Prepared remarks
Thank you. Hello and welcome to Groupon's Second Quarter 2026 Financial Results Conference Call. On the call today are Chief Executive Officer, Dusan Senkypl; and Chief Financial Officer, Rana Kashyap. The company has posted earnings materials, including earnings commentary, on the company's investor relations website at investor.groupon.com. Today's conference call is being recorded. Before we begin, Groupon would like to remind listeners that the following discussion and responses to the questions reflect management's views as of today, August 7, 2026, only, and will include forward-looking statements. Actual results may differ materially from those expressed or implied in the company's forward-looking statements. Groupon undertakes no obligation to update these forward-looking statements as a result of new information or future events. Additional information about risks and other factors that could potentially impact the company's financial results are included in its earnings press release and in its filings with the SEC, including its quarterly report on Form 10-Q. We encourage investors to use Groupon's investor relations website at investor.groupon.com as a way of easily finding information about the company. Groupon promptly makes available on its website the reports that the company files or furnishes with the SEC, corporate governance information, and select press releases and social media postings. On the call today, the company will also discuss the following non-GAAP financial measures, adjusted EBITDA and free cash flow. In Groupon's press release and their filings with the SEC, each of which is posted on its investor relations website, you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures to the most comparable measures under U.S. GAAP. And with that, I would like to turn it over to CEO, Dusan Senkypl, to make a few opening remarks before we jump into Q&A.
Hello and thanks for joining us for our second quarter 2026 earnings call. It's great to be with all of you today. Yesterday, after the market closed, we released our earnings and posted our shareholder letter on our investor relations website. Today, I will make opening remarks and then open up the call for your questions. For more details on our quarterly performance, I encourage you to read our full shareholder letter, press release and Form 10-Q. We believe the best things in life happen offline. As the world becomes increasingly digitized, we believe demand will grow for analog, in-person experiences and for the digital pathways consumers use to identify, discover, and book those experiences. Groupon sits at that intersection of consumer intent and local supply, a natural bridge between the AI economy and the millions of local merchants who power Main Street. Q2 fell slightly short on the top line with billings and revenue each down 1% year over year, while adjusted EBITDA finished at the high end of our guidance range and free cash flow was strong at a positive $15 million. The top-line shortfall was concentrated in North America Local, which continued to see pressure in Q2 and came in below our expectations. Looking ahead, we enter Q3 with momentum, with our business accelerating to mid-single-digit growth in July, a positive signal for the trajectory of our marketplace in the second half. Project Foundry, introduced last quarter, remains our most consequential initiative as we redesign how Groupon works to be an AI-native company. Our approach is first principles and company-wide. We are rethinking how the entire organization runs across every function with AI at the center of how work gets done. Our ambition is that AI handles all repetitive work at Groupon, so our employees spend their time either managing AI agents or talking to customers and merchants. The overarching goal is increasing our execution velocity, collapsing the time between recognizing a customer or merchant unmet need and shipping the solution. We believe operating at AI speed is critical to succeeding in an AI-first world. Just over four months in, we are extremely pleased with the progress we have made and the momentum we are building. We are starting to see outcomes delivered faster for our customers and strategic bets moving at an accelerated pace. AI now builds and optimizes tens of thousands of hyperlocal marketing campaigns, a scale no human team could run, and engineering output per developer has more than doubled in the past six months. This progress and the green shoots we see, while not yet uniform across the entire company, give us confidence we are on the right path. We are doubling down to accelerate this transformation and expect that our organization will be AI-fluent by default by the end of 2026. Turning to our Strategic Bets. The organic search landscape is being rebuilt around AI-generated answers and our search foundation work is paying off. Revenue from our organic channels returned to growth in Q2, and accelerated to double-digit growth in July. We are using AI to produce and structure quality local content at a scale that was not previously possible, making our platform more relevant to both traditional search engines and AI systems. Organic is an inherently volatile channel and there is still work ahead, but together with our high-performing paid marketing engine, our improving organic channels are strengthening our reach. Our second focus is making the Groupon experience more personal and more relevant, so that the customers we bring in engage more deeply and purchase more often. Managed channels continued their improving trajectory in Q2 on the customer data platform we scaled last quarter, sending fewer, more effective messages, with revenue per send up strong double digits. And rather than one experience for everyone, we are building a customized one where different customers see a different Groupon experience. Some customers