Business Wire | Aug 6, 2020 04:05PM EDT

Yelp Reports Second Quarter 2020 Financial Results

Aug. 06, 2020

SAN FRANCISCO--(BUSINESS WIRE)--Aug. 06, 2020--Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today posted its financial results for the second quarter ended June 30, 2020 in the Q2 2020 Shareholder Letter available on its Investor Relations website at www.yelp-ir.com.

"Our second quarter results demonstrate the resilience of our business, in spite of the significant headwinds faced by local economies following the emergence of COVID-19," said Jeremy Stoppelman, Yelp's co-founder and chief executive officer. "Due to our disciplined actions on expenses, coupled with solid revenue performance, we added $35 million of Cash and cash equivalents to our Balance sheet. Though the pace of economic recovery remains uncertain and will not be uniform, we have confidence in our ability to execute in this environment and in the strength of our diversified business."

Quarterly Conference Call

Yelp will host a live Q&A session today at 2:00 p.m. Pacific Time to discuss the second quarter 2020 financial results. The webcast of the Q&A can be accessed on the Yelp Investor Relations website at www.yelp-ir.com. A replay of the webcast will be available at the same website.

About Yelp

Yelp Inc. (www.yelp.com) connects people with great local businesses. With unmatched local business information, photos, and review content, Yelp provides a one-stop local platform for consumers to discover, connect, and transact with local businesses of all sizes by making it easy to request a quote, join a waitlist, and make a reservation, appointment, or purchase. Yelp was founded in San Francisco in July 2004.

Yelp intends to make future announcements of material financial and other information through its Investor Relations website. Yelp will also, from time to time, disclose this information through press releases, filings with the Securities and Exchange Commission, conference calls, or webcasts, as required by applicable law.

Forward-Looking Statements

This press release contains forward-looking statements relating to, among other things, Yelp's future performance, including Yelp's ability to execute in the current environment as well as the strength and resilience of its business, that are based on its current expectations, forecasts, and assumptions that involve risks and uncertainties.

Yelp's actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Factors that could cause or contribute to such differences include, but are not limited to:

* the duration and magnitude of the COVID-19 pandemic and measures implemented to help control its spread; * the pace of reopening and recovery by local economies; * Yelp's ability to maintain and expand its base of advertisers, particularly as many businesses reduce spending on advertising in connection with COVID-19; * Yelp's limited operating history in an evolving industry; * Yelp's ability to generate sufficient revenue to regain profitability, particularly in light of the ongoing impact of COVID-19 and Yelp's relief initiatives; and * Yelp's ability to generate and maintain sufficient high-quality content from its users.

YELP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

June 30, December 31, 2020 2019

Assets

Current assets:

Cash and cash equivalents $ 525,693 $ 170,281

Short-term marketable securities - 242,000

Accounts receivable, net 72,025 106,832

Prepaid expenses and other current assets 19,675 14,196

Total current assets 617,393 533,309

Long-term marketable securities - 53,499

Property, equipment and software, net 106,732 110,949

Operating lease right-of-use assets 188,266 197,866

Goodwill 104,796 104,589

Intangibles, net 8,733 10,082

Restricted cash 910 22,037

Other non-current assets 46,655 38,369

Total assets $ 1,073,485 $ 1,070,700



Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued liabilities $ 60,206 $ 72,333

Operating lease liabilities - current 56,406 57,507

Deferred revenue 3,918 4,315

Total current liabilities 120,530 134,155

Operating lease liabilities - long-term 164,537 174,756

Other long-term liabilities 7,098 6,798

Total liabilities 292,165 315,709



Stockholders' equity:

Common stock - -

Additional paid-in capital 1,325,745 1,259,803

Accumulated other comprehensive loss (11,845 ) (11,759 )

Accumulated deficit (532,580 ) (493,053 )

Total stockholders' equity 781,320 754,991

Total liabilities and stockholders' equity $ 1,073,485 $ 1,070,700



YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended Six Months Ended June 30, June 30,

2020 2019 2020 2019

Net revenue $ 169,030 $ 246,955 $ 418,931 $ 482,897



Costs and expenses:

Cost of revenue ^(1) 11,825 14,975 28,672 29,240

Sales and marketing ^ 96,289 122,045 233,586 246,361 (1)

Product development ^ 53,969 54,566 121,082 112,641 (1)

General and 26,402 30,932 69,938 62,224 administrative^ (1)

Depreciation and 12,582 12,240 24,940 24,116 amortization

Restructuring 3,312 - 3,312 -

Total costs and 204,379 234,758 481,530 474,582 expenses

(Loss) income from (35,349 ) 12,197 (62,599 ) 8,315 operations

Other income, net 495 3,891 2,878 8,582

(Loss) income before (34,854 ) 16,088 (59,721 ) 16,897 income taxes

(Benefit from)provision for income (10,864 ) 3,785 (20,228 ) 3,229 taxes

Net (loss) incomeattributable to $ (23,990 ) $ 12,303 $ (39,493 ) $ 13,668 common stockholders



Net (loss) income pershare attributable to common stockholders

Basic $ (0.33 ) $ 0.16 $ (0.55 ) $ 0.17

Diluted $ (0.33 ) $ 0.16 $ (0.55 ) $ 0.17



Weighted-averageshares used tocompute net (loss) income per shareattributable tocommon stockholders

