Reports Net Revenue of $244 Million, Net
Income of $32 Million and Adjusted EBITDA of $53 Million
Targets Mid-Teens Revenue CAGR for 2019-2023
and a 30-35% Adjusted EBITDA Margin by 2023
Expects to Increase Adjusted EBITDA Margin
by 2-3 Percentage Points in 2019
Board Approves Increase of $250 Million to
Share Repurchase Program, Bringing Outstanding Authorization to
$500 Million; Plans to Repurchase $250 Million in the First Half of
2019
Announces Election of Three Seasoned
Executives to the Board of Directors
The third sentence of the third paragraph in the "Additions to
Board of Directors" section should read: Sharon is an accomplished
marketing executive who most recently served as CMO of Starbucks,
where she led go-to-market and product innovation, and played a key
role in the growth of their mobile apps and loyalty programs.
(instead of Sharon is an accomplished marketing executive who most
recently served as CMO of Starbucks, overseeing the growth of their
mobile apps and loyalty programs.)
The corrected release reads:
YELP REPORTS FOURTH QUARTER AND FULL YEAR
2018 FINANCIAL RESULTS
Reports Net Revenue of $244 Million, Net Income
of $32 Million and Adjusted EBITDA of $53 Million
Targets Mid-Teens Revenue CAGR for 2019-2023
and a 30-35% Adjusted EBITDA Margin by 2023
Expects to Increase Adjusted EBITDA Margin by
2-3 Percentage Points in 2019
Board Approves Increase of $250 Million to
Share Repurchase Program, Bringing Outstanding Authorization to
$500 Million; Plans to Repurchase $250 Million in the First Half of
2019
Announces Election of Three Seasoned Executives
to the 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, 2018 in its Q4 2018
Shareholder Letter. The company has also provided an investor
presentation outlining its strategic plan and long-term financial
targets. Both are available on Yelp’s Investor Relations website at
www.yelp-ir.com.
“In 2018, we evolved our go-to-market strategy to capture more
of our addressable market and reduce sales friction,” said Jeremy
Stoppelman, co-founder and CEO of Yelp. “We also made significant
progress in driving consumer usage in the Restaurants vertical and
business-owner monetization in the Home & Local Services
vertical. We plan to continue the transition in 2019, and expect to
achieve stronger revenue growth and higher Adjusted EBITDA margins
in the second half of 2019 as our growth initiatives begin to
deliver. For the next five years, we see mid-teens revenue growth
and Adjusted EBITDA margins in the 30-35% range by 2023. Our board
of directors has increased our share repurchase authorization to
$500 million and elected three experienced business leaders to our
board of directors.”
Quarterly Conference Call
Yelp will host a conference call at 2:00 p.m. PT to discuss the
fourth quarter and full year 2018 financial results, the company’s
business outlook for the first quarter and full year 2019, and its
strategic plan and long-term financial targets. The webcast of the
conference call 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 until February 21, 2019.
Update on Strategic Initiatives and
Financial Targets
Yelp has identified a detailed path toward long-term shareholder
value. Key components include Yelp’s plans to:
- Deliver long-term double-digit revenue
growth: Yelp currently targets a compound annual revenue growth
rate in the mid-teens from 2019 through 2023, driven by initiatives
aimed at winning in key verticals, expanding business offerings,
driving more value to business customers, capturing enterprise, and
enhancing the consumer experience.
- Drive margin expansion and optimize
cost structure: Yelp has a clear strategy to deliver cost savings
and continue its track record of margin expansion to achieve
Adjusted EBITDA margin of 30-35% by 2023. This strategy includes
initiatives to shift its emphasis to the most efficient sales
channels, relocate its salesforce to more attractive locations, and
optimize marketing spend.
- Accelerate strategy through effective
partnerships: Partnerships like Yelp’s long-term Grubhub
relationship continue to deliver significant value and represent
attractive growth drivers for its business. Yelp recently further
expanded its partner relationships through new engagements with
industry leaders like Visa and GoDaddy, among others, and plans to
continue exploring such opportunities.
Increased Commitment to Return Capital to
Shareholders
Yelp announced that its Board of Directors (“Board”) authorized
an increase of $250 million to the company’s current share
repurchase program, bringing the total outstanding authorization to
$500 million. The company currently plans to repurchase
approximately $250 million of its common stock in the first half of
2019. The company may repurchase shares at management’s discretion,
with the amount and timing of any repurchases subject to liquidity,
cash flow and market conditions, among other factors.
