Groupon, Inc.

Current report

Our strategy to return the Company to stabilized growth, including rebuilding Groupon as an AI-native company, may be unsuccessful, may not produce the expected benefits, and may itself create new operational, financial, and reputational risks.

Current report

We continue to implement a strategy to become the trusted marketplace where customers go to buy local services and experiences. We are executing this by building long-term relationships with local merchants to improve our inventory selection and by improving the customer experience through inventory curation and improved convenience in order to drive customer demand and purchase frequency. We are also working to rebuild Groupon as an AI-native company by embedding AI agents into the core of every function. However, there are no assurances that these actions will be successful in returning the Company to stabilized growth. Our efforts may prove more difficult and costly than we currently anticipate and the associated costs may exceed our current cost structure.

Current report

The macroeconomic environment, including inflationary pressures, higher labor costs, tariff or other trade policies, labor shortages, supply chain challenges and resulting changes in consumer and merchant behavior, may limit our merchants' ability to offer deals or service customers, and reduce consumer discretionary spending. These factors may make it more difficult to effectively execute our strategy, including to quickly test, learn and scale initiatives relating to improving inventory selection or improving customer experience. If we are unable to effectively execute our strategy and realize its anticipated benefits, our business, financial condition and results of operations could be negatively impacted.

Current report

The success of our AI initiatives depend on numerous factors outside our control, including the pace of AI technology evolution, the availability, capability, and cost of third-party AI tools and infrastructure, and our ability to integrate and deploy AI capabilities at the required pace. The benefits we expect from our AI initiatives, including improved execution speed, throughput, talent efficiency, operational productivity, and financial performance, may not be realized in the time frame we expect or at all. The aggregate financial impact of our AI initiatives are not yet reasonably estimable, and our investments in AI-native architecture, agentic workflows, AI-ready search, checkout, and merchant-facing tools may not be recoverable.

Current report

Workforce reductions and organizational changes undertaken in connection with our transition to an AI-enabled operating model may also result in the loss of institutional knowledge, reduced employee engagement, challenges in attracting and retaining personnel with the skills required to execute our strategy, and operational inefficiencies during periods of transition. Our attempts at automation may not succeed in whole or part.

Current report

In addition to execution risks, our public statements about our AI initiatives and our AI strategy, including the pace, nature, and expected operational and financial impact of our deployment of AI agents, are subject to regulatory and litigation risk if not adequately substantiated or later viewed as inconsistent with our actual capabilities or results. Even where our statements have a reasonable basis when made, the rapid evolution of AI technology may render them stale or subject to challenge.

Current report

Our use of AI and machine learning poses new operational, legal, and reputational risks.

Current report

We continue to integrate AI technologies into our platform to enhance internal efficiency, marketing automation, and customer support. The use of these rapidly evolving technologies presents significant risks, including:

Current report

•Accuracy and Reputation: Generative AI models may produce inaccurate, biased, or offensive content. If our AI tools generate false deal terms or inappropriate customer communications, we could be exposed to liability for deceptive trade practices, regulatory scrutiny, and reputational harm.

Current report

•Intellectual Property and Liability: Content generated by AI, such as deal descriptions or marketing images, may not be eligible for copyright protection, limiting our ability to enforce intellectual property rights. Additionally, if our AI vendors use copyrighted third-party data to train their models, we could face infringement claims, resulting in legal costs or restrictions on our use of AI-generated content.

Current report

•Data Security and Privacy: The use of third-party AI tools may require sharing sensitive data with vendors. If proprietary merchant information or consumer personal data is inadvertently fed into public AI models, it could be exposed or used to train models accessible to others, increasing the risk of data breaches and loss of confidential information. Even where we use non-public, enterprise, or contractually restricted third-party AI tools, sensitive or proprietary information, including, but not limited to, PII and financial or other information, may still be unintentionally exposed through employee or vendor misuse, misconfiguration, prompt injection or similar manipulation, or as a result of data breaches or cybersecurity attacks affecting our AI vendors or the underlying model providers.

Current report

•Regulatory Uncertainty: Laws and regulations governing AI are rapidly evolving. New or proposed regulations could impose significant compliance costs, restrict our ability to deploy AI tools, or require changes to our business practices.

Current report

While we continue to implement policies and controls to mitigate these risks, the effectiveness of such measures is not assured given the pace of technological and regulatory change. If any of these risks materialize, our operations, financial results, and reputation could be adversely affected.

