8-K

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

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 8, 2018

YELP INC.
(Exact name of registrant as specified in its charter)

Delaware	001-35444	20-1854266
(State of incorporation)	(Commission File No.)	(IRS Employer Identification No.)

140 New Montgomery Street, 9^th Floor
San Francisco, CA 94105
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (415) 908-3801

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company           ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.            ☐

Item 2.02. Results of Operations and Financial Condition.

On November 8, 2018, Yelp Inc. (the “Company”) announced its financial results for the third quarter ended September 30, 2018 by issuing a Letter to Shareholders (the “Letter”) and a press release. Copies of the press release and Letter are furnished as Exhibits 99.1 and 99.2 to this Current Report on Form 8-K, respectively.

The information in this Item 2.02 and the exhibits attached hereto are furnished to, but not “filed” with, the Securities and Exchange Commission (“SEC”) and shall not be deemed to be incorporated by reference into any of the Company’s filings with the SEC under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01. Financial Statements and Exhibits.

(d)      Exhibits.

Exhibit Number	Description
99.1	Press Release, dated November 8, 2018, entitled “Yelp Reports Third Quarter 2018 Financial Results.”
99.2	Letter to Shareholders, dated November 8, 2018.

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 hereunto duly authorized.

Date: November 8, 2018	YELP INC.
	By:	/s/ Charles Baker
		Charles Baker
		Chief Financial Officer

EX-99.1

Yelp Reports Third Quarter 2018 Financial Results

Reports Net Revenue of $241 Million, Net Income of $15 Million and Adjusted EBITDA of $50 Million

SAN FRANCISCO--(BUSINESS WIRE)--November 8, 2018--Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, today posted its financial results for the quarter ended September 30, 2018 in the Q3 2018 Shareholder Letter on its Investor Relations website at www.yelp-ir.com.

“Although we achieved our adjusted EBITDA outlook for the third quarter, revenue was lower than we anticipated,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “While the shift to non-term advertising has opened our sales funnel, it has also made our results more sensitive to short-term operational issues. We have begun to address a number of the issues that impacted our third quarter results; however, we expect them to affect our fourth quarter results as well, as reflected in our Business Outlook. We remain positive about the move to more flexible and dynamic advertising terms, as we believe the shift greatly increases our long-term sales opportunity and opens up additional levers to expand Yelp's sales reach and profit margins.”

Quarterly Conference Call

Yelp will host a live Q&A session today at 2:00 p.m. PT to discuss the third quarter 2018 financial results and outlook for the fourth quarter of 2018, full year 2018, and full year 2019. The webcast of the Q&A can be accessed on the Yelp Investor Relations website at www.yelp-ir.com. A replay of the webcast will be available at the same website until November 16, 2018.

About Yelp

Yelp Inc. (www.yelp.com) connects people with great local businesses. With unmatched local business information, photos and review content, Yelp provides a platform for consumers to discover, interact and transact with local businesses of all sizes. Yelp was founded in San Francisco in July 2004.

Yelp intends to make future announcements of material financial and other information through its Investor Relations website. Yelp will also, from time to time, disclose this information through press releases, filings with the Securities and Exchange Commission, conference calls or webcasts, as required by applicable law.

Non-GAAP Financial Measures

This press release and statements made during the above referenced webcast may include information relating to EBITDA, Adjusted EBITDA and Adjusted EBITDA margin, each of which the Securities and Exchange Commission has defined as a "non-GAAP financial measure."

We define EBITDA as net income (loss), adjusted to exclude: provision for (benefit from) income taxes; other income, net; and depreciation and amortization.

We define Adjusted EBITDA as net income (loss), adjusted to exclude: provision for (benefit from) income taxes; other income, net; depreciation and amortization; stock-based compensation expense; any gain (loss) on the disposal of a business unit; and restructuring and integration costs. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net revenue.

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are key measures used by Yelp management and the board of directors to understand and evaluate core operating performance and trends, to prepare and approve Yelp’s annual budget and to develop short- and long-term operational plans. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”).

EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of Yelp’s financial results as reported under GAAP. 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 EBITDA and Adjusted EBITDA do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

● EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, Yelp's working capital needs;

● Adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;

● EBITDA and Adjusted EBITDA do not reflect tax payments that may represent a reduction in cash available to Yelp;

● Adjusted EBITDA does not take into account any restructuring and integration costs; and

● other companies, including those in Yelp’s industry, may calculate EBITDA and Adjusted EBITDA differently, which reduces their usefulness as comparative measures.

Because of these limitations, you should consider EBITDA, Adjusted EBITDA and Adjusted EBITDA margin alongside other financial performance measures, including various cash flow metrics, Net income (loss) and Yelp’s other GAAP results.

Forward-Looking Statements

This press release contains forward-looking statements relating to, among other things, Yelp’s future performance that are based on its current expectations, forecasts and assumptions and that involve risks and uncertainties. These statements include, but are not limited to, statements regarding Yelp’s:

● ability to increase client acquisition through the sale of non-term contracts

● strategic and investment priorities, as well as its ability to execute against those priorities;

● plans to increase its focus on different product distribution channels;

● ability to reduce purchase friction and efficiently expand its sales reach; and

● plans and ability to generate stronger profitability.

Yelp’s actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Factors that could cause or contribute to such differences include, but are not limited to Yelp’s:

● limited operating history in an evolving industry;

● ability to generate sufficient revenue to maintain profitability, particularly in light of its significant ongoing sales and marketing expenses;

● ability to generate and maintain sufficient high-quality content from its users; and

● ability to maintain and expand its base of advertisers, particularly as an increasing portion of advertisers have the ability to cancel their advertising campaigns at any time.

