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Yelp Announces First Quarter 2015 Financial Results
Revenue Increases 55% Over First Quarter 2014

SAN FRANCISCO, April 29, 2015 /PRNewswire/ -- Yelp Inc. (NYSE: YELP), the company that connects consumers with great local businesses, today announced financial results for the first quarter ended March 31, 2015.

  • Net revenue was $118.5 million in the first quarter of 2015 reflecting 55% growth over the first quarter of 2014.
  • Adjusted EBITDA for the first quarter of 2015 was $16.3 million, reflecting a 92% increase over the first quarter of 2014.
  • Cumulative reviews grew 36% year over year to approximately 77 million, including a record 6 million reviews contributed in the quarter.
  • Average monthly mobile unique visitors grew 29% year over year to approximately 79 million1 and average monthly desktop unique visitors declined 3% year over year to approximately 80 million2. Average monthly unique visitors (desktop and mobile web) grew 8% year over year to approximately 142 million3.
  • Local advertising accounts grew 43% year over year to approximately 90,2004.

Net loss in the first quarter of 2015 was $(1.3) million, or $(0.02) per share, compared to a net loss of $(2.6) million, or $(0.04) per share, in the first quarter of 2014.

Non-GAAP net income, which consists of net income excluding stock-based compensation and amortization was $7.9 million, or $0.10 per share, for the first quarter of 2015.

"We are excited about our start to the year as we've made significant progress on our key initiatives for 2015," said Jeremy Stoppelman, Yelp's chief executive officer. "In the first quarter, we acquired Eat24 to drive daily usage and improved utility of Yelp and added partners in five additional verticals of Yelp Platform. Looking to the rest of the year, we will continue to seek ways to increase engagement and drive awareness, while striving to demonstrate the value we can deliver to local businesses in order to capture the large local advertising market opportunity."

"We delivered topline growth of 55% year over year," added Rob Krolik, Yelp's chief financial officer. "Local businesses are increasingly adopting performance-based advertising, and in the first quarter, cost-per-click advertisers represented approximately 40% of local advertising revenue, an increase from 32% in the fourth quarter of 2014. With 92% growth in adjusted EBITDA year over year, we continue to show operating leverage in the business and look forward to growing the business through the rest of the year."

First Quarter Operating Summary

  • Local advertising revenue totaled $98.6 million, representing 51% growth over the first quarter of 2014.
  • Brand advertising revenue totaled $6.6 million, representing an 11% decrease compared to the first quarter of 2014.
  • Other revenue totaled $13.3 million, representing 254% growth over the first quarter of 2014. Eat24 contributed revenue of approximately $5 million in the quarter.

Business Highlights

  • Eat24: Yelp acquired Eat24 to improve the consumer experience in the online food ordering vertical and to increase daily consumer engagement on Yelp. Eat24 enables consumers to order food online at over 20,000 restaurants nationwide.
  • Yelp Platform: Yelp increased the number of ways consumers can interact with Yelp by adding six new partners to Yelp Platform, bringing the total number of Platform partners to fifteen. Since its inception in July 2013, consumers had completed about 1.5 million transactions on Yelp Platform as of the end of the first quarter of 2015.
  • SeatMe and Yelp Reservations: Yelp expanded the number of restaurants accepting reservations through SeatMe and Yelp Reservations to more than 12,000, a 50% increase over the fourth quarter of 2014.

Business Outlook

As of today, Yelp is providing its outlook for the second quarter and confirming its outlook for the full year of 2015.

  • For the second quarter of 2015, net revenue is expected to be in the range of $131 million to $134 million, representing growth of approximately 49% compared to the second quarter of 2014. Adjusted EBITDA is expected to be in the range of $22 million to $24 million. Stock-based compensation is expected to be in the range of $14 million to $15 million, and depreciation and amortization is expected to be approximately 5% of revenue.
  • For the full year of 2015, net revenue is expected to be in the range of $574 million to $579 million, representing growth of approximately 53% compared to full year 2014. Adjusted EBITDA is expected to be in the range of $102 million to $105 million. Stock-based compensation is expected to be in the range of $58 million to $60 million, and depreciation and amortization is expected to be approximately 5% of revenue.

Quarterly Conference Call

To access the call, please dial 1 (800) 708-4539, or outside the U.S. 1 (847) 619-6396, with Passcode 39359352, at least five minutes prior to the 1:30 p.m. PT start time.  A live webcast of the call will also be available at http://www.yelp-ir.com under the Events & Presentations menu.  An audio replay will be available between 4:00 p.m. PT April 29, 2015 and 11:59 p.m. PT May 6, 2015 by calling 1 (888) 843-7419 or 1 (630) 652-3042, with Passcode 39359352.  The replay will also be available on the Company's website at http://www.yelp-ir.com.

