Groupon, Inc.
Q1 2018 Earnings Call Transcript

Published: 9 May 2018

[Operator:]

Good day, everyone, and welcome to Groupon's First Quarter 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the company's formal remarks. Today's conference call is being recorded. For opening remarks, I would like to turn the call over to Vice President of Investor Relations, Heather Davis. Please go ahead.

[Heather Davis:]

Good morning, and welcome to Groupon's first quarter 2018 financial results conference call. On the call today are our CEO, Rich Williams; and CFO, Mike Randolfi. The following discussion and responses to your questions reflect management's view as of today, May 9, 2018, only, and will include forward-looking statements. Actual results may differ materially from those expressed or implied in our forward-looking statements. Additional information about risks and other factors that could potentially impact our financial results is included in today's press release and in our filings with the SEC, including our Form 10-K. We encourage investors to use our Investor Relations website at investor.groupon.com as a way of easily finding information about the company. Groupon promptly makes available on this website the reports that the company files or furnishes with the SEC, corporate governance information, and select press releases and social media postings. On the call today, we will also discuss the following non-GAAP financial measures

[Rich Williams:]

In the first quarter, Groupon made real progress in becoming a true platform for local commerce and an economic force for small businesses, connecting millions of customers with great businesses and savings around the world, while delivering strong bottom line performance. We've now sold nearly 1.5 billion Groupons, saved customers more than $29 billion, and pumped more than $19 billion back into local communities, all in fewer than 10 years, and now with increasing consistency and accelerated progress towards our broader mission goal. (3

[Mike Randolfi:]

Thanks, Rich. We are pleased that our first quarter results are better than what we expected during the last earnings call with gross profit of $325 million, and adjusted EBITDA of $53 million. For adjusted EBITDA, this represents a 17% year-over-year increase. Our plans for 2018 include enhancing the customer experience, further building out the Groupon platform, continuing to unlock international potential, and maintaining the rigor we've developed around operational efficiency. During the first quarter, we made significant progress on all of these fronts. As Rich mentioned, we recently announced several third-party supply and distribution agreements, as well as a strategic acquisition. We continue to improve our customer experience through reducing friction and increasing bookable offerings. We grew our international customer and supply base, and finally, we continue to develop greater operating leverage in our cost structure, which allows increases in gross profit to flow to the bottom line. With regards to phasing throughout Q1, some of our initiatives to increase gross profit per customer that we expected to ramp by Q2 were realized a little earlier than anticipated. The resulting higher than projected gross profit drove our adjusted EBITDA outperformance for the quarter. In North America, gross profit was $220 million for the first quarter, Q1 Local gross profit was $167 million, down $3 million, or 2%, as expected. Adjusting for the Groupon+ ramp up and the reduction of gross profit from OrderUp, North America Local gross profit would've experienced a low single-digit percentage increase. Q1 Goods gross profit was $37 million, roughly flat to last year, as we optimized for relevance and gross profit, including trading unit volumes for higher gross margins. Gross profit per customer in North America was $28.38, up 1%. Customers in North America. Over the last year, we've become more granular in our customer analytics and segmentation, which enables us to increasingly target