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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 June 30, 2023
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 August 3, 2023, there were 31,248,618 shares of the registrant's common stock outstanding.



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

______________________________________________________
2



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 and future liquidity. 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, 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 inflationary pressures; ongoing impacts from the COVID-19 pandemic and labor and supply chain challenges; 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 and management teams and other qualified employees and 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, CPRA, other privacy-related laws and regulations of the Internet and e-commerce; classification of our independent contractors, agency workers, or employees; our ability to remediate our material weakness over internal control over financial reporting; 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 laws; our ability to use our tax attributes; 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; our ability to continue as a going concern; 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, 2022 and Part II, Item 1A. Risk Factors of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023, 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)
(unaudited)

June 30, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents$118,145 $281,279 
Accounts receivable, net35,206 44,971 
Prepaid expenses and other current assets 38,989 41,101 
Total current assets192,340 367,351 
Property, equipment and software, net43,486 56,731 
Right-of-use assets - operating leases, net6,012 12,127 
Goodwill178,685 178,685 
Intangible assets, net14,568 17,641 
Investments119,541 119,541 
Deferred income taxes13,830 13,550 
Other non-current assets18,772 27,491 
Total assets$587,234 $793,117 
Liabilities and equity
Current liabilities:
Short-term borrowings$46,700 $75,000 
Accounts payable20,117 59,568 
Accrued merchant and supplier payables178,119 225,420 
Accrued expenses and other current liabilities119,224 171,452 
Total current liabilities364,160 531,440 
Convertible senior notes, net225,693 224,923 
Operating lease obligations5,211 9,310 
Other non-current liabilities16,997 18,586 
Total liabilities612,061 784,259 
Commitments and contingencies (see Note 6)
Stockholders' equity (deficit)
Common stock, par value $0.0001 per share, 100,500,000 shares authorized; 41,521,134 shares issued and 31,227,017 shares outstanding at June 30, 2023; 40,786,996 shares issued and 30,492,879 shares outstanding at December 31, 2022
4 4 
Additional paid-in capital2,331,036 2,322,672 
Treasury stock, at cost, 10,294,117 shares at June 30, 2023 and December 31, 2022
(922,666)(922,666)
Accumulated deficit(1,436,231)(1,394,477)
Accumulated other comprehensive income (loss)2,839 2,942 
Total Groupon, Inc. stockholders' equity (deficit)(25,018)8,475 
Noncontrolling interests191 383 
Total equity (deficit)(24,827)8,858 
Total liabilities and equity (deficit)$587,234 $793,117 

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 June 30, Six Months Ended June 30,
2023202220232022
Revenue$129,109 $153,216 $250,720 $306,536 
Cost of revenue16,144 19,244 33,044 38,563 
Gross profit112,965 133,972 217,676 267,973 
Operating expenses:
Marketing22,267 29,372 47,115 68,788 
Selling, general and administrative96,263 123,938 197,897 250,358 
Goodwill impairment 35,424  35,424 
Long-lived asset impairment 8,811  8,811 
Restructuring and related charges(689)2,939 8,105 3,251 
Total operating expenses117,841 200,484 253,117 366,632 
Income (loss) from operations(4,876)(66,512)(35,441)(98,659)
Other income (expense), net(4,805)(21,340)(1,735)(26,220)
Income (loss) before provision (benefit) for income taxes(9,681)(87,852)(37,176)(124,879)
Provision (benefit) for income taxes2,323 2,398 3,441 (277)
Net income (loss)(12,004)(90,250)(40,617)(124,602)
Net (income) loss attributable to noncontrolling interests(603)(977)(1,137)(1,477)
Net income (loss) attributable to Groupon, Inc.$(12,607)$(91,227)$(41,754)$(126,079)
Basic and diluted net income (loss) per share:$(0.41)$(3.04)$(1.36)$(4.21)
Basic and diluted weighted average number of shares outstanding:31,020,493 30,039,233 30,796,943 29,952,018 
Comprehensive income (loss):
Net income (loss)$(12,004)$(90,250)$(40,617)$(124,602)
Other comprehensive income (loss):
Net change in unrealized gain (loss) on foreign currency translation adjustments5,745 20,818 (103)24,187 
Comprehensive income (loss)(6,259)(69,432)(40,720)(100,415)
Comprehensive (income) loss attributable to noncontrolling interest(603)(977)(1,137)(1,477)
Comprehensive income (loss) attributable to Groupon, Inc. $(6,862)$(70,409)$(41,857)$(101,892)

See Notes to Condensed Consolidated Financial Statements.
5

GROUPON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(in thousands, except share amounts)
(unaudited)

Groupon, Inc. Stockholders' Equity (Deficit)
 Common StockAdditional Paid-In CapitalTreasury StockAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Groupon, Inc. Stockholders' Equity (Deficit)Non-controlling InterestsTotal Equity (Deficit)
SharesAmountSharesAmount
Balance at December 31, 202240,786,996 $4 $2,322,672 (10,294,117)$(922,666)$(1,394,477)$2,942 $8,475 $383 $8,858 
Comprehensive income (loss)— — — — — (29,147)(5,848)(34,995)534 (34,461)
Vesting of restricted stock units and performance share units420,471 — — — — — — — — — 
Shares issued under employee stock purchase plan33,803 — 246 — — — — 246 — 246 
Tax withholdings related to net share settlements of stock-based compensation awards(140,819)— (1,031)— — — — (1,031)— (1,031)
Stock-based compensation on equity-classified awards— — 2,547 — — — — 2,547 — 2,547 
Distributions to noncontrolling interest holders— — — — — — — — (637)(637)
Balance at March 31, 202341,100,451 $4 $2,324,434 (10,294,117)$(922,666)$(1,423,624)$(2,906)$(24,758)$280 $(24,478)
Comprehensive income (loss)— — — — — (12,607)5,745 (6,862)603 (6,259)
Vesting of restricted stock units and performance share units689,050 — — — — — — — — — 
Tax withholdings related to net share settlements of stock-based compensation awards(268,367)— (1,207)— — — — (1,207)— (1,207)
Stock-based compensation on equity-classified awards— — 7,809 — — — — 7,809 — 7,809 
Distributions to noncontrolling interest holders— — — — — — — — (692)(692)
Balance at June 30, 202341,521,134 $4 $2,331,036 (10,294,117)$(922,666)$(1,436,231)$2,839 $(25,018)$191 $(24,827)
See Notes to Condensed Consolidated Financial Statements.









