Groupon (GRPN) Q2 Revenue Beats by 3%

Groupon (GRPN 0.76%), a marketplace platform known for connecting local businesses with consumers via deals and experiences, released its Q2 2025 earnings on August 6, 2025. The results showed GAAP revenue of $125.7 million, which exceeded Wall Street’s GAAP expectation of $122.47 million. The company achieved diluted earnings per share (GAAP) of $0.46, contrasting sharply with a GAAP diluted net loss of $0.25 per share in Q2 2024 and outperforming average analyst projections of a nearly break-even result (GAAP). Gross billings grew 12% to $416.7 million compared to Q2 2024. While bottom-line improvement and strong cash generation were clear positives, GAAP revenue growth was 1% year-over-year and gains were concentrated mostly in core U.S. cities. Overall, the period marked another quarter of progress in the company’s transformation, but also underscored the slow pace of revenue expansion and continued challenges in international markets.

Source: Analyst estimates for the quarter provided by FactSet.

Business Overview and Key Success Drivers

Groupon operates a digital marketplace where local businesses can promote and sell services, experiences, and goods to consumers through its platform. Its model relies on connecting a two-sided network: a robust base of active customers and engaged merchants. The company’s platform spans two main segments, North America and International, and three product categories: Local, Goods, and Travel.

The business has focused recently on transforming from a general daily deals platform into a destination for curated, quality local experiences. Key elements of success include signing higher-value local merchants, and investing in modern technology to simplify the online experience. Factors such as the efficiency of customer acquisition, frequency of purchases, and retention of both consumers and merchants all play a pivotal role for sustaining long-term growth.

Quarter in Review: Financial and Operating Highlights

During the period, Groupon beat GAAP revenue expectations by $3.2 million, posting $125.7 million in GAAP revenue. The company delivered net income from continuing operations (GAAP) of $20.6 million, a reversal from a GAAP net loss of $9.4 million in Q2 2024. Diluted earnings per share reached $0.46, contrasting with an expected GAAP net loss and last year’s result.

Gross billings, which measure the total value of customer purchases before any revenue-sharing or deductions, rose 12% to $416.7 million year over year. Unit sales were up 6% year-over-year, reaching 9.1 million globally, with North America as the main engine of growth. In that region, Local billings jumped 20%, unit sales rose 8% compared with the prior year period, and North America active customers climbed 6% from the prior year to 10.8 million. Company leadership highlighted that more North American merchants are conducting over $1 million in annual billings, up 43% year-over-year in Q1 2025. This shift comes from a strategy that prioritizes quality and large-scale merchant relationships.

Despite strong momentum in North America, Headline revenue (GAAP) grew just 0.9% year over year. Active global customers were flat compared to last year, indicating that new customer gains in North America offset attrition elsewhere. Management attributes slower revenue growth relative to billings to a reduction in the company's take rate — the percentage of billings retained as revenue — a byproduct of efforts to drive more value for merchants and customers by keeping prices competitive and increasing redemption rates.

The company’s performance outside North America remained mixed. International gross billings declined by 3% and Active international customers fell 11% year-over-year. While Local revenue in international markets edged down 1%, there was improvement in some countries, such as Spain, which saw very strong double-digit growth following Groupon’s playbook for marketplace transformation during Q1 and Q2 2025. However, local revenue and billings headline numbers were weighed down by last year’s exit from the Italy market and the sale of Giftcloud.

Profitability showed limited improvement, with adjusted EBITDA (non-GAAP) of $15.6 million, slightly down from $16.5 million in Q2 2024. Free cash flow, a non-GAAP measure of how much cash a business generates after accounting for core expenses and investments, was $25.2 million. Cost discipline contributed as selling, general, and administrative expenses dropped from last year, Marketing costs rose 13.4% year over year as the company invested more aggressively to attract new users and merchants.

The Goods category continued to decline, with North America Goods billings down 37.9%. Travel bookings in North America improved 9.7% compared to Q2 2024, but international travel bookings dropped 14.5%. Local remains the core focus and primary growth source.

On the technology front, Groupon continued its MobileNext rollouts and platform upgrades. Improvements in integrated ticketing — allowing customers to complete sports and event bookings entirely within the platform — were highlighted as early successes from tech modernization initiatives discussed by management in 2024 and Q2 2025. The company also advanced initiatives using artificial intelligence to help merchants design deals and optimize placements on the site, although these are early-stage investments. Plans for further international mobile upgrades are moving carefully, with conversion performance closely monitored as new features debut.

Groupon also strengthened its balance sheet by issuing $244 million in new notes and restructuring convertible debt, helping solidify its cash position, which climbed to $262.6 million at period end.

GRPN does not currently pay a dividend.

Looking Ahead: Guidance and Key Areas to Watch

Management did not offer explicit revenue or profitability guidance and has pointed investors to its online commentary for further details. In prior updates, the company raised full-year billings growth guidance to a range of 3% to 5%, but with no change to anticipated revenue or adjusted EBITDA targets. As a result, investors will need to monitor billings trends and how take rates evolve as the transformation strategy progresses.

Key issues to watch moving forward include whether revenue can keep pace with billings growth, improvements in customer and merchant retention, and performance in international markets. Additionally, the impact of marketing investments, continued efficiency measures, and the trajectory of non-core categories such as Goods and Travel will be areas of focus. As the business continues its shift to a higher quality, local-focused model, future results will likely hinge on the company’s ability to sustain customer acquisition and deliver on planned product and platform enhancements.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.