QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended March 31, 2019
|
|
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, 2019 (unaudited) and December 31, 2018
|
|
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2019 and 2018 (unaudited)
|
|
Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2019 and 2018 (unaudited)
|
|
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018 (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 Disclosures 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
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
645,610
|
|
|
$
|
841,021
|
|
Accounts receivable, net
|
83,658
|
|
|
69,493
|
|
||
Prepaid expenses and other current assets
|
82,686
|
|
|
88,115
|
|
||
Total current assets
|
811,954
|
|
|
998,629
|
|
||
Property, equipment and software, net
|
136,570
|
|
|
143,117
|
|
||
Right-of-use assets - operating leases, net
|
103,101
|
|
|
—
|
|
||
Goodwill
|
324,579
|
|
|
325,491
|
|
||
Intangible assets, net
|
42,659
|
|
|
45,401
|
|
||
Investments (including $42,888 and $84,242 at March 31, 2019 and December 31, 2018, at fair value)
|
66,913
|
|
|
108,515
|
|
||
Other non-current assets
|
20,236
|
|
|
20,989
|
|
||
Total Assets
|
$
|
1,506,012
|
|
|
$
|
1,642,142
|
|
Liabilities and Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
25,312
|
|
|
$
|
38,359
|
|
Accrued merchant and supplier payables
|
512,728
|
|
|
651,781
|
|
||
Accrued expenses and other current liabilities
|
256,060
|
|
|
267,034
|
|
||
Total current liabilities
|
794,100
|
|
|
957,174
|
|
||
Convertible senior notes, net
|
204,844
|
|
|
201,669
|
|
||
Operating lease obligations
|
110,999
|
|
|
—
|
|
||
Other non-current liabilities
|
53,673
|
|
|
100,688
|
|
||
Total Liabilities
|
1,163,616
|
|
|
1,259,531
|
|
||
Commitments and contingencies (see Note 7)
|
|
|
|
||||
Stockholders' Equity
|
|
|
|
||||
Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized; 764,245,924
shares issued and 567,982,801 shares outstanding at March 31, 2019; 760,939,440 shares issued and 569,084,312 shares outstanding at December 31, 2018
|
76
|
|
|
76
|
|
||
Additional paid-in capital
|
2,248,616
|
|
|
2,234,560
|
|
||
Treasury stock, at cost, 196,263,123 and 191,855,128 shares at March 31, 2019 and December 31, 2018
|
(892,546
|
)
|
|
(877,491
|
)
|
||
Accumulated deficit
|
(1,052,986
|
)
|
|
(1,010,499
|
)
|
||
Accumulated other comprehensive income (loss)
|
37,915
|
|
|
34,602
|
|
||
Total Groupon, Inc. Stockholders' Equity
|
341,075
|
|
|
381,248
|
|
||
Noncontrolling interests
|
1,321
|
|
|
1,363
|
|
||
Total Equity
|
342,396
|
|
|
382,611
|
|
||
Total Liabilities and Equity
|
$
|
1,506,012
|
|
|
$
|
1,642,142
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Revenue:
|
|
|
|
||||
Service
|
$
|
285,827
|
|
|
$
|
301,797
|
|
Product
|
292,583
|
|
|
324,743
|
|
||
Total revenue
|
578,410
|
|
|
626,540
|
|
||
Cost of revenue:
|
|
|
|
||||
Service
|
28,627
|
|
|
31,145
|
|
||
Product
|
243,767
|
|
|
270,510
|
|
||
Total cost of revenue
|
272,394
|
|
|
301,655
|
|
||
Gross profit
|
306,016
|
|
|
324,885
|
|
||
Operating expenses:
|
|
|
|
||||
Marketing
|
93,397
|
|
|
99,156
|
|
||
Selling, general and administrative
|
210,424
|
|
|
222,344
|
|
||
Total operating expenses
|
303,821
|
|
|
321,500
|
|
||
Income (loss) from operations
|
2,195
|
|
|
3,385
|
|
||
Other income (expense), net
|
(46,855
|
)
|
|
(8,515
|
)
|
||
Income (loss) from continuing operations before provision (benefit) for income taxes
|
(44,660
|
)
|
|
(5,130
|
)
|
||
Provision (benefit) for income taxes
|
(3,490
|
)
|
|
(2,335
|
)
|
||
Income (loss) from continuing operations
|
(41,170
|
)
|
|
(2,795
|
)
|
||
Income (loss) from discontinued operations, net of tax
|
2,162
|
|
|
—
|
|
||
Net income (loss)
|
(39,008
|
)
|
|
(2,795
|
)
|
||
Net income attributable to noncontrolling interests
|
(3,479
|
)
|
|
(4,093
|
)
|
||
Net income (loss) attributable to Groupon, Inc.
|
$
|
(42,487
|
)
|
|
$
|
(6,888
|
)
|
|
|
|
|
||||
Basic and diluted net income (loss) per share:
|
|
|
|
||||
Continuing operations
|
$
|
(0.08
|
)
|
|
$
|
(0.01
|
)
|
Discontinued operations
|
0.01
|
|
|
0.00
|
|
||
Basic and diluted net income (loss) per share
|
$
|
(0.07
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
||||
Weighted average number of shares outstanding
|
|
|
|
||||
Basic
|
570,095,128
|
|
|
561,735,937
|
|
||
Diluted
|
570,095,128
|
|
|
561,735,937
|
|
||
|
|
|
|
||||
Comprehensive income (loss):
|
|
|
|
||||
Net income (loss)
|
$
|
(39,008
|
)
|
|
$
|
(2,795
|
)
|
Other comprehensive income (loss):
|
|
|
|
||||
Other comprehensive income (loss) from continuing operations:
|
|
|
|
||||
Net change in unrealized gain (loss) on foreign currency translation adjustments
|
3,272
|
|
|
(1,568
|
)
|
||
Net change in unrealized gain (loss) on available-for-sale securities (net of tax effect of $13 and $0 for the three months ended March 31, 2019 and 2018)
|
41
|
|
|
(501
|
)
|
||
Other comprehensive income (loss) from continuing operations
|
3,313
|
|
|
(2,069
|
)
|
||
Other comprehensive income (loss) from discontinued operations
|
—
|
|
|
—
|
|
||
Other comprehensive income (loss)
|
3,313
|
|
|
(2,069
|
)
|
||
|
|
|
|
||||
Comprehensive income (loss)
|
(35,695
|
)
|
|
(4,864
|
)
|
||
Comprehensive income (loss) attributable to noncontrolling interest
|
(3,479
|
)
|
|
(4,093
|
)
|
||
Comprehensive income (loss) attributable to Groupon, Inc.
