0001490281-25-000039
SEC filingGroupon's Q2 2025 revenue grew +0.9% YoY with gross margin improvement, driven by North America Local segment growth.
Groupon's second quarter 2025 revenue increased 0.9% year-over-year to $125.7 million, driven entirely by North America (+1.7%) as International declined 2.1%. Gross profit rose 1.6% to $114.4 million, with gross margin expanding to 91.0% from 90.4% due to lower cost of revenue, particularly from decreased amortization of internally-developed software. Operating income surged to $13.1 million from $4.4 million, reflecting a 690 bps operating margin expansion to 10.4% as SG&A declined 8.5% and a $10.7 million gain on sale of business boosted other income. Net income from continuing operations was $20.6 million versus a loss of $9.4 million in the prior year, primarily due to a $24.8 million favorable swing in net foreign currency gains. Adjusted EBITDA fell 5.6% to $15.6 million as marketing expense increased 13.4% to $41.4 million, with marketing as a percentage of gross profit rising from 32.4% to 36.2%.
North America: Revenue grew 1.7% to $100.0 million, with Local revenue up 3.0% (lagging gross billings growth of 20% due to higher redemptions and lower deal margins). Goods revenue cratered 58.2% as the company de-emphasizes the category. Gross profit increased 2.9% to $91.4 million. Contribution profit declined 1.9% to $58.3 million as marketing spend increased 12.5% to $33.2 million (33.2% of revenue versus 30.0% a year ago).
International: Revenue fell 2.1% to $25.7 million, with Local down 0.9% but up 7% excluding the Giftcloud divestiture and Italy market exit. Goods and Travel declined due to lower site traffic. Gross profit decreased 3.3% to $23.0 million. Contribution profit dropped 11.9% to $14.8 million as marketing increased 17.0% to $8.2 million (32.1% of revenue versus 26.8%). Foreign exchange had a favorable $1.2 million impact on revenue.
Management continues to focus on the Local experiences marketplace, investing in performance marketing to drive customer acquisition while improving technology and platform efficiency. The company highlighted the recent Italy tax assessment agreement in principle, reducing potential liability from $169.5 million to approximately $14.9 million, subject to regulatory approvals. No specific revenue or earnings guidance was provided, but the company noted sufficient liquidity to support operations and repay the remaining $33.7 million of 2026 Notes due in March 2026. The strategic de-emphasis of the Goods category is expected to persist, while Local gross billings momentum from transformation efforts (NA +20%, International ex-Giftcloud/Italy +15%) suggests continued mix shift toward higher-margin local services.
Cash and cash equivalents totaled $262.6M at June 30, 2025, up from $228.8M at year-end 2024. Total debt comprises $53.7M principal of 2026 Convertible Notes (carrying $53.5M) and $197.3M principal of 2027 Convertible Senior Secured Notes (carrying $193.4M), net of discounts. The current portion of debt is $33.5M. The Company has no revolving credit facility; letters of credit are cash-collateralized ($32.8M). Total equity was $51.3M, including accumulated deficit of ($1.48B).
Note 7 states contractual obligations and commitments did not materially change from the 2024 Annual Report. Material contingencies include a Portugal VAT assessment ($4.6M recorded liability, $4.4M bank guarantee) and an Italy tax dispute (Italy 2012 Assessment of $134.4M, but no liability recorded as of June 30, 2025; subsequent agreement in principle in August 2025 expected to reduce exposure to ~$15M net). No other material purchase commitments disclosed.
No share repurchases or dividends were declared or paid during the period. The Company issued no new debt during Q2 2025; however, subsequent to quarter-end on July 2, 2025, it exchanged $20M of 2026 Notes and $150M of 2027 Notes for $244.1M of 4.875% Convertible Senior Notes due 2030. Capital expenditures (purchases of property, equipment, and software) were $7.0M in the first half of 2025, representing 2.9% of total revenue of $242.9M.
The Company operates two reportable segments: North America and International. For Q2 2025, North America generated $100.0M revenue (79.6% of total) and $58.3M contribution profit (58.3% margin). International generated $25.7M revenue and $14.8M contribution profit (57.6% margin). Segment contribution profit excludes SG&A and other unallocated items. Segment information is based on geographic market dynamics and is regularly reviewed by the CODM.
Groupon's operating cash flow (CFO) of $28.4M closely tracked net income from continuing operations of $28.6M, indicating strong cash conversion and high earnings quality. The primary adjustments were non-cash items (depreciation, amortization, stock-based compensation) and a $10.7M gain on sale of business. Working capital changes were modest, with accounts receivable decreasing $4.4M and prepaid expenses increasing $3.0M. Capital expenditures (capex) of $7.0M represented a 25% capex intensity relative to CFO, down from 158% in the prior period due to improved CFO. There were no share repurchases or dividends paid. Notable cash outflows included $11.8M in income tax payments and $4.3M in interest. The investing section benefited from $14.0M in proceeds from asset sales, offsetting capex. Overall, cash generation improved significantly year-over-year, driven by reduced losses and favorable working capital movements.