10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended March 31, 2016
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Transition period from                                   to
Commission file number: 001-35444

YELP INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware	20-1854266
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)
140 New Montgomery Street, 9th Floor
San Francisco, CA	94105
(Address of Principal Executive Offices)	(Zip Code)

(415) 908-3801
(Registrant’s Telephone Number, Including Area Code)
________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   YES ☒    NO ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   YES ☒    NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer (Do not check if a smaller reporting company) ☐	Smaller reporting company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   YES   ☐    NO ☒

As of May 2, 2016, there were 68,024,374 shares of registrant’s Class A common stock, par value $0.000001 per share, issued and outstanding and 8,451,646 shares of registrant’s Class B common stock, par value $0.000001 per share, issued and outstanding.

YELP INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS

			Page
PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements (Unaudited).
		Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015.	1
		Condensed Consolidated Statements of Operations for the Three Months Ended March 31,	2
		2016 and 2015.
		Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended	3
		March 31, 2016 and 2015.
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March	4
		31, 2016 and 2015.
		Notes to Condensed Consolidated Financial Statements.	5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	19
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	30
	Item 4.	Controls and Procedures.	31
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings.	32
	Item 1A.	Risk Factors.	32
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	51
	Item 3.	Defaults Upon Senior Securities.	51
	Item 4.	Mine Safety Disclosures.	51
	Item 5.	Other Information.	51
	Item 6.	Exhibits.	51
SIGNATURES			52

________________________________________

Unless the context suggests otherwise, references in this Quarterly Report on Form 10-Q (the “Quarterly Report”) to “Yelp,” the “Company,” “we,” “us” and “our” refer to Yelp Inc. and, where appropriate, its subsidiaries.

Unless the context otherwise indicates, where we refer in this Quarterly Report to our “mobile application” or “mobile app,” we refer to all of our applications for mobile-enabled devices; references to our “mobile platform” refer to both our mobile app and the versions of our website that are optimized for mobile-based browsers. Similarly, references to our “website” refer to versions of our website dedicated to both desktop- and mobile-based browsers, as well as the U.S. and international versions of our website.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements that involve risks, uncertainties and assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The statements contained in this Quarterly Report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of our management, which are in turn based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Risk Factors” included under Part II, Item 1A below. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

NOTE REGARDING METRICS

We review a number of performance metrics to evaluate our business, measure our performance, identify trends in our business, prepare financial projections and make strategic decisions. Please see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Metrics” for information on how we define our key metrics. Unless otherwise stated, these metrics do not include metrics from our Eat24 or SeatMe businesses.

While our metrics are based on what we believe to be reasonable calculations, there are inherent challenges in measuring usage across our large user base around the world. Certain of our performance metrics, including the number of unique devices accessing our mobile app, are tracked with internal company tools, which are not independently verified by any third party and have a number of limitations. For example, our metrics may be affected by mobile applications that automatically contact our servers for regular updates with no discernable user action involved; this activity can cause our system to count the device associated with the app as a unique app device in a given period.

Our metrics that are calculated based on data from third parties — the number of desktop and mobile website unique visitors — are subject to similar limitations. Our third-party providers periodically encounter difficulties in providing accurate data for such metrics as a result of a variety of factors, including human and software errors. In addition, because these traffic metrics are tracked based on unique cookie identifiers, an individual who accesses our website from multiple devices with different cookies may be counted as multiple unique visitors, and multiple individuals who access our website from a shared device with a single cookie may be counted as a single unique visitor. As a result, the calculations of our unique visitors may not accurately reflect the number of people actually visiting our website.

Our measures of traffic and other key metrics may also differ from estimates published by third parties (other than those whose data we use to calculate such metrics) or from similar metrics of our competitors. We are continually seeking to improve our ability to measure these key metrics, and regularly review our processes to assess potential improvements to their accuracy.

PARTI. FINANCIALINFORMATION

ITEM1. FINANCIALSTATEMENTS

YELP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)

	March 31,			December 31,
	2016			2015
Assets
Current assets:
Cash and cash equivalents	$	183,505		$	171,613
Short-term marketable securities		191,952			199,214
Accounts receivable (net of allowance for doubtful accounts of $3,495 and $3,208
at March 31, 2016 and December 31, 2015, respectively)		54,774			52,755
Prepaid expenses and other current assets		17,109			19,700
Total current assets		447,340			443,282
Long-term marketable securities		8,272			-
Property, equipment and software, net		84,776			80,467
Goodwill		173,733			172,197
Intangibles, net		37,590			39,294
Restricted cash		17,306			16,486
Other assets		3,950			3,701
Total assets	$	772,967		$	755,427
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,200		$	3,388
Accrued liabilities		52,764			43,458
Deferred revenue		2,977			2,931
Total current liabilities		58,941			49,777
Long-term liabilities		13,332			12,030
Total liabilities		72,273			61,807
Commitments and contingencies (Note 11)
Stockholders’ equity:
Common stock, $0.000001 par value — 500,000,000 shares authorized;
76,424,750 and 75,982,802 shares issued and outstanding at
March 31, 2016 and December 31, 2015, respectively		-			-
Additional paid-in capital		793,468			774,022
Accumulated other comprehensive loss		(11,777	)		(13,519	)
Accumulated deficit		(80,997	)		(66,883	)
Total stockholders’ equity		700,694			693,620
Total liabilities and stockholders’ equity	$	772,967		$	755,427

See notes to condensed consolidated financial statements.

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

	Three Months Ended
	March 31,
	2016			2015
Net revenue	$	158,613		$	118,508
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization		15,078			8,699
shown separately below)
Sales and marketing		95,628			63,266
Product development		32,222			23,960
General and administrative		21,769			19,937
Depreciation and amortization		8,189			6,895
Total costs and expenses		172,886			122,757
Loss from operations		(14,273	)		(4,249	)
Other income, net		258			562
Loss before income taxes		(14,015	)		(3,687	)
Benefit (Provision) for income taxes		(1,437	)		2,403
Net loss attributable to common stockholders (Class A and B)	$	(15,452	)	$	(1,284	)
Net loss per share attributable to common stockholders
(Class A and B)
Basic	$	(0.20	)	$	(0.02	)
Diluted	$	(0.20	)	$	(0.02	)
Weighted-average shares used to compute net loss per share
attributable to common stockholders (Class A and B)
Basic		75,884			73,684
Diluted		75,884			73,684

See notes to condensed consolidated financial statements.

2

YELP INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)

	Three Months Ended
	March 31,
	2016			2015
Net loss	$	(15,452	)	$	(1,284	)
Other comprehensive income (loss):
Foreign currency translation adjustments		1,742			(7,864	)
Other comprehensive income (loss)		1,742			(7,864	)
Comprehensive loss	$	(13,710	)	$	(9,148	)

See notes to condensed consolidated financial statements.

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

	Three Months Ended
	March 31,
	2016			2015
OPERATING ACTIVITIES:
Net loss	$	(15,452	)	$	(1,284	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		8,189			6,895
Provision for doubtful accounts and sales returns		5,091			3,434
Stock-based compensation		19,110			13,671
Loss on disposal of assets and website development costs		104			52
Premium amortization, net, on securities held-to-maturity		376			(117	)
Excess tax benefit from share-based award activity		-			(815	)
Changes in operating assets and liabilities:
Accounts receivable		(5,235	)		(2,850	)
Prepaid expenses and other assets		2,884			(6,045	)
Accounts payable, accrued expenses and other liabilties		8,769			12,011
Deferred revenue		43			683
Net cash provided by operating activities		23,879			25,635
INVESTING ACTIVITIES:
Acquisition, net of cash received		-			(71,546	)
Purchases of property, equipment and software		(7,645	)		(10,881	)
Capitalized website and software development costs		(3,125	)		(3,196	)
Changes in restricted cash		(820	)		(5	)
Purchases of intangible assets		-			(314	)
Proceeds from sale of property and equipment		-			97
Purchases of marketable securities		(92,101	)		(36,120	)
Maturities of marketable securities		90,500			18,250
Net cash used in investing activities		(13,191	)		(103,715	)
FINANCING ACTIVITIES:
Issuance of common stock upon exercise of employee stock options		1,045			3,398
Excess tax benefit from share-based award activity		-			815
Repurchase of common stock		-			(168	)
Net cash provided by financing activities		1,045			4,045
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		159			(648	)
CHANGE IN CASH AND CASH EQUIVALENTS		11,892			(74,683	)
CASH AND CASH EQUIVALENTS—Beginning of period		171,613			247,312
CASH AND CASH EQUIVALENTS—End of period	$	183,505		$	172,629
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:
Cash paid for income taxes, net of refunds	$	516		$	422
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Purchases of property and equipment recorded in accounts payable and accruals	$	1,727		$	3,544
Capitalized website and software development costs recorded in accounts payable and accruals	$	-		$	15
Goodwill measurement period adjustment	$	146		$	51
Acquisition consideration included in accruals	$	-		$	1,876
Issuance of common stock in connection with acquisition	$	-		$	59,158

See notes to condensed consolidated financial statements.

4

YELP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. DESCRIPTION OF BUSINESS AND BASIS FOR PRESENTATION

Yelp Inc. was incorporated in Delaware on September 3, 2004. Except where specifically noted or the context otherwise requires, the use of terms such as the “Company” and “Yelp” in these Notes to Condensed Consolidated Financial Statements refers to Yelp Inc. and its subsidiaries.

Yelp connects people with great local businesses by bringing “word of mouth” online and providing a platform for businesses and consumers to engage and transact. Yelp’s platform is transforming the way people discover local businesses; every day, millions of consumers visit its website or use its mobile app to find great local businesses to meet their everyday needs. Businesses of all sizes use the Yelp platform to engage with consumers at the critical moment when they are deciding where to spend their money.

Basis of Presentation

The accompanying interim condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 24, 2016 (the “Annual Report”). The unaudited condensed consolidated balance sheet as of December 31, 2015 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures required by GAAP, including certain notes to the financial statements.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements, except as follows:

During the three months ended March 31, 2016, the Company adopted Accounting Standards Update 2016-09, “Compensation—Stock Compensation (Topic 718)” (“ASU 2016-09”) on a modified retrospective basis. ASU 2016-09 permits entities to make an accounting policy election related to how forfeitures will impact the recognition of compensation cost for stock-based compensation: to estimate the total number of awards for which the requisite service period will not be rendered (as currently required) or to account for forfeitures as they occur. Upon early adoption of ASU 2016-09, the Company elected to change its accounting policy to account for forfeitures as they occur. The change was applied on a modified retrospective basis with a cumulative-effect adjustment to retained earnings of $1.1 million (which reduced the accumulated deficit) as of January 1, 2016.

ASU 2016-09 also eliminates the requirement that excess tax benefits be realized as a reduction in current taxes payable before the associated tax benefit can be recognized as an increase in paid in capital. Approximately $164.1 million of federal net operating losses, $125.7 million of state net operating losses, $1.8 million of Ireland net operating losses, $1.3 million of federal research and development tax credits and $0.1 million of state Enterprise Zone credits (none of which were included in the deferred tax assets recognized in the statement of financial position as of December 31, 2015) have been attributed to tax deduction for stock-based compensation in excess of the related book expense. Under ASU 2016-09, these previously unrecognized deferred tax assets will be recognized on a modified retrospective basis as of the start of the year in which the ASU 2016-09 is adopted (since the Company is adopting the standard early, its modified retrospective entry is as of January 1, 2016). The U.S. federal and state net operating losses and credits (as described above) that were recognized as of January 1, 2016 have been offset by a valuation allowance. As a result, only the Ireland net operating losses result in a cumulative-effect adjustment to retained earnings of $0.2 million (which reduced the accumulated deficit) as of March 31, 2016.

Additionally, ASU 2016-09 addresses the presentation of excess tax benefits and employee taxes paid on the statement of cash flows. The Company is now required to present excess tax benefits as an operating activity (in the same manner as other cash flows related to income taxes) on the statement of cash flows rather than as a financing activity, and the Company adopted this change prospectively.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments of a normally recurring nature necessary for the fair presentation of the interim periods presented.

Significant Accounting Policies

Stock-Based Compensation—The Company accounts for stock-based employee compensation plans under the fair value recognition and measurement provisions in accordance with applicable accounting standards, which require all stock-based payments to employees, including grants of stock options, restricted stock awards, restricted stock units and issuances under its 2012 Employee Stock Purchase Plan (“ESPP”) to be measured based on the grant date fair value of the awards.

5

Prior to January 1, 2016, stock-based compensation expense was recorded net of estimated forfeitures in the Company’s consolidated statements of income (loss) and, accordingly, was recorded for only those stock-based awards that the Company expected to vest. The Company estimated the forfeiture rate based on historical forfeitures of equity awards and adjusted the rate to reflect changes in facts and circumstances, if any. The Company revised its estimated forfeiture rate if actual forfeitures differed from its initial estimates.

As of January 1, 2016, the Company adopted a change in accounting policy in accordance with ASU 2016-09 to account for forfeitures as they occur. The change was applied on a modified retrospective basis, and no prior periods were re-stated as a result of this change in accounting policy.

Income Taxes – Prior to January 1, 2016, the Company recognized the excess tax benefits of stock-based compensation expense as additional paid-in capital (“APIC”) and tax deficiencies of stock-based compensation expense in the income tax provision or as APIC to the extent that there was sufficient recognized excess tax benefits previously recognized. As a result of the prior requirement that excess tax benefit reduce taxes payable prior to be recognized as an increase in paid in capital, the Company had not recognized certain deferred tax assets (all tax attributes such as loss or credit carryforwards) that can be attributed to tax deductions related to equity compensation in excess of compensation recognized for financial reporting.

As of January 1, 2016, the Company early adopted a change in accounting policy in accordance with ASU 2016-09 to account for excess tax benefits and tax deficiencies as income tax expense or benefit, treated as discrete items in the reporting period in which they occur, and to recognize previously unrecognized deferred tax assets that arose directly from (or the use of which was postponed by) tax deductions related to equity compensation in excess of compensation recognized for financial reporting. The change was applied on a modified retrospective basis; no prior periods were re-stated as a result of this change in accounting policy.

There have been no other material changes to the Company’s significant accounting policies from those described in the Annual Report.

Recent Accounting Pronouncements Not Yet Effective

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which amended the existing accounting standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the consideration expected to be received in exchange for those goods or services. The new standard requires that reporting companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. On July 9, 2015, FASB agreed to delay the effective date by one year and, accordingly, the new standard is effective for the Company beginning in the first quarter of 2018. Early adoption is permitted, but not before the original effective date of the standard. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The Company has not yet selected a transition method, nor has it determined the impact of the new standard and its consolidated financial statements.

In January 2016, FASB issued Accounting Standards Update 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10)” (“ASU 2016-01”). The new standard provides guidance for the recognition, measurement, presentation and disclosure of financial instruments. This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-01 on its consolidated financial statements.

In February 2016, FASB issued Accounting Standards Update No. 2016-02, “Leases” (“ASU 2016-02”). The new guidance generally requires an entity to recognize on its balance sheet operating and financing lease liabilities and corresponding right-of-use assets. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2018 and early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its consolidated financial statements.

Principles of Consolidation

These unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the Company’s unaudited interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the unaudited interim condensed consolidated financial statements; therefore, actual results could differ from management’s estimates.

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s investments in money market accounts are recorded as cash equivalents at fair value in the consolidated financial statements. All other financial instruments are classified as held-to-maturity investments and, accordingly, are recorded at amortized cost; however, the Company is required to determine the fair value of these investments on a recurring basis to identify any potential impairment. The accounting guidance for fair value measurements prioritizes the inputs used in measuring fair value in the following hierarchy:

Level 1—Observable inputs, such as quoted prices in active markets,

Level 2—Inputs other than quoted prices in active markets that are observable either directly or indirectly, or

6

Level 3—Unobservable inputs in which there are little or no market data, which require the Company to develop its own assumptions.

This hierarchy requires the Company to use observable market data, when available, to minimize the use of unobservable inputs when determining fair value. The Company’s money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted prices in active markets. The Company’s commercial paper, corporate bonds, agency bonds and agency discount notes are classified within Level 2 of the fair value hierarchy because they have been valued using inputs other than quoted prices in active markets that are observable directly or indirectly.

The following table represents the Company’s financial instruments measured at fair value as of March 31, 2016 and December 31, 2015 (in thousands):

	March 31, 2016								December 31, 2015
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash Equivalents:
Money market funds	$	125,184	$	-	$	-	$	125,184	$	86,660	$	-	$	-	$	86,660
Commercial paper		-		7,993		-		7,993		-		-		-		-
Agency bonds		-		-		-		-		-		4,999		-		4,999
Marketable Securities:
Commercial paper		-		33,947		-		33,947		-		36,981		-		36,981
Corporate bonds		-		13,001		-		13,001		-		18,024		-		18,024
Agency bonds		-		141,322		-		141,322		-		132,102		-		132,102
Agency discount notes		-		11,998		-		11,998		-		11,986		-		11,986
Total cash equivalents and marketable securities	$	125,184	$	208,261	$	-	$	333,445	$	86,660	$	204,092	$	-	$	290,752

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3. MARKETABLE SECURITIES

The amortized cost, gross unrealized gains and losses, and fair value of securities held-to-maturity, all of which mature within two years, as of March 31, 2016 and December 31, 2015 were as follows (in thousands):

	As of March 31, 2016
			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses			Fair Value
Short-term marketable securities:
Commercial paper	$	33,947	$	-	$	-		$	33,947
Corporate bonds		13,002		-		(1	)		13,001
Agency bonds		133,007		49		(13	)		133,043
Agency discount notes		11,996		2		-			11,998
Total marketable securities	$	191,952	$	51	$	(14	)	$	191,989
Long-term marketable securities:
Agency bonds		8,272		7		-			8,279
	$	8,272	$	7	$	-			8,279
Total marketable securities	$	200,224	$	58	$	(14	)		200,268
	As of December 31, 2015
			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses			Fair Value
Short-term marketable securities:
Commercial paper	$	36,981	$	-	$	-		$	36,981
Corporate bonds		18,027		2		(5	)		18,024
Agency bonds		132,224		-		(122	)		132,102
Agency discount notes		11,982		4		-			11,986
Total marketable securities	$	199,214	$	6	$	(127	)	$	199,214

The following table presents gross unrealized losses and fair values for those securities that were in an unrealized loss position as of March 31, 2016 and December 31, 2015, aggregated by investment category and the length of time that the individual securities have been in continuous loss position (in thousands):

	As of March 31, 2016
	Less Than 12 Months					12 Months or Greater				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate bonds		8,000		(1	)		-		-		8,000		(1	)
Agency bonds		29,246		(13	)		-		-		29,246		(13	)
Total	$	37,246	$	(14	)	$	-	$	-	$	37,246	$	(14	)
	As of December 31, 2015
	Less Than 12 Months					12 Months or Greater				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate bonds		10,021		(5	)		-		-		10,021		(5	)
Agency bonds		127,102		(122	)		-		-		127,102		(122	)
Total	$	137,123	$	(127	)	$	-	$	-	$	137,123	$	(127	)

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The Company periodically reviews its investment portfolio for other-than-temporary impairment. The Company considers such factors as the duration, severity and reason for the decline in value, and the potential recovery period. The Company also considers whether it is more likely than not that it will be required to sell the securities before the recovery of their amortized cost basis, and whether the amortized cost basis cannot be recovered as a result of credit losses. During the three months ended March 31, 2016 and 2015, the Company did not recognize any other-than-temporary impairment loss.

4. ACQUISITIONS

2015 Acquisition

On February 9, 2015, the Company acquired Eat24Hours.com, Inc. (“Eat24”). In connection with the acquisition, all of the outstanding capital stock of Eat24 was converted into the right to receive an aggregate of approximately $75.0 million in cash, less certain transaction expenses, and 1,402,844 shares of Yelp Class A common stock with an aggregate fair value of approximately $59.2 million, as determined on the basis of the closing market price of the Company’s Class A common stock on the acquisition date. Of the total consideration paid in connection with the acquisition, $16.5 million in cash and 308,626 shares were initially held in escrow to secure indemnification obligations. The balance remaining in the escrow fund was $7.9 million in cash and 308,626 shares as of March 31, 2016. The key purpose underlying the acquisition was to obtain an online food ordering solution to drive daily engagement in the Company’s key restaurant vertical.

The acquisition was accounted for as a business combination in accordance with Accounting Standards Codification Topic 805, “Business Combinations” (“ASC 805”), with the results of Eat24’s operations included in the Company’s consolidated financial statements from February 9, 2015. The purchase price allocation is as follows (in thousands):

	February 9, 2015
Fair value of purchase consideration:
Cash:
Distributed to Eat24 stockholders	$	56,624
Held in escrow account		16,500
Payable on behalf of Eat24 stockholders		1,876
Total cash		75,000
Class A common stock:
Distributed to Eat24 stockholders		46,143
Held in escrow account		13,015
Total purchase consideration	$	134,158
Fair value of net assets acquired:
Cash and cash equivalents	$	1,578
Intangibles		39,600
Goodwill		110,927
Other assets		6,031
Total assets acquired		158,136
Deferred tax liability		(15,207	)
Other liabilities		(8,771	)
Total liabilities assumed		(23,978	)
Net assets acquired	$	134,158

Estimated useful lives and the amount assigned to each class of intangible assets acquired are as follows:

Intangible Asset Type	Amount Assigned		Useful Life
Restaurant relationships	$	17,400	12.0 years
Developed technology	$	7,400	5.0 years
User relationships	$	12,000	7.0 years
Trade name	$	2,800	4.0 years
Weighted average			8.6 years

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The intangible assets are being amortized on a straight-line basis, which reflects the pattern in which the economic benefits of the intangible assets are being utilized. The goodwill results from the Company’s opportunity to drive daily engagement in its restaurant vertical and potentially expand Eat24’s offering to the approximately 1.0 million U.S. restaurants listed on the Company’s platform. None of the goodwill is deductible for tax purposes.

The Company recorded no acquisition-related costs for the three months ended March 31, 2016 and approximately $0.2 million in acquisition-related costs in the three months ended March 31, 2015, which were included in the general and administrative expense in the accompanying consolidated statements of operations.

5. CASH AND CASH EQUIVALENTS

Cash and cash equivalents as of March 31, 2016 and December 31, 2015 consisted of the following (in thousands):

	March 31,		December 31,
	2016		2015
Cash and cash equivalents
Cash	$	50,328	$	79,954
Money market funds		133,177		91,659
Total cash and cash equivalents	$	183,505	$	171,613

The lease agreements for certain of the Company’s offices require the Company to maintain letters of credit issued to the landlords of each facility. Each letter of credit is subject to renewal annually until the applicable lease expires and is collateralized by restricted cash. As of March 31, 2016 and December 31, 2015, the Company had letters of credit totaling $17.3 million and $16.5 million, respectively, related to such leases.

6. PROPERTY, EQUIPMENT AND SOFTWARE, NET

Property, equipment and software, net as of March 31, 2016 and December 31, 2015 consisted of the following (in thousands):

	March 31,			December 31,
	2016			2015
Computer equipment	$	27,439		$	26,004
Software		1,223			1,213
Capitalized website and internal-use software development costs		46,169			42,320
Furniture and fixtures		11,893			10,771
Leasehold improvements		51,680			47,552
Telecommunication		3,135			2,970
Total		141,539			130,830
Less accumulated depreciation		(56,763	)		(50,363	)
Property, equipment and software, net	$	84,776		$	80,467

Depreciation expense for the three months ended March 31, 2016 and 2015 was approximately $6.5 million and $5.6 million, respectively.

7. GOODWILL AND INTANGIBLE ASSETS

The Company’s goodwill is the result of its acquisition of other businesses, and represents the excess of purchase consideration over the fair value of assets and liabilities acquired. The Company performed its annual goodwill impairment analysis during the three months ended September 30, 2015 and concluded that goodwill was not impaired, as the value of each reporting unit exceeded its carrying value.

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The changes in the carrying amount of goodwill during the three months ended March 31, 2016 were as follows (in thousands):

Balance as of December 31, 2015	$	172,197
Goodwill measurement period adjustment		146
Effect of currency translation		1,390
Balance as of March 31, 2016	$	173,733

Intangible assets at March 31, 2016 and December 31, 2015 consisted of the following (dollars in thousands):

								Weighted
	Gross					Net		Average
	Carrying		Accumulated			Carrying		Remaining
	Amount		Amortization			Amount		Life
March 31, 2016:
Content	$	3,952	$	(2,281	)	$	1,671	2.5 years
Advertiser relationships		1,721		(1,721	)		-	0.0 years
Developed technology		9,311		(2,881	)		6,430	3.8 years
Trade name and other		3,361		(1,336	)		2,025	2.8 years
Domains and data licenses		2,625		(953	)		1,672	3.6 years
Restaurant and user relationships		29,400		(3,608	)		25,792	8.9 years
Total	$	50,370	$	(12,780	)	$	37,590
								Weighted
	Gross					Net		Average
	Carrying		Accumulated			Carrying		Remaining
	Amount		Amortization			Amount		Life
December 31, 2015:
Content	$	3,922	$	(2,066	)	$	1,856	2.7 years
Advertiser relationships		1,708		(1,708	)		-	0.0 years
Developed technology		9,295		(2,441	)		6,854	4.1 years
Trade name and other		3,350		(1,139	)		2,211	3.1 years
Domains and data licenses		2,625		(835	)		1,790	3.9 years
Restaurant and user relationships		29,400		(2,817	)		26,583	9.1 years
Total	$	50,300	$	(11,006	)	$	39,294

Amortization expense for the three months ended March 31, 2016 and 2015 was $1.7 million and $1.2 million, respectively.

As of March 31, 2016, the estimated future amortization of purchased intangible assets for (i) the remaining nine months of 2016, (ii) each of the succeeding five years and (iii) thereafter is as follows (in thousands):

Year Ending December 31,	Amount
2016 (from April 1, 2016)	$	5,143
2017		6,712
2018		6,245
2019		5,359
2020		3,369
2021		3,165
Thereafter		7,597
Total amortization	$	37,590

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8. ACCRUED LIABILITIES

Accrued liabilities as of March 31, 2016 and December 31, 2015 consisted of the following (in thousands):

	March 31,		December 31,
	2016		2015
Restaurant revenue share liability	$	14,873	$	12,654
Accrued employee vacation		6,490		4,662
Accrued bonuses and commissions		5,781		4,546
Employee stock purchase plan liability		3,520		817
Accrued employee benefits and other employee expenses		3,332		3,631
Accrued marketing		3,130		2,144
Accrued income, withholding and business taxes		2,398		1,513
Accrued website hosting		1,930		975
Accrued facilities and other allocations		1,557		1,928
Payroll taxes payable		1,509		1,938
Fixed asset purchase commitments		1,460		1,318
Accrued consulting		1,324		1,763
Deferred rent		876		786
Merchant revenue share liability		821		1,212
Other accrued expenses		3,763		3,571
Total	$	52,764	$	43,458

9. LONG-TERM LIABILITIES

Long-term liabilities as of March 31, 2016 and December 31, 2015 consisted of the following (in thousands):

	March 31,		December 31,
	2016		2015
Deferred rent	$	12,629	$	11,324
Other long-term liabilities		703		706
Total	$	13,332	$	12,030

10. OTHER INCOME (EXPENSE), NET

Other income (expense), net for the three months ended March 31, 2016 and 2015 consisted of the following (in thousands):

	Three Months Ended
	March 31,
	2016			2015
Net interest income	$	311		$	132
Transaction gain (loss) on foreign exchange		66			(171	)
Other non-operating income (loss), net		(119	)		601
Other income (expense), net	$	258		$	562

11. COMMITMENTS AND CONTINGENCIES

Office Facility Leases—The Company leases its office facilities under operating lease agreements that expire from 2016 to 2025. Certain lease agreements provide for rental payments on a graduated basis. The Company recognizes rent expense on a straight-line basis over the lease period. Rental expense was $8.6 million and $6.9 million for the three months ended March 31, 2016 and 2015, respectively.

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The Company has subleased certain office facilities under operating lease agreements that expire in 2021. The Company recognizes sublease rentals as a reduction in rental expense on a straight-line basis over the lease period. Sublease rentals were $0.5 million and zero for the three months ended March 31, 2016 and 2015, respectively.