Additions to Board of Directors
As previously disclosed, the Board and its Nominating and
Corporate Governance Committee initiated a process, with the
support of the nationally-recognized director search firm Spencer
Stuart, to evaluate the Board’s composition and identify additional
director candidates to help drive the Yelp strategy. As a result of
that process, the Board, following the recommendation of the
Nominating and Corporate Governance Committee, appointed George Hu,
Sharon Rothstein and Brian Sharples to serve as members of the
Board, effective March 1, 2019. Hu, Rothstein and Sharples will
replace directors Geoff Donaker, Jeremy Levine, and Peter Fenton,
respectively, who will step down from the Board, effective March 1,
2019.
“We are excited to announce the appointment of George, Sharon
and Brian to our Board,” said Diane Irvine, Chairperson of the
Board. “As we work to capitalize on the opportunities before us to
drive long-term growth and deliver value to our shareholders, we
are committed to maintaining a Board that provides robust oversight
and has the right skills to support Yelp. George, Sharon and Brian
bring to our Board extensive experience as business leaders of
relevant verticals at a variety of impressive companies and their
expertise will be critical as we implement our strategy over the
coming years. On behalf of the entire Board, I would like to thank
Geoff Donaker, Jeremy Levine and Peter Fenton for their many
contributions to Yelp over the years, including preparing for and
taking the company public, and growing it to nearly $1 billion in
annual revenues today.”
“George, Sharon and Brian are experienced business veterans who
bring a wealth of practical, hands-on knowledge and skill sets to
Yelp, including scaling operations, sales, marketing, product and
monetization,” said Jeremy Stoppelman. “George has an extensive
track record in operations, including 13 years at Salesforce prior
to joining Twilio, where he currently serves as COO. Sharon is an
accomplished marketing executive who most recently served as CMO of
Starbucks, where she led go-to-market and product innovation, and
played a key role in the growth of their mobile apps and loyalty
programs. Brian is a successful technology CEO with significant
experience operating e-commerce and marketplace businesses.”
George Hu
Mr. Hu is an accomplished leader with extensive experience as a
software and operations executive at leading technology companies
including Twilio and Salesforce. Throughout his career he has
helped lead companies through hyper-growth, scale businesses and
has extensive experience operating large complex organizations. He
currently serves as Chief Operating Officer of Twilio, the leading
cloud communications platform, where he has overseen and executed
the Company’s strategy, including guiding the Company towards new
market opportunities. Previously Mr. Hu spent over 13 years at
Salesforce, where he served in multiple roles spanning products,
marketing and customer education, and the company grew from
generating $20 million to $5 billion in revenue. He most recently
served as Chief Operating Officer for four years, during which the
company delivered 78% total shareholder return. Earlier in his
career, Mr. Hu held product management and strategic consulting
roles at North Point Communications and The Boston Consulting
Group. Mr. Hu holds an A.B. from Harvard University and an MBA from
the Stanford Graduate School of Business.
Sharon Rothstein
Ms. Rothstein is a veteran marketing executive having led brand,
product and omni-channel marketing at some of the world’s most
iconic global consumer-facing companies. Ms. Rothstein currently
serves as Operating Partner of Stripes Group, a leading growth
equity firm that has been investing in high growth consumer and
SaaS companies for over a decade. Prior to joining Stripes, Ms.
Rothstein served as Executive Vice President, Global Chief
Marketing Officer and subsequently, Executive Vice President,
Global Chief Product Officer for Starbucks, the specialty coffee
retailer, where she had responsibility for the Starbucks brand and
go-to-market plan as well as the company’s portfolio of product
platforms. Ms. Rothstein led the creation of the narrative for
Starbucks’ global retail experiences and directed all product
initiatives, creative expressions, advertising, and omni channel
marketing and merchandising. In addition, Ms. Rothstein held senior
marketing and brand management positions at Sephora, Godiva,
Starwood Hotels & Resorts, Nabisco Biscuit Company and Procter
& Gamble. She currently serves as a Board member of True Food
Kitchen, a fast-growing healthy lifestyle restaurant company, and
Levain Cookies, a premium bakery famous for its decadent cookies.
