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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number: 1-35335
Groupon, Inc.
(Exact name of registrant as specified in its charter)
Delaware27-0903295
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
600 W Chicago Avenue60654
Suite 400(Zip Code)
Chicago
Illinois(312)334-1579
(Address of principal executive offices)(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.0001 per shareGRPNNASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes           No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).        
Yes          No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer                             Accelerated filer         
Non-accelerated filer                             Smaller reporting company
                                     Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes         No   
As of May 3, 2021, there were 29,119,679 shares of the registrant's common stock outstanding.



TABLE OF CONTENTS
PART I. Financial InformationPage
Forward-Looking Statements
Item 1. Financial Statements and Supplementary Data
Condensed Consolidated Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2020 (unaudited)
Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2021 and 2020 (unaudited)
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (unaudited)
Notes to Condensed Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4. Controls and Procedures
PART II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 5. Other Information
Item 6. Exhibits
Signatures

______________________________________________________
2



PART I. FINANCIAL INFORMATION
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our future results of operations and financial position, business strategy and plans and our objectives for future operations. The words "may," "will," "should," "could," "expect," "anticipate," "believe," "estimate," "intend," "continue" and other similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include, but are not limited to, effects of COVID-19 or other pandemics or disease outbreaks on our business; our ability to execute, and achieve the expected benefits of, our go-forward strategy; execution of our business and marketing strategies; volatility in our operating results; challenges arising from our international operations, including fluctuations in currency exchange rates, legal and regulatory developments and any potential adverse impact from the United Kingdom's exit from the European Union; global economic uncertainty; retaining and adding high quality merchants; retaining existing customers and adding new customers; competing successfully in our industry; providing a compelling mobile experience for our customers; managing refund risks; retaining and attracting members of our executive team and other qualified personnel; customer and merchant fraud; payment-related risks; our reliance on email, internet search engines and mobile application marketplaces to drive traffic to our marketplace; cybersecurity breaches; maintaining and improving our information technology infrastructure; reliance on cloud-based computing platforms; completing and realizing the anticipated benefits from acquisitions, dispositions, joint ventures and strategic investments; lack of control over minority investments; managing inventory and order fulfillment risks; claims related to product and service offerings; protecting our intellectual property; maintaining a strong brand; the impact of future and pending litigation; compliance with domestic and foreign laws and regulations, including the CARD Act, GDPR and regulation of the Internet and e-commerce; classification of our independent contractors or employees; exposure to greater than anticipated tax liabilities; adoption of tax legislation; our ability to raise capital if necessary; risks related to our access to capital and outstanding indebtedness, including our convertible senior notes; our common stock, including volatility in our stock price; our ability to realize the anticipated benefits from the hedge and warrant or capped call transactions; and those risks and other factors discussed in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2020 and Part II, Item 1A. Risk Factors of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, as well as in our condensed consolidated financial statements, related notes, and the other financial information appearing elsewhere in this report and our other filings with the Securities and Exchange Commission (the "SEC"). Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. We do not intend, and undertake no obligation, to update any of our forward-looking statements after the date of this report to reflect actual results or future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
As used herein, "Groupon," "the Company," "we," "our," "us" and similar terms include Groupon, Inc. and its subsidiaries, unless the context indicates otherwise.

3



ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

GROUPON, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
March 31, 2021December 31, 2020
(unaudited)
Assets
Current assets:
Cash and cash equivalents$676,799 $850,587 
Accounts receivable, net45,402 42,998 
Prepaid expenses and other current assets 41,261 40,441 
Total current assets763,462 934,026 
Property, equipment and software, net82,521 85,284 
Right-of-use assets - operating leases, net69,899 75,349 
Goodwill217,364 214,699 
Intangible assets, net28,684 30,151 
Investments36,008 37,671 
Restricted cash169,785  
Other non-current assets34,314 34,327 
Total Assets$1,402,037 $1,411,507 
Liabilities and Equity
Current liabilities:
Short-term borrowings$100,000 $200,000 
Accounts payable38,609 33,026 
Accrued merchant and supplier payables329,000 410,963 
Accrued expenses and other current liabilities299,282 294,999 
Total current liabilities766,891 938,988 
Convertible senior notes, net441,996 229,490 
Operating lease obligations83,527 90,927 
Other non-current liabilities44,003 44,428 
Total Liabilities1,336,417 1,303,833 
Commitments and contingencies (see Note 6)
Stockholders' Equity
Common stock, par value $0.0001 per share, 100,500,000 shares authorized; 39,352,337 shares issued and 29,058,220 shares outstanding at March 31, 2021; 39,142,896 shares issued and 28,848,779 shares outstanding at December 31, 2020
4 4 
Additional paid-in capital2,261,095 2,348,114 
Treasury stock, at cost, 10,294,117 shares at March 31, 2021 and December 31, 2020
(922,666)(922,666)
Accumulated deficit(1,258,283)(1,320,886)
Accumulated other comprehensive income (loss)(14,455)3,109 
Total Groupon, Inc. Stockholders' Equity65,695 107,675 
Noncontrolling interests(75)(1)
Total Equity65,620 107,674 
Total Liabilities and Equity$1,402,037 $1,411,507 

See Notes to Condensed Consolidated Financial Statements.
4


GROUPON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except share and per share amounts)
(unaudited)

Three Months Ended March 31,
20212020
Revenue:
Service$172,624 $207,028 
Product91,193 167,122 
Total revenue263,817 374,150 
Cost of revenue:
Service18,425 26,915 
Product78,409 145,988 
Total cost of revenue96,834 172,903 
Gross profit166,983 201,247 
Operating expenses:
Marketing33,666 60,130 
Selling, general and administrative127,143 207,135 
Goodwill impairment 109,486 
Long-lived asset impairment 22,351 
Restructuring and related charges7,422 6 
Total operating expenses168,231 399,108 
Income (loss) from operations(1,248)(197,861)
Other income (expense), net18,123 (18,987)
Income (loss) from continuing operations before provision (benefit) for income taxes16,875 (216,848)
Provision (benefit) for income taxes2,427 (5,988)
Income (loss) from continuing operations14,448 (210,860)
Income (loss) from discontinued operations, net of tax 382 
Net income (loss)14,448 (210,478)
Net (income) loss attributable to noncontrolling interests110 (3,044)
Net income (loss) attributable to Groupon, Inc.$14,558 $(213,522)
Basic net income (loss) per share:
Continuing operations$0.50 $(7.54)
Discontinued operations 0.01 
Basic net income (loss) per share$0.50 $(7.53)
Diluted net income (loss) per share:
Continuing operations$0.48 $(7.54)
Discontinued operations 0.01 
Diluted net income (loss) per share)$0.48 $(7.53)
Weighted average number of shares outstanding
Basic29,028,489 28,365,216 
Diluted30,265,563 28,365,216 
Comprehensive income (loss):
Net income (loss)$14,448 $(210,478)
Other comprehensive income (loss):
Other comprehensive income (loss) from continuing operations:
Net change in unrealized gain (loss) on foreign currency translation adjustments(49,792)(1,961)
Reclassification of cumulative foreign currency translation adjustments 32,228  
Other comprehensive income (loss) from continuing operations(17,564)(1,961)
Other comprehensive income (loss) from discontinued operations  
Other comprehensive income (loss)(17,564)(1,961)
Comprehensive income (loss)(3,116)(212,439)
Comprehensive (income) loss attributable to noncontrolling interest110 (3,044)
Comprehensive income (loss) attributable to Groupon, Inc. $(3,006)$(215,483)

