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| 8-K - 8-K - YELP INC | yelp-20201030.htm |
| EX-99.2 - EX-99.2 - YELP INC | yelpq3-20ex992shareholde.htm |
EXHIBIT 99.1
Yelp Reports Third Quarter 2020 Financial Results
Net Revenue grew by 31% from the second quarter 2020 to $221 million
Third quarter Net Loss of $1 million
Adjusted EBITDA increased by $42 million from the second quarter 2020 to $53 million
Cash and Cash Equivalents increased by $65 million to $591 million as of September 30, 2020
SAN FRANCISCO--(BUSINESS WIRE)--November 5, 2020--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, 2020 in the Q3 2020 Shareholder Letter available on its Investor Relations website at www.yelp-ir.com.
“Yelp’s third quarter results demonstrate our business’s considerable resilience, highlighted by positive year-over-year revenue growth in two key areas of our long-term strategy: Home & Local Services and our Self-serve sales channel,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “Together with our strong balance sheet and increased sales efficiency, we are confident in our ability to return to sustainable growth in the new year while still managing the impacts of the pandemic.”
Yelp today separately announced the appointment of Tony Wells to its Board of Directors. More information on Mr. Wells and the expansion of Yelp’s Board to nine seats can be found here.
Quarterly Conference Call
Yelp will host a live Q&A session today at 2:00 p.m. Pacific Time to discuss the third quarter 2020 financial results and outlook for the fourth quarter of 2020. 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 return to sustainable growth in the new year 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 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;
•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.
Investor Relations Contact
Kate Krieger
ir@yelp.com
YELP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| September 30, 2020 | December 31, 2019 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 590,789 | $ | 170,281 | |||||||
| Short-term marketable securities | — | 242,000 | |||||||||
Accounts receivable, net | 84,813 | 106,832 | |||||||||
| Prepaid expenses and other current assets | 18,590 | 14,196 | |||||||||
| Total current assets | 694,192 | 533,309 | |||||||||
| Long-term marketable securities | — | 53,499 | |||||||||
| Property, equipment and software, net | 105,488 | 110,949 | |||||||||
| Operating lease right-of-use assets | 176,603 | 197,866 | |||||||||
| Goodwill | 106,772 | 104,589 | |||||||||
| Intangibles, net | 14,240 | 10,082 | |||||||||
| Restricted cash | 826 | 22,037 | |||||||||
| Other non-current assets | 40,829 | 38,369 | |||||||||
| Total assets | $ | 1,138,950 | $ | 1,070,700 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued liabilities | $ | 103,378 | $ | 72,333 | |||||||
| Operating lease liabilities — current | 54,396 | 57,507 | |||||||||
| Deferred revenue | 4,731 | 4,315 | |||||||||
| Total current liabilities | 162,505 | 134,155 | |||||||||
| Operating lease liabilities — long-term | 155,297 | 174,756 | |||||||||
Other long-term liabilities | 5,520 | 6,798 | |||||||||
| Total liabilities | 323,322 | 315,709 | |||||||||
| Stockholders' equity: | |||||||||||
Common stock | — | — | |||||||||
| Additional paid-in capital | 1,358,804 | 1,259,803 | |||||||||
| Accumulated other comprehensive loss | (9,576) | (11,759) | |||||||||
| Accumulated deficit | (533,600) | (493,053) | |||||||||
| Total stockholders' equity | 815,628 | 754,991 | |||||||||
| Total liabilities and stockholders' equity | $ | 1,138,950 | $ | 1,070,700 | |||||||
YELP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Net revenue | $ | 220,807 | $ | 262,474 | $ | 639,738 | $ | 745,371 | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
Cost of revenue (1) | 13,193 | 16,514 | 41,865 | 45,754 | |||||||||||||||||||
Sales and marketing (1) | 101,301 | 127,655 | 334,887 | 374,016 | |||||||||||||||||||
Product development (1) | 53,022 | 56,661 | 174,104 | 169,302 | |||||||||||||||||||
General and administrative (1) | 30,887 | 39,703 | 100,825 | 101,927 | |||||||||||||||||||
| Depreciation and amortization | 12,544 | 12,391 | 37,484 | 36,507 | |||||||||||||||||||
| Restructuring | 535 | — | 3,847 | — | |||||||||||||||||||
| Total costs and expenses | 211,482 | 252,924 | 693,012 | 727,506 | |||||||||||||||||||
| Income (loss) from operations | 9,325 | 9,550 | (53,274) | 17,865 | |||||||||||||||||||
| Other income, net | 399 | 3,063 | 3,277 | 11,645 | |||||||||||||||||||
| Income (loss) before income taxes | 9,724 | 12,613 | (49,997) | 29,510 | |||||||||||||||||||
| Provision for (benefit from) income taxes | 10,744 | 2,552 | (9,484) | 5,781 | |||||||||||||||||||
| Net (loss) income attributable to common stockholders | $ | (1,020) | $ | 10,061 | $ | (40,513) | $ | 23,729 | |||||||||||||||
| Net (loss) income per share attributable to common stockholders | |||||||||||||||||||||||
| Basic | $ | (0.01) | $ | 0.14 | $ | (0.56) | $ | 0.31 | |||||||||||||||
| Diluted | $ | (0.01) | $ | 0.14 | $ | (0.56) | $ | 0.30 | |||||||||||||||