Previous report

Our access to capital may be limited and our ability to successfully manage and raise capital in the future may fail, which could prevent us from growing and adversely impact our liquidity.

Previous report

We may need additional capital in the future and may seek additional financing or covenant relief. Any such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business. We have outstanding $33.7 million, $47.3 million, and $244.1 million in aggregate principal amount of our 2026 Notes, 2027 Notes, and 2030 Notes.

Previous report

Other general economic conditions and our future operating performance could ultimately limit our access to funding and adversely affect our liquidity. Although we plan to continue to actively manage and optimize our cash balances and liquidity, working capital and operating expenses, there can be no assurances that we will be able to do so successfully. If we encounter unforeseen circumstances that place further constraints on our capital resources, including our access to funding, management will be required to take various additional measures to conserve liquidity, which could include, but not necessarily be limited to, reducing capital expenditures, controlling overhead expenses and raising additional sources of capital, such as monetizing certain existing assets. Furthermore, additional equity financing may dilute the interests of our Common Stockholders, and debt financing, if available, may involve restrictive covenants that could further restrict our business activities or our ability to execute our strategic objectives and could reduce our profitability. If we cannot access the full capacity of any existing credit facility or raise or borrow funds on acceptable terms or at all, it could adversely affect our liquidity, and we may not be able to grow our business or respond to competitive pressures.

Previous report

In addition, because we grant stock options and other equity based awards under our incentive plans, a rising share price could lead to larger or more frequent grants and, upon exercise or vesting, result in the issuance of new shares that dilute existing stockholders’ ownership. Such dilution may reduce our earnings per share and could adversely affect the market price of our Common Stock and our ability to raise future equity capital on favorable terms.

Previous report

We may not have the ability to raise the funds necessary to settle conversions of the 2026 Notes, 2027 Notes, and 2030 Notes in cash, to repurchase the 2026 Notes, 2027 Notes, and 2030 Notes upon a fundamental change or to repay the 2026 Notes, 2027 Notes, and 2030 Notes in cash at their maturity (if not earlier converted, redeemed or repurchased), and our current outstanding and future debt may contain limitations on our ability to pay cash upon conversions of the 2026 Notes, 2027 Notes, and 2030 Notes or at their maturity or to repurchase the 2026 Notes, 2027 Notes, and 2030 Notes.

Previous report

Holders of the 2026 Notes, 2027 Notes, and 2030 Notes will have the right to require us to repurchase all or a portion of their respective notes upon the occurrence of a fundamental change before the maturity date at a repurchase price equal to 100% of the principal amount of the 2026 Notes, 2027 Notes, and 2030 Notes, respectively, to be repurchased, plus accrued and unpaid interest, if any. In addition, upon conversion of the 2026 Notes, 2027 Notes, and 2030 Notes, unless we elect to deliver solely shares of our Common Stock to settle such conversion (other than paying cash in lieu of delivering any fractional shares), we will be required to make cash payments in respect of the respective notes being converted. Moreover, we will be required to repay the 2026 Notes, 2027 Notes, and 2030 Notes, in cash at their respective maturity dates unless earlier converted, redeemed (noting that the 2027 Notes cannot be redeemed by us) or repurchased. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of the 2026 Notes, the 2027 Notes, and/or the 2030 Notes surrendered or pay cash with respect to the 2026 Notes, the 2027 Notes, and/or the 2030 Notes being converted or at their maturity.

Previous report

In addition, our ability to repurchase the 2026 Notes, 2027 Notes, and 2030 Notes or to pay cash upon conversions of the 2026 Notes, 2027 Notes, and 2030 Notes or at their maturity may be limited by law, regulatory authority or agreements governing our future indebtedness. Our failure to repurchase the 2026 Notes, 2027 Notes, and 2030 Notes at a time when the repurchase is required by the 2026 Notes, 2027 Notes, and 2030 Notes Indenture governing the 2026 Notes, 2027 Notes, and 2030 Notes respectively, or to pay cash upon conversions of the 2026 Notes, 2027 Notes, and 2030 Notes or at their maturity as required by the Indenture would constitute a default under each respective indenture. A default under the 2026 Notes Indenture governing the 2026 Notes, the 2027 Notes Indenture governing the 2027 Notes, and the 2030 Indenture governing the 2030 Notes could also lead to a default under agreements governing our existing and future indebtedness. Moreover, the occurrence of a fundamental change under the 2026 Notes Indenture governing the 2026 Notes, the 2027 Notes Indenture governing the 2027 Notes, and the 2030 Notes Indenture governing the 2030 Notes could constitute an event of default under any such future agreement. If the payment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay such indebtedness and repurchase the 2026 Notes, 2027 Notes, and 2030 Notes or pay cash with respect to the 2026 Notes, 2027 Notes, and 2030 Notes being converted or at maturity of the 2026 Notes, 2027 Notes, and 2030 Notes.