marketing dollars toward higher value customers, while at the same time choosing to not market toward lower value customers. Lower value customers to attrite. This contributed to a small decline in active customers this quarter, and we anticipate this will contribute to expected North America customer declines into Q2. We believe the resulting customer base will have greater potential for long-term gross profit per customer growth. In international, for the third consecutive quarter, we grew our customer base and gross profit in a meaningful way. We added over 200,000 net new customers, and generated international gross profit of $105 million for the first quarter, up $5 million, or 5%. Q1 Local gross profit was $70 million, up $3 million, or 5%. Q1 Goods gross profit was $24 million, up $2 million, or 10%. Gross profit per customer in international was $24.83, up 9% as reported. These results were driven by the investments made in customer experience and strong operational execution. Overall, we believe there is a long runway for international in the coming years. As such, throughout this year, we plan to make investments to improve the customer experience, increase supply, and further develop the Groupon brand in the local markets in which we operate. Additionally, we made a strategic acquisition of U.K. based Vouchercloud on April 30, which gives us the ability to accelerate our international coupon business. In the first quarter on a consolidated basis, marketing expense was $99 million, up $13 million, or 15%. In North America, while Q1 marketing expense was up $8 million, this was entirely offset by lower order discounts, which resulted in marketing and order discounts in the aggregate for North America being down slightly. In international, Q1 marketing was up $5 million, or 22%, which helped drive the gross profit growth we experienced in the quarter. SG&A for the quarter was $222 million, down $10 million, or 4%, reflecting our ongoing focus on operational efficiency. On liquidity, we ended the quarter with $726 million in cash, in addition to our $250 million revolver. Just keep in mind, this is before our $65 million acquisition of Vouchercloud, which will be reflected in our second quarter. Additionally, our Board of Directors recently approved a $300 million share repurchase authorization, which replaces the recently expired authorization. Moving on to guidance for 2018, we are raising our full-year 2018 adjusted EBITDA expectation to $280 million to $290 million, which reflects the favorability we saw in Q1, the Vouchercloud acquisition, and the anticipated ramp up in our gross profit initiatives. This guidance implies 14% adjusted EBITDA year-over-year growth at the midpoint, on top of the nearly 40% adjusted EBITDA growth delivered in 2017, as compared to 2016. For Vouchercloud, we expect that will added $5 million to $6 million to adjusted EBITDA in 2018, which is incorporated in our updated guidance. We continue to expect significant free cash flow generation for 2018, with the rate of growth to likely exceed adjusted EBITDA growth. With regards to the second quarter, we expect revenue to be in the range of $630 million to $640 million, and gross profit to be similar to the first quarter of around $325 million. We expect year-over-year gross profit growth trends in North America and in international to be similar in Q2 to that of Q1. On marketing, we also expect to spend a similar amount in Q2 as Q1. And with merit increases in Q2, and a ramp up in expenses associated with GDPR, we expect a modest sequential increase in SG&A. In total, we expect that Q2 adjusted EBITDA will be approximately $50 million, or a bit below Q1. In summary, with the investments we are making in enhancing the customer experience, building out the Groupon platform, unlocking international's potential and continued rigor around operational efficiencies, we continue to believe we are on a path toward multi-year adjusted EBITDA and free cash flow growth. With that, let me turn the call back over to Rich.