See Notes to Condensed Consolidated Financial Statements.
5


GROUPON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except share amounts)
(unaudited)

Groupon, Inc. Stockholders' Equity
 Common StockAdditional Paid-In CapitalTreasury StockAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Groupon, Inc. Stockholders' EquityNon-controlling InterestsTotal Equity
 SharesAmountSharesAmount
Balance at December 31, 202039,142,896 $4 $2,348,114 (10,294,117)$(922,666)$(1,320,886)$3,109 $107,675 $(1)$107,674 
Cumulative effect of change in accounting principle due to adoption of ASU 2020-06, net of tax— — (67,014)— — 48,045 — (18,969)— (18,969)
Comprehensive income (loss)— — — — — 14,558 (17,564)(3,006)(110)(3,116)
Vesting of restricted stock units and performance share units308,954 — — — — — — — — — 
Shares issued under employee stock purchase plan23,418 — 349 — — — — 349 — 349 
Tax withholdings related to net share settlements of stock-based compensation awards(122,931)— (4,901)— — — — (4,901)— (4,901)
Purchase of convertible note hedges— — (23,840)— — — — (23,840)— (23,840)
Stock-based compensation on equity-classified awards— — 8,387 — — — — 8,387 — 8,387 
Receipts from noncontrolling interest holders— — — — — — — — 36 36 
Balance at March 31, 202139,352,337 $4 $2,261,095 (10,294,117)$(922,666)$(1,258,283)$(14,455)$65,695 $(75)$65,620 

See Notes to Condensed Consolidated Financial Statements.
6


GROUPON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except share amounts)
(unaudited)

Groupon, Inc. Stockholders' Equity
Common Stock (1)
Additional Paid-In Capital (1)
Treasury Stock (1)
Accumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Groupon, Inc. Stockholders' EquityNon-controlling InterestsTotal Equity
SharesAmountSharesAmount
Balance at December 31, 201938,584,854 $4 $2,310,393 (10,294,117)$(922,666)$(1,032,876)$39,081 $393,936 $1,110 $395,046 
Cumulative effect of change in accounting principle due to adoption of ASC Topic 326, net of tax— — — — — (79)— (79)— (79)
Comprehensive income (loss)— — — — — (213,522)(1,961)(215,483)3,044 (212,439)
Vesting of restricted stock units and performance share units165,705 — — — — — — — — — 
Shares issued under employee stock purchase plan28,621 — 1,163 — — — — 1,163 — 1,163 
Tax withholdings related to net share settlements of stock-based compensation awards(67,135)— (3,684)— — — — (3,684)— (3,684)
Stock-based compensation on equity-classified awards— — 15,345 — — — — 15,345 — 15,345 
Distributions to noncontrolling interest holders— — — — — — — — (3,845)(3,845)
Balance at March 31, 202038,712,045 $4 $2,323,217 (10,294,117)$(922,666)$(1,246,477)$37,120 $191,198 $309 $191,507 
(1)All share information and balances have been retroactively adjusted to reflect a reverse stock split. See Note 7, Stockholders' Equity and Compensation Arrangements, for additional information.
See Notes to Condensed Consolidated Financial Statements.
7


GROUPON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

 Three Months Ended March 31,
 20212020
Operating activities  
Net income (loss)$14,448 $(210,478)
Less: Income (loss) from discontinued operations, net of tax 382 
Income (loss) from continuing operations14,448 (210,860)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of property, equipment and software14,727 23,385 
Amortization of acquired intangible assets2,292 2,524 
Impairment of goodwill 109,486 
Impairment of long-lived assets 22,351 
Stock-based compensation7,179 14,015 
Impairment and other changes in fair value of investments 8,089 
Amortization of debt discount on convertible senior notes303 3,516 
Foreign currency translation adjustments reclassified into earnings(32,228) 
Change in assets and liabilities, net of acquisitions and dispositions:
Accounts receivable(2,812)8,334 
Prepaid expenses and other current assets(1,640)13,222 
Right-of-use assets - operating leases5,122 7,009 
Accounts payable5,896 5,860 
Accrued merchant and supplier payables(76,884)(223,098)
Accrued expenses and other current liabilities9,823 (11,970)
Operating lease obligations(6,007)(10,130)
Other, net13,376 1,859 
Net cash provided by (used in) operating activities from continuing operations(46,405)(236,408)
Net cash provided by (used in) operating activities from discontinued operations  
Net cash provided by (used in) operating activities(46,405)(236,408)
Investing activities
Purchases of property and equipment and capitalized software(12,040)(10,596)
Proceeds from sale of investment 31,605 
Acquisitions of intangible assets and other investing activities(704)(1,445)
Net cash provided by (used in) investing activities from continuing operations(12,744)19,564 
Net cash provided by (used in) investing activities from discontinued operations  
Net cash provided by (used in) investing activities(12,744)19,564 
Financing activities
Proceeds from issuance of 2026 convertible notes200,000  
Proceeds from (payments of) borrowings under revolving credit agreement(100,000)150,000 
Purchase of capped call transactions(23,840) 
Issuance costs for 2026 convertible notes and revolving credit agreement(6,572) 
Taxes paid related to net share settlements of stock-based compensation awards(4,901)(3,299)
Payments of finance lease obligations(2,061)(2,707)
Other financing activities(8)(2,682)
Net cash provided by (used in) financing activities62,618 141,312 
Effect of exchange rate changes on cash, cash equivalents and restricted cash, including cash classified within current assets of discontinued operations(7,466)(9,174)
Net increase (decrease) in cash, cash equivalents and restricted cash, including cash classified within current assets of discontinued operations(3,997)(84,706)
Less: Net increase (decrease) in cash classified within current assets of discontinued operations  
Net increase (decrease) in cash, cash equivalents and restricted cash(3,997)(84,706)
Cash, cash equivalents and restricted cash, beginning of period (1)
851,085 752,657 
Cash, cash equivalents and restricted cash, end of period (1)
$847,088 $667,951 

