News Releases

Revenue Increased 24% Over First Quarter 2016

SAN FRANCISCO--(BUSINESS WIRE)--May 9, 2017-- Yelp Inc. (NYSE:YELP), the company that connects people with great local businesses, today announced financial results for the first quarter ended March 31, 2017.

“We had a solid first quarter, growing revenue by 24% and accelerating traffic growth across the app, desktop and mobile website,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “In addition, engagement per unique visitor continues to grow, accelerating on the app where we derive the majority of our activity. Our recent acquisitions of Nowait and Turnstyle introduce more ways for consumers to interact through Yelp, while also enhancing our ability to deliver value to business owners.”

The following results reflect Yelp’s financial performance and key operating metrics for the three months ended March 31, 2017.

First Quarter 2017 Financial Highlights

• Net revenue was $197.3 million in the first quarter of 2017, reflecting 24% growth over the first quarter of 2016.
• GAAP net loss in the first quarter of 2017 was ($4.8) million, or ($0.06) per basic share, compared to a GAAP net loss of ($15.5) million, or ($0.20) per basic share, in the first quarter of 2016.
• Adjusted EBITDA for the first quarter of 2017 was $29.3 million compared to $13.0 million in the first quarter of 2016.
• EBITDA for the first quarter of 2017 was $4.9 million compared to an EBITDA loss of ($6.1) million in the first quarter of 2016.
• Non-GAAP net income was $16.3 million, or $0.19 per diluted share, for the first quarter of 2017, compared to $6.0 million, or $0.08 per diluted share, in the first quarter of 2016.

First Quarter 2017 Revenue Summary

• Advertising revenue totaled $177.0 million, representing 24% growth compared to the first quarter of 2016.
• Transactions revenue totaled $18.1 million, representing 25% growth compared to the first quarter of 2016.
• Other services revenue totaled $2.2 million, representing 107% growth compared to the first quarter of 2016.

First Quarter 2017 Key Business Metrics Highlights

• Cumulative reviews grew 26% year over year to approximately 127 million.
• App Unique Devices grew 22% year over year to approximately 26 million on a monthly average basis¹.
• Paying advertising accounts grew 17% year over year to approximately 139,000².

“We had strong financial performance this quarter doubling adjusted EBITDA compared to a year ago,” said Lanny Baker, Yelp’s chief financial officer. “While we are lowering our revenue and adjusted EBITDA outlook for the year, sales productivity has rebounded, transactions revenue has accelerated and we’ve seen promising results from our newly expanded retention efforts, giving us confidence in our ability to grow and scale in 2017 and beyond.”

Second Quarter and Full Year 2017 Business Outlook

As of today, Yelp is providing its outlook for the second quarter and updating its outlook for the full year of 2017:

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 (expense), net and provision for (benefit from) income taxes, which are reconciling items between adjusted EBITDA and GAAP net income (loss). Because such items cannot be reasonably predicted and could have a significant impact on the calculation of GAAP net income (loss), a reconciliation of the non-GAAP financial measure outlook to the corresponding GAAP measure is not available without unreasonable effort. For more information regarding the non-GAAP financial measures discussed in this release, please see "Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Financial Measures" below.

Adoption of Paying Account Metric

Yelp is revising its paying account metric - formerly referred to as advertising and subscription accounts or local advertising accounts - to better align with its revenue classified as advertising revenue. Paying advertising accounts comprise all business accounts from which Yelp recognizes advertising revenue in a given three-month period. Yelp is retiring the advertising and subscription accounts/local advertising accounts metric, which was approximately 143,000 in the first quarter of 2017, representing 18% growth over the first quarter of 2016. A record of historical paying advertising account values can be found on the data sheet posted on Yelp’s investor relations website at www.yelp-ir.com.

Quarterly Conference Call

To access the call, please dial 1 (844) 795-4421, or outside the U.S. 1 (661) 378-9638, with Passcode 10114502, 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 4:30 p.m. PT May 9, 2017 and 4:30 p.m. PT May 16, 2017 by calling 1 (855) 859-2056 or 1 (404) 537-3406, with Passcode 10114502. 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 has taken root in major metros in more than 30 countries. Approximately 26 million unique devices¹ accessed Yelp via the Yelp app, approximately 84 million unique visitors visited Yelp via desktop computer³ and approximately 73 million unique visitors visited Yelp via mobile website⁴ on a monthly average basis during the first quarter of 2017. By the end of the same quarter, Yelpers had written approximately 127 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 unique devices accessing the app on a monthly average basis over a given three-month period, according to internal Yelp logs.

² Paying advertising accounts comprise all business accounts from which we recognize advertising revenue in a given three-month period.

