Investments in Product-Led Strategy Drove Yelp’s Strong 2023 Results
2023 Net Revenue reached a record high of
2023 Net Income up 173% to a strong
2023 Adjusted EBITDA grew 23% to a record
Expects 2024 Net Revenue in the range of
Board of Directors authorized
“Yelp delivered one of our strongest financial performances ever in 2023,” said
“Investments in our long-term strategic initiatives have led to multiple records as local advertisers continued to see the value of Yelp’s high-intent audience in 2023,” said
¹
2023 Key Business Highlights
Yelp’s product-led business model drove a number of record results in 2023:
-
Net revenue increased by 12% year over year to a record
$1.34 billion , at the high end of the outlook range we provided inNovember 2023 and approximately$30 million above the high end of the initial outlook range we provided inFebruary 2023 . -
Net income increased by approximately by 173% year over year to
$99 million , representing a 7% net income margin. -
Adjusted EBITDA grew 23% year over year to
$330 million ,$6 million above the high end of the outlook range we provided inNovember 2023 and$20 million above the high end of the initial outlook range we provided inFebruary 2023 , representing a 25% adjusted EBITDA margin. -
Total advertising revenue increased by 13% year over year to a record
$1.28 billion , driven by strong advertiser demand. - Ad clicks for the year returned to year-over-year growth, increasing 5% from 2022. Average CPC for the year increased 9% as a result of robust advertiser demand for Yelp’s valuable, high-intent clicks, demonstrated by record average revenue per paying advertising location.
-
In Services,
Yelp demonstrated consistent year-over-year revenue growth throughout 2023, resulting in a record$793 million of advertising revenue from Services businesses for the year, up 14% from 2022. Advertiser demand was particularly robust in the Home Services category, where annual revenue increased by approximately 20% year over year and at a compound annual growth rate of nearly 20% from 2019. -
Advertising revenue from Restaurants, Retail & Other businesses increased by 10% year over year to a record
$483 million , driven by growth in advertiser demand as reflected in average revenue per location. Average revenue per location grew sequentially in each quarter of 2023 to reach a record level in the fourth quarter. - Advertising revenue from Yelp’s most efficient channels, Self-serve and Multi-location, together accounted for approximately 50% of Yelp’s 2023 advertising revenue. Self-serve revenue increased by approximately 20% year over year and Multi-location revenue grew by approximately 15% year over year.
-
On the consumer side of Yelp’s business,
Yelp introduced a number of new products to enhance the consumer experience with new discovery, review and Services features. These included an AI-powered search experience,Yelp Guaranteed and a more visual and interactive review-writing experience. While Yelp’s overall traffic levels remained approximately flat in 2023,Yelp users contributed 22 million new reviews in 2023 to reach a total of 287 million cumulative reviews. While app unique devices were down 3% year over year, mobile web traffic increased by 2% year over year.
Outlook
The company expects 2024 Net revenue will be in the range of
Quarterly Conference Call
About
Forward Looking Statements
This press release contains forward-looking statements relating to, among other things, Yelp’s future performance, including its expected financial results for 2024, its plans to focus on its Services categories and execute against its growth initiatives for the long term in 2024, its robust roadmap to build
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:
- macroeconomic uncertainty — including related to inflation, interest rates and supply chain issues, as well as severe weather events and the prevalence of seasonal respiratory illnesses — and its effect on consumer behavior, user activity and advertiser spending;
- the impact of fears or actual outbreaks of disease and any resulting changes in consumer behavior, economic conditions or governmental actions;
- Yelp’s ability to maintain and expand its base of advertisers, particularly if advertiser turnover substantially worsens and/or consumer demand significantly degrades;
- Yelp’s ability to drive continued growth through its strategic initiatives;
- 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 yelp-ir.com or the SEC’s website at sec.gov.