Non-cash investing and financing activities
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases 2,867 
8


GROUPON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
(1)The following table provides a reconciliation of cash, cash equivalents and restricted cash shown above to amounts reported within the condensed consolidated balance sheets as of March 31, 2021, December 31, 2020, March 31, 2020 and December 31, 2019 (in thousands):
March 31, 2021December 31, 2020March 31, 2020December 31, 2019
Cash and cash equivalents$676,799 $850,587 $666,867 $750,887 
Restricted cash included in prepaid expenses and other current assets504 498 878 1,534 
Restricted cash - non-current169,785  — — 
Restricted cash included in other non-current assets— — 206 236 
Cash, cash equivalents and restricted cash$847,088 $851,085 $667,951 $752,657 

See Notes to Condensed Consolidated Financial Statements.
9


GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Company Information
Groupon, Inc. and its subsidiaries, which commenced operations in October 2008, is a global scaled two-sided marketplace that connects consumers to merchants by offering goods and services, generally at a discount. Consumers access those marketplaces through our mobile applications and our websites, primarily localized groupon.com sites in many countries.
Our operations are organized into two segments: North America and International. See Note 13, Segment Information.
Reverse Stock Split
In June 2020, we effectuated a reverse stock split of our common stock at a ratio of 1-for-20. See Note 7, Stockholders' Equity and Compensation Arrangements, for additional information. As a result, the number of shares and income (loss) per share disclosed throughout this Quarterly Report on Form 10-Q have been retrospectively adjusted to reflect the reverse stock split.
COVID-19 Pandemic
Since March 2020, the COVID-19 pandemic has led to a significant decrease in consumer demand, a decrease in customer redemptions and elevated refund levels due to changes in consumer behavior and actions taken by governments to control the spread of COVID-19, including quarantines, travel restrictions, as well as business restrictions and shutdowns. The COVID-19 pandemic has had an adverse impact on our financial condition, results of operations and cash flows, which included impairments of our goodwill and long-lived assets in 2020. Recovery from the COVID-19 pandemic could be volatile and prolonged given the unprecedented and continuously evolving nature of the situation. We continue to monitor the impact of COVID-19 on our business.
Unaudited Interim Financial Information
We have prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the SEC for interim financial reporting. These condensed consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for a fair presentation of the condensed consolidated balance sheets, statements of operations and comprehensive income (loss), cash flows and stockholders' equity for the periods presented. These condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2020.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Groupon, Inc. and its wholly-owned subsidiaries, majority-owned subsidiaries over which we exercise control and variable interest entities for which we are the primary beneficiary. All intercompany accounts and transactions have been eliminated in consolidation. Outside stockholders' interests in subsidiaries are shown on the condensed consolidated financial statements as Noncontrolling interests. Investments in entities in which we do not have a controlling financial interest are accounted for at fair value, as available-for-sale securities or at cost adjusted for observable price changes and impairments, as appropriate.
10


GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Estimates in our financial statements include, but are not limited to, the following: variable consideration from unredeemed vouchers; income taxes; leases; initial valuation and subsequent impairment testing of goodwill, other intangible assets and long-lived assets; investments; receivables; customer refunds and other reserves; contingent liabilities; and the useful lives of property, equipment and software and intangible assets. Actual results could differ materially from those estimates.
Reclassifications
Certain reclassifications have been made to the condensed consolidated financial statements of prior periods to conform to the current period presentation.

Adoption of New Accounting Standards
We adopted the guidance in ASU 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes, on January 1, 2021. This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The adoption of ASU 2019-12 did not have a material impact on the condensed consolidated financial statements.
We adopted the guidance in ASU 2020-03, Codification Improvements to Financial Instruments, on January 1, 2021. This ASU amends a wide variety of Topics in the Codification, including revolving-debt arrangements and allowance for credit losses related to leases. The adoption of ASU 2020-03 did not have a material impact on the condensed consolidated financial statements.
We early adopted the guidance in ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, on January 1, 2021. The ASU removes the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion feature. Additionally, the ASU removes certain conditions for equity classification related to contracts in an entity’s own equity (e.g., warrants) and amends certain guidance related to the computation of earnings per share for convertible instruments and contracts in an entity’s own equity. As a result of adopting ASU 2020-06, we recorded a $67.0 million net reduction to additional paid-in capital, a $19.0 million increase to non-current liabilities and a $48.0 million reduction to our opening accumulated deficit as of January 1, 2021. See Note 5, Financing Arrangements, for additional information.
2. GOODWILL AND LONG-LIVED ASSETS
During the first quarter 2020, the significant deterioration in our financial performance due to the disruption in our operations from COVID-19 and the sustained decrease in our stock price required us to evaluate our goodwill and long-lived assets for impairment. In determining fair values for our reporting units, we used the discounted cash flow method and the market multiple valuation approach that use Level 3 inputs. For the three months ended March 31, 2020, we recognized $109.5 million of goodwill impairment and $22.4 million of long-lived asset impairment within our International segment related to our EMEA operations.
Future events and changing market conditions due to the impact of COVID-19 could require us to re-evaluate the estimates used in our fair value measurements, potentially resulting in additional impairment of long-lived assets or goodwill in future periods.
11


GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
The following table summarizes impairment for long-lived assets by asset type for the three months ended March 31, 2020 (in thousands):

Impairment
Property, equipment and software, net
Furniture and fixtures$413 
Leasehold improvements2,806 
Office equipment198 
Purchased software14 
Computer hardware2,842 
Right-of-use assets - finance leases, net
1,318 
Capitalized software304 
Internally-developed software2,988 
Total Property, equipment and software, net$10,883 
Right-of-use assets - operating leases, net10,494 
Intangible assets, net103 
Other non-current assets871 
Total long-lived assets$22,351 

