Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Investments in Product-Led Strategy Drove Yelp’s Strong 2023 Results By: Yelp Inc. via Business Wire February 15, 2024 at 16:05 PM EST 2023 Net Revenue reached a record high of $1.34 billion 2023 Net Income up 173% to a strong $99 million 2023 Adjusted EBITDA grew 23% to a record $330 million Expects 2024 Net Revenue in the range of $1.42 billion to $1.44 billion and Adjusted EBITDA¹ in the range of $315 million to $335 million Board of Directors authorized $500 million increase to share repurchase program Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today posted its financial results for the fourth quarter and full year ended Dec. 31, 2023 in the Q4 and Full Year 2023 Shareholder Letter available on its Investor Relations website at yelp-ir.com. “Yelp delivered one of our strongest financial performances ever in 2023,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “We grew net revenue to a new high and nearly tripled our net income year over year. We also rolled out nearly 60 new product features and updates in the last 12 months. Looking ahead, we're increasing our focus on our Services categories in 2024 as we execute on a robust product roadmap to build Yelp into the best place for consumers to connect with trusted service pros and drive more quality leads to advertisers. Our team has repeatedly shown that focusing on our product-led strategy can drive durable growth, and we remain confident in the significant opportunities ahead to drive shareholder value over the long term.” “Investments in our long-term strategic initiatives have led to multiple records as local advertisers continued to see the value of Yelp’s high-intent audience in 2023,” said David Schwarzbach, Yelp’s chief financial officer. “Net revenue increased by 12% year over year to a record $1.34 billion, while net income grew to $99 million, representing a 7% net income margin. Adjusted EBITDA grew by 23% year over year, representing a 25% adjusted EBITDA margin. As we look ahead to 2024, we're focused on executing against our growth initiatives for the long term." 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. 2023 Key Business Highlights Yelp’s product-led business model drove a number of record results in 2023: Net revenue increased by 12% year over year to a record $1.34 billion, at the high end of the outlook range we provided in November 2023 and approximately $30 million above the high end of the initial outlook range we provided in February 2023. Net income increased by approximately by 173% year over year to $99 million, representing a 7% net income margin. Adjusted EBITDA grew 23% year over year to $330 million, $6 million above the high end of the outlook range we provided in November 2023 and $20 million above the high end of the initial outlook range we provided in February 2023, representing a 25% adjusted EBITDA margin. Total advertising revenue increased by 13% year over year to a record $1.28 billion, driven by strong advertiser demand. Ad clicks for the year returned to year-over-year growth, increasing 5% from 2022. Average CPC for the year increased 9% as a result of robust advertiser demand for Yelp’s valuable, high-intent clicks, demonstrated by record average revenue per paying advertising location. In Services, Yelp demonstrated consistent year-over-year revenue growth throughout 2023, resulting in a record $793 million of advertising revenue from Services businesses for the year, up 14% from 2022. Advertiser demand was particularly robust in the Home Services category, where annual revenue increased by approximately 20% year over year and at a compound annual growth rate of nearly 20% from 2019. Advertising revenue from Restaurants, Retail & Other businesses increased by 10% year over year to a record $483 million, driven by growth in advertiser demand as reflected in average revenue per location. Average revenue per location grew sequentially in each quarter of 2023 to reach a record level in the fourth quarter. Advertising revenue from Yelp’s most efficient channels, Self-serve and Multi-location, together accounted for approximately 50% of Yelp’s 2023 advertising revenue. Self-serve revenue increased by approximately 20% year over year and Multi-location revenue grew by approximately 15% year over year. On the consumer side of Yelp’s business, Yelp introduced a number of new products to enhance the consumer experience with new discovery, review and Services features. These included an AI-powered search experience, Yelp Guaranteed and a more visual and interactive review-writing experience. While Yelp’s overall traffic levels remained approximately flat in 2023, Yelp users contributed 22 million new reviews in 2023 to reach a total of 287 million cumulative reviews. While app unique devices were down 3% year over year, mobile web traffic increased by 2% year over year. Outlook The company expects 2024 Net revenue will be in the range of $1.42 billion to $1.44 billion as our Services initiatives gain traction. The company also expects 2024 Adjusted EBITDA¹ will be in the range of $315 million to $335 million. Quarterly Conference Call Yelp will host a live webcast today at 2 p.m. Pacific Time to discuss the fourth quarter and full year 2023 financial results and outlook for the first quarter and full year 2024. The webcast of the Q&A can be accessed on the Yelp Investor Relations website at yelp-ir.com. A replay of the webcast will be available at the same website. About Yelp Yelp Inc. (yelp.com) is a community-driven platform that connects people with great local businesses. Millions of people rely on Yelp for useful and trusted local business information, reviews