Yelp Reports Fourth Quarter and Full Year 2018 Financial Results

Reports Net Revenue of $244 Million, Net Income of $32 Million and
Adjusted EBITDA of $53 Million

Targets Mid-Teens Revenue CAGR for 2019-2023 and a 30-35% Adjusted
EBITDA Margin by 2023

Expects to Increase Adjusted EBITDA Margin by 2-3 Percentage Points
in 2019

Board Approves Increase of $250 Million to Share Repurchase Program,
Bringing Outstanding Authorization to $500 Million; Plans to Repurchase
$250 Million in the First Half of 2019

Announces Election of Three Seasoned Executives to the Board of

SAN FRANCISCO–(BUSINESS WIRE)–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, 2018 in its Q4 2018 Shareholder
Letter. The company has also provided an investor presentation outlining
its strategic plan and long-term financial targets. Both are available
on Yelp’s Investor Relations website at

“In 2018, we evolved our go-to-market strategy to capture more of our
addressable market and reduce sales friction,” said Jeremy Stoppelman,
co-founder and CEO of Yelp. “We also made significant progress in
driving consumer usage in the Restaurants vertical and business-owner
monetization in the Home & Local Services vertical. We plan to continue
the transition in 2019, and expect to achieve stronger revenue growth
and higher Adjusted EBITDA margins in the second half of 2019 as our
growth initiatives begin to deliver. For the next five years, we see
mid-teens revenue growth and Adjusted EBITDA margins in the 30-35% range
by 2023. Our board of directors has increased our share repurchase
authorization to $500 million and elected three experienced business
leaders to our board of directors.”

Quarterly Conference Call

Yelp will host a conference call at 2:00 p.m. PT to discuss the fourth
quarter and full year 2018 financial results, the company’s business
outlook for the first quarter and full year 2019, and its strategic plan
and long-term financial targets. The webcast of the conference call can
be accessed on the Yelp Investor Relations website at
A replay of the webcast will be available at the same website until
February 21, 2019.

Update on Strategic Initiatives and Financial

Yelp has identified a detailed path toward long-term shareholder value.
Key components include Yelp’s plans to:

  • Deliver long-term double-digit revenue growth: Yelp currently
    targets a compound annual revenue growth rate in the mid-teens from
    2019 through 2023, driven by initiatives aimed at winning in key
    verticals, expanding business offerings, driving more value to
    business customers, capturing enterprise, and enhancing the consumer
  • Drive margin expansion and optimize cost structure: Yelp has a
    clear strategy to deliver cost savings and continue its track record
    of margin expansion to achieve Adjusted EBITDA margin of 30-35% by
    2023. This strategy includes initiatives to shift its emphasis to the
    most efficient sales channels, relocate its salesforce to more
    attractive locations, and optimize marketing spend.
  • Accelerate strategy through effective partnerships:
    Partnerships like Yelp’s long-term Grubhub relationship continue to
    deliver significant value and represent attractive growth drivers for
    its business. Yelp recently further expanded its partner relationships
    through new engagements with industry leaders like Visa and GoDaddy,
    among others, and plans to continue exploring such opportunities.

Increased Commitment to Return Capital to

Yelp announced that its Board of Directors (“Board”) authorized an
increase of $250 million to the company’s current share repurchase
program, bringing the total outstanding authorization to $500 million.
The company currently plans to repurchase approximately $250 million of
its common stock in the first half of 2019. The company may repurchase
shares at management’s discretion, with the amount and timing of any
repurchases subject to liquidity, cash flow and market conditions, among
other factors.

Additions to Board of Directors

As previously disclosed, the Board and its Nominating and Corporate
Governance Committee initiated a process, with the support of the
nationally-recognized director search firm Spencer Stuart, to evaluate
the Board’s composition and identify additional director candidates to
help drive the Yelp strategy. As a result of that process, the Board,
following the recommendation of the Nominating and Corporate Governance
Committee, appointed George Hu, Sharon Rothstein and Brian Sharples to
serve as members of the Board, effective March 1, 2019. Hu, Rothstein
and Sharples will replace directors Geoff Donaker, Jeremy Levine, and
Peter Fenton, respectively, who will step down from the Board, effective
March 1, 2019.

“We are excited to announce the appointment of George, Sharon and Brian
to our Board,” said Diane Irvine, Chairperson of the Board. “As we work
to capitalize on the opportunities before us to drive long-term growth
and deliver value to our shareholders, we are committed to maintaining a
Board that provides robust oversight and has the right skills to support
Yelp. George, Sharon and Brian bring to our Board extensive experience
as business leaders of relevant verticals at a variety of impressive
companies and their expertise will be critical as we implement our
strategy over the coming years. On behalf of the entire Board, I would
like to thank Geoff Donaker, Jeremy Levine and Peter Fenton for their
many contributions to Yelp over the years, including preparing for and
taking the company public, and growing it to nearly $1 billion in annual
revenues today.”

