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Yelp Reports Record Net Revenue in the Third Quarter 2022

11/03/2022

Third quarter Net revenue increased by 15% year over year to $309 million, resulting in Net income of $9 million

Adjusted EBITDA increased to record $74 million

Narrows full-year outlook to $1.185 billion to $1.195 billion of Net revenue and $265 million to $275 million of Adjusted EBITDA 1

Board of Directors authorized $250 million increase to stock repurchase program

Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today posted its financial results for the third quarter ended September 30, 2022 in the Q3 2022 Shareholder Letter available on its Investor Relations website at www.yelp-ir.com.

“The third quarter brought a number of new highs as advertisers continued to turn to Yelp for our broad-based ad platform and high-intent audience,” said Jeremy Stoppelman, Yelp co-founder and chief executive officer. “We delivered record net revenue, driven by record revenue in our services categories and in our most efficient Self-serve and Multi-location sales channels. As our teams consistently execute against our strategic initiatives, I remain confident in our ability to drive profitable growth and shareholder value over the long term.”

“We saw particularly strong third-quarter results in our services categories, with year-over-year growth accelerating from the second quarter to 15%, driven by an approximately 25% year-over-year increase in our home services category,” said David Schwarzbach, Yelp’s chief financial officer. “As advertisers and consumers continue to navigate a complex macro environment, we believe our mission of connecting people with great local businesses is even more relevant.”

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 third quarter financial results and outlook for the fourth 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 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:

  • macroeconomic uncertainty, including related to persistent inflation and continued interest rate hikes, and its 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)

 

 

September 30,
2022

 

December 31,
2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

330,970

 

 

$

479,783

 

Short-term marketable securities

 

90,871

 

 

 

 

Accounts receivable, net

 

127,232

 

 

 

107,358

 

Prepaid expenses and other current assets

 

74,028

 

 

 

57,536

 

Total current assets

 

623,101

 

 

 

644,677

 

Property, equipment and software, net

 

78,699

 

 

 

83,857

 

Operating lease right-of-use assets

 

104,412

 

 

 

140,785

 

Goodwill

 

98,256

 

 

 

105,128

 

Intangibles, net

 

9,338

 

 

 

10,673

 

Restricted cash

 

1,146

 

 

 

858

 

Other non-current assets

 

115,382

 

 

 

64,550

 

Total assets

$

1,030,334

 

 

$

1,050,528

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued liabilities

$

150,804

 

 

$

119,620

 

Operating lease liabilities — current

 

40,177

 

 

 

40,237

 

Deferred revenue

 

8,403

 

 

 

4,156

 

Total current liabilities

 

199,384

 

 

 

164,013

 

Operating lease liabilities — long-term

 

95,139

 

 

 

127,979

 

Other long-term liabilities

 

34,433

 

 

 

7,218

 

Total liabilities

 

328,956

 

 

 

299,210

 

 

 

 

 

Stockholders' equity:

 

 

 

Common stock

 

 

 

 

 

Additional paid-in capital

 

1,615,970

 

 

 

1,522,572

 

Accumulated other comprehensive loss

 

(20,624

)

 

 

(11,090

)

Accumulated deficit

 

(893,968

)

 

 

(760,164

)

Total stockholders' equity

 

701,378

 

 

 

751,318

 

Total liabilities and stockholders' equity

$

1,030,334

 

 

$

1,050,528

 

 

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net revenue

$

308,891

 

$

269,155

 

$

884,403

 

$

758,439

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of revenue (1)

 

26,805

 

 

21,185

 

 

77,222

 

 

54,052

 

Sales and marketing (1)

 

133,061

 

 

114,295

 

 

388,570

 

 

340,845

 

Product development (1)

 

75,803

 

 

69,402

 

 

233,336

 

 

206,089

 

General and administrative (1)

 

48,381

 

 

30,001

 

 

126,141

 

 

106,957

 

Depreciation and amortization

 

11,417

 

 

12,627

 

 

34,165

 

 

38,543

 

Restructuring

 

 

 

 

 

 

 

32

 

Total costs and expenses

 

295,467

 

 

247,510

 

 

859,434

 

 

746,518

 

Income from operations

 

13,424

 

 

21,645

 

 

24,969

 

 

11,921

 

Other income, net

 

2,691

 

 

331

 

 

4,947

 

 

1,578

 

Income before income taxes

 

16,115

 

 

21,976

 

 

29,916

 

 

13,499

 

Provision for (benefit from) income taxes

 

7,007

 

 

3,911

 

 

13,714

 

 

(2,982

)

Net income attributable to common stockholders

$

9,108

 

$

18,065

 

$

16,202

 

$

16,481

 

 

 

 

 

 

 

 

 

Net income per share attributable to common stockholders

 

 

 

 

 

 

 

Basic

$

0.13

 

