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Yelp Reports Second Quarter 2020 Financial Results

08/06/2020

Second Quarter 2020 Net Revenue of $169 Million

Net Loss of $24 Million

Adjusted EBITDA of $11 Million

As of June 30, 2020, the Company had $526 Million of Cash and Cash Equivalents

SAN FRANCISCO--(BUSINESS WIRE)-- 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, 2020 in the Q2 2020 Shareholder Letter available on its Investor Relations website at www.yelp-ir.com.

“Our second quarter results demonstrate the resilience of our business, in spite of the significant headwinds faced by local economies following the emergence of COVID-19,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “Due to our disciplined actions on expenses, coupled with solid revenue performance, we added $35 million of Cash and cash equivalents to our Balance sheet. Though the pace of economic recovery remains uncertain and will not be uniform, we have confidence in our ability to execute in this environment and in the strength of our diversified business.”

Quarterly Conference Call

Yelp will host a live Q&A session today at 2:00 p.m. Pacific Time to discuss the second quarter 2020 financial results. 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 unmatched 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, including Yelp’s ability to execute in the current environment as well as the strength and resilience of its business, 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:

  • the duration and magnitude of the COVID-19 pandemic and measures implemented to help control its spread;
  • the pace of reopening and recovery by local economies;
  • Yelp’s ability to maintain and expand its base of advertisers, particularly as many businesses reduce spending on advertising in connection with COVID-19;
  • Yelp’s limited operating history in an evolving industry;
  • Yelp’s ability to generate sufficient revenue to regain profitability, particularly in light of the ongoing impact of COVID-19 and Yelp’s relief initiatives; and
  • Yelp’s ability to generate and maintain sufficient high-quality content from its users.

YELP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

June 30,
2020

 

December 31,
2019

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

525,693

 

 

 

$

170,281

 

 

Short-term marketable securities

 

 

 

242,000

 

 

Accounts receivable, net

72,025

 

 

 

106,832

 

 

Prepaid expenses and other current assets

19,675

 

 

 

14,196

 

 

Total current assets

617,393

 

 

 

533,309

 

 

Long-term marketable securities

 

 

 

53,499

 

 

Property, equipment and software, net

106,732

 

 

 

110,949

 

 

Operating lease right-of-use assets

188,266

 

 

 

197,866

 

 

Goodwill

104,796

 

 

 

104,589

 

 

Intangibles, net

8,733

 

 

 

10,082

 

 

Restricted cash

910

 

 

 

22,037

 

 

Other non-current assets

46,655

 

 

 

38,369

 

 

Total assets

$

1,073,485

 

 

 

$

1,070,700

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued liabilities

$

60,206

 

 

 

$

72,333

 

 

Operating lease liabilities — current

56,406

 

 

 

57,507

 

 

Deferred revenue

3,918

 

 

 

4,315

 

 

Total current liabilities

120,530

 

 

 

134,155

 

 

Operating lease liabilities — long-term

164,537

 

 

 

174,756

 

 

Other long-term liabilities

7,098

 

 

 

6,798

 

 

Total liabilities

292,165

 

 

 

315,709

 

 

 

 

 

 

Stockholders' equity:

 

 

 

Common stock

 

 

 

 

 

Additional paid-in capital

1,325,745

 

 

 

1,259,803

 

 

Accumulated other comprehensive loss

(11,845

)

 

 

(11,759

)

 

Accumulated deficit

(532,580

)

 

 

(493,053

)

 

Total stockholders' equity

781,320

 

 

 

754,991

 

 

Total liabilities and stockholders' equity

$

1,073,485

 

 

 

$

1,070,700

 

 

 

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2020

 

2019

 

2020

 

2019

Net revenue

$

169,030

 

 

 

$

246,955

 

 

$

418,931

 

 

 

$

482,897

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of revenue (1)

11,825

 

 

 

14,975

 

 

28,672

 

 

 

29,240

 

Sales and marketing (1)

96,289

 

 

 

122,045

 

 

233,586

 

 

 

246,361

 

Product development (1)

53,969

 

 

 

54,566

 

 

121,082

 

 

 

112,641

 

General and administrative (1)

26,402

 

 

 

30,932

 

 

69,938

 

 

 

62,224

 

Depreciation and amortization

12,582

 

 

 

12,240

 

 

24,940

 

 

 

24,116

 

Restructuring

3,312

 

 

 

 

 

3,312

 

 

 

 

Total costs and expenses

204,379

 

 

 

234,758

 

 

481,530

 

 

 

474,582

 

(Loss) income from operations

(35,349

)

 

 

12,197

 

 

(62,599

)

 

 

8,315

 

Other income, net

495

 

 

 

3,891

 

 

2,878

 

 

 

8,582

 

(Loss) income before income taxes

(34,854

)

 

 

16,088

 

 

(59,721

)

 

 

16,897

 

(Benefit from) provision for income taxes

(10,864

)

 

 

3,785

 

 

(20,228

)

 

 

3,229

 

Net (loss) income attributable to common stockholders

$

(23,990

)

 

 

$

12,303

 

 

$

(39,493

)

 

 

$

13,668

 

 

 

 

 

 

 

 

 

Net (loss) income per share attributable to common stockholders

 

 

 

 

 

 

 

Basic

$

(0.33

)

 

 

$

0.16

 

 

$

(0.55

)

 

 

$

0.17

 

Diluted

$

(0.33

)

 

 

$

0.16

 

 

$

(0.55

)

 

 

$

0.17

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Basic

72,413

 

 

 

75,601

 

 

71,980

 

 

 

78,620

 

