Revenue Increases 20% Over Second Quarter 2016;
Announces Proposed Sale of Eat24 and Partnership with Grubhub
Board Authorizes $200 Million Share Repurchase
Program
Yelp Inc. (NYSE:YELP), the company that connects people with
great local businesses, today announced financial results for the
second quarter ended June 30, 2017.
“We performed well in the second quarter, growing revenue by 20%
and driving strong growth in app usage and advertiser accounts,”
said Jeremy Stoppelman, Yelp’s co-founder and chief executive
officer. “We generated strong profitability in the second quarter,
even while investing for future growth. We are announcing the
pending sale of Eat24 to Grubhub today as part of an important
strategic partnership to expand online ordering capabilities on
Yelp. The Eat24 team has been instrumental in Yelp’s success over
the past two years and we are excited to continue to work with them
as part of Grubhub.”
The following results reflect Yelp’s financial performance and
key operating metrics for the three months ended June 30, 2017.
Second Quarter 2017 Financial
Highlights
- Net revenue was $208.9 million in the
second quarter of 2017, representing 20% growth over the second
quarter of 2016.
- GAAP net income in the second quarter
of 2017 was $7.6 million, or $0.09 per basic share, compared to
GAAP net income of $0.4 million, or $0.01 per basic share, in the
second quarter of 2016.
- Adjusted EBITDA for the second quarter
of 2017 was $42.9 million compared to $28.1 million in the second
quarter of 2016.
- EBITDA for the second quarter of 2017
was $17.5 million compared to EBITDA of $7.4 million in the second
quarter of 2016.
- Non-GAAP net income was $21.6 million,
or $0.25 per diluted share, for the second quarter of 2017,
compared to $12.5 million, or $0.16 per diluted share, in the
second quarter of 2016.
Second Quarter 2017 Revenue
Summary
- Advertising revenue totaled $186.6
million, representing 19% growth compared to the second quarter of
2016.
- Transactions revenue totaled $18.4
million, representing 19% growth compared to the second quarter of
2016.
- Other services revenue totaled $3.8
million, compared to $1.2 million in the second quarter of
2016.
Second Quarter 2017 Key Business Metrics
Highlights
- Cumulative reviews grew 24% year over
year to approximately 135 million.
- App unique devices grew 22% year over
year to approximately 28 million on a monthly average basis1.
- Paying advertising accounts grew 18%
year over year to approximately 148,0002.
“Our second quarter financial performance reflects the overall
health of our business,” said Lanny Baker, Yelp’s chief financial
officer. “We are pleased to sell Eat24 at a price that we believe
demonstrates the value we’ve created over the past two years. We
are also announcing a share repurchase that reflects confidence in
the business and commitment to efficient management of shareholder
capital.”
Pending Sale of Eat24 and Partnership with
Grubhub
Yelp today announced that it has entered into a definitive
agreement to sell Eat24 to Grubhub for $287.5 million in cash,
subject to customary closing conditions, including the expiration
of U.S. antitrust waiting periods. Commencing upon the closing of
Grubhub’s acquisition of Eat24, Yelp and Grubhub will enter into a
long-term strategic partnership in which Yelp will integrate online
ordering from all Grubhub restaurants into Yelp’s platform. A
detailed release outlining the sale and partnership can be found
online at www.yelp-ir.com.
Share Repurchase Program
Yelp today announced that its Board of Directors has approved
the repurchase of up to $200 million of the company’s common stock.
Yelp may purchase shares at management’s discretion in the open
market, in privately negotiated transactions, in transactions
structured through investment banking institutions, or a
combination of the foregoing. The program has no time limit and may
be modified, suspended or discontinued at any time. The amount and
timing of repurchases are subject to a variety of factors including
liquidity, cash flow and market conditions. The share repurchase
program will be funded by cash available on Yelp’s balance sheet.
The Company had 81.8 million shares of common stock outstanding as
of June 30, 2017.