prefer to explore a map, others browse carousels, others a swipe-based interface. Customer signals that arrive in the morning can now become shipped features the same day, a cycle that previously took months. Trust and quality is our newest bet. We are building a curated experience marketplace where every deal earns its place and no one has to second guess a purchase. We are raising the bar on what appears on Groupon and have remediated or removed hundreds of deals that did not meet it. And AI now resolves the large majority of customer support contacts on its own, actually three times faster than at the start of the year. In the second half, we are adding verification before a deal publishes, a redesigned redemption experience including wallet support, and a pilot of a Groupon AI concierge that helps customers answer questions and book experiences. We also continue to rebuild Groupon's technology stack, and we now expect every surface in every geography to be fully migrated to our new platform by the end of Q3. And this week, we strengthened our leadership team. Adi Rajkumar joined Groupon as Chief Operating Officer, and Mark Marge joined as Vice President of Marketplace Strategy and Operations, both with operating experience from some of the most successful local marketplaces. Our North America local supply engine has been running behind our expectations and we are excited to see the impact Adi and Mark will drive there. Turning to Guidance. For the third quarter, we expect billing growth of 4% to 6%. Revenue of $128 million to $130 million, adjusted EBITDA of $19 million to $21 million and negative free cash flow in the quarter. For the full year, we are maintaining our outlook. Billings growth of 3% to 5%, revenue of $513 million to $523 million, adjusted EBITDA of $75 million to $80 million, and free cash flow of at least $60 million. Our outlook implies second half revenue growth of approximately 6% at the low end and approximately 10% at the high end. We expect the pace of growth to accelerate through the balance of the year, supported by easier year-over-year comparisons, additional marketing investment, and increasing contribution from our strategic bets. The acceleration of our outlook requires — runs ahead of our current pace, and a slower ramp across these drivers would affect our ability to reach it. We are confident in achieving our fourth consecutive year of improving revenue growth. Taking a step back, we are building a platform on three compounding capabilities: AI-native experienced marketplace builders, a technology stack built for AI speed, and data that makes local commerce legible. As these capabilities compound, so does our ability to deliver on our mission to get people offline through quality local experiences at great value. This is a company-wide effort, and I want to thank every Groupon employee for the ambition and energy we are bringing to it. With that, let's open the call for questions.
Questions and answers
Our first question comes from Bobby Brooks from Northland Capital Markets.
I wanted to get a better understanding of the new UI rollout and the phasing of that. Because when I check the website, I still get the classic UI. I was curious to hear more on that at a granular level.
Okay. Bobby, thank you for the question. I will talk about two pieces here. For right now, over the several years, we have been ramping up the new Mobile Next platform. And just a few minutes ago, I was talking about our plan to finish the full migration in Q3. This new interface is right now powering all our countries, all our surfaces, and we are really in the last phases of migration and updating the users who are — some of them are still on the old version of the application. We are cleaning up the last and least used parts of the interface. This is one critical piece of our efforts to improve the user experience because this new platform unlocks a ton of new opportunities and the pace of development, which we have on a new platform is completely different versus what we have on the old platform. Second part of that question is about the user experience, which we are improving on this new Mobile Next platform. We were talking about personalization that I was sharing and part of our management team, multiple posts on LinkedIn or X, where we were showing examples of the interface. And we are running multiple tests, and we already developed multiple features, which we are testing and piloting. And we are identifying user groups who best interact with these features. And I see and expect that during the first quarter, it's pretty much every week when we introduce something new to improve the user experience in terms of personalization. And last but not least, I was also talking about the quality bet. And here, we were talking about it mainly in terms of how we are improving deal quality and making sure that the deals have proper pricing, great customer experience. However, there is also a second very important part of this bet and this is customer experience. You can see on tens of thousands of deals on Groupon across several countries already much improved customer experience in terms of showing the most important parts of the deal and parameters, for example, next to the options. So it's very clear when you are buying this option of the deal, this is what you are getting. We are also taking most important parts of the fine print from the deals and showing it in a very visible way to customers so that they are very clear on what they are getting and there is no confusion after the purchase. So this is a combined effort on multiple fronts, because for me, my goal is to build a marketplace which brings trust to customers. Customers will be buying on Groupon, they need to build the trust and know that if I buy something on Groupon, I will get what I was promised, I will get a quality deal at a great price.