The following table summarizes goodwill activity by segment for the three months ended March 31, 2021 (in thousands):
North AmericaInternationalConsolidated
Balance as of December 31, 2020$178,685 $36,014 $214,699 
Other (1)
 3,776 3,776 
Foreign currency translation (1,111)(1,111)
Balance as of March 31, 2021$178,685 $38,679 $217,364 
(1)Represents the reclassification between Right-of-use assets - operating leases, net and Goodwill due to an adjustment in the allocation of impairments recorded in 2020 between those two accounts.
The following table summarizes intangible assets as of March 31, 2021 and December 31, 2020 (in thousands):
March 31, 2021December 31, 2020
Gross Carrying ValueAccumulated AmortizationNet Carrying ValueGross Carrying ValueAccumulated AmortizationNet Carrying Value
Merchant relationships$20,378 $10,187 $10,191 $20,208 $9,236 $10,972 
Trade names9,671 8,009 1,662 9,651 7,921 1,730 
Developed technology1,688 1,585 103 2,121 1,863 258 
Patents11,104 4,859 6,245 10,813 4,697 6,116 
Other intangible assets17,829 7,346 10,483 17,823 6,748 11,075 
Total$60,670 $31,986 $28,684 $60,616 $30,465 $30,151 
Amortization of intangible assets is computed using the straight-line method over their estimated useful lives, which range from 1 to 10 years. Amortization expense related to intangible assets was $2.3 million and $2.5 million for the three months ended March 31, 2021 and 2020. As of March 31, 2021, estimated future amortization expense related to intangible assets is as follows (in thousands):
12


GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

Remaining amounts in 2021$6,412 
20228,130 
20236,952 
20243,219 
20251,627 
Thereafter2,344 
Total$28,684 

3. INVESTMENTS
The following table summarizes investments as of March 31, 2021 and December 31, 2020 (dollars in thousands):
March 31, 2021Percent Ownership of Voting StockDecember 31, 2020Percent Ownership of Voting Stock
Other equity investments $36,008 1%to19%$37,671 1%to19%
Available-for-sale securities - redeemable preferred shares (1)
 19%to25% 19%to25%
Fair value option investments (1)
 10%to19% 10%to19%
Total investments$36,008 $37,671 
(1)We hold available-for-sale securities and fair value option investments in various entities that were written down to zero prior to December 31, 2020. During the first quarter 2020, we recognized a $1.4 million loss from changes in the fair value of our fair value option investments.
Other Equity Investments
Other equity investments represent equity investments without readily determinable fair values recorded at cost adjusted for observable price changes and impairments. During the first quarter 2020, we sold 50% of our shares in an other equity investment for total cash consideration of $34.0 million.
In addition, we recorded a $6.7 million impairment during the first quarter 2020 to an other equity investment as a result of revised cash flow projections and a deterioration in financial condition due to COVID-19. We did not recognize any impairments during the three months ended March 31, 2021.
4. SUPPLEMENTAL CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS INFORMATION
The following table summarizes other income (expense), net for the three months ended March 31, 2021 and 2020 (in thousands):
Three Months Ended March 31,
20212020
Interest income$1,155 $2,556 
Interest expense(5,116)(6,958)
Foreign currency gains (losses), net (1)
22,084 (6,496)
Impairment and other changes in fair value of investments (8,089)
Other income (expense), net$18,123 $(18,987)
(1)Foreign currency gains (losses), net for the three months ended March 31, 2021 includes a $32.2 million cumulative foreign currency translation adjustment gain that was reclassified into earnings as a result of the substantial liquidation of our subsidiary in Japan as part of our restructuring actions. Refer to Note 9, Restructuring and Related Charges, for additional information.

13


GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
The following table summarizes prepaid expenses and other current assets as of March 31, 2021 and December 31, 2020 (in thousands):
March 31, 2021December 31, 2020
Prepaid expenses$20,588 $18,038 
Income taxes receivable5,282 5,437 
Other15,391 16,966 
Total prepaid expenses and other current assets$41,261 $40,441 
The following table summarizes other non-current assets as of March 31, 2021 and December 31, 2020 (in thousands):
March 31, 2021December 31, 2020
Deferred income tax$11,438 $11,593 
Debt issue costs, net1,489 1,852 
Deferred contract acquisition costs5,957 5,315 
Deferred cloud implementation costs10,494 10,402 
Other4,936 5,165 
Total other non-current assets$34,314 $34,327 
The following table summarizes accrued merchant and supplier payables as of March 31, 2021 and December 31, 2020 (in thousands):
March 31, 2021December 31, 2020
Accrued merchant payables$280,298 $303,260 
Accrued supplier payables (1)
48,702 107,703 
Total accrued merchant and supplier payables$329,000 $410,963 
(1)Amounts include payables to suppliers of inventories and providers of shipping and fulfillment services.
The following table summarizes accrued expenses and other current liabilities as of March 31, 2021 and December 31, 2020 (in thousands):
March 31, 2021December 31, 2020
Refund reserve$35,740 $33,173 
Compensation and benefits60,685 54,958 
Accrued marketing14,589 15,299 
Restructuring-related liabilities17,620 13,746 
Customer credits62,824 61,006 
Income taxes payable6,975 7,862 
Deferred revenue8,857 11,223 
Deferred payroll taxes (1)
2,922 2,922 
Operating and finance lease obligations36,652 37,755 
Deferred cloud computing contract incentive3,000 3,000 
Other49,418 54,055 
Total accrued expenses and other current liabilities$299,282 $294,999 
(1)We have elected to defer certain payroll taxes under the Coronavirus Aid, Relief and Economic Security ("CARES") Act. These amounts are due by December 31, 2021.
14


GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
The following table summarizes other non-current liabilities as of March 31, 2021 and December 31, 2020 (in thousands):
March 31, 2021December 31, 2020
Contingent income tax liabilities$27,105 $25,593 
Finance lease obligations468 730 
Restructuring-related liabilities385 385 
Deferred income taxes3,474 3,170 
Deferred payroll taxes (1)
2,922 2,922 
Deferred cloud computing contract incentive3,500 4,250 
Other6,149 7,378 
Total other non-current liabilities$44,003 $44,428 
(1)We have elected to defer certain payroll taxes under the Coronavirus Aid, Relief, and Economic Security ("CARES") Act. These amounts are due by December 31, 2022.
5. FINANCING ARRANGEMENTS
Adoption of ASU 2020-06
On January 1, 2021, we early adopted ASU 2020-06 using the modified retrospective method. The ASU eliminates the requirement to separately recognize an equity component when accounting for convertible debt that may be cash-settled upon conversion or convertible instruments with a beneficial conversion feature. Additionally, the ASU removes certain conditions for equity classification related to contracts in an entity’s own equity (e.g., warrants) and amends certain guidance related to the computation of earnings per share for convertible instruments and contracts in an entity’s own equity.
Beginning January 1, 2021, our condensed consolidated financials are presented in accordance with ASU 2020-06, while prior period amounts are not adjusted and continue to be reported in accordance with our historical policies. The new guidance changes the accounting for our 3.25% Convertible Senior Notes, due 2022, as discussed below.
3.25% Convertible Senior Notes due 2022
In April 2016, we issued $250.0 million in aggregate principal amount of convertible senior notes (the "Atairos Notes") in a private placement to A-G Holdings, L.P. ("AGH"). Michael Angelakis, the chairman and chief executive officer of Atairos Group, Inc. ("Atairos"), joined our Board of Directors (the "Board") in connection with the issuance of the Atairos Notes. Atairos controls the voting power of AGH. The net proceeds from this offering were $243.2 million. The Atairos Notes bear interest at a rate of 3.25% per annum, payable annually in arrears on April 1 of each year. Each $1,000 of principal amount of the Atairos Notes initially is convertible into 9.25926 shares of common stock, which is equivalent to an initial conversion price of $108.00 per share, subject to adjustment upon the occurrence of specified events. Upon conversion, we can elect to settle the conversion value in cash, shares of our common stock, or any combination of cash and shares of our common stock. In May 2021, we entered into an agreement with AGH pursuant to which we will repurchase the Atairos Notes on or before May 14, 2021. For additional information, see Part II, Item 5. Other Information.
Prior to the adoption of ASU 2020-06, we separated the Atairos Notes into their liability and equity components. The liability was initially calculated by measuring the fair value of a similar liability without an associated conversion feature. The difference between the principal amount of the Atairos Notes and the liability component was recognized in equity, effectively resulting in a debt discount. We incurred transaction costs of $6.8 million related to the issuance of the Atairos Notes. Transaction costs attributable to the liability component of $4.8 million were also recorded as a debt discount in the condensed consolidated balance sheets. The debt discount was amortized to interest expense over the term of the Atairos Notes. Together with the cash interest, this resulted in an effective interest rate of 9.75%. Transaction costs attributable to the equity component of $2.0 million were recorded in stockholders' equity as a reduction of the equity component.
Following the adoption of ASU 2020-06, the previously bifurcated equity component of our Atairos Notes was recombined with the liability component, resulting in a single liability-classified instrument. The carrying value of the Atairos Notes at transition was determined by recalculating the basis of the notes as if the conversion option had not been bifurcated at issuance. Transaction costs related to the issuance of the Atairos Notes that were allocated to the equity component were reclassified out of Additional paid-in-capital and the amortization and the related debt discount associated with these costs was recalculated through the transition date. The transaction costs continue to be recorded as a debt discount in the condensed consolidated balance sheets and are amortized to interest expense over the remaining term of the Atairos Notes. Together with the cash interest, this results in an effective interest rate of 3.76%. As a result of adopting ASU 2020-06, we recorded a $67.0 million net reduction to additional paid-in capital, $19.0 million increase to non-current liabilities and a $48.0 million reduction to our opening accumulated deficit as of January 1, 2021 related to the Atairos Notes. See Note 12, Income (Loss) Per Share, for additional information on the effect on diluted per-share amounts.
The carrying amount of the Atairos Notes consisted of the following as of March 31, 2021 and December 31, 2020 (in thousands):
March 31, 2021December 31, 2020
Liability component:
Principal amount$250,000 $250,000 
Less: debt discount - transaction costs(1,239)(1,459)
Less: debt discount - equity (19,051)
Net carrying amount of liability component$248,761 $229,490 
Net carrying amount of equity component$ $67,014 

