Yelp’s Product-Led Strategy Drove Strong 2022 Results
Yelp Inc. (NYSE: YELP) reported record financial results for 2022, achieving net revenue of $1.2 billion, a 16% increase year-on-year. Net income stood at $36 million, despite a slight decrease from the previous year. Adjusted EBITDA rose to a record $270 million, reflecting a 23% margin. The company anticipates 2023 net revenue between $1.29 billion and $1.31 billion, with Adjusted EBITDA projected between $290 million and $310 million. Positive advertiser demand across various categories contributed to these results. Additionally, Yelp plans to maintain its investment strategy to support long-term shareholder value.
- 2022 net revenue reached a record $1.2 billion, up 16% YoY.
- Adjusted EBITDA increased to a record $270 million, reflecting a 23% margin.
- Total advertising revenue reached $1.1 billion, a 15% increase YoY.
- Paying advertising locations grew by 7% compared to 2021.
- Advertising revenue from Home Services increased by approximately 20% YoY.
- Net income slightly decreased by $3 million year over year.
- Ad clicks decreased by 8% from 2021, following reopening tailwinds.
2022 Net Revenue reached a new high of
2022 Net Income a positive
2022 Adjusted EBITDA increased to a record
Expects 2023 Net Revenue in the range of
“We delivered a number of record financial results in 2022 thanks to the strong execution of our teams on our product-led strategy,” said
“Yelp’s strong performance in 2022 led to
1
2022 Key Business Highlights
Yelp’s product-led business model drove a number of record results in 2022, even as macro challenges persisted:
-
Net revenue increased by
16% year over year to a record , near the high end of Yelp’s outlook range provided in$1.2 billion November 2022 and above the high end of the company’s initial outlook range provided in$14 million February 2022 . -
Net income decreased by approximately
year over year to positive$3 million .$36 million -
Adjusted EBITDA grew
10% year over year to a record , at the midpoint of Yelp’s outlook ranges provided in February and$270 million November 2022 , representing a23% adjusted EBITDA margin. -
Strong advertiser demand drove this record revenue performance across categories and channels. Total advertising revenue increased by
15% year over year to a record , reflecting balanced growth in paying advertising locations and average revenue per location. Paying advertising locations for the year increased by$1.1 billion 7% compared to 2021. -
In Services,
Yelp demonstrated consistent year-over-year growth throughout 2022, resulting in a record of advertising revenue from Services businesses for the year. The company reported the 10th consecutive quarter of growth in average revenue per location in these categories. Advertiser demand was particularly robust in the Home Services category, where annual revenue increased by approximately$694 million 20% year over year and at a compound annual growth rate of nearly20% from 2019. -
Advertising revenue from Restaurants, Retail & Other businesses increased by
17% year over year to , primarily driven by growth in paying advertising locations.$441 million -
Advertising revenue from each of Yelp’s most efficient channels, Self-serve and Multi-location, grew by approximately
25% year over year in 2022. -
Ad clicks for the year decreased by
8% from 2021, a year that benefited from reopening tailwinds and elevated consumer spending. Average CPC for the year increased by27% as advertiser demand for Yelp’s valuable, high-intent clicks was robust, demonstrated by records in both paying advertising locations and average revenue per location for the year. -
On the consumer side of Yelp’s business, demand remained below pre-pandemic levels as consumers visited many types of businesses less frequently. In 2022, app unique devices were flat compared to 2021. The company also reported an increase in average review submission frequency among users, who contributed 21 million new reviews in 2022, up
3% from the prior year. This resulted in more than 265 million cumulative reviews as ofDecember 31 , up9% year over year.
Outlook
The company expects 2023 Net revenue will be in the range of
Quarterly Conference Call
About
Forward Looking Statements
This press release contains forward-looking statements relating to, among other things, Yelp’s future performance and its investment plans, including the ability of its investments and initiatives to drive profitable long-term growth and shareholder value, 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 inflation, rising interest rates, supply chain issues, and the ongoing impact of the COVID-19 pandemic and efforts to contain it — and its effect on consumer behavior, user activity and advertiser spending;
- the impact of fears or actual outbreaks of disease, including COVID-19 and any variants thereof, and any resulting changes in consumer behavior, economic conditions or governmental actions;
- Yelp’s ability to maintain and expand its base of advertisers, particularly if the modest increase in churn in the second half of 2022 substantially worsens and/or consumer demand significantly degrades;
- 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 yelp-ir.com or the SEC’s website at sec.gov.
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) |
|||||||
|
|
|
|
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
306,379 |
|
|
$ |
479,783 |
|
Short-term marketable securities |
|
94,244 |
|
|
|
— |
|
Accounts receivable, net |
|
131,902 |
|
|
|
107,358 |
|
Prepaid expenses and other current assets |
|
63,467 |
|
|
|
57,536 |
|
Total current assets |
|
595,992 |
|
|
|
644,677 |
|
Property, equipment and software, net |
|
77,224 |
|
|
|
83,857 |
|
Operating lease right-of-use assets |
|
97,392 |
|
|
|
140,785 |
|
|
|
102,328 |
|
|
|
105,128 |
|
Intangibles, net |
|
8,997 |
|
|
|
10,673 |
|
Other non-current assets |
|
133,989 |
|
|
|
65,408 |
|
Total assets |
$ |
1,015,922 |
|
|
$ |
1,050,528 |
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable and accrued liabilities |
$ |
137,950 |
|
|
$ |
119,620 |
|
Operating lease liabilities — current |
|
39,674 |
|
|
|
40,237 |
|
Deferred revenue |
|
5,200 |
|
|
|
4,156 |
|
Total current liabilities |
|
182,824 |
|
|
|
164,013 |
|
Operating lease liabilities — long-term |
|
86,661 |
|
|
|
127,979 |
|
Other long-term liabilities |
|
36,113 |
|
|
|
7,218 |
|
Total liabilities |
|
305,598 |
|
|
|
299,210 |
|
|
|
|
|
||||
Stockholders’ equity: |
|
|
|
||||
Common stock |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
1,649,692 |
|
|
|
1,522,572 |
|
Accumulated other comprehensive loss |
|
(15,545 |
) |
|
|
(11,090 |
) |
Accumulated deficit |
|
(923,823 |
) |
|
|
(760,164 |
) |
Total stockholders’ equity |
|
710,324 |
|
|
|
751,318 |
|
Total liabilities and stockholders’ equity |
$ |
1,015,922 |
|
|
$ |
1,050,528 |
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) |
|||||||||||||||
|
Three Months Ended
|
|
Year Ended
|
||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net revenue |
$ |
309,103 |
|
$ |
273,400 |
|
|
$ |
1,193,506 |
|
$ |
1,031,839 |
|
||
|
|
|
|
|
|
|
|
||||||||
Costs and expenses: |
|
|
|
|
|
|
|
||||||||
Cost of revenue(1) |
|
28,483 |
|
|
24,045 |
|
|
|
105,705 |
|
|
78,097 |
|
||
Sales and marketing(1) |
|
126,357 |
|
|
113,379 |
|
|
|
514,927 |
|
|
454,224 |
|
||
Product development(1) |
|
72,225 |
|
|
70,384 |
|
|
|
305,561 |
|
|
276,473 |
|
||
General and administrative(1) |
|
37,967 |
|
|
28,859 |
|
|
|
164,108 |
|
|
135,816 |
|
||
Depreciation and amortization |
|
10,687 |
|
|
17,140 |
|
|
|
44,852 |
|
|
55,683 |
|
||
Restructuring |
|
— |
|
|
— |
|
|
|
— |
|
|
32 |
|
||
Total costs and expenses |
|
275,719 |
|
|
253,807 |
|
|
|
1,135,153 |
|
|
1,000,325 |
|
||
Income from operations |
|
33,384 |
|
|
19,593 |
|
|
|
58,353 |
|
|
31,514 |
|
||
Other income, net |
|
3,478 |
|
|
626 |
|
|
|
8,425 |
|
|
2,204 |
|
||
Income before income taxes |
|
36,862 |
|
|
20,219 |
|
|
|
66,778 |
|
|
33,718 |
|
||
Provision for (benefit from) income taxes |
|
16,717 |
|
|
(2,971 |
) |
|
|
30,431 |
|
|
(5,953 |
) |
||
Net income attributable to common stockholders |
$ |
20,145 |
|
$ |
23,190 |
|
|
$ |
36,347 |
|
$ |
39,671 |
|
||
|
|
|
|
|
|
|
|
||||||||
Net income per share attributable to common stockholders |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
0.29 |
|
$ |
0.32 |
|
|
$ |
0.51 |
|
$ |
0.53 |
|
||
Diluted |
$ |
0.28 |
|
$ |
0.30 |
|
|
$ |
0.50 |
|
$ |
0.50 |
|
||
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used to compute net income per share attributable to common stockholders |
|
|
|
|
|
|
|
||||||||
Basic |
|
70,001 |
|
|
72,955 |
|
|
|
70,867 |
|
|
74,221 |
|
||
Diluted |
|
71,607 |
|
|
76,054 |
|
|
|
73,402 |
|
|
78,616 |
|
||
|
|
|
|
|
|
|
|
||||||||
(1) Includes stock-based compensation expense as follows: |
|||||||||||||||
|
Three Months Ended
|
|
Year Ended
|
||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Cost of revenue |
$ |
1,060 |
|
$ |
1,029 |
|
|
$ |
4,761 |
|
$ |
4,302 |
|
||
Sales and marketing |
|
8,160 |
|
|
7,703 |
|
|
|
33,621 |
|
|
32,335 |
|
||
Product development |
|
20,090 |
|
|
19,817 |
|
|
|
86,871 |
|
|
81,624 |
|
||
General and administrative |
|
7,027 |
|
|
6,584 |
|
|
|
30,837 |
|
|
33,418 |
|
||
Total stock-based compensation |
$ |
36,337 |
|
$ |
35,133 |
|
|
$ |
156,090 |
|
$ |
151,679 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
|||||||
|
Year Ended |
||||||
|
2022 |
|
2021 |
||||
Operating Activities |
|
|
|
||||
Net income |
$ |
36,347 |
|
|
$ |
39,671 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
|
44,852 |
|
|
|
55,683 |
|
Provision for doubtful accounts |
|
25,006 |
|
|
|
14,574 |
|
Stock-based compensation |
|
156,090 |
|
|
|
151,679 |
|
Noncash lease cost |
|
32,810 |
|
|
|
39,339 |
|
Deferred income taxes |
|
(56,621 |
) |
|
|
(9,190 |
) |
Amortization of deferred contract cost |
|
18,827 |
|
|
|
14,613 |
|
Asset impairment |
|
10,464 |
|
|
|
11,164 |
|
Noncash gain on lease termination |
|
— |
|
|
|
(11,485 |
) |
Other adjustments, net |
|
1,036 |
|
|
|
392 |
|
Changes in operating assets and liabilities: |
|
|
|
||||
Accounts receivable |
|
(49,555 |
) |
|
|
(33,535 |
) |
Prepaid expenses and other assets |
|
(36,032 |
) |
|
|
(49,246 |
) |
Operating lease liabilities |
|
(40,057 |
) |
|
|
(41,008 |
) |
Accounts payable, accrued liabilities and other liabilities |
|
49,142 |
|
|
|
30,004 |
|
Net cash provided by operating activities |
|
192,309 |
|
|
|
212,655 |
|
|
|
|
|
||||
