TechDogs-"Yelps Strong Execution Drove Record Net Revenue In The Second Quarter 2023"

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Yelps Strong Execution Drove Record Net Revenue In The Second Quarter 2023

By Business Wire

Business Wire
Overall Rating

Second quarter Net Revenue increased by 13% year over year to a record $337 million

Net Income increased by 84% year over year to a positive $15 million

Adjusted EBITDA increased by 25% year over year to a record $84 million

SAN FRANCISCO--(BUSINESS WIRE)--Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today posted its financial results for the second quarter ended June 30, 2023 in the Q2 2023 Shareholder Letter available on its Investor Relations website at www.yelp-ir.com.

“Yelp's record-breaking top-line second quarter results are a testament to our increased product velocity and consistent execution across the company,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “For the ninth consecutive quarter, we delivered double-digit growth. Net revenue reached a new high driven by record advertising revenue across categories. Self-serve and multi-location accounted for more than half of our advertising revenue for the first time, reaching a milestone that reflects our long-term strategy to drive growth through our most efficient advertising channels. As we remain focused on enhancing our already strong product pipeline, we’re confident in our ability to gain market share and deliver long term shareholder value.”

“Yelp’s second quarter results demonstrate the durability of our top-line growth while delivering healthy profitability,” said David Schwarzbach, Yelp’s chief financial officer. “We grew net revenue by 13% year over year to a record level, while also expanding net income margin and adjusted EBITDA margin by two percentage points each from the prior-year period. We believe the strategic investments we’ve made have positioned us well for continued profitable growth over the long term.”

Quarterly Conference Call

Yelp will host a live Q&A session today at 2:00 p.m. Pacific Time to discuss the second quarter financial results and outlook for the third quarter and full year 2023. 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. (yelp.com) is a community-driven platform that connects people with great local businesses. Millions of people rely on Yelp for useful and trusted local business information, reviews and photos to help inform their spending decisions. As a one-stop local platform, Yelp helps consumers easily discover, connect and transact with businesses across a broad range of categories by making it easy to request a quote for a service, book a table at a restaurant, and more. Yelp was founded in San Francisco in 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 deliver profitable growth 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 inflation, rising interest rates, supply chain issues, and the lingering impact of the COVID-19 pandemic and efforts to contain it — and its effect on consumer behavior, user activity and advertiser spending;
  • the impact of fears or actual outbreaks of disease and any resulting changes in consumer behavior, economic conditions or governmental actions;
  • Yelp’s ability to maintain and expand its base of advertisers, particularly if advertiser turnover substantially worsens and/or consumer demand significantly degrades;
  • Yelp’s ability to maintain continued growth in connection with strategic investments;
  • 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 and 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)

June 30,
2023

December 31,
2022

Assets

Current assets:

Cash and cash equivalents

$

270,256

$

306,379

Short-term marketable securities

126,909

94,244

Accounts receivable, net

151,655

131,902

Prepaid expenses and other current assets

38,690

63,467

Total current assets

587,510

595,992

Property, equipment and software, net

75,588

77,224

Operating lease right-of-use assets

79,591

97,392

Goodwill

103,260

102,328

Intangibles, net

8,315

8,997

Other non-current assets

179,024

133,989

Total assets

$

1,033,288

$

1,015,922

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued liabilities

$

171,871

$

137,950

Operating lease liabilities — current

38,246

39,674

Deferred revenue

5,414

5,200

Total current liabilities

215,531

182,824

Operating lease liabilities — long-term

67,777

86,661

Other long-term liabilities

41,378

36,113

Total liabilities

324,686

305,598

Stockholders' equity:

Common stock

Additional paid-in capital

1,732,909

1,649,692

Treasury stock

(159

)

Accumulated other comprehensive loss

(13,876

)

(15,545

)

Accumulated deficit

(1,010,272

)

(923,823

)

Total stockholders' equity

708,602

710,324

Total liabilities and stockholders' equity

$

1,033,288

$

1,015,922

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended

June 30,

Six Months Ended

June 30,

2023

2022

2023

2022

Net revenue

$

337,126

$

298,884

$

649,564

$

575,512

Costs and expenses:

Cost of revenue (1)

