Third quarter Net revenue increased by 15% year over year to $309 million, resulting in Net income of $9 million

Adjusted EBITDA increased to record $74 million

Narrows full-year outlook to $1.185 billion to $1.195 billion of Net revenue and $265 million to $275 million of Adjusted EBITDA¹

Board of Directors authorized $250 million increase to stock repurchase program

Yelp Inc. (NYSE:YELP), the company that connects people with great local businesses, today posted its financial results for the third quarter ended September 30, 2022 in the Q3 2022 Shareholder Letter available on its Investor Relations website at www.yelp-ir.com.

"The third quarter brought a number of new highs as advertisers continued to turn to Yelp for our broad-based ad platform and high-intent audience," said Jeremy Stoppelman, Yelp co-founder and chief executive officer. "We delivered record net revenue, driven by record revenue in our services categories and in our most efficient Self-serve and Multi-location sales channels. As our teams consistently execute against our strategic initiatives, I remain confident in our ability to drive profitable growth and shareholder value over the long term."

"We saw particularly strong third-quarter results in our services categories, with year-over-year growth accelerating from the second quarter to 15%, driven by an approximately 25% year-over-year increase in our home services category," said David Schwarzbach, Yelp's chief financial officer. "As advertisers and consumers continue to navigate a complex macro environment, we believe our mission of connecting people with great local businesses is even more relevant."

¹ Yelp has not reconciled its Adjusted EBITDA outlook to GAAP Net income (loss) because it does not provide an outlook for GAAP Net income (loss) due to the uncertainty and potential variability of Other income, net and Provision for (benefit from) income taxes, which are reconciling items between Adjusted EBITDA and GAAP Net income (loss). Because Yelp cannot reasonably predict such items, a reconciliation of the non-GAAP financial measure outlook to the corresponding GAAP measure is not available without unreasonable effort. We caution, however, that such items could have a significant impact on the calculation of GAAP Net income (loss). For more information regarding the non-GAAP financial measures discussed in this release, please see "Non-GAAP Financial Measures" below.

Quarterly Conference Call

Yelp will host a live Q&A session today at 2:00 p.m. Pacific Time to discuss the third quarter financial results and outlook for the fourth quarter of and full year 2022. 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 trusted 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, its investment plans, and its ability to drive profitable growth and shareholder value over the long term, 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:

macroeconomic uncertainty, including related to persistent inflation and continued interest rate hikes, and its impact on consumer behavior and advertiser spending;
fluctuations in the number of COVID-19 cases and the spread of COVID-19 variants, the vaccination rate in the United States, and any reimposition of COVID-19-related public health restrictions;
Yelp's ability to maintain and expand its base of advertisers, particularly as many businesses continue to face macroeconomic challenges, including labor and supply chain difficulties;
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; and
Yelp's ability to generate and maintain sufficient high-quality content from its users.

Factors that could cause or contribute to such differences also include, but are not limited to, 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 www.yelp-ir.com or the SEC's website at www.sec.gov.


YELP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)

	September 30, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	330,970		$	479,783
Short-term marketable securities		90,871			—
Accounts receivable, net		127,232			107,358
Prepaid expenses and other current assets		74,028			57,536
Total current assets		623,101			644,677
Property, equipment and software, net		78,699			83,857
Operating lease right-of-use assets		104,412			140,785
Goodwill		98,256			105,128
Intangibles, net		9,338			10,673
Restricted cash		1,146			858
Other non-current assets		115,382			64,550
Total assets	$	1,030,334		$	1,050,528

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities	$	150,804		$	119,620
Operating lease liabilities — current		40,177			40,237
Deferred revenue		8,403			4,156
Total current liabilities		199,384			164,013
Operating lease liabilities — long-term		95,139			127,979
Other long-term liabilities		34,433			7,218
Total liabilities		328,956			299,210

Stockholders' equity:
Common stock		—			—
Additional paid-in capital		1,615,970			1,522,572
Accumulated other comprehensive loss		(20,624	)		(11,090	)
Accumulated deficit		(893,968	)		(760,164	)
Total stockholders' equity		701,378			751,318
Total liabilities and stockholders' equity	$	1,030,334		$	1,050,528

YELP INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021
Net revenue	$	308,891	$	269,155	$	884,403	$	758,439

Costs and expenses:
Cost of revenue ⁽¹⁾		26,805		21,185		77,222		54,052
Sales and marketing ⁽¹⁾		133,061		114,295		388,570		340,845
Product development ⁽¹⁾		75,803		69,402		233,336		206,089
General and administrative⁽¹⁾		48,381		30,001		126,141		106,957
Depreciation and amortization		11,417		12,627		34,165		38,543
Restructuring		—		—		—		32
Total costs and expenses		295,467		247,510		859,434		746,518
Income from operations		13,424		21,645		24,969		11,921
Other income, net		2,691		331		4,947		1,578
Income before income taxes		16,115		21,976		29,916		13,499
Provision for (benefit from) income taxes		7,007		3,911		13,714		(2,982	)
Net income attributable to common stockholders	$	9,108	$	18,065	$	16,202	$	16,481