6

GROUPON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(in thousands, except share amounts)
(unaudited)


Groupon, Inc. Stockholders' Equity (Deficit)
Common Stock Additional Paid-In CapitalTreasury StockAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Groupon, Inc. Stockholders' Equity (Deficit)Non-controlling InterestsTotal Equity (Deficit)
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 
See Notes to Condensed Consolidated Financial Statements.
7

GROUPON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Six Months Ended June 30,
 20232022
Operating activities  
Net income (loss)$(40,617)$(124,602)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of property, equipment and software23,560 29,558 
Amortization of acquired intangible assets4,188 4,305 
Impairment of Goodwill 35,424 
Impairment of long-lived assets 8,811 
Restructuring-related impairment 1,180 
Stock-based compensation9,882 16,078 
Foreign currency (gains) losses, net(159)21,509 
Change in assets and liabilities:
Accounts receivable10,463 (10,233)
Prepaid expenses and other current assets5,384 590 
Right-of-use assets - operating leases6,189 9,258 
Accounts payable(39,427)6,073 
Accrued merchant and supplier payables(48,447)(54,905)
Accrued expenses and other current liabilities(30,557)(36,067)
Operating lease obligations(15,743)(13,831)
Payment for early lease termination(9,724) 
Other, net6,378 (1,504)
Net cash provided by (used in) operating activities(118,630)(108,356)
Investing activities
Purchases of property and equipment and capitalized software(11,797)(22,149)
Proceeds from sale of assets1,475  
Acquisitions of intangible assets and other investing activities(1,174)(1,546)
Net cash provided by (used in) investing activities(11,496)(23,695)
Financing activities
Payments of borrowings under revolving credit agreement(28,300)(40,000)
Taxes paid related to net share settlements of stock-based compensation awards(2,194)(4,703)
Other financing activities(1,642)(1,601)
Net cash provided by (used in) financing activities(32,136)(46,304)
Effect of exchange rate changes on cash, cash equivalents and restricted cash1,967 (4,708)
Net increase (decrease) in cash, cash equivalents and restricted cash(160,295)(183,063)
Cash, cash equivalents and restricted cash, beginning of period (1)
281,696 499,483 
Cash, cash equivalents and restricted cash, end of period (1)
$121,401 $316,420 
    
Six Months Ended June 30,
20232022
Supplemental disclosure of cash flow information:
Cash paid for interest$3,493 $2,428 
Income tax payments2,676 3,611 
Increase (decrease) in liabilities related to purchases of property and equipment and capitalized software(1,568)(53)
Supplemental cash flow information on our leasing obligations
Cash paid for amounts included in the measurement of operating lease liabilities$15,330 $15,860 
Right-of-use assets obtained in exchange for operating lease liabilities$ $1,706 

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 June 30, 2023, December 31, 2022, June 30, 2022 and December 31, 2021 (in thousands):
June 30, 2023December 31, 2022June 30, 2022December 31, 2021
Cash and cash equivalents$118,145 $281,279 $315,595 $498,726 
Restricted cash included in prepaid expenses and other current assets3,256 417 825 757 
Cash, cash equivalents and restricted cash$121,401 $281,696 $316,420 $499,483 
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.
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 (Deficit) 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, 2022.
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. 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.
Going Concern
The accompanying Condensed Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles ("GAAP") applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In accordance with Accounting Standards Update ("ASU") No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the Condensed Consolidated Financial Statements are issued.
Our net cash used in operating activities was $136.0 million and $124.0 million for the years ended December 31, 2022 and December 31, 2021. Net cash used in operating activities was $118.6 million and $108.4 million for the six months ended June 30, 2023 and 2022. Cash and cash equivalents were $118.1 million as of June 30, 2023. We entered into a fourth amendment to the revolving credit agreement in March 2023, which reduced our borrowing capacity and modified certain financial covenants as described in Note 5, Financing Arrangements. The fourth amendment to the revolving credit agreement matures on May 14, 2024. The maturing credit facility together with cash outflows and operating losses indicate that we may not be able to meet our obligations over the next twelve months. These conditions and events, when considered in the aggregate, raised substantial doubt about our ability to continue as a going concern.
We are currently evaluating several different options to enhance our liquidity position. These options include, but are not limited to, pursuing additional financing from both the public and private markets and potential monetization of certain non-core assets. In addition, we expect to pursue additional cost savings initiatives under
10


GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
our 2022 Cost Savings Plan (as defined in Note 9, Restructuring), such as, but not limited to, additional restructuring actions, renegotiating contractual arrangements with certain service providers and continuing to make elective decisions to eliminate vacant positions rather than rehire. Management will also take steps designed to minimize the risk certain payment processors will require reserves or holdback receivables. While management intends to improve our liquidity and our ability to meet our obligations through the plans described above, those plans are not final and are subject to market and other conditions not within our control. Accordingly, we have concluded that these plans do not alleviate substantial doubt about our ability to continue as a going concern. The Condensed Consolidated Financial Statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
Use of Estimates
The preparation of financial statements in conformity with U.S. 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
There were no new accounting standards adopted during the three and six months ended June 30, 2023.
NOTE 2. GOODWILL AND LONG-LIVED ASSETS
We performed an assessment in the first and second quarters of 2023 and did not identify a triggering event that would have required us to test for impairment for the periods.
We determined the impact to our business from the new variant of COVID-19 during the first quarter of 2022 and a downward revision of our forecast during the second quarter of 2022 required us to evaluate our goodwill and long-lived assets for impairment. 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. Our interim quantitative assessment for the first quarter of 2022 did not identify any goodwill or long-lived asset impairment. For the three and six months ended June 30, 2022, we recognized $35.4 million of goodwill impairment within our International reporting unit and $8.8 million of long-lived asset impairment related to certain asset groups within our International reporting unit. We also determined that the carrying amount of certain right-of-use assets related to our 2020 restructuring plan were not fully recoverable and recognized impairment of $1.2 million within our International reporting unit for the three and six months ended June 30, 2022.
11

GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Goodwill
As of June 30, 2023 and December 31, 2022, the balance of our goodwill was $178.7 million. There was no goodwill activity during the six months ended June 30, 2023. All goodwill is within our North America segment, which had a negative carrying value as of June 30, 2023.