Third Quarter and Full Year 2017 Business
Outlook
As of today, Yelp is providing its outlook for the third quarter
and updating its outlook for the full year of 2017:
$ in millions Third Quarter 2017
Full Year 2017
Net Revenue $217 –
$222 $855 – $865 Adjusted EBITDA
$32 – $35 $143 – $153 Stock-Based
Compensation $25 – $26
$102 – $104 Depreciation and Amortization as % of Net Revenue
~5% ~5%
Yelp has not reconciled its adjusted EBITDA outlook to GAAP net
income (loss) because it does not provide an outlook for GAAP net
income (loss) due to the uncertainty and potential variability of
other income, net and provision for (benefit from) income taxes,
which are reconciling items between adjusted EBITDA and GAAP net
income (loss). Because such items cannot be reasonably predicted
and could have a significant impact on the calculation of GAAP net
income (loss), a reconciliation of the non-GAAP financial measure
outlook to the corresponding GAAP measure is not available without
unreasonable effort. For more information regarding the non-GAAP
financial measures discussed in this release, please see "Non-GAAP
Financial Measures" and "Reconciliation of GAAP to Non-GAAP
Financial Measures" below.
Revisions to Previously Reported Desktop
Unique Visitors
The Company continually seeks to improve its ability to measure
its key metrics and regularly reviews its processes to assess
potential improvements to their accuracy. In the course of such a
review, the Company recently discovered that a portion of its
desktop traffic (as measured by Google Analytics) since the third
quarter of 2016 has been attributable to a single robot. Because
such traffic does not represent valid consumer traffic, the Company
has adjusted the number of desktop unique visitors it is reporting
for the three months ended June 30, 2017, as well as the previously
reported numbers for the other affected periods, to remove such
traffic and to provide greater accuracy and transparency. The
adjusted desktop unique visitors for the three months ended June
30, 2017, the three months ended March 31, 2017, three months ended
December 31, 2016 and three months ended September 30, 2016 are 83
million, 78 million, 68 million and 71 million respectively. The
Company does not believe the adjustments are material to its
overall traffic for the affected periods.
Quarterly Conference Call
To access the call, please dial 1 (844) 795-4421, or outside the
U.S. 1 (661) 378-9638, with Passcode 58204832, at least five
minutes prior to the 2:30 p.m. PT start time. A live
webcast of the call will also be available
at http://www.yelp-ir.com under the Events &
Presentations menu. An audio replay will be available
between 5:30 p.m. PT August 3, 2017 and 5:30
p.m. PT August 10, 2017 by calling 1 (855) 859-2056 or 1 (404)
537-3406, with Passcode 58204832. The replay will also be available
on the Company's website at http://www.yelp-ir.com.
About Yelp
Yelp Inc. (http://www.yelp.com) connects people with great local
businesses. Yelp was founded in San Francisco in July 2004. Since
then, Yelp has taken root in major metros in more than 30
countries. Approximately 28 million unique devices1 accessed Yelp
via the Yelp app, approximately 83 million unique visitors visited
Yelp via desktop computer3 and approximately 74 million unique
visitors visited Yelp via mobile website4 on a monthly average
basis during the second quarter of 2017. By the end of the same
quarter, Yelpers had written approximately 135 million rich, local
reviews, making Yelp the leading local guide for real word-of-mouth
on everything from boutiques and mechanics to restaurants and
dentists.
1 Calculated as the number of unique devices accessing the app
on a monthly average basis over a given three-month period,
according to internal Yelp logs.
2 Paying advertising accounts comprise all business accounts
from which we recognize advertising revenue in a given three-month
period.
3 Calculated as the number of “users,” as measured by Google
Analytics, accessing Yelp via the desktop website on a monthly
average basis over a given three-month period. Adjusted as
described above.
4 Calculated as the number of “users,” as measured by Google
Analytics, accessing Yelp via the mobile website on a monthly
average basis over a given three-month period.
