YELP Yelp Inc

First Quarter 2020 Net Revenue Grew 6% Compared to First Quarter 2019

Net Loss of $16 Million

Adjusted EBITDA was $17 Million

As of March 31, 2020, the Company had $491 Million of Cash, Cash Equivalents and Marketable Securities

Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today posted its financial results for the first quarter ended March 31, 2020 in the Q1 2020 Shareholder Letter available on its Investor Relations website at www.yelp-ir.com.

“The emergence of the COVID-19 pandemic has drastically changed nearly all aspects of life and has significantly impacted local businesses and their ability to operate as they once did,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “Our first quarter results demonstrate the strength of our strategy, as we grew Revenue 6% compared to the first quarter of 2019, despite the emergence of the COVID-19 pandemic in March. While there is no way of knowing how long this pandemic will last, we are encouraged by the early signs of stabilization in the business that we witnessed in the second half of April. We are confident that our diversified customer base across a variety of geographies and categories, financial liquidity, and operational capabilities will enable Yelp to weather the current crisis and emerge well-positioned to support local economies as they recover and return to growth.”

Quarterly Conference Call

Yelp will host a live Q&A session today at 2:00 p.m. Pacific Time to discuss the first 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 the stabilization in its business and its ability to weather and emerge well positioned from the current crisis, 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;
• 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)

 

 

March 31,

 

December 31,

2020

 

2019

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

364,576

 

 

$

170,281

 

Short-term marketable securities

122,618

 

 

242,000

 

Accounts receivable, net

85,875

 

 

106,832

 

Prepaid expenses and other current assets

21,804

 

 

14,196

 

Total current assets

594,873

 

 

533,309

 

Long-term marketable securities

3,500

 

 

53,499

 

Property, equipment and software, net

110,141

 

 

110,949

 

Operating lease right-of-use assets

199,053

 

 

197,866

 

Goodwill

103,976

 

 

104,589

 

Intangibles, net

9,304

 

 

10,082

 

Restricted cash

22,332

 

 

22,037

 

Other non-current assets

42,045

 

 

38,369

 

Total assets

$

1,085,224

 

 

$

1,070,700

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued liabilities

$

74,702

 

 

$

72,333

 

Operating lease liabilities — current

62,342

 

 

57,507

 

Deferred revenue

3,637

 

 

4,315

 

Total current liabilities

140,681

 

 

134,155

 

Operating lease liabilities — long-term

175,073

 

 

174,756

 

Other long-term liabilities

7,038

 

 

6,798

 

Total liabilities

322,792

 

 

315,709

 

 

 

 

 

Stockholders' equity:

 

 

 

Common stock

—

 

—

Additional paid-in capital

1,283,885

 

 

1,259,803

 

Accumulated other comprehensive loss

(12,863

)

 

(11,759

)

Accumulated deficit

(508,590

)

 

(493,053

)

Total stockholders' equity

762,432

 

 

754,991

 

Total liabilities and stockholders' equity

$

1,085,224

 

 

$

1,070,700

 

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

March 31,

 

2020

 

2019

Net revenue

$

249,901

 

 

$

235,942

 

 

 

 

 

Costs and expenses:

 

 

 

Cost of revenue (1)

16,847

 

 

14,265

 

Sales and marketing (1)

137,297

 

 

124,316

 

Product development (1)

67,113

 

 

58,075

 

General and administrative (1)

43,536

 

 

31,292

 

Depreciation and amortization

12,358

 

 

11,876

 

Total costs and expenses

277,151

 

 

239,824

 

Loss from operations

(27,250

)

 

(3,882

)

Other income, net

2,383

 

 

4,691

 

(Loss) income before income taxes

(24,867

)

 

809

 

Benefit from income taxes

(9,364

)

 

(556

)

Net (loss) income attributable to common stockholders

$

(15,503

)

 

$

1,365

 

 

 

 

 

Net (loss) income per share attributable to common stockholders

 

 

 

Basic

$

(0.22

)

 

$

0.02

 

Diluted

$

(0.22

)

 

$

0.02

 

 

 

 

 

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

 

 

 

Basic

71,548

 

 

81,772

 

Diluted

71,548

 

 

85,087

 

 

 

 

 

 

 

 

 

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

 

 

 

 

Three Months Ended

March 31,

 

2020

 

2019

Cost of revenue

$

1,043

 

 

$

1,244

 

Sales and marketing

7,696

 

 

7,687

 

Product development

17,755

 

 

16,075

 

General and administrative

5,256

 

 

6,313

 

Total stock-based compensation

$

31,750

 

 

$

31,319

 

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three Months Ended

March 31,

 

2020

 

2019

Operating Activities

 

 

 

Net (loss) income attributable to common stockholders

$

(15,503)

 

 

$

1,365

 

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

 

 

 

Depreciation and amortization

12,358

 

 

11,876

 

Provision for doubtful accounts

15,933

 

 

4,264

 

Stock-based compensation

31,750

 

 

31,319

 

Noncash lease cost

10,378

 

 

9,751

 

Deferred income taxes

(7,450)

 

 

(1,259)

 

Other adjustments, net

(287)

 

 

(1,159)

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

5,024

 

 

(6,260)

 

Prepaid expenses and other assets

(4,118)

 

 

(5,292)

 

Operating lease liabilities

(6,663)

 

 

(9,948)

 

Accounts payable, accrued liabilities and other liabilities

(636)

 

 

6,372

 

Net cash provided by operating activities

40,786

 

 

41,029

 

 

 

 

 

Investing Activities

 

 

 

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

164,215

 

 

—

 

Purchases of marketable securities — held-to-maturity

(87,438)

 

 

(157,567)

 

Maturities of marketable securities — held-to-maturity

93,200

 

 

201,497

 

Purchases of property, equipment and software

(7,053)

 

 

(8,991)

 

Other investing activities

295

 

 

215

 

Net cash provided by investing activities

163,219

 

 

35,154

 

 

 

 

 

Financing Activities

 

 

 

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

2,585

 

 

1,145

 

Repurchases of common stock

—

 

 

(102,126)

 

Taxes paid related to the net share settlement of equity awards

(11,514)

 

 

(12,497)

 

Net cash used in financing activities

(8,929)

 

 

(113,478)

 

 

 

 

 

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

(486)

 

 

(65)

 

 

 

 

 

Change in cash, cash equivalents and restricted cash

194,590

 

 

(37,360)

 

Cash, cash equivalents and restricted cash — Beginning of period

192,318

 

 

354,835

 

Cash, cash equivalents and restricted cash — End of period

$

386,908

 

 

$

317,475

 

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. 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. 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 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 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; 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

March 31,

 

2020

 

2019

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

 

 

 

Net (loss) income

$

(15,503

)

 

$

1,365

 

Benefit from income taxes

(9,364

)

 

(556

)

Other income, net

(2,383

)

 

(4,691

)

Depreciation and amortization

12,358

 

 

11,876

 

EBITDA

(14,892

)

 

7,994

 

Stock-based compensation

31,750

 

 

31,319

 

Adjusted EBITDA

$

16,858

 

 

$

39,313

 

 

 

 

 

Net revenue

$

249,901

 

 

$

235,942

 

Adjusted EBITDA margin

7

%

 

17

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200507005827/en/

Investor Relations Contact Kate Krieger ir@yelp.com