Net Revenue Grew 8% in 2019 Year-Over-Year to
$1 Billion, and Grew 10% in Q4 Compared to Prior Year
Net Income of $41 Million Compared to $55
Million in 2018, Reflecting Higher Income Taxes in 2019
Adjusted EBITDA Margin Expanded to 21% in 2019,
Up From 19% in 2018
Board Authorized $250 Million Increase to Stock
Repurchase Program
David Schwarzbach to join as Chief Financial
Officer
Christine Barone to join Board of Directors
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, 2019 in the Q4 2019
Shareholder Letter available on its Investor Relations website at
www.yelp-ir.com.
“2019 marked a pivotal year for Yelp as we embarked on an
ambitious, multi-year business transformation plan,” said Jeremy
Stoppelman, Yelp’s co-founder and chief executive officer. “We are
pleased to have reaccelerated revenue growth in the second half of
2019, while also increasing adjusted EBITDA margin year-over-year.
We ended the year with double-digit revenue growth in the fourth
quarter and that momentum has continued into 2020, giving us
confidence in our ability to achieve our long-term financial
targets.”
Financial Highlights & Business
Outlook
- Net revenue was $269 million, up 10% from the fourth quarter of
2018, a one percentage point increase from the third quarter’s
growth rate. Greater-than-expected seasonal reductions by small-
and medium-sized business customers resulted in reported growth
slightly below our outlook for the quarter; this seasonal activity
reversed in January, when our non-term advertising business saw
record monthly advertiser acquisitions and budget retention
- Net income was $17 million, or $0.24 per diluted share,
compared to $32 million, or $0.37 per diluted share, in the fourth
quarter of 2018, reflecting higher income taxes in the fourth
quarter of 2019 and a valuation allowance release in the fourth
quarter of 2018
- Adjusted EBITDA1 grew to $61 million, an increase of $8
million, or 15%, compared to the fourth quarter of 2018. Adjusted
EBITDA margin increased one percentage point to 23% compared to the
fourth quarter of 2018
- Cash provided by operating activities was $56 million for the
fourth quarter of 2019, and we ended the fourth quarter with cash,
cash equivalents and marketable securities of $466 million
- We repurchased a total of 14 million shares in 2019 at an
aggregate cost of $481 million, which drove a 12% reduction of our
diluted shares outstanding since the start of the year
- We expect to accelerate revenue growth and expand margins again
in 2020. Specifically, we expect Net revenue to grow 10-12%
compared to 2019, with Adjusted EBITDA margin increasing by 1-2
percentage points compared to 2019
________________________________
1 Refer to the accompanying financial tables for further details
and a reconciliation of the non-GAAP measures presented to the most
directly comparable GAAP measures.
Board and Leadership
Announcements
- The Board authorized a $250 million addition to Yelp’s stock
repurchase program. Since initiating the program in August 2017,
the Board has authorized the return of nearly $1 billion of capital
to Yelp shareholders
- David Schwarzbach appointed Chief Financial Officer. Mr.
Schwarzbach joins Yelp from Optimizely, where he served as Chief
Operating Officer and Chief Financial Officer. He is a seasoned
finance expert who brings extensive experience in driving growth at
consumer data and marketplace companies.
- Christine Barone, Chief Executive Officer of True Food Kitchen,
appointed to Yelp’s Board of Directors. As a leader in the food and
restaurant industry, Ms. Barone brings to Yelp’s Board valuable and
complementary skills and expertise, and shares our commitment to
development and innovation. She replaces Mariam Naficy, who stepped
down as a Director of the Yelp Board. Ms. Barone will serve as a
member of the Nominating and Corporate Governance Committee
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 2019 financial
results and its Business Outlook for the first quarter and full
year 2020. 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
expectations of net revenue and Adjusted EBITDA growth in 2020 and
Yelp’s confidence in its potential to achieve its long-term
financial targets, 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,
Yelp’s:
- limited operating history in an evolving industry;
- ability to generate sufficient revenue to maintain
profitability, particularly in light of its significant ongoing
sales and marketing expenses;
- ability to generate and maintain sufficient high-quality
content from its users; and
- ability to maintain and expand its base of advertisers,
particularly as an increasing portion of advertisers have the
ability to cancel their advertising campaigns at any time.
