure of at least thirty (30) days;
|
ii.
|
the Executive’s engaging in any intentional act of fraud, theft, dishonesty, or falsification with respect to the Company;
|
iii.
|
the Executive’s conviction (including a plea of guilty or nolo contendere) of (i) a felony, (ii) a crime of moral turpitude, or (iii) a criminal act that prevents the Executive from performing his or her duties with the Company;
|
iv.
|
the Executive’s engaging in gross misconduct or the material violation of the Company’s Code of Business Conduct;
|
v.
|
the Executive’s violation of any federal or state law or regulation applicable to the business of the Company; or
|
vi.
|
the intentional material breach of any provision of the Executive’s employment letter or employment agreement where such breach continues or is not cured (if curable) for more than thirty (30) days after written notice from the Company to the Executive specifying the nature of such breach.
|
C.
|
“
Change in Control
” means the occurrence of either of the following events:
|
i.
|
an Ownership Change Event or a series of related Ownership Change Events (collectively, a “
Transaction
”) in which the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding securities
|
ii.
|
approval by the stockholders of a plan of complete liquidation or dissolution of the Company;
|
D.
|
“
Change in Control Termination
”
means an Eligible Termination that occurs during the 12-month period beginning on the date of a Change in Control. A Change in Control Termination also includes an Eligible Termination in circumstances where (i) a Change in Control occurs, and (ii) the Executive’s employment with the Company was terminated in an Eligible Termination without Cause within six (6) months prior to the date on which the Change in Control occurs.
|
E.
|
“
Code
”
means the Internal Revenue Code of 1986, as amended.
|
F.
|
“
Company
”
means Groupon, Inc., a Delaware corporation.
|
G.
|
“
Eligible Termination
”
means the Executive’s “separation from service” (within the meaning of Section 409A) with the Company and its subsidiaries that is (a) an involuntary termination of employment by the Company without Cause, or (b) a resignation for Good Reason. An Eligible Termination does not include a termination of employment (1) by the Company for Cause, (2) by the Executive other than for Good Reason, (3) as a result of the Executive’s death, or (4) by the Company due to the Executive’s absence from the Executive’s duties with the Company on a full-time basis for at least 180 consecutive days as a result of the Executive’s incapacity due to physical or mental illness. An Eligible Termination also does not include a termination of employment occurring upon a sale of all or
part of the business in which the Executive
is
employed, a merger or other combination, spin-off, reorganization or liquidation, dissolution or other winding up or other similar transaction involving the Company, in any such case where an offer of comparable employment is made to the Executive by the purchaser, acquirer or successor or surviving entity (including a third-party vendor) concurrently with his or her termination.
|
H.
|
“
Equity-Based Award
”
means a Stock Option, restricted stock unit or other equity-based award granted under the Incentive Plan.
|
I.
|
“
Good Reason
”
means, without the Executive’s express written consent, the occurrence of any of the following events:
|
i.
|
a material adverse change in the nature or scope of the Executive’s authority, powers, functions, duties, responsibilities, or reporting relationship (including Executive’s ceasing to directly report to the chief executive officer, senior vice-president or board of directors of a publicly traded entity);
|
ii.
|
a material reduction by the Company in the Executive’s rate of annual base salary;
|
iii.
|
the failure of the Company to continue any material compensation plan in which the Executive is participating, unless the Executive is permitted to participate in other plans providing the Executive with substantially comparable compensation-related benefits, or the taking of any action by the Company which would adversely affect the Executive’s participation in or materially reduce the Executive’s compensation-related benefits under any such plan;
|
iv.
|
a change in the Executive’s primary employment location to a location that is more than 50 miles from the primary location of the Executive’s employment immediately before such change; or
|
v.
|
the failure of the Company to obtain from any successor or transferee of the Company an express written and unconditional assumption of the Company’s obligations under this Agreement, as further described in Section 5.C(ii) of this Agreement.
|
J.
|
“
Incentive Plan
”
means the Groupon, Inc. 2011 Incentive Plan, as amended from time to time.