Previous report

The terms of the 2026 Notes, 2027 Notes, and 2030 Notes could delay or prevent an attempt to take over our Company.

Previous report

The terms of the 2026 Notes, 2027 Notes, and 2030 Notes require us to repurchase the 2026 Notes, 2027 Notes, and 2030 Notes in the event of a fundamental change. A takeover of our Company would constitute a fundamental change. This could have the effect of delaying or preventing a takeover of our Company that may otherwise be beneficial to our stockholders.

Previous report

The conditional conversion feature of the 2026 Notes, 2027 Notes, and 2030 Notes, if triggered, may adversely affect our financial condition and operating results.

Previous report

In the event the conditional conversion feature of the 2026 Notes, 2027 Notes, and/or 2030 Notes is triggered, holders of these notes will be entitled to convert their respective notes at any time during specified periods at their option. If one or more holders elect to convert their 2026 Notes, 2027 Notes, and/or 2030 Notes, then we would be required to pay cash, deliver shares or deliver a combination of shares and cash, at our election. Unless we elect to satisfy our conversion obligation by delivering solely shares of our Common Stock (other than paying cash in lieu of delivering any fractional shares), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity. In addition, upon the occurrence of a fundamental change (as defined in the 2026 Notes Indenture, 2027 Notes Indenture, and 2030 Notes Indenture) prior to the maturity date, holders may require us to repurchase all or a portion of the 2026 Notes, 2027 Notes, and/or 2030 Notes for cash at a price equal to 100% of the principal amount of the 2026 Notes, 2027 Notes, and/or 2030 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. Even if holders of the 2026 Notes, 2027 Notes, and 2030 Notes do not elect to convert their respective notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2026 Notes, 2027 Notes, and 2030 Notes, as a current rather than long-term liability, which would result in a material reduction of our net working capital.

Previous report

Our increasing use of AI and other emerging technologies may expose us to operational, legal, and regulatory risks that could adversely affect our business and reputation.

Previous report

Our use of AI and machine learning presents risks that could adversely affect our business, financial condition, and results of operations. We currently do not develop our own foundational AI models but incorporate AI-powered tools into certain internal business operations. AI algorithms may be flawed, and datasets may be insufficient, biased, or otherwise problematic. AI tools may rely on third-party providers with uncertain intellectual property rights, and ownership of AI-generated output remains unsettled under existing law. Future interpretations by courts or regulators could materially affect our rights and obligations.

Previous report

The legal and regulatory landscape for AI is complex and rapidly evolving. Jurisdictions have enacted, or are considering, comprehensive AI frameworks. Any actual or perceived failure by us, our service providers, or our merchants to comply with such requirements could result in liability, regulatory scrutiny, reputational harm, or loss of customer trust. In addition, AI decisions or outputs may produce biased or inaccurate results, lead to unintended discrimination, or otherwise undermine confidence in our products. The use of AI tools also raises risks related to privacy and inadvertent disclosure of sensitive information. AI systems may access, process, or expose personal, confidential, or proprietary data in ways that we do not intend or anticipate. The rapid evolution and increased adoption of AI technologies also may increase the risk of fraudulent purchases on our site.

Previous report

AI initiatives also require significant resources. Investments in proprietary datasets, models, infrastructure, and compute power may be costly and could reduce our profitability if expected efficiencies or revenues do not materialize. Constraints in hardware (such as GPU availability), power capacity, or other supply chain elements may further limit our ability to scale AI responsibly.

Previous report

We also face competitive risk if other companies develop or adopt AI capabilities more effectively, at lower cost, or more rapidly than we do. Because our AI capabilities currently depend in part on third-party providers of models, cloud services, and infrastructure, changes in their performance, pricing, licensing terms, or availability could materially increase our costs. Furthermore, the increasing use of AI-driven search, recommendation, and discovery tools by consumers may diminish direct customer traffic to our website and mobile applications, as users engage with third-party AI interfaces that provide offers or experiences without navigating directly to our platform, which could adversely impact our financial condition and the results of operations.

Previous report

Collectively, these risks may negatively impact our operations, profitability, intellectual property, and brand.