Ms. Rothstein earned a Bachelor of Commerce from the University of
British Columbia and an MBA from the Anderson School of Management
of the University of California, Los Angeles.
Brian Sharples
Mr. Sharples is a successful serial entrepreneur, angel investor
and executive with extensive experience in startup and
well-established technology and e-commerce companies, both as a
board member and in leading operations and executive roles. Mr.
Sharples has founded and scaled several high-growth startups and
oversaw their strategic exits. Mr. Sharples co-founded and served
as Chairman and CEO of HomeAway, Inc., a global online marketplace
for the vacation rental industry, where he led the company's
successful public offering in 2011, and the $3.9 billion
acquisition by Expedia in 2015. Prior to HomeAway, Mr. Sharples was
President and CEO of IntelliQuest Information Group, Inc., a
supplier of marketing data and research to technology companies
that went public in 1996 and was sold to WPP Group in 2000. In
addition to his operational leadership, Mr. Sharples has served on
the boards of several global technology companies specializing in
the consumer space, including KAYAK and RetailMeNot, Inc., and
currently serves on the boards of GoDaddy and Ally Financial Group.
Mr. Sharples also helped oversee the successful acquisitions of
KAYAK (by Priceline) and RetailMeNot Inc. (by Harland Clarke)
during his board tenures. Mr. Sharples also has served on the
boards of several private companies, including most recently as
Chairman of Twyla, Inc., a company he co-founded in 2015 that
offers a software platform to license and sell limited edition
artwork. He also serves as Chairman of private-equity backed Fexy
Media, and on the board of RVShare, a leading online marketplace
for RV rentals. Early in his career, Mr. Sharples founded I Motors,
an event-based marketplace for used cars, and served as a
consultant at Bain & Co. Mr. Sharples holds a B.S. in Economics
and Math from Colby College and an MBA from the Stanford Graduate
School of Business of Stanford University.
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 platform for consumers to discover,
interact and transact with local businesses of all sizes. 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.
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; any Gain (loss) on the disposal of a business unit;
Restructuring and integration costs; and, in certain periods,
certain other income and expense items. 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 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 under GAAP. 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 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;
- Adjusted EBITDA does not consider the
potentially dilutive impact of equity-based compensation;
- EBITDA and Adjusted EBITDA do not
reflect tax payments that may represent a reduction in cash
available to Yelp;
- Adjusted EBITDA does not take into
account any restructuring or integration costs; 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, including various cash flow
metrics, Net income (loss) and Yelp’s other GAAP results.
Forward-Looking Statements
This press release contains forward-looking statements relating
to, among other things, Yelp’s future performance that are based on
its current expectations, forecasts and assumptions and that
involve risks and uncertainties. These statements include, but are
not limited to, statements regarding Yelp’s:
- large market opportunity and ability to
sustain long-term growth;
- ability to achieve stronger revenue
growth in the second half of 2019 and mid-teens revenue growth on a
compound annual growth basis from 2019 to 2023;
- ability to achieve higher Adjusted
EBITDA margins in the second half of 2019 and targeted increases in
its Adjusted EBITDA margin of 2-3 percentage points in 2019 and of
30-35% by 2023;
- near-term and long-term strategic and
investment priorities — including optimizing its cost structure,
expanding its offerings, driving growth from customers of all sizes
and accelerating its strategy through effective partnerships — as
well as its ability to execute against those priorities;
- ability to increase customer
acquisition through the sale of non-term contracts;
- ability to drive more value to
consumers and businesses;
- plans to increase its focus on
different product distribution channels; and
- plans and ability to create shareholder
value and return capital to shareholders, including through its
share repurchase program.
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 and increase profitability, particularly in light of
its significant ongoing sales and marketing expenses;
- ability to reduce or control expenses
sufficiently to meet its profitability targets;
- ability to increase traffic to its
platform and generate and maintain sufficient high-quality content
from its users;
- ability to introduce successful new
products and services; and
- ability to maintain and expand its base
of advertisers, including enterprise customers, particularly as an
increasing portion of advertisers have the ability to cancel their
advertising campaigns at any time.
Factors that could cause or contribute to such differences also
include 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 or Quarterly Report on Form 10-Q at www.yelp-ir.com or
the SEC’s website at www.sec.gov.
