Net revenue grew 9% year over year to $262
million, reaccelerating from Q2 2019
Fourth quarter Net revenue growth expected
to accelerate to 11-13% compared to Q4 2018
$77 million returned to shareholders through
share repurchases in Q3 2019
Yelp Inc. (NYSE: YELP), the company that connects people with
great local businesses, today posted its financial results for the
quarter ended September 30, 2019 in the Q3 2019 Shareholder Letter
available on its Investor Relations website at www.yelp-ir.com.
“We are pleased to have reaccelerated revenue growth, while at
the same time increasing Adjusted EBITDA margin, in the third
quarter,” said Jeremy Stoppelman, Yelp’s co-founder and chief
executive officer. “We expect this momentum to continue in the
fourth quarter, with revenue growing double-digits compared to the
prior year and margin expanding significantly once again. These
strong business fundamentals reinforce our confidence in our
ability to achieve our long-term financial targets.”
Third Quarter 2019 Financial
Highlights
- Net revenue was $262 million, up 9% from the third quarter of
2018, consistent with the Company’s outlook, driven primarily by
growth in Advertising revenue
- Net income, which includes $7 million in fees related to
shareholder activism, was $10 million, or $0.14 per diluted share,
compared to Net income of $15 million, or $0.17 per diluted share,
in the third quarter of 2018
- Adjusted EBITDA1 grew to $58 million, a 16% increase over the
third quarter of 2018. Adjusted EBITDA margin increased one
percentage point to 22%, also in line with the Company’s
outlook
- Cash provided by operating activities was $51 million for the
third quarter of 2019, and Yelp ended the third quarter with cash,
cash equivalents, and marketable securities of $417 million
- Shares repurchased totaled approximately 2.3 million in the
third quarter at an aggregate cost of $77 million, which
contributed to a 14% reduction of Yelp’s outstanding shares by
since the start of the year
- Yelp expects to accelerate revenue growth and expand Adjusted
EBITDA margin again in the fourth quarter of 2019. Specifically,
Yelp expects Net revenue to grow 11-13% over the prior year with
Adjusted EBITDA margin increasing by 2-3 percentage points over
2018 levels
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.
Quarterly Conference Call
Yelp will host a live Q&A session today at 2:00 p.m. Pacific
Time to discuss the third quarter 2019 financial results and its
Business Outlook for the fourth quarter 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.
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 double-digit (11-13%) revenue growth and
significant margin expansion (specifically, adjusted EBITDA margin
increasing by 2-3 percentage points) in the fourth quarter as
compared to the fourth quarter of 2018 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. These statements include the
statements regarding Yelp’s expected revenue growth, plans to drive
long-term growth, expectation that its second quarter achievements
and its continued focus on its 2019 initiatives will accelerate
revenue growth in the second half of the year, and the success and
timing of Baker’s transition from Yelp.
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)
September 30, 2019
December 31, 2018
Assets
Current assets:
Cash and cash equivalents
$
123,402
$
332,764
Short-term marketable securities
258,414
423,096
Accounts receivable, net
101,441
87,305
Prepaid expenses and other current
assets
16,042
17,104
Total current assets
499,299
860,269
Long-term marketable securities
34,964
—
Property, equipment and software, net
113,935
114,800
Operating lease right-of-use assets
207,852
—
Goodwill
103,459
105,620
Intangibles, net
10,778
13,359
Restricted cash
22,127
22,071
Other non-current assets
36,355
59,444
Total assets
$
1,028,769
$
1,175,563
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
3,139
$
6,540
Accrued liabilities
71,739
54,522
Operating lease liabilities — current
57,013
—
Deferred revenue
4,222
3,843
Total current liabilities
136,113
64,905
Operating lease liabilities —
long-term
186,056
—
Other long-term liabilities
4,036
35,140
Total liabilities
326,205
100,045
Stockholders' equity:
Common stock
—
—
Additional paid-in capital
1,220,048
1,139,462
Accumulated other comprehensive loss
(13,297
)
(11,021
)
Accumulated deficit
(504,187
)
(52,923
)
Total stockholders' equity
702,564
1,075,518
Total liabilities and stockholders'
equity
$
1,028,769
$
1,175,563
YELP INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net revenue
$
262,474
$
241,096
$
745,371
$
699,033
Costs and expenses:
Cost of revenue (1)
16,514
14,177
45,754
43,618
Sales and marketing (1)
127,655
121,759
374,016
362,054
Product development (1)
56,661
53,764
169,302
158,046
General and administrative (1)
39,703
30,302
101,927
90,892
