Yelp Inc 10-Q for FY2022 Q3

Yelp Inc (YELP)

10-Q 2022-11-04 For: 2022-09-30

Added on April 11, 2026

About this 10-Q

Yelp Inc filed this 10-Q on November 4, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $308.89M; up 14.8% from $269.16M a year earlier
Net income: $9.11M; down 49.6% from net income of $18.07M a year earlier
Diluted EPS: $0.13; down 43.5% from $0.23 a year earlier

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Delaware			20-1854266
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


		Page
Part I.	Financial Information
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Income	6
	Condensed Consolidated Statements of Stockholders' Equity	7
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37
Part II.	Other Information
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	40
Signatures


	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 of allowance for doubtful accounts of $8,739 and $7,153 at September 30, 2022 and December 31, 2021, respectively)	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
Commitments and contingencies (Note 12)
Stockholders' equity:
Common stock, $0.000001 par value — 200,000 shares authorized, 70,399 shares issued and outstanding at September 30, 2022, and 72,171 shares issued and outstanding at December 31, 2021	—		—
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


	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 (exclusive of depreciation and amortization shown separately below)	26,805		21,185		77,222		54,052
Sales and marketing	133,061		114,295		388,570		340,845
Product development	75,803		69,402		233,336		206,089
General and administrative	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


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Common Stock			Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance as of June 30, 2021	74,590	$	—	$	1,464,490	$	(4,250)	$	(8,378)	$	(648,398)	$	803,464

Issuance of common stock upon exercises of employee stock options	68	—		1,220		—		—		—		1,220
Issuance of common stock upon vesting of restricted stock units ("RSUs")	659	—		—		—		—		—		—

Stock-based compensation (inclusive of capitalized stock-based compensation)	—	—		38,613		—		—		—		38,613
Shares withheld related to net share settlement of equity awards	—	—		(14,461)		—		—		—		(14,461)
Repurchases of common stock	—	—		—		(63,675)		—		—		(63,675)
Retirement of common stock	(1,665)	—		—		63,755		—		(63,755)		—
Other comprehensive loss	—	—		—		—		(1,403)		—		(1,403)
Net income	—	—		—		—		—		18,065		18,065
Balance as of September 30, 2021	73,652	$	—	$	1,489,862	$	(4,170)	$	(9,781)	$	(694,088)	$	781,823

Balance as of June 30, 2022	71,226	$	—	$	1,587,337	$	(3,138)	$	(15,657)	$	(849,938)	$	718,604
Issuance of common stock upon exercises of employee stock options	192	—		5,083		—		—		—		5,083
Issuance of common stock upon vesting of RSUs	688	—		—		—		—		—		—

Stock-based compensation (inclusive of capitalized stock-based compensation)	—	—		39,750		—		—		—		39,750
Shares withheld related to net share settlement of equity awards	—	—		(16,200)		—		—		—		(16,200)
Repurchases of common stock	—	—		—		(50,000)		—		—		(50,000)
Retirement of common stock	(1,707)	—		—		53,138		—		(53,138)		—
Other comprehensive loss	—	—		—		—		(4,967)		—		(4,967)
Net income	—	—		—		—		—		9,108		9,108
Balance as of September 30, 2022	70,399	$	—	$	1,615,970	$	—	$	(20,624)	$	(893,968)	$	701,378


	September 30, 2022		December 31, 2021
Cash	$	60,093	$	89,407
Cash equivalents	270,877		390,376
Total cash and cash equivalents	$	330,970	$	479,783
Restricted cash	1,146		858
Total cash, cash equivalents and restricted cash	$	332,116	$	480,641