Basic 72,413 75,601 71,980 78,620

Diluted 72,413 78,530 71,980 81,742



^(1) Includesstock-based compensation expenseas follows:

Three Months Ended Six Months Ended June 30, June 30,

2020 2019 2020 2019

Cost of revenue $ 943 $ 1,118 $ 1,986 $ 2,361

Sales and marketing 7,302 7,774 14,998 15,461

Product development 16,827 15,247 34,582 31,322

General and 5,513 6,313 10,769 12,626 administrative

Total stock-based $ 30,585 $ 30,452 $ 62,335 $ 61,770 compensation



YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Six Months Ended June 30,

2020 2019

Operating Activities

Net (loss) income attributable to common $ (39,493 ) $ 13,668 stockholders

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization 24,940 24,116

Provision for doubtful accounts 21,897 8,716

Stock-based compensation 62,335 61,770

Noncash lease cost 20,984 21,433

Deferred income taxes (14,263 ) (1,912 )

Other adjustments, net 876 (1,632 )

Changes in operating assets and liabilities:

Accounts receivable 12,910 (17,143 )

Prepaid expenses and other assets 604 (5,335 )

Operating lease liabilities (22,520 ) (20,299 )

Accounts payable, accrued liabilities and other (11,021 ) 14,464 liabilities

Net cash provided by operating activities 57,249 97,846



Investing Activities

Sales and maturities of marketable securities - 290,395 - available-for-sale

Purchases of marketable securities - (87,438 ) (289,100 ) held-to-maturity

Maturities of marketable securities - 93,200 397,197 held-to-maturity

Release of escrow deposit - 28,750

Purchases of property, equipment and software (17,004 ) (19,214 )

Other investing activities 328 276

Net cash provided by investing activities 279,481 117,909



Financing Activities

Proceeds from issuance of common stock for 10,808 11,198 employee stock-based plans

Repurchases of common stock - (397,613 )

Taxes paid related to the net share settlement of (12,557 ) (22,605 ) equity awards

Other financing activities (356 ) -

Net cash used in financing activities (2,105 ) (409,020 )



Effect of exchange rate changes on cash, cash (340 ) (24 ) equivalents and restricted cash



Change in cash, cash equivalents and restricted 334,285 (193,289 ) cash

Cash, cash equivalents and restricted cash - 192,318 354,835 Beginning of period

Cash, cash equivalents and restricted cash - End $ 526,603 $ 161,546 of period

Non-GAAP Financial Measures

This press release and statements made during the above referenced webcast may include information relating to EBITDA, Adjusted EBITDA and Adjusted EBITDA margin, each of which the Securities and Exchange Commission has defined as a "non-GAAP financial measure."

We define EBITDA as net income (loss), adjusted to exclude: provision for (benefit from) income taxes; other income, net; and depreciation and amortization.

We define Adjusted EBITDA as net income (loss), adjusted to exclude: provision for (benefit from) income taxes; other income, net; depreciation and amortization; stock-based compensation expense; and, in certain periods, certain other income and expense items, such as restructuring costs. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net revenue.

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are key measures used by Yelp management and the board of directors to understand and evaluate core operating performance and trends, to prepare and approve Yelp's annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating EBITDA and Adjusted EBITDA can provide a useful measure for period-to-period comparisons of Yelp's primary business operations. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles in the United States ("GAAP").

EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of Yelp's financial results as reported under GAAP. Some of these limitations are:

* although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements; * EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, Yelp's working capital needs; * EBITDA and Adjusted EBITDA do not reflect the impact of the recording or release of valuation allowances or tax payments that may represent a reduction in cash available to Yelp; * Adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation; * Adjusted EBITDA does not take into account any income or costs that management determines are not indicative of ongoing operating performance, such as restructuring costs; and * other companies, including those in Yelp's industry, may calculate EBITDA and Adjusted EBITDA differently, which reduces their usefulness as comparative measures.

Because of these limitations, you should consider EBITDA, Adjusted EBITDA and Adjusted EBITDA margin alongside other financial performance measures, net income (loss) and Yelp's other GAAP results.

The following is a reconciliation of net income to EBITDA and Adjusted EBITDA (in thousands):

Three Months Ended Six Months Ended June 30, June 30,

2020 2019 2020 2019

Reconciliation ofNet (Loss) Income to EBITDA andAdjusted EBITDA:

Net (loss) income $ (23,990 ) $ 12,303 $ (39,493 ) $ 13,668

(Benefit from)provision for (10,864 ) 3,785 (20,228 ) 3,229 income taxes

Other income, net (495 ) (3,891 ) (2,878 ) (8,582 )

Depreciation and 12,582 12,240 24,940 24,116 amortization

EBITDA (22,767 ) 24,437 (37,659 ) 32,431

Stock-based 30,585 30,452 62,335 61,770 compensation

Restructuring 3,312 - 3,312 -

Adjusted EBITDA $ 11,130 $ 54,889 $ 27,988 $ 94,201



Net revenue $ 169,030 $ 246,955 $ 418,931 $ 482,897

Adjusted EBITDA 7 % 22 % 7 % 20 %margin

View source version on businesswire.com: https://www.businesswire.com/news/home/20200806005691/en/

CONTACT: Investor Relations Contact Kate Krieger ir@yelp.com