Legal Proceedings—The Company is subject to legal proceedings arising in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently does not believe that the final outcome of any of these matters will have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

In August 2014, two putative class action lawsuits alleging violations of federal securities laws were filed in the U.S. District Court for the Northern District of California, naming as defendants the Company and certain of its officers. The lawsuits allege violations of the Exchange Act by the Company and certain of its officers for allegedly making materially false and misleading statements regarding the Company’s business and operations between October 29, 2013 and April 3, 2014. These cases were subsequently consolidated and, in January 2015, the plaintiffs filed a consolidated complaint seeking unspecified monetary damages and other relief. Following the court’s dismissal of the consolidated complaint on April 21, 2015, the plaintiffs filed a first amended complaint on May 21, 2015. On November 24, 2015, the court dismissed the first amended complaint with prejudice, and entered judgment in the Company’s favor on December 28, 2015. The plaintiffs have appealed this decision to the U.S. Court of Appeals for the Ninth Circuit.

On April 23, 2015, a putative class action lawsuit was filed by former Eat24 employees in the Superior Court of California for San Francisco County, naming as defendants the Company and Eat24. The lawsuit asserts that the defendants failed to permit meal and rest periods for certain current and former employees working as Eat24 customer support specialists, and alleges violations of the California Labor Code, applicable Industrial Welfare Commission Wage Orders and the California Business and Professions Code. The plaintiffs seek monetary damages in an unspecified amount and injunctive relief. On May 29, 2015, plaintiffs filed a first amended complaint asserting an additional cause of action for penalties under the Private Attorneys General Act. In January 2016, the Company reached a preliminary agreement to settle this matter for payments in the aggregate amount of up to approximately $0.6 million. Once finalized, the settlement will be subject to court approval.

On June 24, 2015, a former Eat24 sales employee filed a lawsuit, on behalf of herself and a putative class of current and former Eat24 sales employees, against Eat24 in the Superior Court of California for San Francisco County. The lawsuit alleges that Eat24 failed to pay required wages, including overtime wages, allow meal and rest periods and maintain proper records, and asserts causes of action under the California Labor Code, applicable Industrial Welfare Commission Wage Orders and the California Business and Professions Code. The plaintiff seeks monetary damages and penalties in unspecified amounts, as well as injunctive relief. On August 3, 2015, the plaintiff filed a first amended complaint asserting an additional cause of action for penalties under the Private Attorneys General Act. In January 2016, the Company reached a preliminary agreement to settle this matter for payments in the aggregate amount of up to approximately $0.2 million. Once finalized, the settlement will be subject to court approval.

Based on the preliminary settlement agreements reached in connection with the two lawsuits by former Eat24 employees described above, the Company recognized a liability for each of the proposed settlement amounts as part of its accrued liabilities as of March 31, 2016. In February 2016, $1.1 million was released to the Company from the escrow fund established in connection with the acquisition of Eat24, to fund such settlement amounts and related legal expenses.

Indemnification Agreements—In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with directors and certain officers and employees that will require the Company to, among other things, indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees.

While the outcome of claims cannot be predicted with certainty, the Company does not believe that the outcome of any claims under the indemnification arrangements will have a material effect on the Company’s financial position, results of operations or cash flows.

Payroll Tax Audit—In June 2015, the Internal Revenue Service (“IRS”) began a payroll tax audit of the Company for 2014 and 2013. The Company has assessed the estimated range of such loss and, as of March 31, 2016, a liability of $0.5 million has been recorded. The Company expects the audits and any related assessments to be finalized by December 31, 2016.

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12. STOCKHOLDERS’ EQUITY

The following table presents the number of shares authorized and issued and outstanding as of the dates indicated:

	March 31, 2016		December 31, 2015
		Shares		Shares
	Shares	Issued and	Shares	Issued and
	Authorized	Outstanding	Authorized	Outstanding
Stockholders’ equity:
Class A common stock, $0.000001 par value	200,000,000	67,982,104	200,000,000	66,535,156
Class B common stock, $0.000001 par value	100,000,000	8,442,646	100,000,000	9,447,646
Common stock, $0.000001 par value	200,000,000	-	200,000,000	-
Undesignated Preferred Stock	10,000,000	-	10,000,000	-

Equity Incentive Plans

The Company has outstanding awards under three equity incentive plans: the Amended and Restated 2005 Equity Incentive Plan (the “2005 Plan”), the 2011 Equity Incentive Plan (the “2011 Plan”) and the 2012 Equity Incentive Plan, as amended (the “2012 Plan”). In July 2011, the Company adopted the 2011 Plan, terminated the 2005 Plan and provided that no further stock awards were to be granted under the 2005 Plan. All outstanding stock awards under the 2005 Plan continue to be governed by their existing terms. Upon the effectiveness of the underwriting agreement in connection with the Company’s initial public offering (“IPO”), the Company terminated the 2011 Plan and all shares that were reserved under the 2011 Plan but not issued were assumed by the 2012 Plan. No further awards will be granted pursuant to the 2011 Plan. All outstanding stock awards under the 2011 Plan continue to be governed by their existing terms. Under the 2012 Plan, the Company has the ability to issue incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock units (“RSUs”), restricted stock awards (“RSAs”), performance units and performance shares. Additionally, the 2012 Plan provides for the grant of performance cash awards to employees, directors and consultants.

Stock Options

Stock options granted under the 2012 Plan are granted at a price per share not less than the fair value at date of grant. Options granted to date generally vest over a four-year period, on one of three schedules: (a) 25% vesting at the end of one year and the remaining shares vesting monthly thereafter; (b) 10% vesting over the first year, 20% vesting over the second year, 30% vesting over the third year and 40% vesting over the fourth year; or (c) ratably on a monthly basis. Options granted are generally exercisable for up to 10 years.

A summary of stock option activity for the three months ended March 31, 2016 is as follows:

	Options Outstanding
				Weighted-
				Average
			Weighted-	Remaining	Aggregate
			Average	Contractual	Intrinsic
	Number of		Exercise	Term (in	Value
	Shares		Price	years)	(in thousands)
Outstanding – January 1, 2016	8,206,356		20.93	6.44	$	92,454
Granted	836,268		22.32
Exercised	(126,700	)	8.17
Canceled	(59,959	)	38.73
Outstanding – March 31, 2016	8,855,965		21.13	6.55	$	38,683
Options vested and exercisable as of March 31, 2016	6,031,340		17.14	5.81	$	38,448

Aggregate intrinsic value represents the difference between the closing price of the Company’s Class A common stock and the exercise price of outstanding, in-the-money options. The total intrinsic value of options exercised was approximately $1.6 million and $10.2 million for the three months ended March 31, 2016 and 2015, respectively.

The weighted-average grant date fair value of options granted was $9.53 and $28.16 per share for the three months ended March 31, 2016 and 2015, respectively.

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As of March 31, 2016, total unrecognized compensation costs related to unvested stock options was approximately $34.6 million, which is expected to be recognized over a weighted-average time period of 1.8 years.

RSUs and RSAs

The cost of RSUs and RSAs is determined using the fair value of the Company’s common stock on the date of grant. RSUs and RSAs generally vest over a four-year period, on one of three schedules: (a) 25% vesting at the end of one year and the remaining vesting quarterly or annually thereafter; (b) 10% vesting over the first year, 20% vesting over the second year, 30% vesting over the third year and 40% vesting over the fourth year; or (c) ratably on a quarterly basis.

A summary of RSU and RSA activity for the three months ended March 31, 2016 is as follows:

	Restricted Stock Units				Restricted Stock Awards
			Weighted-
			Average				Weighted-
			Grant				Average Grant
	Number of		Date Fair		Number		Date Fair
	Shares		Value		of Shares		Value
Unvested—January 1, 2016	4,093,204		$	39.45	312		$	11.68
Granted	2,299,156			26.01	-			-
Released	(315,486	)		38.42	(312	)		11.68
Canceled	(253,364	)		32.23	-			-
Unvested—March 31, 2016	5,823,510		$	34.52	-		$	-

As of March 31, 2016, the Company had approximately $180.3 million of unrecognized stock-based compensation expense related to RSUs and RSAs, which will be recognized over the remaining weighted-average vesting period of approximately 3.29 years.

Employee Stock Purchase Plan

The ESPP allows eligible employees to purchase shares of the Company’s Class A common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations, during designated offering periods. At the end of each offering period that began prior to December 1, 2014, employees were able to purchase shares at 85% of the lower of the fair market value of the Company’s Class A common stock on the first trading day of the offering period or on the last day of the offering period. At the end of each offering period that began December 1, 2014 or later, employees are able to purchase shares at 85% of the fair market value of the Company’s Class A common stock on the last day of the offering period. There were no shares purchased by employees under the ESPP during the three months ended March 31, 2016 or 2015. The Company recognized $0.2 million and $1.4 million of stock-based compensation expense related to the ESPP during the three months ended March 31, 2016 and 2015, respectively.

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Stock-Based Compensation

The following table summarizes the effects of stock-based compensation expense related to stock-based awards in the consolidated statements of operations during the periods presented (in thousands):

	Three Months Ended
	March 31,
	2016		2015
Cost of revenue	$	401	$	124
Sales and marketing		6,342		4,937
Product development		8,030		5,105
General and administrative		4,337		3,505
Total stock-based compensation		19,110		13,671

The Company capitalized $0.8 million and $0.7 million of stock-based compensation expense as website development and internal-use software costs in the three months ended March 31, 2016 and 2015, respectively.

13. NET LOSS PER SHARE

Basic and diluted net loss per share attributable to common stockholders are presented in conformity with the “two-class method” required for participating securities. Shares of Class A and Class B common stock are the only outstanding equity in the Company. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share. Shares of Class B common stock may be converted into Class A common stock at any time at the option of the stockholder, and are automatically converted upon sale or transfer to Class A common stock, subject to certain limited exceptions, and in connection with certain other conversion events.

Basic net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed using the weighted-average number of shares of common stock and, if dilutive, potential shares of common stock outstanding during the period. The Company’s potential shares of common stock consist of the incremental shares of common stock issuable upon the exercise of stock options, shares issuable upon the vesting of RSUs and, to a lesser extent, unvested shares subject to RSAs and purchases related to the ESPP. The dilutive effect of these potential shares of common stock is reflected in diluted earnings per share by application of the treasury stock method. The computation of the diluted net loss per share of Class A common stock assumes the conversion of Class B common stock, while the diluted net loss per share of Class B common stock does not assume the conversion of Class B common stock.

The undistributed earnings are allocated based on the contractual participation rights of the Class A and Class B common stock as if the earnings for the year have been distributed. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis. Further, as the conversion of Class B common stock is assumed in the computation of the diluted net loss per share of Class A common stock, the undistributed earnings are equal to net loss for that computation.

The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):

	Three Months Ended March 31,
	2016						2015
	Class A			Class B			Class A			Class B
Net loss attributable to common stockholders	$	(13,656	)	$	(1,796	)	$	(1,115	)	$	(169	)
Basic Shares:
Weighted-average common shares outstanding		67,065			8,819			63,976			9,708
Diluted Shares:
Weighted-average shares used to compute diluted net loss per share		67,065			8,819			63,976			9,708
Net loss per share attributable to common stockholders
Basic:	$	(0.20	)	$	(0.20	)	$	(0.02	)	$	(0.02	)
Diluted:	$	(0.20	)	$	(0.20	)	$	(0.02	)	$	(0.02	)

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The following weighted-average stock-based instruments were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented (in thousands):

	Three Months Ended
	March 31,
	2016	2015
Stock options	8,856	8,921
Restricted stock units and awards	5,824	1,663
Contingently issuable shares	309	309
ESPP	-	81

14. INCOME TAXES

The Company is subject to income tax in the United States as well as other tax jurisdictions in which it conducts business. Earnings from non-U.S. activities are subject to local country income tax. The Company does not provide for federal income taxes on the undistributed earnings of its foreign subsidiaries as such earnings are to be reinvested indefinitely. The Company recorded an income tax provision of $1.4 million and an income tax benefit of $2.4 million for the three months ended March 31, 2016 and 2015, respectively. The tax provision for the three months ended March 31, 2016 is due to $1.5 million in U.S. federal and state and foreign income tax provision offset by discrete benefits of $0.1 million. The tax benefit for the three months ended March 31, 2015 is due to $2.0 million in U.S. federal and state and foreign income tax benefits and $0.4 million in discrete benefits.

The primary difference between the effective tax rate and the federal statutory tax rate relates to the valuation allowances on certain of the Company’s net operating losses, foreign tax rate differences, meals and entertainment, tax credits, and non-deductible stock-based compensation expense. As of March 31, 2016, the total amount of gross unrecognized tax benefits was $5.6 million, $4.7 million of which is subject to a full valuation allowance and would not affect the Company’s effective tax rate if recognized. As of March 31, 2016, the Company had an immaterial amount related to the accrual of interest and penalties. During the three months ended March 31, 2016, the Company’s gross unrecognized tax benefits increased by $0.6 million, an immaterial amount of which would affect the Company’s effective tax rate if recognized.

In addition, the Company is subject to the continuous examination of its income tax returns by the IRS and other tax authorities. The Company’s federal and state income tax returns for fiscal years 2004 through 2015 remain open to examination. In the Company’s most significant foreign jurisdictions — Ireland, United Kingdom and Germany — the open tax years range from 2010 to 2015. The Company regularly assesses the likelihood of adverse outcomes resulting from examinations to determine the adequacy of its provision for income taxes, and monitors the progress of ongoing discussions with tax authorities and the impact, if any, of the expected expiration of the statute of limitations in various taxing jurisdictions. The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. Although the timing of the resolution or closure of audits is not certain, the Company believes it is reasonably possible that its unrecognized tax benefits could be reduced by up to $0.2 million over the 12 months following December 31, 2015.

15. INFORMATION ABOUT REVENUE AND GEOGRAPHIC AREAS

The Company considers operating segments to be components of the Company in which separate financial information is available that is evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and in assessing performance. The chief operating decision maker for the Company is the Chief Executive Officer. The Chief Executive Officer reviews financial information presented on a consolidated basis, accompanied by information about revenue by product line and geographic region for purposes of allocating resources and evaluating financial performance.

The Company has one business activity and there are no segment managers who are held accountable for operations, operating results or plans for levels or components below the consolidated unit level. Accordingly, the Company has determined that it has a single operating and reporting segment.

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Net Revenue

The table below presents the Company’s net revenue by product line for the periods presented (in thousands). Revenue by geography is based on the billing address of the customer. During the three months ended June 30, 2015, the Company began reporting revenue for the transactions product line, which consists of Eat24, Platform transactions and the sale of Yelp Deals and Gift Certificates. The Company has presented transactions revenue separately in the tables and discussion for prior periods for purposes of comparison.

	Three Months Ended
	March 31,
	2016		2015
Net revenue by product:
Local	$	138,116	$	98,570
Transactions		14,499		6,606
Brand advertising		-		6,627
Other services		5,998		6,705
Total net revenue	$	158,613	$	118,508

During the three months ended March 31, 2016 and 2015, a substantial majority of the Company’s revenue was generated in the United States. In addition, no individual customer accounted for 10% or more of consolidated net revenue in any such period.

Long-Lived Assets

The following table presents the Company’s long-lived assets by geographic region for the periods indicated (in thousands):

	March 31,		December 31,
	2016		2015
United States	$	82,362	$	78,675
All other countries		2,414		5,493
Total	$	84,776	$	84,168

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ITEM 2.      MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs, and involve risks and uncertainties. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those discussed in the section titled “Risk Factors” included under Part II, Item 1A and elsewhere in this Quarterly Report. See “Special Note Regarding Forward-Looking Statements” in this Quarterly Report.

Overview

Yelp connects people with great local businesses by bringing “word of mouth” online and providing a platform for businesses and consumers to engage and transact. Our platform provides value to consumers and businesses alike by connecting consumers with great local businesses at the critical moment when they are deciding where to spend their money. Each day, millions of consumers use our platform to find and interact with local businesses, which in turn use our free and paid services to help them engage with consumers. The Yelp Platform, which allows consumers and businesses to transact directly on Yelp, provides consumers with a continuous experience from discovery to completion of transactions and local businesses with an additional point of consumer engagement.

Our success is primarily the result of significant investment in our communities, employees, content, brand and technology. We believe that continued investment in our business provides our largest opportunity for future growth and plan to continue to invest for long-term growth in our key strategies:

● Network Effect. We plan to invest in marketing and product development aimed at both attracting more, and increasing the engagement of, consumers as we look to leverage our brand and benefit from network dynamics in Yelp communities. In addition to continuing our efforts to raise brand awareness and expand our communities, we plan to explore new ways for contributors to share content and engage and transact on the Yelp Platform. For example, in the first quarter of 2016, we announced an integration with Microsoft’s Outlook.com to incorporate Yelp content directly into messages and meeting invitations. We believe that expanding our content and developing innovative features, while maintaining a great user experience, will attract new consumers as well as increase the number of visits and searches per user.
 

● Enhance Monetization. We plan to continue to invest in enhancing the opportunities in our local advertising business in the United States, which is our core strength. We will continue the expansion of the Yelp Platform, new business owner products and comprehensive tools to measure the effectiveness of our products, as well as our local business outreach. In January 2016, for example, we launched an improved version of our Revenue Estimator tool that provides business owners with additional options to tailor the results to their business. We also rolled out product updates in the first quarter to increase the prominence of opportunities to transact on the Yelp Platform, encouraging consumers to take that next step and transact with local businesses.

Our overall strategy is to invest for long-term growth. During the remainder of 2016, we expect to continue to invest heavily in our sales and marketing efforts, including growing our sales force to reach more businesses and continuing our advertising campaigns to raise brand awareness. As of March 31, 2016, we had 4,028 employees, which represents an increase of 29% compared to March 31, 2015.

Key Metrics

We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends in our business, prepare financial projections and make strategic decisions.

Reviews

Number of reviews represents the cumulative number of reviews submitted to Yelp since inception, as of the period end, including reviews that were not recommended or had been removed from our platform. In addition to the text of the review, each review includes a rating of one to five stars. We include reviews that are not recommended and that have been removed because all of them are either currently accessible on our platform or were accessible at some point in time, providing information that may be useful to users to evaluate businesses and individual reviewers. Because our automated recommendation software continually reassesses which reviews to recommend based on new information that becomes available, the “recommended” or “not recommended” status of reviews may change over time. Reviews that are not recommended or that have been removed do not factor into a business’s overall star rating. By clicking on a link on a reviewed business’s page on our website, users can access the reviews that are not currently recommended for the business, as well as the star rating and other information about reviews that were removed for violation of our terms of service.

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As of March 31, 2016, approximately 94.7 million reviews were available on business listing pages, including approximately 22.2 million reviews that were not recommended, and 6.9 million reviews had been removed from our platform, either by us for violation of our terms of service or by the users who contributed them. The following table presents the number of cumulative reviews as of the dates indicated:

	As of March 31,
	2016	2015
	(in thousands)
Reviews	101,564	77,346

Traffic

Traffic to our website and mobile app has three components: visitors to our non-mobile optimized website (our “desktop website”), visitors to our mobile-optimized website (our “mobile website”) and mobile devices accessing our mobile app. We use the following metrics to measure each of these traffic streams.

Desktop and Mobile Website Unique Visitors. We calculate desktop unique visitors as the number of “users,” as measured by Google Analytics, who have visited our desktop website at least once in a given month, averaged over a given three-month period. Similarly, we calculate mobile website unique visitors as the number of “users” who have visited our mobile website at least once in a given month, averaged over a given three-month period.

Google Analytics, a product from Google Inc. that provides digital marketing intelligence, measures “users” based on unique cookie identifiers. Because the numbers of desktop unique visitors and mobile website unique visitors are therefore based on unique cookies, an individual who accesses our desktop website or mobile website from multiple devices with different cookies may be counted as multiple desktop unique visitors or mobile website unique visitors, as applicable, and multiple individuals who access our desktop website or mobile website from a shared device with a single cookie may be counted as a single desktop unique visitor or mobile website unique visitor.

Unique App Devices. We calculate unique app devices as the number of unique mobile devices using our mobile app in a given month, averaged over a given three-month period. Under this method of calculation, an individual who accesses our mobile app from multiple mobile devices will be counted as multiple unique app devices. Multiple individuals who access our mobile app from a shared device will be counted as a single unique app device.

The following table presents our traffic for the periods indicated:

	Three Months Ended
	March 31,
	2016	2015
	(in thousands)
Desktop Unique Visitors	77,433	79,543
Mobile Website Unique Visitors	68,551	62,923
Unique App Devices	21,186	16,039

We anticipate that our mobile traffic will be the driver of our growth for the foreseeable future and that usage of our desktop website will continue to decline worldwide.

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Claimed Local Business Locations

The number of claimed local business locations represents the cumulative number of business locations that have been claimed on Yelp worldwide since 2008, as of a given date. We define a claimed local business location as each business address for which a business representative has visited our website and claimed the free business listing page for the business located at that address. The following table presents the number of cumulative claimed local business locations as of the dates presented:

	As of March 31,
	2016	2015
	(in thousands)
Claimed Local Business Locations	2,834	2,193

Local Advertising Accounts

Local advertising accounts comprise all local business accounts from which we recognize local revenue in a given three-month period. The following table presents the number of local advertising accounts during the periods presented:

	Three Months Ended
	March 31,
	2016	2015
	(in thousands)
Local Advertising Accounts	121	90

Non-GAAP Financial Measures

Our consolidated financial statements are prepared in accordance with GAAP. However, we have also disclosed below adjusted EBITDA and non-GAAP net income, which are non-GAAP financial measures. We have included adjusted EBITDA and non-GAAP net income because they are key measures used by our management and board of directors to understand and evaluate our operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating adjusted EBITDA and non-GAAP net income can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that adjusted EBITDA and non-GAAP net income provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

Adjusted EBITDA and non-GAAP net income have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. In particular, adjusted EBITDA and non-GAAP net income should not be viewed as substitutes 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 and non-GAAP net income do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
 

● adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
 

● adjusted EBITDA and non-GAAP net income do not consider the potentially dilutive impact of equity-based compensation;
 

● adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and
 

● other companies, including companies in our industry, may calculate adjusted EBITDA and non-GAAP net income differently, which reduces their usefulness as comparative measures.

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Because of these limitations, you should consider adjusted EBITDA and non-GAAP net income alongside other financial performance measures, including various cash flow metrics, net income (loss) and our other GAAP results. The tables below present reconciliations of adjusted EBITDA and non-GAAP net income to net income (loss), the most directly comparable GAAP financial measure in each case, for each of the periods indicated:

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we calculate as net loss, adjusted to exclude: provision (benefit) for income taxes; other income (expense), net; depreciation and amortization; stock-based compensation expense; and restructuring and integration costs. Adjusted EBITDA for the three months ended March 31, 2016 was $13.0 million. The following is a reconciliation of adjusted EBITDA to net loss:

	Three Months Ended,
	March 31,
	2016			2015
	(in thousands)
Reconciliation of adjusted EBITDA to GAAP Net loss:
Net loss	$	(15,452	)	$	(1,284	)
(Benefit) Provisions for income taxes		1,437			(2,403	)
Other (income) expense, net		(258	)		(562	)
Depreciation and amortization		8,189			6,895
Stock-based compensation		19,110			13,671
Adjusted EBITDA	$	13,026		$	16,317

Non-GAAP Net Income

Non-GAAP net income is a non-GAAP financial measure that we calculate as net loss, adjusted to exclude: stock-based compensation expense; amortization of intangibles; the tax effect of stock-based compensation and amortization of intangibles; and the release of valuation allowance (net of tax). Non-GAAP net income for the three months ended March 31, 2016 was $6.0 million. The following is a reconciliation of non-GAAP net income to net loss:

	Three Months Ended,
	March 31,
	2016			2015
	(in thousands)
Reconciliation of Non-GAAP Net Income to GAAP Net Loss:
GAAP net loss	$	(15,452	)	$	(1,284	)
Stock-based compensation		19,110			13,671
Amortization of intangible assets		1,712			1,231
Tax adjustments(1)		593			(5,716	)
Non-GAAP net income	$	5,963		$	7,902

(1)       Includes tax effects of stock-based compensation, amortization of intangibles, and valuation allowance.

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Results of Operations

The following table sets forth our results of operations for the periods presented as a percentage of net revenue for those periods. The period-to-period comparison of financial results is not necessarily indicative of the results of operations to be anticipated for the full year 2016 or any future period.

	Three Months Ended
	March 31,
	2016		2015
	(as percentage of net revenue)
Consolidated Statements of Operations Data:
Net revenue by product
Local	87	%	83	%
Transactions	9	%	5	%
Brand advertising	-		6	%
Other services	4	%	6	%
Total net revenue	100	%	100	%
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below)	10	%	7	%
Sales and marketing	60	%	53	%
Product development	20	%	20	%
General and administrative	14	%	17	%
Depreciation and amortization	5	%	6	%
Total costs and expenses	109	%	104	%
Income (Loss) from operations	(9	%)	(4	%)
Other income (expense), net	-		-
Income (Loss) before income taxes	(9	%)	(3	%)
Benefit (Provision) for income taxes	(1	%)	2	%
Net loss	(10	%)	(1	%)

Three Months Ended March 31, 2016 and 2015

Net Revenue

We generate revenue from our local products, transactions, other services and, through the end of 2015, brand advertising.

Local. We generate local revenue from our local advertising programs, including enhanced listing pages and performance and impression-based advertising in search results and elsewhere on our website and mobile app. We also generate local revenue from our SeatMe reservation product, a monthly subscription service.

Transactions. We generate revenue from various transactions with consumers, including through Eat24, Platform transactions and the sale of Yelp Deals and Gift Certificates. Our Eat24 business generates revenue through arrangements with restaurants, in which restaurants pay a commission percentage fee on orders placed through Eat24’s platform. We record revenue associated with Eat24’s transactions on a net basis. Our Platform partnerships are revenue-sharing arrangements that provide consumers with the ability to complete food delivery transactions, order flowers and book spa and salon appointments, among other products and services, through third parties directly on Yelp. We earn a fee on our Platform partnerships for acting as an agent for these transactions, which we record on a net basis and include in revenue upon completion of a transaction. Yelp Deals allow merchants to promote themselves and offer discounted goods and services on a real-time basis to consumers directly on our website and mobile app. We earn a fee on Yelp Deals for acting as an agent in these transactions, which we record on a net basis and include in revenue upon a consumer’s purchase of a deal. Gift Certificates allow merchants to sell full-priced gift certificates directly to consumers through their business listing pages. We earn a fee based on the amount of the Gift Certificate sold, which we record on a net basis and include in revenue upon a consumer’s purchase of the Gift Certificate.

Prior to the three months ended June 30, 2015, we included revenue from transactions with other services revenue; however, we have presented transactions revenue for earlier periods separately in the tables and discussion below for purposes of comparison.

Brand Advertising. Through the end of 2015, we generated revenue from brand advertising through the sale of display advertisements and brand sponsorships to national brands. We phased out these products to focus on our core strength of local advertising.

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Other Services. We generate revenue through partner arrangements and monetization of remnant advertising inventory through third-party ad networks. Our partner arrangements include allowing third-party data providers to update business listing information on behalf of businesses and resale of our local advertising products by certain partners.

The following table provides a breakdown of our net revenue for the periods indicated.

						2015 to
	Three Months Ended					2016 %
	March 31,					Change
	2016			2015
	(dollars in thousands)
Net revenue by product:
Local	$	138,116		$	98,570	40	%
Transactions		14,499			6,606	119	%
Brand advertising		-			6,627	(100	%)
Other services		5,998			6,705	(11	%)
Total net revenue	$	158,613		$	118,508	34	%
Percentage of total net revenue by product:
Local		87	%		83%
Transactions		9	%		5%
Brand advertising		-			6%
Other services		4	%		6%
Total net revenue		100	%		100%

Total net revenue increased $40.1 million, or 34%, in the three months ended March 31, 2016 compared to the three months ended March 31, 2015.

Local revenue increased $39.5 million, or 40%, in the three months ended March 31, 2016 compared to the three months ended March 31, 2015. The increase was primarily due to a significant increase in the number of customers purchasing local advertising plans as we expanded our sales force to reach more local businesses. This growth was driven primarily by purchases of cost-per-click advertising in 2016. In the three months ended March 31, 2016, 63% of ad clicks were delivered on mobile.

Our transactions revenue increased $7.9 million, or 119%, in the three months ended March 31, 2016 compared to the three months ended March 31, 2015. The increase was primarily the result of revenue from Eat24, which we acquired in February 2015.

As of the beginning of 2016, we no longer offer brand advertising products. As a result, we generated no brand advertising revenue in the three months ended March 31, 2016, a decrease of $6.6 million from the same period in 2015.

Our other services revenue decreased $0.7 million, or 11%, in the three months ended March 31, 2016 compared to the three months ended March 31, 2015. This was primarily the result of decreased partnership activity in the three months ended March 31, 2016 compared to the same period in 2015.

