UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

LAZAR MACOVSKI, Individually and On

Behalf of All Others Similarly Situated,

Plaintiff,

v.

GROUPON, INC., RICH WILLIAMS, and 

MELISSA THOMAS,

Defendants.

Case No. 1:20-cv-02581

AMENDED CLASS ACTION COMPLAINT

FOR VIOLATIONS OF THE FEDERAL

SECURITIES LAWS

Honorable Matthew F. Kennelly

JURY TRIAL DEMANDED

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TABLE OF CONTENTS

I. NATURE OF THE ACTION AND OVERVIEW.................................................................. 1

II. JURISDICTION AND VENUE.............................................................................................. 4

III. PARTIES................................................................................................................................. 5

A. Lead Plaintiff ................................................................................................................ 5

B. Defendants .................................................................................................................... 5

IV. FACTUAL BACKGROUND ................................................................................................. 7

A. Groupon’s Basic Organization...................................................................................... 7

B. Relevant Dynamics Affecting Groupon’s Operations.................................................. 8

1. Groupon’s Recent Customer And Traffic Headwinds............................................ 8

2. With Local As Groupon’s Core, Defendants Retain Goods Because Of 

Its Ability To Drive Additional Local Business................................................... 10

3. Defendants Identify Increasing Customers’ Purchase Frequency As The 

Key To Unlocking Profit Growth ......................................................................... 13

4. Defendants Identify Select As The Key To Increasing Purchase Frequency, 

And Insist Select Was Doing So Profitably.......................................................... 14

5. Groupon’s Guidance For 2019 Results Of Operations......................................... 18

C. Undisclosed Adverse Facts Known to Defendants During the Class Period.............. 20

1. In The Second Half Of 2019, Select “Over-Indexed” To Goods And As 

A Result Failed To Generate Local Business Traction Or Profit ......................... 20

2. It Becomes “Abundantly Clear” To Defendants Midway Through The 

4

th Quarter Of 2019 That Goods Cannot Compete Effectively, Is Being 

Abandoned By Customers, And Is No Longer Driving Meaningful 

Business To Local................................................................................................. 22

3. Groupon’s Share Price Craters In February 2020 Following Disclosure 

Of The Failure Of Select And Goods, And The Consequent Guidance Miss ...... 23

V. DEFENDANTS’ VIOLATIONS OF THE EXCHANGE ACT ........................................... 24

A. Defendants’ Material Misstatements and Omissions in Violation of the 

Exchange Act.............................................................................................................. 24

1. Defendants’ July 30-31, 2019 Statements ............................................................ 24

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2. Defendants’ November 4-5, 2019 Statements...................................................... 30

3. Williams’ December 11, 2019 Statements............................................................ 41

4. Additional Disclosure Duties Imposed By Item 303 Of Regulation S-K............. 44

B. Defendants’ February 18-19, 2020 Disclosures Correct Prior Misstatements and 

Cause the Company’s Shares to Lose Nearly Half of Their Remaining Value.......... 46

1. Groupon’s Poor Fourth Quarter And Full Year 2019 Results.............................. 46

2. Defendants’ Corrective Disclosures Concerning Goods And Select.................... 47

a. Goods.............................................................................................................. 47

b. Select............................................................................................................... 52

3. Groupon Shares Decline Materially Following The February 18-19, 2020 

Corrective Disclosures.......................................................................................... 53

C. Additional Allegations Regarding The Individual Defendants’ Scienter................... 54

1. The Collapse Of Goods, And Of The Cross-Shopping Benefits Good 

Historically Had Provided To Local, Was Long Monitored By Defendants 

And “Abundantly Clear” To Defendants “Midway Through The Fourth 

Quarter” Of 2019 .................................................................................................. 54

2. Select’s Failures To Drive Local Business And Operate Profitably Were 

Evident To Defendants During The Second Half Of 2019 As Select 

Over-Indexed To Goods ....................................................................................... 55

3. Select’s Over-Indexing To Goods During The Second Half of 2019, And 

Consequent Unprofitability, Were The Direct And Foreseeable Results Of 

Defendants’ Own Actions..................................................................................... 56

4. Goods And Select Were Core Operations For Groupon....................................... 56

5. Defendants’ Own Assertions That They Closely Monitored Select 

And Goods . . . ...................................................................................................... 57

6. . . . Are Borne Out By The Mastery Of Details Displayed By Defendants 

In The Q2 2019 And Q3 2019 Conference Calls.................................................. 59

7. Defendants Attested To Their Data Driven Decision-Making Frameworks........ 60

8. Executive Terminations Shortly After the Class Period Further Support an 

Inference of Scienter............................................................................................. 61

D. Additional Allegations Regarding Loss Causation..................................................... 61

E. Presumption Of Reliance ............................................................................................ 62

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1. General Allegations .............................................................................................. 62

2. Class Period Analyst Reports Reflected And Transmitted Defendants’ 

Misstatements ....................................................................................................... 64

a. Analyst Reports Following Defendants’ Q2 2019 Statements....................... 64

b. Analyst Reports Following Defendants’ Q3 2019 Statements....................... 66

c. The UBS Upgrade........................................................................................... 67

VI. INAPPLICABILITY OF THE STATUTORY SAFE HARBOR AND THE 

BESPEAKS CAUTION DOCTRINE................................................................................... 71

VII. CLASS ACTION ALLEGATIONS...................................................................................... 71

VIII.CLAIMS FOR RELIEF ........................................................................................................ 73

IX. PRAYER FOR RELIEF........................................................................................................ 77

X. JURY TRIAL DEMANDED ................................................................................................ 78

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TABLE OF DEFINED TERMS

Barclays Conference 

Presentation

Williams’ oral presentation concerning Groupon at the 

December 11, 2019 Barclays Global Technology, Media and 

Telecommunications Conference, held in the Palace Hotel in 

San Francisco

Class All persons and entities that purchased or otherwise acquired 

Groupon securities between July 30, 2019 and February 18, 

2020, inclusive, and who were damaged thereby

Class Period July 30, 2019 through February 18, 2020, inclusive

Company Groupon

Credit Suisse Q2 Report August 1, 2019 analyst report on Groupon titled “Investing to 

Accelerate Subscription Adoption,” authored by Credit Suisse 

analyst Stephen Ju

Credit Suisse Q3 Report November 6, 2019 analyst report on Groupon titled “Turning 

to Order Frequency and Conversion to Offset Ongoing Traffic 

Headwinds,” authored by Credit Suisse analyst Stephen Ju

Defendants Groupon, Thomas and Williams

Exchange Act Securities Exchange Act of 1934

Goldman Goldman Sachs & Co. LLC

Goods Groupon’s “Goods” business, offering discounted 

merchandise across multiple product lines, including 

electronics, sporting goods, jewelry, toys, household items 

and apparel

Groupon Groupon, Inc.

Guidance $270 million in 2019 adjusted EBITDA, first announced on 

February 12-13, 2019 and re-affirmed on July 30-31, 2019 

and November 4-5, 2019

Individual Defendants Thomas and Williams

Item 303 Item 303 of Regulation S-K (“Item 303”), 17 C.F.R. §229.303

Lead Plaintiff Fadi E. Rahal

Local Groupon’s “Local” businesses, including multiple product 

and service subcategories such as events and activities, beauty 

and spa, health and fitness, food and drink, and home and 

garden and automotive

MD&A The section in certain Groupon SEC filings, including its 

filings on Form 10-Q and Form 10-K, titled “Management 

Discussion and Analysis of Financial Condition and Results 

of Operations”

Q1 2019 Conference Call May 1, 2019 Groupon conference call with analysts and 

investors, in connection with Groupon’s announcement of Q1 

2019 results

Q1 Letter May 1, 2019 letter from Williams to Groupon shareholders

Q2 2018 Conference Call August 3, 2018 Groupon conference call with analysts and 

investors, in connection with Groupon’s announcement of Q2 

2018 results

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Q2 2019 10-Q Groupon’s Form 10-Q for the second quarter of 2019, filed 

with the SEC on July 30, 2019

Q2 2019 Conference Call July 31, 2019 Groupon conference call with analysts and 

investors, in connection with Groupon’s announcement of Q2 

2019 results

Q2 Letter July 30, 2019 letter from Williams to Groupon shareholders

Q2 2019 Press Release July 30, 2019 Groupon press release titled “Groupon 

Announces Second Quarter 2019 Results”

Q3 2019 10-Q Groupon’s Form 10-Q for the third quarter of 2019, filed with 

the SEC on November 4, 2019

Q3 2019 Conference Call November 5, 2019 Groupon conference call with analysts and 

investors, in connection with Groupon’s announcement of Q3 

2019 results

Q3 Letter November 4, 2019 letter from Williams to Groupon 

shareholders

Q3 2019 Presentation November 4, 2019 Groupon presentation titled “3Q19 

Earnings”

Q3 2019 Press Release November 4, 2019 Groupon press release titled “Groupon 

Announces Second Quarter 2019 Results”

Q4 2018 Conference Call February 13, 2019 Groupon conference call with analysts and 

investors, in connection with Groupon’s announcement of Q4 

and full-year 2018 results

Q4 2019 Conference Call February 19, 2020 Groupon conference call with analysts and 

investors, in connection with Groupon’s announcement of Q4 

and full-year 2019 results

Q4 Letter February 18, 2020 letter from Williams to Groupon 

shareholders

Q4 2019 Presentation February 18, 2020 Groupon presentation titled “4Q19 

Earnings”

Q4 2019 Press Release February 18, 2020 Groupon press release titled “Groupon 

Announces Fourth Quarter and Fiscal Year 2019 Results”

Randolfi Michael Randolfi, Groupon’s CFO from April 2016 until his 

August 23, 2019 resignation

SEC Securities and Exchange Commission

Select Groupon’s loyalty program, Groupon Select, under which 

customers paid a $4.99 monthly membership fee and in 

exchange received various discounts on Groupon purchases 

(e.g., 25% off Local purchases, 15% off Goods purchases, 

etc.) and other promotional benefits (e.g., free shipping for 

Goods)

SEM Search engine marketing

SEO Search engine optimization

Thomas Melissa Thomas, Groupon’s interim CFO between August 23, 

2019 and February 18, 2020 (and permanent CFO thereafter), 

and also Groupon’s Chief Accounting Officer and Treasurer 

from November 2018 until approximately February 18, 2020

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UBS Conference Presentation William’s oral presentation concerning Groupon at the March 

5, 2020 UBS Global Consumer & Retail Conference

UBS Q2 Report July 31, 2019 analyst report on Groupon titled “Work in 

Progress; 2020 Is Key for Stock,” authored by UBS analyst 

Eric J. Sheridan

UBS Q3 Report November 5, 2019 analyst report on Groupon titled “Is the 

Plan Coming Together for 2020?,” authored by UBS analyst 

Eric J. Sheridan

UBS Upgrade Report January 17, 2020 analyst report on Groupon titled “Groupon 

on Sale,” authored by UBS analyst Eric J. Sheridan

Wedbush Wedbush Securities, Inc.

Williams Richard Williams, Groupon’s CEO throughout the Class 

Period (and at all times between November 2015 and March 

25, 2020)

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Lead Plaintiff Fadi E. Rahal (“Lead Plaintiff”), individually and on behalf of all others 

similarly situated, by and through his attorneys, alleges the following upon information and belief,

except as to those allegations concerning Lead Plaintiff, which are alleged upon personal

knowledge. Lead Plaintiff’s information and belief is based upon, among other things, his

counsel’s investigation, which includes without limitation: (a) review and analysis of regulatory

filings made by Groupon, Inc. (“Groupon” or the “Company”) with the United States (“U.S.”)

Securities and Exchange Commission (“SEC”); (b) review and analysis of pressreleases and media

reports issued by and disseminated by Groupon; (c) review of reports issued by industry and 

securities analysts; and (d) review of other publicly available information concerning Groupon.

I. NATURE OF THE ACTION AND OVERVIEW

1. This is a class action on behalf of persons and entities that purchased or otherwise 

acquired Groupon securities between July 30, 2019 and February 18, 2020, inclusive (the “Class

Period”). Lead Plaintiff pursues claims against the Defendants under the Securities Exchange Act 

of 1934 (the “Exchange Act”).

2. Groupon offers a marketplace that connects consumers to merchants through 

mobile applications and websites. Groupon has historically operated in three categories: i) Local, 

which provides experiences, including events and activities, health and beauty, food and drink, 

home and garden, and automotive; ii) Goods, which includes product revenue from merchandise 

inventory sold directly to customers and service revenue from third-party merchants who sell 

products using Groupon marketplaces; and iii) Travel, which offers hotels, airfare and package 

deals at discounted and market rates.

3. Local’s high gross margins (in the 80%-90%) range made it Groupon’s primary 

profit driver, generating 73% of the Company’s consolidated gross profits from only 40% of its 

consolidated revenues. Goods, by contrast, was a low-margin business. The low margins 

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prevailing in Goods (mostly in the 10%-20% range, and often less) meant that although Goods 

generated 55% of Groupon’s total revenue, it yielded only 20% of the Company’s gross profits. 

Yet, as Groupon repeatedly explained, Goods, despite the low margins, had value over and above 

the profits it directly produced, because Goods served to draw new customers to Groupon and 

drive engagement with the Company’s higher-margin Local offerings. As Groupon CEO Richard 

Williams explained during the Company’s Q4 2018 Conference Call, “Goods has been a good, 

solid engagement driver for us over the years. . . And our focus with Goods has just been 

making it more and more efficient and driving more gross profit albeit at lower units and lower 

overall volume.”

1 This boost to engagement was critical for the Company because prior to and 

throughout the Class Period, Groupon was experiencing severe “traffic headwinds” in its two of 

its principal marketing channels (email and search engine marketing).2 

4. During the second half of 2019, Groupon sought to further combat its so-called 

“traffic headwinds” and/or customer attrition by driving repeat customer engagement through a 

program called Groupon Select. Groupon Select was a membership program that allowed 

members to receive, in exchange for a $4.99 monthly fee, various discounts on Groupon products 

as well as other benefits (detailed below). The goal of Select was twofold: i) generate substantial 

increases in customers’ purchase frequency; and ii) increase operating profitability, both overall 

and on a per-unit basis. In certain respects, Groupon Select was the latest in a line of new big ideas 

meant to ensure that customers repeatedly turned to Groupon for experiences offered by the Local 

segment, as opposed to purchasing a one-off, discounted restaurant meal. 

5. During the Class Period, Defendants repeatedly touted the purported success of 

1 All emphasis is added unless otherwise noted.

2 Traffic refers to visitors to Groupon’s websites or mobile applications.

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Groupon Select in boosting purchase frequency and generating incremental profits, and suggested 

that this customer engagement strategy was on the cusp of returning the Company to profit growth. 

6. This was not the case. Select’s purported boost to customer purchase frequency, 

and its purported overall and per-unit profitability, were merely mirages. As Groupon did not 

disclose until after the Class Period, the highly touted Select program was in fact “over-indexing” 

to the Company’s Goods segment – i.e., customers had been using Select primarily to make repeat 

low-margin Goods purchases, rather than higher-margin Local purchases. Simultaneously and for 

the same reason, Select had not in fact been profitable: the discounts and other benefits available 

to Select members – including a 15% discount on all Goods purchases – entirely erased Groupon’s 

already low margins on Goods purchases, so that Select purchases of Goods generated incremental 

losses rather than profits. As Defendants acknowledged publicly for the first time in Williams’ 

February 19, 2020 Q4 Letter to shareholders, Select, notwithstanding all of Defendants’ positive 

statements during the Class Period, had failed to “address the core of [Groupon’s] product or 

business model”—i.e., Groupon’s Local offerings – and would be discontinued.

7. Compounding this issue, Defendants also did not disclose, until after the Class 

Period, that the deteriorating performance of Goods had been accompanied by a material 

diminishment in the business-driving benefits Goods had provided to Local, and had led the 

Company to decide to exit Goods entirely. As Williams disclosed in his Q4 Letter, “Midway 

through the fourth quarter it became abundantly clear that we were not competing effectively in 

Goods. We saw far fewer customers engage with Goods in the fourth quarter than we anticipated, 

which impacted overall traffic to our site. The lower traffic ultimately impeded performance in all 

of our categories.” Williams further explained, in the same Q4 Letter, that Goods was no longer 

driving engagement with Local: “In 2019, we were devoting about 40% of our site impressions to 

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a category that was only delivering about 20% of our gross profit and no longer generating the 

cross-shopping behavior or customer activation activity to continue to justify this investment. In 

short, Goods has outlived its role as a business driver and has become a significant drag on our 

business.”

8. Critically, the Company disclosed for the first time in the Q4 Letter that “[o]ur 

management team and board have been evaluating the role of Goods in our ecosystem for some 

time,” and that Groupon had decided to abandon the Goods segment during 2020. Yet, Groupon 

never previously disclosed that exiting the Goods segment was being considered.

9. During the February 19, 2020 Q4 2019 Conference Call, Williams, discussing the 

failure of the Select program, admitted that “[t]he program also began over-indexing towards our 

Goods category in the second half of 2019.” This acknowledgement that Select was merely driving 

customers to Goods contravened Defendants’ repeated Class Period statements concerning 

Select’s ability to deliver higher margin, repeat customers. Groupon continued to make these 

statements throughout the Class Period even though it was “abundantly clear” midway through Q4 

2019 that Goods was no longer performing and the Company was considering exiting the segment 

entirely. To wit, the promise of Select sold to investors was little more than a bag of goods. 

10. As a direct result of Defendants’ material misrepresentations and omissions, the 

market was shocked when, on February 18-19, 2020, the Company disclosed this information. 

Investor confidence in Groupon was shattered and an immediate decline in the price of Groupon 

shares ensued. On February 19, 2020, Groupon shares fell by $1.35 per share, or more than 44%, 

on trading volume that was more than 25 times Groupon’s average daily trading volume during 

the Class Period.

II. JURISDICTION AND VENUE

11. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange 

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Act (15 U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17 

C.F.R. § 240.10b-5). 

12. This Court has jurisdiction over the subject matter of this action pursuant to 28 

U.S.C. § 1331 and Section 27 of the Exchange Act (15 U.S.C. § 78aa).

13. Venue is proper in this Judicial District pursuant to 28 U.S.C. § 1391(b) and Section 

27 of the Exchange Act (15 U.S.C. § 78aa(c)). Substantial acts in furtherance of the alleged fraud 

or the effects of the fraud have occurred in this Judicial District. Many of the acts charged herein, 

including the dissemination of materially false and/or misleading information, occurred in 

substantial part in this Judicial District. In addition, the Company’s principal executive offices are 

located in this District.

14. In connection with the acts, transactions, and conduct alleged herein, Defendants 

directly and indirectly used the means and instrumentalities of interstate commerce, including the 

United States mail, interstate telephone communications, and the facilities of a national securities 

exchange.

III. PARTIES

A. Lead Plaintiff

15. Lead Plaintiff Fadi E. Rahal, as set forth in the certification previously filed with 

the Court (ECF No. 17), incorporated by reference herein, purchased Groupon securities during

the Class Period, and suffered damages as a result of the federal securities law violations and false

and/or misleading statements and/or material omissions alleged herein.

B. Defendants

16. Defendant Groupon is incorporated under the laws of Delaware with its principal 

executive offices located in Chicago, Illinois. Groupon’s common stock trades on the NASDAQ 

exchange under the symbol “GRPN.”