| Weighted-average shares used to compute net (loss) income per share attributable to common stockholders | |||||||||||||||||||||||
| Basic | 73,514 | 70,773 | 72,495 | 75,975 | |||||||||||||||||||
| Diluted | 73,514 | 73,712 | 72,495 | 79,315 | |||||||||||||||||||
(1) Includes stock-based compensation expense as follows: | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Cost of revenue | $ | 849 | $ | 1,054 | $ | 2,835 | $ | 3,415 | |||||||||||||||
| Sales and marketing | 7,196 | 7,683 | 22,194 | 23,143 | |||||||||||||||||||
| Product development | 15,551 | 15,250 | 50,133 | 46,572 | |||||||||||||||||||
| General and administrative | 6,659 | 5,249 | 17,428 | 17,876 | |||||||||||||||||||
| Total stock-based compensation | $ | 30,255 | $ | 29,236 | $ | 92,590 | $ | 91,006 | |||||||||||||||
YELP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Nine Months Ended September 30, | |||||||||||
| 2020 | 2019 | ||||||||||
| Operating Activities | |||||||||||
| Net (loss) income attributable to common stockholders | $ | (40,513) | $ | 23,729 | |||||||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 37,484 | 36,507 | |||||||||
| Provision for doubtful accounts | 26,802 | 15,259 | |||||||||
| Stock-based compensation | 92,590 | 91,006 | |||||||||
| Noncash lease cost | 31,545 | 31,379 | |||||||||
| Deferred income taxes | (6,505) | (673) | |||||||||
| Other adjustments, net | 1,316 | (2,559) | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (4,783) | (29,395) | |||||||||
| Prepaid expenses and other assets | 1,552 | (2,312) | |||||||||
| Operating lease liabilities | (34,284) | (31,002) | |||||||||
| Accounts payable, accrued liabilities and other liabilities | 23,181 | 17,329 | |||||||||
| Net cash provided by operating activities | 128,385 | 149,268 | |||||||||
| Investing Activities | |||||||||||
| Sales and maturities of marketable securities — available-for-sale | 290,395 | — | |||||||||
| Purchases of marketable securities — held-to-maturity | (87,438) | (396,648) | |||||||||
| Maturities of marketable securities — held-to-maturity | 93,200 | 530,597 | |||||||||
| Release of escrow deposit | — | 28,750 | |||||||||
| Purchases of property, equipment and software | (24,072) | (29,950) | |||||||||
| Other investing activities | 329 | 383 | |||||||||
| Net cash provided by investing activities | 272,414 | 133,132 | |||||||||
| Financing Activities | |||||||||||
| Proceeds from issuance of common stock for employee stock-based plans | 11,620 | 15,813 | |||||||||
| Repurchases of common stock | — | (474,993) | |||||||||
| Taxes paid related to the net share settlement of equity awards | (12,557) | (32,784) | |||||||||
| Other financing activities | (433) | — | |||||||||
| Net cash used in financing activities | (1,370) | (491,964) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (132) | 258 | |||||||||
| Change in cash, cash equivalents and restricted cash | 399,297 | (209,306) | |||||||||
| Cash, cash equivalents and restricted cash — Beginning of period | 192,318 | 354,835 | |||||||||
| Cash, cash equivalents and restricted cash — End of period | $ | 591,615 | $ | 145,529 | |||||||
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 and fees related to shareholder activism. 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 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. Accordingly, Yelp believes that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating its operating results in the same manner as its management and board of directors.
EBITDA and Adjusted EBITDA, which are not prepared under any comprehensive set of accounting rules or principles, 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 in accordance with generally accepted accounting principles in the United States (“GAAP”). In particular, EBITDA and Adjusted EBITDA should not be viewed as substitutes 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 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 fees related to shareholder activism; 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 (loss) income to EBITDA and Adjusted EBITDA (in thousands, except percentages; unaudited):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA: | |||||||||||||||||||||||
| Net (loss) income | $ | (1,020) | $ | 10,061 | $ | (40,513) | $ | 23,729 | |||||||||||||||
| Provision for (benefit from) income taxes | 10,744 | 2,552 | (9,484) | 5,781 | |||||||||||||||||||
| Other income, net | (399) | (3,063) | (3,277) | (11,645) | |||||||||||||||||||
| Depreciation and amortization | 12,544 | 12,391 | 37,484 | 36,507 | |||||||||||||||||||
| EBITDA | 21,869 | 21,941 | (15,790) | 54,372 | |||||||||||||||||||
| Stock-based compensation | 30,255 | 29,236 | 92,590 | 91,006 | |||||||||||||||||||
Fees related to shareholder activism(1) | — | 7,116 | — | 7,116 | |||||||||||||||||||
| Restructuring | 535 | — | 3,847 | — | |||||||||||||||||||
| Adjusted EBITDA | $ | 52,659 | $ | 58,293 | $ | 80,647 | $ | 152,494 | |||||||||||||||
| Net revenue | $ | 220,807 | $ | 262,474 | $ | 639,738 | $ | 745,371 | |||||||||||||||
| Adjusted EBITDA margin | 24 | % | 22 | % | 13 | % | 20 | % | |||||||||||||||
(1) Recorded within general and administrative expenses on our Condensed Consolidated Statements of Operations.