|
$
|
(39,174
|
)
|
|
$
|
(8,957
|
)
|
|
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, 2018
|
760,939,440
|
|
|
$
|
76
|
|
|
$
|
2,234,560
|
|
|
(191,855,128
|
)
|
|
$
|
(877,491
|
)
|
|
$
|
(1,010,499
|
)
|
|
$
|
34,602
|
|
|
$
|
381,248
|
|
|
$
|
1,363
|
|
|
$
|
382,611
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42,487
|
)
|
|
—
|
|
|
(42,487
|
)
|
|
3,479
|
|
|
(39,008
|
)
|
||||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,272
|
|
|
3,272
|
|
|
—
|
|
|
3,272
|
|
||||||||
Unrealized gain (loss) on available-for-sale securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
41
|
|
|
—
|
|
|
41
|
|
||||||||
Exercise of stock options
|
12,500
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
||||||||
Vesting of restricted stock units and performance share units
|
4,160,415
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Shares issued under employee stock purchase plan
|
719,297
|
|
|
—
|
|
|
1,998
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,998
|
|
|
—
|
|
|
1,998
|
|
||||||||
Tax withholdings related to net share settlements of stock-based compensation awards
|
(1,585,728
|
)
|
|
—
|
|
|
(5,681
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,681
|
)
|
|
—
|
|
|
(5,681
|
)
|
||||||||
Purchases of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,407,995
|
)
|
|
(15,055
|
)
|
|
—
|
|
|
—
|
|
|
(15,055
|
)
|
|
—
|
|
|
(15,055
|
)
|
||||||||
Stock-based compensation on equity-classified awards
|
—
|
|
|
—
|
|
|
17,731
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,731
|
|
|
—
|
|
|
17,731
|
|
||||||||
Distributions to noncontrolling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,521
|
)
|
|
(3,521
|
)
|
||||||||
Balance at March 31, 2019
|
764,245,924
|
|
|
$
|
76
|
|
|
$
|
2,248,616
|
|
|
(196,263,123
|
)
|
|
$
|
(892,546
|
)
|
|
$
|
(1,052,986
|
)
|
|
$
|
37,915
|
|
|
$
|
341,075
|
|
|
$
|
1,321
|
|
|
$
|
342,396
|
|
|
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, 2017
|
748,541,862
|
|
|
$
|
75
|
|
|
$
|
2,174,708
|
|
|
(188,602,242
|
)
|
|
$
|
(867,450
|
)
|
|
$
|
(1,088,204
|
)
|
|
$
|
31,844
|
|
|
$
|
250,973
|
|
|
$
|
872
|
|
|
$
|
251,845
|
|
Cumulative effect of change in accounting principle, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
88,945
|
|
|
—
|
|
|
88,945
|
|
|
—
|
|
|
88,945
|
|
||||||||
Reclassification for impact of U.S. tax rate change
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
|
161
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,888
|
)
|
|
—
|
|
|
(6,888
|
)
|
|
4,093
|
|
|
(2,795
|
)
|
||||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,568
|
)
|
|
(1,568
|
)
|
|
—
|
|
|
(1,568
|
)
|
||||||||
Unrealized gain (loss) on available-for-sale securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(501
|
)
|
|
(501
|
)
|
|
—
|
|
|
(501
|
)
|
||||||||
Exercise of stock options
|
2,400
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||||||
Vesting of restricted stock units and performance share units
|
4,157,462
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Shares issued under employee stock purchase plan
|
746,773
|
|
|
—
|
|
|
2,434
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,434
|
|
|
—
|
|
|
2,434
|
|
||||||||
Tax withholdings related to net share settlements of stock-based compensation awards
|
(2,024,590
|
)
|
|
—
|
|
|
(9,355
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,355
|
)
|
|
—
|
|
|
(9,355
|
)
|
||||||||
Stock-based compensation on equity-classified awards
|
—
|
|
|
—
|
|
|
18,240
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,240
|
|
|
—
|
|
|
18,240
|
|
||||||||
Shares issued to settle liability-classified awards
|
1,240,379
|
|
|
—
|
|
|
6,436
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,436
|
|
|
—
|
|
|
6,436
|
|
||||||||
Distributions to noncontrolling interest holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,315
|
)
|
|
(3,315
|
)
|
||||||||
Balance at March 31, 2018
|
752,664,286
|
|
|
$
|
75
|
|
|
$
|
2,192,469
|
|
|
(188,602,242
|
)
|
|
$
|
(867,450
|
)
|
|
$
|
(1,006,308
|
)
|
|
$
|
29,936
|
|
|
$
|
348,722
|
|
|
$
|
1,650
|
|
|
$
|
350,372
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
(39,008
|
)
|
|
$
|
(2,795
|
)
|
Less: Income (loss) from discontinued operations, net of tax
|
2,162
|
|
|
—
|
|
||
Income (loss) from continuing operations
|
(41,170
|
)
|
|
(2,795
|
)
|
||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization of property, equipment and software
|
24,522
|
|
|
26,721
|
|
||
Amortization of acquired intangible assets
|
3,894
|
|
|
2,940
|
|
||
Stock-based compensation
|
16,411
|
|
|
19,326
|
|
||
Deferred income taxes
|
—
|
|
|
(6,575
|
)
|
||
(Gain) loss from changes in fair value of investments
|
41,408
|
|
|
5,033
|
|
||
Amortization of debt discount on convertible senior notes
|
3,175
|
|
|
2,866
|
|
||
Change in assets and liabilities, net of acquisitions and dispositions:
|
|
|
|
||||
Accounts receivable
|
(14,200
|
)
|
|
17,623
|
|
||
Prepaid expenses and other current assets
|
3,461
|
|
|
9,601
|
|
||
Accounts payable
|
(12,914
|
)
|
|
(8,341
|
)
|
||
Accrued merchant and supplier payables
|
(136,572
|
)
|
|
(143,330
|
)
|
||
Accrued expenses and other current liabilities
|
(40,405
|
)
|
|
(41,564
|
)
|
||
Other, net
|
4,907
|
|
|
(1,252
|
)
|
||
Net cash provided by (used in) operating activities from continuing operations
|
(147,483
|
)
|
|
(119,747
|
)
|
||
Net cash provided by (used in) operating activities from discontinued operations
|
—
|
|
|
—
|
|
||
Net cash provided by (used in) operating activities
|
(147,483
|
)
|
|
(119,747
|
)
|
||
Investing activities
|
|
|
|
||||
Purchases of property and equipment and capitalized software
|
(17,477
|
)
|
|
(20,144
|
)
|
||
Acquisitions of intangible assets and other investing activities
|
(638
|
)
|
|
(238
|
)
|
||
Net cash provided by (used in) investing activities from continuing operations
|
(18,115
|
)
|
|
(20,382
|
)
|
||
Net cash provided by (used in) investing activities from discontinued operations
|
—
|
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
(18,115
|
)
|
|
(20,382
|
)
|
||
Financing activities
|
|
|
|
||||
Payments for purchases of treasury stock
|
(14,416
|
)
|
|
—
|
|
||
Taxes paid related to net share settlements of stock-based compensation awards
|
(5,090
|
)
|
|
(9,179
|
)
|
||
Proceeds from stock option exercises and employee stock purchase plan
|
2,006
|
|
|
2,434
|
|
||
Distributions to noncontrolling interest holders
|
(3,521
|
)
|
|
(3,315
|
)
|
||
Payments of finance lease obligations
|
(6,756
|
)
|
|
(9,024
|
)
|
||
Payments of contingent consideration related to acquisitions
|
—
|
|
|
(1,815
|
)
|
||
Net cash provided by (used in) financing activities
|
(27,777
|
)
|
|
(20,899
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash, including cash classified within current assets
|
(3,381
|
)
|
|
6,191
|
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash, including cash classified within current assets
|
(196,756
|
)
|
|
(154,837
|
)
|
||
Less: Net increase (decrease) in cash classified within current assets of discontinued operations
|
—
|
|
|
—
|
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(196,756
|
)
|
|
(154,837
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
844,728
|
|
|
885,481
|
|
||
Cash, cash equivalents and restricted cash, end of period
(1)
|
$
|
647,972
|
|
|
$
|
730,644
|
|
Non-cash investing and financing activities
|
|
|
|
||||
Continuing operations:
|
|
|
|
||||
Equipment acquired under finance lease obligations
|
$
|
—
|
|
|
$
|
1,470
|
|
Liability for purchases of treasury stock
|
(1,095
|
)
|
|
—
|
|
||
Increase (decrease) in liabilities related to purchases of property and equipment and capitalized software
|
(355
|
)
|
|
(1,022
|
)
|
(1)
|
The following table provides a reconciliation of cash, cash equivalents and restricted cash shown above to amounts reported within the condensed consolidated balance sheet as of
March 31, 2019
and amounts previously reported within the condensed consolidated balance sheet in our Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2018
(in thousands):
|
|
March 31, 2019
|
|
March 31, 2018
|
||||
Cash and cash equivalents
|
$
|
645,610
|
|
|
$
|
725,909
|
|
Restricted cash included in prepaid expenses and other current assets
|
1,973
|
|
|
4,332
|
|
||
Restricted cash included in other non-current assets
|
389
|
|
|
403
|
|
||
Cash, cash equivalents and restricted cash
|
$
|
647,972
|
|
|
$
|
730,644
|
|
|
North America
|
|
International
|
|
Consolidated
|
||||||
Balance as of December 31, 2018
|
$
|
178,685
|
|
|
$
|
146,806
|
|
|
$
|
325,491
|
|
Foreign currency translation
|
—
|
|
|
(912
|
)
|
|
(912
|
)
|
|||
Balance as of March 31, 2019
|
$
|
178,685
|
|
|
$
|
145,894
|
|
|
$
|
324,579
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
Asset Category
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
||||||||||||
Customer relationships
|
$
|
16,200
|
|
|
$
|
13,050
|
|
|
$
|
3,150
|
|
|
$
|
16,200
|
|
|
$
|
11,700
|
|
|
$
|
4,500
|
|
Merchant relationships
|
22,004
|
|
|
5,208
|
|
|
16,796
|
|
|
21,554
|
|
|
4,105
|
|
|
17,449
|
|
||||||
Trade names
|
9,533
|
|
|
6,943
|
|
|
2,590
|
|
|
9,476
|
|
|
6,799
|
|
|
2,677
|
|
||||||
Developed technology
|
13,810
|
|
|
13,527
|
|
|
283
|
|
|
13,825
|
|
|
13,485
|
|
|
340
|
|
||||||
Patents
|
21,112
|
|
|
16,844
|
|
|
4,268
|
|
|
20,508
|
|
|
16,451
|
|
|
4,057
|
|
||||||
Other intangible assets
|
26,109
|
|
|
10,537
|
|
|
15,572
|
|
|
26,007
|
|
|
9,629
|
|
|
16,378
|
|
||||||
Total
|
$
|
108,768
|
|
|
$
|
66,109
|
|
|
$
|
42,659
|
|
|
$
|
107,570
|
|
|
$
|
62,169
|
|
|
$
|
45,401
|
|
Remaining amounts in 2019
|
$
|
10,179
|
|
2020
|
7,754
|
|
|
2021
|
7,017
|
|
|
2022
|
6,701
|
|
|
2023
|
5,543
|
|
|
Thereafter
|
5,465
|
|
|
Total
|
$
|
42,659
|
|
|
March 31, 2019
|
|
Percent Ownership of Voting Stock
|
|
December 31, 2018
|
|
Percent Ownership of Voting Stock
|
||||||||
Available-for-sale securities - redeemable preferred shares
|
$
|
10,394
|
|
|
19%
|
to
|
25%
|
|
$
|
10,340
|
|
|
19%
|
to
|
25%
|
Fair value option investments
|
32,494
|
|
|
10%
|
to
|
19%
|
|
73,902
|
|
|
10%
|
to
|
19%
|
||
Other equity investments
(1)
|
24,025
|
|
|
1%
|
to
|
19%
|
|
24,273
|
|
|
1%
|
to
|
19%
|
||
Total investments
|
$
|
66,913
|
|
|
|
|
|
|
$
|
108,515
|
|
|
|
|
|
(1)
|
Represents equity investments without readily determinable fair values. We have elected to record equity investments without readily determinable fair values at cost adjusted for observable price changes and impairments. There were no adjustments for observable price changes related to these investments since our adoption of ASU 2016-01,
Financial Instruments (Topic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities,
on January 1, 2018.
