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Yelp Earnings Out, CFO Steps Down

Yelp just released its financials for Q4 and full year 2015 with revenue of 153.7 million (up 40% year-over-year) for the quarter. Cumulative reviews grew 34% to approximately 95 million. Local advert...
Yelp Earnings Out, CFO Steps Down
Written by Chris Crum
  • Yelp just released its financials for Q4 and full year 2015 with revenue of 153.7 million (up 40% year-over-year) for the quarter.

    Cumulative reviews grew 34% to approximately 95 million. Local advertising accounts grew 32% to approximately 111,000.

    CEO Jeremy Stoppelman said, “We are pleased with the progress we made on the key initiatives we set at the beginning of 2015. We have evolved to a mobile-centric company and have successfully completed our transition to a performance-based advertising business. In 2016, our priorities are to continue to build our core local advertising business, further increase engagement and awareness and grow transactions. With our rich, relevant review content and highly engaged consumer traffic, we are well-positioned to capture the enormous opportunity ahead of us.”

    The company also announced that CFO Rob Krolik is stepping down.

    “Rob has played a crucial role in Yelp’s successful transition from startup to public company, bringing his professionalism and experience to bear in setting Yelp on a firm financial foundation and headed in the right direction,” said Stoppelman. “I am grateful for his counsel, his leadership and work on our public offerings and five acquisitions, and his efforts in opening facilities around the world to accommodate our more than 4,000 employees. I will miss his passion for Yelp and wish him continued success in his next endeavor.”

    “I am a strong believer in the power of Yelp to help consumers and local businesses alike, which is why it has been such a tremendous opportunity and privilege to serve as CFO,” said Krolik. “It’s been a rewarding experience taking Yelp public, diversifying our offerings through acquisitions, and seeing our team deliver significant and consistent revenue growth year after year. After almost five years with Yelp, I am ready to take some time off to spend more time with family, but expect us to seamlessly transition to a new chief financial officer in the meantime.”

    Here’s the release in its entirety:

    SAN FRANCISCO, Feb. 8, 2016 /PRNewswire/ — Yelp Inc. (NYSE: YELP), the company that connects consumers with great local businesses, today announced financial results for the fourth quarter and full year endedDecember 31, 2015.

    Yelp logo. (PRNewsFoto)
    • Net revenue was $153.7 million in the fourth quarter of 2015, reflecting 40% growth over the fourth quarter of 2014.
    • Cash flow from operations was $3.8 million in the fourth quarter. Adjusted EBITDA for the fourth quarter of 2015 was $17.5 million.
    • Cumulative reviews grew 34% year over year to approximately 95 million.
    • App Unique Devices grew 38% year over year to approximately 20 million on a monthly average basis1.
    • Local advertising accounts grew 32% year over year to approximately 111,000.

    Net loss in the fourth quarter of 2015 was ($22.2) million, or ($0.29) per share, compared to net income of $32.7 million, or $0.42 per share, in the fourth quarter of 2014. Net loss for the fourth quarter of 2015 included an income tax expense of $20.3 million due to the recording of a valuation allowance against our deferred tax assets. Non-GAAP net income, which consists of net income excluding stock-based compensation, amortization and valuation allowance and release, was $9.0 million for the fourth quarter, or $0.11 per share, compared to $14.5 million, or $0.19 per share, in the fourth quarter of 2014.

    Net revenue for the full year ended December 31, 2015 was $549.7 million, an increase of 46% compared to $377.5 million in the prior year. Adjusted EBITDA for the full year 2015 was $69.1 million compared to $70.9 million for the prior year. Net loss for the full year ended December 31, 2015 was ($32.9) million, or ($0.44) per share, compared to a net income of $36.5 million, or $0.48 per share, in 2014. Non-GAAP net income for the full year ended December 31, 2015 was $28.9 million, or $0.37 per share, compared to $36.3 million, or $0.47 per share in 2014.

    “We are pleased with the progress we made on the key initiatives we set at the beginning of 2015,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “We have evolved to a mobile-centric company and have successfully completed our transition to a performance-based advertising business. In 2016, our priorities are to continue to build our core local advertising business, further increase engagement and awareness and grow transactions. With our rich, relevant review content and highly engaged consumer traffic, we are well-positioned to capture the enormous opportunity ahead of us.”

    “We delivered strong topline growth of 46% year over year as we surpassed half a billion dollars of revenue in 2015,” added Rob Krolik, Yelp’s chief financial officer.

    Fourth Quarter Operating Summary

    • Local advertising revenue totaled $125.9 million, representing 35% growth compared to the fourth quarter of 2014.
    • Transactions revenue totaled $14.0 million, compared to $1.4 million in the fourth quarter of 2014, primarily due to the acquisition of Eat24 in the first quarter of 2015.
    • Brand advertising revenue totaled $7.1 million, representing an 18% decrease compared to the fourth quarter of 2014. Yelp has completed the phase out of its brand advertising product and will have no Brand advertising revenue in 2016.
    • Other revenue totaled $6.8 million which was flat compared to the fourth quarter of 2014.

    Business Highlights

    • App engagement: Approximately 20 million unique devices accessed Yelp via the mobile app on a monthly average basis in the fourth quarter of 2015, an increase of 38% compared to the same period in 2014. In the fourth quarter of 2015, Yelp app users were more than 10 times as engaged as website users based on number of pages viewed.
    • Performance-based advertising: In 2015, Yelp completed its transition to a performance-based advertising business. As of the fourth quarter of 2015, 61% of local advertising revenue came from CPC advertisers, compared to 32% in the fourth quarter of 2014.
    • Eat24 & SeatMe: In 2015, Yelp acquired leading web and app-based online food ordering service Eat24. In the fourth quarter, Eat24 revenue growth accelerated, with revenue up approximately 80% compared to the fourth quarter of 2014. In the fourth quarter of 2015, over 15 million diners were seated through SeatMe, an increase of approximately 120% over the fourth quarter of 2014.

    CFO Transition

    The company announced that chief financial officer Rob Krolik will be stepping down and departing the company in the coming months. Krolik, who joined the company in 2011, will continue as chief financial officer until the earlier of the date a replacement is hired and December 15, 2016, and will assist in the search and transition. The company intends to immediately begin a search for a new chief financial officer.

    “Rob has played a crucial role in Yelp’s successful transition from startup to public company, bringing his professionalism and experience to bear in setting Yelp on a firm financial foundation and headed in the right direction,” said Jeremy Stoppelman. “I am grateful for his counsel, his leadership and work on our public offerings and five acquisitions, and his efforts in opening facilities around the world to accommodate our more than 4,000 employees. I will miss his passion for Yelp and wish him continued success in his next endeavor.”

    “I am a strong believer in the power of Yelp to help consumers and local businesses alike, which is why it has been such a tremendous opportunity and privilege to serve as CFO,” said Krolik. “It’s been a rewarding experience taking Yelp public, diversifying our offerings through acquisitions, and seeing our team deliver significant and consistent revenue growth year after year. After almost five years with Yelp, I am ready to take some time off to spend more time with family, but expect us to seamlessly transition to a new chief financial officer in the meantime.”

    Business Outlook

    As of today, Yelp is providing its outlook for the first quarter and full year of 2016.

    • For the first quarter of 2016, net revenue is expected to be in the range of $154 million to $157 million, representing growth of approximately 31% compared to the first quarter of 2015 at the the midpoint. Adjusted EBITDA is expected to be in the range of $10 million to $12 million. Stock-based compensation is expected to be in the range of $19 million to $21 million, and depreciation and amortization is expected to be approximately 5% of revenue.
    • For the full year of 2016, net revenue is expected to be in the range of $685 million to $700 million, representing growth of approximately 26% compared to full year 2015 at the midpoint. Adjusted EBITDA is expected to be in the range of $90 million to $105 million. Stock-based compensation is expected to be in the range of $83 million to $87 million, and depreciation and amortization is expected to be approximately 5% of revenue.

    Quarterly Conference Call

    To access the call, please dial 1 (866) 776-8879, or outside the U.S. 1 (440) 996-5670, with Passcode 29597481, at least five minutes prior to the 1:30 p.m. PT start time.  A live webcast of the call will also be available at http://www.yelp-ir.com under the Events & Presentations menu.  An audio replay will be available between 4:00 p.m. PT February 8, 2016 and 11:59 p.m. PT February 15, 2016 by calling 1 (855) 859-2056 or 1 (800) 585-8367, with Passcode 29597481.  The replay will also be available on the Company’s website at http://www.yelp-ir.com.

    About Yelp

    Yelp Inc. (http://www.yelp.com) connects people with great local businesses. Yelp was founded in San Franciscoin July 2004. Since then, Yelp communities have taken hold in major metros across more than 30 countries. Approximately 20 million unique devices1 accessed Yelp via the Yelp app, approximately 75 million unique visitors visited Yelp via desktop computer2 and approximately 66 million unique visitors visited Yelp via mobile website3 on a monthly average basis during the fourth quarter of 2015. By the end of the same quarter, Yelpers had written approximately 95 million rich, local reviews, making Yelp the leading local guide for real word-of-mouth on everything from boutiques and mechanics to restaurants and dentists.

    1 Calculated as the number of unique devices accessing the app on a monthly average basis over a given three-month period, according to internal Yelp logs.

    2 Calculated as the number of “users,” as measured by Google Analytics, accessing Yelp via desktop computer on an average monthly basis over a given three-month period.

    3 Calculated as the number of “users,” as measured by Google Analytics, accessing Yelp via mobile website on a monthly average basis over a given three-month period.

    Non-GAAP Financial Measures

    This press release includes information relating to adjusted EBITDA, non-GAAP net income and non-GAAP net income per share, each of which the Securities and Exchange Commission has defined as a “non-GAAP financial measure.” Adjusted EBITDA, non-GAAP net income and non-GAAP net income per share have been included in this press release because they are key measures used by Yelp management and board of directors to understand and evaluate core operating performance and trends, to prepare and approve its 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”).

    Adjusted EBITDA and non-GAAP net income 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 adjusted EBITDA and non-GAAP net income do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
    • adjusted EBITDA does not reflect changes in, or cash requirements for, Yelp’s working capital needs;
    • adjusted EBITDA and non-GAAP net income do not consider the potentially dilutive impact of equity-based compensation;
    • non-GAAP net income does not reflect the impact of the valuation allowance release in the fourth quarter of 2014 or the recording of the valuation allowance in the fourth quarter of 2015;
    • adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to Yelp; and
    • other companies, including those in Yelp’s industry, may calculate adjusted EBITDA and non-GAAP net income differently, which reduces their usefulness as comparative measures.

    Because of these limitations, you should consider adjusted EBITDA, non-GAAP net income and non-GAAP net income per share alongside other financial performance measures, including various cash flow metrics, net income (loss) and Yelp’s other GAAP results. Additionally, Yelp has not reconciled its adjusted EBITDA outlook for the first quarter and full year 2016 to its net income (loss) outlook because it does not provide an outlook for other income (expense) and provision for income taxes, which are reconciling items between net income (loss) and adjusted EBITDA. As items that impact net income (loss) are out of Yelp’s control and cannot be reasonably predicted, Yelp is unable to provide such an outlook. Accordingly, reconciliation to net income (loss) outlook for the first quarter and full year 2016 is not available without unreasonable effort. For a reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see the non-GAAP reconciliations included below in this press release.

    Forward-Looking Statements

    This press release contains forward-looking statements relating to, among other things, the future performance of Yelp and its consolidated subsidiaries that are based on Yelp’s current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding expected financial results for the first quarter and full year 2016, Yelp’s priorities for 2016 and its ability to execute against those priorities, CFO transition and timing thereof, Yelp’s ability to improve its margins, Yelp’s ability to capture a meaningful share of the large local market, the future growth in Yelp revenue and continued investing by Yelp in its future growth, Yelp’s ability to drive daily usage and engagement (particularly on mobile), increase awareness of Yelp among consumers, and deliver value to local businesses, Yelp’s ability to increase transactions completed on its platform, Yelp’s ability to take advantage of trends toward app usage and native advertising and to become the leading destination for consumers connecting with great local businesses. 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; Yelp’s ability to generate sufficient revenue to regain profitability, particularly in light of its significant ongoing sales and marketing expenses; Yelp’s ability to successfully manage acquisitions of new businesses, solutions or technologies, such as Eat24, and to integrate those businesses, solutions or technologies; Yelp’s reliance on traffic to its website from search engines like Google and Bing; Yelp’s ability to generate and maintain sufficient high quality content from its users; maintaining a strong brand and managing negative publicity that may arise; maintaining and expanding Yelp’s base of advertisers; changes in political, business and economic conditions, including any European or general economic downturn or crisis and any conditions that affect ecommerce growth; fluctuations in foreign currency exchange rates; Yelp’s  ability to deal with the increasingly competitive local search environment; Yelp’s need and ability to manage other regulatory, tax and litigation risks as its services are offered in more jurisdictions and applicable laws become more restrictive; the competitive and regulatory environment while Yelp continues to expand geographically and introduce new products and as new laws and regulations related to Internet companies come into effect; Yelp’s ability to timely upgrade and develop its systems, infrastructure and customer service capabilities. The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof.

