Company Announcements

Yelp's Strong Advertiser Demand Drove Record Net Revenue in the Second Quarter 2022

Second quarter Net revenue increased by 16% year over year to $299 million, resulting in Net income of $8 million

Adjusted EBITDA increased to $67 million

Raises full-year outlook to $1.18 billion to $1.20 billion of Net revenue and $265 million to $285 million of Adjusted EBITDA1

SAN FRANCISCO--(BUSINESS WIRE)--Aug. 4, 2022-- 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, 2022 in the Q2 2022 Shareholder Letter available on its Investor Relations website at www.yelp-ir.com.

“We delivered another strong quarter driven by the consistent execution of our team and our product-led strategy to connect advertisers with our high-intent audience,” said Jeremy Stoppelman, Yelp co-founder and chief executive officer. “Our determined efforts led us to record highs in Net revenue and Paying advertising locations in the second quarter. As we continue to invest in our strategic initiatives, I remain confident in our ability to drive profitable growth over the long term.”

“The reach and power of our owned and operated ad platform, combined with the execution of our strategic plan, contributed to our strong performance in the second quarter,” said David Schwarzbach, Yelp’s chief financial officer. “We were particularly pleased by advertiser demand in our Services categories, which once again drove record Advertising revenue. With revenue from our Self-serve and Multi-location channels now comprising 49% of total Ad revenue, it’s clear our strategy is working.”

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 to the uncertainty and potential variability of Other income, net and Provision for (benefit from) income taxes, which are reconciling items between Adjusted EBITDA and GAAP Net income (loss). Because Yelp cannot reasonably predict such items, a reconciliation of the non-GAAP financial measure outlook to the corresponding GAAP measure is not available without unreasonable effort. We caution, however, that such items could have a significant impact on the calculation of GAAP Net income (loss). For more information regarding the non-GAAP financial measures discussed in this release, please see “Non-GAAP Financial 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 of and full year 2022. 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 trusted 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, its investment plans, and its ability to drive profitable growth over 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:

  • adverse macroeconomic conditions and their impact on consumer behavior and advertiser spending;
  • fluctuations in the number of COVID-19 cases and the spread of COVID-19 variants, the vaccination rate in the United States, and any reimposition of COVID-19-related public health restrictions;
  • Yelp’s ability to maintain and expand its base of advertisers, particularly as many businesses continue to face macroeconomic challenges, including labor and supply chain difficulties;
  • 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,
2022

 

December 31,
2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

421,162

 

 

$

479,783

 

Accounts receivable, net

 

124,690

 

 

 

107,358

 

Prepaid expenses and other current assets

 

65,334

 

 

 

57,536

 

Total current assets

 

611,186

 

 

 

644,677

 

Property, equipment and software, net

 

82,212

 

 

 

83,857

 

Operating lease right-of-use assets

 

122,698

 

 

 

140,785

 

Goodwill

 

101,526

 

 

 

105,128

 

Intangibles, net

 

9,679

 

 

 

10,673

 

Restricted cash

 

1,052

 

 

 

858

 

Other non-current assets

 

94,815

 

 

 

64,550

 

Total assets

$

1,023,168

 

 

$

1,050,528

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued liabilities

$

132,688

 

 

$

119,620

 

Operating lease liabilities — current

 

41,177

 

 

 

40,237

 

Deferred revenue

 

6,141

 

 

 

4,156

 

Total current liabilities

 

180,006

 

 

 

164,013

 

Operating lease liabilities — long-term

 

105,809

 

 

 

127,979

 

Other long-term liabilities

 

18,749

 

 

 

7,218

 

Total liabilities

 

304,564

 

 

 

299,210

 

 

 

 

 

Stockholders' equity:

 

 

 

Common stock

 

 

 

 

 

Additional paid-in capital

 

1,587,337

 

 

 

1,522,572

 

Treasury stock

 

(3,138

)

 

 

 

Accumulated other comprehensive loss

 

(15,657

)

 

 

(11,090

)

Accumulated deficit

 

(849,938

)

 

 

(760,164

)

Total stockholders' equity

 

718,604

 

 

 

751,318

 

Total liabilities and stockholders' equity

$

1,023,168

 

 

$

1,050,528

 

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2022

 

 

2021

 

 

 

2022

 

 

2021

 

Net revenue

$

298,884

 

$

257,188

 

 

$

575,512

 

$

489,284

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of revenue (1)

 

26,988

 

 

17,993

 

 

 

50,417

 

 

32,867

 

Sales and marketing (1)

 

129,412

 

 

113,641

 

 

 

255,509

 

 

226,550

 

Product development (1)

 

76,848

 

 

68,695

 

 

 

157,533

 

 

136,687

 

General and administrative (1)

 

38,377

 

 

45,095

 

 

 

77,760

 

 

76,956

 

Depreciation and amortization

 

11,258

 

 

12,833

 

 

 

22,748

 

 

25,916

 

Restructuring

 

 

 

12

 

 

 

 

 

32

 

Total costs and expenses

 

282,883

 

 

258,269

 

 

 

563,967

 

 

499,008

 

Income (loss) from operations

 

16,001

 

 

(1,081

)

 

 

11,545

 

 

(9,724

)

Other income, net

 

1,327

 

 

542

 

 

 

2,256

 

 

1,247

 

Income (loss) before income taxes

 