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17. Defendant Richard Williams (“Williams”) was the Company’s Chief Executive 

Officer (“CEO”) and Director from November 2015 until approximately March 25, 2020, when 

Groupon announced a “management transition” in which it informed that Williams was “no longer 

serving as CEO” but would remain a Company employee. Prior to joining Groupon in 2011, 

Williams served in a variety of marketing leadership roles at Amazon.com, Inc. between 2008 and 

2011, including most recently as Director, Paid Traffic. Before becoming CEO of Groupon in

2015, Williams served in a variety of roles: Chief Operating Officer (2015); President, North 

America (2014-2015); and Senior Vice President, Marketing (2011-2014).

18. Defendant Melissa Thomas (“Thomas”) was the Company’s “interim” CFO from 

August 23, 2019 until February 18, 2020, when she was named permanent CFO. From November 

2018 through approximately February 18, 2020, Thomas also served as the Company’s Chief 

Accounting Officer and Treasurer. Thomas first joined Groupon in June 2017 as Vice President 

of Commercial Finance. Previously, Thomas was Vice President of Finance at Surgical Care 

Affiliates and spent nearly nine years at Orbitz Worldwide in a variety of positions including Vice 

President of Finance. Thomas has also held positions with Equity Office Properties and 

PricewaterhouseCoopers.

19. Defendants Williams and Thomas (collectively the “Individual Defendants”),

because of their positions with the Company, possessed the power and authority to control the

contents of the Company’s reports to the SEC, press releases, and presentations to securities

analysts, money and portfolio managers, and institutional investors, i.e., the market. The

Individual Defendants were provided with copies of the Company’s reports and press releases

alleged herein to be misleading prior to, or shortly after, their issuance and had the ability and

opportunity to prevent their issuance or cause them to be corrected. Because of their positions and

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access to material non-public information, the Individual Defendants knew, or were reckless in 

disregarding, that the adverse facts specified herein had not been disclosed to, and were being

concealed from, the public, and that the positive representations which were being made were then

materially false and/or misleading. The Individual Defendants are liable for the false statements

and omissions of fact pleaded herein, as well as others that may be revealed as such with the benefit 

of further investigation and discovery.

IV. FACTUAL BACKGROUND

A. Groupon’s Basic Organization 

20. During the Class Period, Groupon operated under two geographical segments 

(North America and International) and three product categories: Local, Goods and Travel.

21. The Local business was Groupon’s original business, and by far the most significant 

contributor to Groupon’s financial success, generating nearly 60% of the Company’s total gross 

billings and more than 70% of its total gross profits. Local comprised multiple product and service 

subcategories, including events and activities, beauty and spa, health and fitness, food and drink, 

and home and garden and automotive, and included offerings from local as well as national 

merchants. Local product/service sales generally involve a customer’s purchase of a voucher 

through one of Groupon’s online marketplaces that can be redeemed with a third-party merchant 

for specified goods or services (or for discounts on specified goods or services). Groupon earns 

service revenues from such transactions – in effect, commissions for selling goods or services on 

behalf of third-party Local merchants. Although Groupon’s Local inventory historically

concentrated on “deep discount” offers, Groupon more recently sought to expand its inventory 

through a “full funnel” approach that included moderate discount and market rate offers as well.

22. Groupon’s Goods business offered discounted merchandise across multiple product 

lines, including electronics, sporting goods, jewelry, toys, household items and apparel. Groupon 

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operated its Goods business on both a “first party” model, whereby Groupon earned product 

revenue from transactions in which it sold merchandise from its inventory directly to customers, 

and on a “third party” model, in which Groupon earned service revenue from transactions in which 

third-party merchants sold products to customers through Groupon’s marketplaces. The Company 

stated on its Q4 2018 Conference Call that only 12% of its offers came from third parties.

23. Groupon’s Travel business includes discount and market rate offers for hotels, 

airfare and package deals covering both domestic and international travel. 

24. During 2017 and 2018, Goods generated approximately 31% of Groupon’s gross 

billings and 56% of Groupon’s total revenues, but only 20% of Groupon’s gross profits. Local, 

on the other hand, generated approximately 58% of Groupon’s gross billings, 40% of Groupon’s 

total revenues and 73% of Groupon’s gross profits. These results are summarized in Table 1, 

which reproduces figures from the Form 10-K for 2018 that Groupon filed with the SEC on or 

around February 12, 2019:

TABLE 1

2018 2017

Goods % of Total Gross Billings 31.1% 32.0%

Goods % of Total Revenues 55.5% 56.8%

Goods % of Total Gross Profits 20.0% 19.4%

Local % of Total Gross Billings 58.2% 57.2%

Local % of Total Revenues 40.2% 38.9%

Local % of Total Gross Profits 72.8% 73.0%

B. Relevant Dynamics Affecting Groupon’s Operations

1. Groupon’s Recent Customer And Traffic Headwinds

25. Groupon acquired and retained customers through traffic to its websites and mobile

applications. Groupon’s business model originally centered on offering a limited number of 

discounted product or service offers (“deals”), via an email-based “push” model (i.e., daily deal 

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emails sent to Groupon subscribers). However, the efficacy of this push model waned as 

technology and consumer habits evolved, leading Groupon to develop more extensive online 

“pull” marketplaces, where customers could come to Groupon’s website and mobile application 

to search and browse for deals on goods and services.

26. Prior to and during the Class Period, approximately two-thirds of Groupon’s traffic 

derived from direct customer visits to Groupon’s websites and mobile applications (the “pull”

model), with one-third coming from two “push” sources: (1) the Company’s own direct email 

marketing, which generated approximately 20% of the Company’s traffic, and (2) third-party 

search engine marketing (“SEM”) (e.g., purchasing advertising on Google), and related search 

engine optimization (“SEO”) efforts (e.g., designing and redesigning the Company’s websites in 

order to increase Groupon’s visibility in web search results), which were responsible for 

approximately 10%-20% of the Company’s customer traffic. See e.g. Q1 2019 Conference Call, 

FactSet Transcript at 9-10.

27. Prior to and during the Class Period, Groupon’s active customer count declined.3 

Defendants attributed such declines, and their associated downward pressure on the Company’s 

financial results (e.g., gross billings, revenues, gross profit, adjusted EBITDA) to two primary 

factors: (1) the Company’s strategic decision to focus on customers that offered higher potential 

for gross profit generation (versus unprofitable customers whose purchases Defendants 

characterized as “empty calories”); and (2) “ongoing headwinds” from the Company’s email and 

SEM/SEO channels.4 Specifically, the traffic headwinds were attributable to internet search 

3 Active customers declined from 49.5 million as of December 31, 2017 to 48.2 million as of 

December 31, 2018 and continued to decline to 47.2 million at the end of Q1 2019, 46.2 million 

at the end of Q2 2019, 45.3 million at the end of Q3 2019, and 43.6 million at the end of Q4 2019.

4

See e.g. Q1 2019 Conference Call, FactSet Transcript at 3 (“In Q1, North America net customers 

declined 940,000, which reflects that continued optimization of marketing spend toward customers 

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engines changing their algorithms in a manner that negatively impacted how and where Groupon 

was displayed in search engine results, as well as email providers designating Groupon emails as 

promotional or customers designating them as spam, resulting in less traffic and fewer customers.

28. While such “headwinds” had negative impacts on the Company’s financial results, 

Company executives represented that Groupon’s recent strategic initiatives to increase purchase 

frequency and customer gross profit (such as Select) would substantially blunt those impacts. For 

example, former CFO Michael Randolfi (“Randolfi”) explained on the February 13, 2019 Q4 2018

Conference Call that traffic headwinds related to email and search issues negatively impacted gross

profit to the tune of $100 million in 2018, and that while this trend would continue into 2019, 

“increases in gross profit per customer should offset a meaningful portion of that customer 

decline.” See Q4 2018 Conference Call, FactSet Transcript at 4; see Q3 2019 Letter at 4 (“these 

initiatives help us offset what amounts to over $100 million of annual traffic headwinds. . .”).

2. With Local As Groupon’s Core, Defendants Retain Goods Because Of 

Its Ability To Drive Additional Local Business

29. Prior to and during the Class Period, Defendants identified Groupon’s Local 

business as the Company’s fundamental core. Local was Groupon’s original and largest business, 

that have a higher potential for long-term gross profit generation and ongoing headwinds from 

email and SEO traffic.”); Q2 2019 Letter, at 1 (“. . . we continue to see traffic headwinds, including 

email and SEO, and are taking actions to buffer them”); Q2 2019 Conference Call, FactSet 

Transcript at 3 (“In Q2, North America net customers declined by 1 million, which reflects the 

continued optimization of marketing spend towards customers that have higher potential for longterm gross profit generation and ongoing traffic headwinds, including email and SEO.”); Q3 2019 

Letter, at 2, 4 (“Traffic continues to be a headwind -- one we’re combatting with product 

enhancements and a focus on purchase frequency. . . every day we see that these initiatives help 

us offset what amounts to over $100 million of annual traffic headwinds.”); Q3 2019 Conference 

Call, FactSet Transcript at 6-7 (“And a word out on the decline we saw in active customers in 

North America. This was something that we expected. If you think about the drivers, the key areas 

there, traffic headwinds which – those are ongoing traffic headwinds that impact customer 

accounts in North America in particular, as well as the marketing efficiencies that Rich mentioned. 

Those are really the two largest drivers of the decline in active customer accounts.”)

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and its greatest opportunity: even as the addressable market in the U.S. alone exceeded $1 trillion 

(and in the International arena, possibly twice that), it remained largely untapped and uncaptured 

by Groupon’s competitors. For example, in his November 4, 2019 Q3 Letter to shareholders, 

Williams explained:

Some things have not changed since Groupon launched 11 years ago. Local 

commerce remains a vast opportunity with one of the largest addressable 

markets anywhere. Local merchants still need simple, effective tools to profitably 

promote their businesses. Customers retain their appetite for surprise, delight and 

value.

***

With more than 45 million customers and hundreds of thousands of merchants, we 

believe our growing inventory of experiences and products that connects our 

customers to the world around them will allow us to earn a meaningful share of our 

addressable market, which we estimate to be north of a trillion dollars. Even 

as a market leader with $5 billion in billings in 2018, that market remains 

largely untapped with a significant opportunity for growth.

30. Similarly, as Williams asserted in his opening remarks at the December 11, 2019 

Barclays Global Technology, Media and Telecommunications conference:

[WILLIAMS]: . . . The core of what we do and the core of what Groupon is known 

for is where we’re most differentiated, and that’s in our local business. That’s in 

small business, local services, health and beauty, things to do, food and drink et 

cetera. That’s the core of our value proposition and the core of our brand and that’s 

where we’re investing differentially. So when you look at our investments in the 

product and the user experience, the vast majority of that investment, whether it’s 

booking, card-linked, even the things that we’ve done with our third-party 

inventory aggregation, that’s been centered around that local product, that local 

value prop where Groupon is the leader, like, we just have a significant head start 

there, we have the core of our brand, it’s built around local discovery and that’s 

where we’re looking to differentiate the most over the coming years.

31. Local was also more profitable than Goods. Gross margins on Local products were 

in the range of 80%-90%, far higher than those associated with its first-party Goods business, 

which averaged 10%-20% (but were in many cases lower or even negative). 

32. Goods, however, provided Groupon with a crucial added value over and above the 

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comparatively limited profits it produced: namely, Goods served as a substantial business driver 

for Local by drawing customers to Groupon’s platform, where they could view (and purchase) 

Local offerings. In Defendants’ terms, Goods generated “cross-shopping” opportunities for Local 

and generated significant “customer activation” for Local. As Wedbush Securities, Inc.

(“Wedbush”) analyst Ygal Arounian explained in a September 13, 2018 analyst report on Groupon, 

Goods served “as an effective on-ramp for new customers” for the Company’s “higher margin” 

Local business: 

Nearly the entirety of Groupon’s goods business in North America is first party 

goods, in which Groupon sells directly to a customer out of its own inventory. This 

differs from the rest of Groupon’s business where it acts as a third party that brokers 

transactions between merchants and customers. Groupon’s North America firstparty goods business carries a much lower gross margin (10-20% range) than its 

other businesses including local (80-90%), travel (75-85%), and third party goods 

(75-85%).

Many of the items sold by Groupon’s first-party goods business are actually 

sold at a lower gross margin than the 10-20% range, with some sold at breakeven levels or even at a loss. Historically, Groupon has prioritized the goods 

business, despite some transactions being near break even or at a loss, as this 

business has served as an effective on-ramp for new customers to join the 

Groupon platform and later engage in other higher margin areas of the 

business. However, one of the first priorities management put in place was “cutting 

out” these unprofitable goods transactions (“the empty calories”), which has 

positively impacted North America gross margins in two ways. First, the gross 

margin within the North America goods segment itself has improved from roughly 

10% in 2015 to what we estimate will be 22% in 2018.

Second, the mix of this lower margin business as percent of total North America 

revenue declined from 61% in 2015 to what we estimate is 48% in 2018. The result 

is total North America Gross margin increasing 1800 bps from 39% in 2015 to an 

estimated 57% in 2018. In addition to the financial benefits, the company also 

believes the move was necessary to increase the average customer lifetime value 

(defined in gross profit dollars spent on the platform) as the lower quality 

transactions attracted lower frequency and higher churn customers.

33. Defendants repeatedly explained that Goods was an integral part of Groupon 

because of its ability to pull additional customers to Groupon’s Local offerings. For example, 

prior to the Class Period, during a February 13, 2019 conference call to discuss Groupon’s financial 

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results for the fourth quarter and the full year of 2019 (the “Q4 2018 Conference Call”), Wedbush 

analyst Ygal Arounian asked whether Defendants might consider selling off Groupon’s Goods 

business in order to focus solely on Local. In response, Defendant Williams explained that Goods 

benefitted Groupon not only through the stand-alone profits it generated, but also served as a “solid 

engagement driver” for the Company’s core Local operations:

[AROUNIAN] :. . . [H]ow do you view the Goods and Travel segments fitting into 

the portfolio? Would you ever think of selling the Goods business and becoming 

leaner and kind of going all-in on Local discovery? Thanks.

[WILLIAMS]: . . . With Goods and Travel, again, a great question. Goods has 

been a good, solid engagement driver for us over the years. We have a different 

version of Goods than our typical e-commerce competitor. And our focus with 

Goods has just been making it more and more efficient and driving more gross 

profit albeit at lower units and lower overall volume. But we’re just trying to 

build a good quality business there that continues to engage customers and 

help us bridge to this vision of a broader Local focus marketplace.

***

So, our Travel product very much fits the local marketplace. Now on both of them, 

it's a fair question. Would we sell them? I think the thing to consider about all 

of our businesses is that they share our customer base. So when we look at it, 

this is an integrated business at Groupon. Our customers think of these 

businesses as Groupon. . . And I think there’s a lot of economic opportunity in 

improving those aspects of it. And that’s really where we're focused.

34. The ability of the Goods business to get customers to engage with the higher margin 

areas of the Company was critical in light of the above-described customer and traffic headwinds 

the Company was experiencing. 

3. Defendants Identify Increasing Customers’ Purchase Frequency As 

The Key To Unlocking Profit Growth

35. Although Groupon had been losing customers, partly by design, as discussed above 

in Section IV.B.1, supra, Defendants repeatedly asserted that the most important key to returning 

Groupon to profit growth was not adding more customers, but rather increasing existing 

customers’ purchase frequency – e.g., getting Groupon customers to make four, rather than three, 

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purchases per year.

36. For example, as Williams stated in his November 4, 2019 Q3 Letter to shareholders:

. . . customer count declines in the quarter reflect our traffic headwind and our focus 

on increasing customer quality. That said, increasing purchase frequency and 

total unit volume are more important to us at this point than our customer 

counts, as they unlock the leverage in our model and an ability to profitably 

invest in growth as our marketplace evolves.

37. Williams provided a more expansive explanation on the following day, November 

5, 2019, during the Q3 2019 Conference Call, noting to analysts and investors that, “If you think 

about it in a really simple way, with our roughly 45 million customers that are purchasing call it 

3.5 times a year, one incremental purchase is massive, right? You’re talking about 45 million extra 

units every year. . . So, that unlock is really, really significant.”

38. Likewise, as Williams asserted in his December 11, 2019 Barclays Conference

Presentation, “everything that we’re doing is geared towards unlocking that extra unit of growth 

[] which is really about purchase frequency”:

[WILLIAMS]: One is, we are focused on quality of customer more than 

anything else. And the biggest linchpin to quality for us is frequency. . . [W]ith 

45 million folks, what’s powerful in this model is the incremental unit, is that 

our current unit economics -- every incremental unit is hundreds of millions 

of dollars in gross profit which on our base is very exciting growth if we're able 

to unlock that.

So everything that we’re doing is geared towards unlocking that extra unit of 

growth and the next unit after that and the unit after that. . . When you unlock 

that piece, you also create more opportunity in the flywheel, right? So as gross 

profit per customer increases, so does our ability to go acquire more members into 

process and into the platform. But the core input to that, again, is customer 

quality, which is really about purchase frequency and gross profit per 

customer. So that’s everything that we’re doing, it’s geared to unlocking that.

4. Defendants Identify Select As The Key To Increasing Purchase 

Frequency, And Insist Select Was Doing So Profitably

39. With the principal question facing Groupon thus being, per Defendants, how to 

increase purchase frequency, Defendants, during the Class Period, represented Groupon’s new 

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“loyalty” program, Groupon Select as the potential answer. Groupon customers who chose to join 

Select paid a monthly membership fee ($4.99/month), in exchange for which they received various 

discounts on Groupon products as well as other benefits (detailed below). Specifically, Defendants 

made two critical and repeated assertions concerning Select: first, that it was generating substantial 

increases in purchase frequency; and second, that it was operating profitably, both overall and on 

a per-unit basis.

40. In his July 30, 2019 Q2 Letter to shareholders, Williams spotlighted Select and its 

ability to spur purchase frequency:

Last, while related to our initiative to improve the customer experience, I wanted 

to give some dedicated space to introduce a new program we launched over the last 

few quarters: an exciting new membership product in North America, called 

Groupon Select. Groupon Select amplifies the best of Groupon . . .

. . . Initial indicators are very positive with significantly improved purchase 

frequency, higher average order value and increased customer propensity to 

search for things to eat, see, do and buy.

41. Select’s ability to spur purchase frequency led Williams, during the July 31, 2019 

Q2 2019 Conference Call on the following day, to characterize Select, and Groupon’s investment 

in it, as “critical to transforming the business.” 

42. An analyst on the Q2 2019 Conference Call, noting that Select’s discounts and 

incentives (such as free shipping) allowed customers to get 4-5 months of the subscription fee back 

with one decent-size purchase, asked if Select negatively impacted margins and if the Company 

was subsidizing growth and frequency. In response, the Company asserted that Select was not 

only increasing purchase frequency and average order value, but was doing so profitably, and 

assured that Select would “almost double the average gross profit per customer that we generate 

today.” Q2 2019 Conference Call, FactSet transcript at 7.

43. Select’s incentives were initially aligned with the Company’s strategy to grow 

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Local. Select initially provided members with a 25% discount on Local purchases, a 10% discount 

on Travel purchases, tickets and live events, and free shipping on products from Goods. However, 

on August 6, 2019, Groupon issued a press release titled “Groupon Launches Groupon Select –

New Membership Program Providing Access to Exclusive Savings and Insider Perks,” which 

indicated that in addition to the previously offered benefits of membership, Select now offered 

members a 15% discount on Goods, which was already operating with low to no margins.