|
K.
|
“
Incumbent Director
”
means a director who either (i) is a member of the Board as of the Effective Date or (ii) is elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but excluding a director who was elected or nominated in connection with an actual or threatened proxy contest relating to the election of directors of the Company).
|
L.
|
“
Individual Agreement
”
means an employment or other agreement between the Executive and the Company that was in effect on the Effective Date and provides for severance benefits in the event of qualifying terminations of employment (as determined under such agreement). If the Executive is covered by an Individual Agreement that provides for severance benefits upon the Executive’s termination for “good reason” (as defined in such Individual Agreement), the Individual Agreement shall be deemed amended to the extent necessary to include within such “good reason” definition any circumstance that would entitle the Executive to terminate his or her employment for Good Reason under Section 1.I.
|
M.
|
“
Ownership Change Event
”
means the occurrence of any of the following with respect to the Company: (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of securities of the Company representing more than fifty percent (50%) of the total combined voting power of the Company’s then‑outstanding securities entitled to vote generally in the election of Board members; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company (other than a sale, exchange or transfer to one or more subsidiaries).
|
N.
|
“
Section 409A
”
means Section 409A of the Code and the regulations thereunder.
|
O.
|
“
Stock Option
”
means a stock option granted under the Incentive Plan.
|
P.
|
“
Termination Date
”
means the date on which an Executive experiences an Eligible Termination.
|
2.
|
Severance Benefits
.
|
A.
|
Eligibility
.
The provisions of this Section 2 apply only if (i) the Executive experiences an Eligible Termination, (ii) the Executive executes the Confidentiality, Intellectual Property and Restrictive Covenants Agreement (the “CIPRA”) or an equivalent agreement that includes Non-Compete (excluding California Executives), Nonsolicitation and No-Hire clauses and (iii) the Executive executes a standard mutual separation agreement containing, among other provisions, a release of claims in the form attached hereto as Attachment A (a “
Release
”) within forty-five (45) days following the Termination Date, and does not revoke such Release before the date the release of claims contained therein becomes effective.
|
B.
|
Basic Cash Severance Payment
.
If at the time of the Eligible Termination the Executive is not covered by an Individual Agreement, the Company shall pay the Executive in a lump sum on the 60
th
day after the Termination Date (the “
Payment Date
”) an amount equal to twelve (12) months of the Executive’s annual base salary from the Company and its subsidiaries to the extent not theretofore paid. No amount shall be payable under this Section 2.B if at the time of the Eligible Termination the Executive is covered by an Individual Agreement.
|
C.
|
Additional Cash Severance Payment
.
If (i) at the time of the Eligible Termination the Executive is not covered by an Individual Agreement that provides for Company-subsidized COBRA coverage or any payment intended to serve as an allowance for post-termination health care coverage, and (ii) on the Payment Date the Executive is enrolled in COBRA continuation coverage under the Company’s group health plan, the Company shall pay the Executive in a lump sum on the Payment Date twelve (12) times the monthly COBRA premium applicable to the Executive as of the Payment Date. Notwithstanding the foregoing, this Section 2.C shall cease to apply as of the effective date of any regulation or other guidance under which payment of such component would be deemed to violate any nondiscrimination requirements under the Patient Protection and Affordable Care Act.
|
D.
|
Equity Award Vesting Acceleration
.
|
i.
|
Upon an Eligible Termination that is not a Change in Control Termination, the vesting and exercisability of the Executive’s Stock Options and other Equity-Based Awards shall be accelerated to the extent provided in Exhibit 1. Notwithstanding the foregoing, an Executive who is covered under an Individual Agreement shall be entitled to the vesting and exercisability consequences under such Individual Agreement, but any such vesting and exercisability benefits shall count toward satisfying the accelerated vesting and exercisability under Exhibit 1.
|
ii.
|
Upon a Change in Control Termination, the vesting and exercisability of the Executive’s Stock Options and other Equity-Based Awards shall be accelerated to the extent provided in Exhibit 2.
