Revenue Increases 19% Over Third Quarter
2016
Yelp Inc. (NYSE:YELP), the company that connects people with
great local businesses, today announced financial results for the
third quarter ended September 30, 2017.
“We executed well in the third quarter, growing revenue by 19%
and generating positive net income,” said Jeremy Stoppelman, Yelp’s
co-founder and chief executive officer. “Traffic growth continues
to be healthy, with app unique devices growing 21% year-over-year,
and our retention efforts have contributed to strong double-digit
advertiser account growth.”
The following results reflect Yelp’s financial performance and
key operating metrics for the three months ended September 30,
2017.
Third Quarter 2017 Financial
Highlights
- Net revenue was $222.4 million in the
third quarter of 2017, representing 19% growth over the third
quarter of 2016.
- GAAP net income in the third quarter of
2017 was $7.9 million, or $0.09 per diluted share, compared to GAAP
net income of $2.1 million, or $0.02 per diluted share, in the
third quarter of 2016.
- Adjusted EBITDA for the third quarter
of 2017 was $42.8 million compared to $33.7 million in the third
quarter of 2016.
- EBITDA for the third quarter of 2017
was $17.5 million compared to EBITDA of $11.1 million in the third
quarter of 2016.
- Non-GAAP net income was $25.4 million,
or $0.29 per diluted share, for the third quarter of 2017, compared
to $18.4 million, or $0.22 per diluted share, in the third quarter
of 2016.
Third Quarter 2017 Revenue
Summary
- Advertising revenue totaled $199.6
million, representing 18% growth compared to the third quarter of
2016.
- Transactions revenue totaled $18.5
million, representing 16% growth compared to the third quarter of
2016.
- Other services revenue totaled $4.3
million, compared to $1.4 million in the third quarter of
2016.
Third Quarter 2017 Key Business Metrics
Highlights
- Cumulative reviews grew 23% year over
year to approximately 142 million.
- App unique devices grew 21% year over
year to approximately 30 million on a monthly average basis1.
- Paying advertising accounts grew 18%
year over year to approximately 155,0002.
Fourth Quarter and Full Year 2017 Business
Outlook
As of today, Yelp is providing its outlook for the fourth
quarter and updating its outlook for the full year of 2017:
$ and shares in millions Fourth Quarter 2017
Full Year 2017 Net Revenue $211 – $216
$839 – $844 Adjusted EBITDA $39 – $42
$154 – $157 Stock-Based Compensation $25 – $27
$100 – $102 Depreciation and Amortization as % of Net
Revenue ~5% ~5% Fully Diluted Share
Count
88 – 91
85 – 86
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.
Quarterly Conference Call
To access the call, please dial 1 (844) 795-4421, or outside the
U.S. 1 (661) 378-9638, with Passcode 7599509, at least five minutes
prior to the 1:30 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
4:30 p.m. PT November 1, 2017 and 3:30 p.m. PT November 8, 2017 by
calling 1 (855) 859-2056 or 1 (404) 537-3406, with Passcode
7599509. 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 30 million unique devices1 accessed Yelp
via the Yelp app, approximately 84 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 third quarter of 2017. By the end of the same
quarter, Yelpers had written approximately 142 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 to remove
certain robot traffic, as described in Yelp’s most recent Annual
Report on Form 10-K or Quarterly Report on Form 10-Q.
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 fourth 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 fourth 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 fourth
quarter and full year 2017; Yelp’s investment and other priorities
for 2017 and beyond, and its ability to execute against those
priorities; the sale of Eat24 and strategic partnership with
Grubhub, including Yelp’s ability to capitalize on the sale and
partnership, the expected timing of the partnership integration,
the expected benefits of the partnership and the potential impact
of the sale of Eat24 and long-term partnership with Grubhub on
Yelp’s business and financial results; Yelp’s ability to improve
its earnings, margins and productivity; Yelp’s ability to capture a
meaningful share of the large local market; the future growth in
Yelp revenue; Yelp’s ability to increase usage (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 and
advertiser acceptance of Request-A-Quote; trends in advertiser and
revenue retention; Yelp’s ability to build a comprehensive offering
in the Restaurant category, including the continued expansion of
Yelp Reservations; and Yelp’s plans to manage dilution, including
the implementation of the authorized stock 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, the sale of Eat24 and the
wind down of sales activities outside of the United States and
Canada; the risk that the Grubhub partnership integration 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; 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 stock 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)
September 30,
December 31,
2017 2016 Assets Current assets: Cash and cash
equivalents $ 362,401 $ 272,201 Short-term marketable securities
195,768 207,332 Accounts receivable, net 68,483 68,725 Prepaid
expenses and other current assets 15,694 12,921 Assets held for
sale 143,873 - Total current assets 786,219
561,179 Property, equipment and software, net 94,348 92,440
Intangibles, net 17,815 32,611 Goodwill 107,186 170,667 Restricted