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) |
|||||||
|
|
|
|
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
313,911 |
|
|
$ |
306,379 |
|
Short-term marketable securities |
|
127,485 |
|
|
|
94,244 |
|
Accounts receivable, net |
|
146,147 |
|
|
|
131,902 |
|
Prepaid expenses and other current assets |
|
36,673 |
|
|
|
63,467 |
|
Total current assets |
|
624,216 |
|
|
|
595,992 |
|
Property, equipment and software, net |
|
68,684 |
|
|
|
77,224 |
|
Operating lease right-of-use assets |
|
48,573 |
|
|
|
97,392 |
|
|
|
103,886 |
|
|
|
102,328 |
|
Intangibles, net |
|
7,638 |
|
|
|
8,997 |
|
Other non-current assets |
|
161,726 |
|
|
|
133,989 |
|
Total assets |
$ |
1,014,723 |
|
|
$ |
1,015,922 |
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable and accrued liabilities |
$ |
132,809 |
|
|
$ |
137,950 |
|
Operating lease liabilities — current |
|
39,234 |
|
|
|
39,674 |
|
Deferred revenue |
|
3,821 |
|
|
|
5,200 |
|
Total current liabilities |
|
175,864 |
|
|
|
182,824 |
|
Operating lease liabilities — long-term |
|
48,065 |
|
|
|
86,661 |
|
Other long-term liabilities |
|
41,260 |
|
|
|
36,113 |
|
Total liabilities |
|
265,189 |
|
|
|
305,598 |
|
|
|
|
|
||||
Stockholders’ equity: |
|
|
|
||||
Common stock |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
1,786,667 |
|
|
|
1,649,692 |
|
|
|
(282 |
) |
|
|
— |
|
Accumulated other comprehensive loss |
|
(12,202 |
) |
|
|
(15,545 |
) |
Accumulated deficit |
|
(1,024,649 |
) |
|
|
(923,823 |
) |
Total stockholders’ equity |
|
749,534 |
|
|
|
710,324 |
|
Total liabilities and stockholders’ equity |
$ |
1,014,723 |
|
|
$ |
1,015,922 |
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) |
|||||||||||
|
Three Months Ended
|
|
Year Ended
|
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
Net revenue |
$ |
342,376 |
|
$ |
309,103 |
|
$ |
1,337,062 |
|
$ |
1,193,506 |
|
|
|
|
|
|
|
|
||||
Costs and expenses: |
|
|
|
|
|
|
|
||||
Cost of revenue(1) |
|
29,616 |
|
|
28,483 |
|
|
114,229 |
|
|
105,705 |
Sales and marketing(1) |
|
132,297 |
|
|
126,357 |
|
|
556,605 |
|
|
514,927 |
Product development(1) |
|
78,323 |
|
|
72,225 |
|
|
332,570 |
|
|
305,561 |
General and administrative(1) |
|
66,822 |
|
|
37,967 |
|
|
212,431 |
|
|
164,108 |
Depreciation and amortization |
|
10,303 |
|
|
10,687 |
|
|
42,184 |
|
|
44,852 |
Total costs and expenses |
|
317,361 |
|
|
275,719 |
|
|
1,258,019 |
|
|
1,135,153 |
Income from operations |
|
25,015 |
|
|
33,384 |
|
|
79,043 |
|
|
58,353 |
Other income, net |
|
8,775 |
|
|
3,478 |
|
|
26,039 |
|
|
8,425 |
Income before income taxes |
|
33,790 |
|
|
36,862 |
|
|
105,082 |
|
|
66,778 |
Provision for income taxes |
|
6,384 |
|
|
16,717 |
|
|
5,909 |
|
|
30,431 |
Net income attributable to common stockholders |
$ |
27,406 |
|
$ |
20,145 |
|
$ |
99,173 |
|
$ |
36,347 |
|
|
|
|
|
|
|
|
||||
Net income per share attributable to common stockholders |
|
|
|
|
|
|
|
||||
Basic |
$ |
0.40 |
|
$ |
0.29 |
|
$ |
1.43 |
|
$ |
0.51 |
Diluted |
$ |
0.37 |
|
$ |
0.28 |
|
$ |
1.35 |
|
$ |
0.50 |
|
|
|
|
|
|
|
|
||||
Weighted-average shares used to compute net income per share attributable to common stockholders |
|
|
|
|
|
|
|
||||
Basic |
|
68,790 |
|
|
70,001 |
|
|
69,221 |
|
|
70,867 |
Diluted |
|
73,159 |
|
|
71,607 |
|
|
73,596 |
|
|
73,402 |
|
|
|
|
|
|
|
|
||||
(1) Includes stock-based compensation expense as follows: |
|||||||||||
|
Three Months Ended
|
|
Year Ended
|
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
