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STOCKHOLDERS' EQUITY (DEFICIT) AND COMPENSATION ARRANGEMENTS | 3 Months Ended
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Mar. 31, 2025
Share-Based Payment Arrangement [Abstract] |
STOCKHOLDERS' EQUITY (DEFICIT) AND COMPENSATION ARRANGEMENTS | STOCKHOLDERS' EQUITY (DEFICIT) AND COMPENSATION ARRANGEMENTS Groupon, Inc. Incentive Plan In August 2011, we established the 2011 Plan under which options, RSUs, PSUs and 2024 Executive PSUs of up to 20,775,000 shares of Common Stock are authorized for future issuance to employees, consultants and directors. The 2011 Plan is administered by the Compensation Committee. As of March 31, 2025, 6,005,860 shares of Common Stock were available for future issuance under the 2011 Plan. Restricted Stock Units The RSUs 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 RSU activity for the three months ended March 31, 2025:
| RSUs |  | Weighted-Average Grant Date Fair Value (per unit)
Unvested at December 31, 2024 | 711,346 |  |  | $ | 11.18 |
Granted | 23,614 |  |  | 11.80 |
Vested | (19,805) |  |  | 15.29 |
Forfeited | (37,758) |  |  | 12.15 |
Unvested at March 31, 2025 | 677,397 |  |  | $ | 11.03 |
As of March 31, 2025, $4.6 million of unrecognized compensation costs related to unvested RSUs are expected to be recognized over a remaining weighted-average period of 1.13 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 yield | 0.0 | %
Risk-free interest rate | 4.1 | %
Expected term (in years) | 2.00
Expected volatility | 78.2 | %
The table below summarizes stock option activity for the three months ended March 31, 2025:
| Options |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2024 | 3,062,500 |  |  | $ | 6.00 |  |  | 1.25 |  | $ | 18,834 |
Outstanding at March 31, 2025 | 3,062,500 |  |  | 6.00 |  |  | 1.00 |  | 39,108 |
Exercisable at March 31, 2025 | 3,062,500 |  |  | $ | 6.00 |  |  | 1.00 |  | $ | 39,108 |
As of March 31, 2025, all compensation costs related to unvested stock options granted under the 2011 Plan were recognized. The total fair value of shares vested during the three months ended March 31, 2025 was $0.4 million. These stock options were granted to our CEO, who is based in the Czech Republic. Taxes on stock options in the Czech Republic are payable upon the sale of the underlying shares. The Company's tax liability is determined by multiplying the applicable tax rate by the difference between the value of the shares underlying the options on the date of exercise and the aggregate exercise price of the options. These taxes will be recognized in the Condensed Consolidated Statement of Operations upon any subsequent sale of the shares acquired upon exercise of the options. Performance Share Units Vesting of our PSUs and the 2024 Executive PSUs are subject to continued service through the period dictated by the award and certification by the Compensation Committee that the specified performance and market conditions have been achieved. We have granted PSUs that vest in shares of our Common Stock upon the achievement of financial and operational targets specified in the respective award agreement. Based on our financial and operational results for the year ended December 31, 2024, no shares were issued upon vesting in April 2025 as the specified performance conditions were not met by the end of the performance period. The table below summarizes PSU activity for the three months ended March 31, 2025:
| PSUs |  | Weighted-Average Grant Date Fair Value (per unit)
Unvested at December 31, 2024 | 16,417 |  |  | $ | 16.68 |
Granted | — |  |  | — |
Vested | — |  |  | — |
Forfeited | (16,417) |  |  | 16.68 |
Unvested at March 31, 2025 | — |  |  | $ | — |
As of March 31, 2025, the performance conditions related to unvested PSUs were not met and therefore they were not recognized. 2024 Executive PSUs Equity-classified 2024 Executive PSUs We granted 2024 Executive PSUs on June 12, 2024 and October 14, 2024. The 2024 Executive PSUs may only be earned if certain stock price hurdles are met and the recipient satisfies certain service conditions. The achievement of the stock price hurdles is measured during a period beginning on February 2, 2025 and ending on May 1, 2027. The 2024 Executive PSUs have four stock price hurdles: $14.86, $20.14, $31.01, and $68.82 based on a 90 consecutive calendar day volume-weighted average stock price. The stock price hurdles were not met during the three months ended March 31, 2025. The shares awarded under the 2024 Executive PSU award