Investing Activities |
|
|
|
||||
Purchases of marketable securities — available-for-sale |
|
(127,080 |
) |
|
|
— |
|
Sales and maturities of marketable securities — available-for-sale |
|
32,821 |
|
|
|
— |
|
Purchases of property, equipment and software |
|
(31,979 |
) |
|
|
(28,282 |
) |
Other investing activities |
|
94 |
|
|
|
632 |
|
Net cash used in investing activities |
|
(126,144 |
) |
|
|
(27,650 |
) |
|
|
|
|
||||
Financing Activities |
|
|
|
||||
Proceeds from issuance of common stock for employee stock-based plans |
|
23,497 |
|
|
|
24,984 |
|
Taxes paid related to the net share settlement of equity awards |
|
(61,023 |
) |
|
|
(62,545 |
) |
Repurchases of common stock |
|
(200,006 |
) |
|
|
(262,928 |
) |
Net cash used in financing activities |
|
(237,532 |
) |
|
|
(300,489 |
) |
|
|
|
|
||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
(2,136 |
) |
|
|
(415 |
) |
|
|
|
|
||||
Change in cash, cash equivalents and restricted cash |
|
(173,503 |
) |
|
|
(115,899 |
) |
Cash, cash equivalents and restricted cash — Beginning of period |
|
480,641 |
|
|
|
596,540 |
|
Cash, cash equivalents and restricted cash — End of period |
$ |
307,138 |
|
|
$ |
480,641 |
|
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
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, impairment charges and net gain on lease termination. 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
- 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, impairment charges and net gain on lease termination; 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
|
|
Year Ended
|
||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Reconciliation of Net Income to Adjusted EBITDA: |
|
|
|
|
|
|
|
||||||||
Net income |
$ |
20,145 |
|
|
$ |
23,190 |
|
|
$ |
36,347 |
|
|
$ |
39,671 |
|
Provision for (benefit from) income taxes |
|
16,717 |
|
|
|
(2,971 |
) |
|
|
30,431 |
|
|
|
(5,953 |
) |
Other income, net |
|
(3,478 |
) |
|
|
(626 |
) |
|
|
(8,425 |
) |
|
|
(2,204 |
) |
Depreciation and amortization |
|
10,687 |
|
|
|
17,140 |
|
|
|
44,852 |
|
|
|
55,683 |
|
Stock-based compensation |
|
36,337 |
|
|
|
35,133 |
|
|
|
156,090 |
|
|
|
151,679 |
|
Restructuring |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
32 |
|
Asset impairment(1) |
|
— |
|
|
|
— |
|
|
|
10,464 |
|
|
|
11,164 |
|
Gain on lease termination, net(1) |
|
— |
|
|
|
(3,748 |
) |
|
|
— |
|
|
|
(3,748 |
) |
Adjusted EBITDA |
$ |
80,408 |
|
|
$ |
68,118 |
|
|
$ |
269,759 |
|
|
$ |
246,324 |
|
|
|
|
|
|
|
|
|
||||||||
Net revenue |
$ |
309,103 |
|
|
$ |
273,400 |
|
|
$ |
1,193,506 |
|
|
$ |
1,031,839 |
|
Net income margin |
|
7 |
% |
|
|
8 |
% |
|
|
3 |
% |
|
|
4 |
% |
Adjusted EBITDA margin |
|
26 |
% |
|
|
25 |
% |
|
|
23 |
% |
|
|
24 |
% |
(1) |
Recorded within general and administrative expenses on our condensed consolidated statements of operations. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230209005657/en/
Investor Relations Contact:
ir@yelp.com
Press Contact:
press@yelp.com
Source:
FAQ
What was Yelp's net revenue for 2022?
How much did Yelp's Adjusted EBITDA grow in 2022?
What is Yelp's revenue outlook for 2023?
How did the number of paying advertising locations change in 2022?