Non-GAAP Financial Measures
This press release includes, and statements made during the
above referenced conference call will include, information relating
to adjusted EBITDA, EBITDA, non-GAAP net income, adjusted EBITDA
margin and non-GAAP net income per share, 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 restructuring and integration costs. We
define EBITDA as net income (loss), adjusted to exclude: provision
for (benefit from) income taxes; other income, net; depreciation
and amortization; and restructuring and integration costs. We
define non-GAAP net income as net income (loss), adjusted to
exclude: stock-based compensation expense; amortization of
intangibles; restructuring and integration costs; and the tax
effect of stock-based compensation, amortization of intangibles,
restructuring and integration costs and valuation allowance. We
define adjusted EBITDA margin as adjusted EBITDA divided by net
revenue. Adjusted EBITDA, EBITDA, non-GAAP net income, adjusted
EBITDA margin and non-GAAP net income per share have been included
in this press release, or will be included in the conference call,
because they 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 its 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”).
Adjusted EBITDA, EBITDA, and non-GAAP net income 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 adjusted EBITDA, EBITDA
and non-GAAP net income do not reflect cash capital expenditure
requirements for such replacements or for new capital expenditure
requirements;
- adjusted EBITDA and EBITDA do not
reflect changes in, or cash requirements for, Yelp's working
capital needs;
- adjusted EBITDA and non-GAAP net income
do not consider the potentially dilutive impact of equity-based
compensation;
- adjusted EBITDA and EBITDA do not
reflect tax payments that may represent a reduction in cash
available to Yelp;
- adjusted EBITDA, EBITDA and non-GAAP
net income do not take into account any restructuring and
integration costs; and
- other companies, including those in
Yelp’s industry, may calculate adjusted EBITDA, EBITDA and non-GAAP
net income differently, which reduces their usefulness as
comparative measures.
Because of these limitations, you should consider adjusted
EBITDA, EBITDA, non-GAAP net income, adjusted EBITDA margin and
non-GAAP net income per share alongside other financial performance
measures, including various cash flow metrics, net income (loss)
and Yelp’s other GAAP results. Additionally, Yelp has not
reconciled its adjusted EBITDA outlook for the third quarter and
full year 2017 to net income (loss) because it does not provide an
outlook for net income (loss) due to the uncertainty and potential
variability of other income, net and provision for (benefit from)
income taxes, which are reconciling items between net income (loss)
and adjusted EBITDA. As items that impact net income (loss) are out
of Yelp’s control and cannot be reasonably predicted, Yelp is
unable to provide such an outlook. Accordingly, reconciliation of
adjusted EBITDA outlook to net income (loss) for the third quarter
and full year 2017 is not available without unreasonable effort.
For a reconciliation of historical non-GAAP financial measures
to the nearest comparable GAAP measures, see the non-GAAP
reconciliations included below in this press release.
Forward-Looking Statements
This press release contains, and statements made during the
above referenced conference call will contain, forward-looking
statements relating to, among other things, the future performance
of Yelp and its consolidated subsidiaries that are based on Yelp’s
current expectations, forecasts and assumptions and involve risks
and uncertainties. These statements include, but are not limited
to: statements regarding expected financial results for the third
quarter and full year 2017; Yelp’s investment and other priorities
for 2017 and its ability to execute against those priorities; the
pending sale of Eat24 and strategic partnership with Grubhub,
including Yelp’s expected return and ability to capitalize on the
sale and partnership; Yelp’s ability to improve its earnings,
margins and productivity; Yelp’s ability to broaden its sales
strategy and capture a meaningful share of the large local market;
the future growth in Yelp revenue; Yelp’s ability to increase usage
and engagement (particularly on the app and in less-trafficked
categories), increase awareness of and engagement on Yelp among
consumers, and deliver value to consumers and local businesses;
Yelp’s ability to increase transactions completed on its platform,
including the continued growth of Request-A-Quote and food order
activity on Yelp; trends in advertiser retention; the recovery of
Yelp’s local salesforce productivity; and Yelp’s implementation of
the authorized share repurchase program and purchase of shares
thereunder. 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; Yelp’s ability to generate sufficient revenue to maintain
profitability, particularly in light of its significant ongoing
sales and marketing expenses and the wind down of sales activities
outside of the United States and Canada; the risk that the planned
sale of Eat24 and partnership with Grubhub may not be completed in
a timely manner or at all, which may adversely affect the Company's
business relationships, operating results and business generally;
Yelp’s ability to successfully manage acquisitions of new
businesses, solutions or technologies, such as Nowait and
Turnstyle, and to integrate those businesses, solutions or
technologies; the potential impact of the pending sale of Eat24 and
long-term partnership with Grubhub on Yelp’s business and financial
results; Yelp’s reliance on traffic to its website from search
engines like Google and Bing; Yelp’s ability to generate and
maintain sufficient high quality content from its users;
maintaining a strong brand and managing negative publicity that may
arise; maintaining and expanding Yelp’s base of advertisers;
changes in political, business and economic conditions, including
any economic downturn or crisis and any conditions that affect
ecommerce growth; Yelp’s ability to deal with the increasingly
competitive local search environment; Yelp’s need and ability to
manage other regulatory, tax and litigation risks as applicable
laws become more restrictive; the competitive and regulatory
environment while Yelp continues to introduce new products and as
new laws and regulations related to Internet companies come into
effect; Yelp’s ability to timely upgrade and develop its systems,
infrastructure and customer service capabilities; and Yelp’s
ability to purchase shares under the share repurchase purchase
program, or the modification, suspension or termination of that
program. The forward-looking statements in this release do not
include the potential impact of any acquisitions or divestitures
that may be announced and/or completed after the date hereof.