and photos to help inform their spending decisions. As a one-stop local platform, Yelp helps consumers easily discover, connect and transact with businesses across a broad range of categories by making it easy to request a quote for a service, book a table at a restaurant, and more. Yelp was founded in San Francisco in 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, including its expected financial results for 2024, its plans to focus on its Services categories and execute against its growth initiatives for the long term in 2024, its robust roadmap to build Yelp into the best place for consumers to connect with trusted service pros and drive more quality leads to advertisers, and its ability to drive 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 inflation, interest rates and supply chain issues, as well as severe weather events and the prevalence of seasonal respiratory illnesses — and its effect on consumer behavior, user activity and advertiser spending; the impact of fears or actual outbreaks of disease 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 advertiser turnover substantially worsens and/or consumer demand significantly degrades; Yelp’s ability to drive continued growth through its strategic initiatives; 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. YELP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) December 31, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 313,911 $ 306,379 Short-term marketable securities 127,485 94,244 Accounts receivable, net 146,147 131,902 Prepaid expenses and other current assets 36,673 63,467 Total current assets 624,216 595,992 Property, equipment and software, net 68,684 77,224 Operating lease right-of-use assets 48,573 97,392 Goodwill 103,886 102,328 Intangibles, net 7,638 8,997 Other non-current assets 161,726 133,989 Total assets $ 1,014,723 $ 1,015,922 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable and accrued liabilities $ 132,809 $ 137,950 Operating lease liabilities — current 39,234 39,674 Deferred revenue 3,821 5,200 Total current liabilities 175,864 182,824 Operating lease liabilities — long-term 48,065 86,661 Other long-term liabilities 41,260 36,113 Total liabilities 265,189 305,598 Stockholders’ equity: Common stock — — Additional paid-in capital 1,786,667 1,649,692 Treasury stock (282 ) — Accumulated other comprehensive loss (12,202 ) (15,545 ) Accumulated deficit (1,024,649 ) (923,823 ) Total stockholders’ equity 749,534 710,324 Total liabilities and stockholders’ equity $ 1,014,723 $ 1,015,922 YELP INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net revenue $ 342,376 $ 309,103 $ 1,337,062 $ 1,193,506 Costs and expenses: Cost of revenue(1) 29,616 28,483 114,229 105,705 Sales and marketing(1) 132,297 126,357 556,605 514,927 Product development(1) 78,323 72,225 332,570 305,561 General and administrative(1) 66,822 37,967 212,431 164,108 Depreciation and amortization 10,303 10,687 42,184 44,852 Total costs and expenses 317,361 275,719 1,258,019 1,135,153 Income from operations 25,015 33,384 79,043 58,353 Other income, net 8,775 3,478 26,039 8,425 Income before income taxes 33,790 36,862 105,082 66,778 Provision for income taxes 6,384 16,717 5,909 30,431 Net income attributable to common stockholders $ 27,406 $ 20,145 $ 99,173 $ 36,347 Net income per share attributable to common stockholders Basic $ 0.40 $ 0.29 $ 1.43 $ 0.51 Diluted $ 0.37 $ 0.28 $ 1.35 $ 0.50 Weighted-average shares used to compute net income per share attributable to common stockholders Basic 68,790 70,001 69,221 70,867 Diluted 73,159 71,607 73,596 73,402 (1) Includes stock-based compensation expense as follows: Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Cost of revenue $ 1,248 $ 1,060 $ 5,274 $ 4,761 Sales and marketing 8,266 8,160 35,187 33,621 Product development 22,627 20,090 97,515 86,871 General and administrative 8,006 7,027 35,475 30,837 Total stock-based compensation $ 40,147 $ 36,337 $ 173,451 $ 156,090 YELP INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Year Ended December 31, 2023 2022 Operating Activities Net income $ 99,173 $ 36,347 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 42,184 44,852 Provision for doubtful accounts 40,702 25,006 Stock-based compensation 173,451 156,090 Amortization of right-of-use assets 28,084 32,810 Deferred income taxes (22,150 ) (56,621 ) Amortization of deferred contract cost 24,035 18,827 Asset impairment 23,563 10,464 Other adjustments, net (410 ) 1,036 Changes in operating assets and liabilities: Accounts receivable (54,947 ) (49,555 ) Prepaid expenses and other assets (5,123 ) (36,032 ) Operating lease liabilities (39,734 ) (40,057 ) Accounts payable, accrued liabilities and other liabilities (2,548 ) 49,142 Net cash provided by operating activities 306,280 192,309 Investing Activities Purchases of marketable securities — available-for-sale (148,448 ) (127,080 ) Sales and maturities of marketable securities — available-for-sale 117,916 32,821 Maturities of other investments 2,500 — Purchases of property, equipment and software (26,847 ) (31,979 ) Other investing activities 195 94 Net cash used in investing activities (54,684 ) (126,144 ) Financing Activities Proceeds from issuance of common stock for employee stock-based plans 39,510 23,497 Taxes paid related to the net share settlement of equity awards (85,180 ) (61,023 ) Repurchases of common stock (199,999 ) (200,006 ) Payment of issuance costs for credit facility (1,109 ) — Net cash used in financing activities (246,778 ) (237,532 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 2,046 (2,136 ) Change in cash, cash equivalents and restricted cash 6,864 (173,503 ) Cash, cash equivalents and restricted cash — Beginning of period 