Cost of revenue |
$ |
1,248 |
|
$ |
1,060 |
|
$ |
5,274 |
|
$ |
4,761 |
Sales and marketing |
|
8,266 |
|
|
8,160 |
|
|
35,187 |
|
|
33,621 |
Product development |
|
22,627 |
|
|
20,090 |
|
|
97,515 |
|
|
86,871 |
General and administrative |
|
8,006 |
|
|
7,027 |
|
|
35,475 |
|
|
30,837 |
Total stock-based compensation |
$ |
40,147 |
|
$ |
36,337 |
|
$ |
173,451 |
|
$ |
156,090 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
|||||||
|
Year Ended |
||||||
|
|
2023 |
|
|
|
2022 |
|
Operating Activities |
|
|
|
||||
Net income |
$ |
99,173 |
|
|
$ |
36,347 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
|
42,184 |
|
|
|
44,852 |
|
Provision for doubtful accounts |
|
40,702 |
|
|
|
25,006 |
|
Stock-based compensation |
|
173,451 |
|
|
|
156,090 |
|
Amortization of right-of-use assets |
|
28,084 |
|
|
|
32,810 |
|
Deferred income taxes |
|
(22,150 |
) |
|
|
(56,621 |
) |
Amortization of deferred contract cost |
|
24,035 |
|
|
|
18,827 |
|
Asset impairment |
|
23,563 |
|
|
|
10,464 |
|
Other adjustments, net |
|
(410 |
) |
|
|
1,036 |
|
Changes in operating assets and liabilities: |
|
|
|
||||
Accounts receivable |
|
(54,947 |
) |
|
|
(49,555 |
) |
Prepaid expenses and other assets |
|
(5,123 |
) |
|
|
(36,032 |
) |
Operating lease liabilities |
|
(39,734 |
) |
|
|
(40,057 |
) |
Accounts payable, accrued liabilities and other liabilities |
|
(2,548 |
) |
|
|
49,142 |
|
Net cash provided by operating activities |
|
306,280 |
|
|
|
192,309 |
|
|
|
|
|
||||
Investing Activities |
|
|
|
||||
Purchases of marketable securities — available-for-sale |
|
(148,448 |
) |
|
|
(127,080 |
) |
Sales and maturities of marketable securities — available-for-sale |
|
117,916 |
|
|
|
32,821 |
|
Maturities of other investments |
|
2,500 |
|
|
|
— |
|
Purchases of property, equipment and software |
|
(26,847 |
) |
|
|
(31,979 |
) |
Other investing activities |
|
195 |
|
|
|
94 |
|
Net cash used in investing activities |
|
(54,684 |
) |
|
|
(126,144 |
) |
|
|
|
|
||||
Financing Activities |
|
|
|
||||
Proceeds from issuance of common stock for employee stock-based plans |
|
39,510 |
|
|
|
23,497 |
|
Taxes paid related to the net share settlement of equity awards |
|
(85,180 |
) |
|
|
(61,023 |
) |
Repurchases of common stock |
|
(199,999 |
) |
|
|
(200,006 |
) |
Payment of issuance costs for credit facility |
|
(1,109 |
) |
|
|
— |
|
Net cash used in financing activities |
|
(246,778 |
) |
|
|
(237,532 |
) |
|
|
|
|
||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
2,046 |
|
|
|
(2,136 |
) |
|
|
|
|
||||
Change in cash, cash equivalents and restricted cash |
|
6,864 |
|
|
|
(173,503 |
) |
Cash, cash equivalents and restricted cash — Beginning of period |
|
307,138 |
|
|
|
480,641 |
|
Cash, cash equivalents and restricted cash — End of period |
$ |
314,002 |
|
|
$ |
307,138 |
|
Non-GAAP Financial Measures
This press release and statements made during the above referenced webcast may include information relating to Adjusted EBITDA, Adjusted EBITDA margin and Free cash flow, each of which the
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 material litigation settlements, impairment charges and fees related to shareholder activism that we deem not to be indicative of our ongoing operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net revenue. We define Free cash flow as net cash provided by (used in) operating activities, less cash used for purchases of property, equipment and software.