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Cost of Revenue

Our cost of revenue consists primarily of web hosting costs and credit card processing fees, as well as salaries, benefits and stock-based compensation expense for our infrastructure teams related to the operation of our website and mobile app. It also includes costs associated with video production for our local advertisers as well as confirmation and delivery services associated with Eat24.

	Three Months Ended
	March 31,						2015 to
	2016			2015			2016 % Change
	(dollars in thousands)
Cost of revenue	$	15,078		$	8,699		73	%
Percentage of net revenue		10	%		7	%

Cost of revenue increased $6.4 million, or 73%, in the three months ended March 31, 2016 compared to the three months ended March 31, 2015. The increase was primarily attributable to an increase of $2.6 million in outside hosting and Internet service fees, which are necessary to support the increase in visitors to our website and transactions completed on our website. Set up and creative design costs, consisting primarily of video production costs, increased by $0.7 million due to greater demand by local businesses for video on their business listing pages. We also added personnel to support our website infrastructure resulting in an increase of $0.6 million. In addition, merchant fees related to credit card transactions increased by $1.9 million primarily due to growth in local advertising and transactions revenue. Cost of revenue also increased by $0.6 million in the three months ended March 31, 2016 as a result of increased confirmation and delivery services costs associated with Eat24.

Sales and Marketing

Our sales and marketing expenses primarily consist of salaries, benefits, travel expense and incentive compensation expense, including stock-based compensation expense, for our sales and marketing employees. In addition, sales and marketing expenses include business and consumer acquisition marketing, community management, branding and advertising costs, as well as allocated facilities, insurance, business taxes and other supporting overhead costs. Historically we have focused on organic and viral growth driven by the community development efforts of our community management team, which is responsible for growing and fostering local communities, as well as coordinating events to raise awareness of our brand. As a result, we historically incurred minimal sales and marketing expenses to increase consumer awareness of Yelp. While community development continues to be our primary marketing strategy, in the second half of 2014, we began selectively testing advertising to consumers and launched our first television advertising campaign in 2015. We plan to continue investing in various advertising channels in 2016.

We expect our community management costs to increase as we continue to expand our communities. We expect our sales and marketing expenses to increase as we develop our communities, increase the number of local advertising accounts and continue to build our brand. The majority of these expenses will be related to hiring sales employees and Community Managers, as well as costs incurred with various third-party media outlets and other advertising channels. We expect sales and marketing expenses to increase and to be our largest expense for the foreseeable future.

	Three Months Ended
	March 31,						2015 to
	2016			2015			2016 % Change
	(dollars in thousands)
Sales and marketing	$	95,628		$	63,266		51	%
Percentage of net revenue		60	%		53	%

Sales and marketing expenses increased $32.4 million, or 51%, in the three months ended March 31, 2016 compared to the three months ended March 31, 2015. The increase was primarily attributable to $15.6 million in additional salaries, benefits, travel and other related expenses resulting from increased headcount, including an increase of $1.4 million in stock-based compensation expense, as we expanded our sales organization to take advantage of the market opportunity created by increased recognition of the value of our advertising products and increased use of our free online business accounts. As a result of our increase in net revenue, our commission expenses increased $5.7 million. In addition, we experienced an increase in facilities, insurance, business taxes and other related allocations of $2.6 million. As a result of ongoing marketing campaigns, domestic and international marketing and advertising costs increased by $8.5 million.

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Product Development

Our product development expenses primarily consist of salaries (including employer payroll taxes), various benefits, travel expense and stock-based compensation expense for our engineers, product management and information technology personnel. Product development expenses also include outside services and consulting, allocated facilities, insurance, business taxes and other supporting overhead costs. We believe that continued investment in features, software development tools and code modification is important to attaining our strategic objectives and, as a result, we expect product development expenses to increase for the foreseeable future.

	Three Months Ended
	March 31,						2015 to
	2016			2015			2016 % Change
	(dollars in thousands)
Product development	$	32,222		$	23,960		34	%
Percentage of net revenue		20	%		20	%

Product development expenses increased $8.3 million, or 34%, in the three months ended March 31, 2016 compared to the three months ended March 31, 2015. The increase was primarily attributable to $8.6 million in additional salaries, benefits, travel and related expenses associated with an increase in headcount, including an increase of $2.9 million in stock-based compensation expense. In addition, we experienced an increase in facilities, insurance, business taxes and other related allocations of $0.4 million as a result of the increase in headcount. These increases were partially offset by a decrease in consulting costs of $0.7 million due to decreased reliance on outside consultants.

General and Administrative

Our general and administrative expenses primarily consist of salaries (including employer payroll taxes), various benefits, travel expense and stock-based compensation expense for our executive, finance, user operations, legal, human resources and other administrative employees. Our general and administrative expenses also include outside consulting, legal and accounting services, as well as facilities, insurance, business taxes and other supporting overhead costs not allocated to other departments. We expect our general and administrative expenses to increase for the foreseeable future as we continue to expand our business.

	Three Months Ended
	March 31,						2015 to
	2016			2015			2016 % Change
	(dollars in thousands)
General and administrative	$	21,769		$	19,937		9	%
Percentage of net revenue		14	%		17	%

General and administrative expenses increased $1.8 million, or 9%, in the three months ended March 31, 2016 compared to the three months ended March 31, 2015. The increase was primarily attributable to $2.4 million in additional salaries resulting from increased headcount, including an increase of $0.8 million in stock-based compensation expense, as well as an increase in facilities, insurance, business taxes and other related allocations of $0.3 million. These increases were partially offset by a decrease in consulting costs of $0.5 million and a decrease in bad debt expense of $0.4 million.

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Depreciation and Amortization

Depreciation and amortization expenses primarily consist of depreciation on computer equipment, software, leasehold improvements, capitalized website and software development costs and amortization of purchased intangible assets. We expect depreciation and amortization expenses to increase for the foreseeable future as we continue to expand our technology infrastructure.

	Three Months Ended
	March 31,						2015 to
	2016			2015			2016 % Change
	(dollars in thousands)
Depreciation and amortization	$	8,189		$	6,895		19	%
Percentage of net revenue		5	%		6	%

Depreciation and amortization expenses increased $1.3 million, or 19%, in the three months ended March 31, 2016 compared to the three months ended March 31, 2015. The increase was primarily the result of our investments in expanding our technology infrastructure and capital assets to support our increase in headcount across the organization. Depreciation and amortization expenses related to our fixed assets and capitalized website and software development costs increased $0.8 million. In addition, amortization related to our intangibles increased by $0.5 million primarily due to the intangibles acquired in the Eat24 acquisition.

Other Income (Expense), Net

Other income (expense), net consists primarily of the interest income earned on our cash, cash equivalents and marketable securities, gains and losses on the disposal of assets and foreign exchange gains and losses.

	Three Months Ended
	March 31,						2015 to
	2016			2015			2016 % of Change
	(dollars in thousands)
Net interest income	$	311		$	132		136	%
Transaction gain (loss) on foreign exchange		66			(171	)	(139	%)
Other non-operating income (loss), net		(119	)		601		(120	%)
Other income (expense), net	$	258		$	562		(54	%)

In the three months ended March 31, 2016, other income (expense), net decreased by $0.3 million compared to the three months ended March 31, 2015. The decrease in other non-operating income (loss) was primarily driven by the release of cash in escrow relating to our acquisition of Qype GmbH in the three months ended March 31, 2015. This decrease was offset by an increase in interest income related to marketable securities as well as an increase in foreign exchange gain due to favorable foreign exchange rate movements.

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Benefit (Provision) for Income Taxes

Benefit (provision) for income taxes consists of federal and state income taxes in the United States and income taxes in certain foreign jurisdictions, deferred income taxes reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and the realization of net operating loss carryforwards.

	Three Months Ended
	March 31,						2015 to
	2016			2015			2016 % Change
	(dollars in thousands)
Benefit (Provision) from income taxes	$	(1,437	)	$	2,403		160	%
Percentage of net revenue		(1	%)		2	%

In the three months ended March 31, 2016, we recognized tax expense of $1.4 million that primarily consisted of U.S. federal, state and local income tax benefits on a year-to-date pre-tax loss, as well as discrete benefits related to disqualifying dispositions of incentive stock options and shares purchased under our 2012 Employee Stock Purchase Plan (“ESPP”).

Liquidity and Capital Resources

As of March 31, 2016, we had cash and cash equivalents of $183.5 million. Cash and cash equivalents consist of both cash and money market funds. Our cash held internationally as of March 31, 2016 was $4.9 million. We did not have any outstanding bank loans or credit facilities in place as of March 31, 2016. Our investment portfolio is comprised of highly rated marketable securities, and our investment policy limits the amount of credit exposure to any one issuer. The policy generally requires securities to be investment grade (i.e. rated ‘A’ or higher by bond rating firms) with the objective of minimizing the potential risk of principal loss. To date, we have been able to finance our operations and our acquisitions through proceeds from private and public financings, including our initial public offering in March 2012, our follow-on offering in October 2013, cash generated from operations and, to a lesser extent, cash provided by the exercise of employee stock options and purchases under our ESPP.

Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth under “Risk Factors” in this Quarterly Report. We believe that our existing cash and cash equivalents, together with any cash generated from operations, will be sufficient to meet our working capital requirements and anticipated purchases of property and equipment for at least the next 12 months. However, this estimate is based on a number of assumptions that may prove to be wrong and we could exhaust our available cash and cash equivalents earlier than presently anticipated. We may require or otherwise seek additional funds in the next 12 months to respond to business challenges, including the need to develop new features and products or enhance existing services, improve our operating infrastructure or acquire complementary businesses and technologies, and, accordingly, we may need to engage in equity or debt financings to secure additional funds.

Amounts deposited with third-party financial institutions exceed the Federal Deposit Insurance Corporation and Securities Investor Protection Corporation insurance limits, as applicable. These cash and cash equivalents could be impacted if the underlying financial institutions fail or are subjected to other adverse conditions in the financial markets. To date, we have experienced no loss or lack of access to our cash and cash equivalents; however, we can provide no assurances that access to our invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

Cash Flows

The following table summarizes our cash flows for the periods indicated:

	March 31,
	2016			2015
	(dollars in thousands)
Consolidated Statements of Cash Flows Data:
Purchases of property and equipment and software	$	7,645		$	10,881
Depreciation and amortization		8,189			6,895
Cash provided by operating activities		23,879			25,635
Cash used in investing activities		(13,191	)		(103,715	)
Cash provided by financing activities		1,045			4,045

Operating Activities. We generated $23.9 million of cash in operating activities in the three months ended March 31, 2016, primarily resulting from our net loss of $15.5 million, which included non-cash depreciation and amortization expenses of $8.2 million, non-cash stock-based compensation expense of $19.1 million and non-cash provision for doubtful accounts and sales returns of $5.1 million. In addition, significant changes in our operating assets and liabilities resulted from the following:

● increase in accounts receivable of $5.2 million due to an increase in billings for local advertising plans, as well as the timing of payments from these customers;
 

● increase in accounts payable, accrued expenses and other liabilities of $8.8 million related to the growth in our business, increase in Eat24 restaurant payable, accrued vacation and employee-related expenses, and the timing of invoices and payments to vendors; and
 

● decrease in prepaids and other assets of $2.9 million primarily due to the collection of non-trade receivables of $5.6 million, offset by a $2.7 million increase in prepayments (primarily for marketing and business licenses).

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We generated $25.6 million of cash in operating activities in the three months ended March 31, 2015, primarily resulting from our net loss of $1.3 million, which included non-cash depreciation and amortization of $6.9 million, non-cash stock-based compensation expense of $13.7 million, and non-cash provision for doubtful accounts of $3.4 million. In addition, significant changes in our operating assets and liabilities resulted from the following:

● increase in accounts receivable of $2.9 million due to an increase in billings for local advertising plans, as well as the timing of payments from these customers;
 

● increase in accounts payable, accrued expenses and other liabilities of $12.0 million related to the growth in our business, increase in accrued vacation and employee-related expenses, and the timing of invoices and payments to vendors; and
 

● increase in prepaids and other assets of $6.0 million relating to the increase in prepaid licenses and deferred tax benefits.

Investing Activities. Our primary investing activities in the three months ended March 31, 2016 consisted of purchases of marketable securities, purchases of property and equipment to support the ongoing build out of our leasehold improvements for our new facilities in San Francisco and other locations, the purchase of technology hardware to support our growth in headcount and software to support website and mobile app development, website operations and our corporate infrastructure. Purchases of property and equipment, as well as leasehold improvements, may vary from period to period due to the timing of the expansion of our offices, operations and website and internal-use software and development. We expect to continue to invest in property and equipment, leaseholds and the development of software during the remainder of 2016.

We used $13.2 million of cash in investing activities during the three months ended March 31, 2016. Cash used in investing activities primarily related to purchases of marketable securities of $92.1 million, an increase in expenditures related to website and internally developed software of $3.1 million and purchases of property, equipment, software and leasehold improvements of $7.6 million to support the growth in our business. In addition, as part of our lease agreements for additional office space, we were obligated to deliver additional letters of credit, which resulted in an increase of $0.8 million in restricted cash. Cash used in investing was offset by $90.5 million of maturities of investment securities held-to-maturity.

We used $103.7 million of cash in investing activities during the three months ended March 31, 2015. Cash used in investing activities primarily related to the $71.5 million cash purchase price of Eat24, purchases of marketable securities of $36.1 million, an increase in expenditures related to website and internally developed software of $3.2 million, purchases of intangible data licenses of $0.3 million and purchases of property, equipment, software and leasehold improvements of $10.9 million to support our growth in the business. Cash used in investing was offset by $18.3 million of maturities of investment securities held-to-maturity.

Financing Activities. During the three months ended March 31, 2016, we generated $1.0 million in financing activities from the issuance of common stock upon the exercise of stock options.

During the three months ended March 31, 2015, we generated $4.0 million in financing activities, primarily due to net proceeds from the issuance of common stock upon the exercise of stock options.

Off Balance Sheet Arrangements

We did not have any off balance sheet arrangements in 2015 or in the first three months of 2016.

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Contractual Obligations

We lease various office facilities, including our corporate headquarters in San Francisco, California, under operating lease agreements that expire from 2016 to 2025. The terms of the lease agreements provide for rental payments on a graduated basis. We recognize rent expense on a straight-line basis over the lease periods. We do not have any debt or material capital lease obligations, and all of our property, equipment and software have been purchased with cash. As of March 31, 2016, we had no material long-term purchase obligations outstanding with vendors or third parties other than obligations related to the fit out of certain leasehold properties. As of March 31, 2016, the following table summarizes our future minimum payments under non-cancelable operating leases for equipment and office facilities:

	Payments Due by Period
	Total		Less Than 1 Year		1 – 3 Years		3 – 5 Years		More Than 5 Years
	(in thousands)
Operating lease obligations	$	330,865	$	37,304	$	129,543	$	78,723	$	85,295
Purchase obligations	$	6,519	$	6,179	$	340	$	-	$	-

The contractual commitment amounts in the table above are associated with binding agreements and do not include obligations under contracts that we can cancel without a significant penalty. In addition, as of March 31, 2016, our total liability for uncertain tax positions was $0.6 million of the total unrecognized benefit of $5.6 million. We are not reasonably able to estimate the timing of future cash flow related to this liability. As a result, this amount is not included in the contractual obligations table above.

We have subleased certain office facilities under operating lease agreements that expire in 2021. The terms of these lease agreements provide for rental receipts on a graduated basis. We recognize sublease rentals on a straight-line basis over the lease periods reflected as a reduction in rental expense. As of March 31, 2016, our future minimum rental receipts to be received under non-cancelable subleases was $9.7 million.

ITEM3. QUANTITATIVEANDQUALITATIVEDISCLOSURESABOUTMARKETRISK

We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of business. These risks include primarily interest rate, foreign exchange risks and inflation.

Interest Rate Fluctuation

The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk.

Our cash and cash equivalents consist of cash and money market funds. We do not have any long-term borrowings. Because our cash and cash equivalents have a relatively short maturity, their fair value is relatively insensitive to interest rate changes. We believe a hypothetical 10% increase in the interest rates as of March 31, 2016 would not have a material impact on our cash and cash equivalents portfolio.

Our marketable securities are comprised of fixed-rate debt securities issued by U.S. corporations, U.S. government agencies and the U.S. Treasury; as such, their fair value may be affected by fluctuations in interest rates in the broader economy. As we have both the ability and intent to hold these securities to maturity, such fluctuations would have no impact on our results of operations.

Foreign Currency Exchange Risk

We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar, principally in the British pound sterling and the Euro. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. Although we have experienced and will continue to experience fluctuations in net income (loss) as a result of transaction gains (losses), net related to revaluing certain cash balances, trade accounts receivable balances and intercompany balances that are denominated in currencies other than the U.S. dollar, we believe a hypothetical 10% strengthening/(weakening) of the U.S. dollar against the British pound sterling, either alone or in combination with a hypothetical 10% strengthening/(weakening) of the U.S. dollar against the Euro, would not have a material impact on our results of operations. In the event our foreign sales and expenses increase as a proportion of our overall sales and expenses, our operating results may be more greatly affected by fluctuations in the exchange rates of the currencies in which we do business. At this time, we do not enter into derivatives or other financial instruments in an attempt to hedge our foreign currency exchange risk, though we may in the future. It is difficult to predict the impact hedging activities would have on our results of operations.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition or results of operations.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2016. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2016, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended March 31, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and our Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by the collusion of two or more people or by management override of controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PARTII. OTHERINFORMATION

ITEM1. LEGALPROCEEDINGS

In August 2014, two putative class action lawsuits alleging violations of federal securities laws were filed in the U.S. District Court for the Northern District of California, naming as defendants us and certain of our officers. The lawsuits allege violations of the Exchange Act by us and our officers for allegedly making materially false and misleading statements regarding our business and operations between October 29, 2013 and April 3, 2014. These cases were subsequently consolidated and, in January 2015, the plaintiffs filed a consolidated complaint seeking unspecified monetary damages and other relief. Following the court’s dismissal of the consolidated complaint on April 21, 2015, the plaintiffs filed a first amended complaint on May 21, 2015. On November 24, 2015, the court dismissed the first amended complaint with prejudice, and entered judgment in our favor on December 28, 2015. The plaintiffs have appealed this judgment to the U.S. Court of Appeals for the Ninth Circuit.

On April 23, 2015, a putative class action lawsuit was filed by former Eat24 employees in the Superior Court of California for San Francisco County, naming as defendants us and Eat24. The lawsuit asserts that we failed to permit meal and rest periods for certain current and former employees working as Eat24 customer support specialists, and alleges violations of the California Labor Code, applicable Industrial Welfare Commission Wage Orders and the California Business and Professions Code. The plaintiffs seek monetary damages in an unspecified amount and injunctive relief. On May 29, 2015, plaintiffs filed a first amended complaint asserting an additional cause of action for penalties under the Private Attorneys General Act. In January 2016, we reached a preliminary agreement to settle this matter for payments in the aggregate amount of up to approximately $0.6 million. Once finalized, the settlement will be subject to court approval.

On June 24, 2015, a former Eat24 sales employee filed a lawsuit, on behalf of herself and a putative class of current and former Eat24 sales employees, against Eat24 in the Superior Court of California for San Francisco County. The lawsuit alleges that Eat24 failed to pay required wages, including overtime wages, allow meal and rest periods and maintain proper records, and asserts causes of action under the California Labor Code, applicable Industrial Welfare Commission Wage Orders and the California Business and Professions Code. The plaintiff seeks monetary damages and penalties in unspecified amounts, as well as injunctive relief. On August 3, 2015, the plaintiff filed a first amended complaint asserting an additional cause of action for penalties under the Private Attorneys General Act. In January 2016, we reached a preliminary agreement to settle this matter for payments in the aggregate amount of up to approximately $0.2 million. Once finalized, the settlement will be subject to court approval.

In addition, we are subject to legal proceedings arising in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently do not believe that the final outcome of any of these matters will have a material adverse effect on our business, financial position, results of operations or cash flows.

ITEM1A. RISKFACTORS

Our operations and financial results are subject to various risks and uncertainties, including those described below, which could adversely affect our business, financial condition, results of operations, cash flows and the trading price of our Class A common stock. You should carefully consider the risks and uncertainties described below before making an investment decision.

We have marked with an asterisk (*) those risks described below that reflect substantive changes from the risks described in our Annual Report on Form 10-K for the year ended December 31, 2015.

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Risks Related to Our Business and Industry

*If we are unable to increase traffic to our mobile app and website, or user engagement on our platform declines, our revenue, business and operating results may be harmed.

We derive substantially all of our revenue from the sale of impression- and click-based advertising. Because traffic to our platform determines the number of ads we are able to show, affects the value of those ads to businesses and influences the content creation that drives further traffic, slower traffic growth rates may harm our business and financial results. As a result, our ability to grow our business depends on our ability to increase traffic to and user engagement on our platform. Our traffic could be adversely affected by factors including:

● Reliance on Internet Search Engines. As discussed in greater detail below, we rely on Internet search engines to drive traffic to our platform, including our mobile app. However, the display, including rankings, of unpaid search results can be affected by a number of factors, many of which are not in our direct control, and may change frequently. For example, a search engine may change its ranking algorithms, methodologies or design layouts. As a result, links to our platform may not be prominent enough to drive traffic to our platform, and we may not be in a position to influence the results. Although Internet search engine results have allowed us to attract a large audience with low organic traffic acquisition costs to date, if they fail to drive sufficient traffic to our platform in the future, we may need to increase our marketing expenses, which could harm our operating results.
 

● Increasing Competition. The market for information regarding local businesses is intensely competitive and rapidly changing. If the popularity, usefulness, ease of use, performance and reliability of our products and services do not compare favorably to those of our competitors, traffic may decline.
 

● Review Concentration. Our restaurant and shopping categories together accounted for approximately 40% of the businesses that had been reviewed on our platform and approximately 57% of the cumulative reviews as of March 31, 2016. If the high concentration of reviews in these categories generates a perception that our platform is primarily limited to these categories, traffic may not increase or may decline.
 

● Our Recommendation Software. If our automated software does not recommend helpful content or recommends unhelpful content, consumers may reduce or stop their use of our platform. While we have designed our technology to avoid recommending content that we believe to be unreliable or otherwise unhelpful, we cannot guarantee that our efforts will be successful.
 

● Content Scraping. From time to time, other companies copy information from our platform without our permission, through website scraping, robots or other means, and publish or aggregate it with other information for their own benefit. This may make them more competitive and may decrease the likelihood that consumers will visit our platform to find the local businesses and information they seek. Though we strive to detect and prevent this third-party conduct, we may not be able to detect it in a timely manner and, even if we could, may not be able to prevent it. In some cases, particularly in the case of third parties operating outside of the United States, our available remedies may be inadequate to protect us against such conduct.
 

● Macroeconomic Conditions. Consumer purchases of discretionary items generally decline during recessions and other periods in which disposable income is adversely affected. As a result, adverse economic conditions may impact consumer spending, particularly with respect to local businesses, which in turn could adversely impact the number of consumers visiting our platform.
 

● Internet Access. The adoption of any laws or regulations that adversely affect the growth, popularity or use of the Internet, including laws impacting Internet neutrality, could decrease the demand for our services. Similarly, any actions by companies that provide Internet access that degrade, disrupt or increase the cost of user access to our platform could undermine our operations and result in the loss of traffic.

We also anticipate that our traffic growth rate will continue to slow over time, and potentially decrease in certain periods, as our business matures and we achieve higher penetration rates. In particular, the number of major geographic markets, especially within the United States, that we have not yet entered is declining; further expansion in smaller markets may not yield similar results or sustain our growth. That our traffic growth has slowed in recent quarters even as we have expanded our operations is a reflection of this trend. As our traffic growth rate slows, our success will become increasingly dependent on our ability to increase levels of user engagement on our platform. This dependence may increase as the portion of our revenue derived from performance-based advertising increases. A number of factors may negatively affect our user engagement, including if:

● users engage with other products, services or activities as an alternative to our platform;
 

● there is a decrease in the perceived quality of the content contributed by our users;
 

● we fail to introduce new and improved products or features, or we introduce new products or features that do not effectively address consumer needs or otherwise alienate consumers;
 

● technical or other problems negatively impact the availability and reliability of our platform or otherwise affect the user experience;
 

● users have difficulty installing, updating or otherwise accessing our platform as a result of actions by us or third parties that we rely on to distribute our products;
 

● users believe that their experience is diminished as a result of the decisions we make with respect to the frequency, relevance and prominence of the advertising we display; and
 

● we do not maintain our brand image or our reputation is damaged.

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*Consumers are increasingly using mobile devices to access online services. If our mobile platform and mobile advertising products are not compelling, or if we are unable to operate effectively on mobile devices, our business could be adversely affected.

The number of people who access information about local businesses through mobile devices, including smartphones, tablets and handheld computers, has increased dramatically over the past few years and is expected to continue to increase. Although many consumers access our platform both on their mobile devices and through personal computers, we have seen substantial growth in mobile usage. We anticipate that growth in use of our mobile platform will be the driver of our growth for the foreseeable future and that usage through personal computers may continue to decline worldwide. As a result, we must continue to drive adoption of and user engagement on our mobile platform, and our mobile app in particular. If we are unable to drive continued adoption of and engagement on our mobile app, our business may be harmed and we may be unable to decrease our reliance on traffic from Google and other search engines.

In order to attract and retain engaged users of our mobile platform, the mobile products and services we introduce must be compelling. However, the ways in which users engage with our platform and consume content has changed over time, and we expect it will continue to do so as users increasingly engage via mobile. This may make it more difficult to develop mobile products that consumers find useful or provide them with the information they seek, and may also negatively affect our content if users do not continue to contribute high quality content on their mobile devices. In addition, building an engaged base of mobile users may also be complicated by the frequency with which users change or upgrade their mobile services. In the event users choose mobile devices that do not already include or support our mobile app or do not install our mobile app when they change or upgrade their devices, our traffic and user engagement may be harmed.

Our success is also dependent on the interoperability of our mobile products with a range of mobile technologies, systems, networks and standards that we do not control, such as mobile operating systems like Android and iOS. We may not be successful in developing products that operate effectively with these technologies, systems, networks and standards or in creating, maintaining and developing relationships with key participants in the mobile industry, some of which may be our competitors. Any changes that degrade the functionality of our mobile products, give preferential treatment to competitive products or prevent us from delivering advertising could adversely affect mobile usage and monetization. As new mobile devices and platforms are released, it is difficult to predict the problems we may encounter in developing products for these alternative devices and platforms, and we may need to devote significant resources to the creation, support and maintenance of such products. If we experience difficulties in the future integrating our mobile app into mobile devices, or we face increased costs to distribute our mobile app, our user growth and operating results could be harmed.

In addition, the mobile market remains a rapidly evolving market with which we have limited experience. As new devices and platforms are released, users may begin consuming content in a manner that is more difficult to monetize. Similarly, as mobile advertising products develop, demand may increase for products that we do not offer or that may alienate our user base. Although we currently deliver ads on both our mobile app and mobile website, with 63% of ad clicks delivered on mobile in the three months ended March 31, 2016, our continued success depends on our efforts to innovate and introduce enhanced mobile solutions. If our efforts to develop compelling mobile advertising products are not successful — as a result of, for example, the difficulties detailed above — advertisers may stop or reduce their advertising with us. At the same time, we must balance advertiser demands against our commitment to prioritizing the quality of user experience over short-term monetization. For example, we phased out our brand advertising products in part because demand in the brand advertising market has shifted toward products disruptive to the consumer experience, such as video ads. If we are not able to balance these competing considerations successfully, we may not be able to generate meaningful revenue from our mobile products despite the expected growth in mobile usage.

*We rely on Internet search engines and application marketplaces to drive traffic to our platform, certain providers of which offer products and services that compete directly with our products. If links to our applications and website are not displayed prominently, traffic to our platform could decline and our business would be adversely affected.

Our success depends in part on our ability to attract users through unpaid Internet search results on search engines like Google and Bing. The number of users we attract from search engines to our website (including our mobile website) is due in large part to how and where information from and links to our website are displayed on search engine result pages. The display, including rankings, of unpaid search results can be affected by a number of factors, many of which are not in our direct control, and may change frequently. For example, a search engine may change its ranking algorithms, methodologies or design layouts. As a result, links to our platform may not be prominent enough to drive traffic to our platform, and we may not know how or otherwise be in a position to influence the results. In 2014, for example, Google made changes to its algorithms and methodologies that may be contributing to the slowing of our traffic growth rate and the decline in traffic in the fourth quarter of 2014. Google also recently announced that, beginning in the fourth quarter of 2015, the rankings of sites showing certain types of app install interstitials could be penalized on its mobile search results pages. While we believe the type of interstitial we currently use will not be penalized, the parameters of Google’s policy may change from time to time, be poorly defined and inconsistently interpreted. As a result, Google may unexpectedly penalize our app install interstitials, which may cause links to our mobile website to be featured less prominently in Google’s mobile search results page, and traffic to both our mobile website and mobile app may be harmed as a result. We cannot predict the long-term impact of these changes.