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Amortized cost
|
$
|
9,961
|
|
|
$
|
9,961
|
|
Gross unrealized gain
|
433
|
|
|
379
|
|
||
Gross unrealized loss
|
—
|
|
|
—
|
|
||
Fair value
|
$
|
10,394
|
|
|
$
|
10,340
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Interest income
|
$
|
1,936
|
|
|
$
|
1,509
|
|
Interest expense
|
(5,691
|
)
|
|
(5,493
|
)
|
||
Changes in fair value of investments
|
(41,408
|
)
|
|
(5,033
|
)
|
||
Foreign currency gains (losses), net
|
(1,679
|
)
|
|
1,398
|
|
||
Other
|
(13
|
)
|
|
(896
|
)
|
||
Other income (expense), net
|
$
|
(46,855
|
)
|
|
$
|
(8,515
|
)
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Merchandise inventories
|
$
|
30,652
|
|
|
$
|
33,739
|
|
Prepaid expenses
|
27,517
|
|
|
28,209
|
|
||
Income taxes receivable
|
5,495
|
|
|
6,717
|
|
||
Other
|
19,022
|
|
|
19,450
|
|
||
Total prepaid expenses and other current assets
|
$
|
82,686
|
|
|
$
|
88,115
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Accrued merchant payables
|
$
|
361,735
|
|
|
$
|
371,279
|
|
Accrued supplier payables
(1)
|
150,993
|
|
|
280,502
|
|
||
Total accrued merchant and supplier payables
|
$
|
512,728
|
|
|
$
|
651,781
|
|
(1)
|
Amounts include payables to suppliers of inventories and providers of shipping and fulfillment services.
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Refunds reserve
|
$
|
21,350
|
|
|
$
|
27,957
|
|
Compensation and benefits
|
47,521
|
|
|
56,173
|
|
||
Accrued marketing
|
35,070
|
|
|
39,094
|
|
||
Customer credits
|
15,403
|
|
|
15,118
|
|
||
Income taxes payable
|
8,685
|
|
|
8,987
|
|
||
Deferred revenue
|
21,161
|
|
|
25,452
|
|
||
Current portion of lease obligations
(1)
|
42,806
|
|
|
17,207
|
|
||
Other
|
64,064
|
|
|
77,046
|
|
||
Total accrued expenses and other current liabilities
|
$
|
256,060
|
|
|
$
|
267,034
|
|
(1)
|
Current portion of lease obligations as of March 31, 2019 includes
$25.0 million
of additional lease obligations that were recognized as a result of the adoption of Topic 842 on January 1, 2019. Refer to Note
6
,
Leases
, for additional information.
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Contingent income tax liabilities
|
$
|
31,751
|
|
|
$
|
39,858
|
|
Deferred rent
(1)
|
—
|
|
|
32,186
|
|
||
Deferred income taxes
|
3,880
|
|
|
6,619
|
|
||
Other
|
18,042
|
|
|
22,025
|
|
||
Total other non-current liabilities
|
$
|
53,673
|
|
|
$
|
100,688
|
|
(1)
|
Non-current operating lease liabilities as of March 31, 2019 are included within Operating lease obligations on the condensed consolidated balance sheet as a result of the adoption of Topic 842 on January 1, 2019. Refer to Note
6
,
Leases
, for additional information.
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Liability component:
|
|
|
|
||||
Principal amount
|
$
|
250,000
|
|
|
$
|
250,000
|
|
Less: debt discount
|
(45,156
|
)
|
|
(48,331
|
)
|
||
Net carrying amount of liability component
|
$
|
204,844
|
|
|
$
|
201,669
|
|
|
|
|
|
||||
Net carrying amount of equity component
|
$
|
67,014
|
|
|
$
|
67,014
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Contractual interest (3.25% of the principal amount per annum)
|
$
|
2,032
|
|
|
$
|
2,032
|
|
Amortization of debt discount
|
3,175
|
|
|
2,866
|
|
||
Total
|
$
|
5,207
|
|
|
$
|
4,898
|
|
|
March 31, 2019
|
||
Right-of-use assets - operating leases
|
$
|
109,555
|
|
Right-of-use assets - finance leases
(1)
|
32,196
|
|
|
Total right-of-use assets, gross
|
141,751
|
|
|
Less: accumulated depreciation and amortization
|
(13,197
|
)
|
|
Right-of-use assets, net
|
$
|
128,554
|
|
(1)
|
Right-of-use assets for finance leases are included in Property, equipment and software, net on the condensed consolidated balance sheet.