307,138 480,641 Cash, cash equivalents and restricted cash — End of period $ 314,002 $ 307,138 Non-GAAP Financial Measures This press release and statements made during the above referenced webcast may include information relating to Adjusted EBITDA, Adjusted EBITDA margin and Free cash flow, 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 material litigation settlements, impairment charges and fees related to shareholder activism that we deem not to be indicative of our ongoing operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net revenue. We define Free cash flow as net cash provided by (used in) operating activities, less cash used for purchases of property, equipment and software. Adjusted EBITDA and Free cash flow, which are not prepared under any comprehensive set of accounting rules or principles, 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 in accordance with generally accepted accounting principles in the United States (“GAAP”). In particular, Adjusted EBITDA and Free cash flow should not be viewed as substitutes for, or superior to, net income (loss) or net cash provided by (used in) operating activities prepared in accordance with GAAP as measures 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 material litigation settlements, impairment charges and fees related to shareholder activism; Free cash flow does not represent the total residual cash flow available for discretionary purposes because it does not reflect our contractual commitments or obligations; and other companies, including those in Yelp’s industry, may calculate Adjusted EBITDA and Free cash flow differently, which reduces their usefulness as comparative measures. Because of these limitations, you should consider Adjusted EBITDA, Adjusted EBITDA margin and Free cash flow alongside other financial performance measures, including net income (loss), net cash provided by (used in) operating activities 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 December 31, Year Ended December 31, 2023 2022 2023 2022 Reconciliation of Net Income to Adjusted EBITDA: Net income $ 27,406 $ 20,145 $ 99,173 $ 36,347 Provision for income taxes 6,384 16,717 5,909 30,431 Other income, net (8,775 ) (3,478 ) (26,039 ) (8,425 ) Depreciation and amortization 10,303 10,687 42,184 44,852 Stock-based compensation 40,147 36,337 173,451 156,090 Litigation settlement(1)(2) — — 11,000 — Asset impairment(1) 20,008 — 23,563 10,464 Fees related to shareholder activism(1) 581 — 1,252 — Adjusted EBITDA $ 96,054 $ 80,408 $ 330,493 $ 269,759 Net revenue $ 342,376 $ 309,103 $ 1,337,062 $ 1,193,506 Net income margin 8 % 7 % 7 % 3 % Adjusted EBITDA margin 28 % 26 % 25 % 23 % (1) Recorded within general and administrative expenses on our Condensed Consolidated Statements of Operations. (2) Represents the loss contingency recorded in connection with the settlement of a putative class action lawsuit asserting claims under the California Invasion of Privacy Act. For additional information, see our most recently filed Quarterly Report on Form 10-Q at www.yelp-ir.com or the SEC’s website at www.sec.gov. The following is a reconciliation of net cash provided by operating activities to Free cash flow for each of the periods indicated (in thousands; unaudited): Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow: Net cash provided by operating activities $ 79,170 $ 44,473 $ 306,280 $ 192,309 Purchases of property, equipment and software (5,997 ) (11,875 ) (26,847 ) (31,979 ) Free cash flow $ 73,173 $ 32,598 $ 279,433 $ 160,330 Net cash used in investing activities $ (8,219 ) $ (14,837 ) $ (54,684 ) $ (126,144 ) Net cash used in financing activities $ (63,546 ) $ (55,508 ) $ (246,778 ) $ (237,532 ) View source version on businesswire.com: https://www.businesswire.com/news/home/20240215964428/en/Contacts Investor Relations Contact: Josh Willis ir@yelp.com Press Contact: Amber Albrecht press@yelp.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Investments in Product-Led Strategy Drove Yelp’s Strong 2023 Results By: Yelp Inc. via Business Wire February 15, 2024 at 16:05 PM EST 2023 Net Revenue reached a record high of $1.34 billion 2023 Net Income up 173% to a strong $99 million 2023 Adjusted EBITDA grew 23% to a record $330 million Expects 2024 Net Revenue in the range of $1.42 billion to $1.44 billion and Adjusted EBITDA¹ in the range of $315 million to $335 million Board of Directors authorized $500 million increase to share repurchase program Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today posted its financial results for the fourth quarter and full year ended Dec. 31, 2023 in the Q4 and Full Year 2023 Shareholder Letter available on its Investor Relations website at yelp-ir.com. “Yelp delivered one of our strongest financial performances ever in 2023,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “We grew net revenue to a new high and nearly tripled our net income year over year. We also rolled out nearly 60 new product features and updates in the last 12 months. Looking ahead, we're increasing our focus on our Services categories in 2024 as we execute on a robust product roadmap to build Yelp into the best place for consumers to connect with trusted service pros and drive more quality leads to advertisers. Our team has repeatedly shown that focusing on our product-led strategy can drive durable growth, and we remain confident in the significant opportunities ahead to drive shareholder value over the long term.” “Investments in our long-term strategic initiatives have led to multiple records as local advertisers continued to see the value of Yelp’s high-intent audience in 2023,” said David Schwarzbach, Yelp’s chief financial officer. “Net revenue increased by 12% year over year to a record $1.34 billion, while net income grew to $99 million, representing a 7% net income margin. Adjusted EBITDA grew by 23% year over year, representing a 25% adjusted EBITDA margin. As we look ahead to 2024, we're focused on executing against our growth initiatives for the long term." 