Undue reliance should not be placed on the forward-looking
statements in this release, which are based on information
available to Yelp on the date hereof. Such forward-looking
statements do not include the potential impact of any acquisitions
or divestitures that may be announced and/or completed after the
date hereof. Yelp assumes no obligation to update such
statements.
Yelp Inc. Condensed Consolidated Balance
Sheets (In thousands, except share data) (Unaudited)
December 31, December 31, 2018
2017 (1) Assets Current assets: Cash and cash
equivalents $ 332,764 $ 547,850 Short-term marketable securities
423,096 273,366 Accounts receivable, net 87,305 76,173 Prepaid
expenses and other current assets 17,104
15,700 Total current assets 860,269 913,089
Long-term marketable securities - 25,032 Property, equipment and
software, net 114,800 103,651 Goodwill 105,620 107,954 Intangibles,
net 13,359 16,893 Restricted cash 22,071 18,554 Other non-current
assets 59,444 40,428 Total assets $
1,175,563 $ 1,225,601
Liabilities and
Stockholders' Equity Current liabilities: Accounts payable $
6,540 $ 9,033 Accrued liabilities 54,522 73,665 Deferred revenue
3,843 3,469 Total current liabilities
64,905 86,167 Long-term liabilities 35,140
30,737 Total liabilities 100,045
116,904 Stockholders' equity Common stock - -
Additional paid-in capital 1,139,462 1,038,017 Treasury stock - (46
) Accumulated other comprehensive loss (11,021 ) (8,444 )
(Accumulated deficit) retained earnings (52,923 )
79,170 Total stockholders' equity 1,075,518
1,108,697 Total liabilities and stockholders' equity
$ 1,175,563 $ 1,225,601 (1) As of January 1,
2018, the company adopted Accounting Standards Update 2014-09,
"Revenue from Contracts with Customers (Topic 606)" ("ASC 606"),
using the full retrospective method. Accordingly, the company has
recast certain amounts in prior periods presented.
Yelp Inc. Condensed Consolidated Statements of
Operations (In thousands, except per share data) (Unaudited)
Three Months EndedDecember
31,
Year Ended December 31,
2018 2017 (1) 2018 2017
(1) Net revenue $ 243,740 $ 219,441 $ 942,773 $ 850,847
Costs and expenses: Cost of revenue (2) 14,255 16,236 57,872
70,518 Sales and marketing (2) 121,256 111,013 483,309 437,424
Product development (2) 54,273 47,994 212,319 175,787 General and
administrative (2) 29,677 27,898 120,569 109,707 Depreciation and
amortization 11,557 9,729 42,807 41,198 Restructuring and
integration - 1 - 288 Gain on disposal of a business unit -
(163,697 ) - (163,697 ) Total costs and
expenses 231,018 49,174 916,876
671,225 Income from operations 12,722 170,267 25,897 179,622
Other income, net 4,160 1,897 14,109
4,864 Income before income taxes 16,882 172,164
40,006 184,486 Benefit from (provision for) income taxes
15,064 (31,074 ) 15,344 (31,491 ) Net income
attributable to common stockholders $ 31,946 $ 141,090 $
55,350 $ 152,995 Net income per share attributable to
common stockholders: Basic $ 0.39 $ 1.69 $ 0.66 $ 1.87
Diluted $ 0.37 $ 1.58 $ 0.62 $ 1.76
Weighted-average shares used to compute
net income per share attributable to common stockholders:
Basic 82,706 83,264 83,573
81,602 Diluted 86,287 89,064
88,709 87,170 (1) As of January 1,
2018, the company adopted ASC 606 using the full retrospective
method. Accordingly, the company has recast certain amounts in the
prior period presented. (2) Includes stock-based
compensation expense as follows:
Three Months EndedDecember
31,
Year Ended December 31,
2018 2017 2018 2017 Cost of revenue $
1,227 $ 1,079 $ 4,572 $ 4,010 Sales and marketing 7,265 6,666
30,779 28,100 Product development 15,004 12,851 56,882 47,280
General and administrative 5,157 4,811
22,153 21,025 Total stock-based compensation $ 28,653
$ 25,407 $ 114,386 $ 100,415
Yelp
Inc. Condensed Consolidated Statements of Cash Flows (In
thousands) (Unaudited)
Year Ended December
31, 2018 2017 (1) Operating
