Business Wire | Nov 4, 2021 04:05PM EDT

Yelp Reports Third Quarter 2021 Financial Results

Nov. 04, 2021

SAN FRANCISCO--(BUSINESS WIRE)--Nov. 04, 2021--Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today posted its financial results for the third quarter ended September 30, 2021 in the Q3 2021 Shareholder Letter available on its Investor Relations website at www.yelp-ir.com.

"In the third quarter, our teams continued to make progress on our strategic initiatives through an elevated pace of product innovation," said Jeremy Stoppelman, Yelp co-founder and CEO. "Net revenue matched our best quarterly performance ever, and for the fourth consecutive quarter we drove record revenue in our Services categories and Self-serve channel. These strong results are a testament to the consistent execution of our distributed teams who have remained focused on delivering more value to our advertisers, while connecting people with great local businesses through Yelp's trusted content."

"Even as we continued to increase our strategic investments in the third quarter, we delivered a 26% Adjusted EBITDA margin, reflecting our structurally more efficient business," said David Schwarzbach, Yelp's CFO. "While we expect the macro environment to continue to fluctuate in the short term, our investments aim to drive long-term sustainable growth at attractive margins."

^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 third quarter financial results and outlook for the fourth 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 short-term expectations for the macro environment and the ability of its strategic investments to drive long-term sustainable growth, 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 public health 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)

September 30, December 31, 2021 2020

Assets

Current assets:

Cash and cash equivalents $ 531,620 $ 595,875

Accounts receivable, net 105,843 88,400

Prepaid expenses and other current assets 29,643 28,450

Total current assets 667,106 712,725

Property, equipment and software, net 92,429 101,718

Operating lease right-of-use assets 140,758 168,209

Goodwill 106,500 109,261

Intangibles, net 11,384 13,521

Restricted cash 1,054 665

Other non-current assets 59,837 48,848

Total assets $ 1,079,068 $ 1,154,947



Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued liabilities $ 106,408 $ 87,760

Operating lease liabilities - current 39,625 51,161

Deferred revenue 4,499 4,109

Total current liabilities 150,532 143,030

Operating lease liabilities - long-term 138,431 148,935

Other long-term liabilities 8,282 8,448

Total liabilities 297,245 300,413



Stockholders' equity:

Common stock - -

Additional paid-in capital 1,489,862 1,398,248

Treasury stock (4,170 ) (2,964 )

Accumulated other comprehensive loss (9,781 ) (6,807 )

Accumulated deficit (694,088 ) (533,943 )

Total stockholders' equity 781,823 854,534

Total liabilities and stockholders' equity $ 1,079,068 $ 1,154,947

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2021

2020

2021

2020

Net revenue

$

269,155

$

220,807

$

758,439

$

639,738

Costs and expenses:

Cost of revenue (1)

21,185

13,193

54,052

41,865

Sales and marketing (1)

114,295

101,301

340,845

334,887

Product development (1)

69,402

53,022

206,089

174,104

General and administrative (1)

30,001

30,887

106,957

100,825

Depreciation and amortization

12,627

12,544

38,543

37,484

Restructuring

-

535

32

3,847

Total costs and expenses

247,510

211,482

746,518

693,012

Income (loss) from operations

21,645

9,325

11,921

(53,274

)

Other income, net

331

399

1,578

3,277

Income (loss) before income taxes

21,976

9,724

13,499

(49,997

)

Provision for (benefit from) income taxes

3,911

10,744

(2,982

)

(9,484

)

Net income (loss) attributable to common stockholders

$

18,065

$

(1,020

)

$

16,481

$

(40,513

)

Net income (loss) per share attributable to common stockholders

Basic

$

0.24

$

(0.01

)

$

0.22

$

(0.56

)

Diluted

$

0.23

$

(0.01

)

$

0.21

$

(0.56

)

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

Basic

73,904

73,514

74,647

72,495

Diluted

77,422

73,514

79,007

72,495

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

Three Months Ended

September 30,

Nine Months Ended

September 30,

2021

2020

2021

2020

Cost of revenue

$

1,071

$

849

$

3,273

$

2,835

Sales and marketing

7,794

7,196

24,632

22,194

Product development

20,380

15,551

61,807

50,133

General and administrative

7,197

6,659

26,834

17,428

Total stock-based compensation

$

36,442

$

30,255

$

116,546

$

92,590

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Net revenue $ 269,155 $ 220,807 $ 758,439 $ 639,738



Costs and expenses:

Cost of revenue ^(1) 21,185 13,193 54,052 41,865

Sales and marketing ^(1) 114,295 101,301 340,845 334,887

Product development ^(1) 69,402 53,022 206,089 174,104

General and 30,001 30,887 106,957 100,825 administrative^ (1)

Depreciation and 12,627 12,544 38,543 37,484 amortization

Restructuring - 535 32 3,847

Total costs and expenses 247,510 211,482 746,518 693,012

Income (loss) from 21,645 9,325 11,921 (53,274 )operations

Other income, net 331 399 1,578 3,277

Income (loss) before 21,976 9,724 13,499 (49,997 )income taxes

Provision for (benefit 3,911 10,744 (2,982 ) (9,484 )from) income taxes

Net income (loss)attributable to common $ 18,065 $ (1,020 ) $ 16,481 $ (40,513 )stockholders