For sure. I really appreciate the focus on building customer trust and to piggyback on that, it is encouraging to hear the emphasis today on building trust and quality. I wanted to hear what might be some of the KPIs you and the team will be watching to track your progress there?
So the ultimate metric which we are all watching here is purchase frequency, obviously. This is the key metric which will drive value also for shareholders. But internally, this is the metric which more and more teams that are participating in these activities are looking at. Internally, we are going a little bit deeper, and we are really right now with the platform which we built and migrated over the last several years, we cut our customer base into multiple segments. So we are really looking at performance of new customers. We are looking at performance of what we call champions on the platform. And pretty much every week and every month, we are looking at what features we delivered and how they are impacting behavior of these customers. One example of a very important metric which we are following is conversion to second purchase. If we have a new customer on Groupon, how many of those customers within, for example, the next seven or thirty days after that first purchase will do a second purchase. I would make a slightly jump to the topic which is partially related to it. Initially, when we were rebuilding Groupon and marketing, we were very transactional. We were looking really only at that first transaction. But now with all the capabilities which we have, we start moving in the direction of looking at lifetime value. So we are optimizing campaigns not only based on what they bring in seven days, but we are looking at the type of customers they are acquiring, and we spend money differently if we see that the profile of customers is one-and-done type of customer, or whether this is a customer who purchases the product two to three times a year. We are reallocating our resources more towards the campaigns which are bringing customers with better purchase frequency in general.
That's terrific to hear. And then it was also exciting to see during the quarter the marketing partnership you did with the McDonald's loyalty app. I wanted to ask how you thought that played out. Could we expect similar shorter-duration partnerships like that in the future? And generally, what should that show investors about this capability, because it feels like you probably wouldn't have been able to do that maybe two years ago or even 18 months ago. I wanted to give you the floor there.
Yes, it was our first partnership of this type with McDonald's. Over the last few months, internally, we have been talking a lot and figuring out ways how to expand this. Again, when you think about how the transformation was evolving, originally, we were really focused just on, I would call it, transaction management marketing, which brings revenue immediately because this is what we had to fix. Now when our marketing engine is on this bottom part of the funnel, it's really working very well, scaling, and understands what type of customers we are acquiring. We are expanding the marketing, we started a brand campaign in Q4 last year and we continue with brand activities during this year. We are getting knowledge and experience in influencer marketing where we will need to double down, and this will be one area where we will be visible and investing more and more in coming months and quarters. McDonald's is a type of partnership which we will be bringing more of with recognized brands. It's definitely not just McDonald's; you can see many other great top companies on the platform. Internally, right now, we have an initiative to bring them more because it simply brings Groupon visibility. It brings huge amounts of customers exposed to the Groupon brand going forward. So my plan is to show more of these.
Our next question comes from Eric Sheridan from Goldman Sachs.
I'll just give you two. First, can you go a little bit deeper in what you're seeing in June and July that increasingly gives you some confidence around the way you're framing the back part of the year versus the front part of the year? And is there a way to tease out sort of maybe macroeconomic relative to some of the things inside your control and structural on the product development side? And then the second question would just be, when you think about aligning your strategy over the medium term, how do you think about the strategy evolving towards more frequency of behavior among buyers? So you're not only seeing buyer growth, but you're also seeing some of the elements of frequency. Really appreciate it.