“George, Sharon and Brian are experienced business veterans who bring a
wealth of practical, hands-on knowledge and skill sets to Yelp,
including scaling operations, sales, marketing, product and
monetization,” said Jeremy Stoppelman. “George has an extensive track
record in operations, including 13 years at Salesforce prior to joining
Twilio, where he currently serves as COO. Sharon is an accomplished
marketing executive who most recently served as CMO of Starbucks,
overseeing the growth of their mobile apps and loyalty programs. Brian
is a successful technology CEO with significant experience operating
e-commerce and marketplace businesses.”

George Hu

Mr. Hu is an accomplished leader with extensive experience as a software
and operations executive at leading technology companies including
Twilio and Salesforce. Throughout his career he has helped lead
companies through hyper-growth, scale businesses and has extensive
experience operating large complex organizations. He currently serves as
Chief Operating Officer of Twilio, the leading cloud communications
platform, where he has overseen and executed the Company’s strategy,
including guiding the Company towards new market opportunities.
Previously Mr. Hu spent over 13 years at Salesforce, where he served in
multiple roles spanning products, marketing and customer education, and
the company grew from generating $20 million to $5 billion in revenue.
He most recently served as Chief Operating Officer for four years,
during which the company delivered 78% total shareholder return. Earlier
in his career, Mr. Hu held product management and strategic consulting
roles at North Point Communications and The Boston Consulting Group. Mr.
Hu holds an A.B. from Harvard University and an MBA from the Stanford
Graduate School of Business.

Sharon Rothstein

Ms. Rothstein is a veteran marketing executive having led brand, product
and omni-channel marketing at some of the world’s most iconic global
consumer-facing companies. Ms. Rothstein currently serves as Operating
Partner of Stripes Group, a leading growth equity firm that has been
investing in high growth consumer and SaaS companies for over a decade.
Prior to joining Stripes, Ms. Rothstein served as Executive Vice
President, Global Chief Marketing Officer and subsequently, Executive
Vice President, Global Chief Product Officer for Starbucks, the
specialty coffee retailer, where she had responsibility for the
Starbucks brand and go-to-market plan as well as the company’s portfolio
of product platforms. Ms. Rothstein led the creation of the narrative
for Starbucks’ global retail experiences and directed all product
initiatives, creative expressions, advertising, and omni channel
marketing and merchandising. In addition, Ms. Rothstein held senior
marketing and brand management positions at Sephora, Godiva, Starwood
Hotels & Resorts, Nabisco Biscuit Company and Procter & Gamble. She
currently serves as a Board member of True Food Kitchen, a fast-growing
healthy lifestyle restaurant company, and Levain Cookies, a premium
bakery famous for its decadent cookies. Ms. Rothstein earned a Bachelor
of Commerce from the University of British Columbia and an MBA from the
Anderson School of Management of the University of California, Los

Brian Sharples

Mr. Sharples is a successful serial entrepreneur, angel investor and
executive with extensive experience in startup and well-established
technology and e-commerce companies, both as a board member and in
leading operations and executive roles. Mr. Sharples has founded and
scaled several high-growth startups and oversaw their strategic exits.
Mr. Sharples co-founded and served as Chairman and CEO of HomeAway,
Inc., a global online marketplace for the vacation rental industry,
where he led the company’s successful public offering in 2011, and the
$3.9 billion acquisition by Expedia in 2015. Prior to HomeAway, Mr.
Sharples was President and CEO of IntelliQuest Information Group, Inc.,
a supplier of marketing data and research to technology companies that
went public in 1996 and was sold to WPP Group in 2000. In addition to
his operational leadership, Mr. Sharples has served on the boards of
several global technology companies specializing in the consumer space,
including KAYAK and RetailMeNot, Inc., and currently serves on the
boards of GoDaddy and Ally Financial Group. Mr. Sharples also helped
oversee the successful acquisitions of KAYAK (by Priceline) and
RetailMeNot Inc. (by Harland Clarke) during his board tenures. Mr.
Sharples also has served on the boards of several private companies,
including most recently as Chairman of Twyla, Inc., a company he
co-founded in 2015 that offers a software platform to license and sell
limited edition artwork. He also serves as Chairman of private-equity
backed Fexy Media, and on the board of RVShare, a leading online
marketplace for RV rentals. Early in his career, Mr. Sharples founded I
Motors, an event-based marketplace for used cars, and served as a
consultant at Bain & Co. Mr. Sharples holds a B.S. in Economics and Math
from Colby College and an MBA from the Stanford Graduate School of
Business of Stanford University.

About Yelp

Yelp Inc. (
connects people with great local businesses. With unmatched local
business information, photos and review content, Yelp provides a
platform for consumers to discover, interact and transact with local
businesses of all sizes. 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.

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

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; any
Gain (loss) on the disposal of a business unit; Restructuring and
integration costs; and, in certain periods, certain other income and
expense items. 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
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 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;
  • Adjusted EBITDA does not consider the potentially dilutive impact of
    equity-based compensation;
  • EBITDA and Adjusted EBITDA do not reflect tax payments that may
    represent a reduction in cash available to Yelp;
  • Adjusted EBITDA does not take into account any restructuring or
    integration 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, including various cash flow metrics, Net income (loss) and
Yelp’s other GAAP results.

Forward-Looking Statements

This press release contains forward-looking statements relating to,
among other things, Yelp’s future performance that are based on its
current expectations, forecasts and assumptions and that involve risks
and uncertainties. These statements include, but are not limited to,
statements regarding Yelp’s:

  • large market opportunity and ability to sustain long-term growth;
  • ability to achieve stronger revenue growth in the second half of 2019
    and mid-teens revenue growth on a compound annual growth basis from
    2019 to 2023;
  • ability to achieve higher Adjusted EBITDA margins in the second half
    of 2019 and targeted increases in its Adjusted EBITDA margin of 2-3
    percentage points in 2019 and of 30-35% by 2023;
  • near-term and long-term strategic and investment priorities —
    including optimizing its cost structure, expanding its offerings,
    driving growth from customers of all sizes and accelerating its
    strategy through effective partnerships — as well as its ability to
    execute against those priorities;
  • ability to increase customer acquisition through the sale of non-term
  • ability to drive more value to consumers and businesses;
  • plans to increase its focus on different product distribution
    channels; and
  • plans and ability to create shareholder value and return capital to
    shareholders, including through its share repurchase program.

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 and increase
    profitability, particularly in light of its significant ongoing sales
    and marketing expenses;
  • ability to reduce or control expenses sufficiently to meet its
    profitability targets;
  • ability to increase traffic to its platform and generate and maintain
    sufficient high-quality content from its users;
  • ability to introduce successful new products and services; and
  • ability to maintain and expand its base of advertisers, including
    enterprise customers, particularly as an increasing portion of
    advertisers have the ability to cancel their advertising campaigns at
    any time.

Factors that could cause or contribute to such differences also include
those factors that could affect Yelp’s business, operating results and
stock price 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
or the SEC’s website at

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. Such forward-looking statements do not include the
potential impact of any acquisitions or divestitures that may be
announced and/or completed after the date hereof. Yelp assumes no
obligation to update such statements.

Yelp Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
  December 31,   December 31,
2018 2017 (1)
Current assets:
Cash and cash equivalents $ 332,764 $ 547,850
Short-term marketable securities 423,096 273,366
Accounts receivable, net 87,305 76,173
Prepaid expenses and other current assets   17,104       15,700  
Total current assets 860,269 913,089
Long-term marketable securities 25,032
Property, equipment and software, net 114,800 103,651
Goodwill 105,620 107,954
Intangibles, net 13,359 16,893
Restricted cash 22,071 18,554
Other non-current assets   59,444     40,428  
Total assets $ 1,175,563   $ 1,225,601  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 6,540 $ 9,033
Accrued liabilities 54,522 73,665
Deferred revenue   3,843     3,469  
Total current liabilities 64,905 86,167
Long-term liabilities   35,140     30,737  
Total liabilities   100,045     116,904  
Stockholders’ equity
Common stock
Additional paid-in capital 1,139,462 1,038,017
Treasury stock (46 )
Accumulated other comprehensive loss (11,021 ) (8,444 )
(Accumulated deficit) retained earnings   (52,923 )   79,170  
Total stockholders’ equity   1,075,518     1,108,697  
Total liabilities and stockholders’ equity $ 1,175,563   $ 1,225,601  
(1) As of January 1, 2018, the company adopted Accounting Standards
Update 2014-09, “Revenue from Contracts with Customers (Topic 606)”
(“ASC 606”), using the full retrospective method. Accordingly, the
company has recast certain amounts in prior periods presented.
Yelp Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)

