Business Wire | Feb 9, 2021 04:05PM EST

Yelp Reports Fourth Quarter and Full Year 2020 Financial Results

Feb. 09, 2021

SAN FRANCISCO--(BUSINESS WIRE)--Feb. 09, 2021--Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today posted its financial results for the fourth quarter and full year ended December 31, 2020 in the Q4 and Full Year 2020 Shareholder Letter available on its Investor Relations website at www.yelp-ir.com.

"2020 was a transformational year for Yelp," said Jeremy Stoppelman, Yelp's co-founder and chief executive officer. "We preserved our financial strength throughout the pandemic as we increased the pace of product innovation to help consumers and local businesses stay connected, while continuing to make significant progress on our long-term strategy. We increased monetization in Home & Local Services and completed the realignment of our go-to-market channels, driving more revenue growth through our Self-serve channel. As we look ahead, we are confident in our ability to return to sustainable revenue growth in 2021."

Quarterly Conference Call

Yelp will host a live Q&A session today at 2:00 p.m. Pacific Time to discuss the fourth quarter and full year 2020 financial results and outlook for the first quarter and full year of 2021. 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 return to sustainable growth in 2021, 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:

* fluctuations in the number of COVID-19 cases, the pace at which vaccinations are administered in the United States, and the timeframe for the lifting of COVID-19-related shelter-in-place orders and business restrictions; * the pace of reopening and recovery by local economies and economic recovery in the United States generally; * 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 ability to continue to operate effectively with a primarily remote work force and attract and retain key talent; * 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)

December 31, December 31, 2020 2019

Assets

Current assets:

Cash and cash equivalents $ 595,875 $ 170,281

Short-term marketable securities - 242,000

Accounts receivable, net 88,400 106,832

Prepaid expenses and other current assets 28,450 14,196

Total current assets 712,725 533,309

Long-term marketable securities - 53,499

Property, equipment and software, net 101,718 110,949

Operating lease right-of-use assets 168,209 197,866

Goodwill 109,261 104,589

Intangibles, net 13,521 10,082

Restricted cash 665 22,037

Other non-current assets 48,848 38,369

Total assets $ 1,154,947 $ 1,070,700



Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued liabilities $ 87,760 $ 72,333

Operating lease liabilities - current 51,161 57,507

Deferred revenue 4,109 4,315

Total current liabilities 143,030 134,155

Operating lease liabilities - long-term 148,935 174,756

Other long-term liabilities 8,448 6,798

Total liabilities 300,413 315,709



Stockholders' equity:

Common stock - -

Additional paid-in capital 1,398,248 1,259,803

Treasury stock (2,964 ) -

Accumulated other comprehensive loss (6,807 ) (11,759 )

Accumulated deficit (533,943 ) (493,053 )

Total stockholders' equity 854,534 754,991

Total liabilities and stockholders' equity $ 1,154,947 $ 1,070,700

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months EndedDecember 31,

Year EndedDecember 31,

2020

2019

2020

2019

Net revenue

$

233,195

$

268,823

$

872,933

$

1,014,194

Costs and expenses:

Cost of revenue(1)

15,321

16,656

57,186

62,410

Sales and marketing(1)

102,173

126,370

437,060

500,386

Product development(1)

58,457

61,138

232,561

230,440

General and administrative(1)

29,625

34,164

130,450

136,091

Depreciation and amortization

13,125

12,849

50,609

49,356

Restructuring

15

-

3,862

-

Total costs and expenses

218,716

251,177

911,728

978,683

Income (loss) from operations

14,479

17,646

(38,795

)

35,511

Other income, net

393

2,611

3,670

14,256

Income (loss) before income taxes

14,872

20,257

(35,125

)

49,767

(Benefit from) provision for income taxes

(6,217

)

3,105

(15,701

)

8,886

Net income (loss) attributable to common stockholders

$

21,089

$

17,152

$

(19,424

)

$

40,881

Net income (loss) per share attributable to common stockholders

Basic

$

0.28

$

0.24

$

(0.27

)

$

0.55

Diluted

$

0.27

$

0.24

$

(0.27

)

$

0.52

Weighted-average shares used to compute net income (loss) per share attributable to common stockholders

Basic

74,524

70,627

73,005

74,627

Diluted

76,971

72,987

73,005

77,969

(1) Includes stock-based compensation expense as follows:

Three Months EndedDecember 31,

Year EndedDecember 31,

2020

2019

2020

2019

Cost of revenue

$

949

$

1,119

$

3,784

$

4,535

Sales and marketing

7,476

7,524

29,670

30,668

Product development

17,489

16,861

67,622

63,433

General and administrative

6,070

5,001

23,498

22,876

Total stock-based compensation

$

31,984

$

30,505

$

124,574

$

121,512

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

Net revenue $ 233,195 $ 268,823 $ 872,933 $ 1,014,194



Costs and expenses:

Cost of revenue^(1) 15,321 16,656 57,186 62,410

Sales and marketing 102,173 126,370 437,060 500,386 ^(1)

Product development 58,457 61,138 232,561 230,440 ^(1)

General and 29,625 34,164 130,450 136,091 administrative^(1)

Depreciation and 13,125 12,849 50,609 49,356 amortization

Restructuring 15 - 3,862 -

Total costs and 218,716 251,177 911,728 978,683 expenses

Income (loss) from 14,479 17,646 (38,795 ) 35,511 operations

Other income, net 393 2,611 3,670 14,256

Income (loss) 14,872 20,257 (35,125 ) 49,767 before income taxes

(Benefit from)provision for (6,217 ) 3,105 (15,701 ) 8,886 income taxes

Net income (loss)attributable to $ 21,089 $ 17,152 $ (19,424 ) $ 40,881 common stockholders



Net income (loss)per share attributable tocommon stockholders

Basic $ 0.28 $ 0.24 $ (0.27 ) $ 0.55

Diluted $ 0.27 $ 0.24 $ (0.27 ) $ 0.52



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

Basic 74,524 70,627 73,005 74,627

Diluted 76,971 72,987 73,005 77,969



^(1) Includes stock-based compensation expense as follows:

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

Cost of revenue $ 949 $ 1,119 $ 3,784 $ 4,535

Sales and marketing 7,476 7,524 29,670 30,668

Product development 17,489 16,861 67,622 63,433

General and 6,070 5,001 23,498 22,876 administrative

Total stock-based $ 31,984 $ 30,505 $ 124,574 $ 121,512 compensation

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Year Ended December 31,

2020

2019

Operating Activities

Net (loss) income

$

(19,424

)

$

40,881

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

Depreciation and amortization

50,609

49,356

Provision for doubtful accounts

32,265

22,543

Stock-based compensation

124,574

121,512

Noncash lease cost

42,235

41,365

Deferred income taxes

(11,181

)

(2,799

)

Other adjustments, net

2,193

(2,997

)

Changes in operating assets and liabilities:

Accounts receivable

(13,833

)

(42,070

)

Prepaid expenses and other assets

164

(1,349

)

Operating lease liabilities

(46,283

)

(41,808

)

Accounts payable, accrued liabilities and other liabilities

15,382

20,148

Net cash provided by operating activities

176,701

204,782

Investing Activities

Sales and maturities of marketable securities - available-for-sale

290,395

-

Purchases of marketable securities - held-to-maturity

(87,438

)

(541,451

)

Maturities of marketable securities - held-to-maturity

93,200

674,097

Purchases of other investments

(10,000

)

-

Release of escrow deposit

-

28,750

Purchases of property, equipment and software

(32,002

)

(37,522

)

Purchase of intangible asset

(6,129

)

-

Other investing activities

333

461

Net cash provided by investing activities

248,359

124,335

Financing Activities

Proceeds from issuance of common stock for employee stock-based plans

27,382

32,263

Taxes paid related to the net share settlement of equity awards

(23,605

)

(42,771

)

Repurchases of common stock

(24,396

)

(481,011

)

Other financing activities

(433

)

-

Net cash used in financing activities

(21,052

)

(491,519

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

214

(115

)

Change in cash, cash equivalents and restricted cash

404,222

(162,517

)

Cash, cash equivalents and restricted cash - Beginning of period

192,318

354,835

Cash, cash equivalents and restricted cash - End of period

$

596,540

$

192,318

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 and fees related to shareholder activism. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net revenue.

Adjusted EBITDA and Adjusted EBITDA margin are key measures used by Yelp management and the board of directors to understand and evaluate 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 Adjusted EBITDA can provide a useful measure for period-to-period comparisons of Yelp's primary business operations. Accordingly, Yelp believes that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating its operating results in the same manner as its management and board of directors. Beginning in 2021, Yelp no longer considers EBITDA a key measure used by its management and the board of directors and will cease providing this amount going forward.

