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Yelp Reports Fourth Quarter and Full Year 2020 Financial Results

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Fourth quarter Net Revenue of $233 million

Net Income grew 23% from the fourth quarter of 2019 to $21 million

Fourth quarter Adjusted EBITDA margin was 26%

Expects return to sustainable revenue growth in 2021

Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today posted its financial results for the fourth quarter and full year ended December 31, 2020 in the Q4 and Full Year 2020 Shareholder Letter available on its Investor Relations website at www.yelp-ir.com.

"2020 was a transformational year for Yelp," said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. "We preserved our financial strength throughout the pandemic as we increased the pace of product innovation to help consumers and local businesses stay connected, while continuing to make significant progress on our long-term strategy. We increased monetization in Home & Local Services and completed the realignment of our go-to-market channels, driving more revenue growth through our Self-serve channel. As we look ahead, we are confident in our ability to return to sustainable revenue growth in 2021."

Quarterly Conference Call

Yelp will host a live Q&A session today at 2:00 p.m. Pacific Time to discuss the fourth quarter and full year 2020 financial results and outlook for the first quarter and full year of 2021. 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 2021, 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:

  • fluctuations in the number of COVID-19 cases, the pace at which vaccinations are administered in the United States, and the timeframe for the lifting of COVID-19-related shelter-in-place orders and business restrictions;

  • the pace of reopening and recovery by local economies and economic recovery in the United States generally;

  • 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.

YELP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

December 31,
2020

December 31,
2019

Assets

Current assets:

Cash and cash equivalents

$

595,875

$

170,281

Short-term marketable securities

242,000

Accounts receivable, net

88,400

106,832

Prepaid expenses and other current assets

28,450

14,196

Total current assets

712,725

533,309

Long-term marketable securities

53,499

Property, equipment and software, net

101,718

110,949

Operating lease right-of-use assets

168,209

197,866

Goodwill

109,261

104,589

Intangibles, net

13,521

10,082

Restricted cash

665

22,037

Other non-current assets

48,848

38,369

Total assets

$

1,154,947

$

1,070,700

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable and accrued liabilities

$

87,760

$

72,333

Operating lease liabilities — current

51,161

57,507

Deferred revenue

4,109

4,315

Total current liabilities

143,030

134,155

Operating lease liabilities — long-term

148,935

174,756

Other long-term liabilities

8,448

6,798

Total liabilities

300,413

315,709

Stockholders’ equity:

Common stock

Additional paid-in capital

1,398,248

1,259,803

Treasury stock

(2,964

)

Accumulated other comprehensive loss

(6,807

)

(11,759

)

Accumulated deficit

(533,943

)

(493,053

)

Total stockholders’ equity

854,534

754,991

Total liabilities and stockholders’ equity

$

1,154,947

$

1,070,700

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended
December 31,

Year Ended
December 31,

2020

2019

2020

2019

Net revenue

$

233,195

$

268,823

$

872,933

$

1,014,194

Costs and expenses:

Cost of revenue(1)

15,321

16,656

57,186

62,410

Sales and marketing(1)

102,173

126,370

437,060

500,386

Product development(1)

58,457

61,138

232,561

230,440

General and administrative(1)

29,625

34,164

130,450

136,091

Depreciation and amortization

13,125

12,849

50,609

49,356

Restructuring

15

3,862

Total costs and expenses

218,716

251,177

911,728

978,683

Income (loss) from operations

14,479

17,646

(38,795

)

35,511

Other income, net

393

2,611

3,670

14,256

Income (loss) before income taxes

14,872

20,257

(35,125

)

49,767

(Benefit from) provision for income taxes

(6,217

)

3,105

(15,701

)

8,886

Net income (loss) attributable to common stockholders

$

21,089

$

17,152

$

(19,424

)

$

40,881

Net income (loss) per share attributable to common stockholders

Basic

$

0.28

$

0.24

$

(0.27

)

$

0.55

Diluted

$

0.27

$

0.24

$

(0.27

)

$

0.52

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

Basic

74,524

70,627

73,005

74,627

Diluted

76,971

72,987

73,005

77,969

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

Three Months Ended
December 31,

Year Ended
December 31,

2020

2019

2020

2019

Cost of revenue

$

949

$

1,119

$

3,784

$

4,535

Sales and marketing

7,476

7,524

29,670

30,668

Product development

17,489

16,861

67,622

63,433

General and administrative

6,070

5,001

23,498

22,876

Total stock-based compensation

$

31,984

$

30,505

$

124,574

$

121,512

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Year Ended December 31,

2020

2019

Operating Activities

Net (loss) income

$

(19,424

)

$

40,881

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

Depreciation and amortization

50,609

49,356

Provision for doubtful accounts

32,265

22,543

Stock-based compensation

124,574

121,512

Noncash lease cost

42,235

41,365

Deferred income taxes

(11,181

)

(2,799

)

Other adjustments, net

2,193

(2,997

)

Changes in operating assets and liabilities:

Accounts receivable

(13,833

)

(42,070

)

Prepaid expenses and other assets

164

(1,349

)

Operating lease liabilities

(46,283

)

(41,808

)

Accounts payable, accrued liabilities and other liabilities

15,382

20,148

Net cash provided by operating activities

176,701

204,782

Investing Activities

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

290,395

Purchases of marketable securities — held-to-maturity

(87,438

)

(541,451

)

Maturities of marketable securities — held-to-maturity

93,200

674,097

Purchases of other investments

(10,000

)

Release of escrow deposit

28,750

Purchases of property, equipment and software

(32,002

)

(37,522

)

Purchase of intangible asset

(6,129

)

Other investing activities

333

461

Net cash provided by investing activities

248,359

124,335

Financing Activities

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

27,382

32,263

Taxes paid related to the net share settlement of equity awards

(23,605

)

(42,771

)

Repurchases of common stock

(24,396

)

(481,011

)

Other financing activities

(433

)

Net cash used in financing activities

(21,052

)

(491,519

)

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

214

(115

)

Change in cash, cash equivalents and restricted cash

404,222

(162,517

)

Cash, cash equivalents and restricted cash — Beginning of period

192,318

354,835

Cash, cash equivalents and restricted cash — End of period

$

596,540

$

192,318

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.

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 Adjusted EBITDA can provide a useful measure for period-to-period comparisons of Yelp’s primary business operations. Accordingly, Yelp believes that 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. Beginning in 2021, Yelp no longer considers EBITDA a key measure used by its management and the board of directors and will cease providing this amount going forward.

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 income (loss) to EBITDA and Adjusted EBITDA (in thousands, except percentages; unaudited):

Three Months Ended
December 31,

Year Ended
December 31,

2020

2019

2020

2019

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

Net income (loss)

$

21,089

$

17,152

$

(19,424

)

$

40,881

(Benefit from) provision for income taxes

(6,217

)

3,105

(15,701

)

8,886

Other income, net

(393

)

(2,611

)

(3,670

)

(14,256

)

Depreciation and amortization

13,125

12,849

50,609

49,356

EBITDA

27,604

30,495

11,814

84,867

Stock-based compensation

31,984

30,505

124,574

121,512

Restructuring

15

3,862

Fees related to shareholder activism(1)

7,116

Adjusted EBITDA

$

59,603

$

61,000

$

140,250

$

213,495

Net revenue

$

233,195

$

268,823

$

872,933

$

1,014,194

Adjusted EBITDA margin

26

%

23

%

16

%

21

%

(1)

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20210209006054/en/

Contacts

Investor Relations Contact
Kate Krieger
ir@yelp.com