    More information about factors that could affect Yelp’s operating results is 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 http://www.yelp-ir.com or theSEC’s website at www.sec.gov. 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. Yelp assumes no obligation to update such statements.

    Investor Relations Contact Information
    Wendy Lim, Ronald Clark, Allie Dalglish
    (415) 635-2412
    [email protected]

    Media Contact Information
    Shannon Eis
    (415) 635-2478
    [email protected]

     

    Yelp Inc.
    Condensed Consolidated Balance Sheets
    (In thousands)
    (Unaudited)
    December 31, December 31,
    2015 2014
    Assets
    Current assets:
    Cash and cash equivalents $         171,613 $        247,312
    Short-term marketable securities 199,214 118,498
    Accounts receivable, net 52,755 35,593
    Prepaid expenses and other current assets 19,700 19,355
    Total current assets 443,282 420,758
    Long-term marketable securities 38,612
    Property, equipment and software, net 80,467 62,761
    Goodwill 172,197 67,307
    Intangibles, net 39,294 5,786
    Restricted cash 16,486 17,943
    Other assets 3,701 16,483
    Total assets $         755,427 $        629,650
    Liabilities  and stockholders’ equity
    Current liabilities:
    Accounts payable $             3,388 $            1,398
    Accrued liabilities 43,458 29,581
    Deferred revenue 2,931 2,994
    Total current liabilities 49,777 33,973
    Long-term liabilities 12,030 7,527
    Total liabilities 61,807 41,500
    Stockholders’ equity
    Common stock
    Additional paid-in capital 774,022 627,742
    Accumulated other comprehensive loss (13,519) (5,609)
    Accumulated deficit (66,883) (33,983)
    Total stockholders’ equity 693,620 588,150
    Total liabilities and stockholders’ equity $          755,427 $         629,650

     

    Yelp Inc.
    Condensed Consolidated Statements of Operations
    (In thousands, except per share amounts)
    (Unaudited)
    Three Months Ended Twelve Months Ended
    December 31, December 31,
    2015 2014 2015 2014
    Net revenue $ 153,731 $ 109,887 $ 549,711 $ 377,536
    Costs and expenses
    Cost of revenue (1) 15,000 7,286 51,015 24,382
    Sales and marketing (1) 87,535 53,580 301,764 201,050
    Product development (1) 28,970 19,076 107,786 65,181
    General and administrative (1) 20,659 16,662 80,866 58,274
    Depreciation and amortization 7,980 5,291 29,604 17,590
    Total costs and expenses 160,144 101,895 571,035 366,477
    Income (Loss) from operations (6,413) 7,992 (21,324) 11,059
    Other income (expense), net 40 38 386 221
    Income (Loss) before income taxes (6,373) 8,030 (20,938) 11,280
    Benefit (Provision) for income taxes (15,856) 24,698 (11,962) 25,193
    Net income (loss) attributable to common stockholders $ (22,229) $   32,728 $ (32,900) $   36,473
    Net income (loss) per share attributable to common stockholders:
    Basic $     (0.29) $       0.45 $     (0.44) $       0.51
    Diluted $     (0.29) $       0.42 $     (0.44) $       0.48
    Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
    Basic 75,372 72,645 74,683 71,936
    Diluted 75,372 77,211 74,683 76,712
    (1) Includes stock-based compensation expense as follows:
    Three Months Ended Twelve Months Ended
    December 31, December 31,
    2015 2014 2015 2014
    Cost of revenue $        336 $        207 $     1,117 $        729
    Sales and marketing 5,803 4,038 21,962 15,083
    Product development 6,314 4,508 23,431 14,804
    General and administrative 3,519 3,063 14,332 11,657
    Total stock-based compensation $   15,972 $   11,816 $   60,842 $   42,273

