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

August, 04 2022 04:05 PM Yelp Inc.

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 EBITDA ¹

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005759/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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