Third quarter Net Revenue increased by 12% year
over year to a record $345 million
Net Income increased by 539% year over year to
a strong $58 million
Adjusted EBITDA increased by 30% year over year
to a record $96 million
Raises full-year outlook to $1.332 billion to
$1.337 billion of Net Revenue and $319 million to $324 million of
Adjusted EBITDA
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, 2023 in the Q3 2023 Shareholder
Letter available on its Investor Relations website at
www.yelp-ir.com.
“We continued to see strong momentum from our product-led
strategy as our team delivered another quarter with a number of
record-breaking results,” said Jeremy Stoppelman, Yelp's co-founder
and chief executive officer. “Third quarter net revenue reached a
new high, driven by record advertising revenue in our services
category as service pros spent more on Yelp than ever before, 25%
growth in our self-serve channel and a 9% increase in ad clicks
year over year. As we continue to execute on our robust product
roadmap to make Yelp the go-to platform for services, deliver more
value to advertisers, and enhance the overall consumer experience,
I’m excited about the opportunities ahead to drive profitable
growth and long-term shareholder value.”
“The Yelp team delivered its 10th consecutive quarter of
double-digit revenue growth in the third quarter,” said David
Schwarzbach, Yelp’s chief financial officer. “Net revenue grew 12%
year over year while net income margin expanded 14 percentage
points year over year. Adjusted EBITDA increased by 30%
year-over-year to a record $96 million, representing a 28% adjusted
EBITDA margin. Investing in our product-led strategy has continued
to strengthen Yelp for the long term, giving us even more
conviction in the durability of our business.”
Quarterly Conference Call
Yelp will host a live webcast today at 2:00 p.m. Pacific Time to
discuss the third quarter financial results and outlook for the
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 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 inflation,
rising interest rates, supply chain issues, and the lingering
impact of the COVID-19 pandemic — 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)
September 30,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
305,103
$
306,379
Short-term marketable securities
121,468
94,244
Accounts receivable, net
159,633
131,902
Prepaid expenses and other current
assets
39,735
63,467
Total current assets
625,939
595,992
Property, equipment and software, net
72,373
77,224
Operating lease right-of-use assets
72,098
97,392
Goodwill
101,927
102,328
Intangibles, net
7,977
8,997
Other non-current assets
147,004
133,989
Total assets
$
1,027,318
$
1,015,922
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable and accrued
liabilities
$
143,889
$
137,950
Operating lease liabilities — current
38,733
39,674
Deferred revenue
7,064
5,200
Total current liabilities
189,686
182,824
Operating lease liabilities —
long-term
57,527
86,661
Other long-term liabilities
40,531
36,113
Total liabilities
287,744
305,598
Stockholders' equity:
Common stock
—
—
Additional paid-in capital
1,757,174
1,649,692
Treasury stock
(267
)
—
Accumulated other comprehensive loss
(15,278
)
(15,545
)
Accumulated deficit
(1,002,055
)
(923,823
)
Total stockholders' equity
739,574
710,324
Total liabilities and stockholders'
equity
$
1,027,318
$
1,015,922
YELP INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Net revenue
$
345,122
$
308,891
$
994,686
$
884,403
Costs and expenses:
Cost of revenue (1)
28,370
26,805
84,613
77,222
Sales and marketing (1)
137,703
133,061
424,308
388,570
Product development (1)
81,020
75,803
254,247
233,336
General and administrative (1)
45,695
48,381
145,609
126,141
Depreciation and amortization
10,461
11,417
31,881
34,165
Total costs and expenses
303,249
295,467
940,658
859,434
Income from operations
41,873
13,424
54,028
24,969
Other income, net
6,154
2,691
17,264
4,947
Income before income taxes
48,027
16,115
71,292
29,916
(Benefit from) provision for income
taxes
(10,189
)
7,007
(475
)
13,714
Net income attributable to common
stockholders
$
58,216
$
9,108
$
71,767
$
16,202
Net income per share attributable to
common stockholders
Basic
$
0.84
$
0.13
$
1.03
$
0.23
Diluted
$
0.79
$
0.13
$
0.98
$
0.22
Weighted-average shares used to compute
net income per share attributable to common stockholders
Basic
69,030
70,630
69,366
71,158
Diluted
73,566
72,658
72,920
73,577
(1) Includes stock-based compensation
expense as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Cost of revenue
$
1,298
$
1,148
$
4,026
$
3,701
Sales and marketing
9,200
8,606
26,921
25,461
Product development
24,047
21,352
74,888
66,781
General and administrative
8,922
7,526
27,469
23,810
Total stock-based compensation
$
43,467
$
38,632
$
133,304
$
119,753
YELP INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2023
2022
Operating Activities
Net income
$
71,767
$
16,202
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
31,881
34,165
Provision for doubtful accounts
26,664
18,249
Stock-based compensation
133,304
119,753
Amortization of right-of-use assets
22,848
24,962