More information about factors that could affect Yelp’s
operating results is 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 http://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. Yelp
assumes no obligation to update such statements.
Yelp Inc. Condensed Consolidated Balance
Sheets (In thousands) (Unaudited)
June 30,
December 31, 2017 2016
Assets
Current assets: Cash and cash equivalents $ 319,754 $ 272,201
Short-term marketable securities 192,041 207,332 Accounts
receivable, net 68,778 68,725 Prepaid expenses and other current
assets 14,298 12,921 Total current
assets 594,871 561,179 Property, equipment and software, net
91,714 92,440 Intangibles, net 45,411 32,611 Goodwill 216,440
170,667 Restricted cash 18,539 17,317 Other non-current assets
3,140 10,992 Total assets $ 970,115
$ 885,206
Liabilities and Stockholders'
Equity
Current liabilities: Accounts payable- trade $ 3,183 $ 2,003
Accounts payable- merchant share 17,210 18,352 Accrued liabilities
40,936 36,730 Deferred revenue 3,800 3,314
Total current liabilities 65,129 60,399 Long-term
liabilities 18,320 17,621 Total
liabilities 83,449 78,020
Stockholders' equity
Common stock - - Additional paid-in capital 965,049 892,983
Accumulated other comprehensive loss (10,972 ) (15,576 )
Accumulated deficit (67,411 ) (70,221 ) Total
stockholders' equity 886,666 807,186
Total liabilities and stockholders' equity $ 970,115 $
885,206
Yelp Inc. Condensed
Consolidated Statements of Operations (In thousands, except per
share data) (Unaudited)
Three Months Ended
Six Months Ended June 30, June 30,
2017 2016 2017 2016
Net revenue $ 208,864 $ 173,428 $ 406,187 $ 332,041
Costs and expenses: Cost of revenue (1) 18,056 15,087 34,970 30,165
Sales and marketing (1) 105,232 94,402 214,518 190,030 Product
development (1) 42,088 33,098 81,959 65,320 General and
administrative (1) 25,961 23,464 52,275 45,233 Depreciation and
amortization 10,662 8,564 20,813 16,753 Restructuring and
integration 21 - 251
- Total costs and expenses 202,020
174,615 404,786 347,501
Income (loss) from operations 6,844 (1,187 ) 1,401 (15,460 ) Other
income, net 864 367 1,594
625 Income (loss) before income taxes 7,708 (820 )
2,995 (14,835 ) (Provision for) benefit from income taxes
(118 ) 1,269 (185 ) (168 ) Net income
(loss) attributable to common stockholders $ 7,590 $ 449
$ 2,810 $ (15,003 ) Net income (loss) per
share attributable to common stockholders: Basic $ 0.09 $
0.01 $ 0.03 $ (0.20 ) Diluted $ 0.09 $ 0.01
$ 0.03 $ (0.20 )
Weighted-average shares used to compute
net income (loss) per share attributable to common
stockholders:
Basic 80,996 76,467 80,422
76,176 Diluted 84,860
79,280 85,132 76,176
(1) Includes stock-based compensation expense as
follows:
Three Months Ended Six Months Ended June
30, June 30, 2017 2016 2017
2016 Cost of revenue $ 957 $ 407 $ 1,938 $ 808 Sales and
marketing 7,261 6,843 14,129 13,185 Product development 11,245
8,413 22,453 16,443 General and administrative 5,902
5,063 11,179 9,400 Total
stock-based compensation $ 25,365 $ 20,726 $ 49,699
$ 39,836
Yelp Inc. Condensed
Consolidated Statements of Cash Flows (In thousands)