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. 2023 Key Business Highlights Yelp’s product-led business model drove a number of record results in 2023: Net revenue increased by 12% year over year to a record $1.34 billion, at the high end of the outlook range we provided in November 2023 and approximately $30 million above the high end of the initial outlook range we provided in February 2023. Net income increased by approximately by 173% year over year to $99 million, representing a 7% net income margin. Adjusted EBITDA grew 23% year over year to $330 million, $6 million above the high end of the outlook range we provided in November 2023 and $20 million above the high end of the initial outlook range we provided in February 2023, representing a 25% adjusted EBITDA margin. Total advertising revenue increased by 13% year over year to a record $1.28 billion, driven by strong advertiser demand. Ad clicks for the year returned to year-over-year growth, increasing 5% from 2022. Average CPC for the year increased 9% as a result of robust advertiser demand for Yelp’s valuable, high-intent clicks, demonstrated by record average revenue per paying advertising location. In Services, Yelp demonstrated consistent year-over-year revenue growth throughout 2023, resulting in a record $793 million of advertising revenue from Services businesses for the year, up 14% from 2022. Advertiser demand was particularly robust in the Home Services category, where annual revenue increased by approximately 20% year over year and at a compound annual growth rate of nearly 20% from 2019. Advertising revenue from Restaurants, Retail & Other businesses increased by 10% year over year to a record $483 million, driven by growth in advertiser demand as reflected in average revenue per location. Average revenue per location grew sequentially in each quarter of 2023 to reach a record level in the fourth quarter. Advertising revenue from Yelp’s most efficient channels, Self-serve and Multi-location, together accounted for approximately 50% of Yelp’s 2023 advertising revenue. Self-serve revenue increased by approximately 20% year over year and Multi-location revenue grew by approximately 15% year over year. On the consumer side of Yelp’s business, Yelp introduced a number of new products to enhance the consumer experience with new discovery, review and Services features. These included an AI-powered search experience, Yelp Guaranteed and a more visual and interactive review-writing experience. While Yelp’s overall traffic levels remained approximately flat in 2023, Yelp users contributed 22 million new reviews in 2023 to reach a total of 287 million cumulative reviews. While app unique devices were down 3% year over year, mobile web traffic increased by 2% year over year. Outlook The company expects 2024 Net revenue will be in the range of $1.42 billion to $1.44 billion as our Services initiatives gain traction. The company also expects 2024 Adjusted EBITDA¹ will be in the range of $315 million to $335 million. Quarterly Conference Call Yelp will host a live webcast today at 2 p.m. Pacific Time to discuss the fourth quarter and full year 2023 financial results and outlook for the first quarter and full year 2024. The webcast of the Q&A can be accessed on the Yelp Investor Relations website at yelp-ir.com. A replay of the webcast will be available at the same website. About Yelp Yelp Inc. (yelp.com) is a community-driven platform that connects people with great local businesses. Millions of people rely on Yelp for useful and trusted local business information, reviews and photos to help inform their spending decisions. As a one-stop local platform, Yelp helps consumers easily discover, connect and transact with businesses across a broad range of categories by making it easy to request a quote for a service, book a table at a restaurant, and more. Yelp was founded in San Francisco in 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, including its expected financial results for 2024, its plans to focus on its Services categories and execute against its growth initiatives for the long term in 2024, its robust roadmap to build Yelp into the best place for consumers to connect with trusted service pros and drive more quality leads to advertisers, and its ability to drive 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 inflation, interest rates and supply chain issues, as well as severe weather events and the prevalence of seasonal respiratory illnesses — and its effect on consumer behavior, user activity and advertiser spending; the impact of fears or actual outbreaks of disease 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 advertiser turnover substantially worsens and/or consumer demand significantly degrades; Yelp’s ability to drive continued growth through its strategic initiatives; 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. YELP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) December 31, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 313,911 $ 306,379 Short-term marketable securities 127,485 94,244 Accounts receivable, net 146,147 131,902 Prepaid expenses and other current assets 36,673 63,467 Total current assets 624,216 595,992 Property, equipment and software, net 68,684 77,224 Operating lease right-of-use assets 48,573 97,392 Goodwill 103,886 102,328 Intangibles, net 7,638 8,997 Other non-current assets 