YELP INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
December 31,
2019
December 31,
2018
Assets
Current assets:
Cash and cash equivalents
$
170,281
$
332,764
Short-term marketable securities
242,000
423,096
Accounts receivable, net
106,832
87,305
Prepaid expenses and other current
assets
14,196
17,104
Total current assets
533,309
860,269
Long-term marketable securities
53,499
—
Property, equipment and software, net
110,949
114,800
Operating lease right-of-use assets
197,866
—
Goodwill
104,589
105,620
Intangibles, net
10,082
13,359
Restricted cash
22,037
22,071
Other non-current assets
38,369
59,444
Total assets
$
1,070,700
$
1,175,563
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable and accrued
liabilities
$
72,333
$
61,062
Operating lease liabilities — current
57,507
—
Deferred revenue
4,315
3,843
Total current liabilities
134,155
64,905
Operating lease liabilities —
long-term
174,756
—
Other long-term liabilities
6,798
35,140
Total liabilities
315,709
100,045
Stockholders’ equity:
Common stock
—
—
Additional paid-in capital
1,259,803
1,139,462
Accumulated other comprehensive loss
(11,759
)
(11,021
)
Accumulated deficit
(493,053
)
(52,923
)
Total stockholders’ equity
754,991
1,075,518
Total liabilities and stockholders’
equity
$
1,070,700
$
1,175,563
YELP INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Net revenue
$
268,823
$
243,740
$
1,014,194
$
942,773
Costs and expenses:
Cost of revenue(1)
16,656
14,255
62,410
57,872
Sales and marketing(1)
126,370
121,256
500,386
483,309
Product development(1)
61,138
54,273
230,440
212,319
General and administrative(1)
34,164
29,677
136,091
120,569
Depreciation and amortization
12,849
11,557
49,356
42,807
Total costs and expenses
251,177
231,018
978,683
916,876
Income from operations
17,646
12,722
35,511
25,897
Other income, net
2,611
4,160
14,256
14,109
Income before income taxes
20,257
16,882
49,767
40,006
Provision for (benefit from) income
taxes
3,105
(15,064
)
8,886
(15,344
)
Net income attributable to common
stockholders
$
17,152
$
31,946
$
40,881
$
55,350
Net income per share attributable to
common stockholders
Basic
$
0.24
$
0.39
$
0.55
$
0.66
Diluted
$
0.24
$
0.37
$
0.52
$
0.62
Weighted-average shares used to compute
net income per share attributable to common stockholders
Basic
70,627
82,706
74,627
83,573
Diluted
72,987
86,287
77,969
88,709
(1) Includes stock-based compensation
expense as follows:
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Cost of revenue
$
1,119
$
1,227
$
4,535
$
4,572
Sales and marketing
7,524
7,265
30,668
30,779
Product development
16,861
15,004
63,433
56,882
General and administrative
5,001
5,157
22,876
22,153
Total stock-based compensation
$
30,505
$
28,653
$
121,512
$
114,386
YELP INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Year Ended December
31,
2019
2018
Operating Activities
Net income
$
40,881
$
55,350
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
49,356
42,807
Provision for doubtful accounts
22,543
24,515
Stock-based compensation
121,512
114,386
Noncash lease cost
41,365
—
Deferred income taxes
(2,799
)
(15,469
)
Other adjustments, net
(2,997
)
(722
)
Changes in operating assets and
liabilities:
Accounts receivable
(42,070
)
(35,664
)
Prepaid expenses and other assets
(1,349
)
(5,192
)
Operating lease liabilities
(41,808
)
—
Accounts payable, accrued liabilities and
other liabilities
20,148
(19,824
)
Net cash provided by operating
activities
204,782
160,187
Investing Activities
Purchases of marketable securities
(541,451
)
(751,237
)
Maturities of marketable securities
674,097
613,700
Sale of investment prior to maturity
—
17,895
Release of escrow deposit
28,750
—
Purchases of property, equipment and
software
(37,522
)
(44,972
)
Other investing activities
461
245
Net cash provided by (used in) investing
activities
124,335
(164,369
)
Financing Activities
Proceeds from issuance of common stock for
employee stock-based plans
32,263
29,779
Taxes paid related to the net share
settlement of equity awards
(42,771
)
(50,144
)
Repurchases of common stock
(481,011
)
(187,382
)
Net cash used in financing activities
(491,519
)
(207,747
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(115
)
360
Change in cash, cash equivalents and
restricted cash
(162,517
)
(211,569
)
Cash, cash equivalents and restricted cash
— Beginning of period
354,835
566,404
Cash, cash equivalents and restricted cash
— End of period
$
192,318
$
354,835
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, adjusted to exclude: provision
for (benefit from) income taxes; other income, net; and
depreciation and amortization.
We define Adjusted EBITDA as net income, 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.
For the full year 2019, these other income and expense items
consisted of certain fees related to shareholder activism. 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 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
under GAAP. In particular, EBITDA and adjusted EBITDA should not be
viewed as substitutes for, or superior to, net income 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, Adjusted EBITDA does not reflect all cash capital
expenditure requirements for such replacements or for new capital
expenditure requirements;
- EBITDA and Adjusted EBITDA does not reflect changes in, or cash
requirements for, Yelp's working capital needs;
- Adjusted EBITDA does not consider the potentially dilutive
impact of equity-based compensation;
- 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 take into account any costs that
management determines are not indicative of ongoing operating
performance, such as restructuring and integration costs or fees
related to shareholder activism; and
- other companies, including those in Yelp’s industry, may
calculate EBITDA and Adjusted EBITDA differently, which reduces its
usefulness as a comparative measure.
Because of these limitations, you should consider EBITDA,
Adjusted EBITDA and Adjusted EBITDA margin alongside other
financial performance measures, including net income and Yelp’s
other GAAP results.
The following is a reconciliation of net income — the most
directly comparable GAAP financial measure in each case — to EBITDA
and Adjusted EBITDA (in thousands):
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Reconciliation of Net Income to EBITDA
and Adjusted EBITDA:
Net income
$
17,152
$
31,946
$
40,881
$
55,350
Provision for (benefit from) income
taxes
3,105
(15,064
)
8,886
(15,344
)
Other income, net
(2,611
)
(4,160
)
(14,256
)
(14,109
)
Depreciation and amortization
12,849
11,557
49,356
42,807
EBITDA
30,495
24,279
84,867
68,704
Stock-based compensation
30,505
28,653
121,512
114,386
Fees related to shareholder
activism(1)
—
—
7,116
—
Adjusted EBITDA
$
61,000
$
52,932
$
213,495
$
183,090
Net revenue
$268,823
$
243,740
$
1,014,194
$
942,773
Adjusted EBITDA margin
23
%
22
%
21
%
19
%
(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/20200213005861/en/
Investor Relations Contact
Kate Krieger ir@yelp.com
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