About Yelp

Yelp Inc. (http://www.yelp.com) connects people with great local businesses. Yelp was founded in San Francisco in July 2004. Since then, Yelp communities have taken root in major metros across 29 countries. Approximately 80 million unique visitors visited Yelp via a desktop computer2 and approximately 79 million unique visitors visited Yelp via their mobile device in the first quarter of 20151. By the end of the same quarter, Yelpers had written approximately 77 million rich, local reviews, making Yelp the leading local guide for real word-of-mouth on everything from boutiques and mechanics to restaurants and dentists.

1 Calculated as the number of "users," as measured by Google Analytics, accessing Yelp via mobile web plus unique devices accessing the app, each on a monthly average basis over a given three-month period.

2 "Users," as measured by Google Analytics, accessing Yelp via desktop computer on an average monthly basis over a given three-month period.

3 "Users," as measured by Google Analytics, on a monthly average basis over a given three-month period.

4 Local advertising accounts comprise all local business accounts from which we recognize local advertising revenue in a given three-month period.

Non-GAAP Financial Measures

This press release includes information relating to adjusted EBITDA and non-GAAP net income, each of which the Securities and Exchange Commission has defined as a "non-GAAP financial measure." Adjusted EBITDA and non-GAAP net income have been included in this press release because they are key measures used by the Company's management and board of directors to understand and evaluate core operating performance and trends, to prepare and approve its annual budget and to develop short- and long-term operational plans. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles in the United States ("GAAP").

Adjusted EBITDA and non-GAAP net income have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of the Company's results as reported under GAAP. 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 and non-GAAP net income do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
  • adjusted EBITDA does not reflect changes in, or cash requirements for, the Company's working capital needs;
  • adjusted EBITDA and non-GAAP net income do not consider the potentially dilutive impact of equity-based compensation;
  • adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and
  • other companies, including those in the Company's industry, may calculate adjusted EBITDA and non-GAAP net income differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider adjusted EBITDA and non-GAAP net income alongside other financial performance measures, including various cash flow metrics, net income (loss) and the Company's other GAAP results. Additionally, the Company has not reconciled its adjusted EBITDA outlook for the second quarter and full year 2015 to its net income (loss) outlook because it does not provide an outlook for other income (expense) and provision for income taxes, which are reconciling items between net income (loss) and adjusted EBITDA. As items that impact net income (loss) are out of the Company's control and cannot be reasonably predicted, the Company is unable to provide such an outlook. Accordingly, reconciliation to net income (loss) outlook for the second quarter and full year 2015 is not available without unreasonable effort. For a reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see the non-GAAP reconciliations included below in this press release.

Forward-Looking Statements

This press release contains forward-looking statements relating to, among other things, the future performance of Yelp and its consolidated subsidiaries that are based on the Company's current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding expected financial results for the second quarter and full year 2015,  the future growth in Company revenue and continued investing by the Company in its future growth, the Company's ability to drive daily usage and  engagement, increase awareness of Yelp among consumers, deliver value to local businesses, capture the large local opportunity and more advertising spend and develop new ways to close the loop with local businesses. The Company'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: the Company's short operating history in an evolving industry; the Company's ability to generate sufficient revenue to maintain profitability, particularly in light of its significant ongoing sales and marketing expenses; the Company's ability to successfully manage acquisitions of new businesses, solutions or technologies, such as Eat24, and to integrate those businesses, solutions or technologies; the Company's reliance on traffic to its website from search engines like Google and Bing; the Company's ability to generate and maintain sufficient high quality content from its users; maintaining a strong brand and managing negative publicity that may arise; maintaining and expanding the Company's base of advertisers; changes in political, business and economic conditions, including any European or general economic downturn or crisis and any conditions that affect ecommerce growth; fluctuations in foreign currency exchange rates; the Company's ability to deal with the increasingly competitive local search environment; the Company's need and ability to manage other regulatory, tax and litigation risks as its services are offered in more jurisdictions and applicable laws become more restrictive; the competitive and regulatory environment while the Company continues to expand geographically and introduce new products and as new laws and regulations related to Internet companies come into effect; the Company's ability to timely upgrade and develop its systems, infrastructure and customer service capabilities. The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof.

More information about factors that could affect the Company's operating results is included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's most recent Annual Report on Form 10-K at http://www.yelp-ir.com or the SEC's website at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to the Company on the date hereof. Yelp assumes no obligation to update such statements.