161,726 133,989 Total assets $ 1,014,723 $ 1,015,922 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable and accrued liabilities $ 132,809 $ 137,950 Operating lease liabilities — current 39,234 39,674 Deferred revenue 3,821 5,200 Total current liabilities 175,864 182,824 Operating lease liabilities — long-term 48,065 86,661 Other long-term liabilities 41,260 36,113 Total liabilities 265,189 305,598 Stockholders’ equity: Common stock — — Additional paid-in capital 1,786,667 1,649,692 Treasury stock (282 ) — Accumulated other comprehensive loss (12,202 ) (15,545 ) Accumulated deficit (1,024,649 ) (923,823 ) Total stockholders’ equity 749,534 710,324 Total liabilities and stockholders’ equity $ 1,014,723 $ 1,015,922 YELP INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net revenue $ 342,376 $ 309,103 $ 1,337,062 $ 1,193,506 Costs and expenses: Cost of revenue(1) 29,616 28,483 114,229 105,705 Sales and marketing(1) 132,297 126,357 556,605 514,927 Product development(1) 78,323 72,225 332,570 305,561 General and administrative(1) 66,822 37,967 212,431 164,108 Depreciation and amortization 10,303 10,687 42,184 44,852 Total costs and expenses 317,361 275,719 1,258,019 1,135,153 Income from operations 25,015 33,384 79,043 58,353 Other income, net 8,775 3,478 26,039 8,425 Income before income taxes 33,790 36,862 105,082 66,778 Provision for income taxes 6,384 16,717 5,909 30,431 Net income attributable to common stockholders $ 27,406 $ 20,145 $ 99,173 $ 36,347 Net income per share attributable to common stockholders Basic $ 0.40 $ 0.29 $ 1.43 $ 0.51 Diluted $ 0.37 $ 0.28 $ 1.35 $ 0.50 Weighted-average shares used to compute net income per share attributable to common stockholders Basic 68,790 70,001 69,221 70,867 Diluted 73,159 71,607 73,596 73,402 (1) Includes stock-based compensation expense as follows: Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Cost of revenue $ 1,248 $ 1,060 $ 5,274 $ 4,761 Sales and marketing 8,266 8,160 35,187 33,621 Product development 22,627 20,090 97,515 86,871 General and administrative 8,006 7,027 35,475 30,837 Total stock-based compensation $ 40,147 $ 36,337 $ 173,451 $ 156,090 YELP INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Year Ended December 31, 2023 2022 Operating Activities Net income $ 99,173 $ 36,347 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 42,184 44,852 Provision for doubtful accounts 40,702 25,006 Stock-based compensation 173,451 156,090 Amortization of right-of-use assets 28,084 32,810 Deferred income taxes (22,150 ) (56,621 ) Amortization of deferred contract cost 24,035 18,827 Asset impairment 23,563 10,464 Other adjustments, net (410 ) 1,036 Changes in operating assets and liabilities: Accounts receivable (54,947 ) (49,555 ) Prepaid expenses and other assets (5,123 ) (36,032 ) Operating lease liabilities (39,734 ) (40,057 ) Accounts payable, accrued liabilities and other liabilities (2,548 ) 49,142 Net cash provided by operating activities 306,280 192,309 Investing Activities Purchases of marketable securities — available-for-sale (148,448 ) (127,080 ) Sales and maturities of marketable securities — available-for-sale 117,916 32,821 Maturities of other investments 2,500 — Purchases of property, equipment and software (26,847 ) (31,979 ) Other investing activities 195 94 Net cash used in investing activities (54,684 ) (126,144 ) Financing Activities Proceeds from issuance of common stock for employee stock-based plans 39,510 23,497 Taxes paid related to the net share settlement of equity awards (85,180 ) (61,023 ) Repurchases of common stock (199,999 ) (200,006 ) Payment of issuance costs for credit facility (1,109 ) — Net cash used in financing activities (246,778 ) (237,532 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 2,046 (2,136 ) Change in cash, cash equivalents and restricted cash 6,864 (173,503 ) Cash, cash equivalents and restricted cash — Beginning of period 307,138 480,641 Cash, cash equivalents and restricted cash — End of period $ 314,002 $ 307,138 Non-GAAP Financial Measures This press release and statements made during the above referenced webcast may include information relating to Adjusted EBITDA, Adjusted EBITDA margin and Free cash flow, 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 material litigation settlements, impairment charges and fees related to shareholder activism that we deem not to be indicative of our ongoing operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net revenue. We define Free cash flow as net cash provided by (used in) operating activities, less cash used for purchases of property, equipment and software. Adjusted EBITDA and Free cash flow, which are not prepared under any comprehensive set of accounting rules or principles, 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 in accordance with generally accepted accounting principles in the United States (“GAAP”). In particular, Adjusted EBITDA and Free cash flow should not be viewed as substitutes for, or superior to, net income (loss) or net cash provided by (used in) operating activities prepared in accordance with GAAP as measures 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 material litigation settlements, impairment charges and fees related to shareholder activism; Free cash flow does not represent the total residual cash flow available for discretionary purposes because it does not reflect our contractual commitments or obligations; and other companies, including those in Yelp’s industry, may calculate Adjusted EBITDA and Free cash flow differently, which reduces their usefulness as comparative measures. Because of these limitations, you should consider Adjusted EBITDA, Adjusted EBITDA margin and Free cash flow alongside other