Business Wire | Aug 5, 2021 04:05PM EDT

Yelp Reports Second Quarter 2021 Financial Results

Aug. 05, 2021

SAN FRANCISCO--(BUSINESS WIRE)--Aug. 05, 2021--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, 2021 in the Q2 2021 Shareholder Letter available on its Investor Relations website at www.yelp-ir.com.

"The Yelp of 2021 looks very different than it did when we began implementing our strategic initiatives in 2019, as we continue to connect consumers with local businesses through trusted content and reviews," said Jeremy Stoppelman, Yelp co-founder and CEO. "We elevated the pace of product innovation, and made significant progress on our plan to drive advertising revenue growth from our Services categories as well as our Self-serve and Multi-location channels. This consistent execution of our multi-year strategy has transformed Yelp into a structurally stronger business."

"Our strong second quarter results give us the confidence to raise our full-year outlook," said David Schwarzbach, Yelp's CFO. "We achieved 52% year-over-year revenue growth and record Adjusted EBITDA, even as we invested behind our initiatives. We continue to see a broad set of opportunities to drive significant returns and shareholder value in the long term."

____________________^1 Yelp has not reconciled its Adjusted EBITDA outlook to GAAP Net income(loss) because it does not provide an outlook for GAAP Net income (loss) due tothe uncertainty and potential variability of Other income, net and Provisionfor (benefit from) income taxes, which are reconciling items between AdjustedEBITDA and GAAP Net income (loss). Because Yelp cannot reasonably predict suchitems, a reconciliation of the non-GAAP financial measure outlook to thecorresponding GAAP measure is not available without unreasonable effort. Wecaution, however, that such items could have a significant impact on thecalculation of GAAP Net income (loss). For more information regarding thenon-GAAP financial measures discussed in this release, please see "Non-GAAPFinancial Measures" below.

Quarterly Conference Call

Yelp will host a live Q&A session today at 2:00 p.m. Pacific Time to discuss the second quarter financial results and outlook for the third 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 and opportunities to drive significant returns and shareholder value in the long term, 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 continue to face operating restrictions in connection with the COVID-19 pandemic and other constraints; * 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; and * Yelp's ability to generate and maintain sufficient high-quality content from its users.

Factors that could cause or contribute to such differences also include, but are not limited to, those factors that could affect Yelp's business, operating results and stock price included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Yelp's most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q at www.yelp-ir.com or the SEC's website at www.sec.gov.

YELP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

June 30, December 31, 2021 2020

Assets

Current assets:

Cash and cash equivalents $ 558,227 $ 595,875

Accounts receivable, net 101,542 88,400

Prepaid expenses and other current assets 29,413 28,450

Total current assets 689,182 712,725

Property, equipment and software, net 92,627 101,718

Operating lease right-of-use assets 143,617 168,209

Goodwill 107,630 109,261

Intangibles, net 12,095 13,521

Restricted cash 1,027 665

Other non-current assets 59,066 48,848

Total assets $ 1,105,244 $ 1,154,947



Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued liabilities $ 106,190 $ 87,760

Operating lease liabilities - current 47,858 51,161

Deferred revenue 5,175 4,109

Total current liabilities 159,223 143,030

Operating lease liabilities - long-term 134,448 148,935

Other long-term liabilities 8,109 8,448

Total liabilities 301,780 300,413



Stockholders' equity:

Common stock - -

Additional paid-in capital 1,464,490 1,398,248

Treasury stock (4,250 ) (2,964 )

Accumulated other comprehensive loss (8,378 ) (6,807 )

Accumulated deficit (648,398 ) (533,943 )

Total stockholders' equity 803,464 854,534

Total liabilities and stockholders' equity $ 1,105,244 $ 1,154,947

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended

June 30,

Six Months Ended

June 30,

2021

2020

2021

2020

Net revenue

$

257,188

$

169,030

$

489,284

$

418,931

Costs and expenses:

Cost of revenue (1)

17,993

11,825

32,867

28,672

Sales and marketing (1)

113,641

96,289

226,550

233,586

Product development (1)

68,695

53,969

136,687

121,082

General and administrative (1)

45,095

26,402

76,956

69,938

Depreciation and amortization

12,833

12,582

25,916

24,940

Restructuring

12

3,312

32

3,312

Total costs and expenses

258,269

204,379

499,008

481,530

Loss from operations

(1,081

)

(35,349

)

(9,724

)

(62,599

)