Thank you, Eric, for your questions. For the rest of the year, I expect that — not expect, we know that the comparisons will ease from here. July wasn't an easy month for us in terms of comps, so we are happy with where we are standing right now. A few drivers are very important for the further acceleration in the rest of the year. We finished the majority of the platform rollout, which was a huge drag and huge project for us over the last few years. The last outstanding pieces will be finished in Q3, but really a vast majority of Groupon customers is now using the new platform. So it gives us speed. We progressed significantly also with organic revenue, especially in SEO growing double digits, and we are in a much better position with managed channels, which are responsible for sending push notifications and emails to our customers. So we should be improving our customer lifecycle. The personalization capabilities which we developed, which we are testing, and which we have multiple of in production are giving us tools to accelerate growth and also this piece is very important for purchase frequency because by delivering what customers expect — not a generic offer but based on the signals we get about customer previous behavior, what they are looking at, what they are clicking at, and what device they are using — we can improve purchase frequency. We will also allocate more marketing to the second half, and we see improving returns on marketing. Last but not least, we are going through and still going through a complex transformation to Foundry, making the company AI-native. While it's painful in parts, I can already see results and I see acceleration of delivery of bets where teams that are AI-native move much faster. On the macro piece, in general, demand for local experiences remains resilient. Yes, I fully agree and see there is pressure on wallets and it's probably increasing. But at the same time, it increases the appeal of value, which is our core consumer proposition. When I talk to our sales team, it increases merchants' need for demand, which is our supply proposition. We are not counting on macro in direction; everything is execution driven, but I don't see macro as a headwind to us. On the frequency part, it's mainly about the enablement we got with the new platform and AI development in terms of features. We are releasing many new features for customers where we measure how they appeal and how they change behavior. I was talking about personalization. Another example: we now have a much better understanding of what people are searching and expecting on Groupon every single day of the week. We see very different behavior during weekdays versus weekends. We are customizing the whole engine and platform so that it serves the needs of the customer at that moment by analyzing previous behavior, previous data, and supply structure. All this helps improve purchase frequency, which is one of our top priorities. I would mention once more the changes we announced recently on the supply side, which was dragging us last quarter; with new leadership from Adi and Mark joining, we have very high expectations and ambitions for improving this part of the marketplace.
Thank you, Dusan, and thank you, Eric. We'll continue to take questions from the investors on the line, but the company would like to now take written questions that they've received via X and Reddit from their retail investor community. The first written question comes from LoneWolfV on Reddit. A recurring perception is that buying a Groupon can be a gamble because the quality of the merchant or redemption experience is inconsistent. What is management doing to raise merchant quality and rebuild trust in the marketplace? And which metrics would demonstrate the customer experience is actually improving? Also, to Dusan directly, you mentioned ElevenLabs on the last call. Is there any supply-side agentic initiative?
So, these are two questions. I will take them one by one. On the first one, on the trust question, we were internally talking about customers and merchants and quality and trust a lot. However, we didn't have the tools ready to make some impact. But this has changed. This is the reason why we launched this trust and quality bet inside the company. This is one of our top priority bets. We are building a curated marketplace where every deal earns its place. We are raising the bar on what appears on Groupon and we are removing deals that do not meet this criteria. With AI, we are building capability to be a pricing expert. We are analyzing the pricing of the merchant and what the prices are in the neighborhood of that merchant so that we can really become a place where customers can come and rely that they will get great quality deals at amazing value. Our AI is daily going through all the feedback and customer conversations so we can immediately, on the fly, improve the deals on the platform. It may happen that merchants edit or change the content of the deal, which makes it not so easy to understand for customers what they get. When we get the first one or two complaints from customers, our AI is able to detect it and just resolve it or escalate it so our sales team can discuss with the merchant how to make it better for customers. We are changing the user experience. When you go to the website on most deals, you will see for each option what is included and what is not included. In the past, this was not very clear. We had fine print that was not easy to read. Now on plenty of deals already, and it will be on 100% of deals in the near future, the most important elements that impact customers are visible and presented, which will increase customer satisfaction. Obviously, it's a trade-off with slightly lower but statistically insignificant lower conversion, but then much better customer experience with much lower refunds versus previous status, and then increased purchase frequency. We are bringing visibility of merchant availability. We are looking into their booking systems, even if they are not integrated on Groupon. We already have quite a lot of deals where we are showing availability that otherwise customers had to go to the merchant website to find. So it's all increasing trust and customer experience. The main metric — and we have about ten metrics behind this internally — the main metric is repeat purchase because this is the most important metric for all of us and for our shareholders and one of our biggest focuses right now. On the supply piece, the AI voice agent program for merchant outreach continues, and our objective stands: a majority of new merchant meetings set by AI agents by the end of this year, with our sales team focused on qualified conversations. We are expanding this voice pilot, which was originally just an AI SDR calling merchants to try to book a meeting, into a very broad integrated AI-driven acquisition engine, which starts with better understanding of the opportunity for each category and neighborhood. Meaning in this neighborhood we need a deal like this, and the AI orchestrates all the channels at once — we will send email, launch a paid campaign in that area to acquire a merchant, and launch AI calls based on the results; the system will define the next best approach. I believe supply will benefit from this because with AI and access to all information we collect about merchant communication, it can make the go-to-market and sales process much more efficient and a better experience for merchants. And last but not least, we are doubling down by announcing Adi and Mark joining Groupon.