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Although traffic to our mobile app is less reliant on search results than traffic to our website, growth in mobile device usage may not decrease our overall reliance on search results if mobile users use our mobile website rather than our mobile app. In fact, consumers’ increasing use of mobile devices may exacerbate the risks associated with how and where our website is displayed in search results because mobile device screens are smaller than personal computer screens and therefore display fewer search results.

We also rely on application marketplaces, such as Apple’s App Store and Google’s Play, to drive downloads of our applications. In the future, Apple, Google or other marketplace operators may make changes to their marketplaces that make access to our products more difficult. For example, our applications may receive unfavorable treatment compared to the promotion and placement of competing applications, such as the order in which they appear within marketplaces. Similarly, if problems arise in our relationships with providers of application marketplaces, our user growth could be harmed.

In some instances, search engine companies and application marketplaces may change their displays or rankings in order to promote their own competing products or services or the products or services of one or more of our competitors. For example, Google has integrated its local product offering, Google + Local, with certain of its products, including search. The resulting promotion of Google’s own competing products in its web search results has negatively impacted the search ranking of our website. Because Google in particular is the most significant source of traffic to our website, accounting for more than half of the visits to our website during the three months ended March 31, 2016, our success depends on our ability to maintain a prominent presence in search results for queries regarding local businesses on Google. As a result, Google’s promotion of its own competing products, or similar actions by Google in the future that have the effect of reducing our prominence or ranking on its search results, could have a substantial negative effect on our business and results of operations.

If our users fail to contribute high quality content or their contributions are not valuable to other users, our traffic and revenue could be negatively affected.

Our success in attracting users depends on our ability to provide consumers with the information they seek, which in turn depends on the quantity and quality of the content contributed by our users. We believe that as the depth and breadth of the content on our platform grow, our platform will become more widely known and relevant to broader audiences, thereby attracting new consumers to our service. However, if we are unable to provide consumers with the information they seek, they may stop or reduce their use of our platform, and traffic to our website and on our mobile app will decline. If our user traffic declines, our advertisers may stop or reduce the amount of advertising on our platform and our business could be harmed. Our ability to provide consumers with valuable content may be harmed:

● if our users do not contribute content that is helpful or reliable;
 

● if our users remove content they previously submitted;
 

● as a result of user concerns that they may be harassed or sued by the businesses they review, instances of which have occurred in the past and may occur again in the future; and
 

● as users increasingly contribute content through our mobile platform, because content contributed through mobile devices tends to be shorter than desktop contributions.

Similarly, if robots, shills or other spam accounts are able to contribute a significant amount of recommended content, or consumers perceive a significant amount of our recommended content to be from such accounts, our traffic and revenue could be negatively affected. Although we do not believe content from these sources has had a material impact to date, if our automated software recommends a substantial amount of such content in the future, our ability to provide high quality content would be harmed and the consumer trust essential to our success could be undermined.

In addition, if our platform does not provide current information about local businesses or users do not perceive reviews on our platform as relevant, our brand and business could be harmed. For example, we do not phase out or remove dated reviews, and consumers may view older reviews as less relevant, helpful or reliable than more recent reviews.

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If we fail to maintain and expand our base of advertisers, our revenue and our business will be harmed.

Our ability to grow our business depends on our ability to maintain and expand our advertiser base. To do so, we must convince existing and prospective advertisers alike that our advertising products offer a material benefit and can generate a competitive return relative to other alternatives. Our ability to do so depends on factors including:

● Acceptance of Online Advertising. We believe that the continued growth and acceptance of our online advertising products will depend on the perceived effectiveness and acceptance of online advertising models generally, which is outside of our control. For example, if ad-blocking programs that affect the delivery of online advertising gain further visibility or traction, the perceived value of online advertising, and that of our advertising products in turn, may be harmed. Many advertisers still have limited experience with online advertising and, as a result, may continue to devote significant portions of their advertising budgets to traditional, offline advertising media, such as newspapers or print yellow pages directories.
 

● Competitiveness of Our Products. We must deliver ads in an effective manner. We may be unable to attract new advertisers if our products are not compelling or we fail to innovate and introduce enhanced products meeting advertiser expectations. However, we must balance advertiser demands against our commitment to providing a good user experience. For example, we phased out our brand advertising products in part because demand in the brand advertising market has shifted toward products disruptive to the consumer experience. In addition, we must provide accurate analytics and measurement solutions that demonstrate the value of our advertising products compared to those of our competitors. Similarly, if the pricing of our advertising products does not compare favorably to those of our competitors, advertisers may reduce their advertising with us or choose not to advertise with us at all. The widespread adoption of any technologies that make it more difficult for us to deliver ads, such as ad-blocking programs, could also decrease our value proposition to businesses and reduce demand for our products.
 

● Traffic Quality. The success of our advertising program depends on delivering positive results to our advertising customers. Low-quality or invalid traffic, such as robots, spiders and the mechanical automation of clicking, may be detrimental to our relationships with advertisers and could adversely affect our advertising pricing and revenue. If we fail to detect and prevent click fraud or other invalid clicks on ads, the affected advertisers may experience or perceive a reduced return on their investments, which could lead to dissatisfaction with our products, refusals to pay, refund demands or withdrawal of future business.
 

● Perception of Our Platform. Our ability to compete effectively for advertiser budgets depends on our reputation and perceptions regarding our platform. For example, we may face challenges expanding our advertiser base in businesses outside the restaurant and shopping categories if businesses believe that consumers perceive the utility of our platform to be limited to finding businesses in these categories. The ratings and reviews that businesses receive from our users may also affect their advertising decisions. Favorable ratings and reviews, on the one hand, could be perceived as obviating the need to advertise. Unfavorable ratings and reviews, on the other, could discourage businesses from advertising to an audience that they perceive as hostile or cause them to form a negative opinion of our products and user base.
 

● Macroeconomic Conditions. Adverse macroeconomic conditions can have a negative impact on the demand for advertising, particularly with respect to online advertising products. We rely heavily on small and medium-sized businesses, which often have limited advertising budgets and may be disproportionately affected by economic downturns. In addition, such business may view online advertising as lower priority than offline advertising.

As is typical in our industry, our advertisers generally do not have long-term obligations to purchase our products. Their decisions to renew depend on the degree of satisfaction with our products as well as a number of factors that are outside of our control, including their ability to continue their operations and spending levels. Small and medium-sized local businesses in particular have historically experienced high failure rates. As a result, we may experience attrition in our advertisers in the ordinary course of business resulting from several factors, including losses to competitors, declining advertising budgets, closures and bankruptcies. In addition, our recent phase out of our brand advertising products, which had been an additional source of revenue for us, may make us more susceptible to fluctuations and attrition from small and medium-sized businesses. To grow our business, we must continually add new advertisers to replace advertisers who choose not to renew their advertising, or who go out of business or otherwise fail to fulfill their advertising contracts with us, which we may not be able to do.

If we fail to further develop our markets effectively, including our international markets where we have limited operating experience and may be subject to increased risks, our revenue and business will be harmed.

We intend to further develop our operations both domestically and abroad. Our current and future plans will require significant resources and management attention, and the returns on such investments may not be achieved for several years, or at all. For example, our plans include efforts to further develop and tailor our products and marketing to local needs in certain international communities, where we have limited operating experience and familiarity with the local competitive environments.

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Our communities in many of the largest markets in the United States are in a relatively late stage of development, and further development of smaller markets may not yield similar results. As a result, our continued growth depends on our ability to successfully develop our international communities and operations. We have a limited operating history in international markets, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful. If we are not able to develop our international markets as we expect, or if we fail to address the needs of those markets, our business will be harmed. Expanding our international operations may also subject us to risks that we have not faced before or that increase our exposure to risks that we currently face, including risks associated with:

● operating a rapidly growing business in an environment of multiple languages, cultures, customs, legal systems, regulatory systems and commercial infrastructures;
 

● recruiting and retaining qualified, multi-lingual employees, including sales personnel;
 

● increased competition from local websites and guides, and potential preferences by local populations for local providers;
 

● potentially lower levels of advertiser demand and user engagement;
 

● our ability to achieve prominent display of our content in unpaid search results, which may be more difficult in newer markets where we may have less content and more competitors than in more established markets;
 

● providing solutions in different languages for different cultures, which may require that we modify our solutions and features to ensure that they are culturally relevant in different countries;
 

● compliance with applicable foreign laws and regulations, including different privacy, censorship and liability standards;
 

● the enforceability of our intellectual property rights;
 

● credit risk and higher levels of payment fraud;
 

● currency exchange rate fluctuations;
 

● compliance with anti-bribery laws, including but not limited to the Foreign Corrupt Practices Act and the U.K. Bribery Act;
 

● foreign exchange controls that might prevent us from repatriating cash earned outside the United States;
 

● political and economic instability in some countries;
 

● double taxation of our international earnings and potential adverse tax consequences due to changes in the tax laws of the United States or foreign jurisdictions in which we operate; and
 

● higher costs of doing business internationally.

We may acquire other companies or technologies, which could divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our operations and harm our operating results. We may also be unable to realize the expected benefits and synergies of any acquisitions.

Our success will depend, in part, on our ability to expand our product offerings and grow our business in response to changing technologies, user and advertiser demands and competitive pressures. In some circumstances, we may determine to do so through the acquisition of complementary businesses or technologies rather than through internal development. For example, in February 2015, we acquired Eat24 to obtain an online food ordering solution. We have limited experience as a company in the complex process of acquiring other businesses and technologies. The pursuit of potential future acquisitions may divert the attention of management and cause us to incur expenses in identifying, investigating and pursuing acquisitions, whether or not they are consummated.

Acquisitions that are consummated could result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our results of operations. The incurrence of debt in particular could result in increased fixed obligations or include covenants or other restrictions that would impede our ability to manage our operations. In addition, any acquisitions we announce could be viewed negatively by users, businesses or investors. We may also discover liabilities or deficiencies associated with the companies or assets we acquire that we did not identify in advance, which may result in significant unanticipated costs. For example, in 2015, two lawsuits were filed against us by former Eat24 employees alleging that Eat24 failed to comply with certain labor laws prior to the acquisition. The effectiveness of our due diligence review and our ability to evaluate the results of such due diligence are dependent upon the accuracy and completeness of statements and disclosures made by the companies we acquire or their representatives, as well as the limited amount of time in which acquisitions are executed. We may also fail to accurately forecast the financial impact of an acquisition transaction, including tax and accounting charges.

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In order to realize the expected benefits and synergies of any acquisition that is consummated, we must meet a number of significant challenges that may create unforeseen operating difficulties and expenditures, including:

● integrating operations, strategies, services, sites and technologies of the acquired company;
 

● managing the combined business effectively;
 

● retaining and assimilating the employees of the acquired company;
 

● retaining existing customers and strategic partners and minimizing disruption to existing relationships as a result of any integration of new personnel;
 

● difficulties in the assimilation of corporate cultures;
 

● implementing and retaining uniform standards, controls, procedures, policies and information systems; and
 

● addressing risks related to the business of the acquired company that may continue to impact the business following the acquisition.

Any inability to integrate services, sites and technologies, operations or personnel in an efficient and timely manner could harm our results of operations. Transition activities are complex and require significant time and resources, and we may not manage the process successfully, particularly if we are managing multiple integrations concurrently. Our ability to integrate complex acquisitions is unproven, particularly with respect to companies that have significant operations or that develop products with which we do not have prior experience. For example, Eat24 was larger and more complex than companies we had previously acquired. In addition, Eat24 operates a business that is new to us, and we did not have significant experience or structure in place to support this business prior to the acquisition. We plan to invest resources to support this and any future acquisitions, which will result in ongoing operating expenses and may divert resources and management attention from other areas of our business. We cannot assure you that these investments will be successful. Even if we are able to integrate the operations of any acquired company successfully, these integrations may not result in the realization of the full benefits of synergies, cost savings, innovation and operational efficiencies that may be possible from the combination of the businesses, or we may not achieve these benefits within a reasonable period of time.

We rely on third-party service providers and strategic partners for many aspects of our business, and any failure to maintain these relationships could harm our business.

We rely on relationships with various third parties to grow our business, including strategic partners and technology and content providers. For example, we rely on third parties for data about local businesses, mapping functionality, payment processing and administrative software solutions. We also rely on partners for various transactions available through the Yelp Platform, including Booker for spa and salon appointments, Locu for menu data and BloomNation for flower deliveries, among others. Identifying, negotiating and maintaining relationships with third parties require significant time and resources, as does integrating their data, services and technologies onto our platform. It is possible that these third parties may not be able to devote the resources we expect to the relationships. We may also have competing interests and obligations with respect to our partners in particular, which may make it difficult to maintain, grow or maximize the benefit for each partnership. For example, our entry into the online reservations space with SeatMe and Yelp Reservations put us in competition with OpenTable, which led to the end of our partnership in 2015. Our focus on integrating additional partners to expand the Yelp Platform may exacerbate this risk.

If our relationships with our partners and providers deteriorate, we could suffer increased costs and delays in our ability to provide consumers and advertisers with content or similar services. We have had, and may in the future have, disagreements or disputes with our partners about our respective contractual obligations, which could result in legal proceedings or negatively affect our brand and reputation. In addition, we exercise limited control over our third-party partners and vendors, which makes us vulnerable to any errors, interruptions or delays in their operations. If these third parties experience any service disruptions, financial distress or other business disruption, or difficulties meeting our requirements or standards, it could make it difficult for us to operate some aspects of our business. For example, we rely on a single supplier to process payments of all transactions made on the Yelp Platform and for purchases of Yelp Deals and Gift Certificates. Any disruption or problems with this supplier or its services could have an adverse effect on our reputation, results of operations and financial results. Similarly, upon expiration or termination of any of our agreements with third-party providers, we may not be able to replace the services provided to us in a timely manner or on terms that are favorable to us, if at all, and a transition from one partner or provider to another could subject us to operational delays and inefficiencies.

We face competition for both local business directory traffic and advertiser spending, and expect competition to increase in the future.

The market for information regarding local businesses and advertising is intensely competitive and rapidly changing. With the emergence of new technologies and market entrants, competition is likely to intensify in the future. We compete for consumer traffic with traditional, offline local business guides and directories, Internet search engines, such as Google and Bing, review and social media websites and various other online service providers. These competitors may include regional review websites that may have strong positions in particular countries. We also compete with these companies for the content of contributors, and may experience decreases in both traffic and user engagement if our competitors offer more compelling environments.

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Although advertisers are allocating an increasing amount of their overall marketing budgets to online advertising, such spending lags behind growth in Internet and mobile usage generally, making the market for online advertising intensely competitive. We compete for a share of local businesses’ overall advertising budgets with traditional, offline media companies and service providers, as well as Internet marketing providers. Many of these companies have established marketing relationships with local businesses, and certain of our online competitors have substantial proprietary advertising inventory and web traffic that may provide a significant competitive advantage.

Certain competitors could use strong or dominant positions in one or more markets to gain competitive advantage against us in areas in which we operate, including by: integrating review platforms or features into products they control, such as search engines, web browsers or mobile device operating systems; making acquisitions; changing their unpaid search result rankings to promote their own products; refusing to enter into or renew licenses on which we depend; limiting or denying our access to advertising measurement or delivery systems; limiting our ability to target or measure the effectiveness of ads; or making access to our platform more difficult. This risk may be exacerbated by the trend in recent years toward consolidation among online media companies, potentially allowing our larger competitors to offer bundled or integrated products that feature alternatives to our platform.

Our competitors may also enjoy competitive advantages, such as greater name recognition, longer operating histories, substantially greater market share, large existing user bases and substantially greater financial, technical and other resources. Traditional television and print media companies, for example, have large established audiences and more traditional and widely accepted advertising products. These companies may use these advantages to offer products similar to ours at a lower price, develop different products to compete with our current solutions and respond more quickly and effectively than we do to new or changing opportunities, technologies, standards or client requirements. In particular, major Internet companies, such as Google, Facebook, Yahoo! and Microsoft, may be more successful than us in developing and marketing online advertising offerings directly to local businesses, and may leverage their relationships based on other products or services to gain additional share of advertising budgets.

To compete effectively, we must continue to invest significant resources in product development to enhance user experience and engagement, as well as sales and marketing to expand our base of advertisers. However, there can be no assurance that we will be able to compete successfully for users and advertisers against existing or new competitors, and failure to do so could result in loss of existing users, reduced revenue, increased marketing expenses or diminished brand strength, any of which could harm our business.

*Our business depends on a strong brand, and any failure to maintain, protect and enhance our brand would hurt our ability to retain and expand our base of users and advertisers, as well as our ability to increase the frequency with which they use our products.

We have developed a strong brand that we believe has contributed significantly to the success of our business. Maintaining, protecting and enhancing the “Yelp” brand are critical to expanding our base of users and advertisers and increasing the frequency with which they use our solutions. Our ability to do so will depend largely on our ability to maintain consumer trust in our products and in the quality and integrity of the user content and other information found on our platform, which we may not do successfully. We dedicate significant resources to these goals, primarily through our automated recommendation software, sting operations targeting the buying and selling of reviews, our consumer alerts program, coordination with consumer protection agencies and law enforcement, and, in certain egregious cases, taking legal action against business we believe to be engaged in deceptive activities. We also endeavor to remove content from our platform that violates our terms of service.

Despite these efforts, we cannot guarantee that each of the 72.5 million reviews on our platform that have been recommended and that have not been removed as of March 31, 2016 is useful or reliable, or that consumers will trust the integrity of our content. For example, if our recommendation software does not recommend helpful content or recommends unhelpful content, consumers and businesses alike may stop or reduce their use of our platform and products. Some consumers and businesses have alternately expressed concern that our technology either recommends too many reviews, thereby recommending some reviews that may not be legitimate, or too few reviews, thereby not recommending some reviews that may be legitimate. If consumers do not believe our recommended reviews to be useful and reliable, they may seek other services to obtain the information for which they are looking, and may not return to our platform as often in the future, or at all. This would negatively impact our ability to retain and attract users and advertisers and the frequency with which they use our platform.

Consumers may also believe that the reviews, photos and other user content contributed by our Community Managers or other employees are influenced by our advertising relationships or are otherwise biased. Although we take steps to prevent this from occurring by, for example, identifying Community Managers as Yelp employees on their account profile pages and explaining their role on our platform, the designation does not appear on the page for each review contributed by the Community Manager and we may not be successful in our efforts to maintain consumer trust. Similarly, the actions of our partners may affect our brand if users do not have a positive experience on the Yelp Platform. If others misuse our brand or pass themselves off as being endorsed or affiliated with us, it could harm our reputation and our business could suffer. For example, we have encountered instances of reputation management companies falsely representing themselves as being affiliated with us when soliciting customers; this practice could be contributing to rumors that business owners can pay to manipulate reviews, rankings and ratings. Our website and mobile app also serve as a platform for expression by our users, and third parties or the public at large may also attribute the political or other sentiments expressed by users on our platform to us, which could harm our reputation.

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In addition, negative publicity about our company, including our technology, sales practices, personnel, customer service, litigation, strategic plans or political activities could diminish confidence in our brand and the use of our products. Certain media outlets have previously reported allegations that we manipulate our reviews, rankings and ratings in favor of our advertisers and against non-advertisers. In order to demonstrate that our automated recommendation software applies in a nondiscriminatory manner to both advertisers and non-advertisers, we allow users to access reviews that are both recommended and not recommended by our software. We have also allowed businesses to comment publicly on reviews so that they can provide a response. Nevertheless, our reputation and brand, the traffic to our website and mobile app and our business may suffer if negative publicity about our company persists or if users otherwise perceive that our content is manipulated or biased. Allegations and complaints regarding our business practices, and any resulting negative publicity, may also result in increased regulatory scrutiny of our company. In addition to requiring management time and attention, any regulatory inquiry or investigation could itself result in further negative publicity regardless of its merit or outcome.

Maintaining and enhancing our brand may also require us to make substantial investments, and these investments may not be successful. For example, our trademarks are an important element of our brand. We have faced in the past, and may face in the future, oppositions from third parties to our applications to register key trademarks in foreign jurisdictions in which we expect to expand our presence. If we are unsuccessful in defending against these oppositions, our trademark applications may be denied. Whether or not our trademark applications are denied, third parties may claim that our trademarks infringe their rights. As a result, we could be forced to pay significant settlement costs or cease the use of these trademarks and associated elements of our brand in certain jurisdictions. Doing so could harm our brand recognition and adversely affect our business. If we fail to maintain and enhance our brand successfully, or if we incur excessive expenses in this effort, our business and financial results may be adversely affected.

If we fail to manage our growth effectively, our brand, results of operations and business could be harmed.

We have experienced rapid growth in our headcount and operations, including through our acquisitions of other businesses, such as Eat24 in February 2015, which places substantial demands on management and our operational infrastructure. Most of our employees have been with us for fewer than two years; to manage the expected growth of our operations, we will need to continue to increase the productivity of our current employees and hire, train and manage new employees. In particular, we intend to continue to make substantial investments in our engineering, sales and marketing and community management organizations. As a result, we must effectively integrate, develop and motivate a large number of new employees, including employees in international markets and from any acquired businesses, while maintaining the beneficial aspects of our company culture.

As our business matures, we make periodic changes and adjustments to our organization in response to various internal and external considerations, including market opportunities, the competitive landscape, new and enhanced products, acquisitions, sales performance, increases in headcount and cost levels. In some instances, these changes have resulted in a temporary lack of focus and reduced productivity, which may occur again in connection with any future changes to our organization and may negatively affect our results of operations. Similarly, any significant changes to the way we structure compensation of our sales organization may be disruptive and may affect our ability to generate revenue.

To manage our growth, we may need to improve our operational, financial and management systems and processes, which may require significant capital expenditures and allocation of valuable management and employee resources, as well as subject us to the risk of over-expanding our operating infrastructure. However, if we fail to scale our operations successfully and increase productivity, the quality of our platform and efficiency of our operations could suffer, which could harm our brand, results of operations and business.

We make the consumer experience our highest priority. Our dedication to making decisions based primarily on the best interests of consumers may cause us to forgo short-term gains and advertising revenue.

We base many of our decisions on the best interests of the consumers who use our platform. In the past, we have forgone, and we may in the future forgo, certain expansion or revenue opportunities that we do not believe are in the best interests of consumers, even if such decisions negatively impact our results of operations in the short term. For example, we phased out our brand advertising products in part because demand in the brand advertising market has shifted toward products disruptive to the consumer experience, such as video ads. Our approach of putting consumers first may negatively impact our relationship with existing or prospective advertisers. For example, unless we believe that a review violates our terms of service, such as reviews that contain hate speech or bigotry, we will allow the review to remain on our platform, even if the business disputes its accuracy. Certain advertisers may therefore perceive us as an impediment to their success as a result of negative reviews and ratings. This practice could result in a loss of advertisers, which in turn could harm our results of operations. However, we believe that this approach has been essential to our success in attracting users and increasing the frequency with which they use our platform. As a result, we believe this approach has served the long-term interests of our company and our stockholders and will continue to do so in the future.

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We rely on the performance of highly skilled personnel, and if we are unable to attract, retain and motivate well-qualified employees, our business could be harmed.

We believe our success has depended, and continues to depend, on the efforts and talents of our employees, including our senior management team, software engineers, marketing professionals and advertising sales staff. All of our officers and other U.S. employees are at-will employees, which means they may terminate their employment relationship with us at any time, and their knowledge of our business and industry would be extremely difficult to replace. Any changes in our senior management team in particular may be disruptive to our business. If our senior management team, including any new hires that we may make, fails to work together effectively or execute our plans and strategies on a timely basis, our business could be harmed.

Our future also depends on our continuing ability to attract, develop, motivate and retain highly qualified and skilled employees. Identifying, recruiting, training and integrating new hires will require significant time, expense and attention, and qualified individuals are in high demand; as a result, we may incur significant costs to attract them before we can validate their productivity. Volatility in the price of our Class A common stock may make it more difficult or costly in the future to use equity compensation to motivate, incentivize and retain our employees. If we fail to manage our hiring needs effectively, our efficiency and ability to meet our forecasts, as well as employee morale, productivity and retention, could suffer, and our business and operating results could be adversely affected.

Risks Related to Our Technology

Our business is dependent on the uninterrupted and proper operation of our technology and network infrastructure. Any significant disruption in our service could damage our reputation, result in a potential loss of users and engagement and adversely affect our results of operations.

It is important to our success that users in all geographies be able to access our platform at all times. We have previously experienced, and may experience in the future, service disruptions, outages and other performance problems. Such performance problems may be due to a variety of factors, including infrastructure changes, human or software errors and capacity constraints due to an overwhelming number of users accessing our platform simultaneously. Our products and services are highly technical and complex, and may contain errors or vulnerabilities that could result in unanticipated downtime for our platform and harm to our reputation and business. Users may also use our products in unanticipated ways that may cause a disruption in service for other users attempting to access our platform. We may encounter such difficulties more frequently as we acquire companies and incorporate their technologies into our service. It may also become increasingly difficult to maintain and improve the availability of our platform, especially during peak usage times, as our products become more complex and our user traffic increases.

In some instances, we may not be able to identify the cause or causes of these performance problems within an acceptable period of time. If our platform is unavailable when users attempt to access it or it does not load as quickly as they expect, users may seek other services to obtain the information for which they are looking, and may not return to our platform as often in the future, or at all. This would negatively impact our ability to attract users and advertisers and increase the frequency with which they use our platform. We expect to continue to make significant investments to maintain and improve the availability of our platform and to enable rapid releases of new features and products. To the extent that we do not effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business and operating results may be harmed.

Our systems are also vulnerable to damage or interruption from catastrophic occurrences such as earthquakes, fires, floods, power losses, telecommunications failures, terrorist attacks and similar events. Our U.S. corporate offices and one of the facilities we lease to house our computer and telecommunications equipment are located in the San Francisco Bay Area, a region known for seismic activity. In addition, acts of terrorism, which may be targeted at metropolitan areas that have higher population densities than rural areas, could cause disruptions in our or our advertisers’ businesses or the economy as a whole. We may not have sufficient protection or recovery plans in certain circumstances, such as natural disasters affecting the San Francisco Bay Area, and our business interruption insurance may be insufficient to compensate us for losses that may occur. Our disaster recovery program contemplates transitioning our platform and data to a backup center in the event of a catastrophe. Although this program is functional, if our primary data center shuts down, there will be a period of time that our services will remain shut down while the transition to the back-up data center takes place. During this time, our platform may be unavailable in whole or in part to our users.

If our security measures are compromised, or if our platform is subject to attacks that degrade or deny the ability of users to access our content, users may curtail or stop use of our platform.

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Our platform involves the storage and transmission of user and business information, some of which may be private, and security breaches could expose us to a risk of loss of this information, which could result in potential liability and litigation. Computer viruses, break-ins, malware, phishing attacks, attempts to overload servers with denial-of-service or other attacks and similar disruptions from unauthorized use of computer systems have become more prevalent in our industry, have occurred on our systems in the past and are expected to occur periodically on our systems in the future. We may be a particularly compelling target for such attacks as a result of our brand recognition. User and business owner accounts and listing pages could be hacked, hijacked, altered or otherwise claimed or controlled by unauthorized persons. For example, we enable businesses to create free online accounts and claim the business listing pages for each of their business locations. Although we take steps to confirm that the person setting up the account is affiliated with the business, our verification systems could fail to confirm that such person is an authorized representative of the business, or mistakenly allow an unauthorized person to claim the business’s listing page. In addition, we face risks associated with security breaches affecting our third-party partners and service providers. A security breach at any such third party could be perceived by consumers as a security breach of our systems and result in negative publicity, damage to our reputation and expose us to other losses.

Although none of the disruptions we have experienced to date have had a material effect on our business, any future disruptions could lead to interruptions, delays or website shutdowns, causing loss of critical data or the unauthorized disclosure or use of personally identifiable or other confidential information. Even if we experience no significant shutdown or no critical data is lost, obtained or misused in connection with an attack, the occurrence of such attack or the perception that we are vulnerable to such attacks may harm our reputation, our ability to retain existing users and our ability to attract new users. Although we have developed systems and processes that are designed to protect our data and prevent data loss and other security breaches, the techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently, often are not recognized until launched against a target or long after, and may originate from less regulated and more remote areas around the world. As a result, these preventative measures may not be adequate and we cannot assure you that they will provide absolute security.

