Groupon Q2 2026 Earnings: Revenue Slips 1% as Continuing Operations Turn to a Loss

Groupon (NASDAQ: GRPN) reported Q2 2026 global revenue down 1% year over year and a GAAP loss from continuing operations of $1.5 million, compared with income of $20.6 million a year earlier. Adjusted EBITDA was $14.8 million, while operating cash flow from continuing operations and free cash flow remained positive at $18.1 million and $15.0 million, respectively. Lower transaction volume pressured North America, but higher average order values and reported International Local growth limited the overall revenue decline.

Core financial results

Top-line pressure was relatively contained despite a 7% decline in unit sales. Higher-value local purchases helped offset lower transaction volume, while active customers increased 2% to 16.1 million.

The profitability picture differed sharply by reporting basis. Adjusted EBITDA declined only about 4.7%, but GAAP continuing operations moved from a profit to a loss because the prior-year quarter included significant gains and the current quarter included restructuring and other expenses.

Adjusted EBITDA and free cash flow are non-GAAP measures presented on a continuing-operations basis. The earnings release provided revenue and billings growth rates but did not disclose their Q2 dollar amounts.

Business and segment performance

North America Local remained the primary source of weakness, while International Local grew on a reported basis. International billings nevertheless declined when measured at constant exchange rates, showing that currency contributed to the reported increase.

Excluding Giftcloud, International Local revenue increased 9% and billings rose 5%. Groupon attributed the improvement primarily to Health, Beauty & Wellness and Things to Do offerings.

The operating metrics were mixed. Active customers grew in both North America and International Local, but unit sales fell to 8.5 million because of lower transaction volumes in both regions. Customers purchasing higher-value local inventory increased average order value, helping keep the decline in global billings to 1%.

GAAP profit reversed while adjusted EBITDA remained relatively stable

The change from $20.6 million of continuing-operations income to a $1.5 million loss did not reflect a comparable deterioration in adjusted EBITDA. Adjusted EBITDA decreased by less than $1 million to $14.8 million.

The prior-year GAAP result benefited from a $10.7 million gain on the sale of a business and $18.5 million of other income. Those benefits were absent in Q2 2026, when Groupon instead recorded $3.2 million of restructuring charges and $3.3 million of other expense. Q2 2026 adjusted EBITDA also excluded $8.3 million of stock-based compensation and $4.1 million of depreciation and amortization.

These reconciliation items explain much of the divergence between the relatively modest decline in adjusted operating performance and the unfavorable swing in GAAP continuing operations.

Cash flow, liquidity, and restructuring

Operating cash flow and free cash flow were both positive but lower than in the prior-year quarter. Groupon generated $18.1 million of operating cash flow from continuing operations and spent $3.1 million on property, equipment, and capitalized software, resulting in $15.0 million of free cash flow.

Cash and cash equivalents totaled $226.3 million as of June 30, 2026. The company also reported a $13.8 million financing cash outflow during the quarter.

Groupon’s restructuring plan, announced in May, produced $3.2 million of Q2 charges. The company expects total pre-tax charges of $7 million to $13 million and estimates the payroll actions will generate $20 million to $25 million in annualized cost savings. Most related headcount reductions are expected to occur by the end of the third quarter, so the estimated savings should not be interpreted as a full Q2 benefit.

Guidance

Groupon’s outlook as of August 6 calls for revenue and billings to return to year-over-year growth in Q3 after both declined 1% in the second quarter. The company also expects higher adjusted EBITDA in Q3, although free cash flow is projected to be negative for the quarter.

The release did not provide corresponding GAAP guidance reconciliations because management said the relevant reconciling items could not be meaningfully estimated without unreasonable effort.

Management perspective

CEO Dusan Senkypl said Q2 was slightly below the company’s expectations on the top line, but management entered Q3 with momentum and expects growth to accelerate during the second half of 2026.

Management identified Project Foundry, Groupon’s AI-focused operating redesign, as its most consequential current initiative. The company said the rollout of its new consumer platform was nearing completion, conversion was improving across most surfaces, organic channels had returned to growth, managed channels continued to improve, and personalization capabilities were scaling. The release did not quantify Project Foundry’s contribution to Q2 revenue or profit.

Risks investors should monitor

• North America demand and transaction volume: North America Local revenue declined 2%, with weakness in Health, Beauty & Wellness. Companywide unit sales also fell 7%, leaving results partly dependent on higher average order values.
• Currency sensitivity in International Local: International Local billings increased 2% as reported but declined 1% on an FX-neutral basis. Currency movements can therefore materially affect reported regional growth.
• Restructuring execution: Groupon has recorded only part of the expected $7 million to $13 million in restructuring charges. The timing and realization of the estimated $20 million to $25 million in annualized savings remain important to future profitability.
• Cash flow timing: Q3 free cash flow is expected to be negative even though Groupon targets at least $60 million for the full year, increasing the importance of cash generation later in 2026.
• Project Foundry implementation: The company reported early progress, but the financial contribution has not been quantified, and the broader transformation remains dependent on execution across customer, merchant, and internal systems.

Summary

Groupon’s Q2 2026 results showed a modest top-line decline, lower transaction volume, and a return to a GAAP continuing-operations loss, while adjusted EBITDA and free cash flow remained positive. International Local growth and higher average order values partly offset North America softness. The main issues to watch are whether projected second-half growth materializes, restructuring produces the expected savings, and the company can deliver its full-year cash flow target despite negative Q3 guidance.