Notwithstanding the foregoing, an Executive who is covered under an Individual Agreement shall be entitled to the vesting and exercisability consequences under such Individual Agreement, but any such vesting and exercisability benefits shall count toward satisfying the accelerated vesting and exercisability under Exhibit 2.
|
3.
|
Additional Change in Control Provisions
.
|
A.
|
Obligations of the Executive
. The Executive agrees that in the event any person or group attempts a Change in Control, he shall not voluntarily leave the employ of the Company without Good Reason (a) until such attempted Change in Control terminates or (b) if a Change in Control shall occur, until ninety (90) days following such Change in Control.
|
B.
|
Section 4999 Excise Tax
.
|
i.
|
Anything in this Agreement to the contrary notwithstanding, in the event it is determined that (i) any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Company (or any of its subsidiaries) or any entity that effectuates a Change in Control (or any of its affiliated entities) to or for the benefit of the Executive (whether pursuant to this Agreement or otherwise) (the “
Payments
”) would be subject to the excise tax imposed by Section 4999 of the Code (the “
Excise Tax
”), and (ii) the reduction of the amounts payable to the Executive under this Agreement to the maximum amount that could be paid to the Executive without giving rise to the Excise Tax (the “
Safe Harbor Cap
”) would provide the Executive with a greater after-tax amount than if such amounts were not reduced, then the amounts payable to the Executive under this Agreement shall be reduced (but not below zero) to the Safe Harbor Cap. The reduction of the amounts payable hereunder, if applicable, shall be made to the extent necessary in the following order: (i) the acceleration of vesting of stock options with an exercise price that exceeds the then fair market value of the stock subject to the award and of other equity awards, provided that such the value of such acceleration is not permitted to be determined under Treasury Regulation Section 1.280G-1, Q/A-24(c); (ii) the payment under Sections 2.B and 2.C; (iii) any equity awards accelerated pursuant to Section 2.D or otherwise valued at full value, provided that the value of such acceleration is not permitted to be determined under Treasury Regulation Section 1.280G-1, Q/A-24(c); (iv) the acceleration of vesting of stock options with an exercise price that exceeds the then fair market value of the stock subject to the award and other equity awards, provided that the value of such acceleration is permitted to be determined under Treasury Regulation Section 1.280G-1, Q/A-24(c); and (v) the acceleration of vesting of all other stock options and equity awards on a basis resulting in the highest amount retained by the Executive. For purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a greater after-tax result to the Executive, no amounts payable under this Agreement shall be reduced pursuant to this provision.
|
ii.
|
All determinations required to be made under this Section 3.B shall be made by the public accounting firm that is retained by the Company as of the date immediately prior to the Change in Control (the “
Accounting Firm
”) which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Company or the Executive that there has been a Payment, or such earlier time as is requested by the Company. Notwithstanding the foregoing, in the event (i) the Board shall determine prior to the Change in Control that the Accounting Firm is precluded from performing such services under applicable auditor independence rules or (ii) the Audit Committee of the Board determines that it does not want the Accounting Firm to perform such services because of auditor independence concerns or (iii) the Accounting Firm is serving as accountant or auditor for the person(s) effecting the Change in Control, the Board shall appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees, costs and expenses (including, but not limited to, the costs of retaining experts) of the Accounting Firm shall be borne by the Company. If Payments are reduced to the Safe Harbor Cap or the Accounting Firm determines that no Excise Tax is payable by the Executive without a reduction in Payments, the Accounting Firm shall provide a written opinion to the Executive to the effect that the Executive is not required to report any Excise Tax on the Executive’s federal income tax return, and that the failure to report the Excise Tax, if any, on the Executive’s applicable federal income tax return will not result in the imposition of a negligence or similar penalty. The determination by the Accounting Firm shall be binding upon the Company and the Executive (except as provided in Section 5.C below).
|
iii.