Net income per share attributable to common stockholders
Basic	$	0.13	$	0.24	$	0.23	$	0.22
Diluted	$	0.13	$	0.23	$	0.22	$	0.21

Weighted-average shares used to compute net income per share attributable to common stockholders
Basic		70,630		73,904		71,158		74,647
Diluted		72,658		77,422		73,577		79,007

⁽¹⁾Includes stock-based compensation expense as follows:
	Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021
Cost of revenue	$	1,148	$	1,071	$	3,701	$	3,273
Sales and marketing		8,606		7,794		25,461		24,632
Product development		21,352		20,380		66,781		61,807
General and administrative		7,526		7,197		23,810		26,834
Total stock-based compensation	$	38,632	$	36,442	$	119,753	$	116,546

YELP INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)

	Nine Months Ended September 30,
		2022			2021
Operating Activities
Net income	$	16,202		$	16,481
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		34,165			38,543
Provision for doubtful accounts		18,249			9,834
Stock-based compensation		119,753			116,546
Noncash lease cost		24,962			30,676
Deferred income taxes		(41,162	)		(6,400	)
Amortization of deferred cost		13,477			10,676
Asset impairment		10,464			11,164
Other adjustments, net		1,291			103
Changes in operating assets and liabilities:
Accounts receivable		(38,130	)		(27,279	)
Prepaid expenses and other assets		(39,920	)		(14,937	)
Operating lease liabilities		(29,928	)		(32,891	)
Accounts payable, accrued liabilities and other liabilities		58,413			15,219
Net cash provided by operating activities		147,836			167,735

Investing Activities
Purchases of marketable securities — available-for-sale		(92,895	)		—
Sales and maturities of marketable securities — available-for-sale		1,649			—
Purchases of property, equipment and software		(20,104	)		(21,600	)
Other investing activities		43			341
Net cash used in investing activities		(111,307	)		(21,259	)

Financing Activities
Proceeds from issuance of common stock for employee stock-based plans		16,143			16,807
Taxes paid related to the net share settlement of equity awards		(48,161	)		(49,180	)
Repurchases of common stock		(150,006	)		(177,832	)
Net cash used in financing activities		(182,024	)		(210,205	)

Effect of exchange rate changes on cash, cash equivalents and restricted cash		(3,030	)		(137	)

Change in cash, cash equivalents and restricted cash		(148,525	)		(63,866	)
Cash, cash equivalents and restricted cash — Beginning of period		480,641			596,540
Cash, cash equivalents and restricted cash — End of period	$	332,116		$	532,674

Non-GAAP Financial Measures

This press release and statements made during the above referenced webcast may include information relating to Adjusted EBITDA and Adjusted EBITDA margin, each of which the Securities and Exchange Commission has defined as a "non-GAAP financial measure."

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 impairment charges. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net revenue.

Adjusted EBITDA, which is not prepared under any comprehensive set of accounting rules or principles, 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 in accordance with generally accepted accounting principles in the United States ("GAAP"). In particular, Adjusted EBITDA should not be viewed as a substitute 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 Adjusted EBITDA does not reflect all 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 does 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 impairment charges; and
other companies, including those in Yelp's industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider 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 Adjusted EBITDA, as well as the calculation of net income margin and Adjusted EBITDA margin, for each of the periods indicated (in thousands, except percentages; unaudited):

	Three Months Ended						Nine Months Ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Reconciliation of Net Income to Adjusted EBITDA:
Net income	$	9,108		$	18,065		$	16,202		$	16,481
Provision for (benefit from) income taxes		7,007			3,911			13,714			(2,982	)
Other income, net		(2,691	)		(331	)		(4,947	)		(1,578	)
Depreciation and amortization		11,417			12,627			34,165			38,543
Stock-based compensation		38,632			36,442			119,753			116,546
Restructuring		—			—			—			32
Asset impairment⁽¹⁾		10,464			—			10,464			11,164
Adjusted EBITDA	$	73,937		$	70,714		$	189,351		$	178,206

Net revenue	$	308,891		$	269,155		$	884,403		$	758,439
Net income margin		3	%		7	%		2	%		2	%
Adjusted EBITDA margin		24	%		26	%		21	%		23	%

⁽¹⁾Recorded within general and administrative expenses on our Condensed Consolidated Statements of Operations.

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Yelp Reports Record Net Revenue in the Third Quarter 2022