Any or all of these issues could negatively impact our ability to attract new users, deter current users from returning to our platform, cause existing or potential advertisers to cancel their contracts or subject us to third-party lawsuits or other liabilities. For example, we work with a third-party vendor to process credit card payments by users and businesses, and are subject to payment card association operating rules. Compliance with applicable operating rules will not necessarily prevent illegal or improper use of our payment systems, or the theft, loss or misuse of payment information, however. If our security measures fail to prevent fraudulent credit card transactions and protect payment information adequately as a result of employee error, malfeasance or otherwise, or we fail to comply with the applicable operating rules, we could be liable to the users and businesses for their losses, as well as the vendor under our agreement with it, and be subject to fines and higher transaction fees. In addition, government authorities could also initiate legal or regulatory actions against us in connection with such incidents, which could cause us to incur significant expense and liability or result in orders or consent decrees forcing us to modify our business practices.

Some of our products contain open source software, which may pose particular risks to our proprietary software and solutions.

We use open source software in our products and will use open source software in the future. From time to time, we may face claims from third parties claiming ownership of, or demanding release of, the open source software or derivative works that we developed using such software (which could include our proprietary source code), or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation and could require us to purchase a costly license or cease offering the implicated solutions unless and until we can re-engineer them to avoid infringement. This re-engineering process could require significant additional research and development resources. In addition to risks related to license requirements, use of certain open source software can lead to greater risks than use of third-party commercial software because open source licensors generally do not provide warranties or controls on the origin of the software. Any of these risks could be difficult to eliminate or manage, and, if not addressed, could have a negative effect on our business and operating results.

Failure to protect or enforce our intellectual property rights could harm our business and results of operations.

We regard the protection of our trade secrets, copyrights, trademarks and domain names as critical to our success. In particular, we must maintain, protect and enhance the “Yelp” brand. We pursue the registration of our domain names, trademarks and service marks in the United States and in certain jurisdictions abroad. We strive to protect our intellectual property rights by relying on federal, state and common law rights, as well as contractual restrictions. We typically enter into confidentiality and invention assignment agreements with our employees and contractors, as well as confidentiality agreements with parties with whom we conduct business in order to limit access to, and disclosure and use of, our proprietary information. However, these contractual arrangements and the other steps we have taken to protect our intellectual property may not prevent the misappropriation or disclosure of our proprietary information or deter independent development of similar technologies by others.

Effective trade secret, copyright, trademark and domain name protection is expensive to develop and maintain, both in terms of initial and ongoing registration requirements and expenses and the costs of defending our rights. Seeking protection for our intellectual property, including trademarks and domain names, is an expensive process and may not be successful, and we may not do so in every location in which we operate. Litigation may become necessary to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of proprietary rights claimed by others. For example, we may incur significant costs in enforcing our trademarks against those who attempt to imitate our “Yelp” brand. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could adversely affect our business and operating results.

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We may be unable to continue to use the domain names that we use in our business, or prevent third parties from acquiring and using domain names that infringe on, are similar to, or otherwise decrease the value of our brand or our trademarks or service marks.

We have registered domain names for the websites that we use in our business, such as Yelp.com. If we lose the ability to use a domain name, whether due to trademark claims, failure to renew the applicable registration or any other cause, we may be forced to market our products under a new domain name, which could cause us substantial harm or cause us to incur significant expense in order to purchase rights to the domain name in question. In addition, our competitors and others could attempt to capitalize on our brand recognition by using domain names similar to ours. Domain names similar to ours have been registered by others in the United States and elsewhere. We may be unable to prevent third parties from acquiring and using domain names that infringe on, are similar to or otherwise decrease the value of our brand or our trademarks or service marks. Protecting and enforcing our rights in our domain names may require litigation, which could result in substantial costs and diversion of management’s attention.

Risks Related to Our Financial Statements and Tax Matters

*We have incurred significant operating losses in the past, and we may not be able to generate sufficient revenue to regain profitability. Our recent growth rate will likely not be sustainable, and a failure to maintain an adequate growth rate will adversely affect our business and results of operations.

Since our inception, we have incurred significant operating losses and, as of March 31, 2016, we had an accumulated deficit of approximately $81 million. Although our revenues have grown rapidly in the last several years, increasing from $12.1 million in 2008 to $549.7 million in 2015, our revenue growth rate has declined in recent periods as a result of a variety of factors, including the maturation of our business and the gradual decline in the number of major geographic markets, especially within the United States, to which we have not already expanded. In addition, we incurred net losses in the year ended December 31, 2015 and in the first quarter of 2016. As a result, you should not rely on the revenue growth of any prior quarterly or annual period, or the net income we realized in 2014, as an indication of our future performance. Historically, our costs have increased each year and we expect our costs to increase in future periods as we continue to expend substantial financial resources on:

● sales and marketing;
 

● our technology infrastructure;
 

● product and feature development;
 

● domestic and international expansion efforts;
 

● strategic opportunities, including commercial relationships and acquisitions; and
 

● general administration, including legal and accounting expenses related to being a public company.

These investments may not result in increased revenue or growth in our business. Our costs may also increase as we hire additional employees, particularly as a result of the significant competition that we face to attract and retain technical talent. Our expenses may grow faster than our revenue and may be greater than we anticipate in a particular period or over time. If we are unable to maintain adequate revenue growth and to manage our expenses, we may continue to incur significant losses in the future and may not be able to regain profitability.

We have a limited operating history in an evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.

We have a limited operating history in an evolving industry that may not develop as expected, if at all. As a result, our historical operating results may not be indicative of our future operating results, making it difficult to assess our future prospects. You should consider our business and prospects in light of the risks and difficulties we may encounter in this rapidly evolving industry, which we may not be able to address successfully. These risks and difficulties include our ability to, among other things:

● increase the number of users of our website and mobile app and the number of reviews and other content on our platform;

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● attract and retain new advertising clients, many of which may have limited or no online advertising experience;
 

● forecast revenue and adjusted EBITDA accurately, which may be more difficult as we sell more performance-based advertising, as well as appropriately estimate and plan our expenses;
 

● continue to earn and preserve a reputation for providing meaningful and reliable reviews of local businesses;
 

● effectively monetize our mobile products as usage continues to migrate toward mobile devices;
 

● successfully compete with existing and future providers of other forms of offline and online advertising;
 

● successfully compete with other companies that are currently in, or may in the future enter, the business of providing information regarding local businesses;
 

● successfully manage our growth, including in international markets;
 

● successfully develop and deploy new features and products;
 

● manage and integrate successfully any acquisitions of businesses, solutions or technologies, such as Eat24;
 

● avoid interruptions or disruptions in our service or slower than expected load times;
 

● develop a scalable, high-performance technology infrastructure that can efficiently and reliably handle increased usage globally, as well as the deployment of new features and products;
 

● hire, integrate and retain talented sales and other personnel;
 

● effectively manage rapid growth in our sales force, other personnel and operations; and
 

● effectively identify, engage and manage third-party partners and service providers.

If the demand for information regarding local businesses does not develop as we expect, or if we fail to address the needs of this demand, our business will be harmed. We may not be able to address successfully these risks and difficulties or others, including those described elsewhere in these risk factors. Failure to address these risks and difficulties adequately could harm our business and cause our operating results to suffer.

We expect a number of factors to cause our operating results to fluctuate on a quarterly and annual basis, which may make it difficult to predict our future performance.

Our operating results could vary significantly from period to period as a result of a variety of factors, many of which may be outside of our control. This volatility increases the difficulty in predicting our future performance and means comparing our operating results on a period-to-period basis may not be meaningful. In addition to the other risk factors discussed in this section, factors that may contribute to the volatility of our operating results include:

● changes in the products we offer, such as our phase out of brand advertising products;
 

● changes in our pricing policies and terms of contracts, whether initiated by us or as a result of competition;
 

● cyclicality and seasonality, which may become more pronounced as our growth rate slows;
 

● the effects of changes in search engine placement and prominence;
 

● the adoption of any laws or regulations that adversely affect the growth, popularity or use of the Internet, such as laws impacting Internet neutrality;
 

● the success of our sales and marketing efforts;
 

● costs associated with defending intellectual property infringement and other claims and related judgments or settlements;
 

● interruptions in service and any related impact on our reputation;

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● the impact of fluctuations in currency exchange rates;
 

● changes in advertiser budgets or the market acceptance of online advertising solutions;
 

● changes in consumer behavior with respect to local businesses;
 

● changes in our tax rates or exposure to additional tax liabilities;
 

● the impact of worldwide economic conditions, including the resulting effect on consumer spending at local businesses and the level of advertising spending by local businesses; and
 

● the effects of natural or man-made catastrophic events.

Because we recognize most of the revenue from our advertising products over the term of an agreement, a significant downturn in our business may not be immediately reflected in our results of operations.

We recognize revenue from sales of our advertising products over the terms of the applicable agreements, which are generally three, six or 12 months. As a result, a significant portion of the revenue we report in each quarter is generated from agreements entered into during previous quarters. Consequently, a decline in new or renewed agreements in any one quarter may not significantly impact our revenue in that quarter but will negatively affect our revenue in future quarters. In addition, we may be unable to adjust our fixed costs in response to reduced revenue. Accordingly, the effect of significant declines in advertising sales may not be reflected in our short-term results of operations.

If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings.

We have recorded a significant amount of goodwill related to our acquisitions to date, and a significant portion of the purchase price of any companies we acquire in the future may be allocated to acquired goodwill and other intangible assets. Under accounting principles generally accepted in the United States (“GAAP”), we review our intangible assets for impairment when events or changes in circumstances indicate the carrying value of our goodwill and other intangible assets may not be recoverable. Goodwill is required to be tested for impairment at least annually. Factors that may be considered include declines in our stock price, market capitalization and future cash flow projections. If our acquisitions do not yield expected returns, our stock price declines or any other adverse change in market conditions occurs, a change to the estimation of fair value could result. Any such change could result in an impairment charge to our goodwill and intangible assets, particularly if such change impacts any of our critical assumptions or estimates, and may have a negative impact on our financial position and operating results.

We may require additional capital to support business growth, and such capital might not be available on acceptable terms, if at all.

We intend to continue to invest in our business and may require or otherwise seek additional funds to respond to business challenges, including the need to develop new features and products, enhance our existing services, improve our operating infrastructure and acquire complementary businesses and technologies. As a result, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of our Class A common stock. Any future debt financing we secure could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and respond to business challenges could be significantly impaired, and our business may be harmed.

We may have exposure to greater than anticipated tax liabilities.

Our income tax obligations are based in part on our corporate operating structure and intercompany arrangements, including the manner in which we develop, value and use our intellectual property and the valuations of our intercompany transactions. For example, our corporate structure includes legal entities located in jurisdictions with income tax rates lower than the U.S. statutory tax rate. Our intercompany arrangements allocate income to such entities in accordance with arm’s length principles and commensurate with functions performed, risks assumed and ownership of valuable corporate assets. We believe that income taxed in certain foreign jurisdictions at a lower rate relative to the U.S. statutory rate will have a beneficial impact on our worldwide effective tax rate.

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However, significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. For example, our effective tax rates could be adversely affected by earnings being lower than anticipated in countries where we have lower statutory rates and higher than anticipated in countries where we have higher statutory rates, by changes in foreign currency exchange rates or by changes in the relevant tax, accounting and other laws, regulations, principles and interpretations.

In addition, the application of the tax laws of various jurisdictions, including the United States, to our international business activities is subject to interpretation and depends on our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements. The taxing authorities of jurisdictions in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements, including our transfer pricing, or determine that the manner in which we operate our business does not achieve the intended tax consequences, which could increase our worldwide effective tax rate and harm our financial position and results of operations. As we operate in numerous taxing jurisdictions, the application of tax laws can also be subject to diverging and sometimes conflicting interpretations by tax authorities of these jurisdictions. It is not uncommon for taxing authorities in different countries to have conflicting views, for instance, with respect to, among other things, the manner in which the arm’s-length standard is applied for transfer pricing purposes, or with respect to the valuation of intellectual property.

Changes in tax laws or tax rulings, or the examination of our tax positions, could materially affect our financial position and results of operations.

Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. Our existing corporate structure and intercompany arrangements have been implemented in a manner we believe is in compliance with current prevailing tax laws. However, the tax benefits that we intend to eventually derive could be undermined due to changing tax laws. In particular, the current U.S. administration and key members of Congress have made public statements indicating that tax reform is a priority, resulting in uncertainty not only with respect to the future corporate tax rate, but also the U.S. tax consequences of income derived from income related to intellectual property earned overseas in low tax jurisdictions. Certain changes to U.S. tax laws, including limitations on the ability to defer U.S. taxation on earnings outside of the United States until those earnings are repatriated to the United States, as well as changes to U.S. tax laws that may be enacted in the future, could affect the tax treatment of our foreign earnings. In addition, many countries in the European Union, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development, are actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in many countries where we do business. Due to the expanding scale of our international business activities, any changes in the taxation of such activities may increase our worldwide effective tax rate and harm our financial position and results of operations.

In addition, the taxing authorities in the United States and other jurisdictions where we do business regularly examine our income and other tax returns. The ultimate outcome of these examinations cannot be predicted with certainty. Should the IRS or other taxing authorities assess additional taxes as a result of examinations, we may be required to record charges to our operations, which could harm our business, operating results and financial condition.

Our business and results of operations may be harmed if we are deemed responsible for the collection and remittance of state sales taxes for Eat24’s restaurants.

If we are deemed an agent for the restaurants in our Eat24 network under state tax law, we may be deemed responsible for collecting and remitting sales taxes directly to certain states. It is possible that one or more states could seek to impose sales, use or other tax collection obligations on us with regard to such food sales. These taxes may be applicable to past sales. A successful assertion that we should be collecting additional sales, use or other taxes or remitting such taxes directly to states could result in substantial tax liabilities for past sales and additional administrative expenses, which would harm our business and results of operations. In addition, we rely on the restaurants in our Eat24 network to provide us with the correct sales tax rates for each individual order. If such information proves incorrect, we may be liable for the under or over collection of sales tax from Eat24 customers.

We rely on data from both internal tools and third parties to calculate certain of our performance metrics. Real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.

We track certain performance metrics — including the number of unique devices accessing our mobile app in a given period, page views and calls and clicks for directions and map views — with internal tools, which are not independently verified by any third party. Our internal tools have a number of limitations and our methodologies for tracking these metrics may change over time, which could result in unexpected changes to our metrics, including key metrics that we report. For example, our metrics may be affected by mobile applications that automatically contact our servers for regular updates with no discernable user action involved; this activity can cause our system to count the device associated with the app as a unique app device in a given period. If the internal tools we use to track these metrics over- or under-count performance or contain algorithm or other technical errors, the data we report may not be accurate. In addition, limitations or errors with respect to how we measure data may affect our understanding of certain details of our business, which could affect our longer-term strategies.

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In addition, certain of our key metrics — the number of our desktop unique visitors and mobile website unique visitors — are calculated relying on data from third parties. While these numbers are based on what we believe to be reasonable calculations for the applicable periods of measurement, our third-party providers periodically encounter difficulties in providing accurate data for such metrics as a result of a variety of factors, including human and software errors. We expect these challenges to continue to occur, and potentially to increase as our traffic grows.

There are also inherent challenges in measuring usage across our large user base around the world. For example, because these metrics are based on users with unique cookies, an individual who accesses our website from multiple devices with different cookies may be counted as multiple unique visitors, and multiple individuals who access our website from a shared device with a single cookie may be counted as a single unique visitor. In addition, although we use technology designed to block low-quality traffic, such as robots, spiders and other software, we may not be able to prevent all such traffic, and such technology may have the effect of blocking some valid traffic. For these and other reasons, the calculations of our desktop unique visitors and mobile website unique visitors may not accurately reflect the number of people actually using our platform.

Our measures of traffic and other key metrics may differ from estimates published by third parties (other than those whose data we use to calculate our key metrics) or from similar metrics of our competitors. We are continually seeking to improve our ability to measure these key metrics, and regularly review our processes to assess potential improvements to their accuracy. However, if our users, advertisers, partners and stockholders do not perceive our metrics to be accurate representations, or if we discover material inaccuracies in our metrics, our reputation may be harmed.

Risks Related to Regulatory Compliance and Legal Matters

*We are, and may be in the future, subject to disputes and assertions by third parties that we violate their rights. These disputes may be costly to defend and could harm our business and operating results.

We currently face, and we expect to face from time to time in the future, allegations that we have violated the rights of third parties, including patent, trademark, copyright and other intellectual property rights, and the rights of current and former employees, users and business owners. For example, various businesses have sued us alleging that we manipulate Yelp reviews in order to coerce them and other businesses to pay for Yelp advertising. The nature of our business also exposes us to claims relating to the information posted on our platform, including claims for defamation, libel, negligence and copyright or trademark infringement, among others. Businesses have in the past claimed, and may in the future claim, that we are responsible for the defamatory reviews posted by our users. We expect claims like these to continue, and potentially increase in proportion to the amount of content on our platform. In some instances, we may elect or be compelled to remove the content that is the subject of such claims, or may be forced to pay substantial damages if we are unsuccessful in our efforts to defend against these claims. If we elect or are compelled to remove content from our platform, our products and services may become less useful to consumers and our traffic may decline, which would have a negative impact on our business.

We are also regularly exposed to claims based on allegations of infringement or other violations of intellectual property rights. Companies in the Internet, technology and media industries own large numbers of patent and other intellectual property rights, and frequently enter into litigation. Various “non-practicing entities” that own patents and other intellectual property rights also often aggressively attempt to assert their rights in order to extract value from technology companies. From time to time, we receive notice letters from patent holders alleging that certain of our products and services infringe their patent rights, and we are presently involved in numerous patent lawsuits, including lawsuits involving plaintiffs targeting multiple defendants in the same or similar suits. While we are pursuing a number of patent applications, we currently have only one issued patent, and the contractual restrictions and trade secrets that protect our proprietary technology provide only limited safeguards against infringement. This may make it more difficult to defend certain of our intellectual property rights, particularly related to our core business.

We expect other claims to be made against us in the future, and as we face increasing competition and gain an increasingly high profile, we expect the number of claims against us to accelerate. The results of litigation and claims to which we may be subject cannot be predicted with any certainty. Even if the claims are without merit, the costs associated with defending against them may be substantial in terms of time, money and management distraction. In particular, patent and other intellectual property litigation may be protracted and expensive, and the results may require us to stop offering certain features, purchase licenses or modify our products and features while we develop non-infringing substitutes, or otherwise involve significant settlement costs. The development of alternative non-infringing technology or practices could require significant effort and expense or may not be feasible. Even if claims do not result in litigation or are resolved in our favor without significant cash settlements, such matters, and the time and resources necessary to resolve them, could harm our business, results of operations and reputation.

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Our business is subject to complex and evolving U.S. and foreign regulations and other legal obligations related to privacy, data protection and other matters. Our actual or perceived failure to comply with such regulations and obligations could harm our business.

We are subject to a variety of laws in the United States and abroad that involve matters central to our business, including laws regarding privacy, data retention, distribution of user-generated content and consumer protection, among others. For example, because we receive, store and process personal information and other user data, including credit card information, we are subject to numerous federal, state and local laws around the world regarding privacy and the storing, sharing, use, processing, disclosure and protection of personal information and other user data. We are also subject to a variety of laws, regulations and guidelines that regulate the way we distinguish paid search results and other types of advertising from unpaid search results.

The application and interpretation of these laws and regulations are often uncertain, particularly in the new and rapidly evolving industry in which we operate. For example, we rely on laws limiting the liability of providers of online services for activities of their users and other third parties. These laws are currently being tested by a number of claims, including actions based on invasion of privacy and other torts, unfair competition, copyright and trademark infringement and other theories based on the nature and content of the materials searched, the ads posted or the content provided by users. It is difficult to predict how existing laws will be applied to our business, and if our business grows and evolves and our solutions are used in a greater number of countries, we will also become subject to laws and regulations in additional jurisdictions, which may be inconsistent with the laws of the jurisdictions to which we are currently subject. For example, the risk related to liability for third-party actions may be greater in certain jurisdictions outside the United States where our protection from such liability may be unclear.

It is also possible that the interpretation and application of various laws and regulations may conflict with other rules or our practices, such as industry standards to which we adhere, our privacy policies and our privacy-related obligations to third parties (including, in certain instances, voluntary third-party certification bodies). Similarly, our business could be adversely affected if new legislation or regulations are adopted that require us to change our current practices or the design of our platform, products or features. For example, regulatory frameworks for privacy issues are currently in flux worldwide, and are likely to remain so for the foreseeable future due to increased public scrutiny of the practices of companies offering online services with respect to personal information of their users. The U.S. government, including the White House, the Federal Trade Commission, the Department of Commerce and many state governments are reviewing the need for greater regulation of the collection, processing, storage and use of information about consumer behavior on the Internet, including regulation aimed at restricting certain targeted advertising practices. The European Commission recently approved a new safe harbor program, the E.U.-U.S. Privacy Shield, covering the transfer of personal data from the European Union to the United States, and a new general data protection regulation is expected to take effect in the European Union by 2018, each of which may be subject to varying interpretations and evolving practices, which would create uncertainty for us and possibly result in significantly greater compliance burdens for companies such as us with users and operations in Europe. Changes like these could increase our administrative costs and make it more difficult for consumers to use our platform, resulting in less traffic and revenue. Such changes could also make it more difficult for us to provide effective advertising tools to businesses on our platform, resulting in fewer advertisers and less revenue.

We believe that our policies and practices comply with applicable laws and regulations. However, if our belief proves incorrect, if these guidelines, laws or regulations or their interpretations change or new legislation or regulations are enacted, or if the third parties with whom we share user information fail to comply with such guidelines, laws, regulations or their contractual obligations to us, we may be forced to implement new measures to reduce our legal exposure. This may require us to expend substantial resources, delay development of new products or discontinue certain products or features, which would negatively impact our business. For example, if we fail to comply with our privacy-related obligations to users or third parties, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other user data, we may be compelled to provide additional disclosures to our users, obtain additional consents from our users before collecting or using their information or implement new safeguards to help our users manage our use of their information, among other changes. We may also face litigation, governmental enforcement actions or negative publicity, which could cause our users and advertisers to lose trust in us and have an adverse effect on our business. For example, from time to time we receive inquiries from government agencies regarding our business practices. Although the internal resources expended and expenses incurred in connection with such inquiries and their resolutions have not been material to date, any resulting negative publicity could adversely affect our reputation and brand. Responding to and resolving any future litigation, investigations, settlements or other regulatory actions may require significant time and resources, and could diminish confidence in and the use of our products.

Domestic and foreign laws may be interpreted and enforced in ways that impose new obligations on us with respect to Yelp Deals, which may harm our business and results of operations.

Our Yelp Deals products may be deemed gift certificates, store gift cards, general-use prepaid cards or other vouchers, or “gift cards,” subject to, among other laws, the federal Credit Card Accountability Responsibility and Disclosure Act of 2009 (the “Credit CARD Act”) and similar state and foreign laws. Many of these laws include specific disclosure requirements and prohibitions or limitations on the use of expiration dates and the imposition of certain fees. Various companies that provide deal products similar to ours have been subject to allegations that their deal products are subject to and violate the Credit CARD Act and various state laws governing gift cards. Lawsuits have also been filed in other locations in which we sell or plan to sell our Yelp Deals, such as the Canadian province of Ontario, alleging similar violations of provincial legislation governing gift cards.

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The application of various other laws and regulations to our products, and particularly our Yelp Deals and Gift Certificates, is uncertain. These include laws and regulations pertaining to unclaimed and abandoned property, partial redemption, refunds, revenue-sharing restrictions on certain trade groups and professions, sales and other local taxes and the sale of alcoholic beverages. In addition, we may become, or be determined to be, subject to federal, state or foreign laws regulating money transmitters or aimed at preventing money laundering or terrorist financing, including the Bank Secrecy Act, the USA PATRIOT Act and other similar future laws or regulations.

If we become subject to claims or are required to alter our business practices as a result of current or future laws and regulations, our revenue could decrease, our costs could increase and our business could otherwise be harmed. In addition, the costs and expenses associated with defending any actions related to such additional laws and regulations and any payments of related penalties, fines, judgments or settlements could harm our business.

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the New York Stock Exchange and other applicable securities rules and regulations. Compliance with these rules and regulations has increased, and will likely continue to increase, our legal and financial compliance costs, make some activities more difficult, time-consuming or costly, and place significant strain on our personnel, systems and resources. In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time. This could result in continuing uncertainty regarding compliance matters, higher administrative expenses and a diversion of management’s time and attention. Further, if our compliance efforts differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed. Being a public company that is subject to these rules and regulations also makes it more expensive for us to obtain and retain director and officer liability insurance, and we may in the future be required to accept reduced coverage or incur substantially higher costs to obtain or retain adequate coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors and qualified executive officers.

Risks Related to Ownership of Our Class A Common Stock

*The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our stock prior to our initial public offering, including our founders, directors, executive officers and employees and their affiliates, and limiting our other stockholders’ ability to influence corporate matters.

Our Class B common stock has 10 votes per share and our Class A common stock has one vote per share. As a result, the holders of our Class B common stock collectively will continue to control a majority of the combined voting power of our common stock even when the shares of Class B common stock represent a small minority of all outstanding shares of our capital stock. The current holders of our Class B common stock collectively are able to control all matters submitted to our stockholders for approval even though their stock holdings represent less than 50% of the outstanding shares of our common stock. All shares of Class A and Class B common stock will automatically convert into a single class of common stock upon the earlier of (x) the date on which the number of outstanding shares of Class B common stock represents less than 10% of the aggregate combined number of outstanding shares of Class A and Class B common stock, and (y) March 1, 2019.

As of March 31, 2016, stockholders who held shares of Class B common stock, including certain of our founders, directors, executive officers, employees and their affiliates, together beneficially owned approximately 11% of the outstanding shares of our Class A and Class B common stock, representing approximately 55% of the voting power of our outstanding capital stock. Future transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, which will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares, which may include existing founders, officers, directors and their affiliates. This concentrated control could limit our other stockholders’ ability to influence corporate matters through as late as March 2019 and even when the shares of Class B common stock represent as little as 10% of the outstanding shares of our capital stock. As a result, the market price of our Class A common stock could be adversely affected.

*Our share price has been and will likely continue to be volatile.

The trading price of our Class A common stock has been, and is likely to continue to be, highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. During 2015, our Class A common stock’s daily closing price ranged from $20.87 to $57.47, and was $21.51 on May 2, 2016. In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Quarterly Report, factors that may cause volatility in our share price include:

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● actual or anticipated fluctuations in our financial condition and operating results;
 

● changes in projected operating and financial results;
 

● actual or anticipated changes in our growth rate relative to our competitors;
 

● announcements of technological innovations or new offerings by us or our competitors;
 

● announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital-raising activities or commitments;
 

● additions or departures of key personnel;
 

● actions of securities analysts who cover our company, such as publishing research or forecasts about our business (and our performance against such forecasts), changing the rating of our Class A common stock or ceasing coverage of our company;
 

● investor sentiment with respect to our competitors, business partners and industry in general;
 

● reporting on our business by the financial media, including television, radio and press reports and blogs;
 

● fluctuations in the value of companies perceived by investors to be comparable to us;
 

● changes in the way we measure our key metrics;
 

● sales of our Class A or Class B common stock;
 

● changes in laws or regulations applicable to our solutions;
 

● share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; and
 

● general economic and market conditions such as recessions, interest rate changes or international currency fluctuations.

Furthermore, the stock markets have recently experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. For example, in August 2014, we and certain of our officers were sued in two similar putative class action lawsuits alleging violations of the federal securities laws for allegedly making materially false and misleading statements. We may be the target of additional litigation of this type in the future as well. Securities litigation against us could result in substantial costs and divert our management’s time and attention from other business concerns, which could harm our business.

We do not intend to pay dividends for the foreseeable future, and as a result, our stockholders’ ability to achieve a return on their investment will depend on appreciation in the price of our Class A common stock.

We have never declared or paid any cash dividends on our common stock and do not intend to pay any cash dividends in the foreseeable future. We anticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, investors must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize future gains on their investments.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our Company more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our Class A common stock.

Provisions in our certificate of incorporation and bylaws may have the effect of delaying or preventing a change in control or changes in our management. Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that:

● authorize our board of directors to issue, without further action by the stockholders, up to 10,000,000 shares of undesignated preferred stock;

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● require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;
 

● specify that special meetings of our stockholders can be called only by our board of directors, the Chair of our board of directors or our Chief Executive Officer;
 

● establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors;
 

● establish that our board of directors is divided into three classes, with directors in each class serving three-year staggered terms;
 

● prohibit cumulative voting in the election of directors;
 

● provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum;
 

● require the approval of our board of directors or the holders of a supermajority of our outstanding shares of capital stock to amend our bylaws and certain provisions of our certificate of incorporation; and
 

● reflect two classes of common stock, as discussed above.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.

*Future sales of our Class A common stock in the public market could cause our share price to decline.

Sales of a substantial number of shares of our Class A common stock in the public market, particularly sales by our directors, officers, employees and significant stockholders, or the perception that these sales might occur, could depress the market price of our Class A common stock and could impair our ability to raise capital through the sale of additional equity securities. As of March 31, 2016, we had 67,982,104 shares of Class A common stock and 8,442,646 shares of Class B common stock outstanding. Although a public market exists for our Class A common stock only, shares of our Class B common stock are generally convertible into an equivalent number of shares of Class A common stock at the option of the holder or upon transfer (subject to certain exceptions).

ITEM2. UNREGISTEREDSALESOFEQUITYSECURITIESANDUSEOFPROCEEDS

None.

ITEM3. DEFAULTSUPONSENIORSECURITIES

None.

ITEM4. MINESAFETYDISCLOSURES

Not applicable.

ITEM5. OTHERINFORMATION

None.

ITEM6. EXHIBITS

A list of exhibits filed with this report or incorporated herein by reference is found in the Exhibit Index immediately following the signature page of this report and is incorporated into this Item 6 by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	YELP INC.
Date: May 6, 2016	/s/ Rob Krolik
	Rob Krolik
	Chief Financial Officer
	(Principal Financial and Accounting Officer and Duly Authorized Signatory)

EXHIBIT INDEX
						Filed
		Incorporated by Reference				Herewith
Exhibit
Number	Exhibit Description	Form	File No.	Exhibit	Filing Date
3.1	Amended and Restated Certificate of Incorporation of Yelp Inc.	8-K	001-35444	3.1	3/9/2012
3.2	Amended and Restated Bylaws of Yelp Inc.	S-1/A	333-178030	3.4	2/3/2012
4.1	Reference is made to Exhibits 3.1 and 3.2.
4.2	Form of Class A Common Stock Certificate.	S-1/A	333-178030	4.1	2/3/2012
4.3	Form of Class B Common Stock Certificate.	S-1/A	333-178030	4.2	2/3/2012
10.1*	Transition Agreement, dated February 4, 2016, by and between Yelp Inc. and Rob Krolik.	8-K	001-35444	10.1	2/8/2016
10.2*	Form of Restricted Stock Unit Agreement and Notice.	8-K	001-35444	10.2	2/8/2016
31.1	Certification pursuant to Rule 13a-14(a)/15d-14(a).					X
31.2	Certification pursuant to Rule 13a-14(a)/15d-14(a).					X
32.1†	Certifications of Chief Executive Officer and Chief Financial Officer.					X
101.INS	XBRL Instance Document.					X
101.SCH	XBRL Taxonomy Extension Schema Document.					X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.					X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.					X
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document.					X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.					X
*	Indicates management contract or compensatory plan or arrangement.
†	The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q, are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Yelp Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Jeremy Stoppelman, certify that:

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: May 6, 2016

/s/ Jeremy Stoppelman

Jeremy Stoppelman

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Rob Krolik, certify that:

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: May 6, 2016

/s/ Rob Krolik

Rob Krolik

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. § 1350), Jeremy Stoppelman, Chief Executive Officer of Yelp Inc. (the “Company”), and Rob Krolik, Chief Financial Officer of the Company, each hereby certifies that, to the best of his knowledge:

1.	The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2016, 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.

In Witness Whereof, the undersigned have set their hands hereto as of the 6^th day of May, 2016.

/s/ Jeremy Stoppelman	/s/ Rob Krolik
Jeremy Stoppelman	Rob Krolik
Chief Executive Officer	Chief Financial Officer

This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Yelp Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Quarterly Report on Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

DOCUMENT AND ENTITY INFORMATION - shares	3 Months Ended
	Mar. 31, 2016	May. 02, 2016
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Amendment Flag	false
Entity Registrant Name	YELP INC
Entity Central Index Key	0001345016
Trading Symbol	YELP
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Entity Filer Category	Large Accelerated Filer
Entity Current Reporting Status	Yes
Class A common stock [Member]
Entity Common Stock, Shares Outstanding		68,024,374
Class B common stock [Member]
Entity Common Stock, Shares Outstanding		8,451,646

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 183,505	$ 171,613
Short-term marketable securities	191,952	199,214
Accounts receivable (net of allowance for doubtful accounts of $3,495 and $3,208 at March 31, 2016 and December 31, 2015, respectively)	54,774	52,755
Prepaid expenses and other current assets	17,109	19,700
Total current assets	447,340	$ 443,282
Long-term marketable securities	8,272
Property, equipment and software, net	84,776	$ 80,467
Goodwill	173,733	172,197
Intangibles, net	37,590	39,294
Restricted cash	17,306	16,486
Other assets	3,950	3,701
Total assets	772,967	755,427
Current liabilities:
Accounts payable	3,200	3,388
Accrued liabilities	52,764	43,458
Deferred revenue	2,977	2,931
Total current liabilities	58,941	49,777
Long-term liabilities	13,332	12,030
Total liabilities	$ 72,273	$ 61,807
Commitments and contingencies (Note 11)
Stockholders' equity:
Common stock, $0.000001 par value - 500,000,000 shares authorized; 76,424,750 and 75,982,802 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively
Additional paid-in capital	$ 793,468	$ 774,022
Accumulated other comprehensive loss	(11,777)	(13,519)
Accumulated deficit	(80,997)	(66,883)
Total stockholders' equity	700,694	693,620
Total liabilities and stockholders' equity	$ 772,967	$ 755,427

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract]
Allowance for doubtful accounts	$ 3,495	$ 3,208
Common stock, par value	$ 0.000001	$ 0.000001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	76,424,750	75,982,802
Common stock, shares outstanding	76,424,750	75,982,802

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]
Net revenue	$ 158,613	$ 118,508
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below)	15,078	8,699
Sales and marketing	95,628	63,266
Product development	32,222	23,960
General and administrative	21,769	19,937
Depreciation and amortization	8,189	6,895
Total costs and expenses	172,886	122,757
Loss from operations	(14,273)	(4,249)
Other income, net	258	562
Loss before income taxes	(14,015)	(3,687)
Benefit (Provision) for income taxes	(1,437)	2,403
Net loss attributable to common stockholders (Class A and B)	$ (15,452)	$ (1,284)
Net loss per share attributable to common stockholders (Class A and B)
Basic	$ (0.20)	$ (0.02)
Diluted	$ (0.20)	$ (0.02)
Weighted-average shares used to compute net loss per share attributable to common stockholders (Class A and B)
Basic	75,884	73,684
Diluted	75,884	73,684

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS [Abstract]
Net loss	$ (15,452)	$ (1,284)
Other comprehensive income (loss):
Foreign currency translation adjustments	1,742	(7,864)
Other comprehensive income (loss)	1,742	(7,864)
Comprehensive loss	$ (13,710)	$ (9,148)

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
OPERATING ACTIVITIES:
Net loss	$ (15,452)	$ (1,284)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	8,189	6,895
Provision for doubtful accounts and sales returns	5,091	3,434
Stock-based compensation	19,110	13,671
Loss on disposal of assets and website development costs	104	52
Premium amortization, net, on securities held-to-maturity	$ 376	(117)
Excess tax benefit from share-based award activity		(815)
Changes in operating assets and liabilities:
Accounts receivable	$ (5,235)	(2,850)
Prepaid expenses and other assets	2,884	(6,045)
Accounts payable, accrued expenses and other liabilties	8,769	12,011
Deferred revenue	43	683
Net cash provided by operating activities	$ 23,879	25,635
INVESTING ACTIVITIES:
Acquisition, net of cash received		(71,546)
Purchases of property, equipment and software	$ (7,645)	(10,881)
Capitalized website and software development costs	(3,125)	(3,196)
Changes in restricted cash	$ (820)	(5)
Purchases of intangible assets		(314)
Proceeds from sale of property and equipment		97
Purchases of marketable securities	$ (92,101)	(36,120)
Maturities of marketable securities	90,500	18,250
Net cash used in investing activities	(13,191)	(103,715)
FINANCING ACTIVITIES:
Issuance of common stock upon exercise of employee stock options	$ 1,045	3,398
Excess tax benefit from share-based award activity		815
Repurchase of common stock		(168)
Net cash provided by financing activities	$ 1,045	4,045
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	159	(648)
CHANGE IN CASH AND CASH EQUIVALENTS	11,892	(74,683)
CASH AND CASH EQUIVALENTS-Beginning of period	171,613	247,312
CASH AND CASH EQUIVALENTS-End of period	183,505	172,629
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:
Cash paid for income taxes, net of refunds	516	422
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Purchases of property and equipment recorded in accounts payable and accruals	$ 1,727	3,544
Capitalized website and software development costs recorded in accounts payable and accruals		15
Goodwill measurement period adjustment	$ 146	51
Acquisition consideration included in accruals		1,876
Issuance of common stock in connection with acquisition		$ 59,158

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DESCRIPTION OF BUSINESS AND BASIS FOR PRESENTATION

3 Months Ended

Mar. 31, 2016

DESCRIPTION OF BUSINESS AND BASIS FOR PRESENTATION [Abstract]

DESCRIPTION OF BUSINESS AND BASIS FOR PRESENTATION

1. DESCRIPTION OF BUSINESS AND BASIS FOR PRESENTATION

Yelp Inc. was incorporated in Delaware on September 3, 2004. Except where specifically noted or the context otherwise requires, the use of terms such as the “Company” and “Yelp” in these Notes to Condensed Consolidated Financial Statements refers to Yelp Inc. and its subsidiaries.

Yelp connects people with great local businesses by bringing “word of mouth” online and providing a platform for businesses and consumers to engage and transact. Yelp's platform is transforming the way people discover local businesses; every day, millions of consumers visit its website or use its mobile app to find great local businesses to meet their everyday needs. Businesses of all sizes use the Yelp platform to engage with consumers at the critical moment when they are deciding where to spend their money.

Basis of Presentation

The accompanying interim condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Company's Annual Report on Form 10-K filed with the SEC on February 24, 2016 (the “Annual Report”). The unaudited condensed consolidated balance sheet as of December 31, 2015 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures required by GAAP, including certain notes to the financial statements.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements, except as follows:

During the three months ended March 31, 2016, the Company adopted Accounting Standards Update 2016-09, “Compensation—Stock Compensation (Topic 718)” (“ASU 2016-09”) on a modified retrospective basis. ASU 2016-09 permits entities to make an accounting policy election related to how forfeitures will impact the recognition of compensation cost for stock-based compensation: to estimate the total number of awards for which the requisite service period will not be rendered (as currently required) or to account for forfeitures as they occur. Upon early adoption of ASU 2016-09, the Company elected to change its accounting policy to account for forfeitures as they occur. The change was applied on a modified retrospective basis with a cumulative-effect adjustment to retained earnings of $1.1 million (which reduced the accumulated deficit) as of January 1, 2016.

ASU 2016-09 also eliminates the requirement that excess tax benefits be realized as a reduction in current taxes payable before the associated tax benefit can be recognized as an increase in paid in capital. Approximately $164.1 million of federal net operating losses, $125.7 million of state net operating losses, $1.8 million of Ireland net operating losses, $1.3 million of federal research and development tax credits and $0.1 million of state Enterprise Zone credits (none of which were included in the deferred tax assets recognized in the statement of financial position as of December 31, 2015) have been attributed to tax deduction for stock-based compensation in excess of the related book expense. Under ASU 2016-09, these previously unrecognized deferred tax assets will be recognized on a modified retrospective basis as of the start of the year in which the ASU 2016-09 is adopted (since the Company is adopting the standard early, its modified retrospective entry is as of January 1, 2016). The U.S. federal and state net operating losses and credits (as described above) that were recognized as of January 1, 2016 have been offset by a valuation allowance. As a result, only the Ireland net operating losses result in a cumulative-effect adjustment to retained earnings of $0.2 million (which reduced the accumulated deficit) as of March 31, 2016.

     Additionally, ASU 2016-09 addresses the presentation of excess tax benefits and employee taxes paid on the statement of cash flows. The Company is now required to present excess tax benefits as an operating activity (in the same manner as other cash flows related to income taxes) on the statement of cash flows rather than as a financing activity, and the Company adopted this change prospectively.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments of a normally recurring nature necessary for the fair presentation of the interim periods presented.

Significant Accounting Policies

Stock-Based Compensation—The Company accounts for stock-based employee compensation plans under the fair value recognition and measurement provisions in accordance with applicable accounting standards, which require all stock-based payments to employees, including grants of stock options, restricted stock awards, restricted stock units and issuances under its 2012 Employee Stock Purchase Plan (“ESPP”) to be measured based on the grant date fair value of the awards.

Prior to January 1, 2016, stock-based compensation expense was recorded net of estimated forfeitures in the Company's consolidated statements of income (loss) and, accordingly, was recorded for only those stock-based awards that the Company expected to vest. The Company estimated the forfeiture rate based on historical forfeitures of equity awards and adjusted the rate to reflect changes in facts and circumstances, if any. The Company revised its estimated forfeiture rate if actual forfeitures differed from its initial estimates.

As of January 1, 2016, the Company adopted a change in accounting policy in accordance with ASU 2016-09 to account for forfeitures as they occur. The change was applied on a modified retrospective basis, and no prior periods were re-stated as a result of this change in accounting policy.

Income Taxes – Prior to January 1, 2016, the Company recognized the excess tax benefits of stock-based compensation expense as additional paid-in capital (“APIC”) and tax deficiencies of stock-based compensation expense in the income tax provision or as APIC to the extent that there was sufficient recognized excess tax benefits previously recognized. As a result of the prior requirement that excess tax benefit reduce taxes payable prior to be recognized as an increase in paid in capital, the Company had not recognized certain deferred tax assets (all tax attributes such as loss or credit carryforwards) that can be attributed to tax deductions related to equity compensation in excess of compensation recognized for financial reporting.

As of January 1, 2016, the Company early adopted a change in accounting policy in accordance with ASU 2016-09 to account for excess tax benefits and tax deficiencies as income tax expense or benefit, treated as discrete items in the reporting period in which they occur, and to recognize previously unrecognized deferred tax assets that arose directly from (or the use of which was postponed by) tax deductions related to equity compensation in excess of compensation recognized for financial reporting. The change was applied on a modified retrospective basis; no prior periods were re-stated as a result of this change in accounting policy.

There have been no other material changes to the Company's significant accounting policies from those described in the Annual Report.

Recent Accounting Pronouncements Not Yet Effective

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which amended the existing accounting standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the consideration expected to be received in exchange for those goods or services. The new standard requires that reporting companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. On July 9, 2015, FASB agreed to delay the effective date by one year and, accordingly, the new standard is effective for the Company beginning in the first quarter of 2018. Early adoption is permitted, but not before the original effective date of the standard. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The Company has not yet selected a transition method, nor has it determined the impact of the new standard and its consolidated financial statements.

In January 2016, FASB issued Accounting Standards Update 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10)” (“ASU 2016-01”). The new standard provides guidance for the recognition, measurement, presentation and disclosure of financial instruments. This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-01 on its consolidated financial statements.

In February 2016, FASB issued Accounting Standards Update No. 2016-02, “Leases” (“ASU 2016-02”). The new guidance generally requires an entity to recognize on its balance sheet operating and financing lease liabilities and corresponding right-of-use assets. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2018 and early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its consolidated financial statements.

Principles of Consolidation

These unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the Company's unaudited interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the unaudited interim condensed consolidated financial statements; therefore, actual results could differ from management's estimates.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2016

FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's investments in money market accounts are recorded as cash equivalents at fair value in the consolidated financial statements. All other financial instruments are classified as held-to-maturity investments and, accordingly, are recorded at amortized cost; however, the Company is required to determine the fair value of these investments on a recurring basis to identify any potential impairment. The accounting guidance for fair value measurements prioritizes the inputs used in measuring fair value in the following hierarchy:

Level 1—Observable inputs, such as quoted prices in active markets,

Level 2—Inputs other than quoted prices in active markets that are observable either directly or indirectly, or

Level 3—Unobservable inputs in which there are little or no market data, which require the Company to develop its own assumptions.

This hierarchy requires the Company to use observable market data, when available, to minimize the use of unobservable inputs when determining fair value. The Company's money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted prices in active markets. The Company's commercial paper, corporate bonds, agency bonds, and agency discount notes are classified within Level 2 of the fair value hierarchy because they have been valued using inputs other than quoted prices in active markets that are observable directly or indirectly.

The following table represents the Company's financial instruments measured at fair value as of March 31, 2016 and December 31, 2015 (in thousands):

	March 31, 2016								December 31, 2015
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash Equivalents:
Money market funds	$	125,184	$	-	$	-	$	125,184	$	86,660	$	-	$	-	$	86,660
Commercial paper		-		7,993		-		7,993		-		-		-		-
Agency bonds		-		-		-		-		-		4,999		-		4,999
Marketable Securities:
Commercial paper		-		33,947		-		33,947		-		36,981		-		36,981
Corporate bonds		-		13,001		-		13,001		-		18,024		-		18,024
Agency bonds		-		141,322		-		141,322		-		132,102		-		132,102
Agency discount notes		-		11,998		-		11,998		-		11,986		-		11,986
Total cash equivalents and marketable securities	$	125,184	$	208,261	$	-	$	333,445	$	86,660	$	204,092	$	-	$	290,752

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MARKETABLE SECURITIES

3 Months Ended

Mar. 31, 2016

MARKETABLE SECURITIES [Abstract]

MARKETABLE SECURITIES

3. MARKETABLE SECURITIES

The amortized cost, gross unrealized gains and losses, and fair value of securities held-to-maturity, all of which mature within two years, as of March 31, 2016 and December 31, 2015 were as follows (in thousands):

	As of March 31, 2016
			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
Short-term marketable securities:
Commercial paper	$	33,947	$	-	$	-	$	33,947
Corporate bonds		13,002		-		(1)		13,001
Agency bonds		133,007		49		(13)		133,043
Agency discount notes		11,996		2		-		11,998
Total marketable securities	$	191,952	$	51	$	(14)	$	191,989
Long-term marketable securities:
Agency bonds		8,272		7		-		8,279
	$	8,272	$	7	$	-		8,279
Total marketable securities	$	200,224	$	58	$	(14)		200,268
	As of December 31, 2015
			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
Short-term marketable securities:
Commercial paper	$	36,981	$	-	$	-	$	36,981
Corporate bonds		18,027		2		(5)		18,024
Agency bonds		132,224		-		(122)		132,102
Agency discount notes		11,982		4		-		11,986
Total marketable securities	$	199,214	$	6	$	(127)	$	199,214

The following table presents gross unrealized losses and fair values for those securities that were in an unrealized loss position as of March 31, 2016 and December 31, 2015, aggregated by investment category and the length of time that the individual securities have been in continuous loss position (in thousands):

	As of March 31, 2016
	Less Than 12 Months					12 Months or Greater				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate bonds		8,000		(1	)		-		-		8,000		(1	)
Agency bonds		29,246		(13	)		-		-		29,246		(13	)
Total	$	37,246	$	(14)		$	-	$	-	$	37,246	$	(14	)
	As of December 31, 2015
	Less Than 12 Months					12 Months or Greater				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate bonds		10,021		(5	)		-		-		10,021		(5	)
Agency bonds		127,102		(122	)		-		-		127,102		(122	)
Total	$	137,123	$	(127	)	$	-	$	-	$	137,123	$	(127	)

The Company periodically reviews its investment portfolio for other-than-temporary impairment. The Company considers such factors as the duration, severity and reason for the decline in value, and the potential recovery period. The Company also considers whether it is more likely than not that it will be required to sell the securities before the recovery of their amortized cost basis, and whether the amortized cost basis cannot be recovered as a result of credit losses. During the three months ended March 31, 2016 and 2015, the Company did not recognize any other-than-temporary impairment loss.

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ACQUISITIONS

3 Months Ended

Mar. 31, 2016

ACQUISITIONS [Abstract]

ACQUISITIONS

4. ACQUISITIONS

2015 Acquisition

On February 9, 2015, the Company acquired Eat24Hours.com, Inc. (“Eat24”). In connection with the acquisition, all of the outstanding capital stock of Eat24 was converted into the right to receive an aggregate of approximately $75.0 million in cash, less certain transaction expenses, and 1,402,844 shares of Yelp Class A common stock with an aggregate fair value of approximately $59.2 million, as determined on the basis of the closing market price of the Company's Class A common stock on the acquisition date. Of the total consideration paid in connection with the acquisition, $16.5 million in cash and 308,626 shares were initially held in escrow to secure indemnification obligations. The balance remaining in the escrow fund was $7.9 million in cash and 308,626 shares as of March 31, 2016. The key purpose underlying the acquisition was to obtain an online food ordering solution to drive daily engagement in the Company's key restaurant vertical.

The acquisition was accounted for as a business combination in accordance with Accounting Standards Codification Topic 805, “Business Combinations” (“ASC 805”), with the results of Eat24's operations included in the Company's consolidated financial statements from February 9, 2015. The purchase price allocation is as follows (in thousands):

	February 9, 2015
Fair value of purchase consideration:
Cash:
Distributed to Eat24 stockholders	$	56,624
Held in escrow account		16,500
Payable on behalf of Eat24 stockholders		1,876
Total cash		75,000
Class A common stock:
Distributed to Eat24 stockholders		46,143
Held in escrow account		13,015
Total purchase consideration	$	134,158
Fair value of net assets acquired:
Cash and cash equivalents	$	1,578
Intangibles		39,600
Goodwill		110,927
Other assets		6,031
Total assets acquired		158,136
Deferred tax liability		(15,207	)
Other liabilities		(8,771	)
Total liabilities assumed		(23,978	)
Net assets acquired	$	134,158

Estimated useful lives and the amount assigned to each class of intangible assets acquired are as follows:

Intangible Asset Type	Amount Assigned		Useful Life
Restaurant relationships	$	17,400	12.0 years
Developed technology	$	7,400	5.0 years
User relationships	$	12,000	7.0 years
Trade name	$	2,800	4.0 years
Weighted average			8.6 years

The intangible assets are being amortized on a straight-line basis, which reflects the pattern in which the economic benefits of the intangible assets are being utilized. The goodwill results from the Company's opportunity to drive daily engagement in its restaurant vertical and potentially expand Eat24's offering to the approximately 1.0 million U.S. restaurants listed on the Company's platform. None of the goodwill is deductible for tax purposes.

The Company recorded no acquisition-related costs for the three months ended March 31, 2016 and approximately $0.2 million in acquisition-related costs in the three months ended March 31, 2015, which were included in the general and administrative expense in the accompanying consolidated statements of operations.

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CASH AND CASH EQUIVALENTS

3 Months Ended

Mar. 31, 2016

CASH AND CASH EQUIVALENTS [Abstract]

CASH AND CASH EQUIVALENTS

5. CASH AND CASH EQUIVALENTS

Cash and cash equivalents as of March 31, 2016 and December 31, 2015 consisted of the following (in thousands):

	March 31,		December 31,
	2016		2015
Cash and cash equivalents
Cash	$	50,328	$	79,954
Money market funds		133,177		91,659
Total cash and cash equivalents	$	183,505	$	171,613

The lease agreements for certain of the Company's offices require the Company to maintain letters of credit issued to the landlords of each facility. Each letter of credit is subject to renewal annually until the applicable lease expires and is collateralized by restricted cash. As of March 31, 2016 and December 31, 2015, the Company had letters of credit totaling $17.3 million and $16.5 million, respectively, related to such leases.

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PROPERTY, EQUIPMENT AND SOFTWARE, NET

3 Months Ended

Mar. 31, 2016

PROPERTY, EQUIPMENT AND SOFTWARE, NET [Abstract]

PROPERTY, EQUIPMENT AND SOFTWARE, NET

6. PROPERTY, EQUIPMENT AND SOFTWARE, NET

Property, equipment and software, net as of March 31, 2016 and December 31, 2015 consisted of the following (in thousands):

	March 31,			December 31,
	2016			2015
Computer equipment	$	27,439		$	26,004
Software		1,223			1,213
Capitalized website and internal-use software development costs		46,169			42,320
Furniture and fixtures		11,893			10,771
Leasehold improvements		51,680			47,552
Telecommunication		3,135			2,970
Total		141,539			130,830
Less accumulated depreciation		(56,763	)		(50,363	)
Property, equipment and software, net	$	84,776		$	80,467

Depreciation expense for the three months ended March 31, 2016 and 2015 was approximately $6.5 million and $5.6 million, respectively.

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GOODWILL AND INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2016

GOODWILL AND INTANGIBLE ASSETS [Abstract]

GOODWILL AND INTANGIBLE ASSETS

7. GOODWILL AND INTANGIBLE ASSETS

The Company's goodwill is the result of its acquisition of other businesses, and represents the excess of purchase consideration over the fair value of assets and liabilities acquired. The Company performed its annual goodwill impairment analysis during the three months ended September 30, 2015 and concluded that goodwill was not impaired, as the value of each reporting unit exceeded its carrying value.

The changes in the carrying amount of goodwill during the three months ended March 31, 2016 were as follows (in thousands):

Balance as of December 31, 2015	$	172,197
Goodwill measurement period adjustment		146
Effect of currency translation		1,390
Balance as of March 31, 2016	$	173,733

Intangible assets at March 31, 2016 and December 31, 2015 consisted of the following (dollars in thousands):

								Weighted
	Gross					Net		Average
	Carrying		Accumulated			Carrying		Remaining
	Amount		Amortization			Amount		Life
March 31, 2016:
Content	$	3,952	$	(2,281	)	$	1,671		2.5 years
Advertiser relationships		1,721		(1,721	)		-		0.0 years
Developed technology		9,311		(2,881	)		6,430		3.8 years
Trade name and other		3,361		(1,336	)		2,025		2.8 years
Domains and data licenses		2,625		(953	)		1,672		3.6 years
Restaurant and user relationships		29,400		(3,608	)		25,792		8.9 years
Total	$	50,370	$	(12,780	)	$	37,590
									Weighted
	Gross					Net		Average
	Carrying		Accumulated			Carrying		Remaining
	Amount		Amortization			Amount		Life
December 31, 2015:
Content	$	3,922	$	(2,066	)	$	1,856		2.7 years
Advertiser relationships		1,708		(1,708	)		-		0.0 years
Developed technology		9,295		(2,441	)		6,854		4.1 years
Trade name and other		3,350		(1,139	)		2,211		3.1 years
Domains and data licenses		2,625		(835	)		1,790		3.9 years
Restaurant and user relationships		29,400		(2,817	)		26,583		9.1 years
Total	$	50,300	$	(11,006	)	$	39,294

Amortization expense for the three months ended March 31, 2016 and 2015 was $1.7 million and $1.2 million, respectively.

As of March 31, 2016, the estimated future amortization of purchased intangible assets for (i) the remaining nine months of 2016, (ii) each of the succeeding five years and (iii) thereafter is as follows (in thousands):

Year Ending December 31,	Amount
2016 (from April 1, 2016)	$	5,143
2017		6,712
2018		6,245
2019		5,359
2020		3,369
2021		3,165
Thereafter		7,597
Total amortization	$	37,590

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ACCRUED LIABILITIES

3 Months Ended

Mar. 31, 2016

ACCRUED LIABILITIES [Abstract]

ACCRUED LIABILITIES

8. ACCRUED LIABILITIES

Accrued liabilities as of March 31, 2016 and December 31, 2015 consisted of the following (in thousands):

	March 31,		December 31,
	2016		2015
Restaurant revenue share liability	$	14,873	$	12,654
Accrued employee vacation		6,490		4,662
Accrued bonuses and commissions		5,781		4,546
Employee stock purchase plan liability		3,520		817
Accrued employee benefits and other employee expenses		3,332		3,631
Accrued marketing		3,130		2,144
Accrued income, withholding and business taxes		2,398		1,513
Accrued website hosting		1,930		975
Accrued facilities and other allocations		1,557		1,928
Payroll taxes payable		1,509		1,938
Fixed asset purchase commitments		1,460		1,318
Accrued consulting		1,324		1,763
Deferred rent		876		786
Merchant revenue share liability		821		1,212
Other accrued expenses		3,763		3,571
Total	$	52,764	$	43,458

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LONG-TERM LIABILITIES

3 Months Ended

Mar. 31, 2016

LONG-TERM LIABILITIES [Abstract]

LONG-TERM LIABILITIES

9. LONG-TERM LIABILITIES

Long-term liabilities as of March 31, 2016 and December 31, 2015 consisted of the following (in thousands):

	March 31,		December 31,
	2016		2015
Deferred rent	$	12,629	$	11,324
Other long-term liabilities		703		706
Total	$	13,332	$	12,030

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OTHER INCOME (EXPENSE), NET

3 Months Ended

Mar. 31, 2016

OTHER INCOME (EXPENSE), NET [Abstract]

OTHER INCOME (EXPENSE), NET

10. OTHER INCOME (EXPENSE), NET

Other income (expense), net for the three months ended March 31, 2016 and 2015 consisted of the following (in thousands):

	Three Months Ended
	March 31,
	2016			2015
Net interest income	$	311		$	132
Transaction gain (loss) on foreign exchange		66			(171	)
Other non-operating income (loss), net		(119	)		601
Other income (expense), net	$	258		$	562

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2016

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

11. COMMITMENTS AND CONTINGENCIES

Office Facility Leases—The Company leases its office facilities under operating lease agreements that expire from 2016 to 2025. Certain lease agreements provide for rental payments on a graduated basis. The Company recognizes rent expense on a straight-line basis over the lease period. Rental expense was $8.6 million and $6.9 million for the three months ended March 31, 2016 and 2015, respectively.

The Company has subleased certain office facilities under operating lease agreements that expire in 2021. The Company recognizes sublease rentals as a reduction in rental expense on a straight-line basis over the lease period. Sublease rentals were $0.5 million and zero for the three months ended March 31, 2016 and 2015, respectively.

Legal Proceedings—The Company is subject to legal proceedings arising in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently does not believe that the final outcome of any of these matters will have a material adverse effect on the Company's business, financial position, results of operations or cash flows.

In August 2014, two putative class action lawsuits alleging violations of federal securities laws were filed in the U.S. District Court for the Northern District of California, naming as defendants the Company and certain of its officers. The lawsuits allege violations of the Exchange Act by the Company and certain of its officers for allegedly making materially false and misleading statements regarding the Company's business and operations between October 29, 2013 and April 3, 2014. These cases were subsequently consolidated and, in January 2015, the plaintiffs filed a consolidated complaint seeking unspecified monetary damages and other relief. Following the court's dismissal of the consolidated complaint on April 21, 2015, the plaintiffs filed a first amended complaint on May 21, 2015. On November 24, 2015, the court dismissed the first amended complaint with prejudice, and entered judgment in the Company's favor on December 28, 2015. The plaintiffs have appealed this decision to the U.S. Court of Appeals for the Ninth Circuit.

On April 23, 2015, a putative class action lawsuit was filed by former Eat24 employees in the Superior Court of California for San Francisco County, naming as defendants the Company and Eat24. The lawsuit asserts that the defendants failed to permit meal and rest periods for certain current and former employees working as Eat24 customer support specialists, and alleges violations of the California Labor Code, applicable Industrial Welfare Commission Wage Orders and the California Business and Professions Code. The plaintiffs seek monetary damages in an unspecified amount and injunctive relief. On May 29, 2015, plaintiffs filed a first amended complaint asserting an additional cause of action for penalties under the Private Attorneys General Act. In January 2016, the Company reached a preliminary agreement to settle this matter for payments in the aggregate amount of up to approximately $0.6 million. Once finalized, the settlement will be subject to court approval.

On June 24, 2015, a former Eat24 sales employee filed a lawsuit, on behalf of herself and a putative class of current and former Eat24 sales employees, against Eat24 in the Superior Court of California for San Francisco County. The lawsuit alleges that Eat24 failed to pay required wages, including overtime wages, allow meal and rest periods and maintain proper records, and asserts causes of action under the California Labor Code, applicable Industrial Welfare Commission Wage Orders and the California Business and Professions Code. The plaintiff seeks monetary damages and penalties in unspecified amounts, as well as injunctive relief. On August 3, 2015, the plaintiff filed a first amended complaint asserting an additional cause of action for penalties under the Private Attorneys General Act. In January 2016, the Company reached a preliminary agreement to settle this matter for payments in the aggregate amount of up to approximately $0.2 million. Once finalized, the settlement will be subject to court approval.

Based on the preliminary settlement agreements reached in connection with the two lawsuits by former Eat24 employees described above, the Company recognized a liability for each of the proposed settlement amounts as part of its accrued liabilities as of March 31, 2016. In February 2016, $1.1 million was released to the Company from the escrow fund established in connection with the acquisition of Eat24 to fund such settlement amounts and related legal expenses.

Indemnification Agreements—In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with directors and certain officers and employees that will require the Company to, among other things, indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees.

While the outcome of claims cannot be predicted with certainty, the Company does not believe that the outcome of any claims under the indemnification arrangements will have a material effect on the Company's financial position, results of operations or cash flows.

Payroll Tax Audit—In June 2015, the Internal Revenue Service (“IRS”) began a payroll tax audit of the Company for 2014 and 2013. The Company has assessed the estimated range of such loss and, as of March 31, 2016, a liability of $0.5 million has been recorded. The Company expects the audits and any related assessments to be finalized by December 31, 2016.

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STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2016

STOCKHOLDERS' EQUITY [Abstract]

STOCKHOLDERS' EQUITY

12. STOCKHOLDERS' EQUITY

The following table presents the number of shares authorized and issued and outstanding as of the dates indicated:

	March 31, 2016		December 31, 2015
		Shares		Shares
	Shares	Issued and	Shares	Issued and
	Authorized	Outstanding	Authorized	Outstanding
Stockholders' equity:
Class A common stock, $0.000001 par value	200,000,000	67,982,104	200,000,000	66,535,156
Class B common stock, $0.000001 par value	100,000,000	8,442,646	100,000,000	9,447,646
Common stock, $0.000001 par value	200,000,000	-	200,000,000	-
Undesignated Preferred Stock	10,000,000	-	10,000,000	-

Equity Incentive Plans

The Company has outstanding awards under three equity incentive plans: the Amended and Restated 2005 Equity Incentive Plan (the “2005 Plan”), the 2011 Equity Incentive Plan (the “2011 Plan”) and the 2012 Equity Incentive Plan, as amended (the “2012 Plan”). In July 2011, the Company adopted the 2011 Plan, terminated the 2005 Plan and provided that no further stock awards were to be granted under the 2005 Plan. All outstanding stock awards under the 2005 Plan continue to be governed by their existing terms. Upon the effectiveness of the underwriting agreement in connection with the Company's initial public offering (“IPO”), the Company terminated the 2011 Plan and all shares that were reserved under the 2011 Plan but not issued were assumed by the 2012 Plan. No further awards will be granted pursuant to the 2011 Plan. All outstanding stock awards under the 2011 Plan continue to be governed by their existing terms. Under the 2012 Plan, the Company has the ability to issue incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock units (“RSUs”), restricted stock awards (“RSAs”), performance units and performance shares. Additionally, the 2012 Plan provides for the grant of performance cash awards to employees, directors and consultants.

Stock Options

Stock options granted under the 2012 Plan are granted at a price per share not less than the fair value at date of grant. Options granted to date generally vest over a four-year period, on one of three schedules: (a) 25% vesting at the end of one year and the remaining shares vesting monthly thereafter; (b) 10% vesting over the first year, 20% vesting over the second year, 30% vesting over the third year and 40% vesting over the fourth year; or (c) ratably on a monthly basis. Options granted are generally exercisable for up to 10 years.

A summary of stock option activity for the three months ended March 31, 2016 is as follows:

	Options Outstanding
						Weighted-
						Average
				Weighted-		Remaining		Aggregate
				Average		Contractual		Intrinsic
	Number of			Exercise		Term (in		Value
	Shares			Price		years)		(in thousands)
Outstanding – January 1, 2016		8,206,356			20.93		6.44	$	92,454
Granted		836,268			22.32
Exercised		(126,700	)		8.17
Canceled		(59,959	)		38.73
Outstanding – March 31, 2016		8,855,965			21.13		6.55	$	38,683
Options vested and exercisable as of March 31, 2016		6,031,340			17.14		5.81	$	38,448

Aggregate intrinsic value represents the difference between the closing price of the Company's Class A common stock and the exercise price of outstanding, in-the-money options. The total intrinsic value of options exercised was approximately $1.6 million and $10.2 million for the three months ended March 31, 2016 and 2015, respectively.

The weighted-average grant date fair value of options granted was $9.53 and $28.16 per share for the three months ended March 31, 2016 and 2015, respectively.

As of March 31, 2016, total unrecognized compensation costs related to unvested stock options was approximately $34.6 million, which is expected to be recognized over a weighted-average time period of 1.8 years.

RSUs and RSAs

The cost of RSUs and RSAs is determined using the fair value of the Company's common stock on the date of grant. RSUs and RSAs generally vest over a four-year period, on one of three schedules: (a) 25% vesting at the end of one year and the remaining vesting quarterly or annually thereafter; (b) 10% vesting over the first year, 20% vesting over the second year, 30% vesting over the third year and 40% vesting over the fourth year; or (c) ratably on a quarterly basis.

A summary of RSU and RSA activity for the three months ended March 31, 2016 is as follows:

	Restricted Stock Units				Restricted Stock Awards
			Weighted-
			Average				Weighted-
			Grant				Average Grant
	Number of		Date Fair		Number		Date Fair
	Shares		Value		of Shares		Value
Unvested—January 1, 2016	4,093,204		$	39.45	312		$	11.68
Granted	2,299,156			26.01	-			-
Released	(315,486	)		38.42	(312	)		11.68
Canceled	(253,364	)		32.23	-			-
Unvested—March 31, 2016	5,823,510		$	34.52	-		$	-

As of March 31, 2016, the Company had approximately $180.3 million of unrecognized stock-based compensation expense related to RSUs and RSAs, which will be recognized over the remaining weighted-average vesting period of approximately 3.29 years.

Employee Stock Purchase Plan

The ESPP allows eligible employees to purchase shares of the Company's Class A common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations, during designated offering periods. At the end of each offering period that began prior to December 1, 2014, employees were able to purchase shares at 85% of the lower of the fair market value of the Company's Class A common stock on the first trading day of the offering period or on the last day of the offering period. At the end of each offering period that began December 1, 2014 or later, employees are able to purchase shares at 85% of the fair market value of the Company's Class A common stock on the last day of the offering period. There were no shares purchased by employees under the ESPP during the three months ended March 31, 2016 or 2015. The Company recognized $0.2 million and $1.4 million of stock-based compensation expense related to the ESPP during the three months ended March 31, 2016 and 2015, respectively.

Stock-Based Compensation

The following table summarizes the effects of stock-based compensation expense related to stock-based awards in the consolidated statements of operations during the periods presented (in thousands):

	Three Months Ended
	March 31,
	2016		2015
Cost of revenue	$	401	$	124
Sales and marketing		6,342		4,937
Product development		8,030		5,105
General and administrative		4,337		3,505
Total stock-based compensation		19,110		13,671

The Company capitalized $0.8 million and $0.7 million of stock-based compensation expense as website development and internal-use software costs in the three months ended March 31, 2016 and 2015, respectively.

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INCOME TAXES

3 Months Ended

Mar. 31, 2016

INCOME TAXES [Abstract]

INCOME TAXES

13. NET LOSS PER SHARE

Basic and diluted net loss per share attributable to common stockholders are presented in conformity with the “two-class method” required for participating securities. Shares of Class A and Class B common stock are the only outstanding equity in the Company. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share. Shares of Class B common stock may be converted into Class A common stock at any time at the option of the stockholder, and are automatically converted upon sale or transfer to Class A common stock, subject to certain limited exceptions, and in connection with certain other conversion events.

Basic net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed using the weighted-average number of shares of common stock and, if dilutive, potential shares of common stock outstanding during the period. The Company's potential shares of common stock consist of the incremental shares of common stock issuable upon the exercise of stock options, shares issuable upon the vesting of RSUs and, to a lesser extent, unvested shares subject to RSAs and purchases related to the ESPP. The dilutive effect of these potential shares of common stock is reflected in diluted earnings per share by application of the treasury stock method. The computation of the diluted net loss per share of Class A common stock assumes the conversion of Class B common stock, while the diluted net loss per share of Class B common stock does not assume the conversion of Class B common stock.

The undistributed earnings are allocated based on the contractual participation rights of the Class A and Class B common stock as if the earnings for the year have been distributed. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis. Further, as the conversion of Class B common stock is assumed in the computation of the diluted net loss per share of Class A common stock, the undistributed earnings are equal to net loss for that computation.

The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):

	Three Months Ended March 31,
	2016						2015
	Class A			Class B			Class A			Class B
Net loss attributable to common stockholders	$	(13,656	)	$	(1,796	)	$	(1,115	)	$	(169	)
Basic Shares:
Weighted-average common shares outstanding		67,065			8,819			63,976			9,708
Diluted Shares:
Weighted-average shares used to compute diluted net loss per share		67,065			8,819			63,976			9,708
Net loss per share attributable to common stockholders
Basic:	$	(0.20	)	$	(0.20	)	$	(0.02	)	$	(0.02	)
Diluted:	$	(0.20	)	$	(0.20	)	$	(0.02	)	$	(0.02	)

The following weighted-average stock-based instruments were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented (in thousands):

	Three Months Ended
	March 31,
	2016	2015
Stock options	8,856	8,921
Restricted stock units and awards	5,824	1,663
Contingently issuable shares	309	309
ESPP	-	81

14. INCOME TAXES

The Company is subject to income tax in the United States as well as other tax jurisdictions in which it conducts business. Earnings from non-U.S. activities are subject to local country income tax. The Company does not provide for federal income taxes on the undistributed earnings of its foreign subsidiaries as such earnings are to be reinvested indefinitely. The Company recorded an income tax provision of $1.4 million and an income tax benefit of $2.4 million for the three months ended March 31, 2016 and 2015, respectively. The tax provision for the three months ended March 31, 2016 is due to $1.5 million in U.S. federal and state and foreign income tax provision offset by discrete benefits of $0.1 million. The tax benefit for the three months ended March 31, 2015 is due to $2.0 million in U.S. federal and state and foreign income tax benefits and $0.4 million in discrete benefits.

The primary difference between the effective tax rate and the federal statutory tax rate relates to the valuation allowances on certain of the Company's net operating losses, foreign tax rate differences, meals and entertainment, tax credits, and non-deductible stock-based compensation expense. As of March 31, 2016, the total amount of gross unrecognized tax benefits was $5.6 million, $4.7 million of which is subject to a full valuation allowance and would not affect the Company's effective tax rate if recognized. As of March 31, 2016, the Company had an immaterial amount related to the accrual of interest and penalties. During the three months ended March 31, 2016, the Company's gross unrecognized tax benefits increased by $0.6 million, an immaterial amount of which would affect the Company's effective tax rate if recognized.

In addition, the Company is subject to the continuous examination of its income tax returns by the IRS and other tax authorities. The Company's federal and state income tax returns for fiscal years 2004 through 2015 remain open to examination. In the Company's most significant foreign jurisdictions — Ireland, United Kingdom and Germany — the open tax years range from 2010 to 2015. The Company regularly assesses the likelihood of adverse outcomes resulting from examinations to determine the adequacy of its provision for income taxes, and monitors the progress of ongoing discussions with tax authorities and the impact, if any, of the expected expiration of the statute of limitations in various taxing jurisdictions. The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company's tax audits are resolved in a manner not consistent with management's expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. Although the timing of the resolution or closure of audits is not certain, the Company believes it is reasonably possible that its unrecognized tax benefits could be reduced by up to $0.2 million over the 12 months following December 31, 2015.

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INFORMATION ABOUT REVENUE AND GEOGRAPHIC AREAS

3 Months Ended

Mar. 31, 2016

INFORMATION ABOUT REVENUE AND GEOGRAPHIC AREAS [Abstract]

INFORMATION ABOUT REVENUE AND GEOGRAPHIC AREAS

15. INFORMATION ABOUT REVENUE AND GEOGRAPHIC AREAS

The Company considers operating segments to be components of the Company in which separate financial information is available that is evaluated regularly by the Company's chief operating decision maker in deciding how to allocate resources and in assessing performance. The chief operating decision maker for the Company is the Chief Executive Officer. The Chief Executive Officer reviews financial information presented on a consolidated basis, accompanied by information about revenue by product line and geographic region for purposes of allocating resources and evaluating financial performance.

The Company has one business activity and there are no segment managers who are held accountable for operations, operating results or plans for levels or components below the consolidated unit level. Accordingly, the Company has determined that it has a single operating and reporting segment.

Net Revenue

The table below presents the Company's net revenue by product line for the periods presented (in thousands). Revenue by geography is based on the billing address of the customer. During the three months ended June 30, 2015, the Company began reporting revenue for the transactions product line, which consists of Eat24, Platform transactions and the sale of Yelp Deals and Gift Certificates. The Company has presented transactions revenue separately in the tables and discussion for prior periods for purposes of comparison.

	Three Months Ended
	March 31,
	2016		2015
Net revenue by product:
Local	$	138,116	$	98,570
Transactions		14,499		6,606
Brand advertising		-		6,627
Other services		5,998		6,705
Total net revenue	$	158,613	$	118,508

During the three months ended March 31, 2016 and 2015, a substantial majority of the Company's revenue was generated in the United States. In addition, no individual customer accounted for 10% or more of consolidated net revenue in any such period.

Long-Lived Assets

The following table presents the Company's long-lived assets by geographic region for the periods indicated (in thousands):

	March 31,		December 31,
	2016		2015
United States	$	82,362	$	78,675
All other countries		2,414		5,493
Total	$	84,776	$	84,168

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DESCRIPTION OF BUSINESS AND BASIS FOR PRESENTATION (Policy)

3 Months Ended

Mar. 31, 2016

DESCRIPTION OF BUSINESS AND BASIS FOR PRESENTATION [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying interim condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Company's Annual Report on Form 10-K filed with the SEC on February 24, 2016 (the “Annual Report”). The unaudited condensed consolidated balance sheet as of December 31, 2015 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures required by GAAP, including certain notes to the financial statements.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements, except as follows:

During the three months ended March 31, 2016, the Company adopted Accounting Standards Update 2016-09, “Compensation—Stock Compensation (Topic 718)” (“ASU 2016-09”) on a modified retrospective basis. ASU 2016-09 permits entities to make an accounting policy election related to how forfeitures will impact the recognition of compensation cost for stock-based compensation: to estimate the total number of awards for which the requisite service period will not be rendered (as currently required) or to account for forfeitures as they occur. Upon early adoption of ASU 2016-09, the Company elected to change its accounting policy to account for forfeitures as they occur. The change was applied on a modified retrospective basis with a cumulative-effect adjustment to retained earnings of $1.1 million (which reduced the accumulated deficit) as of January 1, 2016.

ASU 2016-09 also eliminates the requirement that excess tax benefits be realized as a reduction in current taxes payable before the associated tax benefit can be recognized as an increase in paid in capital. Approximately $164.1 million of federal net operating losses, $125.7 million of state net operating losses, $1.8 million of Ireland net operating losses, $1.3 million of federal research and development tax credits and $0.1 million of state Enterprise Zone credits (none of which were included in the deferred tax assets recognized in the statement of financial position as of December 31, 2015) have been attributed to tax deduction for stock-based compensation in excess of the related book expense. Under ASU 2016-09, these previously unrecognized deferred tax assets will be recognized on a modified retrospective basis as of the start of the year in which the ASU 2016-09 is adopted (since the Company is adopting the standard early, its modified retrospective entry is as of January 1, 2016). The U.S. federal and state net operating losses and credits (as described above) that were recognized as of January 1, 2016 have been offset by a valuation allowance. As a result, only the Ireland net operating losses result in a cumulative-effect adjustment to retained earnings of $0.2 million (which reduced the accumulated deficit) as of March 31, 2016.

     Additionally, ASU 2016-09 addresses the presentation of excess tax benefits and employee taxes paid on the statement of cash flows. The Company is now required to present excess tax benefits as an operating activity (in the same manner as other cash flows related to income taxes) on the statement of cash flows rather than as a financing activity, and the Company adopted this change prospectively.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments of a normally recurring nature necessary for the fair presentation of the interim periods presented.

Stock-Based Compensation

Stock-Based Compensation—The Company accounts for stock-based employee compensation plans under the fair value recognition and measurement provisions in accordance with applicable accounting standards, which require all stock-based payments to employees, including grants of stock options, restricted stock awards, restricted stock units and issuances under its 2012 Employee Stock Purchase Plan (“ESPP”) to be measured based on the grant date fair value of the awards.

Prior to January 1, 2016, stock-based compensation expense was recorded net of estimated forfeitures in the Company's consolidated statements of income (loss) and, accordingly, was recorded for only those stock-based awards that the Company expected to vest. The Company estimated the forfeiture rate based on historical forfeitures of equity awards and adjusted the rate to reflect changes in facts and circumstances, if any. The Company revised its estimated forfeiture rate if actual forfeitures differed from its initial estimates.

As of January 1, 2016, the Company adopted a change in accounting policy in accordance with ASU 2016-09 to account for forfeitures as they occur. The change was applied on a modified retrospective basis, and no prior periods were re-stated as a result of this change in accounting policy.

Income Taxes

Income Taxes – Prior to January 1, 2016, the Company recognized the excess tax benefits of stock-based compensation expense as additional paid-in capital (“APIC”) and tax deficiencies of stock-based compensation expense in the income tax provision or as APIC to the extent that there was sufficient recognized excess tax benefits previously recognized. As a result of the prior requirement that excess tax benefit reduce taxes payable prior to be recognized as an increase in paid in capital, the Company had not recognized certain deferred tax assets (all tax attributes such as loss or credit carryforwards) that can be attributed to tax deductions related to equity compensation in excess of compensation recognized for financial reporting.

As of January 1, 2016, the Company early adopted a change in accounting policy in accordance with ASU 2016-09 to account for excess tax benefits and tax deficiencies as income tax expense or benefit, treated as discrete items in the reporting period in which they occur, and to recognize previously unrecognized deferred tax assets that arose directly from (or the use of which was postponed by) tax deductions related to equity compensation in excess of compensation recognized for financial reporting. The change was applied on a modified retrospective basis; no prior periods were re-stated as a result of this change in accounting policy.

There have been no other material changes to the Company's significant accounting policies from those described in the Annual Report.

Recent Accounting Pronouncements Not Yet Effective

Recent Accounting Pronouncements Not Yet Effective

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which amended the existing accounting standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the consideration expected to be received in exchange for those goods or services. The new standard requires that reporting companies disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. On July 9, 2015, FASB agreed to delay the effective date by one year and, accordingly, the new standard is effective for the Company beginning in the first quarter of 2018. Early adoption is permitted, but not before the original effective date of the standard. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The Company has not yet selected a transition method, nor has it determined the impact of the new standard and its consolidated financial statements.

In January 2016, FASB issued Accounting Standards Update 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10)” (“ASU 2016-01”). The new standard provides guidance for the recognition, measurement, presentation and disclosure of financial instruments. This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-01 on its consolidated financial statements.

In February 2016, FASB issued Accounting Standards Update No. 2016-02, “Leases” (“ASU 2016-02”). The new guidance generally requires an entity to recognize on its balance sheet operating and financing lease liabilities and corresponding right-of-use assets. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2018 and early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its consolidated financial statements.

Principles of Consolidation

Principles of Consolidation

These unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of the Company's unaudited interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the unaudited interim condensed consolidated financial statements; therefore, actual results could differ from management's estimates.

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2016

FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value

	March 31, 2016								December 31, 2015
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash Equivalents:
Money market funds	$	125,184	$	-	$	-	$	125,184	$	86,660	$	-	$	-	$	86,660
Commercial paper		-		7,993		-		7,993		-		-		-		-
Agency bonds		-		-		-		-		-		4,999		-		4,999
Marketable Securities:
Commercial paper		-		33,947		-		33,947		-		36,981		-		36,981
Corporate bonds		-		13,001		-		13,001		-		18,024		-		18,024
Agency bonds		-		141,322		-		141,322		-		132,102		-		132,102
Agency discount notes		-		11,998		-		11,998		-		11,986		-		11,986
Total cash equivalents and marketable securities	$	125,184	$	208,261	$	-	$	333,445	$	86,660	$	204,092	$	-	$	290,752

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MARKETABLE SECURITIES (Tables)

3 Months Ended

Mar. 31, 2016

MARKETABLE SECURITIES [Abstract]

Schedule of the Fair Value to Amortized Cost Basis of Securities Held-to-Maturity

	As of March 31, 2016
			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
Short-term marketable securities:
Commercial paper	$	33,947	$	-	$	-	$	33,947
Corporate bonds		13,002		-		(1)		13,001
Agency bonds		133,007		49		(13)		133,043
Agency discount notes		11,996		2		-		11,998
Total marketable securities	$	191,952	$	51	$	(14)	$	191,989
Long-term marketable securities:
Agency bonds		8,272		7		-		8,279
	$	8,272	$	7	$	-		8,279
Total marketable securities	$	200,224	$	58	$	(14)		200,268
	As of December 31, 2015
			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
Short-term marketable securities:
Commercial paper	$	36,981	$	-	$	-	$	36,981
Corporate bonds		18,027		2		(5)		18,024
Agency bonds		132,224		-		(122)		132,102
Agency discount notes		11,982		4		-		11,986
Total marketable securities	$	199,214	$	6	$	(127)	$	199,214

Schedule of Securities in an Unrealized Loss Position

	As of March 31, 2016
	Less Than 12 Months					12 Months or Greater				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate bonds		8,000		(1	)		-		-		8,000		(1	)
Agency bonds		29,246		(13	)		-		-		29,246		(13	)
Total	$	37,246	$	(14)		$	-	$	-	$	37,246	$	(14	)
	As of December 31, 2015
	Less Than 12 Months					12 Months or Greater				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate bonds		10,021		(5	)		-		-		10,021		(5	)
Agency bonds		127,102		(122	)		-		-		127,102		(122	)
Total	$	137,123	$	(127	)	$	-	$	-	$	137,123	$	(127	)

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ACQUISITIONS (Tables) - Eat24 [Member]

3 Months Ended

Mar. 31, 2016

Business Acquisition [Line Items]

Schedule of Purchase Price, Assets Aquired and Liabilities Assumed

	February 9, 2015
Fair value of purchase consideration:
Cash:
Distributed to Eat24 stockholders	$	56,624
Held in escrow account		16,500
Payable on behalf of Eat24 stockholders		1,876
Total cash		75,000
Class A common stock:
Distributed to Eat24 stockholders		46,143
Held in escrow account		13,015
Total purchase consideration	$	134,158
Fair value of net assets acquired:
Cash and cash equivalents	$	1,578
Intangibles		39,600
Goodwill		110,927
Other assets		6,031
Total assets acquired		158,136
Deferred tax liability		(15,207	)
Other liabilities		(8,771	)
Total liabilities assumed		(23,978	)
Net assets acquired	$	134,158

Schedule of Acquired Intangible Assets

Intangible Asset Type	Amount Assigned		Useful Life
Restaurant relationships	$	17,400	12.0 years
Developed technology	$	7,400	5.0 years
User relationships	$	12,000	7.0 years
Trade name	$	2,800	4.0 years
Weighted average			8.6 years

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CASH AND CASH EQUIVALENTS (Tables)

3 Months Ended

Mar. 31, 2016

CASH AND CASH EQUIVALENTS [Abstract]

Schedule of Cash and Cash Equivalents

	March 31,		December 31,
	2016		2015
Cash and cash equivalents
Cash	$	50,328	$	79,954
Money market funds		133,177		91,659
Total cash and cash equivalents	$	183,505	$	171,613

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PROPERTY, EQUIPMENT, AND SOFTWARE, NET (Tables)

3 Months Ended

Mar. 31, 2016

PROPERTY, EQUIPMENT AND SOFTWARE, NET [Abstract]

Schedule of Property, Equipment and Software

	March 31,			December 31,
	2016			2015
Computer equipment	$	27,439		$	26,004
Software		1,223			1,213
Capitalized website and internal-use software development costs		46,169			42,320
Furniture and fixtures		11,893			10,771
Leasehold improvements		51,680			47,552
Telecommunication		3,135			2,970
Total		141,539			130,830
Less accumulated depreciation		(56,763	)		(50,363	)
Property, equipment and software, net	$	84,776		$	80,467

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GOODWILL AND INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2016

GOODWILL AND INTANGIBLE ASSETS [Abstract]

Schedule of Goodwill

Balance as of December 31, 2015	$	172,197
Goodwill measurement period adjustment		146
Effect of currency translation		1,390
Balance as of March 31, 2016	$	173,733