44. Nevertheless, in Williams’ November 4, 2019 Q3 Letter to shareholders, and during 

the Company’s Q3 2019 Conference Call on November 5, 2019, Defendants repeatedly told 

analysts and investors that Select was succeeding on both relevant counts, sparking a 60% increase 

in purchase frequency (as well as a 20% increase in average order value), and operating profitably

(generating “incremental gross profit . . .on membership-related transactions”).

45. In the Q3 Letter, Williams asserted that “we love how Select members continue to 

behave”:

Finally, I want to provide an update on Groupon Select -- our new membership 

program in North America that we announced last quarter. . .

It’s still very early, but we’re pleased with the results to date. We now have more 

than 260,000 paying Select members, up by over 100,000 in the quarter and nearly 

200,000 since the beginning of the year. Membership gains are encouraging, and 

we love how Select members continue to behave. Currently, we’re seeing a 60 

percent increase in purchase frequency and a 20 percent jump in average 

order value. Though encouraging, we are still analyzing these early results -- our 

first small cohorts are barely through their first year with the program -- and we 

still have work to do to fully build out the infrastructure necessary for Select to run 

at scale.

46. During the Q3 2019 Conference Call, Williams and Thomas, in their introductory 

remarks, described Select as one of Groupon’s “key strategic priorities” and described being 

“really excited” by the “encouraging results” that Select had produced to date, including a 60% 

boost to purchase frequency:

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[WILLIAMS]: We are making progress against our key strategic priorities, 

particularly removing friction from the customer experience, growing 

membership in our Select program and expanding our open platform. 

Ultimately, we believe success in these areas will help us drive higher purchase 

frequency, conversion and gross profit growth over the long run.

***

[THOMAS]: We’re excited about our Select membership program and are 

already seeing encouraging results. To-date, we have over 260,000 members 

despite a total third quarter investment that came in slightly lower than the $10 

million expectation. It’s still early days, but we're seeing member acquisition 

costs payback within six months; and payback has been driven by both the 

recurring revenue from membership fees as well as incremental gross profit 

generated on membership-related transactions.

For modeling purposes, it’s important to remember that historically we routinely 

offered order discounts and some of our merchants participate with us on these 

discounts. As a result, the discounts associated with Select memberships are not 

entirely incremental. We are really excited about the early impact we’re seeing 

on purchase behavior. On average, in the first six months post-enrollment, 

Select members increased purchase frequency by about 60% and average 

order values by about 20%.

We believe these early positive results illustrate our ability to monetize the 

member-like behavior of our customers and demonstrate the power of our massive 

Local two-sided marketplace. By making progress on these fronts, we believe we 

can unlock the potential of our financial model and deliver long-term gross profit 

growth and significant adjusted EBITDA.

47. After an analyst on the Q3 2019 Conference Call asked “why [Select is] gross profit 

neutral through the end of the year or, I guess, in fourth quarter,” Thomas again asserted that Select 

was operating profitably on a per-unit basis (“earning incremental [gross profit] on the 

transactions”) and overall (with operating profits offsetting investment and development costs for 

Select):

[THOMAS]: . . .we are making investments in Select and those do show up in 

terms of [gross profit], whether it be opportunity, costs, et cetera. However, those

are offset by subscription fees that we are collecting. And then the important part 

to remember is that we are also earning incremental [gross profit] on the 

transactions and we’re seeing a purchase frequency lift at 60% higher in that 

180-day post-enrollment in the program.

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48. Likewise, during Williams’ December 11, 2019 Barclays Conference Presentation, 

when an analyst asked about Select and “how should we think about [its] unit economics,”

Williams again assured that Select was not only boosting purchase frequency, but doing so 

profitably both on a per-unit basis (“we’re making money on the units”) as well as overall (“the 

total economics of the program are really compelling”):

[WILLIAMS]: So, there is -- one of the things I’d say about Select, so two things. 

One, I’m most -- what I'm most excited about with Select is that, the 

demonstration that we can move purchase frequency up into the right. And 

that’s historically I think for many business has been one of the most difficult 

things, if not, the most difficult thing to do is to move buying behavior and intensify 

it. We’re showing with Select with 60% improvement in purchase frequency 

within the first six months, we’re showing we can move that needle.

***

The other piece on that program is, yes, our margins are such that we make 

money on the units . . . we’re making money on the units as well as making 

money on the membership fees as well. So the total economics of the program 

are really compelling.

5. Groupon’s Guidance For 2019 Results Of Operations

49. Prior to and during the Class Period, in connection with disclosing financial results 

of operations each quarter, Groupon also provided certain explicit statements – included in 

Groupon’s quarterly results press releases and quarterly results presentations, and also in the 

opening remarks of Groupon executives during Groupon’s quarterly conference calls – specifying 

certain financial results expected for upcoming periods, referred to as Groupon’s “outlook” or 

financial “guidance.”

50. At all relevant times, the principal guidance that Groupon provided took the form 

of an annual figure for Adjusted EBITDA. 

51. The guidance for 2019 Adjusted EBITDA was $270 million (the “Guidance”).

52. Groupon first provided the Guidance on February 12-13, 2019, in connection with 

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announcing fourth quarter and fiscal year 2018 results of operations, and thereafter re-iterated and 

affirmed the Guidance in announcing results of operations for the first quarter of 2019 (on April 

30 and May 1, 2019), second quarter of 2019 (on July 30-31, 2019) and third quarter of 2019 (on 

November 4-5, 2019).

53. Defendants’ July 30-31 and November 4-5, 2019 Guidance affirmations were 

issued in the context of mounting concerns that the Company would fall short of the Guidance. 

As an analyst noted during the November 5, 2019 Q3 2019 Conference Call, Groupon’s financial 

results through the first three quarters of 2019 left the Company requiring a positive “inflection” 

during the fourth quarter in order to meet the Guidance. In this context, Defendants’ affirmation 

of the Guidance indicated that such an inflection was materializing.

54. For example, after hosting Groupon CEO Rich Williams and interim CFO/CAO 

Melissa Thomas for investor meetings the prior week, Wedbush analyst Ygal Arounian issued a 

September 9, 2019 report stating:

We see investor concern that Groupon will be challenged to hit FY 2019 guidance, 

which implies 20%+ EBITDA growth in 4Q. Management stood by its guidance 

and the inputs that are driving the inflection point in 4Q, pointing to 2019 

investments recouping in 4Q. While customer decline and traffic headwinds will 

persist into 2020, Groupon expects the phasing out of investments, Groupon Select 

ramping, and other key initiatives like universal shopping cart and guest checkout 

to have more near-term impacts than things like card-linked and bookability. 

Groupon also expects to see gains in marketing efficiency, and SG&A tailwinds as 

it enters 4Q19.

***

Investor confidence in near-term estimates are not particularly high and the need to 

meet its FY and 2020 EBITDA targets are nearly make or break.... Mr. Williams 

noted that he sees the product initiatives as being in the first year of a multi-year 

effort, but is also fully confident in reaching FY targets based on some early 

return on the investments and cost initiatives playing out near-term. 

September 9, 2019 Wedbush report, at 3.

55. Likewise, on November 6, 2019, after the Company had reported its 3Q’19 results, 

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Wedbush analyst Ygal Arounian issued a report stating:

When Groupon first laid out its 2019 FY EBITDA target of $270mm, it included 

revenue guidance of $2.4B, and with revenue and GP coming in below expectations 

through 3Q so far (we now estimate $2.3B for the full year), there is a big 

implication that the key initiatives will lead to material improvement in GP 

and deliver further marketing leverage in 4Q. 

***

Investor confidence in near-term estimates are not particularly high and the need to 

meet its FY and 2020 EBITDA targets are nearly make or break.... Mr. Williams 

noted that he sees the product initiatives as being in the first year of a multi -year 

effort, but is also fully confident in reaching FY targets based on some early 

return on the investments and cost initiatives playing out near-term.

November 6, 2019 Wedbush report, at 1-2.

C. Undisclosed Adverse Facts Known to Defendants During the Class Period

1. In The Second Half Of 2019, Select “Over-Indexed” To Goods And As 

A Result Failed To Generate Local Business Traction Or Profit 

56. During the second half of 2019, Defendants were aware of but failed to disclose the 

known adverse trend that Select was being adopted disproportionately by customers in order to 

make low-margin Goods purchases, rather than more lucrative Local business purchases – and 

consequently, that Select was not only failing to drive engagement with the Local business, but 

was unprofitable for Groupon.

57. At the end of the Class Period, Defendants publicly revealed on February 18-19, 

2020 that Select had failed, and would be discontinued. See Section V.B.2.b, infra. As Defendants 

Williams and Thomas then explained, at the root of Select’s failure was that fact that, in 

Defendants’ terminology, Select had “over-indexed to Goods” – meaning that Select was being 

used “disproportionately [by] customers purchasing goods vs. those transacting on our local 

platform.” Id. The over-indexing of Select to Goods, Thomas added, had occurred during “the 

second half of 2019.” Id. 

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58. Customers’ disproportionate usage of Select by Goods, rather than Local, during 

the second half of 2019 was responsible for rendering Select – notwithstanding Defendants’ 

glowing Class Period representations – a triple failure. First, Select had not been driving 

meaningful increases in purchase frequency for Groupon’s core, Local offerings. Rather, the 

increases to purchase frequency had largely been circumscribed within Goods, and in fact were 

precisely the sort of “empty calorie” sales that Defendants had purportedly foresworn, because 

they generated little, no or negative profits. Second, and relatedly, because the Goods business 

had substantially lower profit margins than Local, and because the Select program’s benefits (e.g., 

free shipping, additional promotional customer acquisition costs, and a 15% discount on all Goods 

purchases since at least August 2019) sufficed to erase and reverse the Goods’ segment’s thinner 

margins, Select was not profitable for Groupon, either on a unit basis or overall, and was not 

capable of generating any incremental gross profit growth. Finally, insofar as it was “abundantly 

clear” to Groupon by mid-Q4 2019 that Goods was no longer performing and the Company had 

determined to exit the business, Defendants’ discussions regarding the promise of Select were 

rendered materially misleading.

59. The omission of this known adverse trend was a material omission in and of itself. 

In addition, the omission of this known adverse trend rendered the many positive statements 

concerning Select that Defendants made during the Class Period – such as Defendants’ assertions 

of “meaningful step-ups in purchase frequency” and the oft-repeated “60 percent increase in 

purchase frequency” generated by Select (as detailed in Section IV.B.4, supra and Section V.A, 

infra) – materially misleading.

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2. It Becomes “Abundantly Clear” To Defendants Midway Through The 

4

th Quarter Of 2019 That Goods Cannot Compete Effectively, Is 

Being Abandoned By Customers, And Is No Longer Driving 

Meaningful Business To Local

60. During the Class Period, Defendants were aware of but failed to disclose the known 

adverse trends that the Goods business was: (1) unable to compete effectively against other online 

retailers (e.g., in terms of inventory breadth, shipping speed, etc.); (2) consequently, being 

abandoned by customers; and (3) relatedly and most importantly, no longer serving as a 

meaningful engagement tool for Local shoppers or generating meaningful Local customer 

activation.

61. At the end of the Class Period, Defendants revealed on February 18-19, 2020 that 

Groupon had decided to exit its Goods business in order to focus solely on Local. As Defendants 

then explained, the decision was rooted in the competitive deterioration of the Goods business and 

the related erasure of the cross-shopping / business-driver benefits that Goods had previously 

provided to Local. See Section V.B.2.a, infra. Defendants had been monitoring these trends “for 

some time,” and, as Defendants explained on February 18, 2019, these trends had become 

“abundantly clear” to them no later than “midway through the fourth quarter” of 2019. Id. Indeed, 

Defendants alluded to a “strategic review” of the Company’s business in November 2019, but did 

not disclose that the Company was considering shuttering a business segment that drove more than 

50% of the Company’s total revenue.

62. The omission of these known adverse trends was a material omission in and of 

itself. In addition, the omission of these known adverse trends rendered Defendants’ Class Period 

affirmative representations concerning Goods, in the context in which they were made, materially 

misleading.

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3. Groupon’s Share Price Craters In February 2020 Following 

Disclosure Of The Failure Of Select And Goods, And The Consequent 

Guidance Miss

63. On February 18, 2020, after the market closed, Defendants announced Groupon’s 

financial results for the fourth quarter and full year of 2019, and held a conference call with 

analysts and investors on the following day, February 19, 2020, to further discuss Groupon’s 

operations and results.

64. In their February 18-19, 2020 disclosures, Defendants revealed that Select had 

failed (i.e., that the boost to purchase frequency had been circumscribed largely to Goods, rather 

than to the Company’s core, higher-margin Local products, and as a result had operated at a loss

rather than generating incremental profit), that Goods had failed (i.e., that it was not able to 

compete effectively, was hemorrhaging customers, and was no longer driving engagement with

the Local business), and that as a result of the foregoing Groupon had fallen far short of the 

Guidance and would be exiting Goods. Specifically, Williams and Thomas stated:

[WILLIAMS]: . . . Midway through the fourth quarter, it became clear, 

however, that we were seeing far fewer customers engaged with goods, and it 

impacted overall traffic to our site. The lower traffic ultimately impeded 

performance in all of our categories. This was particularly notable in November 

and affected our holiday peak period, when goods engagement has historically been 

a business driver.

Adding to these challenges, certain conversion initiatives in Select did not deliver 

on expectations. Our traffic declines and these other factors, which Melissa will 

discuss in greater detail, combined to create a headwind that we could not overcome 

during the fourth quarter. Before I discuss our strategy, let’s touch on Goods.

Our management team and board have been evaluating the role of Goods for some 

time. Our fourth quarter performance and the challenges Goods has posed 

over the past few years have clarified our path forward. Delivering on our 

growth strategy requires total focus on capturing the local experiences opportunity. 

Over time, Goods has become a less meaningful driver of engagement and an 

increasingly inefficient use of our impressions.

It has effectively become a distraction, in which we can no longer compete and 

that we cannot afford, as it has taken roughly 40% of our impressions to 

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deliver roughly 20% of our gross profit. This is the crux of our plan to exit Goods.

***

[THOMAS]: . . . Midway through the quarter, however, it became clear that 

we were not competing well in Goods, and November performance was 

particularly poor.

The lack of engagement with our Goods offering impacted the overall traffic 

to our site, and ultimately performance in all of our categories....

The Select program was expected to be net neutral to gross profit in the fourth 

quarter. But the program underperformed due to higher than anticipated 

customer acquisition costs and a lower than expected number of enrollees 

converting to paid members. The program also began over-indexing towards 

our Goods category in the second half of 2019.

This, coupled with results in the fourth quarter, led to our decision to discontinue 

new enrollments in our Select program. . .

65. In response to these disclosures and during frenzied February 19, 2020 trading,

Groupon shares immediately lost approximately 44% of their remaining value. As 155.34 million 

shares traded on February 19, 2020 (more than 25 times the average daily trading volume during 

the Class Period), Groupon shares fell $1.35 per share (from their February 18, 2020 closing price 

of $3.05 per share) to close at $1.70 per share.

V. DEFENDANTS’ VIOLATIONS OF THE EXCHANGE ACT

A. Defendants’ Material Misstatements and Omissions in Violation of the 

Exchange Act

1. Defendants’ July 30-31, 2019 Statements

66. Following market close on July 30, 2019, Defendants announced Groupon’s 

financial results of operations for the second quarter of 2019, and issued, inter alia: (1) a press 

release titled “Groupon Announces Second Quarter 2019 Results” (the “Q2 2019 Press Release”);

(2) a letter to shareholders from Williams (the “Q2 2019 Letter”); (3) a presentation titled 2Q19 

Earnings; and (4) a Form 10-Q signed by Randolfi and filed with the SEC (the “Q2 2019 10-Q”).

67. Groupon’s results for the second quarter of 2019 featured double-digit percentage 

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declines (versus the year-ago quarter) in most relevant financial and operational metrics, including 

revenues, gross profits, adjusted EBITDA and total units sold, all of which the Company attributed 

to the same root cause: “fewer customers and lower traffic.” 

68. However, the Q2 2019 Press Release, and to a greater extent the Q2 2019 Letter, 

framed these financial and operational results within a narrative of improvement and progress on 

the Company’s key strategic goal (increasing customer purchase frequency), driven by Groupon 

Select.

A. For example, the Q2 2019 Press Release opened with the following statement from 

Williams, focusing on purported progress in the Company’s key goal of “engaging highervalue customers:”

“With more than 45 million active customers worldwide and more than 200 million 

mobile downloads, we have built a scalable marketplace to capture the massive 

local commerce opportunity. As we sharpen our focus on engaging higher-value 

customers, we are seeing encouraging progress,” said CEO Rich Williams. 

“Entering the second half of 2019, we remain committed to advancing our key 

strategic priorities to build the daily habit in local commerce and delivering 

value to customers, merchants and stockholders alike.”

B. Similarly, but at greater length and in greater detail, the Q2 2019 Letter began with 

assertions of purported “progress on the initiatives that we believe lay the foundation for 

long-term, profitable growth,” and continued more specifically to identify Groupon Select 

as one such initiative that appeared to be successfully answering the Company’s key 

strategic goal by generating “significantly improved purchase frequency, higher average 

order value and increased customer propensity to search for things to eat, see, do and buy:”

In the second quarter, Groupon continued our relentless focus on becoming the 

daily habit in local commerce. We are transforming our brand, product and 

business, and we are making progress on the initiatives that we believe lay the 

foundation for long-term, profitable growth and a new Groupon for consumers, 

merchants and stockholders alike.

***

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Last, while related to our initiative to improve the customer experience, I 

wanted to give some dedicated space to introduce a new program we launched 

over the last few quarters: an exciting new membership product in North 

America, called Groupon Select. Groupon Select amplifies the best of Groupon, 

offering exclusive deals, great savings, free shipping and more for a monthly 

subscription fee of $4.99. Select is simply the best way to experience Groupon 

today, leveraging all of the work we’re putting into voucherless while accelerating 

the savings for which we’re best known. And it’s only getting better. For example, 

later this quarter, as we expand our rollout of AMC theaters, we’ll begin offering 

Select members 25% off movie tickets and members-only pricing on Groupon 

Goods.

More than 150,000 members have joined the program so far, and it is scaling 

quickly with both new and existing customers. Initial indicators are very 

positive with significantly improved purchase frequency, higher average order 

value and increased customer propensity to search for things to eat, see, do 

and buy. It’s still early days, but given its promise and pace, we expect to invest 

more aggressively in Select over the coming quarters.

69. On the following morning of July 31, 2019, at 10:00 a.m. Eastern Standard Time, 

Groupon hosted a conference call with analysts and investors to further discuss the Company’s 

financial results and operations (the “Q2 2019 Conference Call”).

70. Randolfi began the Q2 2019 Conference Call by reprising both the poor 

operational/financial results reported in the Q2 Press Release, and the above-indicated re-framing 

within a larger narrative of progress on the Company’s central strategic goals, with Groupon Select 

placed front and center. Randolfi represented, inter alia, that Select was “scaling very quickly,” 

that Groupon had already enrolled “over 150,000 members in the program,” and that Select 

members were displaying “improved frequency, higher average order value, and increased 

customer propensity to search on site.”