financial performance measures, including net income (loss), net cash provided by (used in) operating activities 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 December 31, Year Ended December 31, 2023 2022 2023 2022 Reconciliation of Net Income to Adjusted EBITDA: Net income $ 27,406 $ 20,145 $ 99,173 $ 36,347 Provision for income taxes 6,384 16,717 5,909 30,431 Other income, net (8,775 ) (3,478 ) (26,039 ) (8,425 ) Depreciation and amortization 10,303 10,687 42,184 44,852 Stock-based compensation 40,147 36,337 173,451 156,090 Litigation settlement(1)(2) — — 11,000 — Asset impairment(1) 20,008 — 23,563 10,464 Fees related to shareholder activism(1) 581 — 1,252 — Adjusted EBITDA $ 96,054 $ 80,408 $ 330,493 $ 269,759 Net revenue $ 342,376 $ 309,103 $ 1,337,062 $ 1,193,506 Net income margin 8 % 7 % 7 % 3 % Adjusted EBITDA margin 28 % 26 % 25 % 23 % (1) Recorded within general and administrative expenses on our Condensed Consolidated Statements of Operations. (2) Represents the loss contingency recorded in connection with the settlement of a putative class action lawsuit asserting claims under the California Invasion of Privacy Act. For additional information, see our most recently filed Quarterly Report on Form 10-Q at www.yelp-ir.com or the SEC’s website at www.sec.gov. The following is a reconciliation of net cash provided by operating activities to Free cash flow for each of the periods indicated (in thousands; unaudited): Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow: Net cash provided by operating activities $ 79,170 $ 44,473 $ 306,280 $ 192,309 Purchases of property, equipment and software (5,997 ) (11,875 ) (26,847 ) (31,979 ) Free cash flow $ 73,173 $ 32,598 $ 279,433 $ 160,330 Net cash used in investing activities $ (8,219 ) $ (14,837 ) $ (54,684 ) $ (126,144 ) Net cash used in financing activities $ (63,546 ) $ (55,508 ) $ (246,778 ) $ (237,532 ) View source version on businesswire.com: https://www.businesswire.com/news/home/20240215964428/en/Contacts Investor Relations Contact: Josh Willis ir@yelp.com Press Contact: Amber Albrecht press@yelp.com
2023 Net Revenue reached a record high of $1.34 billion 2023 Net Income up 173% to a strong $99 million 2023 Adjusted EBITDA grew 23% to a record $330 million Expects 2024 Net Revenue in the range of $1.42 billion to $1.44 billion and Adjusted EBITDA¹ in the range of $315 million to $335 million Board of Directors authorized $500 million increase to share repurchase program
Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today posted its financial results for the fourth quarter and full year ended Dec. 31, 2023 in the Q4 and Full Year 2023 Shareholder Letter available on its Investor Relations website at yelp-ir.com. “Yelp delivered one of our strongest financial performances ever in 2023,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “We grew net revenue to a new high and nearly tripled our net income year over year. We also rolled out nearly 60 new product features and updates in the last 12 months. Looking ahead, we're increasing our focus on our Services categories in 2024 as we execute on a robust product roadmap to build Yelp into the best place for consumers to connect with trusted service pros and drive more quality leads to advertisers. Our team has repeatedly shown that focusing on our product-led strategy can drive durable growth, and we remain confident in the significant opportunities ahead to drive shareholder value over the long term.” “Investments in our long-term strategic initiatives have led to multiple records as local advertisers continued to see the value of Yelp’s high-intent audience in 2023,” said David Schwarzbach, Yelp’s chief financial officer. “Net revenue increased by 12% year over year to a record $1.34 billion, while net income grew to $99 million, representing a 7% net income margin. Adjusted EBITDA grew by 23% year over year, representing a 25% adjusted EBITDA margin. As we look ahead to 2024, we're focused on executing against our growth initiatives for the long term." 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. 2023 Key Business Highlights Yelp’s product-led business model drove a number of record results in 2023: Net revenue increased by 12% year over year to a record $1.34 billion, at the high end of the outlook range we provided in November 2023 and approximately $30 million above the high end of the initial outlook range we provided in February 2023. Net income increased by approximately by 173% year over year to $99 million, representing a 7% net income margin. Adjusted EBITDA grew 23% year over year to $330 million, $6 million above the high end of the outlook range we provided in November 2023 and $20 million above the high end of the initial outlook range we provided in February 2023, representing a 25% adjusted EBITDA margin. Total advertising revenue increased by 13% year over year to a record $1.28 billion, driven by strong advertiser demand. Ad clicks for the year returned to year-over-year growth, increasing 5% from 2022. Average CPC for the year increased 9% as a result of robust advertiser demand for Yelp’s valuable, high-intent clicks, demonstrated by record average revenue per paying advertising location. In Services, Yelp demonstrated consistent year-over-year revenue growth throughout 2023, resulting in a record $793 million of advertising revenue from Services businesses for the year, up 14% from 2022. Advertiser demand was particularly robust in the Home Services category, where annual revenue increased by approximately 20% year over year and at a compound annual growth rate of nearly 20% from 2019. Advertising revenue from Restaurants, Retail & Other businesses increased by 10% year over