(Unaudited)
Six Months Ended June 30,
2017 2016
Operating activities:
Net income (loss) $ 2,810 $ (15,003 ) Adjustments to reconcile net
income (loss) to net cash provided by operating activities:
Depreciation and amortization 20,813 16,753 Provision for doubtful
accounts and sales returns 8,859 7,425 Stock-based compensation
49,699 39,836 Other adjustments 267 884 Changes in operating
assets and liabilities: Accounts receivable (7,728 ) (13,237 )
Prepaid expenses and other assets (353 ) 3,492 Accounts payable,
accrued expenses and other liabilities 1,472 5,955 Deferred revenue
484 405 Net cash provided by operating
activities 76,323 46,510
Investing activities: Purchases of marketable securities
(124,855 ) (161,854 ) Maturities of marketable securities 140,000
152,500 Acquisitions of businesses, net of cash received (50,544 )
- Purchases of property, equipment and software (4,079 ) (12,438 )
Capitalized website and software development costs (8,030 ) (6,993
) Other investing activities (1,164 ) (948 ) Net cash
used in investing activities (48,672 ) (29,733 )
Financing activities:
Proceeds from issuance of common stock for employee stock-based
plans 19,354 7,855 Net cash provided by
financing activities 19,354 7,855
Effect of exchange rate changes on cash and cash equivalents
548 50 Change in cash and cash equivalents 47,553 24,682
Cash and cash equivalents - Beginning of period 272,201
171,613 Cash and cash equivalents - End of
period $ 319,754 $ 196,295
Yelp
Inc. Reconciliation of GAAP to Non-GAAP Financial
Measures (In thousands, except per share data) (Unaudited)
Three Months Ended Six Months
Ended June 30, June 30, 2017 2016
2017 2016
Reconciliation of GAAP net income
(loss) to EBITDA, and adjusted EBITDA:
GAAP net income (loss) $ 7,590 $ 449 $ 2,810 $ (15,003 )
Provision for (benefit from) for income taxes 118 (1,269 ) 185 168
Other income, net (864 ) (367 ) (1,594 ) (625 ) Depreciation and
amortization 10,662 8,564 20,813 16,753 Restructuring and
integration costs 21 - 251
- EBITDA 17,527 7,377
22,465 1,293 Stock-based
compensation 25,365 20,726
49,699 39,836 Adjusted EBITDA $ 42,892
$ 28,103 $ 72,164 $ 41,129 Net revenue
$ 208,864 $ 173,428 $ 406,187 $ 332,041 Adjusted EBITDA margin 21 %
16 % 18 % 12 %
Reconciliation of GAAP net income
(loss) to non-GAAP net income:
GAAP net income (loss) $ 7,590 $ 449 $ 2,810 $ (15,003 )
Stock-based compensation 25,365 20,726 49,699 39,836 Amortization
of intangible assets 2,345 1,730 4,278 3,442 Restructuring and
integration costs 21 - 251 - Tax adjustments (1) (13,684 )
(10,389 ) (19,127 ) (9,796 ) Non-GAAP net
income $ 21,637 $ 12,516 $ 37,911 $ 18,479
GAAP diluted shares 84,860 79,280 85,132 78,678
Non-GAAP net income per share $ 0.25
$ 0.16 $ 0.45 $ 0.23 (1)
Includes tax effects of stock-based compensation, amortization of
intangibles, and valuation allowance.
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version on businesswire.com: http://www.businesswire.com/news/home/20170803006337/en/
Investor RelationsYelp Inc.Allie Dalglish,
415-635-2412ir@yelp.com
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