We classified the fair value of the Atairos Notes as a Level 3 measurement due to the lack of observable market data over fair value inputs such as our stock price volatility over the term of the Atairos Notes and our cost of debt. The estimated fair value of the Atairos Notes as of March 31, 2021 and December 31, 2020 was $262.2 million and $263.3 million, and was determined using a lattice model.
As of March 31, 2021, the remaining term of the Atairos Notes is approximately 1 year. During the three months ended March 31, 2021 and 2020, we recognized interest costs on the Atairos Notes as follows (in thousands):
Three Months Ended March 31,
20212020
Contractual interest (3.25% of the principal amount per annum)
$2,032 $2,032 
Amortization of debt discount303 3,516 
Total $2,335 $5,548 
Note Hedges and Warrants
In May 2016, we purchased convertible note hedges with respect to our common stock for a cost of $59.1 million from certain bank counterparties. The convertible note hedges provide us with the right to purchase up to 2.3 million shares of our common stock at an initial strike price of $108.00 per share, which corresponds to the initial conversion price of the Atairos Notes, and are exercisable upon conversion of the Atairos Notes. The convertible note hedges are intended to reduce the potential economic dilution upon conversion of the Atairos Notes. The convertible note hedges are separate transactions and are not part of the terms of the Atairos Notes. Holders of the Atairos Notes do not have any rights with respect to the convertible note hedges.
In May 2016, we also sold warrants for total cash proceeds of $35.5 million to certain bank counterparties. The warrants provide the counterparties with the right to purchase up to 2.3 million shares of our common stock at a strike price of $170.00 per share. The warrants expire on various dates between July 1, 2022 and August 26, 2022 and are exercisable on their expiration dates. The warrants are separate transactions and are not part of the
terms of the Atairos Notes or convertible note hedges. Holders of the Atairos Notes and convertible note hedges do not have any rights with respect to the warrants.
The amounts paid and received for the convertible note hedges and warrants were recorded in additional paid-in capital in the condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020. The convertible note hedges and warrants are not remeasured as long as they continue to meet the conditions for equity classification. The amounts paid for the convertible note hedges are tax deductible over the term of the Atairos Notes, while the proceeds received from the warrants are not taxable. In connection with the repurchase of the Atairos Notes, we intend to unwind the related note hedge and warrants.
Under the if-converted method, the shares of common stock underlying the conversion option in the Atairos Notes are included in the diluted earnings per share denominator and the interest expense and amortization of the transaction costs on the Atairos Notes, net of tax, is added to the numerator. Taken together, the purchase of the convertible note hedges and sale of warrants are intended to offset any actual dilution from the conversion of the Atairos Notes and to effectively increase the overall conversion price from $108.00 to $170.00 per share.
1.125% Convertible Senior Notes due 2026
In March 2021, we issued $200.0 million aggregate principal amount of convertible senior notes due 2026 (the "2026 Notes") in a private offering to qualified institutional buyers. The net proceeds from this offering were $193.0 million. The 2026 Notes bear interest at a rate of 1.125% per annum, payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2021. The 2026 Notes will mature on March 15, 2026, subject to earlier repurchase, redemption or conversion.
We used $23.8 million of the net proceeds from the offering to pay the cost of certain related capped call transactions, and intend to use the remaining net proceeds, together with cash on hand, to repay or repurchase, the Atairos Notes. As of March 31, 2021, the remaining net proceeds from this offering and related transactions of $169.8 million is presented in Restricted cash in our condensed consolidated balance sheets. The use of the net proceeds from the offering is subject to the terms of our second amendment to the revolving credit agreement, as described in the Revolving Credit Agreement section below.
In April 2021, we issued an additional $30.0 million aggregate principal amount of 2026 Notes following the exercise by the initial purchasers of their option to purchase additional 2026 Notes, and we entered into additional capped call transactions in connection therewith. The net proceeds from the sale of the additional 2026 Notes were $29.1 million. We used $3.6 million of the net proceeds to pay the cost of the additional capped call transactions and intend to use the remainder of the net proceeds from the over-allotment option to repay or repurchase the Atairos Notes.
Each $1,000 of principal amount of the 2026 Notes initially is convertible into 14.6800 shares of common stock, which is equivalent to an initial conversion price of $68.12 per share, subject to adjustment upon the occurrence of specified events. In addition, upon the occurrence of a make-whole fundamental change (as defined in the Indenture governing the 2026 Notes) or if we issue a notice of redemption, we will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2026 Notes in connection with such make-whole fundamental change or redemption.
Upon conversion, we can elect to settle the conversion value in cash, shares of our common stock, or any combination of cash and shares of our common stock. Subject to certain conditions, holders of the 2026 Notes may convert the 2026 Notes at their option at any time until the close of business on the scheduled trading day immediately preceding the maturity date. In addition, if specified corporate events occur prior to the maturity date, we may be required to increase the conversion rate for holders who elect to convert based on the effective date of such event and the applicable stock price attributable to the event. Based on the closing price of the common stock of $50.55 as of March 31, 2021, the if-converted value of the 2026 Notes was less than the principal amount.
Certain conditions apply to the conversion by holders and redemption by us of the 2026 Notes, which are set forth in the Indenture governing the 2026 Notes. In addition, upon the occurrence of a fundamental change (as defined in the Indenture) prior to the maturity date, holders may require us to repurchase all or a portion of the 2026 Notes for cash.
The 2026 Notes are our senior unsecured obligations and will rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the 2026 Notes; equal in right of payment to any of our unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities of current or future subsidiaries (including trade payables).
The Indenture includes customary events of default. If an event of default, as defined in the Indenture, occurs and is continuing, the principal amount of the 2026 Notes and any accrued and unpaid interest may be declared immediately due and payable. In the case of bankruptcy or insolvency, the principal amount of the 2026 Notes and any accrued and unpaid interest would automatically become immediately due and payable.
We account for the 2026 Notes as a single liability-classified instrument measured at amortized cost due to the adoption of ASU 2020-06. The carrying value of the 2026 Notes was determined by deducting transaction costs incurred in connection with the issuance of the 2026 Notes of $6.8 million from the principal amount. Those transaction costs were recorded as a debt discount in the condensed consolidated balance sheets and are amortized to interest expense. Together with the cash interest, this results in an effective interest rate of 1.84% over the term of the 2026 Notes. We have presented the 2026 Notes in non-current liabilities in the accompanying condensed consolidated balance sheets.
The carrying amount of the 2026 Notes consisted of the following as of March 31, 2021 (in thousands):
March 31, 2021
Principal amount$200,000 
Less: debt discount(6,765)
Net carrying amount of liability$193,235 
We classified the fair value of the 2026 Notes as a Level 3 measurement due to the lack of observable market data over fair value inputs such as our stock price volatility over the term of the 2026 Notes and our cost of debt. The estimated fair value of the 2026 Notes as of March 31, 2021 was $205.4 million and was determined using a lattice model.
Capped Call Transactions
In March and April 2021, in connection with the offering of the 2026 Notes, we entered into privately negotiated capped call transactions with each of Barclays Bank PLC, BNP Paribas and Mizuho Markets Americas LLC. The capped call transactions cover, subject to customary adjustments, the number of shares of common stock initially underlying the 2026 Notes. The capped call transactions are expected generally to reduce potential dilution to our common stock upon any conversion of the 2026 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, with such reduction and/or offset subject to a cap initially equal to $104.80 (which represents a premium of 100% over the last reported sale price of our common stock on The Nasdaq Global Select Market on March 22, 2021), subject to certain adjustments under the terms of the capped call transactions.