71. Following these introductory remarks, much of the remainder of the Q2 2019 

Conference Call focused on Select. Wedbush analyst Ygal Arounian led off the Select-focused 

discussion by questioning, in light of Select’s substantial discounts and incentives, whether Select 

could really generate any profit for the Company. Defendants replied by representing that Select 

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would be profitable, both overall, given the monthly membership fees paid by Select members, 

and also incrementally on a per-unit basis, and that the discounts and benefits offered to Select 

members still left Groupon positive per-unit profit margins (“we’re still earning money on the 

individual transaction”):

[AROUNIAN]: Okay, great. That’s really helpful. And then I want to ask on 

Groupon Select. First, I think you made a comment that you’re going to push it 

into the checkout, and that’s going to reduce conversions. So I want to make sure 

I understood that correctly and why the dynamic works that way.

And then just like overall kind of philosophically how you think about Select? 

It’s $5 a month, but it drives a lot of incentives. There’s a lot of 25% off Local 

services, free shipping. I spent some time with it. It feels like you can almost 

get back your $5 a month, or even through kind of one decent-size purchase 

you can get four to five months of your monthly subscription fee back through 

that purchase and that discount, [indiscernible] (17:12) good consumer value.

And can you just talk about how you think about it? If it scales, can it have a 

negative revenue margin impact? Are you subsidizing growth and frequency 

through this initiative at least in the short term as you try to scale it out? Just 

some thoughts around that would be helpful. Thanks.

[RANDOLFI]: I’ll start, and I’m sure Rich will add additional commentary on this. 

So, on the conversion path, but first, before I get into that let me just talk about one 

of the reasons why we’ve been pushing this over the last quarter or two is, this was 

something that we started testing early last year, and I would say it’s still early days. 

But what I would also say, based on our indicators that we’ve seen so far, the 

consumer behavior, when someone enrolls in Select is really, really positive. 

We’re seeing meaningful step-ups in purchase frequency, meaningful step-ups 

in the average order value, and a greater propensity to search. So we’re really,

really pleased and excited about that.

And with that, if you think about the economics, you’re right. It is a great consumer 

proposition, and that’s the intent and that's by design. If you think about the math 

of Groupon Select, we essentially are charging a fee of $4.99 a month, so we 

will get somewhere between $55 to $60 per customer in gross profit per year.

As part of the Select program, you’re right that we provide meaningful 

discounts on a given transaction. There’s two things to take into account on 

that discount per transaction. First, in almost all cases, the discount still is at 

or below the current take rate. For example, if you look at Local, you look at 

our current take rate of 32%, 33%, the discount is 25%, so we’re still earning 

money on the individual transaction.

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And the other thing I would say with regard to the order discount is, keep in mind, 

we have many of our transactions today where we already are providing an order 

discount. So the order discount that we provide in Select at 25% isn’t always a true 

incremental 25% relative to what consumers get today.

But the way I would think about it is a Select customer should earn us at least 

that $55 to $60 of gross profit on a per customer basis, if not more, which is 

almost double the average gross profit per customer that we generate today. 

So with that, we've continued to lean into it.

***

[WILLIAMS]: Yeah. I think that's right. And just to speak a little bit about the 

philosophy and where we are on it now, you asked whether we’re thinking about 

it as a way to subsidize growth and frequency. That's not really how we're 

thinking about it.

Ultimately, we’re looking for a way to monetize what has historically been 

member-like behavior in our customer base. So we’ve had that member-like 

behavior for years, but we haven't had a member-like monetization model to go 

along with it. We saw an opportunity to do that and to build that.

And we – really we set a philosophy for the program out of the gate to make it as 

incredibly compelling as we could, really to drive engagement and frequency and 

commitment to the platform and to Groupon over time more so than thinking about 

[ph] in a way as subsidiary of (21:57) growth. And I think hopefully now as 

you've heard Mike walk through the economics of the program, you see there’s 

really – there’s not a ‘subsidy’ there more so than it is just making the core 

Groupon value prop even more compelling.

And our goal pushing forward is to double down on what you mentioned now, 

which I think it is compelling today, but as we bring more features in, more partners 

in, and more unique experiences in, we think we have a program that starts to get 

into the no-brainer territory, the why wouldn't you territory, that ultimately over 

time can support higher membership fees.

But today, our focus is entirely gain traction in the program, gain trial in the 

program, get as many of our customers into the Select experience as we possibly 

can so that we can continue to add value, share the economics with them, and build 

those healthier relationships over time.

72. Defendants’ above-identified representations in the Q2 2019 Press Release, Q2 

2019 Letter and Q2 2019 Conference Call concerning Select – including its purported boost to 

customer purchase frequency, and its purported incremental profitability to Groupon – were 

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29

materially misleading because they omitted to disclose the material adverse facts and trends 

concerning Select, set forth in Section IV.C.1], supra and then known to Defendants (as 

Defendants later admitted on February 18-19, 2020): that Select, during the second half of 2019, 

was over-indexing to Goods (i.e., Select was primarily being used to make less profitable Goods, 

rather than more profitable Local, purchases), and consequently failing to (1) meaningfully boost 

Local purchase frequency, and (2) operate profitably or generate incremental gross profit (as 

Groupon’s thinner profit margins on Goods were turned negative by the discounts and customer 

acquisition costs accompanying Select).

73. The Q2 2019 10-Q contained a section titled “Management’s Discussion and 

Analysis of Financial Condition and Results of Operations” (the “MD&A Section”) in which 

Defendants, inter alia, presented and analyzed Groupon’s results of operations for the second 

quarter of 2019. The MD&A Section made multiple references to Groupon Select:

. . . We have developed and are testing a number of product enhancements 

intended to make our offerings easier to use for both customers and merchants 

and to improve purchase frequency, including cash back offers linked to 

customer credit cards, booking capabilities and a paid membership program 

in North America, Groupon Select, which offers greater discounts on our 

offerings and other benefits. . .

***

. . . We are currently developing and testing a number of product 

enhancements intended to make our offerings easier to use for both customers 

and merchants and to improve purchase frequency, including cash back offers 

linked to customer credit cards, booking capabilities and a paid membership 

program in North America, Groupon Select, which offers greater discounts on 

our offerings and other benefits. We believe that those initiatives may be 

important drivers for increasing customer purchase frequency and growing 

our business over time. We are currently focusing our efforts on growing 

customer awareness of those products and scaling the related merchant base. As 

such, our gross profit and operating income may be adversely impacted in the near 

term as we focus more on driving our strategic initiatives.

Q2 10-Q, at 27, 30.

74. Defendants’ above-identified representations in the MD&A Section of the Q2 10-

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Q were materially misleading because they omitted to disclose the material adverse facts and trends 

concerning Select, set forth in Section IV.C.1, supra and then known to Defendants (as Defendants 

later admitted on February 18-19, 2020): that Select, during the second half of 2019, was overindexing to Goods (i.e., Select was primarily being used to make less profitable Goods, rather than

more profitable Local, purchases), and consequently failing to (1) meaningfully boost Local

purchase frequency, and (2) operate profitably or generate incremental gross profit (as Groupon’s 

thinner profit margins on Goods were turned negative by the discounts and customer acquisition 

costs accompanying Select).

2. Defendants’ November 4-5, 2019 Statements

75. Following market close on November 4, 2019, Defendants announced Groupon’s 

financial results of operations for the third quarter of 2019, and issued, inter alia: (1) a press release 

titled “Groupon Announces Third Quarter 2019 Results” (the “Q3 2019 Press Release”); (2) a 

letter to shareholders from Williams (the “Q3 Letter”); (3) a presentation titled 3Q19 Earnings (the 

“Q3 2019 Presentation”); and (4) a Form 10-Q signed by Thomas and filed with the SEC (the “Q3 

2019 10-Q”).

76. Groupon’s results for the third quarter of 2019, much like the results for the second 

quarter of 2019, featured substantial percentage declines (versus the year-ago quarter) in most 

relevant financial and operational metrics, including revenues, gross profits, adjusted EBITDA and 

total units sold, all of which the Company attributed to the same root cause: “fewer customers and

lower traffic.” 

77. However, and similarly to the Q2 2019 Press Release and Q2 Letter, the Q3 2019 

Press Release and to a greater extent the Q3 Letter framed these financial and operational results 

within a narrative of improvement and progress on the Company’s key strategic goal (increasing 

customer purchase frequency), driven by Groupon Select.

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A. For example, the Q3 2019 Press Release opened with the following statement from 

Williams, re-asserting his faith that the Company had the right strategy in place to fulfill 

the promise represented by the vast Local market:

“In the third quarter, we continued to modernize our marketplace for our customers 

and focus on positioning Groupon as a leader in local commerce,” said Groupon 

CEO Rich Williams. “We believe that the improvements we’re making to the 

customer experience together with new partnerships that expand the breadth and 

depth of our supply will encourage our customers to return to Groupon again and 

again to connect to the world around them. While we continue to face challenges 

from traffic and International macroeconomic conditions, we believe we have 

the right strategy in place to deliver on the promise of our marketplace. As we 

enter the holiday season, we look forward to bringing exciting experiences to our 

millions of customers around the world.”

B. Similarly, but at greater length and in greater detail, the Q3 Letter, noting the vast 

size and promise of the Local market, and the Company’s longstanding traffic 

“headwinds,” asserted the Company’s progress against those headwinds and towards the 

promise represented by the Local market, notably through Groupon Select, which had been 

successful in generating a “60 percent increase in purchase frequency and a 20 percent 

jump in average order value” for customers who became Select members:

Traffic continues to be a headwind -- one we’re combatting with product 

enhancements and a focus on purchase frequency. Our product and engineering 

teams are delivering enhancements at a pace beyond any I’ve seen during my time

at Groupon -- with an ambitious future roadmap -- but we are not yet moving fast 

enough to offset our traffic challenge.

While we continue to believe we have significant opportunity to grow our 

active customer base over the long term, customer count declines in the 

quarter reflect our traffic headwind and our focus on increasing customer 

quality. That said, increasing purchase frequency and total unit volume are 

more important to us at this point than our customer counts, as they unlock 

the leverage in our model and an ability to profitably invest in growth as our 

marketplace evolves. . .

***

Finally, I want to provide an update on Groupon Select -- our new membership 

program in North America that we announced last quarter. Groupon has 

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always had membership-like behavior among our customers, and Select seeks 

to monetize that behavior so that Select customers get the very best deal on 

Groupon -- and in many cases -- anywhere.

It’s still very early, but we’re pleased with the results to date. We now have 

more than 260,000 paying Select members, up by over 100,000 in the quarter 

and nearly 200,000 since the beginning of the year. Membership gains are 

encouraging, and we love how Select members continue to behave. Currently, 

we’re seeing a 60 percent increase in purchase frequency and a 20 percent 

jump in average order value. . . 

***

We are making consistent progress. I understand, however, that the 

improvements we are making are not always easy to see in our quarterly 

results and as such may not be as immediately meaningful to stockholders as 

they are to the teams driving them forward every day. Nevertheless, every day 

we see that these initiatives help us offset what amounts to over $100 million 

of annual traffic headwinds. . .

78. On the following morning of November 5, 2019, at 10:00 a.m. Eastern Standard 

Time, Defendants Williams and Thomas hosted a conference call with analysts and investors to 

further discuss the Company’s financial results and operations (the “Q3 2019 Conference Call”).

79. In their opening remarks during the Q3 2019 Conference Call, both Williams and 

Thomas acknowledged the Company’s continuing customer/traffic headwinds and asserted that 

Groupon, notably through Select, was making progress in overcoming and/or reversing them.

A. For example, in his introductory remarks, Williams stated:

[WILLIAMS]: . . . In spite of some near-term challenges, the team also 

delivered on some key initiatives in the quarter as we continue to scale 

Groupon Select, our new membership product and launched important product 

enhancements, including significant improvements to our mobile web experience, 

focused squarely on reducing friction and improving conversion.

B. In her introductory remarks, Thomas reiterated Williams’ themes but with greater 

concreteness and specificity, depicting Select as the apparent answer to the Company’s 

longstanding customer/traffic declines by generating increased purchase frequency and 

order value, noting that Select membership “increased purchase frequency by about 60% 

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and average order values by about 20%,” and asserting that Select was a profitable

initiative for Groupon both overall and on a unit basis (“we’re seeing member acquisition 

costs payback within six months; and payback has been driven by both the recurring 

revenue from membership fees as well as incremental gross profit generated on 

membership-related transactions.”):

[THOMAS]: . . . I’ll use my time today to walk you through our key financial 

highlights, including gross profit and adjusted EBITDA, provide you with a few 

insights on unit trends which we believe is an important metric to measure our 

success, update you on our progress with Groupon Select; and after that, we'll open 

up the call for questions.

Let’s start with gross profit. In the third quarter, we delivered gross profit of $278 

million. We are making progress against our key strategic priorities, 

particularly removing friction from the customer experience, growing 

membership in our Select program and expanding our open platform.

Ultimately, we believe success in these areas will help us drive higher purchase 

frequency, conversion and gross profit growth over the long run.

***

In Q3, year-over-year Local unit performance for North America improved for the 

third (sic) [second] sequential quarter and our expectation is for this trend to 

continue into Q4. In fact, within the third quarter Local unit year-over-year trends 

strengthened in each month. We are encouraged by these trends which we 

believe are an early indicator that our strategic initiatives are beginning to 

deliver.

We’re excited about our Select membership program and are already seeing 

encouraging results. To-date, we have over 260,000 members despite a total third 

quarter investment that came in slightly lower than the $10 million expectation. It’s 

still early days, but we’re seeing member acquisition costs payback within six 

months; and payback has been driven by both the recurring revenue from 

membership fees as well as incremental gross profit generated on 

membership-related transactions.

For modeling purposes, it’s important to remember that historically we routinely 

offered order discounts and some of our merchants participate with us on these 

discounts. As a result, the discounts associated with Select memberships are not 

entirely incremental. We are really excited about the early impact we’re seeing 

on purchase behavior. On average, in the first six months post-enrollment, 

Select members increased purchase frequency by about 60% and average 

order values by about 20%.

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We believe these early positive results illustrate our ability to monetize the 

member-like behavior of our customers and demonstrate the power of our massive 

Local two-sided marketplace. By making progress on these fronts, we believe 

we can unlock the potential of our financial model and deliver long-term gross 

profit growth and significant adjusted EBITDA.

80. The first two questions on the Q3 2019 Conference Call concerned the Company’s 

customer and traffic declines, and what the Company was doing to counter them. In response to 

these questions, Thomas asserted that the Company’s primary focus was on purchase frequency

(which Groupon Select increased by 60%), as the Company viewed purchase frequency as the key 

to unlocking a return to growth, rather than on total customer numbers, and Williams again 

highlighted Groupon Select, and the 60% boost it had given to purchase frequency, as part of a 

materializing strategy that was beginning to turn around long-standing customer and unit declines:

[TOM CAMPION – ANALYST, COWEN & COMPANY]: . . . The letter talks 

about fighting traffic headwinds with purchase frequency and product 

enhancements. Can you just talk about what you’re doing to ramp product 

development and speed up implementation? And just, I guess lastly, any 

thoughts on the traffic headwinds and whether that might moderate over the 

next couple quarters? Thank you.

[WILLIAMS]: . . . People were excited about what we’re seeing that’s really 

encouraging, as Melissa mentioned, is that you’re starting to see our strategy 

around the product and the investments that we’ve been making and it’s just a 

better customer experience started to play its way through the local consumer.

And I think [ph] in that place (00:19:23) you’re seeing things like guest checkout, 

like universal cart start to make an impact, and we talked about it before. . .

Select as well is in there. Melissa mentioned, a 60% increase in purchase 

frequency is pretty significant, especially over the course of the first six months 

of membership. So, that’s a piece that’s absolutely helping as we grow that 

customer base as well, as small as it is today. So you’re really starting to see 

those pieces through. . .

81. During the Q3 2019 Conference Call, two further analysts sought to question 

Groupon concerning Select’s profitability (as had also been asked in the Q2 2019 Conference 

Call). In response to these questions, Thomas asserted: (1) that Select would have a “net neutral”

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impact to Groupon’s gross profits during Q4 2019 – which implied that Select was operating

profitably, with the subscription fees and operating profits it generated offsetting the cost of the 

investments the Company was making to develop Select; and (2) further confirming the above, 

that Select was indeed profitable on a unit-basis (“we are also earning incremental [gross profit]

on the transactions and we’re seeing a purchase frequency lift at 60% higher. . .”). Specifically:

A. In response to questions from Michael Ng of Goldman Sachs, Thomas said the 

following about Groupon’s Select program:

And then on your question on Select and the headwinds that we saw in Q3 and what 

we expect to see in Q4, what I’d say there is we’ve been really pleased with the 

trajectory in terms of our ability to improve member accounts and what we're 

seeing on the customer side from a frequency standpoint as well as average 

order values improving. I’m not going to give specific impacts on Q3, but just to 

give you a flavor for Q4 what we’re expecting to see, we are expecting to continue 

to invest in acquiring members within the program. But we expect overall the 

program to be net neutral impact on [gross profit] in Q4.

B. In response to questions from Wedbush analyst Ygal Arounian, Thomas and 

Williams said the following about Select:

[THOMAS]: And then on the Select side there, just to give you a little bit of 

color on why essentially Select is – we expect it to be net neutral in the fourth 

quarter. There is a few elements I laid out in my prepared remarks that you need 

to take into consideration when we think about Select. So, we are making 

investments in Select and those do show up in terms of [gross profit], whether it be 

opportunity, costs, et cetera. However, those are offset by subscription fees that we 

are collecting. And then the important part to remember is that we are also 

earning incremental [gross profit] on the transactions and we’re seeing a 

purchase frequency lift at 60% higher in that 180-day post-enrollment in the 

program.

And the third piece I’d call out is that the entire discount is not incremental. 

So when you take into account what we’re earning on the overall program for 

the members we have in it versus the caps which I mentioned on the call – on 

my prepared remarks as well, are very reasonable. We don’t see it as being a 

meaningful headwind for us.

[WILLIAMS]: Right. I think within that you’re seeing us in that net neutrality 

pushing for continued investments, while we’re harvesting the benefits that we see. 

So we’re not going to stop investing in the quarter; we’re going to continue it. We 

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see opportunity to increase enrollment and participation in the program. We like 

what we see in this early stage of development with purchase frequency and 

that just engagement behavior overall. We’re going to continue to lean into 

that. If not at any cost, because we’re – as I mentioned before and we mentioned 

a couple of times, we still have some investments to make there on this core 

infrastructure. And when I say that, it’s really integrating it into the core of the 

Groupon experience.

It’s important to remember, Select was an experiment, was a trial that we've iterated 

on and we continue to develop over time and we are excited by it. But we’re excited 

about it in a way that we’re feeling it needs to be part of Groupon. It can’t just be 

the side; the side test for a group of people really needs to be – needs to permeate 

the Groupon customer experience, which we’re starting to see. You’re starting to 

see, if you go to the desktop as an example, you’re seeing Select pricing frontend 

center as a promotional item and as a reminder to our members that they get a 

unique benefit.