are divided equally between four tranches corresponding to achievement of each stock price hurdle. Once the stock price hurdle is achieved, a service condition must also be met before the shares will vest. Specifically, the service condition for: (i) 33% of the award will be met after May 1, 2025; (ii) an additional 33% of the award will be met after May 1, 2026; and (ii) the final 34% of the award will be met after May 1, 2027. The 2024 Executive PSUs are subject to downward adjustments by the Compensation Committee. We determined these awards are subject to a market condition, and therefore used a Monte Carlo simulation to calculate the grant date fair value of the awards and the related derived service period. The requisite service condition period for each award exceeds the derived service period and therefore we recognize the expense over the requisite service period. The key inputs used in the Monte Carlo simulation and requisite service period for the equity-classified 2024 Executive PSUs by grant date are outlined in the following table:
| Equity-classified 2024 Executive PSUs
| June 12, 2024 |  | October 14, 2024
Dividend yield | 0.00 | % |  | 0.00 | %
Risk-free interest rate | 4.46 | % |  | 3.86 | %
Expected volatility | 95.73 | % |  | 98.70 | %
Requisite service period (in years) | 2.88 |  | 2.54
The table below summarizes equity-classified 2024 Executive PSU activity for the three months ended March 31, 2025:
| Equity-classified 2024 Executive PSUs |  | Weighted-Average Grant Date Fair Value (per unit)
Unvested at December 31, 2024 | 3,698,064 |  |  | $ | 13.29 |
Granted | — |  |  | — |
Vested | — |  |  | — |
Forfeited | (121,971) |  |  | 13.59 |
Unvested at March 31, 2025 | 3,576,093 |  |  | $ | 13.28 |
As of March 31, 2025, we had unrecognized compensation costs related to unvested equity-classified 2024 Executive PSUs of $21.1 million. The cost is expected to be recognized over a remaining weighted-average period of 1.53 years. On May 2, 2025, the first stock price hurdle of $14.86 was achieved based on the 90 consecutive calendar day volume-weighted average stock price. Accordingly, up to 295,022 equity-classified 2024 Executive PSUs are eligible to vest subject to the Compensation Committee’s determinations as to the satisfaction of the other requirements for such Executive PSUs. Liability-classified 2024 Executive PSUs In October 2024, the Compensation Committee approved a cash incentive award, which is required to be settled in cash upon vesting. The award is subject to the same market, performance and service conditions as the 2024 Executive PSUs. Upon vesting, the cash settlement, if any, will be calculated by multiplying the closing stock price on each vesting date by the number of shares that would have otherwise vested if the award provided for equity settlement. The Company's compensation plan limits cash awards to $5.0 million per annum with any amount in excess of $5.0 million to be paid the following year. The related award obligation is presented within Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets. The total compensation expense to be recognized for the award will be based on remeasurement of the award at each interim reporting period through the final vesting date of May 1, 2027. The key inputs used in the initial Monte Carlo simulation on the grant date were the risk-free rate of 3.86%, dividend yield of 0.00%%, and our stock price volatility of 98.70%. The key inputs used in the Monte Carlo simulation as of December 31, 2024 were the risk-free rate of 4.21%, dividend yield of 0.00% and our stock price volatility of 100.27%. As of March 31, 2025, the 2.08 year service condition period exceeds the derived service period and therefore we will recognize the expense over the 2.08 year requisite period. The key inputs used in the Monte Carlo simulation as of March 31, 2025 were the risk-free rate of 3.85%, dividend yield of 0.00% and our stock price volatility of 102.08%. The table below summarizes liability-classified 2024 Executive PSU activity for the quarter ended March 31, 2025:
| Liability-classified 2024 Executive PSUs |  | Weighted-Average Grant Date Fair Value (per unit)
Unvested at December 31, 2024 | 261,365 |  |  | $ | 6.70 |
Granted | — |  |  | — |
Vested | — |  |  | — |
Forfeited | — |  |  | — |
Unvested at March 31, 2025 | 261,365 |  |  | $ | 6.70 |
