Financial News

Yelp Reports Second Quarter 2020 Financial Results

Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today posted its financial results for the second quarter ended June 30, 2020 in the Q2 2020 Shareholder Letter available on its Investor Relations website at www.yelp-ir.com.

“Our second quarter results demonstrate the resilience of our business, in spite of the significant headwinds faced by local economies following the emergence of COVID-19,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “Due to our disciplined actions on expenses, coupled with solid revenue performance, we added $35 million of Cash and cash equivalents to our Balance sheet. Though the pace of economic recovery remains uncertain and will not be uniform, we have confidence in our ability to execute in this environment and in the strength of our diversified business.”

Quarterly Conference Call

Yelp will host a live Q&A session today at 2:00 p.m. Pacific Time to discuss the second quarter 2020 financial results. 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 Yelp’s ability to execute in the current environment as well as the strength and resilience of its business, that are based on its current expectations, forecasts, and assumptions that involve risks and uncertainties.

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:

  • the duration and magnitude of the COVID-19 pandemic and measures implemented to help control its spread;
  • the pace of reopening and recovery by local economies;
  • Yelp’s ability to maintain and expand its base of advertisers, particularly as many businesses reduce spending on advertising in connection with COVID-19;
  • Yelp’s limited operating history in an evolving industry;
  • Yelp’s ability to generate sufficient revenue to regain profitability, particularly in light of the ongoing impact of COVID-19 and Yelp’s relief initiatives; and
  • Yelp’s ability to generate and maintain sufficient high-quality content from its users.

YELP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

June 30,
2020

December 31,
2019

Assets

Current assets:

Cash and cash equivalents

$

525,693

$

170,281

Short-term marketable securities

242,000

Accounts receivable, net

72,025

106,832

Prepaid expenses and other current assets

19,675

14,196

Total current assets

617,393

533,309

Long-term marketable securities

53,499

Property, equipment and software, net

106,732

110,949

Operating lease right-of-use assets

188,266

197,866

Goodwill

104,796

104,589

Intangibles, net

8,733

10,082

Restricted cash

910

22,037

Other non-current assets

46,655

38,369

Total assets

$

1,073,485

$

1,070,700

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued liabilities

$

60,206

$

72,333

Operating lease liabilities — current

56,406

57,507

Deferred revenue

3,918

4,315

Total current liabilities

120,530

134,155

Operating lease liabilities — long-term

164,537

174,756

Other long-term liabilities

7,098

6,798

Total liabilities

292,165

315,709

Stockholders' equity:

Common stock

Additional paid-in capital

1,325,745

1,259,803

Accumulated other comprehensive loss

(11,845

)

(11,759

)

Accumulated deficit

(532,580

)

(493,053

)

Total stockholders' equity

781,320

754,991

Total liabilities and stockholders' equity

$

1,073,485

$

1,070,700

 

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

Three Months Ended
June 30,

Six Months Ended
June 30,

2020

2019

2020

2019

Net revenue

$

169,030

$

246,955

$

418,931

$

482,897

Costs and expenses:

Cost of revenue (1)

11,825

14,975

28,672

29,240

Sales and marketing (1)

96,289

122,045

233,586

246,361

Product development (1)

53,969

54,566

121,082

112,641

General and administrative (1)

26,402

30,932

69,938

62,224

Depreciation and amortization

12,582

12,240

24,940

24,116

Restructuring

3,312

3,312

Total costs and expenses

204,379

234,758

481,530

474,582

(Loss) income from operations

(35,349

)

12,197

(62,599

)

8,315

Other income, net

495

3,891

2,878

8,582

(Loss) income before income taxes

(34,854

)

16,088

(59,721

)

16,897

(Benefit from) provision for income taxes

(10,864

)

3,785

(20,228

)

3,229

Net (loss) income attributable to common stockholders

$

(23,990

)

$

12,303

$

(39,493

)

$

13,668

Net (loss) income per share attributable to common stockholders

Basic

$

(0.33

)

$

0.16

$

(0.55

)