82. Defendants’ above-identified representations in the Q3 Letter and Q3 2019 

Conference Call concerning Select – including its purported boost to customer purchase frequency, 

and its purported incremental profitability to Groupon – were materially misleading because they 

omitted to disclose the material adverse facts and trends concerning Select, set forth in Section 

IV.C.1, supra and then known to Defendants (as Defendants later admitted on February 18-19, 

2020): that Select, during the second half of 2019, was over-indexing to Goods (i.e., Select was 

primarily being used to purchase low margin Goods products, rather than Local) at a time when 

Defendants later admitted that it had become “abundantly clear” to them that Groupon was not 

competing effectively in Goods, to the point where Defendants were planning to exit that business 

altogether, and that consequently, Select was failing to (1) meaningfully boost Local purchase 

frequency, and (2) operate profitably or generate incremental gross profit (as Groupon’s thinner 

profit margins on Goods were turned negative by the discounts and customer acquisition costs 

accompanying Select). 

83. Additionally, the MD&A Section of the Q3 2019 10-Q made multiple disclosures 

concerning Groupon Select and Groupon Goods:

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A. Concerning Select, the MD&A Section of the Q3 2019 10-Q stated:

Factors Affecting Our Performance

. . .

Growing Customer Value. . . We expect our new products, such as voucherless 

offerings and Groupon Select, as well as other enhancements to the customer 

experience to improve engagement, promote increased purchase frequency 

and drive customer retention. . .

Investing in Growth. . . We are currently developing and testing a number of 

product enhancements intended to make our offerings easier to use for both 

customers and merchants and to improve purchase frequency, including cash 

back offers linked to customer credit cards, booking capabilities and Groupon 

Select. We believe that those initiatives may be important drivers for 

increasing customer purchase frequency and growing our business over time. 

We are currently focusing our efforts on growing customer awareness of those 

products and scaling the related merchant base. As such, our gross profit and 

operating income may be adversely impacted in the near term as we focus more on 

driving our strategic initiatives.

See Q3 2019 10-Q, at 31, 34.

B. Concerning Goods, the MD&A Section of the Q3 2019 10-Q presented various 

financial line item results for the Goods and Local categories – including gross billings, 

revenues, etc. – for the 3 and 9 months ended September 30, 2019, attributed year-overyear declines in billings, revenues and profits generally to “fewer customers and lower 

customer traffic” for both Local and Goods, and also added that, in International operations 

such declines were further attributable to “intense competition in our Goods business”:

Results of Operations

Gross Billings

Three Months Ended September 30, 2019 and 2018:

North America

North America gross billings were 65.4% and 66.0% of total gross billings for the 

three months ended September 30, 2019 and 2018. North America gross billings 

decreased for the three months ended September 30, 2019 compared with the prior 

year period due to fewer customers and lower customer traffic, including traffic 

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from email and SEO. Those decreases were partially offset by higher gross 

billings per unit due to a shift in mix of offerings sold.

The above factors also resulted in a decline in total units sold, which decreased to 

21.8 million units for the three months ended September 30, 2019, as compared 

with 25.3 million units in the prior year period.

International

International gross billings were 34.6% and 34.0% of total gross billings for the 

three months ended September 30, 2019 and 2018. International gross billings 

decreased $35.7 million for the three months ended September 30, 2019 compared 

with the prior year period, primarily due to weak consumer sentiment in Europe, 

especially in the United Kingdom, intense competition in our Goods business, a 

$17.0 million unfavorable impact from year-over-year changes in foreign currency 

rates and lower gross billings per unit due to a shift in mix of offerings sold.

***

Nine Months Ended September 30, 2019 and 2018:

. . . 

North America

North America gross billings were 65.5% and 66.1% of total gross billings for the 

nine months ended September 30, 2019 and 2018. North America gross billings 

decreased for the nine months ended September 30, 2019 compared with the prior 

year period due to fewer customers and lower customer traffic, including traffic 

from email and SEO. Those decreases were partially offset by higher gross 

billings per unit due to a shift in mix of offerings sold.

The above factors also resulted in a decline in total units sold, which decreased to 

66.8 million units for the nine months ended September 30, 2019, as compared with 

80.0 million units in the prior year period.

International

International gross billings were 34.5% and 33.9% of total gross billings for the 

nine months ended September 30, 2019 and 2018. International gross billings 

decreased $107.1 million for the nine months ended September 30, 2019 compared 

with the prior year period, primarily due to weak consumer sentiment in Europe, 

especially in the United Kingdom, intense competition in our Goods business, a 

$72.3 million unfavorable impact from year-over-year changes in foreign currency 

rates and lower gross billings per unit due to a shift in mix of offerings sold.

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See Q3 2019 10-Q, at 35-37.5

84. Defendants’ above-identified representations in the MD&A Section of the Q3 2019 

10-Q were materially misleading because they omitted to disclose:

A. the material adverse facts and trends concerning Select, set forth in Section IV.C.1, 

supra and then known to Defendants (as Defendants later admitted on February 18-19, 

2020): that Select, during the second half of 2019, was over-indexing to Goods (i.e., Select 

was primarily being used to make Goods, rather than Local, purchases) at a time when 

Defendants later admitted that it had become “abundantly clear” to them that Groupon was 

not competing effectively in Goods, to the point where Defendants were planning to exit 

that business altogether, and that Select had failed to (1) meaningfully boost Local purchase 

frequency, and (2) operate profitably or generate incremental gross profit (as Groupon’s 

thinner profit margins on Goods were turned negative by the discounts and customer 

acquisition costs accompanying Select); and

B. the material adverse facts and trends concerning Goods, set forth in Section IV.C.2, 

supra and then “abundantly clear” to Defendants (as Defendants later admitted on February 

18-19, 2020): that Goods was no longer able to compete effectively for customers, and 

5 Relatedly, the Q3 2019 Form 10-Q proceeded to present further financial result line items, 

including revenues (id. at 37-40) and gross profits (id. at 43-45), with analysis of these line items 

limited to largely referencing the above-detailed disclosures concerning gross billings. See e.g. id. 

at 38 (“North America revenue . . . for the three months ended September 30, 2019 compared with 

the prior year period, primarily driven by the decline in transaction volume and gross billings as 

discussed above. . . International revenue decreased $39.7 million for the three months ended 

September 30, 2019 compared with the prior year period, primarily driven by lower gross billings 

as discussed above. . .”) and 44 (“The decrease in North America gross profit for the three months 

ended September 30, 2019 compared with the prior year period reflects a decline in transaction 

volume and gross billings as discussed above. . . The decrease in International gross profit for the 

three months ended September 30, 2019 compared with the prior year period was primarily 

attributable to lower gross billings as discussed above . . .”).

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consequently was (1) being abandoned by its customer base, (2) failing to serve as a 

meaningful business driver for Local, and (3) discontinued by Groupon.

85. Lastly, Defendants, in the Q3 2019 Press Release, Q3 2019 Presentation, and Q3 

2019 Conference Call, reaffirmed the Company’s Guidance.

86. The Q3 2019 Press Release represented, concerning Groupon’s “Outlook,” that 

“Groupon continues to expect Adjusted EBITDA of approximately $270 million.” Q3 2019 Press 

Release, at 2. The Q3 2019 Presentation likewise and repeatedly affirmed the Guidance. See Q3 

2019 Presentation, at 5 (“2019 Guidance of ~$270 million”); 6 (same). 

87. Similarly, during the Q3 2019 Conference Call, Defendants affirmed the Guidance. 

For example, Defendant Thomas asserted:

[THOMAS]: As we move into the fourth quarter, a very important time for us, we 

expect positive contribution from our conversion initiatives, which include our 

recent guest checkout and universal cart product launches. In addition, we expect 

marketing leverage to increase modestly from what we delivered in Q3. These 

factors, along with a continued momentum in North America Local including 

improved performance in units, give us confidence that we can drive 

sequential improvement in year-over-year gross profit trends and deliver 

approximately $270 million in adjusted EBITDA for full-year 2019.

88. Furthermore, after Goldman analyst Michael Ng noted that achieving the Guidance 

required an “implied EBITDA inflection in the fourth quarter” and inquired what would drive that 

inflection (and what effect Select would have), Defendant Thomas again affirmed the Guidance, 

adding that Select would have a “net neutral” impact on gross profits during the fourth quarter:

[THOMAS]: . . . And then on your question on Select and the headwinds that we 

saw in Q3 and what we expect to see in Q4, what I'd say there is we've been really 

pleased with the trajectory in terms of our ability to improve member accounts and 

what we're seeing on the customer side from a frequency standpoint as well as 

average order values improving. I’m not going to give specific impacts on Q3, but 

just to give you a flavor for Q4 what we’re expecting to see, we are expecting to 

continue to invest in acquiring members within the program. But we expect overall 

the program to be net neutral impact on GP in Q4.

89. Defendants’ above-identified representations in the Q3 2019 Press Release, Q3 

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2019 Presentation and Q3 2019 Conference Call affirming the Guidance were materially 

misleading because, given the material adverse trends and conditions concerning Select and Goods 

set forth in Sections IV.B.5 and IV.C.1-2, supra, and then known to Defendants (as Defendants 

later admitted on February 18-19, 2020), the Guidance – in light of the collapse of both Goods and 

the cross-shopping business that Goods drove to Local, as well as Select’s over-indexing to Goods 

and consequent unprofitability – was not achievable.

3. Williams’ December 11, 2019 Statements

90. On December 6, 2019, Groupon issued a press release titled “Groupon to 

Participate in the Barclays Global Technology, Media and Telecommunications Conference,”

announcing that Defendants Williams and Thomas would attend the conference, held on December 

11-12, 2019 at San Francisco’s Palace Hotel, where (1) they would participate in “one-on-one and 

small group meetings” with institutional investors; and (2) Williams would “participate in a 

fireside chat at 2:30pm PST.”

91. On December 11, 2019, as indicated by the Company’s December 6, 2019 press 

release, Defendant Williams participated in the aforementioned “fireside chat,” hosted by Barclays 

analyst Deepak Mathivanan (who covered Groupon and other companies in the mid-cap internet 

and online travel sectors), in which Defendant Williams presented on Groupon and answered

questions from Mr. Mathivanan concerning Groupon’s financial results, operations and strategy 

(the “Barclays Conference Presentation”). The Barclays Conference Presentation was webcast 

live on Groupon’s investor relations website (and was available there in recorded form for the 

following 60 days) and was also transcribed and published by Bloomberg LP (“Bloomberg”). 

92. When asked during his Barclays Conference Presentation on Groupon’s declining 

customer count, Williams again asserted that the key strategic metric for Groupon and its return to 

profit growth was not the number of customers, but rather the quality of its customers and 

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specifically the purchase frequency they exhibited – and explained that the Company’s efforts, 

including “the work that we’re doing with loyalty programs” (i.e., Groupon Select) was focused 

on purchase frequency:

[MATHIVANAN]: Okay. So the flip side of it is the customer base. I mean, 

you have seen declines over the past few quarters, some of that is just driven by 

the marketing optimization efforts that you have been doing, when do you think 

we’re going to reach a place where the marketing budgets are intact, and then the 

customer base gets to a stable levels and then the compounding effects or purchase 

frequency improvement starts to really drive gross profit growth?

[WILLIAMS]: Yeah. It’s a great question and I guess a lock-in on a couple of 

pieces of that. One is, we are focused on quality of customer more than 

anything else. And the biggest linchpin to quality for us is frequency. . .

So everything that we’re doing is geared towards unlocking that extra unit of 

growth and the next unit after that and the unit after that. Whether that's 

booking, size of the catalog, the work that we're doing with loyalty programs 

and repeat purchasing products that keep us in the mix over the long term 

between a merchant and a consumer, all of that is geared to unlocking that 

piece. When you unlock that piece, you also create more opportunity in the 

flywheel, right? So as gross profit per customer increases, so does our ability to go 

acquire more members into process and into the platform. But the core input to 

that, again, is customer quality, which is really about purchase frequency and 

gross profit per customer. So that’s everything that we’re doing, it’s geared 

to unlocking that. . .

93. During his Barclays Conference Presentation, Williams was again asked – as he 

and the other Individual Defendants had been asked in both the Q3 2019 Conference Call and the 

Q2 2019 Conference Call – about the “unit economics” of Groupon Select and its ability to be 

“accretive to gross profit.” In response, Williams: (1) reiterated Select’s 60% boost to purchase 

frequency; (2) affirmed that Select was profitable on a unit basis (“yes, our margins are such that 

we make money on the units”); and (3) represented that “the total economics of the program are 

really compelling” because Groupon was not only “making money on the units” but also “making 

money on the membership fees as well.”

[WILLIAMS]: So, there is -- one of the things I’d say about Select, so two 

things. One, I’m most -- what I'm most excited about with Select is that, the 

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demonstration that we can move purchase frequency up into the right. And 

that’s historically I think for many business has been one of the most difficult 

things, if not, the most difficult thing to do is to move buying behavior and 

intensify it. We’re showing with Select with 60% improvement in purchase 

frequency within the first six months, we’re showing we can move that needle. 

So that’s the most exciting thing about that program . . .

***

The other piece on that program is, yes, our margins are such that we make 

money on the units, because there is not -- we as a part of our normal promotional 

process, we’re offering discounts on a regular basis, which is part of why -- and 

you can see that when we share order discounts data. We’re one of the few retail 

oriented sites who shows order discounts and so you can kind of calc what the 

average discount is. So when you take that in consideration, plus our average 

margin, we’re making money on the units as well as making money on the 

membership fees as well. So the total economics of the program are really 

compelling. But again, that's almost secondary at this point, that’s really how do 

you maximize education and knowledge base, so that we can extend everywhere 

possible.

94. Defendants’ above-identified representations in the Barclays Conference 

Presentation concerning Select – including its purported boost to customer purchase frequency, 

and its purported incremental profitability to Groupon – were materially misleading because they 

omitted to disclose the material adverse facts and trends concerning Select, set forth in Section 

IV.C.1, supra and then known to Defendants (as Defendants later admitted on February 18-19, 

2020), that Select, during the second half of 2019, was over-indexing to Goods (i.e., Select was 

primarily being used to make Goods, rather than Local, purchases) at a time when Defendants later 

admitted that it had become “abundantly clear” to them that Groupon was not competing 

effectively in Goods, to the point where Defendants were planning to exit that business altogether, 

and consequently that Select had failed to (1) meaningfully boost Local purchase frequency, and 

(2) operate profitably or generate incremental gross profit (as Groupon’s thinner profit margins on 

Goods were turned negative by the discounts and customer acquisition costs accompanying 

Select).

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4. Additional Disclosure Duties Imposed By Item 303 Of Regulation S-K

95. SEC Regulation S-K Item 303 (“Item 303”) requires disclosure of operational and 

other information necessary to understand the Company’s “financial condition, changes in 

financial condition and results of operations.” According to the SEC, this includes “unusual or 

infrequent events or transactions,” “known trends or uncertainties that have had or [might] 

reasonably [be] expect[ed to] have a material favorable or unfavorable impact on net sales or 

revenues or income from continuing operations.” These MD&A requirements are intended to 

provide a narrative explanation of a company’s financial statements that enables investors to see 

the company through the eyes of management.

96. During the Class Period, Defendants were aware of but failed to disclose the two 

particular, materially adverse trends described above, namely that: (1) Select was over-indexing 

to Goods; and (2) Goods was no longer able to compete and hard largely ceased providing added 

value for Groupon by driving meaningful business to Local.

97. The material adverse trend relating to Select directly caused a material change in 

the relationship between costs and revenues. Defendants had repeatedly represented Select as 

profitable on a per-unit basis: i.e., that even after factoring in the discounts and other costs 

associated with Select, Select transactions were still generating incremental profits. However, 

because Select purchases were largely circumscribed to the low-margin Goods business rather than 

the high-margin Local business, the adverted relationship between costs and revenues did not in 

fact apply, and was in fact the very opposite. For Goods, and thus for Select, costs (when Selectspecific costs were added) rose higher than revenues, rather than remaining lower.

98. The material adverse trend concerning Goods had double, material unfavorable 

impacts on Groupon’s revenues (and consequently, income). First, Goods revenues themselves 

suffered material declines, as Goods’ inability to compete effectively led to increasing customer 

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abandonment. Second, as Goods’ ability to drive additional Local sales withered, Local revenues 

also suffered. In fact, Defendants admitted at the end of the Class Period that (1) Goods’ ability 

to generate Local benefits had long been in decline (“Over time, Goods has become a less 

meaningful driver of engagement. . .”), and (2) it was “abundantly clear” to them no later than 

“[m]idway through the fourth quarter” that Groupon was unable to compete effectively in Goods

and that the Company decided to exit the Goods segment entirely.

99. Defendants should have disclosed the trend of over-indexing to the unprofitable 

Goods segment in the MD&A section of the Q2 2019 10-Q which they filed on July 30, 2019, as 

they later admitted that this trend, which ultimately led them to discontinue the highly-touted 

Groupon Select program, had started in the second half of 2019. Likewise, Defendants should 

have also disclosed, in the same Q2 2019 10-Q, the trend of Goods’ declining ability to drive 

engagement with the Company’s Local offerings, a trend that Defendants admitted, after the Class 

Period and during the Q4 2019 Conference Call, they had witnessed developing “[o]ver time” as 

Groupon’s “management team and board [had] been evaluating the role of Goods for some time.”

100. These trends, and their potential impact on the Company, had intensified by the 

time the Defendants filed the Q3 2019 10-Q on November 4, 2019. By that time, Defendants 

accelerated this over-indexing trend by offering a 15% discount on Goods transactions beginning 

in August 2019, and midway through the fourth quarter of 2019, it had become “abundantly clear” 

to Defendants that the Goods segment, to which the highly-touted Select business was overindexing, was not effectively competing to the point where Defendants were considering exiting 

that business altogether. 

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B. Defendants’ February 18-19, 2020 Disclosures Correct Prior Misstatements 

and Cause the Company’s Shares to Lose Nearly Half of Their Remaining 

Value

1. Groupon’s Poor Fourth Quarter And Full Year 2019 Results

101. Following market close on February 18, 2020, Defendants announced Groupon’s 

financial results of operations for the fourth quarter and full year of 2019, and issued, inter alia: 

(1) a press release titled “Groupon Announces Fourth Quarter and Fiscal Year 2019 Results” (the 

“Q4 2019 Press Release”); (2) a letter to shareholders from Williams (the “Q4 2019 Letter”); (3) 

a presentation titled “4Q19 Earnings” (the “Q4 2019 Presentation”); and (4) a Form 10-K for the 

year ended December 31, 2019 filed with the SEC.

102. On the following morning of February 19, 2020, at 8:00 a.m. Eastern Standard Time 

and before the open of stock market trading, Defendants Williams and Thomas hosted a conference 

call with analysts and investors to further discuss the Company’s financial results and operations 

(the “Q4 2019 Conference Call”).

103. Groupon’s fourth quarter results, rather than displaying any amelioration of 

Groupon’s longstanding customer/traffic declines (e.g., as a result of Groupon Select and other 

strategic improvements), instead evidenced deepening customer, unit and gross profit declines, 

driven substantially, as discussed further below, by multiple matters centering on Groupon Goods

of which Defendants had long been aware:

Fourth Quarter 2019 Summary

North America

• North America gross profit in the fourth quarter 2019 decreased 16% to $207.3 

million primarily due to fewer customers, lower traffic and increased 

competition in our Goods category. The decrease was partially offset by higher 

gross profit per customer. In Local, gross profit decreased 6% to $169.7 million. 

Goods gross profit decreased 45% to $30.6 million. Gross profit in Travel 

decreased 41% to $6.9 million.