Other income, net

542

495

1,247

2,878

Loss before income taxes

(539

)

(34,854

)

(8,477

)

(59,721

)

Benefit from income taxes

(4,751

)

(10,864

)

(6,893

)

(20,228

)

Net income (loss) attributable to common stockholders

$

4,212

$

(23,990

)

$

(1,584

)

$

(39,493

)

Net income (loss) per share attributable to common stockholders

Basic

$

0.06

$

(0.33

)

$

(0.02

)

$

(0.55

)

Diluted

$

0.05

$

(0.33

)

$

(0.02

)

$

(0.55

)

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

Basic

74,807

72,413

75,025

71,980

Diluted

78,983

72,413

75,025

71,980

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

Three Months Ended

June 30,

Six Months Ended

June 30,

2021

2020

2021

2020

Cost of revenue

$

1,094

$

943

$

2,202

$

1,986

Sales and marketing

8,441

7,302

16,838

14,998

Product development

20,674

16,827

41,427

34,582

General and administrative

10,650

5,513

19,637

10,769

Total stock-based compensation

$

40,859

$

30,585

$

80,104

$

62,335

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

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

2021 2020 2021 2020

Net revenue $ 257,188 $ 169,030 $ 489,284 $ 418,931



Costs and expenses:

Cost of revenue ^ 17,993 11,825 32,867 28,672 (1)

Sales and 113,641 96,289 226,550 233,586 marketing ^(1)

Product 68,695 53,969 136,687 121,082 development ^(1)

General andadministrative^ 45,095 26,402 76,956 69,938 (1)

Depreciation and 12,833 12,582 25,916 24,940 amortization

Restructuring 12 3,312 32 3,312

Total costs and 258,269 204,379 499,008 481,530 expenses

Loss from (1,081 ) (35,349 ) (9,724 ) (62,599 ) operations

Other income, net 542 495 1,247 2,878

Loss before (539 ) (34,854 ) (8,477 ) (59,721 ) income taxes

Benefit from (4,751 ) (10,864 ) (6,893 ) (20,228 ) income taxes

Net income (loss)attributable to $ 4,212 $ (23,990 ) $ (1,584 ) $ (39,493 ) commonstockholders



Net income (loss)per shareattributable to commonstockholders

Basic $ 0.06 $ (0.33 ) $ (0.02 ) $ (0.55 )

Diluted $ 0.05 $ (0.33 ) $ (0.02 ) $ (0.55 )



Weighted-averageshares used tocompute netincome (loss) per shareattributable tocommonstockholders

Basic 74,807 72,413 75,025 71,980

Diluted 78,983 72,413 75,025 71,980



^(1) Includesstock-basedcompensation expense asfollows:

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

2021 2020 2021 2020

Cost of revenue $ 1,094 $ 943 $ 2,202 $ 1,986

Sales and 8,441 7,302 16,838 14,998 marketing

Product 20,674 16,827 41,427 34,582 development

General and 10,650 5,513 19,637 10,769 administrative

Total stock-based $ 40,859 $ 30,585 $ 80,104 $ 62,335 compensation

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Six Months Ended

June 30,

2021

2020

Operating Activities

Net loss

$

(1,584

)

$

(39,493

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

25,916

24,940

Provision for doubtful accounts

7,240

21,897

Stock-based compensation

80,104

62,335

Noncash lease cost

20,712

20,984

Deferred income taxes

(7,755

)

(14,263

)

Asset impairment

11,164

-

Other adjustments, net

386

876

Changes in operating assets and liabilities:

Accounts receivable

(20,382

)

12,910

Prepaid expenses and other assets

88

604

Operating lease liabilities

(22,489

)

(22,520

)

Accounts payable, accrued liabilities and other liabilities

15,707

(11,021

)

Net cash provided by operating activities

109,107

57,249

Investing Activities

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

-

290,395

Purchases of marketable securities - held-to-maturity

-

(87,438

)

Maturities of marketable securities - held-to-maturity

-

93,200

Purchases of property, equipment and software

(13,286

)

(17,004

)

Other investing activities

90

328

Net cash (used in) provided by investing activities

(13,196

)

279,481

Financing Activities

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

15,587

10,808

Taxes paid related to the net share settlement of equity awards

(34,824

)

(12,557

)

Repurchases of common stock

(114,157

)

-

Other financing activities

-

(356

)

Net cash used in financing activities

(133,394

)

(2,105

)

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

197

(340

)

Change in cash, cash equivalents and restricted cash

(37,286

)

334,285

Cash, cash equivalents and restricted cash - Beginning of period

596,540

192,318

Cash, cash equivalents and restricted cash - End of period

$

559,254

$

526,603

Non-GAAP Financial Measures

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

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 impairment charges. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net revenue.