The capped call transactions are accounted for as freestanding derivatives and recorded at the initial fair value in additional paid-in-capital in the condensed consolidated balance sheets with no recorded subsequent change to fair value as long as they meet the criteria for equity classification.
Under the if-converted method, the shares of common stock underlying the conversion option in the 2026 Notes are included in the diluted earnings per share denominator and the interest expense and amortization of the debt discount on the 2026 Notes, net of tax, is added to the numerator. However, upon conversion, there will be minimized economic dilution from the 2026 Notes, as exercise of the capped call transactions reduces dilution
from the 2026 Notes that would have otherwise occurred when the price of our common stock exceeds the conversion price. The capped call transactions are intended to offset actual dilution from the conversion of the 2026 Notes and to effectively increase the overall conversion price from $68.12 to $104.80 per share.
Revolving Credit Agreement
In May 2019, we entered into a second amended and restated senior secured revolving credit agreement which provided for aggregate principal borrowings of up to $400.0 million (prior to the Amendments described below) and matures in May 2024.
In July 2020, we entered into an amendment to the revolving credit agreement (the "First Amendment") in order to provide us with, among other things, operational flexibility and covenant relief through the end of the first quarter of 2021 in light of the ongoing impacts of COVID-19 on our business. In addition to the covenant relief described below, the First Amendment permanently reduces borrowing capacity under our senior secured revolving credit facility from $400.0 million to $225.0 million.
In March 2021, we entered into a second amendment to the revolving credit agreement (the "Second Amendment" and the revolving credit agreement as amended, the "Amended Credit Agreement") to extend the suspension period provided by the First Amendment through the fourth quarter 2021 (the "Suspension Period"), amend and remove certain financial covenants applicable after the amended Suspension Period ends and permit the issuance of the 2026 Notes and related capped call transactions. The Second Amendment requires that the net proceeds from the 2026 Notes be used to repay or repurchase the Atairos Notes.
We deferred debt issuance costs of $3.5 million as a result of entering into the Amended Credit Agreement. Deferred debt issuance costs are included within Other non-current assets on the condensed consolidated balance sheets as of March 31, 2021 and are amortized to interest expense over the term of the respective agreement.
Pursuant to the Amendments, during the Suspension Period, we will be exempt from certain covenant restrictions, namely the requirements to maintain a maximum funded indebtedness to EBITDA ratio, and a minimum liquidity balance (including any undrawn amounts under the credit facility) of at least 70% of our accrued merchant and supplier payables balance (which covenant will apply again upon termination of the Suspension Period). Additionally, the Amendments provide that, during the Suspension Period, we will be required to maintain specified minimum quarterly EBITDA levels and to maintain a monthly minimum liquidity balance (including any undrawn amounts under the credit facility) of at least 100% of our accrued merchant and supplier payables balance for such month plus $50.0 million. The Second Amendment also permanently removes requirements (which previously only applied after the Suspension Period) that we maintain (i) a maximum senior secured indebtedness to EBITDA ratio and (ii) unrestricted cash of not less than $250 million. Finally, the Second Amendment changes the requirement to maintain a minimum fixed charge coverage ratio (which requirement applies only after the Suspension Period ends) to a requirement to maintain a minimum interest coverage ratio.
In addition, under the Amended Credit Agreement, we are subject to various covenants, including customary restrictive covenants that limit our ability to, among other things: incur additional indebtedness; make dividend and other restricted payments, including limiting the amount of our share repurchases; enter into sale and leaseback transactions; make investments, loans or advances; grant or incur liens on assets; sell assets; engage in mergers, consolidations, liquidations or dissolutions; and engage in transactions with related parties and other affiliates. The Amendments further restrict certain of these negative covenants during the Suspension Period, including our ability to make share repurchases, acquisitions, investments and to incur additional indebtedness and liens.
Non-compliance with the covenants under the Amended Credit Agreement may result in termination of the commitments thereunder and any then outstanding borrowings may be declared due and payable immediately. We have the right to terminate the Amended Credit Agreement or reduce the available commitments at any time.
The Amendments also increased interest rates through the end of the Suspension Period, raising the alternative base rate and Canadian prime spreads to 1.50%, the fixed rate spreads to 2.50% and the commitment fee to 0.4% on the daily amount of the unused commitments under the Amended Credit Agreement. Following the Suspension Period, the applicable spread and commitment fee will revert to pre-Amendment levels, which provides for (a) interest at a rate per annum equal to (i) an adjusted LIBO rate or (ii) a customary base rate (with loans denominated in certain currencies bearing interest at rates specific to such currencies) plus an additional margin ranging between 0.50% and 2.00% and (b) commitment fees ranging from 0.25% to 0.35% on the daily amount of unused commitments. The Amended Credit Agreement also provides for the issuance of up to $75.0 million in letters of credit, provided that the sum of outstanding borrowings and letters of credit do not exceed the maximum funding commitment of $225.0 million.
The Amended Credit Agreement is secured by substantially all of our tangible and intangible assets, including a pledge of 100% of the outstanding capital stock of substantially all of our direct and indirect domestic subsidiaries and 65% of the shares or equity interests of first-tier foreign subsidiaries and each U.S. entity whose assets substantially consist of capital stock and/or intercompany debt of one or more foreign subsidiaries, subject to certain exceptions. Certain of our domestic and foreign subsidiaries are guarantors under the Amended Credit Agreement.
We had $100.0 million of outstanding borrowings and $23.1 million of outstanding letters of credit as of March 31, 2021, and $200.0 million of outstanding borrowings and $20.6 million of outstanding letters of credit as of December 31, 2020 under the Amended Credit Agreement.
6. COMMITMENTS AND CONTINGENCIES
Our contractual obligations and commitments and future operating income under our operating subleases as of March 31, 2021 and through the date of this report, did not materially change from the amounts set forth in our 2020 Annual Report on Form 10-K.
Legal Matters and Other Contingencies
From time to time, we are party to various legal proceedings incident to the operation of our business. For example, we currently are involved in proceedings brought by merchants, employment and related matters, intellectual property infringement suits, customer lawsuits, stockholder claims relating to U.S. securities law, consumer class actions and suits alleging, among other things, violations of state consumer protection or privacy laws.
On April 28, 2020, an individual plaintiff filed a securities fraud class action complaint in the United States District Court for the Northern District of Illinois, and in July 2020, another individual was appointed as lead plaintiff. The lawsuit covers the time period from July 30, 2019 through February 18, 2020. The lead plaintiff alleges that Groupon and certain of its officers made materially false and/or misleading statements or omissions regarding its business, operations and prospects, specifically as it relates to reiterating its full year guidance on November 4, 2019 and the Groupon Select program. Groupon filed a motion to dismiss the complaint and, on April 28, 2021, the Court granted this motion and dismissed the complaint without prejudice. The Court provided the plaintiff with the opportunity to file a motion to seek leave to file an amended complaint. It set a deadline of May 19, 2021 for plaintiff to file this motion. We intend to continue to vigorously defend the case, which we believe to be without merit.
