YELP - Yelp's Strategic Initiatives Drove Strong First Quarter 2022 Results

May, 05 2022 04:05 PM Yelp Inc.

First quarter Net Revenue increased by 19% year over year to $277 million

Net Loss improved by $5 million year over year to ($1) million

Adjusted EBITDA increased by 10% year over year to $48 million

Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today posted its financial results for the first quarter ended March 31, 2022 in the Q1 2022 Shareholder Letter available on its Investor Relations website at www.yelp-ir.com .

“Our strong start to the year was driven by the continued execution of our long-term strategy and the strong demand for Yelp’s advertising products,” said Jeremy Stoppelman, Yelp co-founder and chief executive officer. “Our first quarter results reflect the value we’re delivering to our advertisers, with year-over year growth in both the number of business locations that advertised on Yelp and the average amount each location chose to spend on our platform. We believe that the strength of our broad-based advertising model positions us well to deliver on our plan for the year and drive shareholder value over the long term.”

“Led by growth in our most efficient channels, self-serve and multi-location, first-quarter net revenue reached a new quarterly high, increasing by 19% year over year,” said David Schwarzbach, Yelp’s chief financial officer. “We’re pleased by these strong results and currently expect Net revenue to come in towards the high end of our business outlook range for the full year. We plan to continue prioritizing investments in areas that we believe will drive profitable growth, including product development and marketing.”

Quarterly Conference Call

Yelp will host a live Q&A session today at 2:00 p.m. Pacific Time to discuss the first quarter financial results and outlook for the second quarter and full year of 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 deliver on its plan for the year and shareholder value 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:

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;
the pace of economic recovery in local economies and the United States generally;
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)





March 31, 2022

December 31, 2021
Assets



Current assets:



Cash and cash equivalents
$
465,121


$
479,783

Accounts receivable, net

111,762



107,358

Prepaid expenses and other current assets

60,458



57,536

Total current assets

637,341



644,677

Property, equipment and software, net

83,138



83,857

Operating lease right-of-use assets

132,029



140,785

Goodwill

104,317



105,128

Intangibles, net

10,020



10,673

Restricted cash

794



858

Other non-current assets

77,267



64,550

Total assets
$
1,044,906


$
1,050,528





Liabilities and Stockholders' Equity



Current liabilities:



Accounts payable and accrued liabilities
$
146,283


$
119,620

Operating lease liabilities — current

41,130



40,237

Deferred revenue

8,218



4,156

Total current liabilities

195,631



164,013

Operating lease liabilities — long-term

117,398



127,979

Other long-term liabilities

7,528



7,218

Total liabilities

320,557



299,210





Stockholders' equity:



Common stock

—



—

Additional paid-in capital

1,547,337



1,522,572

Treasury stock

(2,886
)


—

Accumulated other comprehensive loss

(11,903
)


(11,090
)
Accumulated deficit

(808,199
)


(760,164
)
Total stockholders' equity

724,349



751,318

Total liabilities and stockholders' equity
$
1,044,906


$
1,050,528

YELP INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)



Three Months Ended March 31,


2022



2021

Net revenue
$
276,628


$
232,096





Costs and expenses:



Cost of revenue ⁽¹⁾

23,429



14,874

Sales and marketing ⁽¹⁾

126,097



112,909

Product development ⁽¹⁾

80,685



67,992

General and administrative ⁽¹⁾

39,383



31,861

Depreciation and amortization

11,490



13,083

Restructuring

—



20

Total costs and expenses

281,084



240,739

Loss from operations

(4,456
)


(8,643
)
Other income, net

929



705

Loss before income taxes

(3,527
)


(7,938
)
Benefit from income taxes

(2,612
)


(2,142
)
Net loss attributable to common stockholders
$
(915
)

$
(5,796
)




Net loss per share attributable to common stockholders



Basic
$
(0.01
)

$
(0.08
)
Diluted
$
(0.01
)

$
(0.08
)




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



Basic

71,639



75,245

Diluted

71,639



75,245





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




Three Months Ended March 31,


2022



2021

Cost of revenue
$
1,305


$
1,108

Sales and marketing

8,655



8,397

Product development

23,125



20,753

General and administrative

7,975



8,987

Total stock-based compensation
$
41,060


$
39,245

YELP INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)



Three Months Ended March 31,


2022



2021

Operating Activities



Net loss
$
(915
)

$
(5,796
)
Adjustments to reconcile net loss to net cash provided by operating activities:



Depreciation and amortization

11,490



13,083

Provision for doubtful accounts

7,562



3,289

Stock-based compensation

41,060



39,245

Noncash lease cost

8,453



10,779

Deferred income taxes

(11,074
)


(2,406
)
Amortization of deferred cost

4,039



3,401

Other adjustments, net

248



14

Changes in operating assets and liabilities:



Accounts receivable

(11,968
)


(3,639
)
Prepaid expenses and other assets

(7,494
)


491

Operating lease liabilities

(9,492
)


(6,871
)
Accounts payable, accrued liabilities and other liabilities

27,994



7,341

Net cash provided by operating activities

59,903



58,931





Investing Activities



Purchases of property, equipment and software

(6,636
)


(6,005
)
Other investing activities

61



29

Net cash used in investing activities

(6,575
)


(5,976
)




Financing Activities



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

540



6,049

Taxes paid related to the net share settlement of equity awards

(18,487
)


(16,803
)
Repurchases of common stock

(50,006
)


(49,528
)
Net cash used in financing activities

(67,953
)


(60,282
)




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

(101
)


68





Change in cash, cash equivalents and restricted cash

(14,726
)


(7,259
)
Cash, cash equivalents and restricted cash — Beginning of period

480,641



596,540

Cash, cash equivalents and restricted cash — End of period
$
465,915


$
589,281

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. 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

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 loss to Adjusted EBITDA, as well as the calculation of net loss margin and Adjusted EBITDA margin, for each of the periods indicated (in thousands, except percentages; unaudited):


Three Months Ended March 31,


2022



2021

Reconciliation of Net Loss to Adjusted EBITDA:



Net loss
$
(915
)

$
(5,796
)
Benefit from income taxes

(2,612
)


(2,142
)
Other income, net

(929
)


(705
)
Depreciation and amortization

11,490



13,083

Stock-based compensation

41,060



39,245

Restructuring

—



20

Adjusted EBITDA
$
48,094


$
43,705





Net revenue
$
276,628


$
232,096

Net loss margin

—
%


(2
)%
Adjusted EBITDA margin

17
%


19
%

View source version on businesswire.com: https://www.businesswire.com/news/home/20220505005826/en/

Investor Relations Contact:
Kate Krieger
ir@yelp.com

Press Contact:
Amber Albrecht
press@yelp.com

Company Name:	Yelp Inc.
Stock Symbol:	YELP
Market:	NYSE
Website:	yelp.com

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