year to a record $483 million, driven by growth in advertiser demand as reflected in average revenue per location. Average revenue per location grew sequentially in each quarter of 2023 to reach a record level in the fourth quarter. Advertising revenue from Yelp’s most efficient channels, Self-serve and Multi-location, together accounted for approximately 50% of Yelp’s 2023 advertising revenue. Self-serve revenue increased by approximately 20% year over year and Multi-location revenue grew by approximately 15% year over year. On the consumer side of Yelp’s business, Yelp introduced a number of new products to enhance the consumer experience with new discovery, review and Services features. These included an AI-powered search experience, Yelp Guaranteed and a more visual and interactive review-writing experience. While Yelp’s overall traffic levels remained approximately flat in 2023, Yelp users contributed 22 million new reviews in 2023 to reach a total of 287 million cumulative reviews. While app unique devices were down 3% year over year, mobile web traffic increased by 2% year over year. Outlook The company expects 2024 Net revenue will be in the range of $1.42 billion to $1.44 billion as our Services initiatives gain traction. The company also expects 2024 Adjusted EBITDA¹ will be in the range of $315 million to $335 million. Quarterly Conference Call Yelp will host a live webcast today at 2 p.m. Pacific Time to discuss the fourth quarter and full year 2023 financial results and outlook for the first quarter and full year 2024. The webcast of the Q&A can be accessed on the Yelp Investor Relations website at yelp-ir.com. A replay of the webcast will be available at the same website. About Yelp Yelp Inc. (yelp.com) is a community-driven platform that connects people with great local businesses. Millions of people rely on Yelp for useful and trusted local business information, reviews and photos to help inform their spending decisions. As a one-stop local platform, Yelp helps consumers easily discover, connect and transact with businesses across a broad range of categories by making it easy to request a quote for a service, book a table at a restaurant, and more. Yelp was founded in San Francisco in 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, including its expected financial results for 2024, its plans to focus on its Services categories and execute against its growth initiatives for the long term in 2024, its robust roadmap to build Yelp into the best place for consumers to connect with trusted service pros and drive more quality leads to advertisers, and its ability to drive 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 inflation, interest rates and supply chain issues, as well as severe weather events and the prevalence of seasonal respiratory illnesses — and its effect on consumer behavior, user activity and advertiser spending; the impact of fears or actual outbreaks of disease 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 advertiser turnover substantially worsens and/or consumer demand significantly degrades; Yelp’s ability to drive continued growth through its strategic initiatives; 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. YELP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) December 31, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 313,911 $ 306,379 Short-term marketable securities 127,485 94,244 Accounts receivable, net 146,147 131,902 Prepaid expenses and other current assets 36,673 63,467 Total current assets 624,216 595,992 Property, equipment and software, net 68,684 77,224 Operating lease right-of-use assets 48,573 97,392 Goodwill 103,886 102,328 Intangibles, net 7,638 8,997 Other non-current assets 161,726 133,989 Total assets $ 1,014,723 $ 1,015,922 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable and accrued liabilities $ 132,809 $ 137,950 Operating lease liabilities — current 39,234 39,674 Deferred revenue 3,821 5,200 Total current liabilities 175,864 182,824 Operating lease liabilities — long-term 48,065 86,661 Other long-term liabilities 41,260 36,113 Total liabilities 265,189 305,598 Stockholders’ equity: Common stock — — Additional paid-in capital 1,786,667 1,649,692 Treasury stock (282 ) — Accumulated other comprehensive loss (12,202 ) (15,545 ) Accumulated deficit (1,024,649 ) (923,823 ) Total stockholders’ equity 749,534 710,324 Total liabilities and stockholders’ equity $ 1,014,723 $ 1,015,922 YELP INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net revenue $ 342,376 $ 309,103 $ 1,337,062 $ 1,193,506 Costs and expenses: Cost of revenue(1) 29,616 28,483 114,229 105,705 Sales and marketing(1) 132,297 126,357 556,605 514,927 Product development(1) 78,323 72,225 332,570 305,561 General and administrative(1) 66,822 37,967 212,431 164,108 Depreciation and amortization 10,303 10,687 42,184 44,852 Total costs and expenses 317,361 275,719 1,258,019 1,135,153 Income from operations 25,015 33,384 79,043 58,353 Other income, net 8,775 3,478 26,039 8,425 Income before income taxes 33,790 36,862 105,082 66,778 Provision for income taxes 6,384 16,717 5,909 30,431 Net income attributable to common stockholders $ 27,406 $ 20,145 $ 99,173 $ 36,347 Net income per share attributable to common stockholders Basic $ 0.40 $ 0.29 $ 1.43 $ 0.51 Diluted $ 0.37 $ 0.28 $ 1.35 $ 0.50 Weighted-average shares used to compute net income per share attributable to common stockholders Basic 68,790 70,001 69,221 70,867 Diluted 73,159 71,607 73,596 73,402 (1) Includes stock-based compensation expense as follows: Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Cost of revenue $ 1,248 $ 1,060 $ 5,274 $ 4,761 Sales and marketing 8,266 8,160 35,187 33,621 Product development 