Thank you, Dusan. We'll move back to investors on the line. Our next question comes from Sean McGowan from ROTH Capital Partners.
A couple of questions. On that trust and quality issue, how are you communicating that shift and that goal to the consumer? You've talked in the past about doing brand marketing for Groupon. But other than the consumer having a good experience and being maybe positively surprised or pleased, how are you communicating that this is an important strategy or goal for the company?
So, Sean, thanks for the question. Similar to many other areas, we are trying to do the work first, and then we want to let the results speak for themselves. I don't think that if we started communicating this as a message while we can't stand for 100% of deals and experiences that it would do us good in the long run. So this is an internal focus right now, which has been running for several months. You can see the change in the user interface on the website. When we ramp this up to 100% of deals and we are internally happy with the results, then we will expand this into more marketing and promotional communication, which we can do through some types of guarantees that Groupon can provide to customers.
Yes, that's helpful. Shifting gears. You talked about July seeing a return to mid-single-digit. I assume that's across the whole company. Can you parse that out a bit more? What are the implications for North America Local, international local? What are you seeing on a more detailed level?
Sure. Sean, great to hear from you. Thanks so much for the question. We are seeing broad-based strength across the platform. If you look at it, North America and international both showed strength in July. We are also seeing a strong presence in our Things To Do business and our Beauty and Wellness business. It is the season for things to do right now. Our Things To Do portfolio is doing very strongly, and we're pleased specifically in the tours and attractions space, but also in the local activity space. We've got great assortment, we're executing well in the season, and our customers are really responding. So we are seeing strength. North America has picked up. But the comment we made was for the whole company.
And then my last question is, you've got so many initiatives that you've talked about over the last couple of years and Foundry being very important but very recent. Are you able to identify any of the improvement that you've seen so far? I know it's early days, but is there anything you can point to in this uptick that you're seeing recently that you would say is directly attributable to Foundry or is it still too early to start to see any benefit from that in those numbers?
The way we talk externally about Foundry, and internally, is that the operating engine needs to be changed first. We are not trying to build shiny stuff visible from outside. I want to make sure that we operate internally with AI pace and that we have all the data and harnesses. When a new person joins, the AI support they get helps them understand all pieces of Groupon and I see significant results here internally. When Mark joined and provided feedback, it was very positive about the way data are available for all teams, how we share scales, and how we have data packages pre-configured so they can talk to AI about the data. We already see significant effects on internal acceleration and how teams are speeding up. Foundry also changes how teams are structured — smaller teams or 'speedboats' of two or three people working on fairly big initiatives, which means much fewer meetings. Internally, we already see that pace. We would not be able to have all the personalization features implemented if we could not do it with AI. The financial impact is coming after that and we believe it will come through better features, reaching customers faster, seeing better marketing results, and solving customer needs quickly. Internally, I'm really pleased because the initiative started at the end of March, and this is by far the biggest impact I've seen in the last three years on how we operate and how we deliver results.
Thank you, Sean. We'll take one more written question from X from Evan Loesel. What is the plan to get a generation that has never really used Groupon to try it for the first time? And what early evidence would you point to that it's working? Specifically, are you seeing changes in first-time purchases, customer age mix, acquisition costs, or repeat purchase rates among newer cohorts?
I would cover this from three perspectives. First is reach. We are rebuilding the organic part of our traffic acquisition and at the same time the paid marketing engine. We will be doubling down on influencer marketing. We see improving returns and more traffic on the website because we have unique content which will be valuable in the future. We have much better granularity in understanding what traffic and customers are coming. With the personalization project, we will be able to provide a different Groupon experience for younger generations and show products more appealing to them. The product piece is very important: a new app experience and different onboarding built for people who never used Groupon. I expect a very different onboarding experience rolled out completely in Q3, which will make it easier for new joiners to understand what Groupon can bring and what the product proposition is. On the inventory side, we have new formats and we're thinking about what can be appealing to younger generations. For example, our tourist packages found viral organic traction and reached customers who never responded to the classic deal format. You can see that active customers grew again this quarter and our conversion on new surfaces we released recently is improving.