$

0.24

 

$

0.23

 

$

0.22

 

Diluted

$

0.13

 

$

0.23

 

$

0.22

 

$

0.21

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Basic

 

70,630

 

 

73,904

 

 

71,158

 

 

74,647

 

Diluted

 

72,658

 

 

77,422

 

 

73,577

 

 

79,007

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Cost of revenue

$

1,148

 

$

1,071

 

$

3,701

 

$

3,273

 

Sales and marketing

 

8,606

 

 

7,794

 

 

25,461

 

 

24,632

 

Product development

 

21,352

 

 

20,380

 

 

66,781

 

 

61,807

 

General and administrative

 

7,526

 

 

7,197

 

 

23,810

 

 

26,834

 

Total stock-based compensation

$

38,632

 

$

36,442

 

$

119,753

 

$

116,546

 

 

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Nine Months Ended

September 30,

 

 

2022

 

 

 

2021

 

Operating Activities

 

 

 

Net income

$

16,202

 

 

$

16,481

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

34,165

 

 

 

38,543

 

Provision for doubtful accounts

 

18,249

 

 

 

9,834

 

Stock-based compensation

 

119,753

 

 

 

116,546

 

Noncash lease cost

 

24,962

 

 

 

30,676

 

Deferred income taxes

 

(41,162

)

 

 

(6,400

)

Amortization of deferred cost

 

13,477

 

 

 

10,676

 

Asset impairment

 

10,464

 

 

 

11,164

 

Other adjustments, net

 

1,291

 

 

 

103

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(38,130

)

 

 

(27,279

)

Prepaid expenses and other assets

 

(39,920

)

 

 

(14,937

)

Operating lease liabilities

 

(29,928

)

 

 

(32,891

)

Accounts payable, accrued liabilities and other liabilities

 

58,413

 

 

 

15,219

 

Net cash provided by operating activities

 

147,836

 

 

 

167,735

 

 

 

 

 

Investing Activities

 

 

 

Purchases of marketable securities — available-for-sale

 

(92,895

)

 

 

 

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

 

1,649

 

 

 

 

Purchases of property, equipment and software

 

(20,104

)

 

 

(21,600

)

Other investing activities

 

43

 

 

 

341

 

Net cash used in investing activities

 

(111,307

)

 

 

(21,259

)

 

 

 

 

Financing Activities

 

 

 

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

 

16,143

 

 

 

16,807

 

Taxes paid related to the net share settlement of equity awards

 

(48,161

)

 

 

(49,180

)

Repurchases of common stock

 

(150,006

)

 

 

(177,832

)

Net cash used in financing activities

 

(182,024

)

 

 

(210,205

)

 

 

 

 

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

 

(3,030

)

 

 

(137

)

 

 

 

 

Change in cash, cash equivalents and restricted cash

 

(148,525

)

 

 

(63,866

)

Cash, cash equivalents and restricted cash — Beginning of period

 

480,641

 

 

 

596,540

 

Cash, cash equivalents and restricted cash — End of period

$

332,116

 

 

$

532,674

 

 

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

 

Three Months Ended

 

Nine Months Ended

 

September 30,

2022

 

September 30,

2021

 

September 30,

2022

 

September 30,

2021

Reconciliation of Net Income to Adjusted EBITDA:

 

 

 

 

 

 

 

Net income

$

9,108

 

 

$

18,065

 

 

$

16,202

 

 

$

16,481

 

Provision for (benefit from) income taxes

 

7,007

 

 

 

3,911

 

 

 

13,714

 

 

 

(2,982

)

Other income, net

 

(2,691

)

 

 

(331

)

 

 

(4,947

)

 

 

(1,578

)

Depreciation and amortization

 

11,417

 

 

 

12,627

 

 

 

34,165

 

 

 

38,543

 

Stock-based compensation

 

38,632

 

 

 

36,442

 

 

 

119,753

 

 

 

116,546

 

Restructuring

 

 

 

 

 

 

 

 

 

 

32

 

Asset impairment(1)

 

10,464

 

 

 

 

 

 

10,464

 

 

 

11,164

 

Adjusted EBITDA

$

73,937

 

 

$

70,714

 

 

$

189,351

 

 

$

178,206

 

 

 

 

 

 

 

 

 

Net revenue

$

308,891

 

 

$

269,155

 

 

$

884,403

 

 

$

758,439

 

Net income margin

 

3

%

 

 

7

%

 

 

2

%

 

 

2

%

Adjusted EBITDA margin

 

24

%

 

 

26

%

 

 

21

%

 

 

23

%

 

(1) Recorded within general and administrative expenses on our Condensed Consolidated Statements of Operations.

 

Investor Relations Contact:
Kate Krieger
ir@yelp.com

Press Contact:
Amber Albrecht
press@yelp.com

Source: Yelp Inc.
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