[Rich Williams:]

Thanks, Mike. As you can see, we've continued to make solid progress as an attractive platform for merchants, as a prime destination for customers, as an international business, and as a team. We believe these inputs are the right areas of focus to further press our advantage in Local, and we're seeing them generate results. We intend to lean into them across the balance of 2018, keeping our eyes on becoming a daily habit in Local and adding real building blocks to communities in the form of thriving businesses. Thanks as always to the Groupon team for their continued passion for our cause, and their ever improving execution and service to it. With that, let's take some questions.

[Operator:]

Certainly. Our first question comes from the line of Sam Kemp from Piper Jaffray. Your question please.

[Samuel James Kemp:]

Great, thanks. Thanks for taking the question. First, thanks for the color on Q2 revenue. Can you give an update for the full year revenue guide to be consistent with what you gave last quarter? And then, when you look at the Q1 gross profit results versus what you had talked about qualitatively last quarter, can you just call out how much of that difference was from outperformance versus FX changes? And then just one last question, which is, can you call out specifically how much Groupon order – Groupon+ order volume was coming through redemptions in the quarter? Thanks.

[Rich Williams:]

Thanks for those, Sam. I'll hit on just overall on what we're seeing on performance. I think, but basically baked in some of your questions is just a little bit how much is our execution versus some extrinsic factors. And then Mike can add color on some of the specifics in Q2 rev and full year rev guide, et cetera. But, I mean, really there not a lot has changed in the last little stretch in terms of FX. But what we have done is executed really well against our strategy. We were very clear on the last call about what our strategy was for 2018 and the areas we were going to focus on. I think, across the board, whether it's from customer experience and the traction we've seen on Groupon+, and on booking and ticketing integrations, then on the platform, you've obviously seen a lot of, and I talked a little bit about this, or a fair amount in the prepared remarks, just a lot of traction with partners and bringing on more amazing inventory to our platform, which are I think some just top-notch brands coming on board. To seeing international continue to perform well, and just execute really well against that. And then continued execution on just our basic operating efficiency agenda, which is now really just a part of the DNA of the company. So I think you've seen, overall, that's really the primary driving force of our performance in Q1, and what we expect will be a driving force of performance throughout the rest of the year. So, with that, I'll turn it over to Mike and let him add some color on your other guidance questions.

[Mike Randolfi:]

Yeah. So, Sam, on your question on FX impact in terms of relative to outperformance for the quarter, at the time we provided the commentary on the last earnings call, FX rates were approximately the same as they are today, so in terms of the outperformance, the outperformance is, as Rich had mentioned, is really driven around our ability to just continue to better identify that which is most relevant to customers, and that which maximizes gross profit for us as a company, as well. So while having some year-over-year benefit, it's not the driver of the outperformance. On revenue specifically, as I highlighted on the earnings call, or in the prepared remarks, I highlighted $630 million to $640 million. I would expect we're probably likely to be closer to the lower end of that, about $630 million for Q2. For the full year, I would still expect we'd be roughly around $2.6 billion for revenue for the full year.

[Samuel James Kemp:]

Wonderful. Thank you.

[Rich Williams:]

Thanks, Sam.

[Operator:]

Thank you. Our next question comes from the line of Brian Fitzgerald from Jefferies. Your question, please.

[Brian P. Fitzgerald:]

Thanks, guys. Couple of questions. Wanted to know if you could talk a little bit about your experience category. How is that ramping up, and the level of competition you're seeing there? And then I appreciate the color you gave on the coupons offering. Maybe a follow-up there, the level of consumer intention you're seeing for that product, and how the economics differ between traditional Groupon deal and the coupons space?

[Rich Williams:]

Sure. Thanks for that, Brian. Good morning. So on the experience category, it's interesting. It's been a space that I think a lot of people have woken up to here over the last little stretch, and it's – yet for us it's been a core part of the Groupon Local experience really from the get-go. And I would – I feel really good about our position in that space, and if you look at our offering, I think you'd have a very hard time even coming remotely close to matching it in terms of the inventory that we provide and the breadth of experiences, activities and events that we provide. And I'd go so far as to say I believe we have the best version of experiences category that's available in our markets by a wide, wide margin. So, look, I think you can just see some of the proof of that with the kinds of relationships that we're pulling on. I mean, we're working directly with amazing brands like Live Nation and MLB, and now CourseHorse, and these are just ones that have added on to other great relationships we've had for a very long time there. So I welcome competition in every way, I think, it's great for everybody, and – but I also see it as an opportunity for us. And I mentioned in our last call, where the open platform concept really has two pieces. One is us pulling this inventory in, and a second piece is us pushing that inventory out. And as more brands and more eCommerce companies recognize the opportunities to cross-sell and upsell their customer onto more kinds – more and different kinds of things, I think that the strength of our inventory positions us very well to be a great partner and provider of those services for them. And while it's early on that side for us, it's an area where we do have focus internally and we expect to see some traction here over the relative near term. So I think, we're in a great place there, and we love that category. It's one of our biggest in Local and don't expect that to change anytime soon. On the coupon side, we haven't talked an awful lot about this business, and mostly because it's just part of the core Local experience. And it's – in the U.S., we gave a little bit of color on that earlier. I mean, we're sending billions of dollars of value to retail partners and our online coupons partners through that business since we opened that channel up for customers a couple years ago. It's a lot of volume and a lot of value created for those partnerships, and I think that it's just indicative of the volume of customers that move through our product into those experiences. So we don't see any indicator, especially as we've launched the coupons offering in international over the last year in a bunch of markets, we don't see any indication that there's a different level of intent for those shoppers in international versus the North American business. And with Vouchercloud, we really saw an opportunity to accelerate that offering. It's a great team, a solid technology, solid traction and progress in a number of European markets, so we think that's a great addition to the family, and we're really happy to have them on board. As far as the economics of it, I think in general, it's a high-quality gross profit to EBITDA product offering for us. We don't share the specifics on it, but in general, it's a very high-quality business, and one that we expect even Vouchercloud to be accretive this year. So I think it's indicative of the overall quality of the dollars that flow through that system. So we're hopeful that we combine that capacity with our customer base, and over the coming years we have a really compelling offering that's very good for Groupon and shareholders.