³ Calculated as the number of “users,” as measured by Google Analytics, accessing Yelp via the desktop website on a monthly average basis over a given three-month period.

⁴ Calculated as the number of “users,” as measured by Google Analytics, accessing Yelp via the mobile website on a monthly average basis over a given three-month period.

Non-GAAP Financial Measures

This press release includes, and statements made during the above referenced conference call will include, information relating to adjusted EBITDA, EBITDA, non-GAAP net income, adjusted EBITDA margin and non-GAAP net income per share, 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 (expense), net; depreciation and amortization; stock-based compensation expense; and restructuring and integration costs. We define EBITDA as net income (loss), adjusted to exclude: provision for (benefit from) income taxes; other income (expense), net; depreciation and amortization; and restructuring and integration costs. We define non-GAAP net income as net income (loss), adjusted to exclude: stock-based compensation expense; amortization of intangibles; restructuring and integration costs; and the tax effect of stock-based compensation, amortization of intangibles, restructuring and integration costs and valuation allowance. We define adjusted EBITDA margin as adjusted EBITDA divided by net revenue. Adjusted EBITDA, EBITDA, non-GAAP net income, adjusted EBITDA margin and non-GAAP net income per share have been included in this press release, or will be included in the conference call, because they 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 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, 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 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 adjusted EBITDA, EBITDA and non-GAAP net income do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
• adjusted EBITDA and EBITDA do not reflect changes in, or cash requirements for, Yelp's working capital needs;
• adjusted EBITDA and non-GAAP net income do not consider the potentially dilutive impact of equity-based compensation;
• adjusted EBITDA and EBITDA do not reflect tax payments that may represent a reduction in cash available to Yelp;
• adjusted EBITDA, EBITDA and non-GAAP net income do not take into account any restructuring costs; and
• other companies, including those in Yelp’s industry, may calculate adjusted EBITDA, EBITDA and non-GAAP net income differently, which reduces their usefulness as comparative measures.

Because of these limitations, you should consider adjusted EBITDA, EBITDA, non-GAAP net income, adjusted EBITDA margin and non-GAAP net income per share alongside other financial performance measures, including various cash flow metrics, net income (loss) and Yelp’s other GAAP results. Additionally, Yelp has not reconciled its adjusted EBITDA outlook for the second quarter and full year 2017 to net income (loss) because it does not provide an outlook for net income (loss) due to the uncertainty and potential variability of other income (expense), net and provision for (benefit from) income taxes, which are reconciling items between net income (loss) and adjusted EBITDA. As items that impact net income (loss) are out of Yelp’s control and cannot be reasonably predicted, Yelp is unable to provide such an outlook. Accordingly, reconciliation of adjusted EBITDA outlook to net income (loss) for the second quarter and full year 2017 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, and statements made during the above referenced conference call will contain, forward-looking statements relating to, among other things, the future performance of Yelp and its consolidated subsidiaries that are based on Yelp’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 2017; Yelp’s investment and other priorities for 2017 and its ability to execute against those priorities; Yelp’s ability to improve its earnings, margins and productivity; Yelp’s ability to broaden its sales strategy and capture a meaningful share of the large local market; the future growth in Yelp revenue; Yelp’s ability to increase usage and engagement (particularly on the app), increase awareness of and engagement on Yelp among consumers, and deliver value to consumers and local businesses; Yelp’s ability to increase transactions completed on its platform, including the continued growth of Request-A-Quote and food order activity on Yelp; trends in advertiser retention; and the recovery of Yelp’s local salesforce productivity. 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: Yelp’s limited operating history in an evolving industry; Yelp’s ability to generate sufficient revenue to maintain profitability, particularly in light of its significant ongoing sales and marketing expenses and the wind down of sales activities outside of the United States and Canada; Yelp’s ability to successfully manage acquisitions of new businesses, solutions or technologies, such as Nowait and Turnstyle, and to integrate those businesses, solutions or technologies; Yelp’s reliance on traffic to its website from search engines like Google and Bing; Yelp’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 Yelp’s base of advertisers; changes in political, business and economic conditions, including any economic downturn or crisis and any conditions that affect ecommerce growth; Yelp’s ability to deal with the increasingly competitive local search environment; Yelp’s need and ability to manage other regulatory, tax and litigation risks as applicable laws become more restrictive; the competitive and regulatory environment while Yelp continues to introduce new products and as new laws and regulations related to Internet companies come into effect; and Yelp’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 Yelp’s operating results is 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 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 Yelp on the date hereof. Yelp assumes no obligation to update such statements.

View source version on businesswire.com: http://www.businesswire.com/news/home/20170509006486/en/

Source: Yelp Inc.

Investor Relations
Yelp Inc.
Allie Dalglish, 415-635-2412
ir@yelp.com