|
|
Three Months Ended March 31, 2019
|
||
Financing lease cost:
|
|
||
Amortization of right-of-use assets
|
$
|
6,756
|
|
Interest on lease liabilities
|
307
|
|
|
Total finance lease cost
|
7,063
|
|
|
Operating lease cost
|
8,474
|
|
|
Variable lease cost
|
892
|
|
|
Short-term lease cost
|
41
|
|
|
Sublease income, gross
|
(1,312
|
)
|
|
Total lease cost
|
$
|
15,158
|
|
|
Finance Leases
|
|
Operating Leases
|
||||
Remaining in 2019
|
$
|
11,373
|
|
|
$
|
26,612
|
|
2020
|
7,654
|
|
|
31,932
|
|
||
2021
|
4,806
|
|
|
26,998
|
|
||
2022
|
715
|
|
|
26,114
|
|
||
2023
|
12
|
|
|
21,917
|
|
||
Thereafter
|
—
|
|
|
32,600
|
|
||
Total minimum lease payments
|
24,560
|
|
|
166,173
|
|
||
Less: Amount representing interest
|
(1,272
|
)
|
|
(24,964
|
)
|
||
Present value of net minimum lease payments
|
23,288
|
|
|
141,209
|
|
||
Less: Current portion of lease obligations
|
(12,596
|
)
|
|
(30,210
|
)
|
||
Total long-term lease obligations
|
$
|
10,692
|
|
|
$
|
110,999
|
|
|
Subleases
|
||
Remaining in 2019
|
$
|
3,905
|
|
2020
|
5,027
|
|
|
2021
|
5,065
|
|
|
2022
|
5,103
|
|
|
2023
|
4,385
|
|
|
Thereafter
|
4,891
|
|
|
Total future sublease income
|
$
|
28,376
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Cost of revenue
|
$
|
378
|
|
|
$
|
396
|
|
Marketing
|
1,425
|
|
|
1,794
|
|
||
Selling, general and administrative
|
14,608
|
|
|
17,088
|
|
||
Other income (expense), net
|
—
|
|
|
48
|
|
||
Total stock-based compensation expense
|
$
|
16,411
|
|
|
$
|
19,326
|
|
|
Restricted Stock Units
|
|
Weighted-Average Grant Date Fair Value (per unit)
|
|||
Unvested at December 31, 2018
|
26,623,432
|
|
|
$
|
4.47
|
|
Granted
|
5,759,900
|
|
|
3.89
|
|
|
Vested
|
(3,382,842
|
)
|
|
4.43
|
|
|
Forfeited
|
(2,828,751
|
)
|
|
4.39
|
|
|
Unvested at March 31, 2019
|
26,171,739
|
|
|
4.35
|
|
|
Performance Share Units
|
|
Weighted-Average Grant Date Fair Value (per unit)
|
|
Market-based Performance Share Units
|
|
Weighted-Average Grant Date Fair Value (per unit)
|
||||||
Unvested at December 31, 2018
|
3,431,918
|
|
|
$
|
4.90
|
|
|
—
|
|
|
$
|
—
|
|
Granted
|
4,013,126
|
|
|
3.96
|
|
|
8,486,708
|
|
|
3.03
|
|
||
Vested
|
(777,573
|
)
|
|
4.88
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
(2,191,878
|
)
|
|
4.90
|
|
|
—
|
|
|
—
|
|
||
Unvested at March 31, 2019
|
4,475,593
|
|
|
4.06
|
|
|
8,486,708
|
|
|
3.03
|
|
|
Options
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Term (in years)
|
|
Aggregate Intrinsic Value (in thousands)
(1)
|
|||||
Outstanding and exercisable at December 31, 2018
|
212,787
|
|
|
$
|
1.80
|
|
|
1.37
|
|
$
|
298
|
|
Exercised
|
(12,500
|
)
|
|
0.68
|
|
|
|
|
|
|||
Outstanding and exercisable at March 31, 2019
|
200,287
|
|
|
$
|
1.85
|
|
|
1.14
|
|
$
|
340
|
|
(1)
|
The aggregate intrinsic value of options outstanding and exercisable represents the total pretax intrinsic value (the difference between the fair value of our 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, 2019
and
December 31, 2018
.
|
|
Customer Credits
|
||
Balance as of December 31, 2018
|
$
|
15,118
|
|
Credits issued
|
27,803
|
|
|
Credits redeemed
(1)
|
(25,020
|
)
|
|
Breakage revenue recognized
|
(2,560
|
)
|
|
Foreign currency translation
|
62
|
|
|
Balance as of March 31, 2019
|
$
|
15,403
|
|
(1)
|
Customer credits can be redeemed through our online marketplaces for goods or services provided by a third-party merchant or for merchandise inventory sold by us. When customer credits are redeemed for goods or services provided by a third-party merchant, service revenue is recognized on a net basis as the difference between the carrying amount of the customer credit liability derecognized and the amount due to the merchant for the related transaction. When customer credits are redeemed for merchandise inventory sold by us, product revenue is recognized on a gross basis equal to the amount of the customer credit liability derecognized. Customer credits are typically used within one year of issuance.
|
|
|
|
Fair Value Measurement at Reporting Date Using
|
||||||||||||
|
March 31, 2019
|
|
Quoted Prices in Active Markets for
Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Fair value option investments
|
$
|
32,494
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
32,494
|
|
Available-for-sale securities - redeemable preferred shares
|
10,394
|
|
|
—
|
|
|
—
|
|
|
10,394
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
1,586
|
|
|
—
|
|
|
—
|
|
|
1,586
|
|
|
|
|
Fair Value Measurement at Reporting Date Using
|
||||||||||||
|
December 31, 2018
|
|
Quoted Prices in Active Markets for
Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Fair value option investments
|
$
|
73,902
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
73,902
|
|
Available-for-sale securities - redeemable preferred shares
|
10,340
|
|
|
—
|
|
|
—
|
|
|
10,340
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
1,529
|
|
|
—
|
|
|
—
|
|
|
1,529
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Fair value option investments:
|
|
|
|
||||
Beginning Balance
|
$
|
73,902
|
|
|
$
|
82,966
|
|
Total gains (losses) included in earnings
|
(41,408
|
)
|
|
(5,033
|
)
|
||
Ending Balance
|
$
|
32,494
|
|
|
$
|
77,933
|
|
Unrealized gains (losses) still held
(1)
|
$
|
(41,408
|
)
|
|
$
|
(5,033
|
)
|
Available-for-sale securities
|
|
|
|
||||
Convertible debt securities:
|
|
|
|
||||
Beginning Balance
|
$
|
—
|
|
|
$
|
11,354
|
|
Total gains (losses) included in other comprehensive income (loss)
|
—
|
|
|
(501
|
)
|
||
Total gains (losses) included in earnings
(2)
|
—
|
|
|
217
|
|
||
Ending Balance
|
$
|
—
|
|
|
$
|
11,070
|
|
Unrealized gains (losses) still held
(1)
|
$
|
—
|
|
|
$
|
(284
|
)
|
Redeemable preferred shares:
|
|
|
|
||||
Beginning Balance
|
$
|
10,340
|
|
|
$
|
15,431
|
|
Total gains (losses) included in other comprehensive income (loss)
|
54
|
|
|
—
|
|
||
Impairment included in earnings
|
—
|
|
|
(855
|
)
|
||
Ending Balance
|
$
|
10,394
|
|
|
$
|
14,576
|
|
Unrealized gains (losses) still held
(1)
|
$
|
54
|
|
|
$
|
(855
|
)
|
Liabilities
|
|
|
|
||||
Contingent Consideration:
|
|
|
|
||||
Beginning Balance
|
$
|
1,529
|
|
|
$
|
—
|
|
Total losses (gains) included in earnings
|
22
|
|
|
—
|
|
||
Foreign currency translation
|
35
|
|
|
—
|
|
||
Ending Balance
|
$
|
1,586
|
|
|
$
|
—
|
|
Unrealized gains (losses) still held
(1)
|
$
|
22
|
|
|
$
|
—
|
|
(1)
|
Represents the unrealized gains or losses 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 a gain at maturity of a previously impaired convertible debt security, accretion of interest income and changes in the fair value of an embedded derivative.
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Basic and diluted net income (loss) per share:
|
|
|
|
||||
Numerator
|
|
|
|
||||
Net income (loss) - continuing operations
|
$
|
(41,170
|
)
|
|
$
|
(2,795
|
)
|
Less: Net income (loss) attributable to noncontrolling interests
|
3,479
|
|
|
4,093
|
|
||
Net income (loss) attributable to common stockholders - continuing operations
|
(44,649
|
)
|
|
(6,888
|
)
|
||
Net income (loss) attributable to common stockholders - discontinued operations
|
2,162
|
|
|
—
|
|
||
Net income (loss) attributable to common stockholders
|
$
|
(42,487
|
)
|
|
$
|
(6,888
|
)
|
Denominator
|
|
|
|
||||
Weighted-average common shares outstanding
|
570,095,128
|
|
|
561,735,937
|
|
||
|
|
|
|
||||
Basic and diluted net income (loss) per share:
|
|
|
|
||||
Continuing operations
|
$
|
(0.08
|
)
|
|
$
|
(0.01
|
)
|
Discontinued operations
|
0.01
|
|
|
0.00
|
|
||
Basic and diluted net income (loss) per share
|
$
|
(0.07
|
)
|
|
$
|
(0.01
|
)
|
|
Three Months Ended March 31,
|
||||
|
2019
|
|
2018
|
||
Restricted stock units
|
27,088,851
|
|
|
28,033,489
|
|
Other stock-based compensation awards
|
1,752,744
|
|
|
3,212,026
|
|
Convertible senior notes
|
46,296,300
|
|
|
46,296,300
|
|
Warrants
|
46,296,300
|
|
|
46,296,300
|
|
Total
|
121,434,195
|
|
|
123,838,115
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
North America
|
|
|
|
||||
Service revenue:
|
|
|
|
||||
Local
|
$
|
180,377
|
|
|
$
|
187,411
|
|
Goods
|
3,127
|
|
|
4,874
|
|
||
Travel
|
18,941
|
|
|
20,084
|
|
||
Product revenue - Goods
|
154,720
|
|
|
180,887
|
|
||
Total North America revenue
(1)
|
357,165
|
|
|
393,256
|
|
||
|
|
|
|
||||
International
|
|
|
|
||||
Service revenue:
|
|
|
|
||||
Local
|
73,190
|
|
|
74,578
|
|
||
Goods
|
1,455
|
|
|
3,414
|
|
||
Travel
|
8,737
|
|
|
11,436
|
|
||
Product revenue - Goods
|
137,863
|
|
|
143,856
|
|
||
Total International revenue
(1)
|
$
|
221,245
|
|
|
$
|
233,284
|
|
(1)
|
North America includes revenue from the United States of
$348.8 million
and
$385.4 million
for the
three months ended March 31, 2019
and
2018
. International includes revenue from the United Kingdom of
$81.1 million
and
$83.0 million
for the
three months ended March 31, 2019
and
2018
. There were no other individual countries that represented more than 10% of consolidated total revenue for the
three months ended March 31, 2019
and
2018
. Revenue is attributed to individual countries based on the location of the customer.