Diluted

72,413

 

 

 

78,530

 

 

71,980

 

 

 

81,742

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2020

 

2019

 

2020

 

2019

Cost of revenue

$

943

 

 

 

$

1,118

 

 

$

1,986

 

 

 

$

2,361

 

Sales and marketing

7,302

 

 

 

7,774

 

 

14,998

 

 

 

15,461

 

Product development

16,827

 

 

 

15,247

 

 

34,582

 

 

 

31,322

 

General and administrative

5,513

 

 

 

6,313

 

 

10,769

 

 

 

12,626

 

Total stock-based compensation

$

30,585

 

 

 

$

30,452

 

 

$

62,335

 

 

 

$

61,770

 

 

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Six Months Ended
June 30,

 

2020

 

2019

Operating Activities

 

 

 

Net (loss) income attributable to common stockholders

$

(39,493

)

 

 

$

13,668

 

 

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

 

 

 

Depreciation and amortization

24,940

 

 

 

24,116

 

 

Provision for doubtful accounts

21,897

 

 

 

8,716

 

 

Stock-based compensation

62,335

 

 

 

61,770

 

 

Noncash lease cost

20,984

 

 

 

21,433

 

 

Deferred income taxes

(14,263

)

 

 

(1,912

)

 

Other adjustments, net

876

 

 

 

(1,632

)

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

12,910

 

 

 

(17,143

)

 

Prepaid expenses and other assets

604

 

 

 

(5,335

)

 

Operating lease liabilities

(22,520

)

 

 

(20,299

)

 

Accounts payable, accrued liabilities and other liabilities

(11,021

)

 

 

14,464

 

 

Net cash provided by operating activities

57,249

 

 

 

97,846

 

 

 

 

 

 

Investing Activities

 

 

 

Sales and maturities of marketable securities — available-for-sale

290,395

 

 

 

 

 

Purchases of marketable securities — held-to-maturity

(87,438

)

 

 

(289,100

)

 

Maturities of marketable securities — held-to-maturity

93,200

 

 

 

397,197

 

 

Release of escrow deposit

 

 

 

28,750

 

 

Purchases of property, equipment and software

(17,004

)

 

 

(19,214

)

 

Other investing activities

328

 

 

 

276

 

 

Net cash provided by investing activities

279,481

 

 

 

117,909

 

 

 

 

 

 

Financing Activities

 

 

 

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

10,808

 

 

 

11,198

 

 

Repurchases of common stock

 

 

 

(397,613

)

 

Taxes paid related to the net share settlement of equity awards

(12,557

)

 

 

(22,605

)

 

Other financing activities

(356

)

 

 

 

 

Net cash used in financing activities

(2,105

)

 

 

(409,020

)

 

 

 

 

 

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

(340

)

 

 

(24

)

 

 

 

 

 

Change in cash, cash equivalents and restricted cash

334,285

 

 

 

(193,289

)

 

Cash, cash equivalents and restricted cash — Beginning of period

192,318

 

 

 

354,835

 

 

Cash, cash equivalents and restricted cash — End of period

$

526,603

 

 

 

$

161,546

 

 

Non-GAAP Financial Measures

This press release and statements made during the above referenced webcast may include information relating to EBITDA, Adjusted EBITDA and Adjusted EBITDA margin, each of which the Securities and Exchange Commission has defined as a "non-GAAP financial measure."

We define EBITDA as net income (loss), adjusted to exclude: provision for (benefit from) income taxes; other income, net; and depreciation and amortization.

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.

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are key measures used by Yelp management and the board of directors to understand and evaluate core operating performance and trends, to prepare and approve Yelp’s annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating EBITDA and Adjusted EBITDA can provide a useful measure for period-to-period comparisons of Yelp’s primary business operations. 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”).

EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of Yelp’s financial 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 EBITDA and Adjusted EBITDA do not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
  • EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, Yelp's working capital needs;
  • EBITDA and Adjusted EBITDA do 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 EBITDA and Adjusted EBITDA differently, which reduces their usefulness as comparative measures.

Because of these limitations, you should consider EBITDA, 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 to EBITDA and Adjusted EBITDA (in thousands):

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2020

 

2019

 

2020

 

2019

Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA:

 

 

 

 

 

 

 

Net (loss) income

$

(23,990

)

 

 

$

12,303

 

 

 

$

(39,493

)

 

 

$

13,668

 

 

(Benefit from) provision for income taxes

(10,864

)

 

 

3,785

 

 

 

(20,228

)

 

 

3,229

 

 

Other income, net

(495

)

 

 

(3,891

)

 

 

(2,878

)

 

 

(8,582

)

 

Depreciation and amortization

12,582

 

 

 

12,240

 

 

 

24,940

 

 

 

24,116

 

 

EBITDA

(22,767

)

 

 

24,437

 

 

 

(37,659

)

 

 

32,431

 

 

Stock-based compensation

30,585

 

 

 

30,452

 

 

 

62,335

 

 

 

61,770

 

 

Restructuring

3,312

 

 

 

 

 

 

3,312

 

 

 

 

 

Adjusted EBITDA

$

11,130

 

 

 

$

54,889

 

 

 

$

27,988

 

 

 

$

94,201

 

 

 

 

 

 

 

 

 

 

Net revenue

$

169,030

 

 

 

$

246,955

 

 

 

$

418,931

 

 

 

$

482,897

 

 

Adjusted EBITDA margin

7

 

%

 

22

 

%

 

7

 

%

 

20

 

%

 

Investor Relations Contact
Kate Krieger
ir@yelp.com

Source: Yelp Inc.

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