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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number: 1-35335
Groupon, Inc.
(Exact name of registrant as specified in its charter)
Delaware27-0903295
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
600 W Chicago Avenue60654
Suite 400(Zip Code)
Chicago
Illinois(312)334-1579
(Address of principal executive offices)(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.0001 per shareGRPNNASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes           No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).        
Yes          No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer                             Accelerated filer         
Non-accelerated filer                             Smaller reporting company
                                     Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes         No   
As of November 2, 2022, there were 30,437,380 shares of the registrant's common stock outstanding.



TABLE OF CONTENTS
PART I. Financial InformationPage
PART II. Other Information

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PART I. FINANCIAL INFORMATION
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our future results of operations and financial position, business strategy and plans and our objectives for future operations. The words "may," "will," "should," "could," "expect," "anticipate," "believe," "estimate," "intend," "continue" and other similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include, but are not limited to, effects of the ongoing COVID-19 pandemic or other pandemics or disease outbreaks on our business; our ability to execute, and achieve the expected benefits of, our go-forward strategy; execution of our business and marketing strategies; volatility in our operating results; challenges arising from our international operations, including fluctuations in currency exchange rates, legal and regulatory developments in the jurisdictions in which we operate and geopolitical instability resulting from the conflict in Ukraine; global economic uncertainty, including as a result of the inflationary environment; retaining and adding high quality merchants and third-party business partners; retaining existing customers and adding new customers; competing successfully in our industry; providing a strong mobile experience for our customers; managing refund risks; retaining and attracting members of our executive team and other qualified personnel; customer and merchant fraud; payment-related risks; our reliance on email, internet search engines and mobile application marketplaces to drive traffic to our marketplace; cybersecurity breaches; maintaining and improving our information technology infrastructure; reliance on cloud-based computing platforms; completing and realizing the anticipated benefits from acquisitions, dispositions, joint ventures and strategic investments; lack of control over minority investments; managing inventory and order fulfillment risks; claims related to product and service offerings; protecting our intellectual property; maintaining a strong brand; the impact of future and pending litigation; compliance with domestic and foreign laws and regulations, including the CARD Act, GDPR and regulation of the Internet and e-commerce; classification of our independent contractors or employees; risks relating to information or content published or made available on our websites or service offerings we make available; exposure to greater than anticipated tax liabilities; adoption of tax legislation; impacts if we become subject to the Bank Secrecy Act or other anti-money laundering or money transmission laws or regulations; our ability to raise capital if necessary; risks related to our access to capital and outstanding indebtedness, including our convertible senior notes; our common stock, including volatility in our stock price; our ability to realize the anticipated benefits from the capped call transactions relating to our convertible senior notes; difficulties, delays or our inability to successfully complete all or part of the announced restructuring actions or to realize the operating efficiencies and other benefits of such restructuring actions; higher than anticipated restructuring charges or changes in the timing of such restructuring charges; and those risks and other factors discussed in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2021, Part II, Item 1A. Risk Factors of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, Part II, Item 1A. Risk Factors of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 and Part II, Item 1A. Risk Factors of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, as well as in our Condensed Consolidated Financial Statements, related notes, and the other financial information appearing elsewhere in this report and our other filings with the Securities and Exchange Commission (the "SEC"). Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. We do not intend, and undertake no obligation, to update any of our forward-looking statements after the date of this report to reflect actual results or future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
As used herein, "Groupon," "the Company," "we," "our," "us" and similar terms include Groupon, Inc. and its subsidiaries, unless the context indicates otherwise.
3


ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

GROUPON, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
September 30, 2022December 31, 2021
(unaudited)
Assets
Current assets:
Cash and cash equivalents$307,998 $498,726 
Accounts receivable, net42,589 36,755 
Prepaid expenses and other current assets 52,663 52,570 
Total current assets403,250 588,051 
Property, equipment and software, net61,117 73,581 
Right-of-use assets - operating leases, net18,007 47,958 
Goodwill178,685 216,393 
Intangible assets, net18,795 24,310 
Investments119,541 119,541 
Deferred income taxes60,157 62,945 
Other non-current assets29,419 25,102 
Total assets$888,971 $1,157,881 
Liabilities and equity
Current liabilities:
Short-term borrowings$110,000 $100,000 
Accounts payable35,195 22,165 
Accrued merchant and supplier payables178,627 269,509 
Accrued expenses and other current liabilities198,308 239,313 
Total current liabilities522,130 630,987 
Convertible senior notes, net224,540 223,403 
Operating lease obligations14,636 58,747 
Other non-current liabilities30,551 34,448 
Total liabilities791,857 947,585 
Commitments and contingencies (see Note 6)
Stockholders' equity
Common stock, par value $0.0001 per share, 100,500,000 shares authorized; 40,693,600 shares issued and 30,399,483 shares outstanding at September 30, 2022; 40,007,255 shares issued and 29,713,138 shares outstanding at December 31, 2021
4 4 
Additional paid-in capital2,317,003 2,294,215 
Treasury stock, at cost, 10,294,117 shares at September 30, 2022 and December 31, 2021
(922,666)(922,666)
Accumulated deficit(1,339,170)(1,156,868)
Accumulated other comprehensive income (loss)41,657 (4,813)
Total Groupon, Inc. stockholders' equity96,828 209,872 
Noncontrolling interests286 424 
Total equity97,114 210,296 
Total liabilities and equity$888,971 $1,157,881 
See Notes to Condensed Consolidated Financial Statements.
4

GROUPON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2022202120222021
Revenue:
Service$144,390 $198,976 $450,926 $577,761 
Product 15,195  166,185 
Total revenue144,390 214,171 450,926 743,946 
Cost of revenue:
Service18,668 19,127 57,231 58,719 
Product 13,605  142,862 
Total cost of revenue18,668 32,732 57,231 201,581 
Gross profit125,722 181,439 393,695 542,365 
Operating expenses:
Marketing37,897 53,159 106,685 130,545 
Selling, general and administrative119,243 119,494 369,601 384,606 
Goodwill impairment  35,424  
Long-lived asset impairment  8,811  
Restructuring and related charges4,912 12,483 8,163 34,150 
Total operating expenses162,052 185,136 528,684 549,301 
Income (loss) from operations(36,330)(3,697)(134,989)(6,936)
Other income (expense), net(23,541)82,533 (49,761)97,729 
Income (loss) from operations before provision (benefit) for income taxes(59,871)78,836 (184,750)90,793 
Provision (benefit) for income taxes(4,328)135 (4,605)773 
Net income (loss)(55,543)78,701 (180,145)90,020 
Net (income) loss attributable to noncontrolling interests(680)(594)(2,157)(737)
Net income (loss) attributable to Groupon, Inc.$(56,223)$78,107 $(182,302)$89,283 
Net income (loss) per share:
Basic$(1.86)$2.64 $(6.06)$3.05 
Diluted$(1.86)$2.36 $(6.06)$2.80 
Weighted average number of shares outstanding:
Basic30,307,734 29,567,802 30,070,598 29,282,932 
Diluted30,307,734 33,364,538 30,070,598 32,393,891 
Comprehensive income (loss):
Net income (loss)$(55,543)$78,701 $(180,145)$90,020 
Other comprehensive income (loss):
Net change in unrealized gain (loss) on foreign currency translation adjustments22,283 6,770 46,470 (46,353)
Reclassification of cumulative foreign currency translation adjustments (See Note 9)
 (16) 32,268 
Other comprehensive income (loss)22,283 6,754 46,470 (14,085)
Comprehensive income (loss)(33,260)85,455 (133,675)75,935 
Comprehensive (income) loss attributable to noncontrolling interest(680)(594)(2,157)(737)
Comprehensive income (loss) attributable to Groupon, Inc. $(33,940)$84,861 $(135,832)$75,198 
See Notes to Condensed Consolidated Financial Statements.
5