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
North America
|
|
|
|
||||
Service gross profit:
|
|
|
|
||||
Local
|
$
|
161,082
|
|
|
$
|
166,756
|
|
Goods
|
2,563
|
|
|
3,941
|
|
||
Travel
|
15,268
|
|
|
16,002
|
|
||
Product gross profit - Goods
|
30,889
|
|
|
32,981
|
|
||
Total North America gross profit
|
209,802
|
|
|
219,680
|
|
||
|
|
|
|
||||
International
|
|
|
|
||||
Service gross profit:
|
|
|
|
||||
Local
|
68,978
|
|
|
70,215
|
|
||
Goods
|
1,268
|
|
|
3,087
|
|
||
Travel
|
8,041
|
|
|
10,651
|
|
||
Product gross profit - Goods
|
17,927
|
|
|
21,252
|
|
||
Total International gross profit
|
$
|
96,214
|
|
|
$
|
105,205
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Operating income (loss)
(1)
:
|
|
|
|
||||
North America
|
$
|
5,336
|
|
|
$
|
(1,860
|
)
|
International
|
(3,141
|
)
|
|
5,245
|
|
||
Total operating income (loss)
|
$
|
2,195
|
|
|
$
|
3,385
|
|
(1)
|
Includes stock-based compensation of
$14.8 million
and
$17.9 million
for North America and
$1.6 million
and
$1.4 million
for International for the
three months ended March 31, 2019
and
2018
.
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Total assets:
|
|
|
|
||||
North America
(1)
|
$
|
918,502
|
|
|
$
|
958,412
|
|
International
(1)
|
587,510
|
|
|
683,730
|
|
||
Consolidated total assets
|
$
|
1,506,012
|
|
|
$
|
1,642,142
|
|
(1)
|
North America contains assets from the United States of
$899.5 million
and
$940.5 million
as of
March 31, 2019
and
December 31, 2018
. International contains assets from Ireland of
$204.6 million
as of
December 31, 2018
. Assets from Ireland were less than 10% of consolidated total assets as of
March 31, 2019
. There were no other individual countries that represented more than
10%
of consolidated total assets as of
March 31, 2019
and
December 31, 2018
.
|
•
|
Revenue
is earned through product and service revenue transactions. We earn product revenue from direct sales of merchandise inventory in our Goods category and report product revenue on a gross basis as the purchase price received from the customer. We earn service revenue from transactions in which we generate commissions by selling goods or services on behalf of third-party merchants, primarily through sales of vouchers and similar transactions in which we collect the transaction price from the customer and remit a portion of that transaction price to the third-party merchant who will provide the related goods or services. We report service revenue from those transactions on a net basis as the purchase price collected from the customer less the portion of the purchase price that is payable to the third-party merchant. Service revenue also includes commissions we earn when customers make purchases with retailers using digital coupons accessed through our websites and mobile applications and from voucherless merchant offerings in which customers earn cash back on their credit card statements when they transact with third-party merchants.
|
•
|
Gross profit
reflects the net margin we earn after deducting our cost of revenue from our revenue. Due to the lack of comparability between product revenue, which is reported on a gross basis, and service revenue, which primarily consists of transactions reported on a net basis, we believe that gross profit is an important measure for evaluating our performance.
|
•
|
Adjusted EBITDA
is a non-GAAP financial measure that we define as net income (loss) from continuing operations excluding income taxes, interest and other non-operating items, depreciation and amortization, stock-based compensation, acquisition-related expense (benefit), net and other special charges and credits, including items that are unusual in nature or infrequently occurring. For further information and a reconciliation to Income (loss) from continuing operations, refer to our discussion under Non-GAAP Financial Measures in the
Results of Operations
section.
|
•
|
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. For further information and a reconciliation to Net cash provided by (used in) operating activities from continuing operations, refer to our discussion in the
Liquidity
and
Capital Resources
section.
|
•
|
Gross billings
is the total dollar value of customer purchases of goods and services. Gross billings is
presented net of customer refunds, order discounts and sales and related taxes.
The substantial majority of our service revenue transactions are comprised of sales of vouchers and similar transactions in which we collect the transaction price from the customer and remit a portion of the transaction price to the third-party merchant who will provide the related goods or services. For these transactions, gross billings differs from revenue reported in our condensed consolidated statements of operations, which is presented net of the merchant's share of the transaction price. For product revenue transactions, gross billings are equivalent to product revenue reported in our condensed consolidated statements of operations. Gross billings is an indicator of our growth and business performance as it measures the dollar volume of transactions generated through our marketplaces. Tracking gross billings on service revenue transactions also allows us to monitor the percentage of gross billings that we are able to retain after payments to merchants. However, management is primarily focused on optimizing the business for long-term gross profit and adjusted EBITDA growth.
|
•
|
Active customers
are
unique user accounts that have made a purchase during the trailing twelve months ("TTM") either through one of our online marketplaces or directly with a merchant for which we earned a commission. We consider this metric to be an important indicator of our business performance as it helps us
|
•
|
Gross billings and gross profit per active customer
are the TTM gross billings and gross profit generated per active customer. We use these metrics to evaluate trends in customer spend and in the average contribution to gross billings and gross profit on a per-customer basis.
|
•
|
Units
is
the number of purchases during the reporting period, before refunds and cancellations, made either through one of our online marketplaces or directly with a merchant for which we earn a commission. We do not include purchases with retailers using digital coupons accessed through our websites and mobile applications in our units metric. 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,
|
||||||
|
2019
|
|
2018
|
||||
TTM Active customers (in thousands)
|
47,177
|
|
|
49,680
|
|
||
TTM Gross billings per active customer
|
$
|
107.80
|
|
|
$
|
112.34
|
|
TTM Gross profit per active customer
|
$
|
27.59
|
|
|
$
|
27.16
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
|
|
|
|
|
|
|
|||||||
Service gross billings:
|
|
|
|
|
|
|
|
|||||||
Local
|
$
|
502,309
|
|
|
$
|
543,021
|
|
|
$
|
(40,712
|
)
|
|
(7.5
|
)%
|
Goods
|
19,918
|
|
|
28,589
|
|
|
(8,671
|
)
|
|
(30.3
|
)
|
|||
Travel
|
92,083
|
|
|
102,499
|
|
|
(10,416
|
)
|
|
(10.2
|
)
|
|||
Total service gross billings
|
614,310
|
|
|
674,109
|
|
|
(59,799
|
)
|
|
(8.9
|
)
|
|||
Product gross billings - Goods
|
154,720
|
|
|
180,887
|
|
|
(26,167
|
)
|
|
(14.5
|
)
|
|||
Total North America gross billings
|
769,030
|
|
|
854,996
|
|
|
(85,966
|
)
|
|
(10.1
|
)
|
|||
|
|
|
|
|
|
|
|
|||||||
International
|
|
|
|
|
|
|
|
|||||||
Service gross billings:
|
|
|
|
|
|
|
|
|||||||
Local
|
207,396
|
|
|
217,307
|
|
|
(9,911
|
)
|
|
(4.6
|
)
|
|||
Goods
|
9,780
|
|
|
19,583
|
|
|
(9,803
|
)
|
|
(50.1
|
)
|
|||
Travel
|
51,939
|
|
|
57,522
|
|
|
(5,583
|
)
|
|
(9.7
|
)
|
|||
Total service gross billings
|
269,115
|
|
|
294,412
|
|
|
(25,297
|
)
|
|
(8.6
|
)
|
|||
Product gross billings - Goods
|
137,863
|
|
|
143,856
|
|
|
(5,993
|
)
|
|
(4.2
|
)
|
|||
Total International gross billings
|
406,978
|
|
|
438,268
|
|
|
(31,290
|
)
|
|
(7.1
|
)
|
|||
Total gross billings
|
$
|
1,176,008
|
|
|
$
|
1,293,264
|
|
|
$
|
(117,256
|
)
|
|
(9.1
|
)
|
|
Three Months Ended March 31, 2019
|
||||||||||
|
At Avg. Q1 2018 Rates
(1)
|
|
Exchange Rate Effect
(2)
|
|
As Reported
|
||||||
Gross billings
|
$
|
1,208,276
|
|
|
$
|
(32,268
|
)
|
|
$
|
1,176,008
|
|
(1)
|
Represents the financial statement balances 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.