Adjusted EBITDA and Free cash flow, 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
- 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 material litigation settlements, impairment charges and fees related to shareholder activism;
- Free cash flow does not represent the total residual cash flow available for discretionary purposes because it does not reflect our contractual commitments or obligations; and
- other companies, including those in Yelp’s industry, may calculate Adjusted EBITDA and Free cash flow differently, which reduces their usefulness as comparative measures.
Because of these limitations, you should consider Adjusted EBITDA, Adjusted EBITDA margin and Free cash flow alongside other financial performance measures, including net income (loss), net cash provided by (used in) operating activities and Yelp’s other GAAP results.
The following is a reconciliation of net income to Adjusted EBITDA, as well as the calculation of net income margin and Adjusted EBITDA margin, for each of the periods indicated (in thousands, except percentages; unaudited):
|
Three Months Ended
|
|
Year Ended
|
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Reconciliation of Net Income to Adjusted EBITDA: |
|
|
|
|
|
|
|
||||||||
Net income |
$ |
27,406 |
|
|
$ |
20,145 |
|
|
$ |
99,173 |
|
|
$ |
36,347 |
|
Provision for income taxes |
|
6,384 |
|
|
|
16,717 |
|
|
|
5,909 |
|
|
|
30,431 |
|
Other income, net |
|
(8,775 |
) |
|
|
(3,478 |
) |
|
|
(26,039 |
) |
|
|
(8,425 |
) |
Depreciation and amortization |
|
10,303 |
|
|
|
10,687 |
|
|
|
42,184 |
|
|
|
44,852 |
|
Stock-based compensation |
|
40,147 |
|
|
|
36,337 |
|
|
|
173,451 |
|
|
|
156,090 |
|
Litigation settlement(1)(2) |
|
— |
|
|
|
— |
|
|
|
11,000 |
|
|
|
— |
|
Asset impairment(1) |
|
20,008 |
|
|
|
— |
|
|
|
23,563 |
|
|
|
10,464 |
|
Fees related to shareholder activism(1) |
|
581 |
|
|
|
— |
|
|
|
1,252 |
|
|
|
— |
|
Adjusted EBITDA |
$ |
96,054 |
|
|
$ |
80,408 |
|
|
$ |
330,493 |
|
|
$ |
269,759 |
|
|
|
|
|
|
|
|
|
||||||||
Net revenue |
$ |
342,376 |
|
|
$ |
309,103 |
|
|
$ |
1,337,062 |
|
|
$ |
1,193,506 |
|
Net income margin |
|
8 |
% |
|
|
7 |
% |
|
|
7 |
% |
|
|
3 |
% |
Adjusted EBITDA margin |
|
28 |
% |
|
|
26 |
% |
|
|
25 |
% |
|
|
23 |
% |
(1) Recorded within general and administrative expenses on our Condensed Consolidated Statements of Operations. |
(2) Represents the loss contingency recorded in connection with the settlement of a putative class action lawsuit asserting claims under the California Invasion of Privacy Act. For additional information, see our most recently filed Quarterly Report on Form 10-Q at www.yelp-ir.com or the SEC’s website at www.sec.gov. |
The following is a reconciliation of net cash provided by operating activities to Free cash flow for each of the periods indicated (in thousands; unaudited):
|
Three Months Ended
|
|
Year Ended
|
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow: |
|
|
|
|
|
|
|
||||||||
Net cash provided by operating activities |
$ |
79,170 |
|
|
$ |
44,473 |
|
|
$ |
306,280 |
|
|
$ |
192,309 |
|
Purchases of property, equipment and software |
|
(5,997 |
) |
|
|
(11,875 |
) |
|
|
(26,847 |
) |
|
|
(31,979 |
) |
Free cash flow |
$ |
73,173 |
|
|
$ |
32,598 |
|
|
$ |
279,433 |
|
|
$ |
160,330 |
|
|
|
|
|
|
|
|
|
||||||||
Net cash used in investing activities |
$ |
(8,219 |
) |
|
$ |
(14,837 |
) |
|
$ |
(54,684 |
) |
|
$ |
(126,144 |
) |
|
|
|
|
|
|
|
|
||||||||
Net cash used in financing activities |
$ |
(63,546 |
) |
|
$ |
(55,508 |
) |
|
$ |
(246,778 |
) |
|
$ |
(237,532 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240215964428/en/
Investor Relations Contact:
ir@yelp.com
Press Contact:
press@yelp.com
Source: