Attached files
| file | filename |
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| 8-K - 8-K - YELP INC | yelp-20200208.htm |
| EX-99.2 - EX-99.2 - YELP INC | yelpq419ex992shareholdea01.pdf |
| EX-99.2 - EX-99.2 - YELP INC | yelpq419ex992shareholdea.htm |
EXHIBIT 99.1
Yelp Reports Fourth Quarter and Full Year 2019 Financial Results
Net Revenue Grew 8% in 2019 Year-Over-Year to $1 Billion, and Grew 10% in Q4 Compared to Prior Year
Net Income of $41 Million Compared to $55 Million in 2018, Reflecting Higher Income Taxes in 2019
Adjusted EBITDA Margin Expanded to 21% in 2019, Up From 19% in 2018
Board Authorized $250 Million Increase to Stock Repurchase Program
David Schwarzbach to join as Chief Financial Officer
Christine Barone to join Board of Directors
SAN FRANCISCO--(BUSINESS WIRE)--February 13, 2020--Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today posted its financial results for the fourth quarter and full year ended December 31, 2019 in the Q4 2019 Shareholder Letter available on its Investor Relations website at www.yelp-ir.com.
“2019 marked a pivotal year for Yelp as we embarked on an ambitious, multi-year business transformation plan,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “We are pleased to have reaccelerated revenue growth in the second half of 2019, while also increasing adjusted EBITDA margin year-over-year. We ended the year with double-digit revenue growth in the fourth quarter and that momentum has continued into 2020, giving us confidence in our ability to achieve our long-term financial targets.”
Financial Highlights & Business Outlook
•Net revenue was $269 million, up 10% from the fourth quarter of 2018, a one percentage point increase from the third quarter’s growth rate. Greater-than-expected seasonal reductions by small- and medium-sized business customers resulted in reported growth slightly below our outlook for the quarter; this seasonal activity reversed in January, when our non-term advertising business saw record monthly advertiser acquisitions and budget retention
•Net income was $17 million, or $0.24 per diluted share, compared to $32 million, or $0.37 per diluted share, in the fourth quarter of 2018, reflecting higher income taxes in the fourth quarter of 2019 and a valuation allowance release in the fourth quarter of 2018
•Adjusted EBITDA1 grew to $61 million, an increase of $8 million, or 15%, compared to the fourth quarter of 2018. Adjusted EBITDA margin increased one percentage point to 23% compared to the fourth quarter of 2018
•Cash provided by operating activities was $56 million for the fourth quarter of 2019, and we ended the fourth quarter with cash, cash equivalents and marketable securities of $466 million
•We repurchased a total of 14 million shares in 2019 at an aggregate cost of $481 million, which drove a 12% reduction of our diluted shares outstanding since the start of the year
•We expect to accelerate revenue growth and expand margins again in 2020. Specifically, we expect Net revenue to grow 10-12% compared to 2019, with Adjusted EBITDA margin increasing by 1-2 percentage points compared to 2019
________________________________
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.
Board and Leadership Announcements
•The Board authorized a $250 million addition to Yelp’s stock repurchase program. Since initiating the program in August 2017, the Board has authorized the return of nearly $1 billion of capital to Yelp shareholders
•David Schwarzbach appointed Chief Financial Officer. Mr. Schwarzbach joins Yelp from Optimizely, where he served as Chief Operating Officer and Chief Financial Officer. He is a seasoned finance expert who brings extensive experience in driving growth at consumer data and marketplace companies.
•Christine Barone, Chief Executive Officer of True Food Kitchen, appointed to Yelp’s Board of Directors. As a leader in the food and restaurant industry, Ms. Barone brings to Yelp’s Board valuable and complementary skills and expertise, and shares our commitment to development and innovation. She replaces Mariam Naficy, who stepped down as a Director of the Yelp Board. Ms. Barone will serve as a member of the Nominating and Corporate Governance Committee
Quarterly Conference Call
Yelp will host a live Q&A session today at 2:00 p.m. Pacific Time to discuss the fourth quarter and full year 2019 financial results and its Business Outlook for the first quarter and full year 2020. 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 net revenue and Adjusted EBITDA growth in 2020 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.
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.
Investor Relations Contact
Kate Krieger
ir@yelp.com
YELP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| December 31, 2019 | December 31, 2018 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 170,281 | $ | 332,764 | |||||||
| Short-term marketable securities | 242,000 | 423,096 | |||||||||
| Accounts receivable, net | 106,832 | 87,305 | |||||||||
| Prepaid expenses and other current assets | 14,196 | 17,104 | |||||||||
| Total current assets | 533,309 | 860,269 | |||||||||
| Long-term marketable securities | 53,499 | — | |||||||||
| Property, equipment and software, net | 110,949 | 114,800 | |||||||||
| Operating lease right-of-use assets | 197,866 | — | |||||||||
| Goodwill | 104,589 | 105,620 | |||||||||
| Intangibles, net | 10,082 | 13,359 | |||||||||
| Restricted cash | 22,037 | 22,071 | |||||||||
| Other non-current assets | 38,369 | 59,444 | |||||||||
| Total assets | $ | 1,070,700 | $ | 1,175,563 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued liabilities | $ | 72,333 | $ | 61,062 | |||||||
| Operating lease liabilities — current | 57,507 | — | |||||||||
| Deferred revenue | 4,315 | 3,843 | |||||||||
| Total current liabilities | 134,155 | 64,905 | |||||||||
| Operating lease liabilities — long-term | 174,756 | — | |||||||||
| Other long-term liabilities | 6,798 | 35,140 | |||||||||
| Total liabilities | 315,709 | 100,045 | |||||||||
| Stockholders’ equity: | |||||||||||
| Common stock | — | — | |||||||||
| Additional paid-in capital | 1,259,803 | 1,139,462 | |||||||||
| Accumulated other comprehensive loss | (11,759) | (11,021) | |||||||||
| Accumulated deficit | (493,053) | (52,923) | |||||||||
| Total stockholders’ equity | 754,991 | 1,075,518 | |||||||||
| Total liabilities and stockholders’ equity | $ | 1,070,700 | $ | 1,175,563 | |||||||
YELP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
| Net revenue | $ | 268,823 | $ | 243,740 | $ | 1,014,194 | $ | 942,773 | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
Cost of revenue(1) | 16,656 | 14,255 | 62,410 | 57,872 | |||||||||||||||||||
Sales and marketing(1) | 126,370 | 121,256 | 500,386 | 483,309 | |||||||||||||||||||
Product development(1) | 61,138 | 54,273 | 230,440 | 212,319 | |||||||||||||||||||
General and administrative(1) | 34,164 | 29,677 | 136,091 | 120,569 | |||||||||||||||||||
| Depreciation and amortization | 12,849 | 11,557 | 49,356 | 42,807 | |||||||||||||||||||
| Total costs and expenses | 251,177 | 231,018 | 978,683 | 916,876 | |||||||||||||||||||
| Income from operations | 17,646 | 12,722 | 35,511 | 25,897 | |||||||||||||||||||
| Other income, net | 2,611 | 4,160 | 14,256 | 14,109 | |||||||||||||||||||
| Income before income taxes | 20,257 | 16,882 | 49,767 | 40,006 | |||||||||||||||||||
| Provision for (benefit from) income taxes | 3,105 | (15,064) | 8,886 | (15,344) | |||||||||||||||||||
| Net income attributable to common stockholders | $ | 17,152 | $ | 31,946 | $ | 40,881 | $ | 55,350 | |||||||||||||||
| Net income per share attributable to common stockholders | |||||||||||||||||||||||
| Basic | $ | 0.24 | $ | 0.39 | $ | 0.55 | $ | 0.66 | |||||||||||||||
| Diluted | $ | 0.24 | $ | 0.37 | $ | 0.52 | $ | 0.62 | |||||||||||||||
| Weighted-average shares used to compute net income per share attributable to common stockholders | |||||||||||||||||||||||
| Basic | 70,627 | 82,706 | 74,627 | 83,573 | |||||||||||||||||||
| Diluted | 72,987 | 86,287 | 77,969 | 88,709 | |||||||||||||||||||
(1) Includes stock-based compensation expense as follows: | |||||||||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
| Cost of revenue | $ | 1,119 | $ | 1,227 | $ | 4,535 | $ | 4,572 | |||||||||||||||
| Sales and marketing | 7,524 | 7,265 | 30,668 | 30,779 | |||||||||||||||||||
| Product development | 16,861 | 15,004 | 63,433 | 56,882 | |||||||||||||||||||
| General and administrative | 5,001 | 5,157 | 22,876 | 22,153 | |||||||||||||||||||
| Total stock-based compensation | $ | 30,505 | $ | 28,653 | $ | 121,512 | $ | 114,386 | |||||||||||||||
YELP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Year Ended December 31, | |||||||||||
| 2019 | 2018 | ||||||||||
| Operating Activities | |||||||||||
| Net income | $ | 40,881 | $ | 55,350 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 49,356 | 42,807 | |||||||||
| Provision for doubtful accounts | 22,543 | 24,515 | |||||||||
| Stock-based compensation | 121,512 | 114,386 | |||||||||
| Noncash lease cost | 41,365 | — | |||||||||
| Deferred income taxes | (2,799) | (15,469) | |||||||||
| Other adjustments, net | (2,997) | (722) | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (42,070) | (35,664) | |||||||||
| Prepaid expenses and other assets | (1,349) | (5,192) | |||||||||
| Operating lease liabilities | (41,808) | — | |||||||||
| Accounts payable, accrued liabilities and other liabilities | 20,148 | (19,824) | |||||||||
| Net cash provided by operating activities | 204,782 | 160,187 | |||||||||
| Investing Activities | |||||||||||
| Purchases of marketable securities | (541,451) | (751,237) | |||||||||
| Maturities of marketable securities | 674,097 | 613,700 | |||||||||
| Sale of investment prior to maturity | — | 17,895 | |||||||||
| Release of escrow deposit | 28,750 | — | |||||||||
| Purchases of property, equipment and software | (37,522) | (44,972) | |||||||||
| Other investing activities | 461 | 245 | |||||||||
| Net cash provided by (used in) investing activities | 124,335 | (164,369) | |||||||||
| Financing Activities | |||||||||||
| Proceeds from issuance of common stock for employee stock-based plans | 32,263 | 29,779 | |||||||||
| Taxes paid related to the net share settlement of equity awards | (42,771) | (50,144) | |||||||||
| Repurchases of common stock | (481,011) | (187,382) | |||||||||
| Net cash used in financing activities | (491,519) | (207,747) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (115) | 360 | |||||||||
| Change in cash, cash equivalents and restricted cash | (162,517) | (211,569) | |||||||||
| Cash, cash equivalents and restricted cash — Beginning of period | 354,835 | 566,404 | |||||||||
| Cash, cash equivalents and restricted cash — End of period | $ | 192,318 | $ | 354,835 | |||||||
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, 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 full year 2019, these other income and expense items consisted of certain 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 has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of Yelp’s financial 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 accordace 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, Adjusted EBITDA does not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
•EBITDA and Adjusted EBITDA does 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 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 take into account any costs that management determines are not indicative of ongoing operating performance, such as restructuring and integration costs or fees related to shareholder activism; and
•other companies, including those in Yelp’s industry, may calculate EBITDA and Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
Because of these limitations, you should consider EBITDA, Adjusted EBITDA and Adjusted EBITDA margin alongside other financial performance measures, including net income and Yelp’s other GAAP results.
The following is a reconciliation of net income — the most directly comparable GAAP financial measure in each case — to EBITDA and Adjusted EBITDA (in thousands):
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
| Reconciliation of Net Income to EBITDA and Adjusted EBITDA: | |||||||||||||||||||||||
| Net income | $ | 17,152 | $ | 31,946 | $ | 40,881 | $ | 55,350 | |||||||||||||||
| Provision for (benefit from) income taxes | 3,105 | (15,064) | 8,886 | (15,344) | |||||||||||||||||||
| Other income, net | (2,611) | (4,160) | (14,256) | (14,109) | |||||||||||||||||||
| Depreciation and amortization | 12,849 | 11,557 | 49,356 | 42,807 | |||||||||||||||||||
| EBITDA | 30,495 | 24,279 | 84,867 | 68,704 | |||||||||||||||||||
| Stock-based compensation | 30,505 | 28,653 | 121,512 | 114,386 | |||||||||||||||||||
Fees related to shareholder activism(1) | — | — | 7,116 | — | |||||||||||||||||||
| Adjusted EBITDA | $ | 61,000 | $ | 52,932 | $ | 213,495 | $ | 183,090 | |||||||||||||||
| Net revenue | $268,823 | $ | 243,740 | $ | 1,014,194 | $ | 942,773 | ||||||||||||||||
| Adjusted EBITDA margin | 23 | % | 22 | % | 21 | % | 19 | % | |||||||||||||||
(1) Recorded within general and administrative expenses on our Condensed Consolidated Statements of Operations.