     

    Yelp Inc.
    Condensed Consolidated Statements of Cash Flows
    (In thousands)
    (Unaudited)
    Twelve Months Ended
    December 31,
    2015 2014
    Operating activities
    Net income (loss) $ (32,900) $  36,473
     Adjustments to reconcile net income (loss) to net cash provided by operating activities:
      Depreciation and amortization 29,604 17,590
      Provision for doubtful accounts and sales returns 16,788 7,238
      Stock-based compensation 60,842 42,273
      Recording (Release) of valuation allowance 20,341 (28,197)
      Loss on disposal of assets and website development costs 213 4
      Premium amortization, net, on securities held-to-maturity 1,190 349
      Excess tax benefit from share-based award activity (6,583) (1,834)
      Realized (gain) on investments (4)
    Changes in operating assets and liabilities:
    Accounts receivable (25,279) (21,291)
    Prepaid expenses and other assets (22,703) (4,011)
    Accounts payable, accrued expenses and other liabilities 15,894 8,927
    Deferred revenue (41) 411
    Net cash provided by operating activities 57,362 57,932
    Investing activities
    Acquisition, net of cash received (73,422) (14,340)
    Purchases of property, equipment and software (31,127) (29,054)
    Capitalized website and software development costs (11,734) (11,349)
    Change in restricted cash 1,404 (14,764)
    Purchase of intangibles (647) (1,724)
    Proceeds from sale of property and equipment 134 14
    Purchases of marketable securities (246,160) (210,459)
    Maturities of marketable securities 202,870 53,002
    Net cash used in investing activities (158,682) (228,674)
    Financing activities
    Issuance of common stock upon exercise of employee stock options 12,255
    Proceeds from issuance of common stock from share-based awards 20,164
    Proceeds from issuance of common stock for Employee Stock Purchase Plan 8,911 8,869
    Repurchase of common stock (482) (1,318)
    Excess tax benefit from stock-based award activity 6,583 1,834
    Contingent consideration payments (825)
    Net cash provided by financing activities 26,442 29,549
    Effect of exchange rate changes on cash and cash equivalents (821) (1,259)
    Change in cash and cash equivalents (75,699) (142,452)
    Cash and cash equivalents – Beginning of period 247,312 389,764
    Cash and cash equivalents – End of period $ 171,613 $ 247,312

     

    Yelp Inc.
    Reconciliation of GAAP to Non-GAAP Financial Measures
    (In thousands)
    (Unaudited)
    Three Months Ended Twelve Months Ended
    December 31, December 31,
    2015 2014 2015 2014
    Adjusted EBITDA:
    Net income (loss) $ (22,229) $ 32,728 $ (32,900) $ 36,473
    (Benefit) provision for income taxes 15,856 (24,698) 11,962 (25,193)
    Other (income) expense, net (40) (38) (386) (221)
    Depreciation and amortization 7,980 5,291 29,604 17,590
    Stock-based compensation 15,972 11,816 60,842 42,273
    Adjusted EBITDA $  17,539 $ 25,099 $  69,122 $ 70,922
    Non-GAAP Net Income (Loss) and Income (Loss) per share:
    GAAP net income (loss) $ (22,229) $ 32,728 $ (32,900) $ 36,473
       Add back: stock-based compensation 15,972 11,816 60,842 42,273
       Add back: amortization of intangible assets 1,718 550 6,475 2,448
       Less: tax effect of stock-based compensation & amortization of intangible assets  

    (6,827)

     

    (4,422)

     

    (25,853)

     

    (16,654)

       Add back: recording (release) of valuation allowance (net of tax) 20,341 (26,197) 20,341 (28,197)
    NON-GAAP NET INCOME $    8,975 $ 14,475 $  28,905 $ 36,343
    GAAP diluted shares 78,166 77,211 78,078 76,712
    NON-GAAP NET INCOME PER SHARE $      0.11 $     0.19 $      0.37 $     0.47

     

    Logo – http://photos.prnewswire.com/prnh/20150714/236436LOGO

     

    To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/yelp-announces-fourth-quarter-and-full-year-2015-financial-results-300216659.html

    SOURCE Yelp Inc.

    Image via Yelp (Flickr)

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