[Brian P. Fitzgerald:]

Got it. Thanks, Rich.

[Rich Williams:]

Thanks, Brian.

[Operator:]

Thank you. Our next question comes from the line of Matthew Trusz from Gabelli & Company. Your question, please.

[Matthew Trusz:]

Good morning. Thanks for taking the questions. First, I was hoping, could you walk us through the ways that your booking and ticketing platforms are differentiated from the market? And then just what are your early thoughts on the long-term mix as you build these platforms out of deals versus full-price inventory on the platform?

[Rich Williams:]

Yeah. That's great. Thanks for that, Matthew. Great questions, and not boring at all. They're great questions. Booking and ticketing on our platform are differentiated I think in a couple different ways. The primary differentiation is how we're bringing booking and ticketing to bear, and how much we've mobile enabled it. I think that's like number one for us versus a lot of other folks in the marketplace. And some of that is just the nature of how we've built our business and how we've invested in mobile, where the vast majority of our transactions now are occurring on a mobile device. And so we've had to focus really intently on making that booking and ticketing experience, particularly the ticketing experience, really seamless on mobile. And so, as an example, we're one of the few outlets that you can have a Ticketmaster ticket rendered in real time on your mobile device, inside a different company's app. So we're one of the few apps. Inside Groupon is the example where you're getting the real Ticketmaster ticket and it being rendered in our app, so you don't have to jump to a different experience. So I think just that seamless nature of what we're doing on the ticketing side is really powerful. You can see that with MLB as well. Just everything can occur within the app you purchased the ticket, which is unlike most of the other experiences out there. The other piece is, I guess, it's related to that as well, is just the combination of first-party and third-party that you're seeing in our ecosystem. Where we do have first-party booking tools, as an example, and we have a first-party ticket rendering system, as well. So we have these first-party tools, but we're making that first-party and third-party piece just completely transparent. We don't – to our user, they just get a ticket from Groupon. They see a ticket in their Groupon app, and they don't know that there's a bunch of plumbing behind the scenes that makes that irrelevant really for them. And all they know is, they can take their app, and they can walk through, have it scanned and move in. So I think that seamless integration of first-party and third-party tools and experiences is another really big piece for us.

[Matthew Trusz:]

Great.

[Rich Williams:]

And as far as the second piece, just on full-price versus discount, I think, it's very early in that side. But as you can see, with even folks like MLB coming on board, we have half the teams live, and that's a combination of full-price and discounted. I'd say in that, just using that as a microcosm, there are far more full priced games than there are discounted games. And that's I think really where the market will ultimately go, where our marketplace will ultimately go, where there will be more full-price inventory over the long term than discounted inventory. And that's why we're so focused on these things like booking and ticketing integrations, so that we can make those full-price experiences better than the original. If you're going to transact at full-price on our platform, you need to get extra value. And for us, that extra value can be just a better experience. It doesn't always have to be 50% off or 30% off. So I would expect, over time, to see more and more full-price come on board, and to have us be much more a representation of the broader small business landscape, which is primarily full-price offerings with the occasional discount.

[Matthew Trusz:]

Thank you for so much detail. Appreciate it. I'll get back in queue.

[Rich Williams:]

Thanks, Matthew.

[Operator:]

Thank you. Our next question comes from the line of Sameet Sinha from B. Riley FBR. Your question, please.

