Second quarter Net revenue increased by 16% year over year to $299 million, resulting in Net income of $8 million

Adjusted EBITDA increased to $67 million

Raises full-year outlook to $1.18 billion to $1.20 billion of Net revenue and $265 million to $285 million of Adjusted EBITDA¹

Yelp Inc. (NYSE:YELP), the company that connects people with great local businesses, today posted its financial results for the second quarter ended June 30, 2022 in the Q2 2022 Shareholder Letter available on its Investor Relations website at www.yelp-ir.com.

"We delivered another strong quarter driven by the consistent execution of our team and our product-led strategy to connect advertisers with our high-intent audience," said Jeremy Stoppelman, Yelp co-founder and chief executive officer. "Our determined efforts led us to record highs in Net revenue and Paying advertising locations in the second quarter. As we continue to invest in our strategic initiatives, I remain confident in our ability to drive profitable growth over the long term."

"The reach and power of our owned and operated ad platform, combined with the execution of our strategic plan, contributed to our strong performance in the second quarter," said David Schwarzbach, Yelp's chief financial officer. "We were particularly pleased by advertiser demand in our Services categories, which once again drove record Advertising revenue. With revenue from our Self-serve and Multi-location channels now comprising 49% of total Ad revenue, it's clear our strategy is working."

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 second quarter financial results and outlook for the third 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 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:

adverse macroeconomic conditions and their 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)

	June 30, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	421,162		$	479,783
Accounts receivable, net		124,690			107,358
Prepaid expenses and other current assets		65,334			57,536
Total current assets		611,186			644,677
Property, equipment and software, net		82,212			83,857
Operating lease right-of-use assets		122,698			140,785
Goodwill		101,526			105,128
Intangibles, net		9,679			10,673
Restricted cash		1,052			858
Other non-current assets		94,815			64,550
Total assets	$	1,023,168		$	1,050,528

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities	$	132,688		$	119,620
Operating lease liabilities — current		41,177			40,237
Deferred revenue		6,141			4,156
Total current liabilities		180,006			164,013
Operating lease liabilities — long-term		105,809			127,979
Other long-term liabilities		18,749			7,218
Total liabilities		304,564			299,210

Stockholders' equity:
Common stock		—			—
Additional paid-in capital		1,587,337			1,522,572
Treasury stock		(3,138	)		—
Accumulated other comprehensive loss		(15,657	)		(11,090	)
Accumulated deficit		(849,938	)		(760,164	)
Total stockholders' equity		718,604			751,318
Total liabilities and stockholders' equity	$	1,023,168		$	1,050,528

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

	Three Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2022		2021
Net revenue	$	298,884	$	257,188		$	575,512	$	489,284

Costs and expenses:
Cost of revenue ⁽¹⁾		26,988		17,993			50,417		32,867
Sales and marketing ⁽¹⁾		129,412		113,641			255,509		226,550
Product development ⁽¹⁾		76,848		68,695			157,533		136,687
General and administrative⁽¹⁾		38,377		45,095			77,760		76,956
Depreciation and amortization		11,258		12,833			22,748		25,916
Restructuring		—		12			—		32
Total costs and expenses		282,883		258,269			563,967		499,008
Income (loss) from operations		16,001		(1,081	)		11,545		(9,724	)
Other income, net		1,327		542			2,256		1,247
Income (loss) before income taxes		17,328		(539	)		13,801		(8,477	)
Provision for (benefit from) income taxes		9,319		(4,751	)		6,707		(6,893	)
Net income (loss) attributable to common stockholders	$	8,009	$	4,212		$	7,094	$	(1,584	)

Net income (loss) per share attributable to common stockholders
Basic	$	0.11	$	0.06		$	0.10	$	(0.02	)
Diluted	$	0.11	$	0.05		$	0.10	$	(0.02	)

Weighted-average shares used to compute net income (loss) per share attributable to common stockholders
Basic		71,217		74,807			71,427		75,025
Diluted		72,835		78,983			73,572		75,025

⁽¹⁾Includes stock-based compensation expense as follows:
	Three Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2022		2021
Cost of revenue	$	1,248	$	1,094		$	2,553	$	2,202
Sales and marketing		8,200		8,441			16,855		16,838
Product development		22,304		20,674			45,429		41,427
General and administrative		8,309		10,650			16,284		19,637
Total stock-based compensation	$	40,061	$	40,859		$	81,121	$	80,104

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

	Six Months Ended June 30,
		2022			2021
Operating Activities
Net income (loss)	$	7,094		$	(1,584	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		22,748			25,916
Provision for doubtful accounts		12,676			7,240
Stock-based compensation		81,121			80,104
Noncash lease cost		16,870			20,712
Deferred income taxes		(24,114	)		(7,755	)
Amortization of deferred cost		8,413			6,881
Asset impairment		—			11,164
Other adjustments, net		717			386
Changes in operating assets and liabilities:
Accounts receivable		(30,014	)		(20,382	)
Prepaid expenses and other assets		(22,149	)		(6,793	)
Operating lease liabilities		(19,813	)		(22,489	)
Accounts payable, accrued liabilities and other liabilities		24,683			15,707
Net cash provided by operating activities		78,232			109,107

Investing Activities
Purchases of property, equipment and software		(14,498	)		(13,286	)
Other investing activities		19			90
Net cash used in investing activities		(14,479	)		(13,196	)

Financing Activities
Proceeds from issuance of common stock for employee stock-based plans		11,026			15,587
Taxes paid related to the net share settlement of equity awards		(32,046	)		(34,824	)
Repurchases of common stock		(100,006	)		(114,157	)
Net cash used in financing activities		(121,026	)		(133,394	)

Effect of exchange rate changes on cash, cash equivalents and restricted cash		(1,154	)		197

Change in cash, cash equivalents and restricted cash		(58,427	)		(37,286	)
Cash, cash equivalents and restricted cash — Beginning of period		480,641			596,540
Cash, cash equivalents and restricted cash — End of period	$	422,214		$	559,254

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 (loss) to Adjusted EBITDA, as well as the calculation of net income (loss) margin and Adjusted EBITDA margin, for each of the periods indicated (in thousands, except percentages; unaudited):

	Three Months Ended									Six Months Ended
	June 30, 2022			March 31, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Reconciliation of Net Income (Loss) to Adjusted EBITDA:
Net income (loss)	$	8,009		$	(915	)	$	4,212		$	7,094		$	(1,584	)
Provision for (benefit from) income taxes		9,319			(2,612	)		(4,751	)		6,707			(6,893	)
Other income, net		(1,327	)		(929	)		(542	)		(2,256	)		(1,247	)
Depreciation and amortization		11,258			11,490			12,833			22,748			25,916
Stock-based compensation		40,061			41,060			40,859			81,121			80,104
Restructuring		—			—			12			—			32
Asset impairment⁽¹⁾		—			—			11,164			—			11,164
Adjusted EBITDA	$	67,320		$	48,094		$	63,787		$	115,414		$	107,492

Net revenue	$	298,884		$	276,628		$	257,188		$	575,512		$	489,284
Net income (loss) margin		3	%		—	%		2	%		1	%		—	%
Adjusted EBITDA margin		23	%		17	%		25	%		20	%		22	%

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

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Yelp's Strong Advertiser Demand Drove Record Net Revenue in the Second Quarter 2022