Depreciation and amortization
12,391
10,713
36,507
31,250
Total costs and expenses
252,924
230,715
727,506
685,860
Income from operations
9,550
10,381
17,865
13,173
Other income, net
3,063
3,921
11,645
9,950
Income before income taxes
12,613
14,302
29,510
23,123
(Provision for) benefit from income
taxes
(2,552
)
684
(5,781
)
281
Net income attributable to common
stockholders
$
10,061
$
14,986
$
23,729
$
23,404
Net income per share attributable to
common stockholders
Basic
$
0.14
$
0.18
$
0.31
$
0.28
Diluted
$
0.14
$
0.17
$
0.30
$
0.26
Weighted-average shares used to compute
net income per share attributable to common stockholders
Basic
70,773
84,008
75,975
83,865
Diluted
73,712
88,724
79,315
89,271
(1) Includes stock-based compensation
expense as follows:
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Cost of revenue
$
1,054
$
1,162
$
3,415
$
3,345
Sales and marketing
7,683
7,941
23,143
23,514
Product development
15,250
14,536
46,572
41,878
General and administrative
5,249
5,555
17,876
16,995
Total stock-based compensation
$
29,236
$
29,194
$
91,006
$
85,732
YELP INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September
30,
2019
2018
Operating Activities
Net income attributable to common
stockholders
$
23,729
$
23,404
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
36,507
31,250
Provision for doubtful accounts
15,259
19,285
Stock-based compensation
91,006
85,732
Noncash lease cost
31,379
—
Deferred income taxes
(673
)
—
Other adjustments
(2,559
)
(2,793
)
Changes in operating assets and
liabilities:
Accounts receivable
(29,395
)
(24,956
)
Prepaid expenses and other assets
(2,312
)
(2,085
)
Operating lease liabilities
(31,002
)
—
Accounts payable, accrued liabilities and
other liabilities
17,329
(13,722
)
Net cash provided by operating
activities
149,268
116,115
Investing Activities
Purchases of marketable securities
(396,648
)
(572,788
)
Maturities of marketable securities
530,597
460,800
Release of escrow deposit
28,750
—
Purchases of property, equipment and
software
(29,950
)
(33,937
)
Other investing activities
383
64
Net cash provided by (used in) investing
activities
133,132
(145,861
)
Financing Activities
Proceeds from issuance of common stock for
employee stock-based plans
15,813
21,835
Repurchases of common stock
(474,993
)
(71,993
)
Taxes paid related to the net share
settlement of equity awards
(32,784
)
(41,081
)
Net cash used in financing activities
(491,964
)
(91,239
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
258
197
Change in cash, cash equivalents and
restricted cash
(209,306
)
(120,788
)
Cash, cash equivalents and restricted cash
— Beginning of period
354,835
566,404
Cash, cash equivalents and restricted cash
— End of period
$
145,529
$
445,616
Non-GAAP Financial Measures
This press release 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 third quarter of 2019, these other income and expense items
consisted of 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 have limitations as analytical tools,
and you should not consider them in isolation or as substitutes for
analysis of our 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, and EBITDA and adjusted EBITDA do not reflect all
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, our 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 us;
- 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 in 2017
and fees related to shareholder activism in 2019; and
- other companies, including companies in our industry, may
calculate EBITDA and adjusted EBITDA differently, which reduces
their usefulness as comparative measures.
Because of these limitations, you should consider EBITDA and
adjusted EBITDA alongside other financial performance measures,
including net income and our other GAAP results. The tables below
present reconciliations of net income — the most directly
comparable GAAP financial measure in each case — to EBITDA and
adjusted EBITDA for each of the periods indicated.
The following is a reconciliation of net income to EBITDA and
adjusted EBITDA (in thousands):
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Reconciliation of net income to EBITDA
and adjusted EBITDA:
Net income
$
10,061
$
14,986
$
23,729
$
23,404
Provision for (benefit from) income
taxes
2,552
(684
)
5,781
(281
)
Other income, net
(3,063
)
(3,921
)
(11,645
)
(9,950
)
Depreciation and amortization
12,391
10,713
36,507
31,250
EBITDA
21,941
21,094
54,372
44,423
Stock-based compensation
29,236
29,194
91,006
85,732
Fees related to shareholder activism
(1)
7,116
—
7,116
—
Adjusted EBITDA
$
58,293
$
50,288
$
152,494
$
130,155
Net revenue
$
262,474
$
241,096
$
745,371
$
699,033
Adjusted EBITDA margin
22
%
21
%
20
%
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/20191107005349/en/
Investor Relations Contact Kate Krieger 415-266-3513
ir@yelp.com
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