[Sameet Sinha:]

Yes, thank you. Couple of questions. The first thing is, you outlined kind of the changes you're making to the domestic, the marketing and advertising as you target the customer, focusing only on the high value customers. From that perspective, does that change kind of your schema that you used of breakeven 12 to 18 months in kind of lifetime value and customer acquisition costs? And my second question is, I'm going to put two things together between GDPR and Brexit. In the last few quarters, you have consolidated the operations in UK. Is there any impact from Brexit, and does GDPR entail that maybe you have to re-open some offices in Continental Europe? And if yes, what sort of costs would that entail? Thank you.

[Rich Williams:]

Yeah. Thanks, Sameet. So, a couple things. As we're – what I would say is, as we market and target our customers, our overall goal has been very, very consistent, and that is to invest our marketing dollars in a way that ultimately achieves a 12 to 18 month payback. What we've continued to evolve on and continued to refine is our ability to achieve that at a more granular and a more segmented level. So, one of the things over the last year within our company, we've continued to build tools that get us closer and closer to the individual customer, within elements of the cohort. So inherent in doing that, you find pockets of efficiency, and you also find pockets of inefficiency. And so what you see is, is us responding to that, where there's customers that are valuable. We are able to market to them very effectively. Get our 12 to 18 month payback, sometimes sooner. We're also, as part of that, identifying customers within those cohorts at a more granular level that may not have that payback. And so, with that, we're being very disciplined with how we deploy our marketing dollars. If we're able to discern the customer doesn't have that value, in some instances, we're allowing them to attrite. But it isn't a change of mindset, and it wouldn't, from our perspective, change our goal of achieving a 12 to 18 month payback. It's just really a refinement of analytics to really deploy the marketing dollars in the most efficient and effective way. In terms of Europe and the impact of GDPR and Brexit, what I would say for Brexit at this stage, I would say, from our perspective, really no meaningful impact in terms of how we operate. For us, the UK is definitely one of our stronger and larger economies that we operate in, outside the U.S. And we don't see that changing, and that's a core part of our business. And we have an office there, a large office there, and that's something that I would expect to continue. With regards to GDPR, I would say the biggest impact for GDPR is, it's something that we as a company have had to work on and have a level of focus on over the last 7, 8, 9 months, to make sure we're on a path to be GDPR compliant, which we believe we will be by the May 25 deadline. But outside of it taking resources and a degree of attention and focus, that's just the part of what's required to do business in that region, so – and we're prepared for that.

[Sameet Sinha:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of Justin Patterson from Raymond James. Your question, please.

[Justin T. Patterson:]

Great. Thank you very much. Rich, can you talk about the AI investments and learnings there in more detail? It seems like an area where you should have bought cost savings down the road on the customer service side, as well as improved discovery and sell-through for offers. And then going back to the partnerships, in your prepared remarks, you mentioned pipeline growth. Any color on just what that growth rate is and how we should be thinking about the trajectory there going forward would be helpful. Thank you.

[Rich Williams:]

Sure. Thanks, Justin. The AI side is funny. We've – it's been a part of what we've done from the very beginning, and we deployed it in different ways I think in the earlier days. But it is a big peace of our technology investment, is on machine learning and artificial intelligence. I think, some of the quickest wins that we've had lately have been in the service area, where historically we've had an extraordinarily high-touch customer service environment with very, I think, early-stage self-service capabilities, particularly in the mobile experience. So we've decided to put more investment there and some really discrete investment there, to kind of ramp that up, and we're seeing really exciting results on that front. I think, in one way to think about it is, yes, we're directing more people to self-serve, and more to find answers faster on their own, which in the mobile device, in the mobile experience, is a highly preferable way, and we're seeing great response on customer satisfaction from there. So I would – and I'd say we're in the early days there. We're going to continue to make those investments, and continue to scale it. Mike mentioned a couple other pieces as well, where we're continuing to invest in the machine learning side of our relevant and search areas internally, which is incredibly important for us as we make more and more progress on the partnership front. Because I think, the – it's one thing for us to go acquire inventory, to call small businesses, bring them on our platform. And we have a pretty good track record of doing that, and we're more and more efficient on doing that, but there's only so much scale so fast you're going to generate with that. But when we sign up with – let's say we extend our partnership with MLB, or we bring on CourseHorse or Universal. We're bringing on, in those cases, in the case of CourseHorse, thousands of classes, like, literally tens of thousands of classes instantly. So we're really challenging our teams and our systems to get smarter and smarter to help people move through what is becoming a much, much bigger catalog with a whole another level of ease and sophistication and targeting. So, we're going to continue to make significant efforts there. And right now efficiency in terms of SG&A efficiency isn't the number one driving force of that. It's really the efficiency of the experience and making it seamless and easy and more rewarding. But over time, can it translate into other things? The possibility surely is there, and so – and we think about that, but that's definitely not the number one vector for the business and for the teams working on it. On the partnership pipeline, we're really excited about that, Justin, you can see it in the last 90 days of announcements. We've gained really nice traction there. I can't give you any specifics of partners to expect, but we're very excited by the pipeline and we see a lot of opportunity to just scale, continue to open up our platform and our customer base there. And I think, you'll see with success more big brands coming online, and some really great brands wanting to reach our audience, as well as some really interesting small brands that add, I think, just amazing high-quality content. So you should see a good mix of that coming over the coming quarters, and hopefully well beyond.