Three Months Ended
December 31,


Year Ended December 31,

2018   2017 (1) 2018   2017 (1)
Net revenue $ 243,740 $ 219,441 $ 942,773 $ 850,847
Costs and expenses:
Cost of revenue (2) 14,255 16,236 57,872 70,518
Sales and marketing (2) 121,256 111,013 483,309 437,424
Product development (2) 54,273 47,994 212,319 175,787
General and administrative (2) 29,677 27,898 120,569 109,707
Depreciation and amortization 11,557 9,729 42,807 41,198
Restructuring and integration 1 288
Gain on disposal of a business unit     (163,697 )     (163,697 )
Total costs and expenses   231,018   49,174     916,876   671,225  
Income from operations 12,722 170,267 25,897 179,622
Other income, net   4,160   1,897     14,109   4,864  
Income before income taxes 16,882 172,164 40,006 184,486
Benefit from (provision for) income taxes   15,064   (31,074 )   15,344   (31,491 )
Net income attributable to common stockholders $ 31,946 $ 141,090   $ 55,350 $ 152,995  
Net income per share attributable to common stockholders:
Basic $ 0.39 $ 1.69   $ 0.66 $ 1.87  
Diluted $ 0.37 $ 1.58   $ 0.62 $ 1.76  


Weighted-average shares used to compute net income per share
attributable to common stockholders:

Basic   82,706   83,264     83,573   81,602  
Diluted   86,287   89,064     88,709   87,170  
(1) As of January 1, 2018, the company adopted ASC 606 using the
full retrospective method. Accordingly, the company has recast
certain amounts in the prior period presented.
(2) Includes stock-based compensation expense as follows:

Three Months Ended
December 31,

Year Ended December 31,

2018 2017 2018 2017
Cost of revenue $ 1,227 $ 1,079 $ 4,572 $ 4,010
Sales and marketing 7,265 6,666 30,779 28,100
Product development 15,004 12,851 56,882 47,280
General and administrative   5,157   4,811     22,153   21,025  
Total stock-based compensation $ 28,653 $ 25,407   $ 114,386 $ 100,415  
Yelp Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
  Year Ended
December 31,
2018   2017 (1)
Operating activities
Net income attributable to common stockholders $ 55,350 $ 152,995
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 42,807 41,198
Bad debt expense 24,515 20,917
Stock-based compensation 114,386 100,415
Release of valuation allowance against deferred tax assets (16,632 )
Gain on disposal of a business unit (163,697 )
Other adjustments (3,978 ) 293
Changes in operating assets and liabilities:
Accounts receivable (35,664 ) (36,146 )
Prepaid expenses and other assets (773 ) (1,362 )
Accounts payable, accrued expenses and other liabilities   (19,824 )   53,034  
Net cash provided by operating activities   160,187     167,647  
Investing activities
Purchases of marketable securities (751,237 ) (354,895 )
Maturities of marketable securities 613,700 264,000
Sale of investment prior to maturity 17,895
Sale of a business, net of cash sold 252,663
Acquisitions, net of cash received (50,544 )
Purchases of property, equipment and software (24,849 ) (15,598 )
Capitalized website and software development costs (20,123 ) (14,647 )
Other investing activities   245     157  
Net cash (used in) provided by investing activities   (164,369 )   81,136  
Financing activities
Proceeds from issuance of common stock for employee stock-based plans 29,779 40,917
Taxes paid related to net share settlement of equity awards (50,144 ) (1,199 )
Repurchases of common stock   (187,382 )   (12,556 )
Net cash (used in) provided by financing activities   (207,747 )   27,162  
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
360 941
Change in cash, cash equivalents and restricted cash (211,569 ) 276,886
Cash, cash equivalents and restricted cash – Beginning of period   566,404     289,518  
Cash, cash equivalents and restricted cash – End of period $ 354,835   $ 566,404  
(1) As of January 1, 2018, the company adopted ASC 606 using the
full retrospective method. Accordingly, the company has recast
certain amounts in the prior period presented. Also as of January 1,
2018, the company adopted Accounting Standards Update No. 2016-18,
“Statement of Cash Flows (Subtopic 230): Restricted Cash,” and
recast the prior period presented.
Yelp Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands)

Three Months Ended
December 31,


Year Ended December 31,

2018   2017 (1) 2018   2017 (1)
Reconciliation of GAAP net income to EBITDA and adjusted EBITDA:
GAAP net income $ 31,946 $ 141,090 $ 55,350 $ 152,995
(Benefit from) provision for income taxes (15,064 ) 31,074 (15,344 ) 31,491
Other income, net (4,160 ) (1,897 ) (14,109 ) (4,864 )
Depreciation and amortization   11,557     9,729     42,807     41,198  
EBITDA $ 24,279   $ 179,996   $ 68,704   $ 220,820  
Stock-based compensation 28,653 25,407 114,386 100,415
Gain on disposal of a business unit (163,697 ) (163,697 )
Restructuring and integration costs       1         288  
Adjusted EBITDA $ 52,932   $ 41,707   $ 183,090   $ 157,826  
Net revenue $ 243,740 $ 219,441 $ 942,773 $ 850,847
Adjusted EBITDA margin











Investor Relations Contact
Kate Krieger

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