Yelp Reports Fourth Quarter and Full Year 2020 Financial Results

Fourth quarter Net Revenue of $233 million
Net Income grew 23% from the fourth quarter of 2019 to $21 million
Fourth quarter Adjusted EBITDA margin was 26%
Expects return to sustainable revenue growth in 2021

SAN FRANCISCO--(BUSINESS WIRE)--February 9, 2021--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, 2020 in the Q4 and Full Year 2020 Shareholder Letter available on its Investor Relations website at

“2020 was a transformational year for Yelp,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “We preserved our financial strength throughout the pandemic as we increased the pace of product innovation to help consumers and local businesses stay connected, while continuing to make significant progress on our long-term strategy. We increased monetization in Home & Local Services and completed the realignment of our go-to-market channels, driving more revenue growth through our Self-serve channel. As we look ahead, we are confident in our ability to return to sustainable revenue growth in 2021.”

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 2020 financial results and outlook for the first quarter and full year of 2021. 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 return to sustainable growth in 2021, 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:
fluctuations in the number of COVID-19 cases, the pace at which vaccinations are administered in the United States, and the timeframe for the lifting of COVID-19-related shelter-in-place orders and business restrictions;
the pace of reopening and recovery by local economies and economic recovery in the United States generally;
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 ability to continue to operate effectively with a primarily remote work force and attract and retain key talent;
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.

Investor Relations Contact

Kate Krieger

(In thousands)
December 31,
December 31,
Current assets:
Cash and cash equivalents$595,875 $170,281 
Short-term marketable securities— 242,000 
Accounts receivable, net88,400 106,832 
Prepaid expenses and other current assets28,450 14,196 
Total current assets712,725 533,309 
Long-term marketable securities— 53,499 
Property, equipment and software, net101,718 110,949 
Operating lease right-of-use assets168,209 197,866 
Goodwill109,261 104,589 
Intangibles, net13,521 10,082 
Restricted cash665 22,037 
Other non-current assets48,848 38,369 
Total assets$1,154,947 $1,070,700 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities$87,760 $72,333 
Operating lease liabilities — current51,161 57,507 
Deferred revenue4,109 4,315 
Total current liabilities143,030 134,155 
Operating lease liabilities — long-term148,935 174,756 
Other long-term liabilities8,448 6,798 
Total liabilities300,413 315,709 
Stockholders’ equity:
Common stock— — 
Additional paid-in capital1,398,248 1,259,803 
Treasury stock(2,964)— 
Accumulated other comprehensive loss(6,807)(11,759)
Accumulated deficit(533,943)(493,053)
Total stockholders’ equity854,534 754,991 
Total liabilities and stockholders’ equity$1,154,947 $1,070,700 

(In thousands, except per share data)

Three Months Ended
December 31,
Year Ended
December 31,
Net revenue$233,195 $268,823 $872,933 $1,014,194 
Costs and expenses:
Cost of revenue(1)
15,321 16,656 57,186 62,410 
Sales and marketing(1)
102,173 126,370 437,060 500,386 
Product development(1)
58,457 61,138 232,561 230,440 
General and administrative(1)
29,625 34,164 130,450 136,091 
Depreciation and amortization13,125 12,849 50,609 49,356 
Restructuring15 — 3,862 — 
Total costs and expenses218,716 251,177 911,728 978,683 
Income (loss) from operations14,479 17,646 (38,795)35,511 
Other income, net393 2,611 3,670 14,256 
Income (loss) before income taxes14,872 20,257 (35,125)49,767 
(Benefit from) provision for income taxes(6,217)3,105 (15,701)8,886 
Net income (loss) attributable to common stockholders$21,089 $17,152 $(19,424)$40,881 
Net income (loss) per share attributable to common stockholders
Basic$0.28 $0.24 $(0.27)$0.55 
Diluted$0.27 $0.24 $(0.27)$0.52 
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders
Basic74,524 70,627 73,005 74,627 
Diluted76,971 72,987 73,005 77,969 
(1) Includes stock-based compensation expense as follows:
Three Months Ended
December 31,
Year Ended
December 31,
Cost of revenue$949 $1,119 $3,784 $4,535 
Sales and marketing7,476 7,524 29,670 30,668 
Product development17,489 16,861 67,622 63,433 
General and administrative6,070 5,001 23,498 22,876 
Total stock-based compensation$31,984 $30,505 $124,574 $121,512 

(In thousands)

Year Ended December 31,
Operating Activities
Net (loss) income$(19,424)$40,881 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization50,609 49,356 
Provision for doubtful accounts32,265 22,543 
Stock-based compensation124,574 121,512 
Noncash lease cost42,235 41,365 
Deferred income taxes(11,181)(2,799)
Other adjustments, net2,193 (2,997)
Changes in operating assets and liabilities:
Accounts receivable(13,833)(42,070)
Prepaid expenses and other assets164 (1,349)
Operating lease liabilities(46,283)(41,808)
Accounts payable, accrued liabilities and other liabilities15,382 20,148 
Net cash provided by operating activities176,701 204,782 
Investing Activities
Sales and maturities of marketable securities — available-for-sale290,395 — 
Purchases of marketable securities — held-to-maturity(87,438)(541,451)
Maturities of marketable securities — held-to-maturity93,200 674,097 
Purchases of other investments(10,000)— 
Release of escrow deposit— 28,750 
Purchases of property, equipment and software(32,002)(37,522)
Purchase of intangible asset(6,129)— 
Other investing activities333 461 
Net cash provided by investing activities248,359 124,335 
Financing Activities
Proceeds from issuance of common stock for employee stock-based plans27,382 32,263 
Taxes paid related to the net share settlement of equity awards(23,605)(42,771)
Repurchases of common stock(24,396)(481,011)
Other financing activities(433)— 
Net cash used in financing activities(21,052)(491,519)
Effect of exchange rate changes on cash, cash equivalents and restricted cash214 (115)
Change in cash, cash equivalents and restricted cash404,222 (162,517)
Cash, cash equivalents and restricted cash — Beginning of period192,318 354,835 
Cash, cash equivalents and restricted cash — End of period$596,540 $192,318 

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 and fees related to shareholder activism. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net revenue.

Adjusted EBITDA and Adjusted EBITDA margin are key measures used by Yelp management and the board of directors to understand and evaluate 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 Adjusted EBITDA can provide a useful measure for period-to-period comparisons of Yelp’s primary business operations. Accordingly, Yelp believes that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating its operating results in the same manner as its management and board of directors. Beginning in 2021, Yelp no longer considers EBITDA a key measure used by its management and the board of directors and will cease providing this amount going forward.

EBITDA and Adjusted EBITDA, which are not prepared under any comprehensive set of accounting rules or principles, 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 in accordance with generally accepted accounting principles in the United States (“GAAP”). In particular, EBITDA and Adjusted EBITDA should not be viewed as substitutes for, or superior to, net income (loss) 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, 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 fees related to shareholder activism; 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 (loss) to EBITDA and Adjusted EBITDA (in thousands, except percentages; unaudited):

Three Months Ended
December 31,
Year Ended
December 31,
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA:
Net income (loss)$21,089 $17,152 $(19,424)$40,881 
(Benefit from) provision for income taxes(6,217)3,105 (15,701)8,886 
Other income, net(393)(2,611)(3,670)(14,256)
Depreciation and amortization13,125 12,849 50,609 49,356 
EBITDA27,604 30,495 11,814 84,867 
Stock-based compensation31,984 30,505 124,574 121,512 
Restructuring15 — 3,862 — 
Fees related to shareholder activism(1)
— — — 7,116 
Adjusted EBITDA$59,603 $61,000 $140,250 $213,495 
Net revenue$233,195 $268,823 $872,933 $1,014,194 
Adjusted EBITDA margin26 %23 %16 %21 %
(1) Recorded within general and administrative expenses on our Condensed Consolidated Statements of Operations.

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