[Justin T. Patterson:]

Great. Thank you very much.

[Rich Williams:]

Thanks, Justin.

[Operator:]

Thank you. Our next question comes from the line of Tom Forte from D.A. Davidson. Your question, please.

[Tom Forte:]

Great, thanks. So you walked through the rationale for your acquisition of cloud savings companies, but how should we think about your M&A strategy in general right now? Thanks.

[Rich Williams:]

Thanks, Tom. I'll start. Mike, if you have anything else to add, feel free. Cloud savings companies, yeah, as we explained it, it's kind of more dead center than I think people would expect. And I say that to go back to how we've talked about M&A for the last couple years, which is we're going to be incredibly disciplined and very much focused on accelerating our core strategies and our core experiences. And cloud savings is going to help do that, on the coupon side and international, possibly beyond. With the Giftcloud part of the business, I think there's some very interesting opportunity in that space for us. But we're going to continue to have that be the core, the real crux of our M&A strategy, is that highly disciplined, dead center acceleration of our strategy. But of course there's always a piece of that world where we're opportunistic and we think big. So we're going to be open-minded, as well, but I think in practical terms, you'll just see that continued discipline.

[Mike Randolfi:]

Yeah, and I mean really, just building on what Rich had talked about, if I think about just, think about it from a capital allocation perspective, we're always trading off, investing in our business, our M&A strategy, and always returning cash to shareholders. And ultimately we're going to be focused on just maximizing that set of options for shareholders in the best way we can.

[Tom Forte:]

Great. Thanks for taking my question.

[Rich Williams:]

Thanks, Tom.

[Mike Randolfi:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of Tom Champion from Cowen & Company. Your question, please.

[Thomas Champion:]

Hi, good morning, guys. Last earnings you talked about reallocating impressions to Groupon+ to expand its role on the marketplace. Did that happen as planned? And how do you feel about the trade-off between near-term billings and long-term engagement? And then relatedly, can you give us an update on purchase frequency on the marketplace? And what are you seeing from Groupon+ customers over time, and is Groupon+ bookability now at a scale where it can impact the total platform? Thank you.

[Mike Randolfi:]

Sure. So I'll start off, and then Rich could add on. In terms of billings versus impacts on the business for impressions, first, as you know, Tom, as we're managing the business, we always think about it in terms of gross profit, not necessarily billings. And as I mentioned in my prepared remarks, there were some impacts from trading off impressions. And if you adjust for both the Groupon+ impacts and no longer having gross profit associated with portions of OrderUp, that we would have basically had a single-digit increase year-over-year in the second quarter on gross profit. But, from our perspective, the way we think about these types of investments are, we're making some short-term trade-offs. We're using assets on our site, on our app, on email, to encourage enrollments, to encourage claims. It's part of getting customers used to a transaction mechanism, which we think is ultimately more seamless, more frictionless, over time. We think that's ultimately part of the path of increasing frequency on our platform. And so, inherent in our guidance for the year is an underlying assumption that gross profit trends will continue to build as the year progresses. And inherent in that trend is assumptions that we continue to see enhancements from a unit perspective and gross profit per customer perspective.