|
If it is established pursuant to a final determination of a court or an Internal Revenue Service (the “
IRS
”) proceeding which has been finally and conclusively resolved, that Payments have been made to, or provided for the benefit of, the Executive by the Company which are in excess of the limitations provided in this section (referred to hereinafter as an “
Excess Payment
”), the Executive shall repay the Excess Payment to the Company on demand, together with interest on the Excess Payment at the applicable federal rate (as defined in Section 1274(d) of the Code) from the date of the Executive’s receipt of such Excess Payment until the date of such repayment. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the determination, it is possible that Payments which will not have been made by the Company should have been made (an “
Underpayment
”), consistent with the calculations required to be made under this Section. In the event that it is determined (i) by the Accounting Firm, the Company (which shall include the position taken by the Company, or together with its consolidated group, on its federal income tax return) or the IRS or (ii) pursuant to a determination by a court, that an Underpayment has occurred, the Company shall pay an amount equal to such Underpayment to the Executive within ten (10) days of such determination together with interest on such amount at the applicable federal rate from the date such amount would have been paid to the Executive until the date of payment. The Executive shall cooperate, to the extent the Executive’s expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the IRS in connection with the Excise Tax or the determination of the Excess Payment. Notwithstanding the foregoing, in the event that amounts payable under this Agreement were reduced pursuant to Section 3.B(i) and the present value of any Payment is subsequently re-determined by the Accounting Firm within the context of Treasury Regulation Section 1.280G-1 Q/A 33 that reduces the value of the Payment, the Company shall promptly pay to Executive any amounts payable under this Agreement that were not previously paid solely as a result of Section 5.A, subject to the Safe Harbor Cap.
|
iv.
|
A payment or reimbursement of expenses described in this Section 3 shall be made promptly and in no event later than December 31 of the year following the year in which such expenses were incurred, any reimbursement of expenses incurred due to a tax audit or litigation shall be made no later than the end of the calendar year immediately following the calendar year in which the taxes that are the subject of the audit or litigation are remitted to the taxing authority, or, if no taxes are to be remitted, the end of the calendar year following the calendar year in which the audit or litigation is completed, and the amount of such expenses eligible for payment or reimbursement in any year shall not affect the amount of such expenses eligible for payment or reimbursement in any other year nor shall such right to payment or reimbursement be subject to liquidation or exchange for another benefit.
|
4.
|
Section 409A
.
|
A.
|
In General
.
The parties intend that this Agreement and the benefits provided hereunder be interpreted and construed to comply with Section 409A to the extent applicable thereto. Notwithstanding any provision of this Agreement to the contrary, this Agreement shall be interpreted and construed consistent with this intent, provided that the Company shall not be required to assume any increased economic burden in connection therewith. Although the Company intends to administer this Agreement so that it will comply with the requirements of Section 409A, the Company does not represent or warrant that this Agreement will comply with Section 409A or any other provision of federal, state, local or non-United States law.
|
B.
|
Prohibition on Acceleration of Payments
. The time or schedule of any payment or amount scheduled to be paid pursuant to the terms of this Agreement, or pursuant to the terms of any other employment agreement or compensation arrangement entered into between the Executive and the Company or any
|
C.
|
Delay Period
.
In the event that any payment or distribution or portion of any payment or distribution to be made to the Executive hereunder cannot be characterized as a “short-term deferral” for purposes of Section 409A and is not otherwise exempt from the provisions of Section 409A, and the Executive is determined to be a “specified employee” under Section 409A, such portion of the payment shall be delayed until the earlier to occur of the Executive’s death or the date that is six months after the Executive’s termination of employment with the Company and its subsidiaries (the “
Delay Period
”). Upon the expiration of the Delay Period, the payments delayed pursuant to this Section 4.C shall be paid to the Executive in a lump sum, and any remaining payments due under this Agreement shall be payable in accordance with their original payment schedule.
|
5.
|
Miscellaneous
.
|
A.
|
Withholding Taxes
.
The Company may withhold from all payments due to the Executive hereunder all taxes which, by applicable federal, state, local or other law, the Company is required to withhold therefrom.
|
B.
|
Scope of Agreement
.
