Yelp Reports Fourth Quarter and Full Year 2020 Financial Results

February 9, 2021 4:05 PM EST

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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

SAN FRANCISCO--(BUSINESS WIRE)-- 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.

 

Investor Relations Contact
Kate Krieger
ir@yelp.com

Source: Yelp Inc.



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