Long-Lived Assets
The following table summarizes long-lived asset impairment by asset type for the three and six months ended June 30, 2022 (in thousands):
Three and Six Months Ended June 30, 2022
Property, equipment and software, net
Leasehold improvements$1,632 
Computer hardware1,323 
Other property, equipment and software, net416 
Total Property, equipment and software, net3,371 
Right-of-use assets - operating leases, net (1)
6,620 
Total long-lived asset impairment$9,991 
(1)Includes right-of-use asset impairment of $1.2 million presented within Restructuring and related charges during the three and six months ended June 30, 2022.
The following table summarizes intangible assets as of June 30, 2023 and December 31, 2022 (in thousands):
June 30, 2023December 31, 2022
Gross Carrying ValueAccumulated AmortizationNet Carrying ValueGross Carrying ValueAccumulated AmortizationNet Carrying Value
Merchant relationships$18,699 $16,470 $2,229 $17,912 $14,327 $3,585 
Trade names9,441 8,590 851 9,340 8,382 958 
Patents14,024 7,107 6,917 13,341 6,701 6,640 
Other intangible assets16,709 12,138 4,571 17,517 11,059 6,458 
Total$58,873 $44,305 $14,568 $58,110 $40,469 $17,641 
Amortization of intangible assets is computed using the straight-line method over their estimated useful lives, which range from 1 to 10 years. Amortization expense related to intangible assets was $2.1 million and $2.1 million for the three months ended June 30, 2023 and 2022 and $4.2 million and $4.3 million for the six months ended June 30, 2023 and 2022. As of June 30, 2023, estimated future amortization expense related to intangible assets is as follows (in thousands):

Remaining amounts in 2023$3,608 
20244,316 
20252,805 
20261,934 
20271,257 
Thereafter648 
Total$14,568 
NOTE 3. INVESTMENTS
As of June 30, 2023 and December 31, 2022, our carrying value in other equity investments was $119.5 million, which relates to our non-controlling interest in SumUp Holdings S.a.r.l. ("SumUp"), a privately-held mobile
12

GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
payments company. Our available-for-sale securities and fair value option investments had a carrying value of zero. There were no changes in fair value of our investments for the three and six months ended June 30, 2023.
The following table summarizes our percentage ownership in our investments as of the dates noted below:
June 30, 2023 and December 31, 2022
Other equity investments 1%to19%
Available-for-sale securities 1%to19%
Fair value option investments10%to19%
NOTE 4. SUPPLEMENTAL CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS INFORMATION
The following table summarizes Prepaid expenses and other current assets as of June 30, 2023 and December 31, 2022 (in thousands):
June 30, 2023December 31, 2022
Prepaid expenses$11,766 $16,048 
Income taxes receivable6,990 6,691 
Deferred cloud implementation cost, net10,751 9,362 
Other9,482 9,000 
Total prepaid expenses and other current assets$38,989 $41,101 
The following table summarizes Other non-current assets as of June 30, 2023 and December 31, 2022 (in thousands):
June 30, 2023December 31, 2022
Deferred contract acquisition costs, net$3,591 $4,815 
Deferred cloud implementation costs, net11,287 17,684 
Other3,894 4,992 
Total other non-current assets$18,772 $27,491 
The following table summarizes Accrued expenses and other current liabilities as of June 30, 2023 and December 31, 2022 (in thousands):
June 30, 2023December 31, 2022
Refund reserve$8,706 $11,072 
Compensation and benefits14,151 15,005 
Accrued marketing6,025 19,596 
Restructuring-related liabilities2,196 4,782 
Customer credits30,316 36,220 
Operating lease obligations16,289 37,525 
Other (1)
41,541 47,252 
Total accrued expenses and other current liabilities$119,224 $171,452 
(1)Includes certain payroll taxes deferred under the Coronavirus Aid, Relief and Economic Security ("CARES") Act of $2.7 million as of December 31, 2022. This balance was paid in January 2023.
13

GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
The following table summarizes Other non-current liabilities as of June 30, 2023 and December 31, 2022 (in thousands):
June 30, 2023December 31, 2022
Contingent income tax liabilities$11,451 $11,213 
Deferred income taxes3,154 3,100 
Other2,392 4,273 
Total other non-current liabilities$16,997 $18,586 
The following table summarizes Other income (expense), net for the three and six months ended June 30, 2023 and 2022 (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Interest income$4,276 $1,458 $8,747 $2,773 
Interest expense(5,494)(3,206)(11,115)(6,089)
Foreign currency gains (losses), net and other(3,587)(19,592)633 (22,904)
Other income (expense), net$(4,805)$(21,340)$(1,735)$(26,220)
NOTE 5. FINANCING ARRANGEMENTS
Convertible Senior Notes due 2026
The convertible senior notes due 2026 (the "2026 Notes") bear interest at a rate of 1.125% per annum, payable semiannually in arrears on March 15 and September 15 of each year, with an annual effective interest rate of 1.83%. The 2026 Notes will mature on March 15, 2026, subject to earlier repurchase, redemption or conversion.
The carrying amount of the 2026 Notes consisted of the following as of June 30, 2023 and December 31, 2022 (in thousands):
June 30, 2023December 31, 2022
Principal amount$230,000 $230,000 
Less: debt discount(4,307)(5,077)
Net carrying amount of liability$225,693 $224,923 
We classified the fair value of the 2026 Notes as a Level 3 measurement due to the lack of observable market data over fair value inputs such as our stock price volatility over the term of the 2026 Notes and our cost of debt. The estimated fair value of the 2026 Notes as of June 30, 2023 and December 31, 2022 was $86.7 million and $133.1 million and was determined using a lattice model.
During the three and six months ended June 30, 2023 and 2022, we recognized interest costs on the 2026 Notes as follows (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Contractual interest$647 $647 $1,294 $1,294 
Amortization of debt discount386 379 770 757 
Total $1,033 $1,026 $2,064 $2,051 
Capped Call Transactions
In connection with the 2026 Notes, we entered into privately-negotiated capped call transactions. The capped call transactions cover, subject to customary adjustments, the number of shares of common stock initially underlying the 2026 Notes. The capped call transactions are expected generally to reduce potential dilution to our common stock upon any conversion of the 2026 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, with such reduction and/or offset subject to a cap initially equal to $104.80 (which represents a premium of 100% over the last reported sale price of our common stock on The Nasdaq Global Select Market on March 22, 2021), subject to certain adjustments under the terms of the capped call transactions.
Revolving Credit Agreement
In May 2019, we entered into a second amended and restated senior secured revolving credit agreement, which matures on May 14, 2024, as amended from time to time (the "Amended Credit Agreement"). Most recently, in March 2023, we entered into a fourth amendment to the revolving credit agreement (the "Fourth Amendment" and together with the Amended Credit Agreement the "Existing Credit Agreement") to modify certain financial covenants and provide for additional flexibility in our operations, among other changes, including certain modifications to (i) our requirements to maintain a monthly minimum liquidity balance (including any undrawn amounts under the revolving credit facility) of at least $50.0 million, (ii) the calculation of EBITDA under the Existing Credit Agreement, (iii) mandatory prepayment requirements and (iv) certain affirmative covenants. In addition, the Fourth Amendment reduced our borrowing capacity under our senior secured revolving credit facility from $150.0 million to $75.0 million, which provides for the issuance of up to $75.0 million in letters of credit, provided that the sum of outstanding borrowings and letters of credit do not exceed the maximum funding commitment of $75.0 million.
We deferred debt issuance costs of $4.6 million in aggregate in connection with the Existing Credit Agreement. Deferred debt issuance costs are included within Other non-current assets on the Condensed Consolidated Balance Sheet as of June 30, 2023 and are amortized to interest expense over the term of the respective agreement.
As of June 30, 2023, we were in compliance with the covenants under our Existing Credit Agreement. Non-compliance with the covenants under the Existing Credit Agreement may result in termination of the commitments thereunder and then any outstanding borrowings may be declared due and payable immediately. We have the right to terminate the Existing Credit Agreement or reduce the available commitments at any time.
Amounts committed to outstanding borrowings and letters of credit under our Existing Credit Agreement as of June 30, 2023 and our Amended Credit Agreement as of December 31, 2022 were as follows (in thousands):
June 30, 2023December 31, 2022
Borrowings$46,700 $75,000 
Letters of credit24,545 24,900 
14

GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
NOTE 6. COMMITMENTS AND CONTINGENCIES
Our contractual obligations and commitments and future sublease income under our contractually obligated operating subleases as of June 30, 2023 and through the date of this report, did not materially change from the amounts set forth in our 2022 Annual Report on Form 10-K.
We sublease a portion of 600 West Chicago to Uptake, Inc. "Uptake." In the first quarter of 2023, we initiated a lawsuit against Uptake in the Circuit Court of Cook County for breach of the lease agreement and that lawsuit remains pending.
Legal Matters and Other Contingencies
From time to time, we are party to various legal proceedings incident to the operation of our business. For example, we currently are involved in proceedings brought by merchants, employment and related matters, intellectual property infringement suits, customer lawsuits, stockholder claims relating to U.S. securities law, consumer class actions and suits alleging, among other things, violations of state consumer protection or privacy laws.
Four shareholders have filed separate shareholder derivative lawsuits (collectively, the "Derivative Lawsuits") in relation to a previously settled lawsuit that alleged that Groupon and certain of its officers made materially false and/or misleading statements or omissions regarding its business, operations and prospects, specifically as it relates to reiterating its full year guidance on November 4, 2019 and the Groupon Select program (the "Securities Lawsuit"). First, on September 9, 2021, a shareholder named Jonathan Frankel filed a federal derivative lawsuit in the United States District Court for District of Delaware. Second, on January 19, 2022, a shareholder named Alyssa Estreen filed a derivative lawsuit in the Court of Chancery in the State of Delaware. Third, on January 24, 2022, a shareholder named Saman Khoury filed a derivative lawsuit, also in the Court of Chancery in the State of Delaware. Finally, on May 9, 2022, a shareholder named Moriah Anders filed a lawsuit, also in the Court of Chancery in the State of Delaware. All four lawsuits name Groupon and certain of the Company's former and current officers and directors. The allegations in all four Derivative Lawsuits relate to the same time period and events that are the subject of the Securities Lawsuit and allege that the Company and its shareholders have sustained damages as a result of the conduct of certain current and former officers and directors. The Plaintiffs in each of these Derivative Lawsuits sought unspecified damages they allege were sustained by the Company, injunctive and equitable relief and attorneys’ fees. On June 13, 2023, the Court granted final approval of a shareholder settlement that resolved all four matters. Under the settlement, Groupon agreed to undertake certain corporate reforms. The Court awarded attorneys' fees in the amount of $950,000 to Plaintiffs' counsel. That amount was covered under Groupon's insurance policies and was paid directly by Groupon's insurance carriers in July 2023.
In addition, third parties have from time to time claimed, and others may claim in the future, that we have infringed their intellectual property rights. We are subject to intellectual property disputes, including patent infringement claims, and expect that we will continue to be subject to intellectual property infringement claims as our services expand in scope and complexity. In the past, we have litigated such claims, and we are presently involved in several patent infringement and other intellectual property-related claims, including pending litigation or trademark disputes relating to, for example, our Goods category, some of which could involve potentially substantial claims for damages or injunctive relief. We may also become more vulnerable to third-party claims as laws such as the Digital Millennium Copyright Act are interpreted by the courts, and we become subject to laws in jurisdictions where the underlying laws with respect to the potential liability of online intermediaries are either unclear or less favorable. We believe that additional lawsuits alleging that we have violated patent, copyright or trademark laws may be filed against us. Intellectual property claims, whether meritorious or not, are time consuming and often costly to resolve, could require expensive changes in our methods of doing business or the goods we sell, or could require us to enter into costly royalty or licensing agreements.
We also are subject to consumer claims or lawsuits relating to alleged violations of consumer protection or privacy rights and statutes, some of which could involve potentially substantial claims for damages, including statutory or punitive damages. Consumer and privacy-related claims or lawsuits, whether meritorious or not, could be time consuming, result in costly litigation, damage awards, fines and penalties, injunctive relief or increased
15

GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
costs of doing business through adverse judgment or settlement, or require us to change our business practices, sometimes in expensive ways.
We are also subject to, or in the future may become subject to, a variety of regulatory inquiries, audits, and investigations across the jurisdictions where we conduct our business, including, for example, inquiries related to consumer protection, employment matters and/or hiring practices, marketing practices, tax, unclaimed property and privacy rules and regulations. Any regulatory actions against us, whether meritorious or not, could be time consuming, result in costly litigation, damage awards, fines and penalties, injunctive relief or increased costs of doing business through adverse judgment or settlement, require us to change our business practices in expensive ways, require significant amounts of management time, result in the diversion of significant operational resources, materially damage our brand or reputation, or otherwise harm our business.
We establish an accrued liability for loss contingencies related to legal and regulatory matters when the loss is both probable and reasonably estimable. Those accruals represent management's best estimate of probable losses and, in such cases, there may be an exposure to loss in excess of the amounts accrued. For certain of the matters described above, there are inherent and significant uncertainties based on, among other factors, the stage of the proceedings, developments in the applicable facts of law, or the lack of a specific damage claim. However, we believe that the amount of reasonably possible losses in excess of the amounts accrued for those matters would not have a material adverse effect on our business, Condensed Consolidated Financial Statements, results of operations or cash flows. Our accrued liabilities for loss contingencies related to legal and regulatory matters may change in the future as a result of new developments, including, but not limited to, the occurrence of new legal matters, changes in the law or regulatory environment, adverse or favorable rulings, newly discovered facts relevant to the matter, or changes in the strategy for the matter. Regardless of the outcome, litigation and other regulatory matters can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Indemnifications
In connection with the disposition of our operations in Latin America in 2017, we recorded $5.4 million in indemnification liabilities for certain tax and other matters upon the closing of the transactions as an adjustment to the net loss on the dispositions within discontinued operations at their fair value. We estimated the indemnification liabilities using a probability-weighted expected cash flow approach. Our remaining indemnification liabilities were $2.8 million as of June 30, 2023. We estimate that the total amount of obligations that are reasonably possible to arise under the indemnifications in excess of amounts accrued as of June 30, 2023 is approximately $11.7 million.
In the normal course of business to facilitate transactions related to our operations, we indemnify certain parties, including employees, lessors, service providers, merchants, and counterparties to investment agreements and asset and stock purchase agreements with respect to various matters. We have agreed to hold certain parties harmless against losses arising from a breach of representations or covenants, or other claims made against those parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. We are also subject to increased exposure to various claims as a result of our divestitures and acquisitions, particularly in cases where we are entering into new businesses in connection with such acquisitions. We may also become more vulnerable to claims as we expand the range and scope of our services and are subject to laws in jurisdictions where the underlying laws with respect to potential liability are either unclear or less favorable. In addition, we have entered into indemnification agreements with our officers, directors and underwriters, and our bylaws contain similar indemnification obligations that cover officers, directors, employees and other agents. 
Except as noted above, it is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, any payments that we have made under these agreements have not had a material impact on our operating results, financial position or cash flows.
16

GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
NOTE 7. STOCKHOLDERS' EQUITY (DEFICIT) AND COMPENSATION ARRANGEMENTS
Groupon, Inc. Incentive Plan
In August 2011, we established the Groupon, Inc. 2011 Incentive Plan, as amended and restated (the "2011 Plan"), under which options, restricted stock units and performance stock units for up to 13,775,000 shares of common stock are authorized for future issuance to employees, consultants and directors. The 2011 Plan is administered by the Compensation Committee of the Board. As of June 30, 2023, 2,631,382 shares of common stock were available for future issuance under the 2011 Plan.
Restricted Stock Units
The restricted stock units granted under the 2011 Plan ("Restricted Stock Units") generally have vesting periods between one and four years and are amortized on a straight-line basis over their requisite service period.
The table below summarizes Restricted Stock Unit activity for employees and non-employees under the 2011 Plan for the six months ended June 30, 2023:
Restricted Stock UnitsWeighted-Average Grant Date Fair Value (per unit)
Unvested at December 31, 20222,876,089 $19.33 
Granted563,429 5.20 
Vested(1,092,252)21.88 
Forfeited(1,119,327)16.03 
Unvested at June 30, 20231,227,939 $10.55 
As of June 30, 2023, $9.0 million of unrecognized compensation costs related to unvested Restricted Stock Units are expected to be recognized over a remaining weighted-average period of 1.03 years.
Stock Options
On March 30, 2023, we issued 3,500,000 units of stock options with a per share value of $0.95, a strike price of $6.00 and vesting over two years. The exercise price of stock options granted is equal to the fair market value of the underlying stock on the date of grant. The contractual term for these stock options expires three years from the grant date. The fair value of stock options on the grant date is amortized on a straight-line basis over the requisite service period.
The fair value of stock options granted is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. Expected volatility is based on Groupon's historical volatility over the estimated expected life of the stock options. The expected term represents the period of time the stock options are expected to be outstanding. The risk-free interest rate is based on yields on U.S. Treasury STRIPS with maturity similar to the estimated expected life of the stock options. The weighted-average assumptions for stock options granted are outlined in the following table:
Dividend yield0.0 %
Risk-free interest rate4.1 %
Expected term (in years)2
Expected volatility78.2 %

17

GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
The table below summarizes stock option activity for the six months ended June 30, 2023:
OptionsWeighted-Average Exercise PriceWeighted-Average Remaining Contractual Term (in years)Aggregate Intrinsic Value
Outstanding at December 31, 2022 $ — $ 
Granted3,500,000 6.00 3.00— 
Outstanding at June 30, 20233,062,500 6.00 2.75 
Vested and exercisable at June 30, 2023437,500 $6.00 2.75$— 
As of June 30, 2023, there was $2.9 million of total unrecognized compensation costs related to unvested stock options granted under the 2011 Plan. That cost is expected to be recognized over a weighted-average period of 1.75 years. The total fair value of shares vested during the six months ended June 30, 2023 was $0.4 million.
Performance Shares Units
We have previously granted performance share units under the 2011 Plan that vest in shares of our common stock upon the achievement of financial and operational targets specified in the respective award agreement ("Performance Share Units"). Our existing Performance Share Units are subject to continued employment through the performance period dictated by the award and certification by the Compensation Committee of the Board that the specified performance conditions have been achieved.
The table below summarizes Performance Share Unit activity under the 2011 Plan for the six months ended June 30, 2023:
Performance Share UnitsWeighted-Average Grant Date Fair Value (per unit)
Unvested at December 31, 202217,269 $24.13 
Granted  
Vested(17,269)24.13 
Forfeited  
Unvested at June 30, 2023 $ 
18

GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
NOTE 8. REVENUE RECOGNITION
Refer to Note 13, Segment Information, for revenue summarized by reportable segment and category for the three and six months ended June 30, 2023 and 2022.
Customer Credits
We issue credits to customers that can be applied to future purchases through our online marketplaces. Credits are primarily issued as consideration for refunds. To a lesser extent, credits are issued for customer relationship purposes. The following table summarizes the activity in the liability for customer credits for the six months ended June 30, 2023 (in thousands):
Customer Credits
Balance as of December 31, 2022$36,220 
Credits issued48,101 
Credits redeemed (1)
(47,908)
Breakage revenue recognized(6,174)
Foreign currency translation77 
Balance as of June 30, 2023$30,316 
(1)Customer credits can be redeemed through our online marketplaces for goods or services provided by a third-party merchant and 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. Customer credits are typically used within one year of issuance.
Costs of Obtaining Contracts
Incremental costs to obtain contracts with third-party merchants, such as sales commissions, are deferred and recognized over the expected period of the merchant arrangement, generally from 12 to 18 months. Deferred contract acquisition costs are presented in Prepaid expenses and other current assets and Other non-current assets on the Condensed Consolidated Balance Sheets. As of June 30, 2023 and December 31, 2022, deferred contract acquisition costs were $4.5 million and $5.9 million.
The amortization of deferred contract acquisition costs is classified within Selling, general and administrative expense in the Condensed Consolidated Statements of Operations. We amortized $2.1 million and $2.7 million of deferred contract acquisition costs for the three months ended June 30, 2023 and 2022, and $4.4 million and $5.6 million for the six months ended June 30, 2023 and 2022.
Allowance for Expected Credit Losses on Accounts Receivable
Accounts receivable primarily represents the net cash due from credit card and other payment processors and from merchants and performance marketing networks for commissions earned on consumer purchases. We establish an allowance for expected credit losses on accounts receivable based on identifying the following customer risk characteristics: size, type of customer, and payment terms offered in the normal course of business. Receivables with similar risk characteristics are grouped into pools. For each pool, we consider the historical credit loss experience, current economic conditions, bankruptcy filings, published or estimated credit default rates, age of the receivable and any recoveries in assessing the lifetime expected credit losses.
19

GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
The following table summarizes the activity in the allowance for expected credit losses on accounts receivable for the six months ended June 30, 2023 (in thousands):
Allowance for Expected Credit Losses
Balance as of December 31, 2022$4,538 
Change in provision(787)
Write-offs(420)
Foreign currency translation49 
Balance as of June 30, 2023$3,380 
Variable Consideration for Unredeemed Vouchers
For merchant agreements with redemption payment terms, the merchant is not paid its share of the sale price for a voucher sold through one of our online marketplaces until the customer redeems the related voucher. If the customer does not redeem a voucher with such merchant payment terms, we retain all of the gross billings for that voucher, rather than retaining only our net commission. We estimate the variable consideration from vouchers that will not ultimately be redeemed using our historical voucher redemption experience and recognize that amount as revenue at the time of sale. We apply a constraint to ensure it is probable that a significant reversal of revenue will not occur in future periods. We recognized variable consideration from unredeemed vouchers that were sold in a prior period of $4.7 million and $4.3 million for the three months ended June 30, 2023 and 2022, and $4.4 million and $3.0 million for the six months ended June 30, 2023 and 2022. When actual redemptions differ from our estimates, the effects could be material to the Condensed Consolidated Financial Statements.
NOTE 9. RESTRUCTURING AND RELATED CHARGES
In August 2022 and April 2020, we initiated Board-approved restructuring plans. Costs incurred related to the restructuring plans are classified as Restructuring and related charges on the Condensed Consolidated Statements of Operations. The restructuring activities are summarized by plan in the sections below.
2022 Restructuring Plan
In August 2022, we initiated a multi-phase cost savings plan designed to reduce our expense structure to align with our go-forward business and financial objectives (the “2022 Cost Savings Plan”). The 2022 Cost Savings Plan included a restructuring plan, approved by our Board on August 5, 2022 (the “2022 Restructuring Plan”). The first phase and second phase of the 2022 Restructuring Plan are expected to include an overall reduction of approximately 1,000 positions globally, with the majority of these reductions completed as of March 31, 2023 and the remainder expected to occur by the end of 2023. In connection with first and second phase actions, we expect to record total pre-tax charges of $20.0 million to $27.0 million. A majority of the pre-tax charges are expected to be paid in cash and relate to employee severance and compensation benefits, with an immaterial amount of charges related to other exit costs. We have incurred total pretax charges of $19.1 million since the inception of the 2022 Restructuring Plan.
The following table summarizes costs incurred by segment related to the 2022 Restructuring Plan for the three and six months ended June 30, 2023 (in thousands):
Three Months Ended June 30, 2023
Employee Severance and Benefit Costs (Credits) (1)
Other Exit CostsTotal Restructuring Charges (Credits)
North America$126 $229 $355 
International158  158 
Consolidated$284 $229 $513 
(1)The employee severance and benefits costs for the three months ended June 30, 2023 are related to the termination of approximately 39 employees.
20

GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Six Months Ended June 30, 2023
Employee Severance and Benefit Costs (Credits) (1)
Other Exit CostsTotal Restructuring Charges (Credits)
North America$4,566 $1,037 $5,603 
International3,891  3,891 
Consolidated$8,457 $1,037 $9,494 
(1)The employee severance and benefits costs for the six months ended June 30, 2023 are related to the termination of approximately 371 employees.
The following table summarizes restructuring liability activity for the 2022 Restructuring Plan (in thousands):
Employee Severance and Benefit CostsOther Exit CostsTotal
Balance as of December 31, 2022
$175 $ $175 
Charges payable in cash8,457 1,037 9,494 
Cash payments(8,108)(730)(8,838)
Foreign currency translation73  73 
Balance as of June 30, 2023 (1)
$597 $307 $904 
(1)Substantially all of the remaining cash payments for the first and second phase of the 2022 Restructuring Plan costs are expected to be disbursed by the end of 2023.
In July 2023, the Board approved the third phase of the 2022 Restructuring Plan, which is expected to include reductions in positions globally. In connection with the third phase, we expect to record total pre-tax charges of approximately $3.6 million. A majority of the pre-tax charges for the third phase are expected to be paid in cash and primarily related to employee severance and compensation benefits, with an immaterial amount of charges related to other exit costs.
2020 Restructuring Plan
In April 2020, the Board approved a multi-phase restructuring plan related to our previously-announced strategic shift and as part of the cost cutting measures implemented in response to the impact of COVID-19 on our business (the "2020 Restructuring Plan"). We have incurred total pretax charges of $108.0 million since the inception of the 2020 Restructuring Plan. Our actions under this plan were substantially completed by December 31, 2021, and our current and future charges or credits will be from changes in estimates. Our 2020 Restructuring Plan included workforce reductions of approximately 1,600 positions globally, the exit or discontinuation of the use of certain leases and other assets, impairments of our right-of-use and other long-lived assets, and the exit of our operations in New Zealand and Japan.
21

GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
The following tables summarize costs incurred by segment related to the 2020 Restructuring Plan for the three and six months ended June 30, 2023 and 2022 (in thousands):
Three Months Ended June 30, 2023
Employee Severance and Benefit Costs (Credits)Legal and Advisory CostsLease-related Charges (Credits)Total Restructuring Charges (Credits)
North America$ $1 $(63)$(62)
International(1,436)8 288 (1,140)
Consolidated$(1,436)$9 $225 $(1,202)
Three Months Ended June 30, 2022
Employee Severance and Benefit Costs (Credits)Legal and Advisory CostsLease-related Charges (Credits)Total Restructuring Charges (Credits)
North America$ $86 $818 $904 
International473 24 1,538 2,035 
Consolidated$473 $110 $2,356 $2,939 
Six Months Ended June 30, 2023
Employee Severance and Benefit Costs (Credits)Legal and Advisory CostsLease-related Charges (Credits)Total Restructuring Charges (Credits)
North America$ $2 $544 $546 
International(2,482)(48)595 (1,935)
Consolidated$(2,482)$(46)$1,139 $(1,389)
Six Months Ended June 30, 2022
Employee Severance and Benefit Costs (Credits)Legal and Advisory CostsLease-related Charges (Credits)Total Restructuring Charges (Credits)
North America$1 $130 $1,174 $1,305 
International184 61 1,701 1,946 
Consolidated$185 $191 $2,875 $3,251 
As a part of our 2020 Restructuring Plan, we terminated or modified several of our leases. In other cases we vacated our leased facilities, and some of those facilities are being actively marketed for sublease or we are in negotiations with the landlord to potentially terminate or modify those leases. We recognized $1.2 million in impairment related to those leases during the three and six months ended June 30, 2022. See Note 2, Goodwill and Long-Lived Assets, for additional information. In January 2023, we exercised our option to early terminate our lease at 600 West Chicago, now expiring on January 31, 2024, which required us to pay a penalty of $9.6 million with our early termination notice. Prior to exercising our option to early terminate, the expiration of 600 West Chicago was January 31, 2026. Rent expense, including amortization of the right-of-use asset and accretion of the operating lease liability, sublease income, termination and modification gains and losses, and other variable lease costs related to the leased facilities vacated as part of our restructuring plan are presented within Restructuring and related charges in the Condensed Consolidated Statements of Operations. The current and
22

GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
non-current liabilities associated with these leases continue to be presented within Accrued expenses and other current liabilities and Operating lease obligations in the Condensed Consolidated Balance Sheets.
The following table summarizes restructuring liability activity for the 2020 Restructuring Plan (in thousands):
Employee Severance and Benefit CostsOther Exit CostsTotal
Balance as of December 31, 2022
$4,306 $301 $4,607 
Charges payable in cash and changes in estimate (1)
(2,482)(46)(2,528)
Cash payments(709)(113)(822)
Foreign currency translation33 2 35 
Balance as of June 30, 2023 (2)
$1,148 $144 $1,292 
(1)The credit recorded during the three and six months ended June 30, 2023 primarily relates to the release of our estimated accrual for certain severance benefits upon expiration of the eligible payout period.
(2)Substantially all of the remaining cash payments for the 2020 Restructuring Plan costs are expected to be disbursed by the end of 2023.
NOTE 10. INCOME TAXES
Our income tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items.
Provision (benefit) for income taxes and Income (loss) from operations before provision (benefit) for income taxes for the three and six months ended June 30, 2023 and 2022 were as follows (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Provision (benefit) for income taxes$2,323 $2,398 $3,441 $(277)
Income (loss) before provision (benefit) for income taxes(9,681)(87,852)(37,176)(124,879)
Our U.S. Federal income tax rate is 21%. The primary factor impacting the effective tax rate for the three and six months ended June 30, 2023 and 2022 was the pretax losses incurred in jurisdictions that have valuation allowances against their net deferred tax assets. For the three and six months ended June 30, 2022, we were also impacted by the reduction to our estimated annual tax rate due to an increase in expected annual losses. For the three months ended June 30, 2022, we had a valuation allowance in the U.S. against capital losses, deferred tax assets that will convert into capital losses upon reversal, and state credits that we were not expecting to be able to realize. We recorded a valuation allowance against the remaining U.S. federal and state deferred tax assets in Q4 2022. For the three and six months ended June 30, 2023, we continue to maintain a full valuation allowance against all U.S. federal and state deferred tax assets. We expect that our consolidated effective tax rate in future periods will continue to differ significantly from the U.S. federal income tax rate as a result of our tax obligations in jurisdictions with profits and valuation allowances in jurisdictions with losses.
We are currently undergoing income tax audits in multiple jurisdictions. It is likely that the examination phase of some of those audits will conclude in the next 12 months. There are many factors, including factors outside of our control, which influence the progress and completion of those audits. We are subject to claims for tax assessments by foreign jurisdictions, including a proposed assessment for $117.3 million, inclusive of estimated incremental interest from the original assessment. We believe that the assessment, which primarily relates to transfer pricing on transactions occurring in 2011, is without merit and we intend to vigorously defend ourselves in that matter. There could be potential increases in our liabilities for uncertain tax positions from the ultimate resolution of that assessment. We believe it is reasonably possible that reductions of up to $7.1 million in unrecognized tax benefits may occur within the 12 months following June 30, 2023 upon closing of income tax audits or the expiration of applicable statutes of limitations.
In general, it is our practice and intention to reinvest the earnings of our non-U.S. subsidiaries in those operations or remit such earnings in a tax-efficient manner. An actual repatriation from our non-U.S. subsidiaries
could be subject to foreign and U.S. state income taxes. Aside from limited exceptions for which the related deferred tax liabilities recognized as of June 30, 2023 and December 31, 2022 are immaterial, we do not intend to distribute earnings of foreign subsidiaries for which we have an excess of the financial reporting basis over the tax basis of our investments and therefore have not recorded any deferred taxes related to such amounts. The actual tax cost resulting from a distribution would depend on income tax laws and circumstances at the time of distribution. Determination of the amount of unrecognized deferred tax liability related to the excess of the financial reporting basis over the tax basis of our foreign subsidiaries is not practical due to the complexities associated with the calculation.
NOTE 11. FAIR VALUE MEASUREMENTS
Fair value is defined under U.S. GAAP as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability.
In determining fair value, we use valuation approaches within the fair value measurement framework. We have fair value option investments and available-for-sale securities that we measure using the income approach. We have classified these investments as Level 3 due to the lack of observable market data over fair value inputs such as cash flow projections and discount rates.
There was no material activity in the fair value of recurring Level 3 fair value measurements for the three and six months ended June 30, 2023 and 2022.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis, including assets that are written down to fair value as a result of an impairment or modified due to an observable price change in an orderly transaction.
We did not record any significant nonrecurring fair value measurements for the three and six months ended June 30, 2023. We recognized $35.4 million in non-cash impairment charges related to goodwill and $10.0 million in non-cash impairment charges related to long-lived assets, of which $1.2 million was included in Restructuring and related charges on our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2022.
Estimated Fair Value of Financial Assets and Liabilities Not Measured at Fair Value
Our financial instruments not carried at fair value consist primarily of accounts receivable, restricted cash, short-term borrowings, accounts payable, accrued merchant and supplier payables and accrued expenses. The carrying values of those assets and liabilities approximate their respective fair values as of June 30, 2023 and December 31, 2022 due to their short-term nature.
NOTE 12. INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted-average number of common shares and the effect of potentially dilutive securities outstanding during the period. Potentially dilutive securities include stock options, restricted stock units, performance share units, ESPP shares, capped call transactions and convertible senior notes. If dilutive, those potentially dilutive securities are reflected in diluted net income (loss) per share using the treasury stock method, except for the convertible senior notes, which are subject to the if-converted method.
23

GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
The following table sets forth the computation of basic and diluted net income (loss) per share of common stock for the three and six months ended June 30, 2023 and 2022 (in thousands, except share amounts and per share amounts):
Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Basic and diluted net income (loss) per share:
Numerator
Net income (loss) $(12,004)$(90,250)$(40,617)$(124,602)
Less: Net income (loss) attributable to noncontrolling interests603 977 1,137 1,477 
Net income (loss) attributable to common stockholders(12,607)(91,227)(41,754)(126,079)
Denominator
Weighted-average common shares outstanding31,020,493 30,039,233 30,796,943 29,952,018 
Basic and diluted net income (loss) per share:$(0.41)$(3.04)$(1.36)$(4.21)
The following weighted-average potentially dilutive instruments are not included in the diluted net income (loss) per share calculations above because they would have had an antidilutive effect on the net income (loss) per share:
Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
Restricted stock units1,624,378 3,073,435 1,988,886 2,560,609 
Stock options3,500,000  1,769,444  
Other stock-based compensation awards(1)
33,165 158,344 48,176 106,263 
Convertible Senior notes due 2026 (2)
3,376,400 3,376,400 3,376,400 3,376,400 
Capped call transactions3,376,400 3,376,400 3,376,400 3,376,400 
Total11,910,343 9,984,579 10,559,306 9,419,672 
(1)As of June 30,2022, there were up to 33,333 shares of common stock outstanding that were excluded from the table above due to their status as Market-based Performance Share Units eligible to vest subject to the achievement of specified performance or market conditions which were not satisfied as of the end of the period.
(2)We apply the if-converted method in computing the effect of our convertible senior notes on diluted net income (loss) per share, whereby the numerator of our diluted net income (loss) per share computations is adjusted for interest expense, net of tax, and the denominator is adjusted for the number of shares into which the convertible senior notes could be converted. The effect is only included in the calculation of income (loss) per share for those instruments for which it would reduce income (loss) per share. See Note 5, Financing Arrangements, for additional information.
24

GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
NOTE 13. SEGMENT INFORMATION
The segment information reported in the tables below reflects the operating results that are regularly reviewed by our chief operating decision maker to assess performance and make resource allocation decisions. Our operations are organized into two segments: North America and International. Our measure of segment profitability is contribution profit, defined as gross profit less marketing expense, which is consistent with how management reviews the operating results of the segments. Contribution profit measures the amount of marketing investment needed to generate gross profit. Other operating expenses are excluded from contribution profit as management does not review those expenses by segment.
The following table summarizes revenue by reportable segment and category for the three and six months ended June 30, 2023 and 2022 (in thousands):    
Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
North America revenue:
Local$85,475 $101,469 $166,854 $198,390 
Goods4,780 6,204 9,845 14,498 
Travel5,579 4,451 8,394 9,400 
Total North America revenue (1)
95,834 112,124 185,093 222,288 
International revenue:
Local27,374 32,111 52,639 65,261 
Goods3,729 5,748 7,975 12,527 
Travel2,172 3,233 5,013 6,460 
Total International revenue (1)
$33,275 $41,092 $65,627 $84,248 
(1)North America includes revenue from the United States of $94.4 million and $110.1 million for the three months ended June 30, 2023 and 2022 and $182.1 million and $218.9 million for the six months ended June 30, 2023 and 2022. There were no other individual countries that represented more than 10% of consolidated total revenue for the three and six months ended June 30, 2023 and 2022. Revenue is attributed to individual countries based on the location of the customer.
The following table summarizes cost of revenue by reportable segment and category for the three and six months ended June 30, 2023 and 2022 (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2023202220232022
North America cost of revenue:
Local$11,012 $13,877 $22,399 $27,040 
Goods797 1,248 1,742 2,707 
Travel932 1,096 1,917 2,391 
Total North America cost of revenue12,741 16,221 26,058 32,138 
International cost of revenue:
Local2,415 2,676 5,038