GROUPON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except share amounts)
(unaudited)
Groupon, Inc. Stockholders' Equity
 Common StockAdditional Paid-In CapitalTreasury StockAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Groupon, Inc. Stockholders' EquityNon-controlling InterestsTotal Equity
SharesAmountSharesAmount
Balance at December 31, 202140,007,255 $4 $2,294,215 (10,294,117)$(922,666)$(1,156,868)$(4,813)$209,872 $424 $210,296 
Comprehensive income (loss)— — — — — (34,852)3,369 (31,483)500 (30,983)
Vesting of restricted stock units and performance share units308,152 — — — — — — — — — 
Shares issued under employee stock purchase plan30,022 — 591 — — — — 591 — 591 
Tax withholdings related to net share settlements of stock-based compensation awards(118,589)— (2,597)— — — — (2,597)— (2,597)
Stock-based compensation on equity-classified awards— — 8,349 — — — — 8,349 — 8,349 
Distributions to noncontrolling interest holders— — — — — — — — (814)(814)
Balance at March 31, 202240,226,840 $4 $2,300,558 (10,294,117)$(922,666)$(1,191,720)$(1,444)$184,732 $110 $184,842 
Comprehensive income (loss)— — — — — (91,227)20,818 (70,409)977 (69,432)
Vesting of restricted stock units and performance share units407,426 — — — — — — — — — 
Tax withholdings related to net share settlements of stock-based compensation awards(151,368)— (2,166)— — — — (2,166)— (2,166)
Stock-based compensation on equity-classified awards— — 9,784 — — — — 9,784 — 9,784 
Distributions to noncontrolling interest holders— — — — — — — — (943)(943)
Balance at June 30, 202240,482,898 $4 $2,308,176 (10,294,117)$(922,666)$(1,282,947)$19,374 $121,941 $144 $122,085 
Comprehensive income (loss)— — — — — (56,223)22,283 (33,940)680 (33,260)
Vesting of restricted stock units and performance share units230,186 — — — — — — — — — 
Shares issued under employee stock purchase plan53,529 — 514 — — — — 514 — 514 
Tax withholdings related to net share settlements of stock-based compensation awards(73,013)— (830)— — — — (830)— (830)
Stock-based compensation on equity-classified awards— — 9,143 — — — — 9,143 — 9,143 
Distributions to noncontrolling interest holders— — — — — — — — (538)(538)
Balance at September 30, 202240,693,600 $4 $2,317,003 (10,294,117)$(922,666)$(1,339,170)$41,657 $96,828 $286 $97,114 
See Notes to Condensed Consolidated Financial Statements.
6

GROUPON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except share amounts)
(unaudited)
Groupon, Inc. Stockholders' Equity
Common Stock Additional Paid-In CapitalTreasury StockAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Groupon, Inc. Stockholders' EquityNon-controlling InterestsTotal Equity
SharesAmountSharesAmount
Balance at December 31, 202039,142,896 $4 $2,348,114 (10,294,117)$(922,666)$(1,320,886)$3,109 $107,675 $(1)$107,674 
Cumulative effect of change in accounting principle due to adoption of ASU 2020-06, net of tax (see Note 1)— — (64,319)— — 45,350 — (18,969)— (18,969)
Comprehensive income (loss)— — — — — 14,558 (17,564)(3,006)(110)(3,116)
Vesting of restricted stock units and performance share units308,954 — — — — — — — — — 
Shares issued under employee stock purchase plan23,418 — 349 — — — — 349 — 349 
Tax withholdings related to net share settlements of stock-based compensation awards(122,931)— (4,901)— — — — (4,901)— (4,901)
Purchase of capped call transactions— — (23,840)— — — — (23,840)— (23,840)
Stock-based compensation on equity-classified awards— — 8,387 — — — — 8,387 — 8,387 
Receipts from noncontrolling interest holders— — — — — — — — 36 36 
Balance at March 31, 202139,352,337 $4 $2,263,790 (10,294,117)$(922,666)$(1,260,978)$(14,455)$65,695 $(75)$65,620 
Comprehensive income (loss)— — — — — (3,382)(3,275)(6,657)253 (6,404)
Vesting of restricted stock units and performance share units707,372 — — — — — — — — — 
Tax withholdings related to net share settlements of stock-based compensation awards(254,466)— (11,716)— — — — (11,716)— (11,716)
Settlement of convertible note hedges— — 3,061 — — — — 3,061 — 3,061 
Settlement of warrants— — (1,752)— — — — (1,752)— (1,752)
Purchase of capped call transactions— — (3,576)— — — — (3,576)— (3,576)
Stock-based compensation on equity-classified awards— — 10,501 — — — — 10,501 — 10,501 
Receipts from noncontrolling interest holders— — — — — — — — 102 102 
Balance at June 30, 202139,805,243 $4 $2,260,308 (10,294,117)$(922,666)$(1,264,360)$(17,730)$55,556 $280 $55,836 
Comprehensive income (loss)— $— $— — $— $78,107 $6,754 $84,861 $594 $85,455 
Vesting of restricted stock units and performance share units72,851 — — — — — — — — — 
Shares issued under employee stock purchase plan25,981 — 779 — — — — 779 — 779 
Tax withholdings related to net share settlements of stock-based compensation awards(30,820)— (974)— — — — (974)— (974)
Stock-based compensation on equity-classified awards— — 9,071 — — — — 9,071 — 9,071 
Distributions to noncontrolling interest holders— — — — — — — — (670)(670)
Balance at September 30, 202139,873,255 $4 $2,269,184 (10,294,117)$(922,666)$(1,186,253)$(10,976)$149,293 $204 $149,497 
See Notes to Condensed Consolidated Financial Statements.
7

GROUPON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Nine Months Ended September 30,
 20222021
Operating activities  
Net income (loss)$(180,145)$90,020 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of property, equipment and software42,172 46,879 
Amortization of acquired intangible assets6,397 6,728 
Impairment of goodwill35,424  
Impairment of long-lived assets8,811  
Restructuring-related impairment2,949 7,651 
Stock-based compensation24,194 25,121 
Changes in fair value of investments (95,533)
Foreign currency translation adjustments reclassified into earnings (32,268)
Change in assets and liabilities:
Accounts receivable(9,321)7,985 
Prepaid expenses and other current assets(4,086)(11,155)
Right-of-use assets - operating leases22,896 16,016 
Accounts payable13,222 3,996 
Accrued merchant and supplier payables(80,436)(175,079)
Accrued expenses and other current liabilities(40,331)(43,654)
Operating lease obligations(36,671)(24,614)
Other, net43,075 22,961 
Net cash provided by (used in) operating activities(151,850)(154,946)
Investing activities
Purchases of property and equipment and capitalized software(30,495)(37,865)
Proceeds from sale or divestment of investment 6,859 
Acquisitions of intangible assets and other investing activities(2,077)(2,491)
Net cash provided by (used in) investing activities(32,572)(33,497)
Financing activities
Proceeds from borrowings under revolving credit agreement50,000  
Payments of borrowings under revolving credit agreement(40,000)(100,000)
Proceeds from issuance of 2026 convertible notes 230,000 
Issuance costs for 2026 convertible notes and revolving credit agreement (7,747)
Purchase of capped call transactions (27,416)
Payments for the repurchase of Atairos convertible notes (254,000)
Proceeds from the settlement of convertible note hedges 2,315 
Payments for the settlement of warrants (1,345)
Taxes paid related to net share settlements of stock-based compensation awards(5,601)(17,591)
Payments of finance lease obligations(653)(4,887)
Other financing activities(1,238)203 
Net cash provided by (used in) financing activities2,508 (180,468)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(9,240)(4,894)
Net increase (decrease) in cash, cash equivalents and restricted cash(191,154)(373,805)
Cash, cash equivalents and restricted cash, beginning of period (1)
499,483 851,085 
Cash, cash equivalents and restricted cash, end of period (1)
$308,329 $477,280 
        