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***

Consolidated

• Revenue was $612.3 million in the fourth quarter 2019, down 23% (23% FXneutral).

• Gross profit was $310.0 million in the fourth quarter 2019, down 15% (15% FXneutral).

***

• Adjusted EBITDA, a non-GAAP financial measure, was $83.8 million in the 

fourth quarter 2019, down from $104.6 million in the fourth quarter 2018.

• Global units sold were down 16% to 42.6 million in the fourth quarter 2019 largely 

driven by fewer customers and lower traffic. North America units were down 

11% in Local and down 32% in Goods. International units were up 4% in 

Local and down 22% in Goods.

104. These poor fourth quarter operational and financial results had in turn led the 

Company to report adjusted EBITDA of $227.2 million for the full year of 2019 – significantly 

below Groupon’s $270 million Guidance, which Defendants had affirmed and reiterated in their 

November 4-5, 2019 disclosures.

2. Defendants’ Corrective Disclosures Concerning Goods And Select

105. As set forth immediately below, Defendants’ February 18-19, 2020 disclosures 

corrected Defendants’ prior Class Period statements concerning Goods and Select, in substantial 

part by revealing material adverse trends concerning Goods and Select that had existed, and were 

evident and known to Defendants, throughout the Class Period.

a. Goods

106. Defendants’ February 18-19, 2020 disclosures included the revelation of a

“transformational” new strategy to exit Groupon’s Goods segment, in light of especially poor 

performance in that segment and in order to focus solely on Local. The Q4 2019 Press Release 

summarized, in relevant part:

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Transformational Plan to Exit Goods and Focus on Our Local Experiences 

Marketplace

Following a comprehensive review of opportunities and strategic alternatives, we 

determined that a plan to exit the Goods category and focus on our local experiences 

marketplace best positions us for long-term and sustained growth. We believe this 

plan will allow us to devote the focused execution necessary to take share in the 

growing local experiences market. This market, which we estimate to be north of 

$1 trillion, is highly fragmented, growing, and migrating quickly from offline to 

online. Currently, we are a market leader, yet we have less than 1% market share. 

In addition, our 2019 Goods category performance, particularly in the fourth 

quarter, has made it increasingly clear that we are not well-positioned in a 

saturated retail market.

107. Defendants’ Q4 2019 Letter provided a more fulsome explanation of the 

Company’s decision to exit Goods, noting, inter alia, that: (1) although Goods was less profitable 

than Local, both overall and on a unit basis, it had “historically been a meaningful engagement 

tool for Local shoppers and its overall impact on the business extended beyond its direct 

contribution to gross profit” (i.e., Groupon’s Goods offerings had been serving, through “crossshopping” and/or “customer activation,” as a meaningful driver for Local traffic and sales); (2) 

this had changed no later than midway through the fourth quarter of 2019, as it had become 

“abundantly clear” to Defendants “[m]idway through the fourth quarter” that Groupon was unable 

to compete effectively in Goods, that customer engagement with Goods inventory had 

meaningfully declined, and that such decreased engagement with Goods was also translating into 

diminished customers, traffic and units for Groupon’s core Local segment.

Midway through the fourth quarter it became abundantly clear that we were 

not competing effectively in Goods. We saw far fewer customers engage with 

Goods in the fourth quarter than we anticipated, which impacted overall 

traffic to our site. The lower traffic ultimately impeded performance in all of 

our categories. This was particularly notable in November, including during the 

holiday peak period when Goods engagement has historically been a business 

driver.

***

PLAN TO EXIT GOODS

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Our management team and board have been evaluating the role of Goods in our 

ecosystem for some time. Goods’ contribution to gross profit has been declining 

for four quarters, but it has historically been a meaningful engagement tool 

for Local shoppers and its overall impact on the business extended beyond its 

direct contribution to gross profit. Recently we’ve seen engagement with our 

Goods inventory shift meaningfully lower, driven in large part by our inability 

to compete in a fiercely competitive, and in some cases, economically irrational 

retail landscape. In 2019, we were devoting about 40% of our site impressions to 

a category that was only delivering about 20% of our gross profit and no longer 

generating the cross-shopping behavior or customer activation activity to 

continue to justify this investment. In short, Goods has outlived its role as a 

business driver and has become a significant drag on our business.

Our fourth quarter performance, and the challenges Goods has posed over the past 

few years, has clarified our path forward. What we’ve now realized is that too 

many of our efforts in the past, even good products like Select and Groupon+, 

didn’t address the core of our product or business model, nor did they overcome 

the limitations in the legacy Groupon business.

In order to deliver on our growth strategy to attack the large and growing market 

opportunity in local experiences, we have to be willing to walk away from any and 

all distractions. This is why we plan to exit Goods.

108. Defendants Williams and Thomas, in their introductory remarks during the Q4 

2019 Conference Call, reiterated the above-mentioned explanations concerning the extent, effects 

and timing of the dramatic deterioration of the Goods Segment:

[WILLIAMS]: . . . Midway through the fourth quarter, it became clear, 

however, that we were seeing far fewer customers engaged with goods, and it 

impacted overall traffic to our site. The lower traffic ultimately impeded 

performance in all of our categories. This was particularly notable in November 

and affected our holiday peak period, when goods engagement has historically been 

a business driver.

Adding to these challenges, certain conversion initiatives in Select did not deliver 

on expectations. Our traffic declines and these other factors, which Melissa will 

discuss in greater detail, combined to create a headwind that we could not overcome 

during the fourth quarter. Before I discuss our strategy, let’s touch on Goods.

Our management team and board have been evaluating the role of Goods for some 

time. Our fourth quarter performance and the challenges Goods has posed 

over the past few years have clarified our path forward. Delivering on our 

growth strategy requires total focus on capturing the local experiences opportunity. 

Over time, Goods has become a less meaningful driver of engagement and an 

increasingly inefficient use of our impressions.

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It has effectively become a distraction, in which we can no longer compete and 

that we cannot afford, as it has taken roughly 40% of our impressions to 

deliver roughly 20% of our gross profit. This is the crux of our plan to exit 

Goods.

***

[THOMAS]: . . . To give you insight into the trajectory within the quarter, first note 

that our plan, which considers historical buying patterns on our site, calls for a 

meaningful shift of impressions and other assets to the Goods category throughout 

the quarter. Midway through the quarter, however, it became clear that we 

were not competing well in Goods, and November performance was particularly 

poor.

The lack of engagement with our Goods offering impacted the overall traffic 

to our site, and ultimately performance in all of our categories. 

109. In the Q4 2019 Presentation, Defendants described Goods as “a headwind to 

performance,” explaining that “[c]ross-shopping between Local and Goods continues to decline” 

and that although Goods was “[h]istorically an important Local engagement tool” its current 

impact on Local was “now minimal.” 

110. During the Q4 2019 Conference Call, Williams reiterated these points in response 

to questions from Wedbush analyst Ygal Arounian:

[WILLIAMS]: Thanks, Ygal. I’ll start on the traffic side, and how to think about 

overall the exit path and impression reallocation and just how balance of traffic 

plays into that. So, yeah, Goods has been a significant part of our traffic. It’s 

highly seasonal, in particular, just we didn’t obviously see the kind of 

seasonality we expected in Q4. But it has been, historically, a significant driver 

of traffic, particularly that time of the year.

I think the key piece, however, to think about it is how we manage our impression 

pool. And as I mentioned, historically, it's been around 40% of traffic going to 

Goods. And at certain times of the year, in Q4, that could be as much as 60% 

or 70% during peak periods. But what we’ve really seen change there over 

time is not just the volume of traffic or mix. It’s just that the overall utility or 

productivity of the impressions that we’ve been allocating to Goods has been 

declining.

As a part of that, we’ve also just seen more division and more clear division in 

the customer base. And as you point out, historically, it has been more of a 

driver of Local activation. And at times, I think in the past, we’ve shared as 

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one of our largest channels of Local activation. That’s just no longer the case.

And we've seen that the customer base is becoming more specific in what their 

shopping behavior really drives.

And so, those things combined, where you have a lack of utility of the 

impressions and a lack of cross-shopping behavior and more division or more 

calcification in the customer base,

6

it makes it a lot easier to make these kinds of 

decisions. Still very hard call to make, given the overall size of the business, but it 

makes it a lot easier.

111. Defendant Williams further specified that Groupon had been unable to compete –

i.e., unable to meet customers’ expectations (and competitors’ provision) – with respect to

“comprehensive inventory” and fast shipping. See Q4 2019 Conference Call, FactSet transcript at 

12-13. Williams reiterated this explanation in later remarks made at UBS’s March 5, 2020 Global 

Consumer & Retail Conference (the “UBS Presentation”), noting that “the e-commerce landscape 

fundamentally changed, in particular over the last couple of years,” particularly with respect to the 

importance of shipping speed, which Groupon’s management “had considered a lot” as they saw 

“that business shrinking” over “the last couple of years.”

[WILLIAMS]:. . . [T]he history of Groupon was really had started as a local 

services business and most people are familiar with that part of the business, where 

it's -- great deals on things in your neighborhood whether that’s pizza or massages 

or concert tickets. And over the course of the development of that business, we 

really by -- we experimented our way into selling physical goods and physical 

products and created a good business and that was during the time of where flash 

sales was a really big part of e-commerce growth. And so it's in our brand in many 

ways in those days whereas about saving a lot of money and limited inventory as 

well, but -- and that goes back to that 2011-2012 timeframe.

And that over the years, since then as we had become a pretty big business for us. 

North - - well at one point -- close to $2 billion of billings in that range, but really 

6 By “calcification in the customer base,” Williams, as he clarified later in the Q4 2019 Conference 

Call, was referring to a substantial subset of Groupon’s customer base that were, in effect, shopping 

only for Goods and not for Local. See Q4 2019 Conference Call, FactSet Transcript at 16 (“So, as 

I mentioned, we do have more of a calcified customer base there that's been more focused and 

specific to Goods only.”). As Thomas further noted during the Q4 2019 Conference Call, there 

were “8 million Goods-only customers” and 35 million further Local, Travel and cross-shopping 

customers. Id. 

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the e-commerce landscape fundamentally changed, in particular over the last 

couple of years and we saw that business really struggling to compete and 

that's starting at the crux of our big discussion and our bigger announcements 

over the last couple of weeks has been we made a decision to exit that physical 

products business and we had a really rough Q4 in that business, where 

consumers just – we’re just engaging with it at a really high rate.

And when we talk to consumers about it, and it's like look we were a price 

leader, we had great prices on products that were popular, but when we're 

shipping in two days versus delivering in two days or a day or less consumers 

were less willing to trade-off price for that and it's something that we had 

considered a lot over the ensuing quarters as we've seen really the last couple 

of years that business shrinking was really what's right for the business going 

forward, and I guess it boils down to a really simple paradigm of -- can we really 

let a business that we can't win in, keep us from winning in the business we must

win in and that we have the right to win in. And that's -- those are hard decisions 

to make to make given the size of the business being north of $1 billion of billings, 

but we didn't feel that we were in a place to compete effectively in the goods of 

the physical products business and the level of investment required to 

effectively compete didn't make sense for us and that would frankly be a 

distraction from what is a leading business and local services and local experiences 

in particular.

b. Select

112. In their February 18-19, 2020 disclosures, Defendants also announced that Groupon 

Select had failed and would be discontinued. As Defendants revealed in these disclosures: (1) in 

the second half of 2019, Select, in Defendants’ terminology, “over-indexed to Goods” (meaning 

that Select was being used “disproportionately [by] customers purchasing goods vs. those 

transacting on our local platform;” (2) Select had not generated meaningful change in customer 

behavior / purchase frequency with respect to Groupon’s core Local business, and (3) Select was 

unprofitable for Groupon (“The Select program was expected to be net neutral to gross profit in 

the fourth quarter. But the program underperformed . . .”).

113. With respect to Select, the Q4 2019 Letter stated:

While we saw strong performance from guest checkout, other conversion initiatives 

did not deliver on expectations. Groupon Select added to our challenges in the 

quarter as it over-indexed to Goods, pressured margins and drove higher than 

anticipated customer acquisition costs. This brings us to the future of Select. 

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The program’s fourth quarter performance showed that it cannot provide the 

ROI needed for it to be a key priority for us at this time. Select’s current 

features began appealing disproportionately to customers purchasing goods 

vs. those transacting on our local platform. As a result, we will continue to 

provide Select benefits to current members, but we will not pursue new enrollees 

for the program.

***

What we’ve now realized is that too many of our efforts in the past, even good 

products like Select and Groupon+, didn’t address the core of our product or 

business model, nor did they overcome the limitations in the legacy Groupon 

business. . .

114. During the Q4 2019 Conference Call, Thomas provided additional disclosures and 

details concerning Select:

[THOMAS]: . . . The Select program was expected to be net neutral to gross 

profit in the fourth quarter. But the program underperformed due to higher 

than anticipated customer acquisition costs and a lower than expected number of 

enrollees converting to paid members. The program also began over-indexing 

towards our Goods category in the second half of 2019.

This, coupled with results in the fourth quarter, led to our decision to discontinue 

new enrollments in our Select program. . .

115. Select’s unprofitability was a direct result of the fact, evident to Defendants in the 

second half of 2019, that it “over-indexed to Goods.” Groupon’s profit margins on Goods 

(averaging approximately 10-20%, and often near-zero, nonexistent or even negative) were 

materially lower than its 80-90% margins for Local. The benefits and discounts included with 

Select, such as free shipping and a 15% discount for Goods purchases, had the effect of entirely 

erasing – and/or turning negative – the Company’s profit margins on Goods.

3. Groupon Shares Decline Materially Following The February 18-19, 

2020 Corrective Disclosures

116. Following Defendant’s above-detailed February 18-19, 2020 corrective 

disclosures, Groupon shares, which had closed trading on February 18, 2020 at $3.05 per share –

quite near to the Class Period high of $3.40 per share – fell sharply during February 19, 2020 to 

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close at $1.70 per share – a decline of $1.35 per share, representing more than 44% of Groupon’s 

market capitalization. Trading volume on February 19, 2020 was extreme: approximately 155.34 

million Groupon shares traded hands, more than 25 times Groupon’s average daily trading volume 

of 6.18 million shares during the Class Period.

C. Additional Allegations Regarding The Individual Defendants’ Scienter

117. As alleged herein, Defendants acted with scienter since Defendants knew that the 

public documents and statements issued or disseminated in the name of the Company were 

materially false and/or misleading; knew that such statements or documents would be issued or 

disseminated to the investing public; and knowingly and substantially participated or acquiesced 

in the issuance or dissemination of such statements or documents as primary violations of the 

federal securities laws. As set forth elsewhere herein in detail, the Individual Defendants, by virtue 

of their receipt of information reflecting the true facts regarding Groupon, their control over, and/or 

receipt and/or modification of Groupon’s allegedly materially misleading misstatements and/or 

their associations with the Company which made them privy to confidential proprietary 

information concerning Groupon, participated in the fraudulent scheme alleged herein.

1. The Collapse Of Goods, And Of The Cross-Shopping Benefits Good 

Historically Had Provided To Local, Was Long Monitored By 

Defendants And “Abundantly Clear” To Defendants “Midway 

Through The Fourth Quarter” Of 2019

118. As Defendants admitted in their February 18-19, 2020 disclosures, the collapse of 

Goods, and of the benefits that Goods provided to Local, had been (1) long ongoing, and (2) 

“abundantly clear” to Defendants no later than “[m]idway through the fourth quarter of 2019.”

119. For example, in their February 18-19, 2020 disclosures, Defendants repeatedly 

explained that Goods’ decline had been long evident to them: the “challenges Goods has posed 

over the past few years” and the fact that “Goods’ contribution to gross profit ha[d] been 

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declining for four quarters” had caused Groupon’s “management team and board [to] have been 

evaluating the role of Goods in our ecosystem for some time,” to have seen “over the course of 

the last year in the Goods landscape specifically [that] it’s a different world out there,” and to 

have understood that “[o]ver time, Goods has become a less meaningful driver of engagement.” 

See e.g. Q4 Letter at 2; Q4 2019 Conference Call, FactSet transcript at 4, 12-13.

120. Additionally, Defendants admitted during the same disclosures that the material 

adverse trends and conditions affecting Goods had become “abundantly clear” to them no later 

than midway through the fourth quarter of 2019. See e.g. Q4 Letter at 2; Q4 2019 Conference 

Call, FactSet transcript at 3-4, 6-7.

2. Select’s Failures To Drive Local Business And Operate Profitably

Were Evident To Defendants During The Second Half Of 2019 As 

Select Over-Indexed To Goods

121. As set forth above, Defendants revealed on February 18-19, 2020, when 

announcing Select’s discontinuation, that Select had “over-indexed to Goods” (i.e., it had been 

used primarily to make Goods, rather than Local, purchases), and that, relatedly, Select was 

unprofitable (in light of the Company’s thinner profit margins on Goods). See Section IV.C.1, 

supra.

122. Simultaneously, Defendant Thomas then admitted that the underlying adverse trend 

– Select’s over-indexing to Goods – had existed during the second half of 2019. See Sections 

IV.C.1 and V.B.2.b, supra.

123. Given Select’s importance for Groupon (see Section V.C.4, infra), Defendants’ 

assertions that they monitored Select closely (see Section V.C.5, infra), and Defendants’ 

demonstrated mastery of Select’s technical and operating minutiae (see Section V.C.6, infra), 

Defendants were aware during the second half of 2019 that Select was over-indexing to Goods, 

failing to spur Local business, and consequently unprofitable.

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3. Select’s Over-Indexing To Goods During The Second Half of 2019, 

And Consequent Unprofitability, Were The Direct And Foreseeable 

Results Of Defendants’ Own Actions

124. As set forth above, Defendants sought to accelerate the growth of Select following 

the second quarter of 2019, in part by adding a new benefit to Select membership: a 15% discount 

off all Goods purchases.

125. This 15% discount was a substantial driver of Select’s over-indexing toward Goods, 

as it made the Goods value proposition, for Select members who already received free shipping on 

Goods purchases, all the more compelling. However, it simultaneously destroyed Select’s 

profitability for Groupon, because, when added to Select’s other costs (e.g., free shipping, 

promotional expenses for ‘customer acquisition,’ etc.), this discount sufficed to erase and/or 

reverse the Company’s already low profit margins on Goods.

126. Therefore, both Select’s indexing towards Goods and its unprofitability were direct 

and foreseeable results of Defendants’ own decision, following the second quarter of 2019, to add 

a 15% discount on Goods purchases to Select’s membership benefits.

4. Goods And Select Were Core Operations For Groupon

127. Defendants’ above-detailed misstatements concerned two matters – Goods and 

Select – both of which constituted core operations for Groupon. Consequently, knowledge of the 

fraud may be imputed to the Individual Defendants.

128. Goods was a substantially sizeable business for Groupon. As set forth in Table 1

above (see ¶24, supra), Goods provided Groupon with approximately 31% of its gross billings, 

56% of total revenues, and 20% of gross profits.

129. Although Select, as a new product launched in late 2018, did not rise to the same 

sheer size, Select still constituted a core operation for Groupon in light of its central strategic 

importance. See Sections IV.B.3-4, supra. Defendants had identified increasing customer 

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purchase frequency as Groupon’s foremost strategic concern and had represented Select as a 

primary means to address it. Id. Consequently, in Defendants’ view and Defendants’ own words, 

Select was “critical to transforming the business” and one of Groupon’s “key strategic priorities.” 