Adjusted EBITDA, which is not prepared under any comprehensive set of accounting rules or principles, has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of Yelp's financial results as reported in accordance with generally accepted accounting principles in the United States ("GAAP"). In particular, Adjusted EBITDA should not be viewed as a substitute 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 Adjusted EBITDA does not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements; * Adjusted EBITDA does not reflect changes in, or cash requirements for, Yelp's working capital needs; * Adjusted EBITDA does 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 impairment charges; and * other companies, including those in Yelp's industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider 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 Adjusted EBITDA, as well as the calculation of net income (loss) margin and Adjusted EBITDA margin, for each of the periods indicated (in thousands, except percentages; unaudited):

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Six Months Ended June 30,

2021 2020

Operating Activities

Net loss $ (1,584 ) $ (39,493 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 25,916 24,940

Provision for doubtful accounts 7,240 21,897

Stock-based compensation 80,104 62,335

Noncash lease cost 20,712 20,984

Deferred income taxes (7,755 ) (14,263 )

Asset impairment 11,164 -

Other adjustments, net 386 876

Changes in operating assets and liabilities:

Accounts receivable (20,382 ) 12,910

Prepaid expenses and other assets 88 604

Operating lease liabilities (22,489 ) (22,520 )

Accounts payable, accrued liabilities and other 15,707 (11,021 ) liabilities

Net cash provided by operating activities 109,107 57,249



Investing Activities

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

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

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

Purchases of property, equipment and software (13,286 ) (17,004 )

Other investing activities 90 328

Net cash (used in) provided by investing activities (13,196 ) 279,481



Financing Activities

Proceeds from issuance of common stock for employee 15,587 10,808 stock-based plans

Taxes paid related to the net share settlement of (34,824 ) (12,557 ) equity awards

Repurchases of common stock (114,157 ) -

Other financing activities - (356 )

Net cash used in financing activities (133,394 ) (2,105 )



Effect of exchange rate changes on cash, cash 197 (340 ) equivalents and restricted cash



Change in cash, cash equivalents and restricted cash (37,286 ) 334,285

Cash, cash equivalents and restricted cash - 596,540 192,318 Beginning of period

Cash, cash equivalents and restricted cash - End of $ 559,254 $ 526,603 period

Non-GAAP Financial Measures

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

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 impairment charges. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net revenue.

Adjusted EBITDA, which is not prepared under any comprehensive set of accounting rules or principles, has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of Yelp's financial results as reported in accordance with generally accepted accounting principles in the United States ("GAAP"). In particular, Adjusted EBITDA should not be viewed as a substitute 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 Adjusted EBITDA does not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements; * Adjusted EBITDA does not reflect changes in, or cash requirements for, Yelp's working capital needs; * Adjusted EBITDA does 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 impairment charges; and * other companies, including those in Yelp's industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider 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 Adjusted EBITDA, as well as the calculation of net income (loss) margin and Adjusted EBITDA margin, for each of the periods indicated (in thousands, except percentages; unaudited):

Three Months Ended

June 30, March 31, June 30, June 30, 2021 2021 2020 2019

Reconciliation of NetIncome (Loss) to Adjusted EBITDA:

Net income (loss) $ 4,212 $ (5,796 ) $ (23,990 ) $ 12,303

(Benefit from) provision (4,751 ) (2,142 ) (10,864 ) 3,785 for income taxes

Other income, net (542 ) (705 ) (495 ) (3,891 )

Depreciation and 12,833 13,083 12,582 12,240 amortization

Stock-based compensation 40,859 39,245 30,585 30,452

Restructuring 12 20 3,312 -

Asset impairment^(1) 11,164 - - -

Adjusted EBITDA $ 63,787 $ 43,705 $ 11,130 $ 54,889



Net revenue $ 257,188 $ 232,096 $ 169,030 $ 246,955

Net income (loss) margin 2 % (2 ) (14 ) 5 % % %

Adjusted EBITDA margin 25 % 19 % 7 % 22 %

(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/20210805005957/en/

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

CONTACT: Press Contact: Amber Albrecht press@yelp.com