Nothing in this Agreement shall be deemed to entitle the Executive to continued employment with the Company or its subsidiaries.
|
C.
|
Successors; Binding Agreement
.
|
i.
|
This Agreement shall not be terminated by any merger or consolidation of the Company whereby the Company is or is not the surviving or resulting corporation or as a result of any transfer of all or substantially all of the assets of the Company. In the event of any such merger, consolidation or transfer of assets, the provisions of this Agreement shall be binding upon the surviving or resulting corporation or the person or entity to which such assets are transferred.
|
ii.
|
The Company agrees that concurrently with any merger, consolidation or transfer of assets referred to in Section 5.C(i), it will cause any successor or transferee unconditionally to assume, by written instrument delivered to the Executive, all of the obligations of the Company hereunder.
|
iii.
|
This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amounts would be payable to the Executive hereunder had the Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to such person or persons appointed in writing by the Executive to receive such amounts or, if no person is so appointed, to the Executive’s estate.
|
D.
|
Notices
.
|
i.
|
For purposes of this Agreement, all notices and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given when delivered or five (5) days after deposit in the United States mail, certified and return receipt requested, postage prepaid, addressed (1) if to the Executive, to the last known residential address on file for the Executive with the Company, and if to the Company, attention General Counsel, with a copy to the Secretary, or (2) to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.
|
ii.
|
A written notice of the Executive’s Termination Date by the Company or the Executive, as the case may be, to the other, shall (1) indicate the specific termination provision in this Agreement relied upon, (2) to the extent applicable, set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (3) specify the Termination Date (which date shall be not less than fifteen (15) days after the giving of such notice). The failure by the Executive or the Company to set forth in such notice any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.
|
E.
|
Governing Law; Validity
.
The interpretation, construction and performance of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Illinois without regard to the principle of conflicts of laws. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which other provisions shall remain in full force and effect.
|
F.
|
Counterparts
.
This Agreement may be executed in two counterparts, each of which shall be deemed to be an original and both of which together shall constitute one and the same instrument.
|
G.
|
Entire Agreement
.
Except to the extent expressly provided herein, this Agreement constitutes the entire understanding between the parties with respect to the Executive’s severance pay and benefits in the event of a termination of the Executive’s employment with the Company and supersedes any other agreement, whether written or unwritten, with respect thereto.
|
6.
|
Full Settlement; Resolution of Disputes
.
|
A.
|
The Company’s obligation to make any payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others.
|
B.
|
If there shall be any dispute between the Company and the Executive in the event of any termination of the Executive’s employment, then unless and until there is a final, nonappealable judgment by a court of competent jurisdiction declaring that such termination was for Cause or that the Company is not otherwise obligated to pay any amount or provide any benefit to the Executive under Section 2, the Company shall pay all amounts, and provide all benefits, to the Executive that the Company would be required to pay or provide pursuant to Section 2 as though such termination were by the Company without Cause or by the Executive with Good Reason;
provided
,
however
, that the Company shall not be required to pay any disputed amounts pursuant to this Section 6.B except upon receipt of an undertaking by or on behalf of the Executive to repay all such amounts to which the Executive is ultimately adjudged by such court not to be entitled.
|
C.
|
If any contest or dispute shall arise under this Agreement involving termination of the Executive’s employment with the Company or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, the Company shall reimburse the Executive, on a current basis, for all legal fees and expenses, if any, incurred by the Executive in connection with such contest or dispute; provided, however, that in the event the resolution of any such contest or dispute includes a finding denying, in total, the Executive’s claims in such contest or dispute, the Executive shall be required to reimburse the Company, over a period of 12 months from the date of such resolution, for all sums advanced to the Executive pursuant to this Section 6.C. Payment or reimbursement of expenses described in this Section 8 shall be made promptly and in no event later than December 31 of the year following the year in which such expenses were incurred, and the amount of such expenses
|
7.