In addition, third parties have from time to time claimed, and others may claim in the future, that we have infringed their intellectual property rights. We are subject to intellectual property disputes, including patent infringement claims, and expect that we will continue to be subject to intellectual property infringement claims as our services expand in scope and complexity. In the past, we have litigated such claims, and we are presently involved in several patent infringement and other intellectual property-related claims, including pending litigation or trademark disputes relating to, for example, our Goods category, some of which could involve potentially substantial claims for damages or injunctive relief. We may also become more vulnerable to third-party claims as laws such as the Digital Millennium Copyright Act are interpreted by the courts, and we become subject to laws in jurisdictions where the underlying laws with respect to the potential liability of online intermediaries are either unclear or less favorable. We believe that additional lawsuits alleging that we have violated patent, copyright or
trademark laws may be filed against us. Intellectual property claims, whether meritorious or not, are time consuming and often costly to resolve, could require expensive changes in our methods of doing business or the goods we sell, or could require us to enter into costly royalty or licensing agreements.
We also are subject to consumer claims or lawsuits relating to alleged violations of consumer protection or privacy rights and statutes, some of which could involve potentially substantial claims for damages, including statutory or punitive damages. Consumer and privacy related claims or lawsuits, whether meritorious or not, could be time consuming, result in costly litigation, damage awards, fines and penalties, injunctive relief or increased costs of doing business through adverse judgment or settlement, or require us to change our business practices, sometimes in expensive ways.
We are also subject to, or in the future may become subject to, a variety of regulatory inquiries, audits, and investigations across the jurisdictions where we conduct our business, including, for example, inquiries related to consumer protection, employment matters and/or hiring practices, marketing practices, tax, unclaimed property and privacy rules and regulations. Any regulatory actions against us, whether meritorious or not, could be time consuming, result in costly litigation, damage awards, fines and penalties, injunctive relief or increased costs of doing business through adverse judgment or settlement, require us to change our business practices in expensive ways, require significant amounts of management time, result in the diversion of significant operational resources, materially damage our brand or reputation, or otherwise harm our business.
We establish an accrued liability for loss contingencies related to legal and regulatory matters when the loss is both probable and reasonably estimable. Those accruals represent management's best estimate of probable losses and, in such cases, there may be an exposure to loss in excess of the amounts accrued. For certain of the matters described above, there are inherent and significant uncertainties based on, among other factors, the stage of the proceedings, developments in the applicable facts of law, or the lack of a specific damage claim. However, we believe that the amount of reasonably possible losses in excess of the amounts accrued for those matters would not have a material adverse effect on our business, condensed consolidated financial position, results of operations or cash flows. Our accrued liabilities for loss contingencies related to legal and regulatory matters may change in the future as a result of new developments, including, but not limited to, the occurrence of new legal matters, changes in the law or regulatory environment, adverse or favorable rulings, newly discovered facts relevant to the matter, or changes in the strategy for the matter. Regardless of the outcome, litigation and other regulatory matters can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Indemnifications
In connection with the disposition of our operations in Latin America in 2017, we recorded $5.4 million in indemnification liabilities for certain tax and other matters upon the closing of the transactions as an adjustment to the net loss on the dispositions within discontinued operations at their fair value. We estimated the indemnification liabilities using a probability-weighted expected cash flow approach. Our remaining indemnification liabilities were $2.8 million as of March 31, 2021. We estimate that the total amount of obligations that are reasonably possible to arise under the indemnifications in excess of amounts accrued as of March 31, 2021 is approximately $11.7 million.
In the normal course of business to facilitate transactions related to our operations, we indemnify certain parties, including employees, lessors, service providers, merchants, and counterparties to investment agreements and asset and stock purchase agreements with respect to various matters. We have agreed to hold certain parties harmless against losses arising from a breach of representations or covenants, or other claims made against those parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. We are also subject to increased exposure to various claims as a result of our divestitures and acquisitions, particularly in cases where we are entering into new businesses in connection with such acquisitions. We may also become more vulnerable to claims as we expand the range and scope of our services and are subject to laws in jurisdictions where the underlying laws with respect to potential liability are either unclear or less favorable. In addition, we have entered into indemnification agreements with our officers, directors and underwriters, and our bylaws contain similar indemnification obligations that cover officers, directors, employees and other agents. 
Except as noted above, it is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, any payments that we have made under these agreements have not had a material impact on our operating results, financial position or cash flows.
7. STOCKHOLDERS' EQUITY AND COMPENSATION ARRANGEMENTS
Reverse Stock Split
On June 9, 2020, our stockholders approved amendments to our Restated Certificate of Incorporation to effect a reverse stock split of our shares of common stock, and our Board approved a final reverse stock split ratio of 1-for-20 and a corresponding reduction in the number of authorized shares of our common stock. The reverse stock split became effective on June 10, 2020. Accordingly, the number of shares, equity awards, and income (loss) per share disclosed throughout this Quarterly Report on Form 10-Q have been retrospectively adjusted to reflect the reverse stock split for all prior periods presented.
Common Stock
Pursuant to our restated certificate of incorporation, as of March 31, 2021, the Board had the authority to issue up to a total of 100,500,000 shares of common stock. Each holder of common stock is entitled to one vote per share on any matter that is submitted to a vote of stockholders. In addition, holders of our common stock will vote as a single class of stock on any matter that is submitted to a vote of stockholders.
Share Repurchase Program
In May 2018, the Board authorized us to repurchase up to $300.0 million of our common stock under our share repurchase program. During the three months ended March 31, 2021 and 2020, we did not purchase any shares under the program. As of March 31, 2021, up to $245.0 million of common stock remained available for purchase under our program. The timing and amount of share repurchases, if any, will be determined based on market conditions, limitations under the Amended Credit Agreement, share price, available cash and other factors, and the share repurchase program may be terminated at any time.
Groupon, Inc. Stock Plans
The Groupon, Inc. Stock Plans (the "Plans") are administered by the Compensation Committee of the Board (the "Compensation Committee"). As of March 31, 2021, 3,212,132 shares of common stock were available for future issuance under the Plans.
The stock-based compensation expense related to stock awards issued under the Plans are presented within the following line items of the condensed consolidated statements of operations for the three months ended March 31, 2021 and 2020 (in thousands):

Three Months Ended March 31,
20212020
Cost of revenue $171 $259 
Marketing135 874 
Selling, general and administrative6,873 12,882 
Total stock-based compensation expense $7,179 $14,015 
We capitalized $0.9 million and $1.1 million of stock-based compensation for the three months ended March 31, 2021 and 2020 in connection with internally-developed software and cloud computing arrangements.
15


GROUPON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Employee Stock Purchase Plan
The Groupon, Inc. 2012 Employee Stock Purchase Plan, as amended, ("ESPP") authorizes us to grant up to 1,000,000 shares of common stock under that plan as of March 31, 2021. For the three months ended March 31, 2021 and 2020, 23,418 and 28,621 shares of common stock were issued under the ESPP.
Restricted Stock Units
The restricted stock units granted under the Plans generally have vesting periods between one and four years and are amortized on a straight-line basis over their requisite service period.
The table below summarizes restricted stock unit activity under the Plans for the three months ended March 31, 2021:
Restricted Stock UnitsWeighted-Average Grant Date Fair Value (per unit)
Unvested at December 31, 20201,853,007 $