17,328

 

 

(539

)

 

 

13,801

 

 

(8,477

)

Provision for (benefit from) income taxes

 

9,319

 

 

(4,751

)

 

 

6,707

 

 

(6,893

)

Net income (loss) attributable to common stockholders

$

8,009

 

$

4,212

 

 

$

7,094

 

$

(1,584

)

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to common stockholders

 

 

 

 

 

 

 

Basic

$

0.11

 

$

0.06

 

 

$

0.10

 

$

(0.02

)

Diluted

$

0.11

 

$

0.05

 

 

$

0.10

 

$

(0.02

)

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Basic

 

71,217

 

 

74,807

 

 

 

71,427

 

 

75,025

 

Diluted

 

72,835

 

 

78,983

 

 

 

73,572

 

 

75,025

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2022

 

 

2021

 

 

 

2022

 

 

2021

 

Cost of revenue

$

1,248

 

$

1,094

 

 

$

2,553

 

$

2,202

 

Sales and marketing

 

8,200

 

 

8,441

 

 

 

16,855

 

 

16,838

 

Product development

 

22,304

 

 

20,674

 

 

 

45,429

 

 

41,427

 

General and administrative

 

8,309

 

 

10,650

 

 

 

16,284

 

 

19,637

 

Total stock-based compensation

$

40,061

 

$

40,859

 

 

$

81,121

 

$

80,104

 

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Six Months Ended

June 30,

 

 

2022

 

 

 

2021

 

Operating Activities

 

 

 

Net income (loss)

$

7,094

 

 

$

(1,584

)

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

 

 

 

Depreciation and amortization

 

22,748

 

 

 

25,916

 

Provision for doubtful accounts

 

12,676

 

 

 

7,240

 

Stock-based compensation

 

81,121

 

 

 

80,104

 

Noncash lease cost

 

16,870

 

 

 

20,712

 

Deferred income taxes

 

(24,114

)

 

 

(7,755

)

Amortization of deferred cost

 

8,413

 

 

 

6,881

 

Asset impairment

 

 

 

 

11,164

 

Other adjustments, net

 

717

 

 

 

386

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(30,014

)

 

 

(20,382

)

Prepaid expenses and other assets

 

(22,149

)

 

 

(6,793

)

Operating lease liabilities

 

(19,813

)

 

 

(22,489

)

Accounts payable, accrued liabilities and other liabilities

 

24,683

 

 

 

15,707

 

Net cash provided by operating activities

 

78,232

 

 

 

109,107

 

 

 

 

 

Investing Activities

 

 

 

Purchases of property, equipment and software

 

(14,498

)

 

 

(13,286

)

Other investing activities

 

19

 

 

 

90

 

Net cash used in investing activities

 

(14,479

)

 

 

(13,196

)

 

 

 

 

Financing Activities

 

 

 

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

 

11,026

 

 

 

15,587

 

Taxes paid related to the net share settlement of equity awards

 

(32,046

)

 

 

(34,824

)

Repurchases of common stock

 

(100,006

)

 

 

(114,157

)

Net cash used in financing activities

 

(121,026

)

 

 

(133,394

)

 

 

 

 

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

 

(1,154

)

 

 

197

 

 

 

 

 

Change in cash, cash equivalents and restricted cash

 

(58,427

)

 

 

(37,286

)

Cash, cash equivalents and restricted cash — Beginning of period

 

480,641

 

 

 

596,540

 

Cash, cash equivalents and restricted cash — End of period

$

422,214

 

 

$

559,254

 

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

 

Six Months Ended

 

June 30,

2022

 

March 31,

2022

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

Reconciliation of Net Income (Loss) to Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

Net income (loss)

$

8,009

 

 

$

(915

)

 

$

4,212

 

 

$

7,094

 

 

$

(1,584

)

Provision for (benefit from) income taxes

 

9,319

 

 

 

(2,612

)

 

 

(4,751

)

 

 

6,707

 

 

 

(6,893

)

Other income, net

 

(1,327

)

 

 

(929

)

 

 

(542

)

 

 

(2,256

)

 

 

(1,247

)

Depreciation and amortization

 

11,258

 

 

 

11,490

 

 

 

12,833

 

 

 

22,748

 

 

 

25,916

 

Stock-based compensation

 

40,061

 

 

 

41,060

 

 

 

40,859

 

 

 

81,121

 

 

 

80,104

 

Restructuring

 

 

 

 

 

 

 

12

 

 

 

 

 

 

32

 

Asset impairment(1)

 

 

 

 

 

 

 

11,164

 

 

 

 

 

 

11,164

 

Adjusted EBITDA

$

67,320

 

 

$

48,094

 

 

$

63,787

 

 

$

115,414

 

 

$

107,492

 

 

 

 

 

 

 

 

 

 

 

Net revenue

$

298,884

 

 

$

276,628

 

 

$

257,188

 

 

$

575,512

 

 

$

489,284

 

Net income (loss) margin

 

3

%

 

 

%

 

 

2

%

 

 

1

%

 

 

%

Adjusted EBITDA margin

 

23

%

 

 

17

%

 

 

25

%

 

 

20

%

 

 

22

%

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

Investor Relations Contact:
Kate Krieger
ir@yelp.com

Press Contact:
Amber Albrecht
press@yelp.com

Source: Yelp Inc.