Deferred income taxes
(8,845
)
(41,162
)
Amortization of deferred contract cost
17,818
13,477
Asset impairment
3,555
10,464
Other adjustments, net
(229
)
1,291
Changes in operating assets and
liabilities:
Accounts receivable
(54,395
)
(38,130
)
Prepaid expenses and other assets
3,101
(39,920
)
Operating lease liabilities
(30,255
)
(29,928
)
Accounts payable, accrued liabilities and
other liabilities
9,896
58,413
Net cash provided by operating
activities
227,110
147,836
Investing Activities
Purchases of marketable securities —
available-for-sale
(115,388
)
(92,895
)
Sales and maturities of marketable
securities — available-for-sale
89,613
1,649
Purchases of property, equipment and
software
(20,850
)
(20,104
)
Other investing activities
160
43
Net cash used in investing activities
(46,465
)
(111,307
)
Financing Activities
Proceeds from issuance of common stock for
employee stock-based plans
28,958
16,143
Taxes paid related to the net share
settlement of equity awards
(61,142
)
(48,161
)
Repurchases of common stock
(149,999
)
(150,006
)
Payment of issuance costs for credit
facility
(1,049
)
—
Net cash used in financing activities
(183,232
)
(182,024
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
903
(3,030
)
Change in cash, cash equivalents and
restricted cash
(1,684
)
(148,525
)
Cash, cash equivalents and restricted cash
— Beginning of period
307,138
480,641
Cash, cash equivalents and restricted cash
— End of period
$
305,454
$
332,116
Non-GAAP Financial Measures
This press release and statements made during the above
referenced webcast may include information relating to Adjusted
EBITDA, Adjusted EBITDA margin and Free cash flow, 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 material litigation settlements, impairment charges
and fees related to shareholder activism that we deem not to be
indicative of our ongoing operating performance. We define Adjusted
EBITDA margin as Adjusted EBITDA divided by net revenue. We define
Free cash flow as net cash provided by (used in) operating
activities, less cash used for purchases of property, equipment and
software.
Adjusted EBITDA and Free cash flow, 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,
Adjusted EBITDA and Free cash flow should not be viewed as
substitutes for, or superior to, net income (loss) or net cash
provided by (used in) operating activities prepared in accordance
with GAAP as measures 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 material litigation settlements, impairment
charges and fees related to shareholder activism;
- Free cash flow does not represent the total residual cash flow
available for discretionary purposes because it does not reflect
our contractual commitments or obligations; and
- other companies, including those in Yelp’s industry, may
calculate Adjusted EBITDA and Free cash flow differently, which
reduces their usefulness as comparative measures.
Because of these limitations, you should consider Adjusted
EBITDA, Adjusted EBITDA margin and Free cash flow alongside other
financial performance measures, including net income (loss), net
cash provided by (used in) operating activities 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
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Reconciliation of Net Income to
Adjusted EBITDA:
Net income
$
58,216
$
9,108
$
71,767
$
16,202
(Benefit from) provision for income
taxes
(10,189
)
7,007
(475
)
13,714
Other income, net
(6,154
)
(2,691
)
(17,264
)
(4,947
)
Depreciation and amortization
10,461
11,417
31,881
34,165
Stock-based compensation
43,467
38,632
133,304
119,753
Litigation settlement(1)(2)
—
—
11,000
—
Asset impairment(1)
—
10,464
3,555
10,464
Fees related to shareholder
activism(1)
671
—
671
—
Adjusted EBITDA
$
96,472
$
73,937
$
234,439
$
189,351
Net revenue
$
345,122
$
308,891
$
994,686
$
884,403
Net income margin
17
%
3
%
7
%
2
%
Adjusted EBITDA margin
28
%
24
%
24
%
21
%
(1)
Recorded within general and administrative
expenses on our Condensed Consolidated Statements of
Operations.
(2)
Represents the loss contingency recorded
in connection with the settlement of a putative class action
lawsuit asserting claims under the California Invasion of Privacy
Act. For additional information, see our most recently filed
Quarterly Report on Form 10-Q at www.yelp-ir.com or the SEC’s
website at www.sec.gov.
The following is a reconciliation of net cash provided by
operating activities to Free cash flow for each of the periods
indicated (in thousands; unaudited):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Net cash provided by operating
activities
$
104,859
$
69,604
$
227,110
$
147,836
Purchases of property, equipment and
software
(5,697
)
(5,606
)
(20,850
)
(20,104
)
Free cash flow
$
99,162
$
63,998
$
206,260
$
127,732
Net cash provided by (used in) investing
activities
$
420
$
(96,828
)
$
(46,465
)
$
(111,307
)
Net cash used in financing activities
$
(70,327
)
$
(60,998
)
$
(183,232
)
$
(182,024
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231102237530/en/
Investor Relations Contact: Kate Krieger ir@yelp.com
Press Contact: Amber Albrecht press@yelp.com
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