	September 30, 2022								December 31, 2021
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	269,878	$	—	$	—	$	269,878	$	390,376	$	—	$	—	$	390,376
Commercial paper	—		999		—		999		—		—		—		—
Marketable securities:
Certificates of deposit	—		11,566		—		11,566		—		—		—		—
Commercial paper	—		16,506		—		16,506		—		—		—		—
Corporate bonds	—		27,682		—		27,682		—		—		—		—
Agency bonds	—		1,898		—		1,898		—		—		—		—
U.S. government bonds	—		33,219		—		33,219		—		—		—		—
Other investments:
Certificates of deposit	—		10,000		—		10,000		—		10,000		—		10,000
Total cash equivalents and other investments	$	269,878	$	101,870	$	—	$	371,748	$	390,376	$	10,000	$	—	$	400,376


	September 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

Cash equivalents:
Commercial paper	$	999	$	—	$	—	$	999
Total cash equivalents	999		—		—		999
Short-term marketable securities:
Certificates of deposit	11,566		—		—		11,566
Commercial paper	16,506		—		—		16,506
Corporate bonds	28,041		7		(366)		27,682
Agency bonds	1,898		—		—		1,898
U.S. government bonds	33,478		—		(259)		33,219
Total short-term marketable securities	91,489		7		(625)		90,871





Total	$	92,488	$	7	$	(625)	$	91,870


	September 30, 2022
	Less Than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss


Corporate bonds	$	24,900	$	(366)	$	—	$	—	$	24,900	$	(366)

U.S. government bonds	28,225		(259)		—		—		28,225		(259)
Total	$	53,125	$	(625)	$	—	$	—	$	53,125	$	(625)


	Amortized Cost		Fair Value
Due in one year or less	$	60,050	$	59,960
Due in one to five years	32,438		31,910
Total	$	92,488	$	91,870


	September 30, 2022		December 31, 2021
Prepaid expenses	$	16,482	$	13,480
Certificates of deposit	10,000		10,000
Other current assets	47,546		34,056
Total prepaid expenses and other current assets	$	74,028	$	57,536


	September 30, 2022		December 31, 2021
Capitalized website and internal-use software development costs	$	222,372	$	202,169
Leasehold improvements(1)	59,865		59,190
Computer equipment	50,076		48,264
Furniture and fixtures	11,474		12,573
Telecommunication	4,900		4,953
Software	1,700		1,703
Total	350,387		328,852
Less accumulated depreciation and amortization	(271,688)		(244,995)
Property, equipment and software, net	$	78,699	$	83,857


	September 30, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Life
Business relationships	$	9,918	$	(5,373)	$	4,545	6.4	years
Developed technology	7,709		(7,709)		—		0.0	years
Licensing agreements	6,129		(1,344)		4,785		7.4	years

Domains and data licenses	2,869		(2,861)		8		0.8	years


Total	$	26,625	$	(17,287)	$	9,338


	December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Life
Business relationships	$	9,918	$	(4,786)	$	5,132	7.1	years
Developed technology	7,709		(7,453)		256		0.2	years
Licensing agreements	6,129		(860)		5,269		8.2	years

Domain and data licenses	2,869		(2,853)		16		1.5	years


Total	$	26,625	$	(15,952)	$	10,673



Remainder of 2022	$	341
2023	1,359
2024	1,353
2025	1,353
2026	1,353
2027	1,353
Thereafter	2,226
Total amortization	$	9,338


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Operating lease cost	$	10,008	$	12,323	$	31,174	$	38,717
Short-term lease cost (12 months or less)	291		133		815		406
Sublease income	(3,195)		(2,308)		(8,749)		(5,714)
Total lease cost, net	$	7,104	$	10,148	$	23,240	$	33,409


Balance as of December 31, 2021	$	105,128
Effect of currency translation	(6,872)
Balance as of September 30, 2022	$	98,256



Remainder of 2022	$	11,852
2023	45,125
2024	42,432
2025	21,907
2026	6,969
2027	6,156
Thereafter	15,689
Total minimum lease payments	150,130
Less imputed interest	(14,814)
Present value of lease liabilities	$	135,316


	September 30, 2022		December 31, 2021
Weighted-average remaining lease term (years) — operating leases	4.2		4.8
Weighted-average discount rate — operating leases	5.3	%	5.4	%