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
|
|
|
|
|
|
|
|||||||
Service revenue:
|
|
|
|
|
|
|
|
|||||||
Local
|
$
|
180,377
|
|
|
$
|
187,411
|
|
|
$
|
(7,034
|
)
|
|
(3.8
|
)%
|
Goods
|
3,127
|
|
|
4,874
|
|
|
(1,747
|
)
|
|
(35.8
|
)
|
|||
Travel
|
18,941
|
|
|
20,084
|
|
|
(1,143
|
)
|
|
(5.7
|
)
|
|||
Total service revenue
|
202,445
|
|
|
212,369
|
|
|
(9,924
|
)
|
|
(4.7
|
)
|
|||
Product revenue - Goods
|
154,720
|
|
|
180,887
|
|
|
(26,167
|
)
|
|
(14.5
|
)
|
|||
Total North America revenue
|
357,165
|
|
|
393,256
|
|
|
(36,091
|
)
|
|
(9.2
|
)
|
|||
|
|
|
|
|
|
|
|
|||||||
International
|
|
|
|
|
|
|
|
|||||||
Service revenue:
|
|
|
|
|
|
|
|
|||||||
Local
|
73,190
|
|
|
74,578
|
|
|
(1,388
|
)
|
|
(1.9
|
)
|
|||
Goods
|
1,455
|
|
|
3,414
|
|
|
(1,959
|
)
|
|
(57.4
|
)
|
|||
Travel
|
8,737
|
|
|
11,436
|
|
|
(2,699
|
)
|
|
(23.6
|
)
|
|||
Total service revenue
|
83,382
|
|
|
89,428
|
|
|
(6,046
|
)
|
|
(6.8
|
)
|
|||
Product revenue - Goods
|
137,863
|
|
|
143,856
|
|
|
(5,993
|
)
|
|
(4.2
|
)
|
|||
Total International revenue
|
221,245
|
|
|
233,284
|
|
|
(12,039
|
)
|
|
(5.2
|
)
|
|||
Total revenue
|
$
|
578,410
|
|
|
$
|
626,540
|
|
|
$
|
(48,130
|
)
|
|
(7.7
|
)
|
|
Three Months Ended March 31, 2019
|
||||||||||
|
At Avg. Q1 2018 Rates
(1)
|
|
Exchange Rate Effect
(2)
|
|
As Reported
|
||||||
Revenue
|
$
|
596,123
|
|
|
$
|
(17,713
|
)
|
|
$
|
578,410
|
|
(1)
|
Represents the financial statement balances 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.
|
North America
|
|
International
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
|
|
|
|
|
|
|
|||||||
Service cost of revenue:
|
|
|
|
|
|
|
|
|||||||
Local
|
$
|
19,295
|
|
|
$
|
20,655
|
|
|
$
|
(1,360
|
)
|
|
(6.6
|
)%
|
Goods
|
564
|
|
|
933
|
|
|
(369
|
)
|
|
(39.5
|
)
|
|||
Travel
|
3,673
|
|
|
4,082
|
|
|
(409
|
)
|
|
(10.0
|
)
|
|||
Total service cost of revenue
|
23,532
|
|
|
25,670
|
|
|
(2,138
|
)
|
|
(8.3
|
)
|
|||
Product cost of revenue - Goods
|
123,831
|
|
|
147,906
|
|
|
(24,075
|
)
|
|
(16.3
|
)
|
|||
Total North America cost of revenue
|
147,363
|
|
|
173,576
|
|
|
(26,213
|
)
|
|
(15.1
|
)
|
|||
|
|
|
|
|
|
|
|
|||||||
International
|
|
|
|
|
|
|
|
|||||||
Service cost of revenue:
|
|
|
|
|
|
|
|
|||||||
Local
|
4,212
|
|
|
4,363
|
|
|
(151
|
)
|
|
(3.5
|
)
|
|||
Goods
|
187
|
|
|
327
|
|
|
(140
|
)
|
|
(42.8
|
)
|
|||
Travel
|
696
|
|
|
785
|
|
|
(89
|
)
|
|
(11.3
|
)
|
|||
Total service cost of revenue
|
5,095
|
|
|
5,475
|
|
|
(380
|
)
|
|
(6.9
|
)
|
|||
Product cost of revenue - Goods
|
119,936
|
|
|
122,604
|
|
|
(2,668
|
)
|
|
(2.2
|
)
|
|||
Total International cost of revenue
|
125,031
|
|
|
128,079
|
|
|
(3,048
|
)
|
|
(2.4
|
)
|
|||
Total cost of revenue
|
$
|
272,394
|
|
|
$
|
301,655
|
|
|
$
|
(29,261
|
)
|
|
(9.7
|
)
|
|
Three Months Ended March 31, 2019
|
||||||||||
|
At Avg. Q1 2018 Rates
(1)
|
|
Exchange Rate Effect
(2)
|
|
As Reported
|
||||||
Cost of revenue
|
$
|
282,535
|
|
|
$
|
(10,141
|
)
|
|
$
|
272,394
|
|
(1)
|
Represents the financial statement balances 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.
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
|
|
|
|
|
|
|
|||||||
Service gross profit:
|
|
|
|
|
|
|
|
|||||||
Local
|
$
|
161,082
|
|
|
$
|
166,756
|
|
|
$
|
(5,674
|
)
|
|
(3.4
|
)%
|
Goods
|
2,563
|
|
|
3,941
|
|
|
(1,378
|
)
|
|
(35.0
|
)
|
|||
Travel
|
15,268
|
|
|
16,002
|
|
|
(734
|
)
|
|
(4.6
|
)
|
|||
Total service gross profit
|
178,913
|
|
|
186,699
|
|
|
(7,786
|
)
|
|
(4.2
|
)
|
|||
Product gross profit - Goods
|
30,889
|
|
|
32,981
|
|
|
(2,092
|
)
|
|
(6.3
|
)
|
|||
Total North America gross profit
|
209,802
|
|
|
219,680
|
|
|
(9,878
|
)
|
|
(4.5
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||||
International
|
|
|
|
|
|
|
|
|
||||||
Service gross profit:
|
|
|
|
|
|
|
|
|
||||||
Local
|
68,978
|
|
|
70,215
|
|
|
(1,237
|
)
|
|
(1.8
|
)
|
|||
Goods
|
1,268
|
|
|
3,087
|
|
|
(1,819
|
)
|
|
(58.9
|
)
|
|||
Travel
|
8,041
|
|
|
10,651
|
|
|
(2,610
|
)
|
|
(24.5
|
)
|
|||
Total service gross profit
|
78,287
|
|
|
83,953
|
|
|
(5,666
|
)
|
|
(6.7
|
)
|
|||
Product gross profit - Goods
|
17,927
|
|
|
21,252
|
|
|
(3,325
|
)
|
|
(15.6
|
)
|
|||
Total International gross profit
|
96,214
|
|
|
105,205
|
|
|
(8,991
|
)
|
|
(8.5
|
)
|
|||
Total gross profit
|
$
|
306,016
|
|
|
$
|
324,885
|
|
|
$
|
(18,869
|
)
|
|
(5.8
|
)
|
|
Three Months Ended March 31, 2019
|
||||||||||
|
At Avg. Q1 2018 Rates
(1)
|
|
Exchange Rate Effect
(2)
|
|
As Reported
|
||||||
Gross profit
|
$
|
313,588
|
|
|
$
|
(7,572
|
)
|
|
$
|
306,016
|
|
(1)
|
Represents the financial statement balances 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.
|
|
Three Months Ended March 31,
|
|||||||||||||||||||
|
2019
|
|
% of Gross Profit
|
|
2018
|
|
% of Gross Profit
|
|
$ Change
|
|
% Change
|
|||||||||
Marketing:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
North America
|
$
|
59,799
|
|
|
28.5
|
%
|
|
$
|
71,451
|
|
|
32.5
|
%
|
|
$
|
(11,652
|
)
|
|
(16.3
|
)%
|
International
|
33,598
|
|
|
34.9
|
|
|
27,705
|
|
|
26.3
|
|
|
5,893
|
|
|
21.3
|
|
|||
Total marketing
|
$
|
93,397
|
|
|
30.5
|
|
|
$
|
99,156
|
|
|
30.5
|
|
|
$
|
(5,759
|
)
|
|
(5.8
|
)
|
|
Three Months Ended March 31,
|
|||||||||||||||||||
|
2019
|
|
% of Gross Profit
|
|
2018
|
|
% of Gross Profit
|
|
$ Change
|
|
% Change
|
|||||||||
Selling, general and administrative
|
$
|
210,424
|
|
|
68.8
|
%
|
|
$
|
222,344
|
|
|
68.4
|
%
|
|
$
|
(11,920
|
)
|
|
(5.4
|
)%
|
•
|
a
$6.3 million
favorable impact from year-over-year changes in foreign currency exchange rates;
|
•
|
a
$4.4 million
decrease in compensation-related costs, including variable compensation; and
|
•
|
decreases in facilities costs, system costs, litigation and other general expenses.