Investor Relations Contact Information
Wendy Lim, Allie Dalglish
(415) 635-2412
ir@yelp.com

 

Yelp Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)









March 31,



December 31,



2015



2014

Assets






Current assets:






Cash and cash equivalents


$  172,629



$        247,312

Short-term marketable securities


158,603



118,498

Accounts receivable, net


38,969



35,593

Prepaid expenses and other current assets


22,706



19,355

Total current assets


392,907



420,758







Long-term marketable securities


16,495



38,612

Property, equipment and software, net


68,594



62,761

Goodwill


172,160



67,307

Intangibles, net


44,187



5,786

Restricted cash


17,899



17,943

Other assets


3,644



16,483

Total assets


$  715,886



$        629,650







Liabilities  and stockholders' equity






Current liabilities:






Accounts payable


$      1,836



$            1,398

Accrued liabilities


41,888



29,581

Deferred revenue


3,657



2,994

Total current liabilities


47,381



33,973

Long-term liabilities


11,849



7,527

Total liabilities


59,230



41,500







Commitments and contingencies












Stockholders' equity






Common stock


-



-

Additional paid-in capital


705,397



627,742

Accumulated other comprehensive loss


(13,474)



(5,609)

Accumulated deficit


(35,267)



(33,983)

Total stockholders' equity


656,656



588,150

Total liabilities and stockholders' equity


$   715,886



$         629,650

 

Yelp Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)



Three Months Ended



March 31,



2015


2014






Net revenue


$ 118,508


$ 76,407






Cost and expenses





Cost of revenue (1)


8,699


5,077

Sales and marketing (1)


63,266


45,121

Product development (1)


23,960


13,982

General and administrative (1)


19,937


13,170

Depreciation and amortization


6,895


3,661






Total cost and expenses


122,757


81,011

Loss from operations


(4,249)


(4,604)

Other income (expense), net


562


(2)

Loss before income taxes


(3,687)


(4,606)

Benefit for income taxes


2,403


1,971

Net loss attributable to common stockholders


$   (1,284)


$ (2,635)






Net loss per share attributable to common stockholders:





Basic


$     (0.02)


$   (0.04)

Diluted


$     (0.02)


$   (0.04)






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

Basic


73,684


71,171

Diluted


73,684


71,171
















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







Three Months Ended



March 31,



2015


2014

Cost of revenue


$        124


$      150

Sales and marketing


4,937


3,397

Product development


5,105


3,042

General and administrative


3,505


2,867

Total stock-based compensation


$   13,671


$   9,456

 

Yelp Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



Year Ended



March 31,



2015


2014

Operating activities





Net income (loss)


$   (1,284)


$  (2,635)

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





   Depreciation and amortization


6,895


3,661

   Provision for doubtful accounts and sales returns


3,434


1,186

   Stock-based compensation


13,671


9,456

   (Gain) loss on disposal of assets and website development costs


52


-

   Premium amortization, net, on securities held-to-maturity


(117)


-

   Excess tax benefit from share-based award activity


(815)


(39)






Changes in operating assets and liabilities:





   Accounts receivable


(2,850)


(1,249)

   Prepaid expenses and other assets


(6,045)


(5,928)

   Accounts payable, accrued expenses and other liabilities


12,011


5,309

   Deferred revenue


683


(438)

Net cash provided by (used in) operating activities


25,635


9,323






Investing activities





Acquisitions, net of cash received


(71,546)


-

Purchases of property, equipment and software


(10,881)


(4,246)

Capitalized website and software development costs


(3,196)


(1,592)

Change in restricted cash


(5)


(397)

Purchase of intangibles


(314)


-

Proceeds from sale of property and equipment


97


-

Purchases of investment securities held-to- maturity


(36,120)


-

Maturities of investment securities held-to-maturity


18,250


-

Cash used in investing activities


(103,715)


(6,235)






Financing activities





Proceeds from exercise of employee stock options


3,398


6,735

Excess tax benefit from share-based award activity


815


39

Repurchase of common stock


(168)


(361)






Net cash provided by financing activities


4,045


6,413






Effect of exchange rate changes on cash and cash equivalents


(648)


55






Net increase in cash and cash equivalents


(74,683)


9,556

Cash and cash equivalents at beginning of period


247,312


389,764

Cash and cash equivalents at end of period


$172,629


$ 399,320

 


Yelp Inc.


Reconciliation of GAAP to Non-GAAP Financial Measures


(In thousands, except per share amounts)


(Unaudited)










Three Months Ended




March 31,




2015


2014







Adjusted EBITDA:






Net loss


$ (1,284)


$ (2,635)


(Benefit) Provision for income taxes


(2,403)


(1,971)


Other (income) expense, net


(562)


2


Depreciation and amortization


6,895


3,661


Stock-based compensation


13,671


9,456


Adjusted EBITDA


$ 16,317


$  8,513







Non-GAAP Net Income (Loss) and Income (Loss) per share:





GAAP net loss attributable to common






shareholders


$ (1,284)


$ (2,635)


   Add back: stock-based compensation


13,671


9,456


   Add back: amortization of intangible assets


1,231


626


   Less: tax effect of stock-based compensation & amortization of intangible assets


(5,716)


(3,860)


   Add back: valuation allowance release (net of tax)


-


1,958


Non-GAAP Net Income


$   7,902


$  5,545








Non-GAAP diluted shares


77,899









Non-GAAP Net Income (Loss) per share


$     0.10



 

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SOURCE Yelp Inc.