See Section IV.B.4, supra.

5. Defendants’ Own Assertions That They Closely Monitored Select And 

Goods . . .

130. Defendants asserted, prior to their February 2020 corrective disclosures, and 

admitted as part of their February 2020 corrective disclosures, that they had long and closely 

monitored both Select and Goods.

131. As Select was intended and designed as a solution for what Defendants identified 

as Groupon’s foremost strategic goal – increasing customers’ purchase frequency, and thereby 

returning Groupon to gross profit growth – Defendants, by their own admission, thereafter 

monitored Select’s operations and results closely. For example, during their May 1, 2019 

conference call with analysts and investors in connection with Groupon’s results of operations for 

the first quarter of 2019 (the “Q1 2019 Conference Call”), after B. Riley FBR, Inc. analyst Sameet 

Sinha asked for an early update on Select, Williams assured that “we’re watching it really closely,”

and more specifically observed:

[WILLIAMS]: ...As far as Groupon Select, it’s not something that we’ve 

discussed broadly. And I think that’s just because it’s very much in an 

experimental stage. It’s very early. There's still a lot of folks who haven't been 

exposed to it, haven't seen it on the site or in our apps. We're very excited about 

that program. We think it has a lot of potential. But, again, it's a membership 

oriented program, so it's a little too early to start discussing what the potential of it 

is ultimately financially for the company and for customer accounts because as you 

know in membership it's really about continuity. And that's where it counts not just 

how many folks you can get in the program initially. So I'd say stay tuned on that 

one. We’re watching it really closely. We are excited about it and as an early 

stage initiative, but we have a lot of wood to chop on that one.

132. During the Q3 2019 Conference Call, Thomas discussed the adoption of the Select 

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program at length and described how “we’ve been really pleased with the trajectory in terms of 

our ability to improve member accounts and what we’re seeing on the customer side from a 

frequency standpoint as well as average order values improving.” 

133. Similarly, during his Barclays Conference Presentation a month later, Williams 

detailed how he was pushing the team to develop more granular insights into how Select was 

performing. Specifically, he observed, “So we’re really challenging our team to decompose the 

value and not just the value in aggregate, but what’s meaningful to every group, what’s 

meaningful to the first time buyer or the one-time buyer, versus the 12 time buyer. And can we 

use that to extend the program in different ways to evolve it in new ways.”

134. Likewise, with respect to Goods, Defendants clearly articulated prior to the Class 

Period what they viewed as Goods’ fundamental purpose – to generate profits, even if at a lower 

margin than Local, while driving further traffic to Local and spurring Local “customer activation”

and “cross-shopping” (see Section IV.B.2, supra). Throughout the Class Period, they closely 

monitored Goods’ decline on both these metrics. As Williams explained in his February 18, 2020 

Q4 Letter to shareholders:

Our management team and board have been evaluating the role of Goods in 

our ecosystem for some time. Goods’ contribution to gross profit has been 

declining for four quarters, but it has historically been a meaningful engagement 

tool for Local shoppers and its overall impact on the business extended beyond its 

direct contribution to gross profit. Recently we’ve seen engagement with our 

Goods inventory shift meaningfully lower, driven in large part by our inability to 

compete . . . In short, Goods has outlived its role as a business driver . . .

135. Similarly, as Williams explained during the Q4 2019 Conference Call, Groupon’s 

management and board had long been monitoring the deterioration of Goods and of Goods’ ability 

to drive Local business:

[WILLIAMS]: Our management team and board have been evaluating the 

role of Goods for some time. Our fourth quarter performance and the challenges 

Goods has posed over the past few years have clarified our path forward. . . Over 

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time, Goods has become a less meaningful driver of engagement and an 

increasingly inefficient use of our impressions.

6. . . . Are Borne Out By The Mastery Of Details Displayed By 

Defendants In The Q2 2019 And Q3 2019 Conference Calls

136. Defendants, during both the Q2 2019 Conference Call and the Q3 2019 Conference 

Call, demonstrated extremely detailed knowledge with respect to Select that extended deep into 

the technical minutiae of Select’s operations, and of the strategic and product development 

considerations and decisions responsible for them.

137. For example, during the Q2 2019 Conference Call and in response to multiple 

questions from analysts concerning Select’s operations and results, Defendant Williams discussed 

quite detailed considerations relating to Select’s product development, how Select was being 

technically presented on Groupon’s websites and mobile applications to optimize customer 

enrollment, and how Groupon had been and would be testing such technical features, and 

considering the resulting customer response data, in order to continue to optimize Select:

[WILLIAMS]: Yeah. I think that's right. And just to speak a little bit about the 

philosophy and where we are on it now, you asked whether we’re thinking about it 

as a way to subsidize growth and frequency. That's not really how we're thinking 

about it.

Ultimately, we’re looking for a way to monetize what has historically been 

member-like behavior in our customer base. So we’ve had that member-like 

behavior for years, but we haven't had a member-like monetization model to go 

along with it. We saw an opportunity to do that and to build that.

And we – really we set a philosophy for the program out of the gate to make it 

as incredibly compelling as we could, really to drive engagement and 

frequency and commitment to the platform and to Groupon over time more 

so than thinking about [ph] in a way as subsidiary of (21:57) growth. And I 

think hopefully now as you’ve heard Mike walk through the economics of the 

program, you see there's really – there's not a ‘subsidy’ there more so than it is just 

making the core Groupon value prop even more compelling.

And our goal pushing forward is to double down on what you mentioned now, 

which I think it is compelling today, but as we bring more features in, more 

partners in, and more unique experiences in, we think we have a program that 

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starts to get into the no-brainer territory, the why wouldn’t you territory, that 

ultimately over time can support higher membership fees.

But today, our focus is entirely gain traction in the program, gain trial in the 

program, get as many of our customers into the Select experience as we possibly 

can so that we can continue to add value, share the economics with them, and build 

those healthier relationships over time.

***

Yeah. And the only other thing that I'll add there, Deepak, is we’re like everybody 

else in the online space, we’ve spent years refining our checkout process. And 

as Mike mentioned earlier, any time you add something new, especially an 

extra step to the checkout process, the consumer reacts to that friction.

We’re not going to be satisfied with that friction, this is an early program for 

us and it’s early in our checkout funnel. We have a dedicated team that’s 

working on conversion in our checkout funnel that is making Select a part of 

that conversion optimization effort. So we’re not going to just sit back and be 

satisfied with some conversion friction there.

Over the next couple of quarters, a big part of our testing will be refining that 

checkout pipeline to make it as smooth and seamless for consumers as possible, 

and hopefully we can mitigate some of that conversion headwind that makes the 

compounding effect of the membership fees even more powerful as we go forward. 

But we have real work to do there over the next few quarters, and we have a team 

whose sole focus is really pushing on those elements.

7. Defendants Attested To Their Data Driven Decision-Making 

Frameworks

138. Groupon likens itself to a “massive data-driven experiment,” that “has tweaked and 

tested every corner of its e-commerce platform to find out precisely what makes customers click.”7 

The Company’s senior leadership, including the Individual Defendants, endorsed the development 

of data driven decision making processes. For example, during the Q2 2018 Conference Call held 

on August 3, 2018, Williams described how the Groupon used “machine learning to use that 

data advantage that we have in this space, use that huge corpus of intent data that we have 

7

See “Groupon is a massive data-driven experiment — this team helps run it,” available at: 

https://people.groupon.com/2018/groupon-data-driven-experiment-chicago/ (last visited Sept. 21, 

2020).

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to just better service the best possible offer instead of-- in many cases, the best possible

discount.” 

139. Thus, when the Individual Defendants described how initiatives were being 

developed or deployed, they spoke based on their assessment of real time data analysis – and not 

mere anecdotal observation. For example, during the Q3 2019 Conference Call held on November 

5, 2019, Thomas described how Groupon sought to improve marketing efficiency by “deploying 

marketing strategies that allow us to leverage data to better segment our customer base and 

personalize the overall Groupon experience. Our goal is to drive purchase frequency, particularly 

within the first 90 days post purchase.” During the same call, Williams described how “the more 

intelligent use of data” was directed towards “really harnessing all that we know about customers. 

So, you’re starting to see some of those pieces really work their way through that local customer

experience, and we’re seeing the impacts of that.”

8. Executive Terminations Shortly After the Class Period Further 

Support an Inference of Scienter

140. On March 25, 2020, Groupon abruptly announced that its Chief Executive Officer, 

Williams, and its Chief Operating Officer, Steve Krenzer, were “no longer serving” in their roles, 

but would “continue as employees of the Company.” The disclosure of the departures came 

approximately one month after the Company reported the failures of Goods and Select and the 

ensuing Guidance miss.

D. Additional Allegations Regarding Loss Causation

141. Defendants’ wrongful conduct as alleged herein directly and proximately caused 

the economic loss suffered by Lead Plaintiff and the Class.

142. During the Class Period, Lead Plaintiff and the Class purchased Groupon securities 

at artificially inflated prices and were damaged thereby. The price of the Company’s securities 

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significantly declined when the misrepresentations made to the market, and/or the information 

alleged herein to have been concealed from the market, and/or the effects thereof, were revealed 

or materialized, causing investors’ losses.

143. Artificial inflation in Groupon’s stock price was removed when concealed risks 

materialized and/or the truth about the material misrepresentations and omissions was partially 

revealed to the public on February 18-19, 2020. Defendants’ disclosures on those days revealed,

inter alia, the collapse of Goods, the unprofitability of Select, and the failure of both Goods and 

Select as drivers for Groupon’s core Local business and overall gross profits. As more particularly 

described above (see Section V.B.3, supra), these disclosures reduced the amount of inflation in 

the price of Groupon’s publicly traded securities, causing economic injury to Lead Plaintiff and 

other members of the Class. 

E. Presumption Of Reliance

1. General Allegations

144. The market for Groupon’s securities was open, well-developed and efficient at all 

relevant times. As a result of the materially false and/or misleading statements and/or failures to 

disclose, Groupon’s securities traded at artificially inflated prices during the Class Period. On 

January 21, 2020, following the misstatements complained of herein and shortly prior to 

Defendants’ corrective disclosures, the Company’s share price closed at $3.14 per share, just 

below the Class Period high of $3.40 reached on the first day of the Class Period (July 30, 2019). 

Lead Plaintiff and other members of the Class purchased or otherwise acquired the Company’s 

securities relying upon the integrity of the market price of Groupon’s securities and market 

information relating to Groupon, and have been damaged thereby.

145. During the Class Period, the artificial inflation of Groupon’s shares was caused by 

the material misrepresentations and/or omissions particularized in this Complaint causing the 

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damages sustained by Lead Plaintiff and other members of the Class. As described herein, during 

the Class Period, Defendants made or caused to be made a series of materially false and/or 

misleading statements about Groupon’s business, operations and prospects. These material 

misstatements and/or omissions created an unrealistically positive assessment of Groupon and its 

business, operations, and prospects, thus causing the price of the Company’s securities to be 

artificially inflated at all relevant times, and when disclosed, negatively affected the value of the 

Company shares. Defendants’ materially false and/or misleading statements during the Class 

Period resulted in Lead Plaintiff and other members of the Class purchasing the Company’s 

securities at such artificially inflated prices, and each of them has been damaged as a result. 

146. At all relevant times, the market for Groupon’s securities was an efficient market 

for the following reasons, among others:

(a) Groupon shares met the requirements for listing, and were listed and 

actively traded on the NASDAQ, a highly efficient and automated market;

(b) As a regulated issuer, Groupon filed periodic public reports with the SEC 

and/or the NASDAQ;

(c) Groupon regularly communicated with public investors via established 

market communication mechanisms, including through regular dissemination of press releases on 

the national circuits of major newswire services and through other wide-ranging public disclosures, 

such as communications with the financial press and other similar reporting services; and/or

(d) Groupon was followed by securities analysts employed by brokerage firms 

who wrote reports about the Company, and these reports were distributed to the sales force and 

certain customers of their respective brokerage firms. Each of these reports was publicly available 

and entered the public marketplace. 

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147. As a result of the foregoing, the market for Groupon’s securities promptly digested 

current information regarding Groupon from all publicly available sources and reflected such 

information in Groupon’s share price. Under these circumstances, all purchasers of Groupon’s 

securities during the Class Period suffered similar injury through their purchase of Groupon’s 

securities at artificially inflated prices and a presumption of reliance applies.

148. A Class-wide presumption of reliance is also appropriate in this action under the 

Supreme Court’s holding in Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128 (1972), 

because the Class’s claims are, in large part, grounded on Defendants’ material misstatements 

and/or omissions. Because this action involves Defendants’ failure to disclose material adverse 

information regarding the Company’s business operations and financial prospects—information 

that Defendants were obligated to disclose—positive proof of reliance is not a prerequisite to 

recovery. All that is necessary is that the facts withheld be material in the sense that a reasonable 

investor might have considered them important in making investment decisions. Given the 

importance of the Class Period material misstatements and omissions set forth above, that 

requirement is satisfied here.

2. Class Period Analyst Reports Reflected And Transmitted Defendants’ 

Misstatements

149. Defendants’ misstatements concerning Select and Goods were considered and 

relied upon by securities analysts and featured in their Class Period published reports on Groupon.

a. Analyst Reports Following Defendants’ Q2 2019 Statements

150. On July 31, 2019, UBS analyst Eric J. Sheridan published a report titled “Work in 

Progress; 2020 Is Key for Stock” (the “UBS Q2 Report”) in which, after noting disappointing 

“headline [Q2 2019 numbers] on rev[enues] and bookings” that would “likely dominate the shortterm narrative,” he concluded that “management’s strategy and focus is the correct approach,” and 

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listed Select as the first “Q2 2019 Positive[]:”

Work In Progress; 2020 Is Key For Stock

Transition Continues to Produce Volatility

While headlines #s on revs and bookings will likely dominate the short-term 

narrative, we were encouraged that GRPN management remains laser focused on 

the same 2020 re-alignment that has been the investor narrative over past few 

quarters. In our view, management’s strategy and focus is the correct approach for 

2020 and beyond to stabilize customer trends, align marketing channels against 

customer value and drive higher margin/FCF trajectory. In the interim, we stay on 

the sidelines as we look for signs of the strategy producing a possible inflection in 

forward estimates and see the stock stuck in its recent trading range ($3-4) until 

further evidence emerges.

Q2 2019 Positives & Negatives

Positives: a) Over 150k members joined ‘Groupon Select’ (new 

membership/subscription product) with initial indicators showing improved 

purchase frequency, higher AOV, and increased customer propensity to 

search for services/products; . . .

UBS Q2 Report, at 1.

151. On August 1, 2019, Credit Suisse analyst Stephen Ju published a report on Groupon 

titled “Investing to Accelerate Subscription Adoption” (the “Credit Suisse Q2 Report”), in which 

he focused on Select at length and described Select as “[t]he highlight this quarter:”

Investing to Accelerate Subscription Adoption

***

■ Investment Case: The highlight this quarter was the strategic allocation of 

incremental marketing budgets and impressions towards driving membership 

of its recently-launched Groupon Select program in North America – which 

offers ~25% discounts on Local deals, free shipping within the Goods category, and 

an extra ~10% off travel and event purchases. Notably, in addition to a ~$5 

monthly subscription fee, the company highlighted a significant increase in 

incremental repeat purchase rates and AOV resulting in higher annual gross 

profit per shopper. As a result, management expects to pull forward marketing to 

accelerate adoption of its Select program from ~150,000 members this quarter. 

That said, Groupon continues to experience headwinds due to ongoing traffic issues 

within its SEO and email marketing channels, weaker consumer demand in the UK, 

and increased competition in seasonal categories (e.g., Home & Garden). As a 

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result we elect to maintain our wait-and-see Neutral stance as we anticipate the 

lapping of some of these headwinds as we exit FY19. As a reminder, management 

anticipates improving profitability in 2020 as it increases profitability per customer 

in its North American business and continues to rationalize OpEx.

Credit Suisse Q2 Report, at 1; see also id. at 3.

b. Analyst Reports Following Defendants’ Q3 2019 Statements

152. On November 5, 2019, UBS analyst Eric J. Sheridan published a report on Groupon 

titled “Is the Plan Coming Together for 2020?” (the “UBS Q3 Report”), taking note of Groupon’s 

continuing customer declines as well as Groupon’s “key” strategies to counter such declines, 

including Select, whose purported progress, as represented by Defendants (i.e., that Select was 

growing fast and producing significant increases in purchase frequency and average order value), 

he deemed as the foremost “positive” among the Company’s Q3 2019 results disclosures:

Is The Plan Coming Together for 2020?

Is 2020 The Year GRPN's Plan Begins To Bear Fruit?

While some investors focused on declining active users (not a driver mgmt is 

focused on) and/or revenue volatility, GRPN mgmt is steadily building the 

strategy around a few key themes into 2020 - effective marketing with defined 

pay back periods, broadening out available inventory (especially thru distribution 

partners), driving higher levels of shopping velocity per user and driving better 

output in terms of gross profit per user growth. As we look into 2020, the key 

question is likely to remain how effectively GRPN mgmt can execute against 

these themes. In addition, we believe the best course of action for GRPN mgmt is 

to be prudent with capital (balance sheet strength) and focus on organic execution 

with modest shareholder returns. While we remain with questions on execution vs. 

forward estimates, we reiterate our Neutral rating. We note that GRPN is 

increasingly trading at the lower end of its 2019 trading range ($3-4) and 

positive signs could emerge for 2020 and beyond.

Q3 2019 Positives & Negatives

Positives: a) +260k members joined ‘Groupon Select’ (+100k QoQ) w/ initial 

indicators showing 60% increase in purchase frequency & 20% higher AOV;

b) Positive mgmt commentary on product enhancements intended to improve 

conversion and card- linked & booking initiatives (e.g., -65% of food & drink 

inventory is now bookable in Intl & rolled out bookings software in NA); & c) 

Repurchased 5m+ shares for -$15m (-$44m YTD). Negatives: a) Q3 revs miss 

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driven by softness in Europe & lower traffic in NA w/ expectations for current 

trends to remain in Q4; b) -900k net loss QoQ in NA active customers (vs. -(1000)k 

in Q2) due to continued traffic headwinds; & c) No change to FY19 Adj. EBITDA 

guide of -$270m despite 3 qtrs of beats.

UBS Q3 Report, at 1.

153. On November 6, 2019, Credit Suisse analyst Stephen Ju published a report on 

Groupon titled “Turning to Order Frequency and Conversion to Offset Ongoing Traffic 

Headwinds” (the “Credit Suisse Q3 Report”), in which – as in his Credit Suisse Q2 Report – he 

focused on Select and described it as the quarter’s “highlight:”

Investment Case: The highlight this quarter was continued traction in the NA 

rollout of Groupon Select – with subscribers growing by ~100k in 3Q19 to 

reach ~260k; with the company indicating that Select members are transacting 

at a +20%/+60% lift to AOV/order frequency resulting in higher annual gross 

profit per shopper. That said, Groupon continues to experience headwinds due to 

ongoing traffic issues within its SEO and email marketing channels, with further 

weakening of consumer demand in the UK, and increased competition in its Goods 

business. These headwinds were offset by continued marketing optimization and 

the recent improvement in website traffic conversion within Groupon’s domestic 

business following the rollout of a refreshed mobile website and the implementation 

of guest checkout functionality. As a result we elect to maintain our wait- and-see 

Neutral stance as we anticipate the lapping of some of these headwinds over the 

next few quarters. As a reminder, management anticipates improving profitability 

in 2020 as it increases profitability per customer in its North American business 

and continues to rationalize OpEx.