We have a follow-up from Bobby Brooks on the line.
On onboarding high-quality merchants, that's been a key goal during this whole transformation in the marketplace. I wanted to ask about your approach to win these new merchants. It has shifted the last couple of quarters. Last quarter, I think you called out using some AI voice agents to make broader calls with the goal of setting up that first follow-up with one of your actual sales agents. How has that progressed and what have you seen?
There is overlap with the question coming from X. We have internal pilots on an AI voice agent that can call merchants and discuss the Groupon value proposition and set up a meeting with our agents. Right now, we see the future of this segment as a multi-touch AI engine customized to understand what we need where and then run complete communication and marketing channels to approach the right merchants in the right location. The AI piece is part of that. I still believe that by the end of this year, a majority of cold calls to small merchants and many marketing approaches — emails, SMS messages, paid campaigns — will be done by AI, with AI understanding what's happening on each channel and deciding the next best action to bring a merchant on board. Second, on how we run sales, we already run an internal sales brain which digests all information about merchants, our communication, deal performance, and other deals in that neighborhood. That AI-driven engine builds recommendations for next actions. The impact is if you are a salesperson, you get amazing support: every day it tells you your next action, for example, call this merchant because if that merchant adds a gifting option to the deal, they can expect 50% more. Or the engine can say, please call this merchant and if you fix items on this deal we can expect refund rates to go from 10% to 2%, for example. It already understands the value of actions which makes the supply engine more efficient.
That's super helpful color. Then maybe a follow-up for Rana. It seems like the rebound in July would suggest North America Local is at least high single digits. Is that accurate? Could you quantify that, given it was still a tough comp for you in July?
Yes. We are not going to start getting into exact numbers for more of our business beyond what we've said, but I will give more color. North America Local did improve versus Q2. We also saw strength in North America Travel. We've had interesting progress with the new format we've been developing on tour packages. Obviously, this is very small, but from a year-over-year basis point standpoint it helps a little because we're seeing strong strength there. International maintained the level we were at. So yes, the strength is coming from a pickup in North America Local and North America Travel, but I don't think we will go into more specifics than that.
We have another question from the company's retail investor community. From Outlier Capital on X. Management has highlighted the importance of increasing customer lifetime value, session frequency, and platform stickiness as part of the shift to an AI-native operating model. Have you evaluated or considered launching a subscription product that could deliver exclusive deals, enhance personalization, priority access, or other benefits in exchange for a recurring fee?
Yes, we did, and we are evaluating models that deepen the customer relationship. Membership economics are very well understood in our space and I agree there's huge potential. At the same time, the sequencing matters. First, we have to make the marketplace relevant and build the quality and trust piece so people who use Groupon will trust it and come back more often. At that moment we should introduce membership because it would be worth paying for. The capabilities we are building — personalization, the managed channels platform, trust and quality — are all pieces that would unlock a future membership product. But at this moment, we have nothing to announce.
One more question from a user on X. I would love to have management address if they are working to implement the UGC marketing that you have mentioned you should start doing. I think it's an amazing idea. So many influencers who document local activities should be making more Groupon UGC. Seems like a no-brainer and would love to hear management's thoughts on this.
I fully agree. I mentioned earlier that we started by rebuilding the bottom-of-funnel marketing and now we are moving up toward upper-funnel marketing. UGC is an area where we are already running experiments. We have some influencers generating tens of millions of impressions for us, but the opportunity is much bigger. We are still building internal tooling for this with our AI development and Foundry unlocking this possibility. We want to be a place where influencers can come, select deals, and we could provide an interface where they can ask AI to build their own influencer mini-site with their selection. We'll build functionality that allows anyone running a local community to have their set of deals, run for their community under their own name and promote it. With this functionality we will target micro and small local influencers and expand to local communities, sharing a portion of the revenue and making it part of self-funding for small local communities.
Thank you, Dusan. There are no other questions. This will conclude our call for today. Thank you, everyone, for joining us. For additional information, please go to investor.groupon.com.