Reports Net Revenue of $241 Million, Net
Income of $15 Million and Adjusted EBITDA of $50 Million
Yelp Inc. (NYSE: YELP), the company that connects people with
great local businesses, today posted its financial results for the
quarter ended September 30, 2018 in the Q3 2018 Shareholder Letter
on its Investor Relations website at www.yelp-ir.com.
“Although we achieved our adjusted EBITDA outlook for the third
quarter, revenue was lower than we anticipated,” said Jeremy
Stoppelman, Yelp’s co-founder and chief executive officer. “While
the shift to non-term advertising has opened our sales funnel, it
has also made our results more sensitive to short-term operational
issues. We have begun to address a number of the issues that
impacted our third quarter results; however, we expect them to
affect our fourth quarter results as well, as reflected in our
Business Outlook. We remain positive about the move to more
flexible and dynamic advertising terms, as we believe the shift
greatly increases our long-term sales opportunity and opens up
additional levers to expand Yelp’s sales reach and profit
margins.”
Quarterly Conference Call
Yelp will host a live Q&A session today at 2:00 p.m. PT to
discuss the third quarter 2018 financial results and the outlook
for the fourth quarter of 2018, full year 2018, and full year 2019.
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 until November 16, 2018.
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; and
restructuring and integration costs. 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 and 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:
- ability to increase client acquisition
through the sale of non-term contracts;
- strategic and investment priorities, as
well as its ability to execute against those priorities;
- Plans to increase its focus on
different product distribution channels;
- ability to reduce purchase friction and
efficiently expand its sales reach; and
- plans and ability to generate stronger
profitability.
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.
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) (Unaudited)
September 30, December 31, 2018
2017 Assets Current assets: Cash and
cash equivalents $ 423,495 $ 547,850 Short-term marketable
securities 414,002 273,366 Accounts receivable, net 81,835 76,173
Prepaid expenses and other current assets 17,567
15,700 Total current assets 936,899 913,089
Long-term marketable securities - 25,032 Property, equipment and
software, net 110,899 103,651 Goodwill 106,323 107,954 Intangibles,
net 14,242 16,893 Restricted cash 22,121 18,554 Other non-current
assets 42,773 40,428 Total assets $
1,233,257 $ 1,225,601
Liabilities and
Stockholders' Equity Current liabilities: Accounts payable $
6,829 $ 9,033 Accrued liabilities 58,564 73,665 Deferred revenue
3,392 3,469 Total current liabilities
68,785 86,167 Long-term liabilities 34,978
30,737 Total liabilities 103,763
116,904 Stockholders' equity Common stock - -
Additional paid-in capital 1,109,199 1,038,017 Treasury stock - (46
) Accumulated other comprehensive loss (10,225 ) (8,444 ) Retained
earnings 30,520 79,170 Total
stockholders' equity 1,129,494 1,108,697
Total liabilities and stockholders' equity $ 1,233,257
$ 1,225,601
Yelp Inc.
Condensed Consolidated Statements of
Operations
(In thousands, except per share
data)
(Unaudited)
Three Months Ended Nine Months
Ended September 30, September 30, 2018
2017 2018 2017 Net revenue $
241,096 $ 223,287 $ 699,033 $ 631,406 Costs and expenses:
Cost of revenue(1) 14,177 19,312 43,618 54,282 Sales and marketing
(1) 121,759 112,958 362,054 326,409 Product development (1) 53,764
45,834 158,046 127,793 General and administrative (1) 30,302 27,601
90,892 81,808 Depreciation and amortization 10,713 10,656 31,250
31,470 Restructuring and integration - 35 - 286
Total costs and expenses 230,715
216,396 685,860 622,048 Income from
operations 10,381 6,891 13,173 9,358 Other income, net 3,921
1,371 9,950 2,933 Income before
income taxes 14,302 8,262 23,123 12,291 Benefit from (provision
for) income taxes 684 (232 ) 281 (417 )
Net income attributable to common stockholders $ 14,986 $ 8,030
$ 23,404 $ 11,874 Net income per share
attributable to common stockholders: Basic $ 0.18 $ 0.10 $
0.28 $ 0.15 Diluted $ 0.17 $ 0.09 $ 0.26 $ 0.14
Weighted-average shares used to compute net income
per share attributable to common stockholders: Basic 84,008
82,259 83,865 81,041 Diluted
88,724 87,433 89,271 86,097
(1) Includes stock-based compensation expense
as follows:
Three Months Ended Nine Months Ended
September 30, September 30, 2018 2017
2018 2017 Cost of revenue $ 1,162 $ 993 $ 3,345 $
2,931 Sales and marketing 7,941 7,305 23,514 21,434 Product
development 14,536 11,976 41,878 34,428 General and administrative
5,555 5,035 16,995 16,214
Total stock-based compensation $ 29,194 $ 25,309 $ 85,732 $
75,007
Yelp Inc.