Schedule of Intangible Assets

								Weighted
	Gross					Net		Average
	Carrying		Accumulated			Carrying		Remaining
	Amount		Amortization			Amount		Life
March 31, 2016:
Content	$	3,952	$	(2,281	)	$	1,671		2.5 years
Advertiser relationships		1,721		(1,721	)		-		0.0 years
Developed technology		9,311		(2,881	)		6,430		3.8 years
Trade name and other		3,361		(1,336	)		2,025		2.8 years
Domains and data licenses		2,625		(953	)		1,672		3.6 years
Restaurant and user relationships		29,400		(3,608	)		25,792		8.9 years
Total	$	50,370	$	(12,780	)	$	37,590
									Weighted
	Gross					Net		Average
	Carrying		Accumulated			Carrying		Remaining
	Amount		Amortization			Amount		Life
December 31, 2015:
Content	$	3,922	$	(2,066	)	$	1,856		2.7 years
Advertiser relationships		1,708		(1,708	)		-		0.0 years
Developed technology		9,295		(2,441	)		6,854		4.1 years
Trade name and other		3,350		(1,139	)		2,211		3.1 years
Domains and data licenses		2,625		(835	)		1,790		3.9 years
Restaurant and user relationships		29,400		(2,817	)		26,583		9.1 years
Total	$	50,300	$	(11,006	)	$	39,294

Schedule of Future Amortization Expense

Year Ending December 31,	Amount
2016 (from April 1, 2016)	$	5,143
2017		6,712
2018		6,245
2019		5,359
2020		3,369
2021		3,165
Thereafter		7,597
Total amortization	$	37,590

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ACCRUED LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2016

ACCRUED LIABILITIES [Abstract]

Schedule of Accrued Liabilities

	March 31,		December 31,
	2016		2015
Restaurant revenue share liability	$	14,873	$	12,654
Accrued employee vacation		6,490		4,662
Accrued bonuses and commissions		5,781		4,546
Employee stock purchase plan liability		3,520		817
Accrued employee benefits and other employee expenses		3,332		3,631
Accrued marketing		3,130		2,144
Accrued income, withholding and business taxes		2,398		1,513
Accrued website hosting		1,930		975
Accrued facilities and other allocations		1,557		1,928
Payroll taxes payable		1,509		1,938
Fixed asset purchase commitments		1,460		1,318
Accrued consulting		1,324		1,763
Deferred rent		876		786
Merchant revenue share liability		821		1,212
Other accrued expenses		3,763		3,571
Total	$	52,764	$	43,458

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LONG-TERM LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2016

LONG-TERM LIABILITIES [Abstract]

Schedule of long-term liabilities

	March 31,		December 31,
	2016		2015
Deferred rent	$	12,629	$	11,324
Other long-term liabilities		703		706
Total	$	13,332	$	12,030

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OTHER INCOME (EXPENSE), NET (Tables)

3 Months Ended

Mar. 31, 2016

OTHER INCOME (EXPENSE), NET [Abstract]

Schedule of Other Income (Expense)

	Three Months Ended
	March 31,
	2016			2015
Net interest income	$	311		$	132
Transaction gain (loss) on foreign exchange		66			(171	)
Other non-operating income (loss), net		(119	)		601
Other income (expense), net	$	258		$	562

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STOCKHOLDERS' EQUITY (Tables)

3 Months Ended

Mar. 31, 2016

STOCKHOLDERS' EQUITY [Abstract]

Schedule of Stock by Class

	March 31, 2016		December 31, 2015
		Shares		Shares
	Shares	Issued and	Shares	Issued and
	Authorized	Outstanding	Authorized	Outstanding
Stockholders' equity:
Class A common stock, $0.000001 par value	200,000,000	67,982,104	200,000,000	66,535,156
Class B common stock, $0.000001 par value	100,000,000	8,442,646	100,000,000	9,447,646
Common stock, $0.000001 par value	200,000,000	-	200,000,000	-
Undesignated Preferred Stock	10,000,000	-	10,000,000	-

Schedule of Stock Option Activity

	Options Outstanding
						Weighted-
						Average
				Weighted-		Remaining		Aggregate
				Average		Contractual		Intrinsic
	Number of			Exercise		Term (in		Value
	Shares			Price		years)		(in thousands)
Outstanding – January 1, 2016		8,206,356			20.93		6.44	$	92,454
Granted		836,268			22.32
Exercised		(126,700	)		8.17
Canceled		(59,959	)		38.73
Outstanding – March 31, 2016		8,855,965			21.13		6.55	$	38,683
Options vested and exercisable as of March 31, 2016		6,031,340			17.14		5.81	$	38,448

Summary of RSUs and RSAs Activity

	Restricted Stock Units				Restricted Stock Awards
			Weighted-
			Average				Weighted-
			Grant				Average Grant
	Number of		Date Fair		Number		Date Fair
	Shares		Value		of Shares		Value
Unvested—January 1, 2016	4,093,204		$	39.45	312		$	11.68
Granted	2,299,156			26.01	-			-
Released	(315,486	)		38.42	(312	)		11.68
Canceled	(253,364	)		32.23	-			-
Unvested—March 31, 2016	5,823,510		$	34.52	-		$	-

Schedule of Stock-Based Compensation Expense

	Three Months Ended
	March 31,
	2016		2015
Cost of revenue	$	401	$	124
Sales and marketing		6,342		4,937
Product development		8,030		5,105
General and administrative		4,337		3,505
Total stock-based compensation		19,110		13,671

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NET LOSS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2016

NET LOSS PER SHARE [Abstract]

Schedule of Earnings Per Share

	Three Months Ended March 31,
	2016						2015
	Class A			Class B			Class A			Class B
Net loss attributable to common stockholders	$	(13,656	)	$	(1,796	)	$	(1,115	)	$	(169	)
Basic Shares:
Weighted-average common shares outstanding		67,065			8,819			63,976			9,708
Diluted Shares:
Weighted-average shares used to compute diluted net loss per share		67,065			8,819			63,976			9,708
Net loss per share attributable to common stockholders
Basic:	$	(0.20	)	$	(0.20	)	$	(0.02	)	$	(0.02	)
Diluted:	$	(0.20	)	$	(0.20	)	$	(0.02	)	$	(0.02	)

Schedule of Anti-dilutive Securities

	Three Months Ended
	March 31,
	2016	2015
Stock options	8,856	8,921
Restricted stock units and awards	5,824	1,663
Contingently issuable shares	309	309
ESPP	-	81

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INFORMATION ABOUT REVENUE AND GEOGRAPHIC AREAS (Tables)

3 Months Ended

Mar. 31, 2016

INFORMATION ABOUT REVENUE AND GEOGRAPHIC AREAS [Abstract]

Schedule of Revenue by Product Line

	Three Months Ended
	March 31,
	2016		2015
Net revenue by product:
Local	$	138,116	$	98,570
Transactions		14,499		6,606
Brand advertising		-		6,627
Other services		5,998		6,705
Total net revenue	$	158,613	$	118,508

Schedule of Long-Lived Assets by Geographic Region

	March 31,		December 31,
	2016		2015
United States	$	82,362	$	78,675
All other countries		2,414		5,493
Total	$	84,776	$	84,168

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DESCRIPTION OF BUSINESS AND BASIS FOR PRESENTATION (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Basis of Presentation [Line Items]
Cumulative-effect adjustment to retained earnings	$ 1,100
Retained earnings	80,997	$ 66,883
Domestic [Member]
Basis of Presentation [Line Items]
Tax stock option deductions in excess of book deductions	164,100
Domestic [Member] | Research [Member]
Basis of Presentation [Line Items]
Tax stock option deductions in excess of book deductions	1,300
State [Member]
Basis of Presentation [Line Items]
Tax stock option deductions in excess of book deductions	125,700
State [Member] | State Enterprise Zone Credit [Member]
Basis of Presentation [Line Items]
Tax stock option deductions in excess of book deductions	100
IRELAND
Basis of Presentation [Line Items]
Tax stock option deductions in excess of book deductions	1,800
IRELAND | Restatement adjustment [Member]
Basis of Presentation [Line Items]
Retained earnings	$ 200

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	$ 200,268
Total cash equivalents and marketable securities	333,445	$ 290,752
Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	125,184	$ 86,660
Commercial paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	7,993
Marketable securities	33,947	$ 36,981
Corporate bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	$ 13,001	18,024
Agency bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds		4,999
Marketable securities	$ 141,322	132,102
Agency discount notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	11,998	11,986
Recurring [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents and marketable securities	125,184	86,660
Recurring [Member] | Level 1 [Member] | Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	$ 125,184	$ 86,660
Recurring [Member] | Level 1 [Member] | Commercial paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds
Marketable securities
Recurring [Member] | Level 1 [Member] | Corporate bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities
Recurring [Member] | Level 1 [Member] | Agency bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds
Marketable securities
Recurring [Member] | Level 1 [Member] | Agency discount notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities
Recurring [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents and marketable securities	$ 208,261	$ 204,092
Recurring [Member] | Level 2 [Member] | Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds
Recurring [Member] | Level 2 [Member] | Commercial paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	$ 7,993
Marketable securities	33,947	$ 36,981
Recurring [Member] | Level 2 [Member] | Corporate bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	$ 13,001	18,024
Recurring [Member] | Level 2 [Member] | Agency bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds		4,999
Marketable securities	$ 141,322	132,102
Recurring [Member] | Level 2 [Member] | Agency discount notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	$ 11,998	$ 11,986
Recurring [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total cash equivalents and marketable securities
Recurring [Member] | Level 3 [Member] | Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds
Recurring [Member] | Level 3 [Member] | Commercial paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds
Marketable securities
Recurring [Member] | Level 3 [Member] | Corporate bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities
Recurring [Member] | Level 3 [Member] | Agency bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds
Marketable securities
Recurring [Member] | Level 3 [Member] | Agency discount notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities

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MARKETABLE SECURITIES (Schedule of the Fair Value to Amortized Cost Basis of Securities Held-to-Maturity) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 200,224
Gross Unrealized Gains	58
Gross Unrealized Losses	(14)
Fair Value	200,268
Short-term marketable securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	191,952	$ 199,214
Gross Unrealized Gains	51	6
Gross Unrealized Losses	(14)	(127)
Fair Value	191,989	199,214
Long-term marketable securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	8,272
Gross Unrealized Gains	$ 7
Gross Unrealized Losses
Fair Value	$ 8,279
Commercial paper [Member]
Schedule of Held-to-maturity Securities [Line Items]
Fair Value	33,947	36,981
Commercial paper [Member] | Short-term marketable securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 33,947	$ 36,981
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value	$ 33,947	$ 36,981
Corporate bonds [Member]
Schedule of Held-to-maturity Securities [Line Items]
Fair Value	13,001	18,024
Corporate bonds [Member] | Short-term marketable securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 13,002	18,027
Gross Unrealized Gains		2
Gross Unrealized Losses	$ (1)	(5)
Fair Value	13,001	18,024
Agency bonds [Member]
Schedule of Held-to-maturity Securities [Line Items]
Fair Value	141,322	132,102
Agency bonds [Member] | Short-term marketable securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	133,007	$ 132,224
Gross Unrealized Gains	49
Gross Unrealized Losses	(13)	$ (122)
Fair Value	133,043	132,102
Agency bonds [Member] | Long-term marketable securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	8,272
Gross Unrealized Gains	$ 7
Gross Unrealized Losses
Fair Value	$ 8,279
Agency discount notes [Member]
Schedule of Held-to-maturity Securities [Line Items]
Fair Value	11,998	11,986
Agency discount notes [Member] | Short-term marketable securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	11,996	11,982
Gross Unrealized Gains	$ 2	$ 4
Gross Unrealized Losses
Fair Value	$ 11,998	$ 11,986

XML

MARKETABLE SECURITIES (Schedule of Securities in an Unrealized Loss Position) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Fair Value
Less than 12 months	$ 37,246	$ 137,123
12 months or greater
Total	$ 37,246	$ 137,123
Unrealized Loss
Less than 12 months	$ (14)	$ (127)
12 months or greater
Total	$ (14)	$ (127)
Corporate bonds [Member]
Fair Value
Less than 12 months	$ 8,000	$ 10,021
12 months or greater
Total	$ 8,000	$ 10,021
Unrealized Loss
Less than 12 months	$ (1)	$ (5)
12 months or greater
Total	$ (1)	$ (5)
Agency bonds [Member]
Fair Value
Less than 12 months	$ 29,246	$ 127,102
12 months or greater
Total	$ 29,246	$ 127,102
Unrealized Loss
Less than 12 months	$ (13)	$ (122)
12 months or greater
Total	$ (13)	$ (122)

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ACQUISITIONS (Summary of Purchase Price and Net Assets Acquired) (Details) - USD ($) $ in Thousands		3 Months Ended
	Feb. 09, 2015	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Fair value of purchase consideration:
Net cash consideration			$ 71,546
Payable on behalf of Eat24 stockholders			1,876
Fair value of net assets acquired:
Goodwill		$ 173,733		$ 172,197
Eat 24 Inc [Member]
Business Acquisition [Line Items]
Acquisition-related transaction costs		0	$ 200
Shares issued or issuable for business acquisition	1,402,844
Fair value of purchase consideration:
Cash consideration	$ 75,000
Fair value of common stock	59,200
Payable on behalf of Eat24 stockholders	1,876
Total purchase price	134,158
Fair value of net assets acquired:
Cash and cash equivalents	1,578
Intangibles	39,600
Goodwill	110,927
Other assets	6,031
Total assets acquired	158,136
Deferred tax liability	(15,207)
Other liabilities	(8,771)
Total liabilities assumed	(23,978)
Net assets acquired	134,158
Eat 24 Inc [Member] | Distributed [Member]
Fair value of purchase consideration:
Cash consideration	56,624
Fair value of common stock	$ 46,143
Eat 24 Inc [Member] | Escrow account [Member]
Business Acquisition [Line Items]
Funds held in escrow		$ 7,900
Number of shares held in escrow		308,626
Shares issued or issuable for business acquisition	308,626
Fair value of purchase consideration:
Cash consideration	$ 16,500
Fair value of common stock	$ 13,015

XML

ACQUISITIONS (Summary of Estimated Useful lives of Intangible Assets Acquired ) (Details) - Eat 24 Inc [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Feb. 09, 2015
Acquired Finite-Lived Intangible Assets [Line Items]
Amount Assigned		$ 39,600
Weighted average useful life	8 years 7 months 6 days
Restaurant relationships [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Amount Assigned		17,400
Weighted average useful life	12 years
Developed technology [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Amount Assigned		7,400
Weighted average useful life	5 years
User relationships [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Amount Assigned		12,000
Weighted average useful life	7 years
Trade name [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Amount Assigned		$ 2,800
Weighted average useful life	4 years

XML

CASH AND CASH EQUIVALENTS (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Cash and cash equivalents
Cash	$ 50,328	$ 79,954
Money market funds	133,177	91,659
Total cash and cash equivalents	183,505	171,613	$ 172,629	$ 247,312
Restricted cash related to letters of credit	$ 17,306	$ 16,486

XML

PROPERTY, EQUIPMENT AND SOFTWARE, NET (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
PROPERTY, EQUIPMENT AND SOFTWARE, NET [Abstract]
Depreciation expense	$ 6,500	$ 5,600
Property, Plant and Equipment [Line Items]
Property, equipment and software	141,539		$ 130,830
Less accumulated depreciation	(56,763)		(50,363)
Property, equipment and software, net	84,776		80,467
Computer equipment [Member]
Property, Plant and Equipment [Line Items]
Property, equipment and software	27,439		26,004
Software [Member]
Property, Plant and Equipment [Line Items]
Property, equipment and software	1,223		1,213
Capitalized website and internal-use software development costs [Member]
Property, Plant and Equipment [Line Items]
Property, equipment and software	46,169		42,320
Furniture and fixtures [Member]
Property, Plant and Equipment [Line Items]
Property, equipment and software	11,893		10,771
Leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Property, equipment and software	51,680		47,552
Telecommunication [Member]
Property, Plant and Equipment [Line Items]
Property, equipment and software	$ 3,135		$ 2,970

XML

GOODWILL AND INTANGIBLE ASSETS (Schedule of Goodwill) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
GOODWILL AND INTANGIBLE ASSETS [Abstract]
Balance	$ 172,197
Goodwill measurement period adjustment	146	$ 51
Effect of currency translation	1,390
Balance	$ 173,733

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GOODWILL AND INTANGIBLE ASSETS (Schedule of Intangible Assets) (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
GOODWILL AND INTANGIBLE ASSETS [Abstract]
Amortization expense	$ 1,700	$ 1,200
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	50,370		$ 50,300
Accumulated Amortization	(12,780)		(11,006)
Net Carrying Amount	37,590		39,294
Content [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	3,952		3,922
Accumulated Amortization	(2,281)		(2,066)
Net Carrying Amount	$ 1,671		$ 1,856
Weighted Average Remaining Life	2 years 6 months		2 years 8 months 12 days
Advertiser relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,721		$ 1,708
Accumulated Amortization	$ (1,721)		$ (1,708)
Net Carrying Amount
Weighted Average Remaining Life	0 years		0 years
Developed technology [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 9,311		$ 9,295
Accumulated Amortization	(2,881)		(2,441)
Net Carrying Amount	$ 6,430		$ 6,854
Weighted Average Remaining Life	3 years 9 months 18 days		4 years 1 month 6 days
Trade name and other [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 3,361		$ 3,350
Accumulated Amortization	(1,336)		(1,139)
Net Carrying Amount	$ 2,025		$ 2,211
Weighted Average Remaining Life	2 years 9 months 18 days		3 years 1 month 6 days
Domains and data licenses [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 2,625		$ 2,625
Accumulated Amortization	(953)		(835)
Net Carrying Amount	$ 1,672		$ 1,790
Weighted Average Remaining Life	3 years 7 months 6 days		3 years 10 months 24 days
Restaurant and user relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 29,400		$ 29,400
Accumulated Amortization	(3,608)		(2,817)
Net Carrying Amount	$ 25,792		$ 26,583
Weighted Average Remaining Life	8 years 10 months 24 days		9 years 1 month 6 days

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GOODWILL AND INTANGIBLE ASSETS (Schedule of Future Amortization Expense) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Estimated future amortization expense:
2016 (from April 1, 2016)	$ 5,143
2017	6,712
2018	6,245
2019	5,359
2020	3,369
2021	3,165
Thereafter	7,597
Net Carrying Amount	$ 37,590	$ 39,294

XML

ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
ACCRUED LIABILITIES [Abstract]
Restaurant revenue share liability	$ 14,873	$ 12,654
Accrued employee vacation	6,490	4,662
Accrued bonuses and commissions	5,781	4,546
Employee stock purchase plan liability	3,520	817
Accrued employee benefits and other employee expenses	3,332	3,631
Accrued marketing	3,130	2,144
Accrued income, withholding and business taxes	2,398	1,513
Accrued website hosting	1,930	975
Accrued facilities and other allocations	1,557	1,928
Payroll taxes payable	1,509	1,938
Fixed asset purchase commitments	1,460	1,318
Accrued consulting	1,324	1,763
Deferred rent	876	786
Merchant revenue share liability	821	1,212
Other accrued expenses	3,763	3,571
Total	$ 52,764	$ 43,458

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LONG-TERM LIABILITIES (Schedule of Long-Term Liabilities) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
LONG-TERM LIABILITIES [Abstract]
Deferred rent	$ 12,629	$ 11,324
Other long-term liabilities	703	706
Total	$ 13,332	$ 12,030

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OTHER INCOME (EXPENSE), NET (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
OTHER INCOME (EXPENSE), NET [Abstract]
Net interest income	$ 311	$ 132
Transaction gain (loss) on foreign exchange	66	(171)
Other non-operating income (loss), net	(119)	601
Other income (expense), net	$ 258	$ 562

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COMMITMENTS AND CONTINGENCIES (Office Facility Lease) (Details) $ in Millions	1 Months Ended			3 Months Ended
	Feb. 29, 2016 USD ($)	Jan. 31, 2016 USD ($)	Aug. 31, 2014 item	Mar. 31, 2016 USD ($)	Mar. 31, 2015 USD ($)
COMMITMENTS AND CONTINGENCIES [Abstract]
Rental expense				$ 8.6	$ 6.9
Sublease rentals				0.5	$ 0.0
Number of lawsuits filed | item			2
COMMITMENTS AND CONTINGENCIES [Line Items]
Amount released from escrow fund	$ 1.1
Payroll tax audit liability				$ 0.5
Putative Class Action Lawsuit [Member]
COMMITMENTS AND CONTINGENCIES [Line Items]
Settlement amount		$ 0.6
Lawsuit Filed By Former Sales Employee [Member]
COMMITMENTS AND CONTINGENCIES [Line Items]
Settlement amount		$ 0.2

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STOCKHOLDERS' EQUITY (Award Compensation Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation	$ 19,110	$ 13,671
Capitalized stock-based compensation	$ 800	700
Stock options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years
Exercisable period	10 years
Intrinsic value of options exercised	$ 1,600	$ 10,200
Weighted average grant date fair value	$ 9.53	$ 28.16
Unrecognized compensation costs	$ 34,600
Unrecognized compensation costs, period for recognition	1 year 9 months 18 days
Stock options [Member] | End of year one [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting rate	25.00%
Stock options [Member] | First year [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting rate	10.00%
Stock options [Member] | Second year [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting rate	20.00%
Stock options [Member] | Third year [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting rate	30.00%
Stock options [Member] | Fourth year [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting rate	40.00%
RSUs and RSAs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years
Unrecognized compensation costs	$ 180,300
Unrecognized compensation costs, period for recognition	3 years 3 months 14 days
RSUs and RSAs [Member] | End of year one [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting rate	25.00%
RSUs and RSAs [Member] | First year [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting rate	10.00%
RSUs and RSAs [Member] | Second year [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting rate	20.00%
RSUs and RSAs [Member] | Third year [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting rate	30.00%
RSUs and RSAs [Member] | Fourth year [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting rate	40.00%
ESPP [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Subscription rate of eligible compensation	15.00%
Purchase price, percentage of fair market value	85.00%
Number of shares purchased	0	0
Stock-based compensation	$ 200	$ 1,400

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STOCKHOLDERS' EQUITY (Schedule of Stock by Class) (Details) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Stockholders' equity:
Common stock, par value	$ 0.000001	$ 0.000001
Common stock, Shares Authorized	500,000,000	500,000,000
Common stock, Shares Issued	76,424,750	75,982,802
Common stock, Shares Outstanding	76,424,750	75,982,802
Undesignated Preferred Stock, Shares Authorized	10,000,000	10,000,000
Undesignated Preferred Stock, Shares Issued
Undesignated Preferred Stock, Shares Outstanding
Class A common stock [Member]
Stockholders' equity:
Common stock, par value	$ 0.000001	$ 0.000001
Common stock, Shares Authorized	200,000,000	200,000,000
Common stock, Shares Issued	67,982,104	66,535,156
Common stock, Shares Outstanding	67,982,104	66,535,156
Class B common stock [Member]
Stockholders' equity:
Common stock, par value	$ 0.000001	$ 0.000001
Common stock, Shares Authorized	100,000,000	100,000,000
Common stock, Shares Issued	8,442,646	9,447,646
Common stock, Shares Outstanding	8,442,646	9,447,646
Common stock [Member]
Stockholders' equity:
Common stock, par value	$ 0.000001	$ 0.000001
Common stock, Shares Authorized	200,000,000	200,000,000
Common stock, Shares Issued
Common stock, Shares Outstanding

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STOCKHOLDERS' EQUITY (Schedule of Stock Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Number of Shares
Outstanding, beginning balance	8,206,356
Granted	836,268
Exercised	(126,700)
Canceled	(59,959)
Outstanding, ending balance	8,855,965	8,206,356
Options vested and exercisable	6,031,340
Weighted Average Exercise Price
Outstanding, beginning balance	$ 20.93
Granted	22.32
Exercised	8.17
Canceled	38.73
Outstanding, ending balance	21.13	$ 20.93
Options vested and exercisable	$ 17.14
Weighted Average Remaining Contractual Term, Outstanding	6 years 6 months 18 days	6 years 5 months 8 days
Weighted Average Remaining Contractual Term, Options vested and exercisable	5 years 9 months 22 days
Aggregate Intrinsic Value
Outstanding, beginning balance	$ 92,454
Outstanding, ending balance	38,683	$ 92,454
Options vested and exercisable	$ 38,448

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STOCKHOLDERS' EQUITY (Schedule of Restricted Stock Awards and Restricted Stock Units Activity) (Details)	3 Months Ended
	Mar. 31, 2016 $ / shares shares
Restricted Stock Units [Member]
Number of Shares
Unvested, beginning balance | shares	4,093,204
Granted | shares	2,299,156
Released | shares	(315,486)
Canceled | shares	(253,364)
Unvested, ending balance | shares	5,823,510
Weighted-Average Grant Date Fair Value
Unvested, beginning balance | $ / shares	$ 39.45
Granted | $ / shares	26.01
Released | $ / shares	38.42
Canceled | $ / shares	32.23
Unvested, ending balance | $ / shares	$ 34.52
Restricted Stock Awards [Member]
Number of Shares
Unvested, beginning balance | shares	312
Granted | shares
Released | shares	(312)
Canceled | shares
Unvested, ending balance | shares
Weighted-Average Grant Date Fair Value
Unvested, beginning balance | $ / shares	$ 11.68
Granted | $ / shares
Released | $ / shares	$ 11.68
Canceled | $ / shares
Unvested, ending balance | $ / shares

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STOCKHOLDERS' EQUITY (Schedule of Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation	$ 19,110	$ 13,671
Cost of revenue [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation	401	124
Sales and marketing [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation	6,342	4,937
Product development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation	8,030	5,105
General and administration [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation	$ 4,337	$ 3,505

XML

NET LOSS PER SHARE (Narrative) (Details)	3 Months Ended
	Mar. 31, 2016 item
Common Class [Member]
Class of Stock [Line Items]
Voting rights	1
Common Class B [Member]
Class of Stock [Line Items]
Voting rights	10

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NET LOSS PER SHARE (Schedule of Basic and Diluted Net Loss Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Basic Shares:
Weighted-average common shares outstanding	75,884	73,684
Diluted Shares:
Weighted-average shares used to compute diluted net loss per share	75,884	73,684
Basic:	$ (0.20)	$ (0.02)
Diluted	$ (0.20)	$ (0.02)
Numerator:
Allocation of undistributed earnings	$ (15,452)	$ (1,284)
Numerator:
Allocation of undistributed earnings for basic computation	(15,452)	(1,284)
Class A [Member]
Earnings Per Share Reconciliation [Line Items]
Net loss attributable to common stockholders	$ (13,656)	$ (1,115)
Basic Shares:
Weighted-average common shares outstanding	67,065	63,976
Diluted Shares:
Weighted-average shares used to compute diluted net loss per share	67,065	63,976
Basic:	$ (0.20)	$ (0.02)
Diluted	$ (0.20)	$ (0.02)
Class B [Member]
Earnings Per Share Reconciliation [Line Items]
Net loss attributable to common stockholders	$ (1,796)	$ (169)
Basic Shares:
Weighted-average common shares outstanding	8,819	9,708
Diluted Shares:
Weighted-average shares used to compute diluted net loss per share	8,819	9,708
Basic:	$ (0.20)	$ (0.02)
Diluted	$ (0.20)	$ (0.02)

XML

NET LOSS PER SHARE (Schedule of Anti-Dilutive Employee Stock Awards) (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Stock options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive awards	8,856	8,921
Restricted stock units and awards [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive awards	5,824	1,663
Contingently Issuable Shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive awards	309	309
ESPP [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive awards		81

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INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
INCOME TAXES [Abstract]
Income tax provision (benefit)	$ 1,437	$ (2,403)
Income tax benefit due to U.S. federal and state income taxes and foreign income taxes	1,500	2,000
Income tax benefit discrete benefits	100	$ 400
Unrecognized tax benefits	5,600
Unrecognized tax benefits that would not impact the effective tax rate	4,700
Unrecognized tax benefits increase	$ 600
Unrecognized tax benefits for which reduction is reasonably possible			$ 200

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INFORMATION ABOUT REVENUE AND GEOGRAPHIC AREAS (Revenue) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenue	$ 158,613	$ 118,508
Local [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenue	138,116	98,570
Transactions [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenue	$ 14,499	6,606
Brand advertising [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenue		6,627
Other services [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenue	$ 5,998	$ 6,705

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INFORMATION ABOUT REVENUE AND GEOGRAPHIC AREAS (Long-Lived Assets) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	$ 84,776	$ 84,168
Unites States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	82,362	78,675
All Other Countries [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	$ 2,414	$ 5,493