[Rich Williams:]

Yeah, I think that pretty much covers it.

[Thomas Champion:]

Thank you, guys.

[Rich Williams:]

Thanks, Tom.

[Operator:]

Thank you. Our next question comes from the line of Chris Merwin from Goldman Sachs. Your question please.

[Christopher Merwin:]

Okay. Thank you. From a supply perspective, you called out a number of partnerships that you added, but can you talk about how supply is trending for Groupon+. In particular, I know historically you've been focused on food and drink as a category, but maybe can you talk about some other categories you're expanding into as well? And then for international, I think in the release, you mentioned the deal with Odeon in the quarter. Should we think of that as something that's one time in nature or a partnership that's going to drive much more sustained growth for that segment as well? Thank you.

[Rich Williams:]

Thanks, Chris. Great questions. On the supply side with G+, we're really pleased with the trajectory where that's headed. We've consistently been growing that and, basically, thousands and thousands every quarter. And now we're well north of 5,000 on that front, and continuing to see really solid traction. And in a number of markets, I think, just if you use the product and you go in and you're looking for restaurants, in a number of markets, you're going to see more Groupon+ restaurants than voucher restaurants. And we're crossing that line in a number of markets, which I think is really exciting, and at a rate that we haven't really seen in the past year. So, we really like what we see on that front. We're going to – on that as well. We're going to continue focusing on food and drink. We could explore, we may explore later in the year, some other categories. And I think a bunch of categories are relevant for the Plus product. But food and drink, given how important restaurants really are in the Local space and for frequency, is going to continue to be our focus there. And on that note, I'll just call out, I think, it's important to remember, with Groupon+, Groupon+ is a product we're very excited about. But I would actually say, we're much more excited about the platform on which Groupon+ is built. That's the platform where we have an ability to combine an offer with a payment instrument, and a customer in real time, and that's an incredibly powerful mechanism. And if you think of that platform in that way, Groupon+ is just one iteration of what's possible on the platform. And you can see just how that payment mechanism and the ability to link an offer and the payment mechanism opens up an entire world of redemption for products across the board. And it's not really whether it's food and drink, or health and beauty, or home and auto, or anything else that we work in. It's really as a redemption mechanism to be able to link the customer and the offer with that payment device. And so, I think that's a really key piece to keep in mind. So, we'll not just be thinking about, over the coming quarters and beyond, how we expand this Groupon+ iteration of a payment-linked offer. We'll be thinking, how do we leverage our platform that we've constructed to enable Groupon+ into a bunch of other areas of our business that can be really powerful for users? And as far as international, I mean, like Odeon is an example, there's an amazing offer for us, a great offer for customers, great response. I think, it's showing us and it showed us how much potential there is for movies on our platform, and our customers responded really well to that, and have responded to similar offers in the U.S., with some of the amazing partners we have here. At this point, that was an offer we ran, and we've had a long relationship with Odeon. I would hope that that would continue, but it has us thinking about are there other opportunities in that space for us that we can – where we can add extra value for consumers and we can add extra value for exhibitors in the movie space, given all that's happening there. So more to come on that side, I'm sure, but right now, I just think of it as an amazing offer that we ran with a great partner.

[Christopher Merwin:]

Okay, thank you.

[Rich Williams:]

Thanks, Chris.

[Operator:]

Thank you. Our final question comes from the line of Deepak Mathivanan from Barclays. Your question please.

[Deepak Mathivanan:]

Hey, guys. Thanks for taking the question. Two questions from us.

[Rich Williams:]

Oh, oh, Deepak, you might have a bad connection.

[Deepak Mathivanan:]

Hey, guys. Can you hear me?

[Mike Randolfi:]

Yes.

[Rich Williams:]

Now we can, or we could. Well, Deepak, I think, we might have to catch up after the call.

[Operator:]

Okay. This does conclude the question-and-answer session, as well as today's program. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.