Net income (loss) pershare attributable to common stockholders

Basic $ 0.24 $ (0.01 ) $ 0.22 $ (0.56 )

Diluted $ 0.23 $ (0.01 ) $ 0.21 $ (0.56 )



Weighted-average sharesused to compute netincome (loss) per share attributable to commonstockholders

Basic 73,904 73,514 74,647 72,495

Diluted 77,422 73,514 79,007 72,495



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

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Cost of revenue $ 1,071 $ 849 $ 3,273 $ 2,835

Sales and marketing 7,794 7,196 24,632 22,194

Product development 20,380 15,551 61,807 50,133

General and 7,197 6,659 26,834 17,428 administrative

Total stock-based $ 36,442 $ 30,255 $ 116,546 $ 92,590 compensation

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Nine Months Ended

September 30,

2021

2020

Operating Activities

Net income (loss)

$

16,481

$

(40,513

)

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

Depreciation and amortization

38,543

37,484

Provision for doubtful accounts

9,834

26,802

Stock-based compensation

116,546

92,590

Noncash lease cost

30,676

31,545

Deferred income taxes

(6,400

)

(6,505

)

Asset impairment

11,164

-

Other adjustments, net

103

1,316

Changes in operating assets and liabilities:

Accounts receivable

(27,279

)

(4,783

)

Prepaid expenses and other assets

(4,261

)

1,552

Operating lease liabilities

(32,891

)

(34,284

)

Accounts payable, accrued liabilities and other liabilities

15,219

23,181

Net cash provided by operating activities

167,735

128,385

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

(21,600

)

(24,072

)

Other investing activities

341

329

Net cash (used in) provided by investing activities

(21,259

)

272,414

Financing Activities

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

16,807

11,620

Taxes paid related to the net share settlement of equity awards

(49,180

)

(12,557

)

Repurchases of common stock

(177,832

)

-

Other financing activities

-

(433

)

Net cash used in financing activities

(210,205

)

(1,370

)

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

(137

)

(132

)

Change in cash, cash equivalents and restricted cash

(63,866

)

399,297

Cash, cash equivalents and restricted cash - Beginning of period

596,540

192,318

Cash, cash equivalents and restricted cash - End of period

$

532,674

$

591,615

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 fees related to shareholder activism, 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 fees related to shareholder activism, 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)

Nine Months Ended September 30,

2021 2020

Operating Activities

Net income (loss) $ 16,481 $ (40,513 )

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

Depreciation and amortization 38,543 37,484

Provision for doubtful accounts 9,834 26,802

Stock-based compensation 116,546 92,590

Noncash lease cost 30,676 31,545

Deferred income taxes (6,400 ) (6,505 )

Asset impairment 11,164 -

Other adjustments, net 103 1,316

Changes in operating assets and liabilities:

Accounts receivable (27,279 ) (4,783 )

Prepaid expenses and other assets (4,261 ) 1,552

Operating lease liabilities (32,891 ) (34,284 )

Accounts payable, accrued liabilities and other 15,219 23,181 liabilities

Net cash provided by operating activities 167,735 128,385



Investing Activities

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

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

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

Purchases of property, equipment and software (21,600 ) (24,072 )

Other investing activities 341 329

Net cash (used in) provided by investing activities (21,259 ) 272,414



Financing Activities

Proceeds from issuance of common stock for employee 16,807 11,620 stock-based plans

Taxes paid related to the net share settlement of (49,180 ) (12,557 )equity awards

Repurchases of common stock (177,832 ) -

Other financing activities - (433 )

Net cash used in financing activities (210,205 ) (1,370 )



Effect of exchange rate changes on cash, cash (137 ) (132 )equivalents and restricted cash



Change in cash, cash equivalents and restricted cash (63,866 ) 399,297

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

Cash, cash equivalents and restricted cash - End of $ 532,674 $ 591,615 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 fees related to shareholder activism, 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 fees related to shareholder activism, 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

September June 30, September September 30, 30, 30, 2021 2021 2020 2019

Reconciliation of NetIncome (Loss) to Adjusted EBITDA:

Net income (loss) $ 18,065 $ 4,212 $ (1,020 ) $ 10,061

Provision for (benefit 3,911 (4,751 ) 10,744 2,552 from) income taxes

Other income, net (331 ) (542 ) (399 ) (3,063 )

Depreciation and 12,627 12,833 12,544 12,391 amortization

Stock-based compensation 36,442 40,859 30,255 29,236

Fees related to - - - 7,116 shareholder activism^(1)

Restructuring - 12 535 -

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

Adjusted EBITDA $ 70,714 $ 63,787 $ 52,659 $ 58,293



Net revenue $ 269,155 $ 257,188 $ 220,807 $ 262,474

Net income (loss) margin 7 % 2 % - % 4 %

Adjusted EBITDA margin 26 % 25 % 24 % 22 %

^(1) Recorded within general and administrative expenses on our CondensedConsolidated Statements of Operations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211104006107/en/

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

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