$

0.17

Diluted

$

(0.33

)

$

0.16

$

(0.55

)

$

0.17

Weighted-average shares used to compute net (loss) income per share attributable to common stockholders

Basic

72,413

75,601

71,980

78,620

Diluted

72,413

78,530

71,980

81,742

(1) Includes stock-based compensation expense as follows:

Three Months Ended
June 30,

Six Months Ended
June 30,

2020

2019

2020

2019

Cost of revenue

$

943

$

1,118

$

1,986

$

2,361

Sales and marketing

7,302

7,774

14,998

15,461

Product development

16,827

15,247

34,582

31,322

General and administrative

5,513

6,313

10,769

12,626

Total stock-based compensation

$

30,585

$

30,452

$

62,335

$

61,770

 

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

Six Months Ended
June 30,

2020

2019

Operating Activities

Net (loss) income attributable to common stockholders

$

(39,493

)

$

13,668

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization

24,940

24,116

Provision for doubtful accounts

21,897

8,716

Stock-based compensation

62,335

61,770

Noncash lease cost

20,984

21,433

Deferred income taxes

(14,263

)

(1,912

)

Other adjustments, net

876

(1,632

)

Changes in operating assets and liabilities:

Accounts receivable

12,910

(17,143

)

Prepaid expenses and other assets

604

(5,335

)

Operating lease liabilities

(22,520

)

(20,299

)

Accounts payable, accrued liabilities and other liabilities

(11,021

)

14,464

Net cash provided by operating activities

57,249

97,846

Investing Activities

Sales and maturities of marketable securities — available-for-sale

290,395

Purchases of marketable securities — held-to-maturity

(87,438

)

(289,100

)

Maturities of marketable securities — held-to-maturity

93,200

397,197

Release of escrow deposit

28,750

Purchases of property, equipment and software

(17,004

)

(19,214

)

Other investing activities

328

276

Net cash provided by investing activities

279,481

117,909

Financing Activities

Proceeds from issuance of common stock for employee stock-based plans

10,808

11,198

Repurchases of common stock

(397,613

)

Taxes paid related to the net share settlement of equity awards

(12,557

)

(22,605

)

Other financing activities

(356

)

Net cash used in financing activities

(2,105

)

(409,020

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(340

)

(24

)

Change in cash, cash equivalents and restricted cash

334,285

(193,289

)

Cash, cash equivalents and restricted cash — Beginning of period

192,318

354,835

Cash, cash equivalents and restricted cash — End of period

$

526,603

$

161,546

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; and, in certain periods, certain other income and expense items, such as restructuring 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. In particular, the exclusion of certain expenses in calculating EBITDA and Adjusted EBITDA can provide a useful measure for period-to-period comparisons of Yelp’s primary business operations. 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 a substitute 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 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, Yelp's working capital needs;
  • 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 Yelp;
  • Adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;
  • Adjusted EBITDA does not take into account any income or costs that management determines are not indicative of ongoing operating performance, such as restructuring 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, net income (loss) and Yelp’s other GAAP results.

The following is a reconciliation of net income to EBITDA and Adjusted EBITDA (in thousands):

Three Months Ended
June 30,

Six Months Ended
June 30,

2020

2019

2020

2019

Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA:

Net (loss) income

$

(23,990

)

$

12,303

$

(39,493

)

$

13,668

(Benefit from) provision for income taxes

(10,864

)

3,785

(20,228

)

3,229

Other income, net

(495

)

(3,891

)

(2,878

)

(8,582

)

Depreciation and amortization

12,582

12,240

24,940

24,116

EBITDA

(22,767

)

24,437

(37,659

)

32,431

Stock-based compensation

30,585

30,452

62,335

61,770

Restructuring

3,312

3,312

Adjusted EBITDA

$

11,130

$

54,889

$

27,988

$

94,201

Net revenue

$

169,030

$

246,955

$

418,931

$

482,897

Adjusted EBITDA margin

7

%

22

%

7

%

20

%

Contacts:

Investor Relations Contact
Kate Krieger
ir@yelp.com

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