activities Net income attributable to common stockholders $
55,350 $ 152,995 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization
42,807 41,198 Bad debt expense 24,515 20,917 Stock-based
compensation 114,386 100,415 Release of valuation allowance against
deferred tax assets (16,632 ) - Gain on disposal of a business unit
- (163,697 ) Other adjustments (3,978 ) 293 Changes in operating
assets and liabilities: Accounts receivable (35,664 ) (36,146 )
Prepaid expenses and other assets (773 ) (1,362 ) Accounts payable,
accrued expenses and other liabilities (19,824 )
53,034 Net cash provided by operating activities
160,187 167,647
Investing
activities Purchases of marketable securities (751,237 )
(354,895 ) Maturities of marketable securities 613,700 264,000 Sale
of investment prior to maturity 17,895 - Sale of a business, net of
cash sold - 252,663 Acquisitions, net of cash received - (50,544 )
Purchases of property, equipment and software (24,849 ) (15,598 )
Capitalized website and software development costs (20,123 )
(14,647 ) Other investing activities 245 157
Net cash (used in) provided by investing activities
(164,369 ) 81,136
Financing activities
Proceeds from issuance of common stock for employee stock-based
plans 29,779 40,917 Taxes paid related to net share settlement of
equity awards (50,144 ) (1,199 ) Repurchases of common stock
(187,382 ) (12,556 ) Net cash (used in) provided by
financing activities (207,747 ) 27,162
Effect of exchange rate changes on cash, cash equivalents and
restricted cash 360 941 Change in cash, cash equivalents and
restricted cash (211,569 ) 276,886 Cash, cash equivalents and
restricted cash - Beginning of period 566,404
289,518 Cash, cash equivalents and restricted cash - End of
period $ 354,835 $ 566,404 (1) As of January
1, 2018, the company adopted ASC 606 using the full retrospective
method. Accordingly, the company has recast certain amounts in the
prior period presented. Also as of January 1, 2018, the company
adopted Accounting Standards Update No. 2016-18, "Statement of Cash
Flows (Subtopic 230): Restricted Cash," and recast the prior period
presented.
Yelp Inc. Reconciliation of GAAP
to Non-GAAP Financial Measures (In thousands) (Unaudited)
Three Months EndedDecember
31,
Year Ended December 31,
2018 2017 (1) 2018 2017
(1) Reconciliation of GAAP net income to EBITDA and
adjusted EBITDA: GAAP net income $ 31,946 $ 141,090 $
55,350 $ 152,995 (Benefit from) provision for income taxes (15,064
) 31,074 (15,344 ) 31,491 Other income, net (4,160 ) (1,897 )
(14,109 ) (4,864 ) Depreciation and amortization 11,557
9,729 42,807 41,198
EBITDA $ 24,279 $ 179,996 $ 68,704 $
220,820 Stock-based compensation 28,653 25,407
114,386 100,415 Gain on disposal of a business unit - (163,697 ) -
(163,697 ) Restructuring and integration costs -
1 - 288 Adjusted EBITDA $
52,932 $ 41,707 $ 183,090 $ 157,826
Net revenue $ 243,740 $ 219,441 $ 942,773 $ 850,847 Adjusted
EBITDA margin
22%
19%
19%
19%
(1) As of January 1, 2018, the company adopted ASC 606 using
the full retrospective method. Accordingly, the company has recast
certain amounts in the prior period presented.
Yelp Inc. Fourth Quarter and Full Year Net Revenue
Adjusted for Eat24, Nowait and Turnstyle (In thousands)
(Unaudited)
Three Months Ended Year
Ended December 31, December 31, 2018
2017 (1) 2018 2017 (1) Net
revenue, as reported $ 243,740 $ 219,441 $ 942,773 $ 850,847 Eat24
revenue - (1,830 ) - (53,909 ) Nowait and Turnstyle revenue
- - (8,453 ) (5,188 )
Adjusted net revenue
$ 243,740 $ 217,611 $ 934,320 $ 791,750
(1) As of January 1, 2018, the company adopted ASC 606 using the
full retrospective method. Accordingly, the company has recast
certain amounts in the prior period presented.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190213005713/en/
Investor Relations ContactKate
Krieger415-266-3513ir@yelp.com
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