Nine Months Ended September 30,
20222021
Supplemental disclosure of cash flow information:
Cash paid for interest$4,361 $13,166 
Income tax payments4,483 9,406 
Supplemental cash flow information on our leasing obligations:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$22,640 $24,614 
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases$2,669 $ 

8

GROUPON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
(1)The following table provides a reconciliation of Cash, cash equivalents and restricted cash shown above to amounts reported within the Condensed Consolidated Balance Sheets as of September 30, 2022, December 31, 2021, September 30, 2021 and December 31, 2020 (in thousands):
September 30, 2022December 31, 2021September 30, 2021December 31, 2020
Cash and cash equivalents$307,998 $498,726 $476,782 $850,587 
Restricted cash included in prepaid expenses and other current assets331 757 498 498 
Cash, cash equivalents and restricted cash$308,329 $499,483 $477,280 $851,085 
See Notes to Condensed Consolidated Financial Statements.
9

GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Company Information
Groupon, Inc. and its subsidiaries, which commenced operations in October 2008, is a global scaled two-sided marketplace that connects consumers to merchants by offering goods and services, generally at a discount. Consumers access those marketplaces through our mobile applications and our websites.
Our operations are organized into two segments: North America and International. See Note 13, Segment Information.
COVID-19 Pandemic and Macroeconomic Conditions
The COVID-19 pandemic has changed the environment that our business operates in, which includes changes in consumer behavior and macroeconomic impacts affecting both us and our merchants. Although global economies have begun to recover from the COVID-19 pandemic as many health and safety restrictions have been lifted, certain adverse consequences of the pandemic continue to impact the macroeconomic environment and may persist for some time. Impacts to our operations may be caused by macroeconomic trends such as the ongoing COVID-19 pandemic, inflationary pressures, higher labor costs, labor shortages, supply chain challenges and resulting changes in consumer and merchant behavior. The full extent of the impact of both the COVID-19 pandemic and recent macroeconomic trends on our business, operations and financial results will depend on numerous evolving factors. We continue to monitor the pandemic and other macroeconomic trends and the potential impacts they may have on our future financial position, results of operations and cash flows. See Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.
Unaudited Interim Financial Information
We have prepared the accompanying Condensed Consolidated Financial Statements pursuant to the rules and regulations of the SEC for interim financial reporting. These Condensed Consolidated Financial Statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for a fair presentation of the Condensed Consolidated Balance Sheets, Statements of Operations and Comprehensive Income (Loss), Cash Flows and Stockholders' Equity for the periods presented. These Condensed Consolidated Financial Statements and notes should be read in conjunction with the audited Consolidated Financial Statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2021.
Principles of Consolidation
The Condensed Consolidated Financial Statements include the accounts of Groupon, Inc. and its wholly-owned subsidiaries, majority-owned subsidiaries over which we exercise control and variable interest entities for which we are the primary beneficiary. In July 2022, we extended our arrangement through July 2025 with the strategic partner in the variable interest entity that we consolidate. All intercompany accounts and transactions have been eliminated in consolidation. Outside stockholders' interests in subsidiaries are shown on the Condensed Consolidated Financial Statements as Noncontrolling interests. Investments in entities in which we do not have a controlling financial interest are accounted for at fair value as available-for-sale securities or at cost adjusted for observable price changes and impairments, as appropriate.
10


GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Estimates in our financial statements include, but are not limited to, the following: variable consideration from unredeemed vouchers; income taxes; leases; initial valuation and subsequent impairment testing of goodwill, other intangible assets and long-lived assets; investments; receivables; customer refunds and other reserves; contingent liabilities; and the useful lives of property, equipment and software and intangible assets. Actual results could differ materially from those estimates.
Reclassifications
Certain reclassifications have been made to the Condensed Consolidated Financial Statements of prior periods to conform to the current period presentation.
Adoption of New Accounting Standards
We early adopted the guidance in ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, on January 1, 2021. The ASU removes the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion feature. Additionally, the ASU removes certain conditions for equity classification related to contracts in an entity’s own equity (e.g., warrants) and amends certain guidance related to the computation of income (loss) per share for convertible instruments and contracts in an entity’s own equity.
Prior to the adoption of ASU 2020-06, we separated the convertible senior notes due 2022 (the "Atairos Notes") into their liability and equity components. Following the adoption of ASU 2020-06, the previously bifurcated equity component of the Atairos Notes was recombined with the liability component, resulting in a single liability-classified instrument. The carrying value of the Atairos Notes at transition was determined by recalculating the basis of the Atairos Notes as if the conversion option had not been bifurcated at issuance. Transaction costs related to the issuance of the Atairos Notes that were allocated to the equity component were reclassified out of Additional paid-in-capital and the amortization and the related debt discount associated with these costs was recalculated through the transition date. The transaction costs were recorded as a debt discount in the Condensed Consolidated Balance Sheets and amortized to interest expense over the remaining term of the Atairos Notes. Together with the cash interest, this resulted in an effective interest rate of 3.76%. As a result of adopting ASU 2020-06, in the first quarter of 2021, we recorded a $67.0 million net reduction to additional paid-in capital, a $19.0 million increase to Convertible senior notes, net and a $48.0 million reduction to our opening accumulated deficit as of January 1, 2021. In the fourth quarter of 2021, we recorded an additional $2.7 million adjustment to our opening accumulated deficit and additional paid-in capital related to tax impacts of our bond hedges.
NOTE 2. GOODWILL AND LONG-LIVED ASSETS
During the three and nine months ended September 30, 2022 we evaluated goodwill and long-lived assets for impairment, due to the events described below, which indicated that the carrying amount of our assets or asset groups was not recoverable. In order to evaluate goodwill and long-lived assets for impairment, we compared the fair value of our two reporting units, North America and International, and our asset groups to their carrying values. In determining the fair values of our reporting units and asset groups, we used the discounted cash flow method under the income approach that uses Level 3 inputs.
During the third quarter of 2022, we determined that the carrying amount of one of our right-of-use assets related to our 2020 Restructuring Plan may not be fully recoverable due to collectability of sublease income, and recognized impairment within our North America segment. See details in the table below and Note 9, Restructuring and Related Charges, for more information.
11

GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
During the second quarter of 2022, we determined a downward revision of our forecast required us to evaluate our goodwill and long-lived assets for impairment. As a result of our interim quantitative assessment, we recognized goodwill impairment within our International reporting unit, representing a full impairment of goodwill for that reporting unit. We also recognized long-lived asset impairment related to certain asset groups within our International segment. We also determined that the carrying amount of certain right-of-use assets within our International segment related to our 2020 Restructuring Plan were not fully recoverable and recognized impairment. See details in the table below and Note 9, Restructuring and Related Charges, for more information.
During the first quarter of 2022, we determined the impact to our business from the new variant of COVID-19 required us to evaluate our goodwill and long-lived assets for impairment. Our interim quantitative assessment for the first quarter of 2022 did not identify any goodwill or long-lived asset impairment.
During the third quarter of 2021, we recognized impairment for our right-of-use assets and leasehold improvements under our 2020 Restructuring Plan. See details in the table below and Note 9, Restructuring and Related Charges, for more information.
Goodwill
The following table summarizes goodwill activity by segment for the nine months ended September 30, 2022 (in thousands):
North America
International (1)
Consolidated
Balance as of December 31, 2021$178,685 $37,708 $216,393 
Goodwill impairment (35,424)(35,424)
Foreign currency translation (2,284)(2,284)
Balance as of September 30, 2022$178,685 $ $178,685 
(1)As of December 31, 2021, the International reporting unit had a negative carrying value.
Long-Lived Assets
The following table summarizes impairment charges presented within the following line items on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Long-lived asset impairment
North America$ $ $ $ 
International  8,811  
Total Long-lived asset impairment  8,811  
Restructuring and related charges
North America1,769 5,430 1,769 5,430 
International 2,221 1,180 2,221