22,627 20,090 97,515 86,871 General and administrative 8,006 7,027 35,475 30,837 Total stock-based compensation $ 40,147 $ 36,337 $ 173,451 $ 156,090 YELP INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Year Ended December 31, 2023 2022 Operating Activities Net income $ 99,173 $ 36,347 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 42,184 44,852 Provision for doubtful accounts 40,702 25,006 Stock-based compensation 173,451 156,090 Amortization of right-of-use assets 28,084 32,810 Deferred income taxes (22,150 ) (56,621 ) Amortization of deferred contract cost 24,035 18,827 Asset impairment 23,563 10,464 Other adjustments, net (410 ) 1,036 Changes in operating assets and liabilities: Accounts receivable (54,947 ) (49,555 ) Prepaid expenses and other assets (5,123 ) (36,032 ) Operating lease liabilities (39,734 ) (40,057 ) Accounts payable, accrued liabilities and other liabilities (2,548 ) 49,142 Net cash provided by operating activities 306,280 192,309 Investing Activities Purchases of marketable securities — available-for-sale (148,448 ) (127,080 ) Sales and maturities of marketable securities — available-for-sale 117,916 32,821 Maturities of other investments 2,500 — Purchases of property, equipment and software (26,847 ) (31,979 ) Other investing activities 195 94 Net cash used in investing activities (54,684 ) (126,144 ) Financing Activities Proceeds from issuance of common stock for employee stock-based plans 39,510 23,497 Taxes paid related to the net share settlement of equity awards (85,180 ) (61,023 ) Repurchases of common stock (199,999 ) (200,006 ) Payment of issuance costs for credit facility (1,109 ) — Net cash used in financing activities (246,778 ) (237,532 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 2,046 (2,136 ) Change in cash, cash equivalents and restricted cash 6,864 (173,503 ) Cash, cash equivalents and restricted cash — Beginning of period 307,138 480,641 Cash, cash equivalents and restricted cash — End of period $ 314,002 $ 307,138 Non-GAAP Financial Measures This press release and statements made during the above referenced webcast may include information relating to Adjusted EBITDA, Adjusted EBITDA margin and Free cash flow, 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 material litigation settlements, impairment charges and fees related to shareholder activism that we deem not to be indicative of our ongoing operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net revenue. We define Free cash flow as net cash provided by (used in) operating activities, less cash used for purchases of property, equipment and software. Adjusted EBITDA and Free cash flow, which are not prepared under any comprehensive set of accounting rules or principles, 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 in accordance with generally accepted accounting principles in the United States (“GAAP”). In particular, Adjusted EBITDA and Free cash flow should not be viewed as substitutes for, or superior to, net income (loss) or net cash provided by (used in) operating activities prepared in accordance with GAAP as measures 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 material litigation settlements, impairment charges and fees related to shareholder activism; Free cash flow does not represent the total residual cash flow available for discretionary purposes because it does not reflect our contractual commitments or obligations; and other companies, including those in Yelp’s industry, may calculate Adjusted EBITDA and Free cash flow differently, which reduces their usefulness as comparative measures. Because of these limitations, you should consider Adjusted EBITDA, Adjusted EBITDA margin and Free cash flow alongside other financial performance measures, including net income (loss), net cash provided by (used in) operating activities 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 December 31, Year Ended December 31, 2023 2022 2023 2022 Reconciliation of Net Income to Adjusted EBITDA: Net income $ 27,406 $ 20,145 $ 99,173 $ 36,347 Provision for income taxes 6,384 16,717 5,909 30,431 Other income, net (8,775 ) (3,478 ) (26,039 ) (8,425 ) Depreciation and amortization 10,303 10,687 42,184 44,852 Stock-based compensation 40,147 36,337 173,451 156,090 Litigation settlement(1)(2) — — 11,000 — Asset impairment(1) 20,008 — 23,563 10,464 Fees related to shareholder activism(1) 581 — 1,252 — Adjusted EBITDA $ 96,054 $ 80,408 $ 330,493 $ 269,759 Net revenue $ 342,376 $ 309,103 $ 1,337,062 $ 1,193,506 Net income margin 8 % 7 % 7 % 3 % Adjusted EBITDA margin 28 % 26 % 25 % 23 % (1) Recorded within general and administrative expenses on our Condensed Consolidated Statements of Operations. (2) Represents the loss contingency recorded in connection with the settlement of a putative class action lawsuit asserting claims under the California Invasion of Privacy Act. For additional information, see our most recently filed Quarterly Report on Form 10-Q at www.yelp-ir.com or the SEC’s website at www.sec.gov. The following is a reconciliation of net cash provided by operating activities to Free cash flow for each of the periods indicated (in thousands; unaudited): Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow: Net cash provided by operating activities $ 79,170 $ 44,473 $ 306,280 $ 192,309 Purchases of property, equipment and software (5,997 ) (11,875 ) (26,847 ) (31,979 ) Free cash flow $ 73,173 $ 32,598 $ 279,433 $ 160,330 Net cash used in investing activities $ (8,219 ) $ (14,837 ) $ (54,684 ) $ (126,144 ) Net cash used in financing activities $ (63,546 ) $ (55,508 ) $ (246,778 ) $ (237,532 ) View source version on businesswire.com: https://www.businesswire.com/news/home/20240215964428/en/