Credit Suisse Q3 Report, at 1; see also id. at 3.

c. The UBS Upgrade

154. On January 17, 2020, following – and reflecting – Defendants’ Class Period 

misstatements as set forth herein, UBS analyst Eric J. Sheridan upgraded Groupon to “Buy” (from 

his prior “Neutral” recommendation) and published a lengthy report on Groupon, tiled “Groupon 

on Sale” (the “UBS Upgrade Report”) setting forth the basis for his upgrade. In essence, Sheridan 

credited Defendants’ representations concerning the purported progress they had been making in 

“core initiatives,” such as Select, intended to counter the Company’s continued customer declines 

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and return it to profit/EBITDA growth, and cited as “evidence” that such initiatives were working 

Defendants’ Class Period assertions concerning the effects of Select (i.e., a purported 60% increase 

in purchase frequency and 20% increase in average order value):

Groupon on Sale

2020 – GRPN’s Mgmt Should Begin To Deliver On The Plan

While GRPN’s stock remained volatile throughout 2019 on the back of user growth 

narratives, we think that momentum has been building against mgmt long term 

objectives to focus on a) user growth wrapped around “quality” not 

“quantity”; b) framing and allocating mkting against payback ROI targets & c) 

positioning GRPN for success in a mobile first world. In addition, initiatives 

aimed at broadening out available inventory (esp. thru distribution partners) 

& driving higher levels of shopping velocity per user and driving better output 

in terms of gross profit per user growth. Looking forward, we see GRPN as 

compellingly cheap with an asymmetric risk/reward profile from current levels. As 

a result, we upgrade our rating to Buy and maintain our $3.50 PT but see a 2:1 skew 

in risk/reward between our upside & downside cases.

What Are The Initiatives That Will Drive The Narrative Forward?

Throughout the course of 2019, Groupon has focused on a few key strategic 

initiatives to drive higher purchase frequency, conversion, and gross profit per 

customer growth. Specifically, management has invested in: a) voucherless 

coupons (in the form of card-linked offers & bookability); b) an enhanced mobile 

experience; & c) subscription-based program (Groupon Select). Collectively, 

we see these initiatives reducing consumer shopping friction, reducing consumer 

churn & improving ROI as inventory and choice scales (especially thru distribution 

partner agreements). We expect Groupon’s strategic investments in Groupon 

Select, mobile experience, & voucherless transition to drive sustained YoY 

growth for TTM gross profit per active customer in 2020 and beyond.

***

PIVOTAL QUESTIONS

***

Q: Can Groupon maintain steady user growth to drive top line momentum?

Yes. While we expect 2019 to result in customer net losses (due to traffic headwinds 

in NA & softened consumer environment in UK), we model ~400-900k in annual 

net adds in FY20 & beyond. As the company shifts to target high value users and 

forego low value customers, we see medium-to-long term momentum on the back 

of an improved user experience and growing international contribution.

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Q: Will core initiatives re-position Groupon for sustained adj. EBITDA 

growth?

Yes. We expect GRPN to grow gross profit dollars at a ~3% CAGR (’19- ’24E) 

for the next 5 years with potential upside from deepening personalization and 

further reducing customer friction. Against company guidance for the long-term, 

our estimates might prove to be conservative. We see increasing flow through to 

bottom line, driving ~8% (’19-’24E CAGR) adj. EBITDA growth runway.

UBS VIEW

Groupon has formulated a focused turnaround strategy (centered on 

voucherless, local offerings, & driving GP dollar per customer) and executed 

steadily in the past few qtrs. While there is still a long road ahead in strengthening 

the company’s positioning in the local ad and/or local eCommerce mkt in the face 

of competitive threats from large internet companies, we are constructive on 

GRPN shares at current levels as we see a + skew (2:1) in our upside/downside 

skew given better line of sight on GP & EBITDA growth (in terms of business 

momentum as an output of 2019 investments).

EVIDENCE

Anchored to its new focus on maximizing profit and de-emphasizing low ROI 

customer adds, GRPN was able to achieve GP per customer growth over the 

past 3 yrs w/ 2019 invtmts displaying + initial results (e.g., Select members 

have seen a ~60% increase in purchase frequency & ~20% higher AOV).

WHAT’S PRICED IN

By applying a 11.0x EV/(FCF-SBC), the market is assuming ~28% FY19-FY21 

FCF-SBC CAGR (vs. UBSe ~38.7%). We view this as conservative given the 

potential for GRPN to scale Groupon Select & gross profit dollar growth on 

the back of 2019 investments.

UBS Upgrade Report, at 1-2.

155. Sheridan counted Select as one of three “key strategic initiatives” that Groupon had 

focused on through the court of 2019 “to drive higher purchase frequency, conversion, and gross 

profit per customer growth.” UBS Upgrade Report, at 3 et seq. Sheridan believed that as Select 

was still “in early phases,” the market was “not factoring in the opportunity this initiative presents 

in terms of enhancing the gross margin per customer profile.” Id. at 3. Sheridan then depicted the 

opportunity presented by Select, principally by amalgamating and reflecting Defendants’ aboveCase: 1:20-cv-02581 Document #: 43 Filed: 09/22/20 Page 76 of 85 PageID #:461
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detailed Class Period representations concerning Select, including its purported 60% boost to 

purchase frequency and its overall and per-unit profitability:

Groupon Select – Earlier this year Groupon announced Groupon Select, a 

membership program that offers value for members for a monthly subscription fee 

of $4.99. Currently, the program is only offered in North America. Initial 

indicators are positive with results pointing to ~60% increased purchase 

frequency, ~20% higher average order value, and an increased customer 

propensity to search on the site. As of Q3 2019, Groupon Select had ~260,000 

members in North America (up from ~150,000 in Q2 2019 and up from ~50,000 in 

Q1 2019). In order to support member acquisition, Groupon intends to leverage 

promotional offers for sign-up and encourage enrollment through the checkout 

path. To date, Groupon has spent nearly ~$10m to support this initiative and 

have seen member acquisition costs pay back within 6 months driven both by 

the recurring revenue from membership fees and the incremental gross profit 

generated on membership-related transactions. As Groupon scales the 

program, management expects it to be a net neutral impact to gross profit in 

Q4. On the Q2 2019 earnings call, CFO Michael Randolfi stated that “a Select 

customer should earn at least $55 to $60 of gross profit on a per customer basis, 

if not more, which is almost double the average gross profit per customer that 

[they] generate today”. As can be seen in figure 4, at a $4.99 monthly subscription 

fee and ~2.2m Select members, we would expect to see a ~520bps uplift to gross 

margins – if Groupon were to raise the monthly fee to $9.99 and at ~2.2m Select 

members, we would expect to see ~1,050bps uplift to gross margins.

We expect Groupon’s strategic investments in Groupon Select, mobile 

experience, & voucherless transition to drive ~2-3% YoY growth for TTM 

gross profit per active customer in 2020 and beyond. For 2019, we forecast flat 

YoY growth as we believe the weak consumer environment in the UK, the traffic 

headwinds in North America, and initial investments (in Groupon Select, mobile 

experience, & transition to Voucherless) will offset any initial contributions from 

these 2019 strategic investments. With many of the partnerships launching in 2H19 

(e.g., the 3 card-linked distribution offers), we believe these investments will 

materialize as we enter 2020 and be a key driver in growing gross profit per 

customer.

UBS Upgrade Report, at 5-6.

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VI. INAPPLICABILITY OF THE STATUTORY SAFE HARBOR AND THE 

BESPEAKS CAUTION DOCTRINE

156. The statutory safe harbor provided for forward-looking statements under certain 

circumstances does not apply to any of the allegedly false statements pleaded in this Complaint. 

The statements alleged to be false and misleading herein all relate to then-existing facts and 

conditions. In addition, to the extent certain of the statements alleged to be false may be 

characterized as forward looking, they were not identified as “forward-looking statements” when 

made and there were no meaningful cautionary statements identifying important factors that could 

cause actual results to differ materially from those in the purportedly forward-looking statements. 

In the alternative, to the extent that the statutory safe harbor is determined to apply to any forwardlooking statements pleaded herein, Defendants are liable for those false forward-looking 

statements because at the time each of those forward-looking statements was made, the speaker 

had actual knowledge that the forward-looking statement was materially false or misleading, 

and/or the forward-looking statement was authorized or approved by an executive officer of 

Groupon who knew that the statement was false when made.

VII. CLASS ACTION ALLEGATIONS

157. Lead Plaintiff brings this action as a class action pursuant to Fed. R. Civ. P. 23(a)

and (b)(3) on behalf of a class, consisting of all persons and entities that purchased or otherwise 

acquired Groupon securities between July 30, 2019 and February 18, 2020, inclusive, and who

were damaged thereby (the “Class”). Excluded from the Class are Defendants, the officers and

directors of the Company, at all relevant times, members of their immediate families and their

legal representatives, heirs, successors, or assigns, and any entity in which Defendants have or had

a controlling interest.

158. The members of the Class are so numerous that joinder of all members is

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impracticable. Throughout the Class Period, Groupon’s common shares actively traded on the 

NASDAQ. While the exact number of Class members is unknown to Lead Plaintiff at this time

and can only be ascertained through appropriate discovery, Plaintiff believes that there are at least

hundreds or thousands of members in the proposed Class. Millions of shares of Groupon common 

stock were traded publicly during the Class Period on the NASDAQ. As of July 26, 2019, Groupon 

had 567,619,924 shares of common stock outstanding. Record owners and other members of the

Class may be identified from records maintained by Groupon or its transfer agent and may be

notified of the pendency of this action by mail, using the form of notice similar to that customarily

used in securities class actions.

159. Lead Plaintiff’s claims are typical of the claims of the members of the Class as all

members of the Class are similarly affected by Defendants’ wrongful conduct in violation of

federal law that is complained of herein. 

160. Lead Plaintiff will fairly and adequately protect the interests of the members of the

Class and has retained counsel competent and experienced in class and securities litigation.

161. Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely affecting individual members of the Class. Among the

questions of law and fact common to the Class are:

(a) whether the federal securities laws were violated by Defendants’ acts as

alleged herein;

(b) whether statements made by Defendants to the investing public during the

Class Period omitted and/or misrepresented material facts about the Company’s business,

operations, and prospects;

(c) whether Defendants made false and/or misleading statements;

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(d) whether Defendants’ statements omitted material facts necessary in order to 

make the statements made, in light of circumstances under which they were made, not misleading; 

and

(e) to what extent the members of the Class have sustained damages and the

proper measure of damages.

162. A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the

damages suffered by individual Class members may be relatively small, the expense and burden

of individual litigation makes it impossible for members of the Class to individually redress the

wrongs done to them. There will be no difficulty in the management of this action as a class action.

VIII. CLAIMS FOR RELIEF

FIRST CLAIM

Violation of Section 10(b) of The Exchange Act and 

Rule 10b-5 Promulgated Thereunder

Against All Defendants

163. Lead Plaintiff repeats and re-alleges each and every allegation contained above as 

if fully set forth herein. 

164. During the Class Period, Defendants carried out a plan, scheme and course of 

conduct which was intended to and, throughout the Class Period, did: i) deceive the investing 

public, including Lead Plaintiff and other Class members, as alleged herein; and ii) cause Lead 

Plaintiff and other members of the Class to purchase Groupon’s securities at artificially inflated 

prices. In furtherance of this unlawful scheme, plan and course of conduct, Defendants, and each 

defendant, took the actions set forth herein.

165. Defendants (i) employed devices, schemes, and artifices to defraud; ii) made untrue 

statements of material fact and/or omitted to state material facts necessary to make the statements 

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not misleading; and (iii) engaged in acts, practices, and a course of business which operated as a 

fraud and deceit upon the purchasers of the Company’s securities in an effort to maintain 

artificially high market prices for Groupon’s securities in violation of Section 10(b) of the

Exchange Act and Rule 10b-5. All Defendants are sued either as primary participants in the 

wrongful and illegal conduct charged herein or as controlling persons as alleged below. 

166. Defendants, individually and in concert, directly and indirectly, by the use, means 

or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a 

continuous course of conduct to conceal adverse material information about Groupon’s financial 

well-being and prospects, as specified herein. 

167. Defendants employed devices, schemes and artifices to defraud, while in 

possession of material adverse non-public information and engaged in acts, practices, and a course 

of conduct as alleged herein in an effort to assure investors of Groupon’s value and performance 

and continued substantial growth, which included the making of, or the participation in the making 

of, untrue statements of material facts and/or omitting to state material facts necessary in order to 

make the statements made about Groupon and its business operations and future prospects in light 

of the circumstances under which they were made, not misleading, as set forth more particularly 

herein, and engaged in transactions, practices and a course of business which operated as a fraud 

and deceit upon the purchasers of the Company’s securities during the Class Period. 

168. Each of the Individual Defendants’ primary liability and controlling person liability 

arises from the following facts: i) the Individual Defendants were high-level executives and/or 

directors at the Company during the Class Period and members of the Company’s management 

team or had control thereof; ii) each of these defendants, by virtue of their responsibilities and 

activities as a senior officer and/or director of the Company, was privy to and participated in the 

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creation, development and reporting of the Company’s internal budgets, plans, projections and/or 

reports; iii) each of these defendants enjoyed significant personal contact and familiarity with the 

other defendants and was advised of, and had access to, other members of the Company’s 

management team, internal reports and other data and information about the Company’s finances, 

operations, and sales at all relevant times; and (iv) each of these defendants was aware of the 

Company’s dissemination of information to the investing public which they knew and/or 

recklessly disregarded was materially false and misleading. 

169. Defendants had actual knowledge of the misrepresentations and/or omissions of 

material facts set forth herein, or acted with reckless disregard for the truth in that they failed to 

ascertain and to disclose such facts, even though such facts were available to them. Such 

defendants’ material misrepresentations and/or omissions were done knowingly or recklessly and 

for the purpose and effect of concealing Groupon’s financial well-being and prospects from the 

investing public and supporting the artificially inflated price of its securities. As demonstrated by 

Defendants’ overstatements and/or misstatements of the Company’s business, operations, 

financial well-being, and prospects throughout the Class Period, Defendants, if they did not have 

actual knowledge of the misrepresentations and/or omissions alleged, were reckless in failing to 

obtain such knowledge by deliberately refraining from taking those steps necessary to discover 

whether those statements were false or misleading. 

170. As a result of the dissemination of the materially false and/or misleading 

information and/or failure to disclose material facts, as set forth above, the market price of 

Groupon’s securities was artificially inflated during the Class Period. In ignorance of the fact that 

market prices of the Company’s securities were artificially inflated, and relying directly or 

indirectly on the false and misleading statements made by Defendants, or upon the integrity of the 

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market in which the securities trades, and/or in the absence of material adverse information that 

was known to or recklessly disregarded by Defendants, but not disclosed in public statements by 

Defendants during the Class Period, Lead Plaintiff and the other members of the Class acquired 

Groupon’s securities during the Class Period at artificially high prices and were damaged thereby.

171. At the time of said misrepresentations and/or omissions, Lead Plaintiff and other 

members of the Class were ignorant of their falsity, and believed them to be true. Had Lead 

Plaintiff and the other members of the Class and the marketplace known the truth regarding the 

problems that Groupon was experiencing, which were not disclosed by Defendants, Lead Plaintiff 

and other members of the Class would not have purchased or otherwise acquired their Groupon

securities, or, if they had acquired such securities during the Class Period, they would not have 

done so at the artificially inflated prices which they paid.

172. By virtue of the foregoing, Defendants violated Section 10(b) of the Exchange Act 

and Rule 10b-5 promulgated thereunder. 

173. As a direct and proximate result of Defendants’ wrongful conduct, Lead Plaintiff 

and the other members of the Class suffered damages in connection with their respective purchases 

and sales of the Company’s securities during the Class Period. 

SECOND CLAIM

Violation of Section 20(a) of The Exchange Act

Against the Individual Defendants

174. Lead Plaintiff repeats and re-alleges each and every allegation contained above as 

if fully set forth herein. 

175. Individual Defendants acted as controlling persons of Groupon within the meaning 

of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level positions and 

their ownership and contractual rights, participation in, and/or awareness of the Company’s 

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operations and intimate knowledge of the false financial statements filed by the Company with the 

SEC and disseminated to the investing public, Individual Defendants had the power to influence 

and control and did influence and control, directly or indirectly, the decision-making of the 

Company, including the content and dissemination of the various statements which Lead Plaintiff 

contends are false and misleading. Individual Defendants were provided with or had unlimited 

access to copies of the Company’s reports, press releases, public filings, and other statements 

alleged by Lead Plaintiff to be misleading prior to and/or shortly after these statements were issued 

and had the ability to prevent the issuance of the statements or cause the statements to be corrected. 

176. In particular, Individual Defendants had direct and supervisory involvement in the 

day-to-day operations of the Company and, therefore, had the power to control or influence the 

particular transactions giving rise to the securities violations as alleged herein, and exercised the 

same.

177. As set forth above, Groupon and Individual Defendants each violated Section 10(b) 

and Rule 10b-5 by their acts and omissions as alleged in this Complaint. By virtue of their position 

as controlling persons, Individual Defendants are liable pursuant to Section 20(a) of the Exchange 

Act. As a direct and proximate result of Defendants’ wrongful conduct, Lead Plaintiff and other 

members of the Class suffered damages in connection with their purchases of the Company’s 

securities during the Class Period. 

IX. PRAYER FOR RELIEF

WHEREFORE, Lead Plaintiff prays for relief and judgment, as follows:

(a) determining that this action is a proper class action under Rule 23 of the Federal

Rules of Civil Procedure;

(b) awarding compensatory damages in favor of Lead Plaintiff and the other Class

members against all Defendants, jointly and severally, for all damages sustained as a result of

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Defendants’ wrongdoing, in an amount to be proven at trial, including interest thereon;

(c) awarding Lead Plaintiff and the Class their reasonable costs and expenses

incurred in this action, including counsel fees and expert fees; and

(d) such other and further relief as the Court may deem just and proper.

X. JURY TRIAL DEMANDED

Lead Plaintiff hereby demands a trial by jury.

Dated: September 22, 2020 POMERANTZ LLP

By /s/ Louis C. Ludwig

Patrick V. Dahlstrom

Louis C. Ludwig

10 South LaSalle Street, Suite 3505

Chicago, IL 60603

Telephone: (312) 377-1181

Email: pdahlstrom@pomlaw.com

lcludwig@pomlaw.com

Liaison Counsel for Lead Plaintiff and the 

Proposed Class

GLANCY PRONGAY & MURRAY LLP

Robert V. Prongay (admitted pro hac vice)

Christopher Fallon (pro hac vice pending)

1925 Century Park East, Suite 2100

Los Angeles, CA 90067

Telephone: (310) 201-9150

Email: rprongay@glancylaw.com

cfallon@glancylaw.com

KIRBY MCINERNEY LLP

Ira M. Press (admitted pro hac vice)

Thomas W. Elrod (admitted pro hac vice)

250 Park Avenue, Suite 820

New York, NY 10177

Telephone: (212) 371-6600

Email: ipress@kmllp.com 

telrod@kmllp.com

Counsel for Lead Plaintiff and Lead Counsel 

for the Proposed Class

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