|
Agreement Modification, Waiver, or Termination
.
|
A.
|
Subject to Section 7.B, no provision of this Agreement may be modified or waived unless such modification or waiver is agreed to in writing and signed by the Executive and by a duly authorized officer of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. Failure by the Executive or the Company to insist upon strict compliance with any provision of this Agreement or to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
|
B.
|
The Company shall have the right prior to a Change in Control, in its sole discretion, pursuant to action by the Board, to approve the termination of this Agreement, which termination shall not become effective until the date fixed by the Board for such termination, which date shall be at least 120 days after notice thereof is given by the Company to the Executive in accordance with Section 5.D;
provided
,
however
, that no such action shall be taken by the Board during any period of time when the Board has knowledge that any person has taken steps reasonably calculated to effect a Change in Control until, in the opinion of the Board, such person has abandoned or terminated its efforts to effect a Change in Control; and
provided
,
further
, that in no event shall this Agreement be terminated during the one-year period commencing on the date of a Change in Control.
|
1
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Immediately upon the Executive’s Termination Date, the portion of the Executive’s unvested Equity-Based Awards (whose vesting is based solely on continued service over time) that is scheduled to vest during the twelve (12) month period beginning on the Termination Date shall immediately vest. Additionally, Executive shall immediately vest in the amount of any outstanding performance based equity awards for the annual performance period in which the Termination Date occurs equal to the lesser of (i) the full number of shares for such performance based equity awards or (ii) the full number of such performance based shares multiplied by a fraction, the numerator of which is the sum of the number of days of Executive’s employment during the annual performance period in which the Termination Date occurs plus 365 days, and the denominator of which is the number of days in such performance period, with the actual amount earned under such vested award, if any, to be based on and subject to actual performance results as certified by the Committee following such performance period and paid within thirty days of the Committee’s certification.
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2
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Each of the Executive’s vested Stock Options shall remain exercisable following the Termination Date until the expiration of the term of the Stock Option (as set forth in the Stock Option agreement).
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3
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Notwithstanding anything to the contrary in this Exhibit 1, the timing of payment of any Equity-Based Award that provides for the “deferral of compensation” (as such term is defined under Section 409A) may not be accelerated except as otherwise permitted under Section 409A.
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1
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Immediately upon the Executive’s Termination Date, hundred percent (100%) of the Executive’s outstanding Equity-Based Awards (or equity awards granted in substitution therefor by an acquirer of, or successor to, the Company) that are not otherwise vested shall become immediately vested, with any performance-based conditions for such awards (with respect to the performance period in which the Termination Date occurs) deemed satisfied at the target level. In the event the Executive’s employment is terminated in a Change in Control Termination on a date that precedes the Change in Control date, any Equity-Based Awards that were accelerated by application of Exhibit 1 shall count toward satisfying the accelerated vesting described in the preceding sentence.
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2
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Each of the Executive’s vested Stock Options shall remain exercisable following the Termination Date until the expiration of the term of the Stock Option (as set forth in the Stock Option agreement).
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3
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Notwithstanding anything to the contrary in this Exhibit 2, the timing of payment of any Equity-Based Award that provides for the “deferral of compensation” (as such term is defined under Section 409A) may not be accelerated except as otherwise permitted under Section 409A.
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(1)
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the Registration Statement (Form S-8 No. 333-177799) pertaining to the 2011 Amended Incentive Plan, 2010 Stock Plan, and 2008 Stock Plan of Groupon, Inc.;
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(2)
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the Registration Statement (Form S-8 No. 333-181854) pertaining to the Groupon, Inc. 2012 Employee Stock Purchase Plan;
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(3)
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the Registration Statement (Form S-8 No. 333-193165) pertaining to the Groupon, Inc. 2011 Incentive Plan;
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(4)
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the Registration Statement (Form S-8 No. 333-202061) pertaining to the Groupon, Inc. 2011 Incentive Plan; and
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(5)
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Registration Statement (Form S-3 ASR No. 333-202060) of Groupon, Inc.,
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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