EBITDA and Adjusted EBITDA, which are not prepared under any comprehensive set of accounting rules or principles, have limitations as analytical tools and you should not consider them in isolation or as substitutes for analysis of Yelp's financial results as reported in accordance with generally accepted accounting principles in the United States ("GAAP"). In particular, EBITDA and Adjusted EBITDA should not be viewed as substitutes for, or superior to, net income (loss) prepared in accordance with GAAP as a measure of profitability or liquidity. 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 fees related to shareholder activism; 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 (loss) to EBITDA and Adjusted EBITDA (in thousands, except percentages; unaudited):

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Year Ended December 31,

2020 2019

Operating Activities

Net (loss) income $ (19,424 ) $ 40,881

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

Depreciation and amortization 50,609 49,356

Provision for doubtful accounts 32,265 22,543

Stock-based compensation 124,574 121,512

Noncash lease cost 42,235 41,365

Deferred income taxes (11,181 ) (2,799 )

Other adjustments, net 2,193 (2,997 )

Changes in operating assets and liabilities:

Accounts receivable (13,833 ) (42,070 )

Prepaid expenses and other assets 164 (1,349 )

Operating lease liabilities (46,283 ) (41,808 )

Accounts payable, accrued liabilities and other 15,382 20,148 liabilities

Net cash provided by operating activities 176,701 204,782



Investing Activities

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

Purchases of marketable securities - (87,438 ) (541,451 ) held-to-maturity

Maturities of marketable securities - 93,200 674,097 held-to-maturity

Purchases of other investments (10,000 ) -

Release of escrow deposit - 28,750

Purchases of property, equipment and software (32,002 ) (37,522 )

Purchase of intangible asset (6,129 ) -

Other investing activities 333 461

Net cash provided by investing activities 248,359 124,335



Financing Activities

Proceeds from issuance of common stock for 27,382 32,263 employee stock-based plans

Taxes paid related to the net share settlement of (23,605 ) (42,771 ) equity awards

Repurchases of common stock (24,396 ) (481,011 )

Other financing activities (433 ) -

Net cash used in financing activities (21,052 ) (491,519 )



Effect of exchange rate changes on cash, cash 214 (115 ) equivalents and restricted cash



Change in cash, cash equivalents and restricted 404,222 (162,517 ) cash

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

Cash, cash equivalents and restricted cash - End $ 596,540 $ 192,318 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 and fees related to shareholder activism. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net revenue.

Adjusted EBITDA and Adjusted EBITDA margin are key measures used by Yelp management and the board of directors to understand and evaluate 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 Adjusted EBITDA can provide a useful measure for period-to-period comparisons of Yelp's primary business operations. Accordingly, Yelp believes that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating its operating results in the same manner as its management and board of directors. Beginning in 2021, Yelp no longer considers EBITDA a key measure used by its management and the board of directors and will cease providing this amount going forward.

EBITDA and Adjusted EBITDA, which are not prepared under any comprehensive set of accounting rules or principles, have limitations as analytical tools and you should not consider them in isolation or as substitutes for analysis of Yelp's financial results as reported in accordance with generally accepted accounting principles in the United States ("GAAP"). In particular, EBITDA and Adjusted EBITDA should not be viewed as substitutes for, or superior to, net income (loss) prepared in accordance with GAAP as a measure of profitability or liquidity. 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 fees related to shareholder activism; 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 (loss) to EBITDA and Adjusted EBITDA (in thousands, except percentages; unaudited):

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

Reconciliationof Net Income(Loss) to EBITDA andAdjustedEBITDA:

Net income $ 21,089 $ 17,152 $ (19,424 ) $ 40,881 (loss)

(Benefit from)provision for (6,217 ) 3,105 (15,701 ) 8,886 income taxes

Other income, (393 ) (2,611 ) (3,670 ) (14,256 ) net

Depreciationand 13,125 12,849 50,609 49,356 amortization

EBITDA 27,604 30,495 11,814 84,867

Stock-based 31,984 30,505 124,574 121,512 compensation

Restructuring 15 - 3,862 -

Fees related toshareholder - - - 7,116 activism^(1)

Adjusted EBITDA $ 59,603 $ 61,000 $ 140,250 $ 213,495



Net revenue $ 233,195 $ 268,823 $ 872,933 $ 1,014,194

Adjusted EBITDA 26 % 23 % 16 % 21 %margin

(1)

Recorded within general and administrative expenses on our Condensed Consolidated Statements of Operations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210209006054/en/

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