	September 30, 2022		December 31, 2021
Deferred tax assets	$	81,612	$	40,606
Deferred contract costs	25,236		16,931
Other non-current assets	8,534		7,013
Total other non-current assets	$	115,382	$	64,550


	Nine Months Ended September 30, 2022
Balance, beginning of period	$	16,931
Add: costs deferred on new contracts	21,782
Less: amortization recorded in sales and marketing expenses	(13,477)
Balance, end of period	$	25,236


	September 30, 2022		December 31, 2021
Accounts payable	$	10,388	$	16,127
Employee-related liabilities	79,256		50,132
Accrued sales and marketing expenses	13,260		5,455

Accrued cost of revenue	7,667		9,537

Accrued legal settlements	22,250		26,037
Other accrued liabilities	17,983		12,332
Total accounts payable and accrued liabilities	$	150,804	$	119,620


	September 30, 2022		December 31, 2021
	Shares Authorized	Shares Issued	Shares Authorized	Shares Issued
Stockholders’ equity:
Common stock, $0.000001 par value	200,000	70,399	200,000	72,171
Undesignated preferred stock	10,000	—	10,000	—


	Number of Shares (in thousands)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2021	3,979	$	32.59	4.4	$	24,580
Granted	10	31.42
Exercised	(282)	25.08
Canceled	(132)	45.43
Outstanding at September 30, 2022	3,575	$	32.71	3.8	$	8,255
Options vested and exercisable at September 30, 2022	3,411	$	32.60	3.6	$	8,255


	Number of Shares	Weighted-Average Grant Date Fair Value
Nonvested at December 31, 2021	10,016	$	32.39
Granted	6,256	35.11
Vested(1)	(3,683)	33.49
Canceled	(1,848)	32.97
Nonvested at September 30, 2022	10,741	$	33.50


	September 30, 2022		December 31, 2021
United States	$	74,160	$	79,027
All other countries	4,539		4,830
Total long-lived assets	$	78,699	$	83,857


	Three Months Ended September 30,				% Change	Nine Months Ended September 30,				% Change
	2022		2021			2022		2021
Services	$	180,957	$	157,319	15%	$	515,518	$	450,528	14%
Restaurants, Retail & Other	112,707		99,511		13%	324,901		273,250		19%
Total Advertising Revenue	$	293,664	$	256,830	14%	$	840,419	$	723,778	16%


Period	Total Number of Shares Purchased(1)	Average Price Paid per Share(2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program
July 1 – July 31, 2022	856	$	28.78	856	$	107,019
August 1 – August 31, 2022	274	$	33.96	274	$	97,708
September 1 – September 30, 2022	470	$	34.15	470	$	81,658


		YELP INC.
Date:	November 4, 2022	/s/ David Schwarzbach
		David Schwarzbach
		Chief Financial Officer
		(Principal Financial and Accounting Officer and Duly Authorized Signatory)


Investment Type	Rating	Maximum % Limit*	Maximum Maturity
U.S. Treasuries	N/A	No maximum	2 years
U.S. Gov’t Agencies	N/A	No maximum	2 years
Commercial Paper	A1 and P1	85%** 5% issuer	397 days
Corporate Obligations, including Notes, Bonds, and MTNs	A2 or A	85%** 5% issuer	2 years
Municipal Securities*** (as tax situation permits)	Aa2 or AA Mig1 and P1	20% 5% issuer	2 years
Institutional U.S. Treasury or Institutional U.S. Government Agency Funds	AAAm and Aaa	Minimum 3% of fund assets	Overnight
Asset-Backed Securities	AAA	10%**	2 years


1.	I have reviewed this Quarterly Report on Form 10-Q of Yelp Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date:			November 4, 2022

/s/ Jeremy Stoppelman

Jeremy Stoppelman
Chief Executive Officer


1.			The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2022, to which this Certification is attached as Exhibit 32.1 (the “Quarterly Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and

2.			The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.