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Income (loss) from operations
|
|
|
|
|
|
|
|
|||||||
North America
|
$
|
5,336
|
|
|
$
|
(1,860
|
)
|
|
$
|
7,196
|
|
|
386.9
|
%
|
International
|
(3,141
|
)
|
|
5,245
|
|
|
(8,386
|
)
|
|
(159.9
|
)
|
|||
Total income (loss) from operations
|
$
|
2,195
|
|
|
$
|
3,385
|
|
|
$
|
(1,190
|
)
|
|
(35.2
|
)
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Other income (expense), net
|
$
|
(46,855
|
)
|
|
$
|
(8,515
|
)
|
|
$
|
(38,340
|
)
|
|
(450.3
|
)%
|
•
|
$41.4 million
of net losses on our fair value option investments. See Item 1, Note
3
,
Investments
, for additional information;
|
•
|
$5.7 million
of interest expense primarily related to interest on our convertible notes; and
|
•
|
$1.7 million
in foreign currency losses, which primarily resulted from intercompany balances with our subsidiaries that are denominated in foreign currencies.
|
•
|
$5.0 million
of net losses on our fair value option investments. See Item 1, Note
3
,
Investments
, for additional information; and
|
•
|
$5.5 million
of interest expense.
|
•
|
$1.4 million
in foreign currency gains, which primarily resulted from intercompany balances with our subsidiaries that are denominated in foreign currencies; and
|
•
|
$1.5 million
in interest income.
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Provision (benefit) for income taxes
|
$
|
(3,490
|
)
|
|
$
|
(2,335
|
)
|
|
$
|
(1,155
|
)
|
|
(49.5
|
)%
|
Effective tax rate
|
7.8
|
%
|
|
45.5
|
%
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Income (loss) from continuing operations
|
$
|
(41,170
|
)
|
|
$
|
(2,795
|
)
|
Adjustments:
|
|
|
|
|
|||
Stock-based compensation
(1)
|
16,411
|
|
|
19,278
|
|
||
Depreciation and amortization
|
28,416
|
|
|
29,661
|
|
||
Restructuring charges
|
(67
|
)
|
|
283
|
|
||
Other (income) expense, net
|
46,855
|
|
|
8,515
|
|
||
Provision (benefit) for income taxes
|
(3,490
|
)
|
|
(2,335
|
)
|
||
Total adjustments
|
88,125
|
|
|
55,402
|
|
||
Adjusted EBITDA
|
$
|
46,955
|
|
|
$
|
52,607
|
|
(1)
|
Represents stock-based compensation expense recorded within Selling, general and administrative, Cost of revenue and Marketing.
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(147,483
|
)
|
|
$
|
(119,747
|
)
|
Investing activities
|
(18,115
|
)
|
|
(20,382
|
)
|
||
Financing activities
|
(27,777
|
)
|
|
(20,899
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Net cash provided by (used in) operating activities from continuing operations
|
$
|
(147,483
|
)
|
|
$
|
(119,747
|
)
|
Purchases of property and equipment and capitalized software from continuing operations
|
(17,477
|
)
|
|
(20,144
|
)
|
||
Free cash flow
|
$
|
(164,960
|
)
|
|
$
|
(139,891
|
)
|
•
|
our ability to maintain merchant and customer satisfaction such that our marketplace will continue to attract high quality merchants;
|
•
|
our ability to successfully respond to macroeconomic challenges, including by optimizing our deal mix to take into account consumer preferences at a particular point in time;
|
•
|
political, economic and civil instability and uncertainty (including acts of terrorism, civil unrest, labor unrest, violence and outbreaks of war);
|
•
|
currency exchange rate fluctuations;
|
•
|
strong local competitors, who may better understand the local market and/or have greater resources in the local market;
|
•
|
different regulatory or other legal requirements (including potential fines and penalties that may be imposed for failure to comply with those requirements), such as regulation of gift cards and coupon terms, Internet services, professional selling, distance selling, bulk emailing, privacy and data protection (including GDPR, which became effective in May 2018), cybersecurity, business licenses and certifications, taxation (including the European Union's voucher directive, digital service tax and similar regulations), consumer protection laws including those restricting the types of services we may offer (e.g., medical-related services), banking and money transmitting, that may limit or prevent the offering of our services in some jurisdictions, cause unanticipated compliance expenses or limit our ability to enforce contractual obligations;
|
•
|
our ability to use a common technology platform in our North America and International segments to operate our business without significant business interruptions or delays;
|
•
|
difficulties in integrating with local payment providers, including banks, credit and debit card networks and electronic funds transfer systems;
|
•
|
different employee and employer relationships and the existence and actions of workers' councils and labor unions;
|
•
|
difficulty in staffing, developing and managing foreign operations, including through centralized shared service centers, as a result of distance, language barriers and cultural differences;
|
•
|
seasonal reductions in business activity;
|
•
|
expenses associated with localizing our products; and
|
•
|
differing intellectual property laws.
|
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
|
||||||
January 1-31, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
290,000,000
|
|
February 1-28, 2019
|
|
743,246
|
|
|
3.33
|
|
|
743,246
|
|
|
287,531,397
|
|
||
March 1-31, 2019
|
|
3,664,749
|
|
|
3.43
|
|
|
3,664,749
|
|
|
275,000,002
|
|
||
Total
|
|
4,407,995
|
|
|
$
|
3.42
|
|
|
4,407,995
|
|
|
$
|
275,000,002
|
|
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, 2019
|
|
256,551
|
|
|
$
|
3.59
|
|
|
—
|
|
|
—
|
|
February 1-28, 2019
|
|
408,817
|
|
|
3.81
|
|
|
—
|
|
|
—
|
|
|
March 1-31, 2019
|
|
920,360
|
|
|
3.48
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
1,585,728
|
|
|
$
|
3.58
|
|
|
—
|
|
|
—
|
|
(1)
|
Total number of shares delivered to us by employees to satisfy the mandatory tax withholding requirement upon vesting of stock-based compensation awards.
|
Exhibit
Number
|
|
Description
|
10.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
GROUPON, INC.
|
|||
By:
|
|
/s/ Michael Randolfi
|
|
|
|
Name:
|
Michael Randolfi
|
|
|
Title:
|
Chief Financial Officer
|
1.
|
Name:
[____________] (the “Participant”)
|
2.
|
Address:
[________]
|
3.
|
Grant Date:
[____]
|
4.
|
Performance Period:
the period commencing on the Grant Date and ending on December 31, 2022 (the “Performance Period”).
|
5.
|
Performance Condition; Vesting:
|
a)
|
If the Performance Condition (defined below) is achieved prior to the end of the Performance Period, the PSUs shall become fully vested, provided that (i) the Committee has certified the attainment of the Performance Condition (the date of such certification, the “Vesting Date”) and (ii) the Participant has not experienced a Termination Date prior to the Vesting Date, except as expressly set forth herein. Except as set forth in Section 8 of this Notice, if the Performance Condition is not attained during the Performance Period, no PSUs will be earned.
|
b)
|
“Performance Condition” means the Company’s achievement of an average closing price per Share (as reported on the Nasdaq Global Select Market) of $6.00 or more for any period of 30 consecutive trading days.
|
6.
|
Settlement:
On the Vesting Date, the Participant shall become entitled to receive the number of Shares equal to the total number of PSUs set forth in this Notice, subject to any tax withholding obligation with respect to any Tax-Related Items (as defined in Section 3 of the Agreement). Delivery of such Shares shall be made as soon as practicable following the Vesting Date, but
|
7.