Condensed Consolidated Statements of
Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended September 30, 2018
2017 Operating activities
Net income attributable to common stockholders $ 23,404 $ 11,874
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 31,250 31,470
Bad debt expense 19,285 15,239 Stock-based compensation 85,732
75,007 Other adjustments (2,793 ) 280 Changes in operating
assets and liabilities: Accounts receivable (24,956 ) (19,810 )
Prepaid expenses and other assets (2,085 ) (2,077 ) Accounts
payable, accrued expenses and other liabilities (13,647 ) 15,628
Deferred revenue (75 ) 350 Net cash provided
by operating activities 116,115 127,961
Investing activities Purchases of marketable
securities (572,788 ) (179,557 ) Maturities of marketable
securities 460,800 191,000 Acquisition of a business, net of cash
received - (50,544 ) Purchases of property, equipment and software
(18,699 ) (7,892 ) Capitalized website and software development
costs (15,238 ) (12,236 ) Other investing activities 64
69 Net cash used in investing activities
(145,861 ) (59,160 )
Financing
activities Proceeds from issuance of common stock for employee
stock-based plans 21,835 29,556 Repurchases of common stock (71,993
) (7,743 ) Taxes paid related to the net share settlement of equity
awards (41,081 ) - Net cash (used in) provided
by financing activities (91,239 ) 21,813
Effect of exchange rate changes on cash, cash equivalents
and restricted cash 197 864 Change in cash, cash equivalents
and restricted cash (120,788 ) 91,478 Cash, cash equivalents and
restricted cash - Beginning of period 566,404
289,518 Cash, cash equivalents and restricted cash - End of
period $ 445,616 $ 380,996
Yelp Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures (In
thousands, except per share data) (Unaudited)
Three Months Ended Nine Months
Ended September 30, September 30,
2018 2017 2018
2017 Reconciliation of GAAP
net income to EBITDA and adjusted EBITDA: GAAP net
income $ 14,986 $ 8,030 $ 23,404 $ 11,874 (Benefit from) provision
for income taxes (684 ) 232 (281 ) 417 Other income, net (3,921 )
(1,371 ) (9,950 ) (2,933 ) Depreciation and amortization
10,713 10,656 31,250
31,470 EBITDA 21,094 17,547
44,423 40,828 Stock-based
compensation 29,194 25,309 85,732 75,007 Restructuring and
integration costs - 35 -
286 Adjusted EBITDA $ 50,288 $ 42,891 $
130,155 $ 116,121 Net revenue $ 241,096 $
223,287 $ 699,033 $ 631,406 Adjusted EBITDA margin
21%
19%
19%
18%
Yelp Inc.
Third Quarter Net Revenue Adjusted for
Eat24
(In thousands)
(Unaudited)
Three Months Ended Nine
Months Ended September 30, September 30,
2018 2017 2018 2017 Net revenue as
reported $ 241,096 $ 223,287 $ 699,033 $ 631,406 Eat24 revenue
- (17,550 ) - (52,079 ) Net revenue
excluding Eat24 $ 241,096 $ 205,737 $ 699,033 $ 579,327
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181108005949/en/
Investor Relations ContactYelp Inc.Kate Krieger,
415-266-3513ir@yelp.com
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