Groupon Q3: Billings Up 6% to $439 Million, EBITDA Misses at $15 Million

Billings grew 6% year over year to $439 million in the third quarter, near the top of Groupon's guidance range, while revenue rose only 2% to $125 million and adjusted EBITDA came in at $15 million, below plan. Chief Executive Officer Dušan Šenkypl delivered the figures on the company's November 10 earnings call, describing a quarter pulled apart by refund generosity and marketing spending that failed to deliver its expected return.

Free cash flow was negative $46 million, a figure Šenkypl attributed to the company's seasonal cash flow pattern rather than structural deterioration. The pattern is familiar to practitioners who track voucher-marketplace economics: cash arrives at voucher sale, but costs land later in the cycle.

What dragged on the numbers?

Šenkypl described the quarter as uneven. Growth came from Things to Do, Travel and International Local, while North America Core Local supply outside Things to Do fell short of expectations. The company expects the effects of rebuilding that supply to begin appearing in results in 2027 — a long runway for investors to price.

Investments in trust and quality, including honoring more customer refund requests, reduced reported billings growth by 180 basis points. Refunds grew by double digits year over year, with most of the increase issued through Groupon Bucks, the company's platform currency. That matters for revenue recognition: issuing refunds in platform currency defers the cash impact but still suppresses reported billings.

Chief Financial Officer Rana Kashyap said the corresponding impact on revenue was slightly greater than the billings impact, though she did not quantify it precisely. The shift toward Things to Do and Travel, which carry different take rates, plus the trust investments, contributed to revenue growing more slowly than billings, Šenkypl said.

Groupon is also raising marketplace quality standards and can pause deals from merchants with low-quality scores. Šenkypl declined to disclose how many deals were paused or how concentrated refunds were among merchants. Kashyap said quality challenges were more pronounced in beauty and wellness, automotive services, retail and other products than in Things to Do.

When does the trust investment pay back?

Management expects the investments to support retention and repeat purchases over time, but Šenkypl said Groupon has not yet seen the purchase-frequency gains it had expected. Measuring the effect of changes in trust and quality may take more than one or two quarters, he cautioned — effectively telling the market not to expect a clean read before mid-2026.

Higher marketing spending also contributed to the adjusted EBITDA shortfall because it did not deliver the expected return. Šenkypl said Groupon is shifting from evaluating customers primarily on their seven-day returns to considering their expected behavior over 12 months. The company had difficulty fine-tuning Google and Meta advertising algorithms for the new approach during the quarter, and it is continuing to adjust campaigns with tighter spending guardrails in the fourth quarter.

What is growing despite the noise?

Travel billings grew 36%, and Things to Do grew by double digits in both North America and international markets. It was the category's sixth double-digit growth quarter in the past eight, helped by direct connections to partners' booking systems.

Groupon also relaunched LivingSocial as a marketplace designed for AI agents. More than 50,000 Groupon local experiences are available through it, and an agent can reserve a specific date and time for more than 25,000 of them, with customers completing purchases through Groupon's checkout. Šenkypl said the initiative could create a new channel for Groupon and help merchants appear in agent-led searches, but he does not expect a material impact on fourth-quarter results.

Separately, the company introduced FoundryAI, an internal platform intended to centralize data and share AI capabilities across teams. AI resolved 84% of customer support contacts on its own in the third quarter, up from 42% in January, and passed 90% in early November. Engineering output per developer more than doubled in the first half of the year, Šenkypl said.

What about cash, buybacks and costs?

Groupon ended the quarter with $177 million in cash and cash equivalents. Kashyap confirmed an analyst's calculation that the company expects at least $85 million in fourth-quarter free cash flow — a swing large enough to cover the third quarter's outflow nearly twice over.

Since its previous earnings release, Groupon repurchased 677,561 shares for $11.3 million, bringing 2026 repurchases to approximately 3.5 million shares for $43 million. Kashyap confirmed that most of the latest repurchases occurred after the third quarter ended.

Third-quarter selling, general and administrative expenses benefited from lower expected bonus payouts that will not recur, she said, and the fourth-quarter expense level better reflects a normalized rate. As of October, Groupon had realized approximately 70% of its planned restructuring savings on a run-rate basis, with some remaining savings expected in the first quarter. The company plans to provide 2027 guidance with its fourth-quarter results.

For finance teams watching Groupon, the throughline is a company spending reputation capital and marketing dollars now against returns management says will arrive — measurably in 2027, and for quality investments, sometime after the next two quarters.