|
Termination of Employment/Service:
If the Participant experiences a Termination Date prior to the Vesting Date, all PSUs awarded in this Notice and the Agreement shall be forfeited, and all rights of the Participant to such PSUs shall immediately terminate;
provided
,
however
, if the Vesting Date occurs on or within 120 days following a termination of the Participant’s employment or service by the Company without Cause or a termination of such employment or service by the Participant for Good Reason (each, as defined in the Participant’s SBA with the Company), then the PSUs shall vest on the same terms and conditions that would have applied had the Participant not experienced such termination of employment or service. Other than with respect to the incorporation of the defined terms noted above, the PSUs granted pursuant to this Notice and the Agreement shall not be subject to the terms of the SBA between the Participant and the Company.
|
8.
|
Change in Control:
Notwithstanding the foregoing, the following provisions shall apply upon a Change in Control that occurs during the Performance Period, and provided that the Participant does not experience a Termination Date prior to the date of such Change in Control (except as set forth in Section 8(d) below):
|
a)
|
Subject to Section 8(c) below, if the price per Share paid in connection with such Change in Control equals or exceeds $6.00, then 100% of the PSUs shall become immediately vested and nonforfeitable on the date of such Change in Control.
|
b)
|
Subject to Section 8(c) below, if the price per Share paid in connection with such Change in Control is less than $6.00, then a portion of the PSUs shall become immediately vested and nonforfeitable as of the date of such Change in Control, which portion shall be based on a linear interpolation of the price per Share paid in connection with such Change in Control between (i) the closing trading price per Share as of the Grant Date and (ii) $6.00 (e.g., if the closing trading price per Share as of the Grant Date were $3.00 and price per Share paid in connection with the Change in Control were $4.50, then 50% of the PSUs would become immediately vested and nonforfeitable). For the avoidance of doubt, any remaining portion of the PSUs that do not vest in accordance with the preceding sentence will be forfeited, and all of the PSUs will be forfeited if the price per Share paid in connection with the Change in Control is not greater than the closing trading price per Share as of the Grant Date.
|
c)
|
If a mutual agreement in principle between the Company and a third party (e.g., term sheet, letter of intent or similar non-binding agreement) or a definitive agreement for a Change in Control is executed within 90 days following the Grant
|
d)
|
Notwithstanding any other provision contained herein, if the Participant’s employment or service is terminated by the Company without Cause or by the Participant for Good Reason, in each case within 120 days prior to the date of a Change in Control that occurs during the Performance Period, then the PSUs shall vest on the same terms and conditions that would have applied had the Participant not experienced such termination of employment or service.
|
9.
|
Share Price Adjustment:
All Share prices contained in this Notice shall be subject to equitable adjustment in the case of an adjustment pursuant to Section 5.2 of the Plan.
|
10.
|
General Terms:
The Participant understands that his or her employment with or service to the Company is for an unspecified duration, can be terminated at any time in accordance with applicable law, and that nothing in this Notice, the Agreement, or the Plan changes the nature of that relationship. The Participant acknowledges that the vesting of the PSUs pursuant to this Notice and the Agreement is conditioned on the achievement of the Performance Condition and his or her continued employment or service through the Vesting Date, except as otherwise indicated above. The Participant understands that this Notice is subject to the terms and conditions of the Agreement and the Plan prospectus that contains the entire plan, both of which are incorporated herein by reference. The Participant represents and warrants that the Participant has received and read this Notice, the Agreement, and the Plan. If there are any inconsistencies between this Notice or Agreement and the Plan, the terms of the Plan will govern.
|
1.
|
No Stockholder Rights.
Unless and until such time as Shares are issued in settlement of vested PSUs, the Participant shall have no ownership of the Shares underlying the PSUs and shall have no right to receive dividends or dividend equivalents with respect to such Shares or to vote such Shares.
|
2.
|
No Transfer.
Awards under the Plan are not transferable except to the Participant’s Beneficiary upon the death of the Participant.
|
3.
|
Tax Withholding Obligations.
|
(i)
|
Withholding from any wages or other cash compensation paid to the Participant by the Company; or
|
(ii)
|
Withholding from the proceeds of the sale of Shares acquired upon vesting/settlement of the PSUs either through a voluntary sale or through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization).
|
(c)
|
To avoid negative accounting treatment, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant shall be deemed to have been issued the full number of Shares subject to the vested PSUs, notwithstanding that a number of Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Participant’s participation in the Plan. Finally, the Participant shall pay to the Company any amount of Tax-Related Items that the Company may be required to withhold as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to deliver the Shares or proceeds of the sale of Shares if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
|
4.
|
Compliance with Laws and Regulations.
The issuance of Shares underlying the PSUs will be subject to and conditioned upon compliance by the Company and the Participant (including any written representations, warranties and agreements as the Committee may request of the Participant for compliance with all applicable laws) with all applicable state, federal, local and foreign laws and regulations of any governmental authority, including adopting any such conforming amendments as are necessary to comply with Section 409A of the Code, and with all applicable requirements of any national or regional securities exchange or quotation system on which the Shares may be listed or quoted at the time of such issuance or transfer.
|
5.
|
No Advice Regarding Award
. The Company is not providing any tax, legal, or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding the Participant’s participation in the Plan before taking any action related to the Plan.
|
6.
|
Legend on Certificates.
The certificates and/or book-entry notation representing the Shares issued hereunder shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan, this Agreement or the rules, regulations, and other requirements of the U.S. Securities and Exchange Commission, any national or regional securities exchange or quotation system upon which such Shares are listed, and any applicable federal, state, local and foreign laws, and the Committee may cause a legend or legends, electronic or otherwise, to be put on any such certificates and/or book-entry notation to make appropriate reference to such restrictions.
|
7.
|
Market Standoff Agreement.
The Participant agrees that in connection with any registration of the Company’s securities that, upon the request of the Company or the underwriters managing any public offering of the Company’s securities, the Participant will not sell or otherwise dispose of any Shares without the prior written consent of the Company or such underwriters, as the case may be, for such reasonable period of time after the effective date of such registration as may be requested by such managing underwriters and subject to all restrictions as the Company or the underwriters may specify. The Participant will enter into any agreement reasonably required by the underwriters to implement the foregoing.
|
8.
|
Successors and Assigns.
The Company may assign any of its rights under this Agreement. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Participant and the Participant’s heirs, executors, administrators, legal representatives, successors and assigns.
|
9.
|
Entire Agreement; Severability.
The Plan and the Notice are incorporated herein by reference. Except with respect to certain defined terms specifically incorporated from the Participant’s severance benefit agreement with the Company (the “SBA”), the Plan, the Notice and this Agreement supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the 2019 Supplemental PSUs. If any provision of this Agreement is determined by a court of law to be illegal or unenforceable, then such provision will be enforced to the maximum extent possible and the other provisions will remain fully effective and enforceable.
|
10.
|
Waiver.
Waiver of any term or condition of this Agreement by any party shall not be construed as a waiver of a subsequent breach or failure of the same term or condition, or a waiver of any other term or condition of this Agreement. Any waiver must be in writing.
|
11.
|
Governing Law and Venue.
The validity, interpretation, instruction, performance, enforcement and remedies of or relating to this Agreement, and the rights and obligations of the parties hereunder, shall be governed by and construed in accordance with the substantive laws of the State of Delaware, without regard to the conflict of law principles, rules or statutes of any jurisdiction. For the purpose of litigating any dispute that arises under this Agreement, the parties hereby consent to the exclusive jurisdiction and agree that such litigation shall be conducted in the federal or state courts of the State of Illinois.
|
12.
|
Notices.
Any notice or document required to be filed with the Committee or the Company under the Plan must be in writing and will be properly filed if delivered or mailed to the Company’s Human Resources Department
at the Company’s principal executive offices. If intended for the Participant, notices shall be delivered personally or shall be addressed (if sent by mail) to the Participant’s then current residence address as shown on the Company’s records, or to such other address as the Participant directs in a notice to the Company, or shall be delivered electronically to the Participant’s email address as shown on the Company’s records. All notices shall be deemed to be given on the date received at the address of the addressee or, if delivered personally or electronically, on the date delivered. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan through an on-line or electronic system established and maintained by the Company or its designee. The Company may, by written notice to affected
|
13.
|
Need to Accept Award.
The Participant acknowledges that the Notice and this Agreement must be accepted within 90 days of the Grant Date in order to be eligible to receive any benefits from this Award. If this Award is not accepted within that time period, the Award may be cancelled and all benefits under this Award will be forfeited. To accept this Award, the Participant must access the Merrill Lynch website and follow the instructions for acceptance. If this grant was distributed to the Participant in hard copy format, the Participant must sign the agreement and return it to the Company’s Compensation Department within 90 days.
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|