As of March 31, 2025, we had unrecognized compensation costs related to unvested liability-classified 2024 Executive PSUs of $2.2 million. The cost is expected to be recognized over a remaining weighted-average period of 1.50 years. On May 2, 2025, the first stock price hurdle of $14.86 was achieved based on the 90 consecutive calendar day volume-weighted average stock price. Accordingly, the equivalent of up to 21,562 liability-classified 2024 Executive PSUs are eligible to be settled in cash subject to the Compensation Committee’s determinations as to the satisfaction of the other requirements for such Executive PSUs. We expect the cash settlement to be paid during the second quarter 2025. Major Rocket Incentive Shares On March 11, 2025 (the "grant date"), the Company entered into a marketing agreement with Major Rocket with a three-year contractual term beginning January 1, 2025. Pursuant to the Major Rocket Agreement, Major Rocket provides marketing services in North America including sourcing and facilitation of contracts for enterprise offerings on Groupon’s platform. Under the Major Rocket Agreement, Major Rocket is eligible to receive incentive compensation if the merchant offerings it is responsible for sourcing achieve certain financial benchmarks ranging in amount from $10 million to $25 million. The incentives payable to Major Rocket upon satisfaction of these benchmarks may be satisfied through the Company’s issuance of up to 954,000 shares of the Common Stock or, at the Company’s election, the payment of cash in an amount equal to the then current value of such shares. The award is equity-classified under ASC 718, given the Company's past practice of settlement of such awards in shares of equity, and its intent and ability to do so. The total compensation expense is measured at the grant-date fair value of the maximum number of shares issuable, which was approximately $9.3 million, based on the grant date share price as of March 11, 2025. Compensation expense will be recognized over the service period as Major Rocket’s services are received through December 31, 2027, or earlier if all the financial benchmarks are met before then, and only when achievement of these benchmarks becomes probable. As of March 31, 2025, no compensation expense has been recognized, as the achievement of these benchmarks was not deemed probable. Rights Offering In November 2023, the Board approved an $80.0 million fully backstopped Rights Offering to our stockholders of record of our Common Stock, as of the close of business on November 20, 2023. The Rights Offering was made through the distribution of non-transferable subscription rights to purchase shares of Common Stock at a subscription price of $11.30 per share and otherwise on such terms and subject to such conditions as may be required to comply with any applicable Nasdaq Global Market stock exchange rules and regulations. The Expiration Date for the subscription period for the Rights Offering ended on January 17, 2024. The Rights Offering was fully backstopped by the Backstop Party, an entity affiliated with (i) Dusan Senkypl, the Company’s CEO and a member of the Board, and (ii) Jan Barta, a member of the Board. The Backstop Party had a binding commitment to (i) fully exercise its pro rata subscription right prior to the Expiration Date of the Rights Offering and (ii) fully purchase any and all unsubscribed shares in the Rights Offering following the Expiration Date at the same price and on the same terms and conditions as other participants in the Rights Offering. On January 22, 2024, we announced the closing of our $80.0 million fully backstopped Rights Offering for shares of our Common Stock. Pursuant to the terms of the Rights Offering, 7,079,646 shares of Common Stock were purchased at $11.30 per share, generating $80.0 million in gross proceeds, less issuance costs incurred. As detailed below, the Rights Offering was oversubscribed, and the subscriptions, inclusive of the exercise of all over-subscription privileges, well exceeded $80.0 million, the maximum aggregate offering size of the Rights Offering. Through the exercise of both basic subscription rights and over-subscription privileges, the Backstop Party subscribed for approximately 7.1 million shares and other stockholders subscribed for approximately 9.7 million shares. The Company issued 4,574,113 shares of Common Stock via the exercise of the basic subscription rights and 2,505,533 shares of Common Stock via the exercise of over-subscription privileges. The Backstop Party purchased approximately 3.1 million shares of Common Stock in connection with the Rights Offering.

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