cash 18,595 17,317 Other non-current assets 2,952
10,992 Total assets $ 1,027,115 $ 885,206
Liabilities and
Stockholders' Equity Current liabilities: Accounts payable-
trade $ 2,269 $ 2,003 Accounts payable- merchant share 878 18,352
Accrued liabilities 48,320 36,730 Deferred revenue 3,667 3,314
Liabilities held for sale 25,170 - Total current
liabilities 80,304 60,399 Long-term liabilities 21,515
17,621 Total liabilities 101,819 78,020
Stockholders' equity Common stock - - Additional paid-in capital
1,001,633 892,983 Accumulated other comprehensive loss (9,107)
(15,576) Accumulated deficit (67,230) (70,221) Total
stockholders' equity 925,296 807,186 Total
liabilities and stockholders' equity $ 1,027,115 $ 885,206
Yelp Inc. Condensed Consolidated Statements of
Operations (In thousands, except per share data) (Unaudited)
Three Months Ended
Nine Months Ended September 30, September 30,
2017 2016 2017
2016 Net revenue $ 222,380 $ 186,232 $ 628,567 $
518,273 Costs and expenses: Cost of revenue (1) 19,312
14,594 54,282 44,759 Sales and marketing (1) 113,041 99,274 327,559
289,304 Product development (1) 45,834 36,369 127,793 101,689
General and administrative (1) 26,694 24,876 78,969 70,109
Depreciation and amortization 10,656 9,159 31,470 25,912
Restructuring and integration 35 - 286
- Total costs and expenses 215,572 184,272
620,359 531,773 Income (Loss) from operations 6,808 1,960
8,208 (13,500) Other income, net 1,371 327
2,933 952 Income (Loss) before income taxes 8,179 2,287
11,141 (12,548)
Provision for income taxes
(232) (217) (417) (385) Net income
(loss) attributable to common stockholders $ 7,947 $ 2,070 $ 10,724
$ (12,933) Net income (loss) per share attributable to
common stockholders: Basic $ 0.10 $ 0.03 $ 0.13 $ (0.17) Diluted $
0.09 $ 0.02 $ 0.12 $ (0.17)
Weighted-average shares used to compute
net income (loss) per share
attributable to common stockholders: Basic 82,259
77,521 81,041 76,627 Diluted 87,433
82,917 86,097 76,627 (1)
Includes stock-based compensation expense as follows:
Three
Months Ended Nine Months Ended September 30,
September 30, 2017 2016 2017
2016 Cost of revenue $ 993 $ 764 $ 2,931 $ 1,572 Sales and
marketing 7,305 7,191 21,434 20,376 Product development 11,976
9,284 34,428 25,727 General and administrative 5,035
5,321 16,214 14,721 Total stock-based compensation $
25,309 $ 22,560 $ 75,007 $ 62,396
Yelp Inc.
Condensed Consolidated Statements of Cash Flows (In
thousands) (Unaudited)
Nine Months Ended
September 30, 2017 2016
Operating activities Net income (loss) $ 10,724 $ (12,933)
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation and amortization 31,470 25,912 Provision
for doubtful accounts and sales returns 13,448 12,139 Stock-based
compensation 75,007 62,396 Other adjustments 411 1,314
Changes in operating assets and liabilities: Accounts receivable
(16,971) (24,167) Prepaid expenses and other assets (2,106) 3,638
Accounts payable, accrued expenses and other liabilities 15,628
13,193 Deferred revenue 350 295 Net cash provided by
operating activities 127,961 81,787
Investing activities Purchases of marketable securities
(179,557) (221,771) Maturities of marketable securities 191,000
212,500 Purchase of cost method investment - (8,000) Acquisitions
of businesses, net of cash received (50,544) - Purchases of
property, equipment and software (7,892) (17,798) Capitalized
website and software development costs (12,236) (10,596) Other
investing activities (1,209) (927) Net cash used in
investing activities (60,438) (46,592)
Financing activities Proceeds from issuance of common stock
for employee stock-based plans 29,556 18,055 Repurchases of common
stock (7,743) - Net cash provided by financing
activities 21,813 18,055 Effect of exchange
rate changes on cash and cash equivalents 864 28 Change in
cash and cash equivalents 90,200 53,278 Cash and cash equivalents -
Beginning of period 272,201 171,613 Cash and cash
equivalents - End of period $ 362,401 $ 224,891
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,
2017 2016 2017
2016 Reconciliation of GAAP net income (loss) to
EBITDA and adjusted EBITDA: GAAP net income (loss) $
7,947 $ 2,070 $ 10,724 $ (12,933) Provision for income taxes 232
217 417 385 Other income, net (1,371) (327) (2,933) (952)
Depreciation and amortization 10,656 9,159 31,470 25,912
Restructuring and integration costs 35 - 286
- EBITDA 17,499 11,119 39,964
12,412 Stock-based compensation 25,309 22,560
75,007 62,396 Adjusted EBITDA $ 42,808 $ 33,679 $
114,971 $ 74,808 Net revenue $ 222,380 $ 186,232 $ 628,567 $
518,273 Adjusted EBITDA margin 19% 18% 18% 14%
Reconciliation of GAAP net income (loss) to non-GAAP net
income: GAAP net income (loss) $ 7,947 $ 2,070 $ 10,724
$ (12,933) Stock-based compensation 25,309 22,560 75,007 62,396
Amortization of intangible assets 1,441 1,706 5,719 5,148
Restructuring and integration costs 35 - 286 - Tax adjustments (1)
(9,327) (7,927) (28,454) (17,723)
Non-GAAP net income $ 25,405 $ 18,409 $ 63,282 $ 36,888 GAAP
diluted shares 87,433 82,917 86,097 79,945
NON-GAAP net income per share $ 0.29 $ 0.22 $ 0.74 $ 0.46
(1) Includes tax effects of stock-based compensation,
amortization of intangibles, restructuring and integration, and
valuation allowance.
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version on businesswire.com: http://www.businesswire.com/news/home/20171101006569/en/
Yelp Inc.Allie Dalglish, 415-635-2412Investor
Relationsir@yelp.com
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