30,184

26,988

56,243

50,417

Sales and marketing (1)

139,150

129,412

286,605

255,509

Product development (1)

85,030

76,848

173,227

157,533

General and administrative (1)

53,405

38,377

99,914

77,760

Depreciation and amortization

10,615

11,258

21,420

22,748

Total costs and expenses

318,384

282,883

637,409

563,967

Income from operations

18,742

16,001

12,155

11,545

Other income, net

5,898

1,327

11,110

2,256

Income before income taxes

24,640

17,328

23,265

13,801

Provision for income taxes

9,911

9,319

9,714

6,707

Net income attributable to common stockholders

$

14,729

$

8,009

$

13,551

$

7,094

Net income per share attributable to common stockholders

Basic

$

0.21

$

0.11

$

0.19

$

0.10

Diluted

$

0.21

$

0.11

$

0.19

$

0.10

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

Basic

69,256

71,217

69,537

71,427

Diluted

71,238

72,835

71,645

73,572

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

Three Months Ended

June 30,

Six Months Ended

June 30,

2023

2022

2023

2022

Cost of revenue

$

1,346

$

1,248

$

2,728

$

2,553

Sales and marketing

8,607

8,200

17,721

16,855

Product development

24,974

22,304

50,841

45,429

General and administrative

8,653

8,309

18,547

16,284

Total stock-based compensation

$

43,580

$

40,061

$

89,837

$

81,121

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Six Months Ended

June 30,

2023

2022

Operating Activities

Net income

$

13,551

$

7,094

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

Depreciation and amortization

21,420

22,748

Provision for doubtful accounts

14,636

12,676

Stock-based compensation

89,837

81,121

Amortization of right-of-use assets

15,699

16,870

Deferred income taxes

(42,148

)

(24,114

)

Amortization of deferred contract cost

11,716

8,413

Asset impairment

3,555

Other adjustments, net

(64

)

717

Changes in operating assets and liabilities:

Accounts receivable

(34,389

)

(30,014

)

Prepaid expenses and other assets

12,156

(22,149

)

Operating lease liabilities

(20,943

)

(19,813

)

Accounts payable, accrued liabilities and other liabilities

37,225

24,683

Net cash provided by operating activities

122,251

78,232

Investing Activities

Purchases of marketable securities — available-for-sale

(82,491

)

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

50,613

Purchases of property, equipment and software

(15,153

)

(14,498

)

Other investing activities

146

19

Net cash used in investing activities

(46,885

)

(14,479

)

Financing Activities

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

26,095

11,026

Taxes paid related to the net share settlement of equity awards

(38,201

)

(32,046

)

Repurchases of common stock

(100,000

)

(100,006

)

Payment of issuance costs for credit facility

(799

)

Net cash used in financing activities

(112,905

)

(121,026

)

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

1,175

(1,154

)

Change in cash, cash equivalents and restricted cash

(36,364

)

(58,427

)

Cash, cash equivalents and restricted cash — Beginning of period

307,138

480,641

Cash, cash equivalents and restricted cash — End of period

$

270,774

$

422,214

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 litigation settlement expenses 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 litigation settlement expenses 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

June 30,

Six Months Ended

June 30,

2023

2022

2023

2022

Reconciliation of Net Income to Adjusted EBITDA:

Net income

$

14,729

$

8,009

$

13,551

$

7,094

Provision for income taxes

9,911

9,319

9,714

6,707

Other income, net

(5,898

)

(1,327

)

(11,110

)

(2,256

)

Depreciation and amortization

10,615

11,258

21,420

22,748

Stock-based compensation

43,580

40,061

89,837

81,121

Litigation settlement expense(1)

11,000

11,000

Asset impairment(1)

3,555

Adjusted EBITDA

$

83,937

$

67,320

$

137,967

$

115,414

Net revenue

$

337,126

$

298,884

$

649,564

$

575,512

Net income margin

4

%

3

%

2

%

1

%

Adjusted EBITDA margin

25

%

23

%

21

%

20

%

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

Contacts

Investor Relations Contact:
Kate Krieger
ir@yelp.com

Press Contact:
Amber Albrecht
press@yelp.com

First published on Fri, Aug 4, 2023

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