Factors that could cause or contribute to such differences also include those factors that could affect Yelp’s business, operating results and stock price included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Yelp’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q at www.yelp-ir.com or the SEC’s website at www.sec.gov.

Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to Yelp on the date hereof. Such forward-looking statements do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof. Yelp assumes no obligation to update such statements.

Yelp Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

	September			December
	30,			31,
	2018			2017
Assets
Current assets:
Cash and cash equivalents	$	423,495		$	547,850
Short-term marketable securities		414,002			273,366
Accounts receivable, net		81,835			76,173
Prepaid expenses and other current assets		17,567			15,700
Total current assets		936,899			913,089
Long-term marketable securities		-			25,032
Property, equipment and software, net		110,899			103,651
Goodwill		106,323			107,954
Intangibles, net		14,242			16,893
Restricted cash		22,121			18,554
Other non-current assets		42,773			40,428
Total assets	$	1,233,257		$	1,225,601
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	6,829		$	9,033
Accrued liabilities		58,564			73,665
Deferred revenue		3,392			3,469
Total current liabilities		68,785			86,167
Long-term liabilities		34,978			30,737
Total liabilities		103,763			116,904
Stockholders' equity
Common stock		-			-
Additional paid-in capital		1,109,199			1,038,017
Treasury stock		-			(46	)
Accumulated other comprehensive loss		(10,225	)		(8,444	)
Retained earnings		30,520			79,170
Total stockholders' equity		1,129,494			1,108,697
Total liabilities and stockholders' equity	$	1,233,257		$	1,225,601

Yelp Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2018		2017			2018		2017
Net revenue	$	241,096	$	223,287		$	699,033	$	631,406
Costs and expenses:
Cost of revenue (1)		14,177		19,312			43,618		54,282
Sales and marketing (1)		121,759		112,958			362,054		326,409
Product development (1)		53,764		45,834			158,046		127,793
General and administrative (1)		30,302		27,601			90,892		81,808
Depreciation and amortization		10,713		10,656			31,250		31,470
Restructuring and integration		-		35			-		286
Total costs and expenses		230,715		216,396			685,860		622,048
Income from operations		10,381		6,891			13,173		9,358
Other income, net		3,921		1,371			9,950		2,933
Income before income taxes		14,302		8,262			23,123		12,291
Benefit from (provision for) income taxes		684		(232	)		281		(417	)
Net income attributable to common stockholders	$	14,986	$	8,030		$	23,404	$	11,874
Net income per share attributable to common stockholders:
Basic	$	0.18	$	0.10		$	0.28	$	0.15
Diluted	$	0.17	$	0.09		$	0.26	$	0.14
Weighted-average shares used to compute net income per share attributable to common stockholders:
Basic		84,008		82,259			83,865		81,041
Diluted		88,724		87,433			89,271		86,097
(1) Includes stock-based compensation expense as follows:
	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2018		2017			2018		2017
Cost of revenue	$	1,162	$	993		$	3,345	$	2,931
Sales and marketing		7,941		7,305			23,514		21,434
Product development		14,536		11,976			41,878		34,428
General and administrative		5,555		5,035			16,995		16,214
Total stock-based compensation	$	29,194	$	25,309		$	85,732	$	75,007

Yelp Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

	Nine Months Ended
	September 30,
	2018			2017
Operating activities
Net income attributable to common stockholders	$	23,404		$	11,874
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		31,250			31,470
Bad debt expense		19,285			15,239
Stock-based compensation		85,732			75,007
Other adjustments		(2,793	)		280
Changes in operating assets and liabilities:
Accounts receivable		(24,956	)		(19,810	)
Prepaid expenses and other assets		(2,085	)		(2,077	)
Accounts payable, accrued expenses and other liabilities		(13,647	)		15,628
Deferred revenue		(75	)		350
Net cash provided by operating activities		116,115			127,961
Investing activities
Purchases of marketable securities		(572,788	)		(179,557	)
Maturities of marketable securities		460,800			191,000
Acquisition of a business, net of cash received		-			(50,544	)
Purchases of property, equipment and software		(18,699	)		(7,892	)
Capitalized website and software development costs		(15,238	)		(12,236	)
Other investing activities		64			69
Net cash used in investing activities		(145,861	)		(59,160	)
Financing activities
Proceeds from issuance of common stock for employee stock-based plans		21,835			29,556
Repurchases of common stock		(71,993	)		(7,743	)
Taxes paid related to the net share settlement of equity awards		(41,081	)		-
Net cash (used in) provided by financing activities		(91,239	)		21,813
Effect of exchange rate changes on cash, cash equivalents and restricted cash		197			864
Change in cash, cash equivalents and restricted cash		(120,788	)		91,478
Cash, cash equivalents and restricted cash - Beginning of period		566,404			289,518
Cash, cash equivalents and restricted cash - End of period	$	445,616		$	380,996

Yelp Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Reconciliation of GAAP net income to EBITDA and adjusted EBITDA:
GAAP net income	$	14,986		$	8,030		$	23,404		$	11,874
(Benefit from) provision for income taxes		(684	)		232			(281	)		417
Other income, net		(3,921	)		(1,371	)		(9,950	)		(2,933	)
Depreciation and amortization		10,713			10,656			31,250			31,470
EBITDA		21,094			17,547			44,423			40,828
Stock-based compensation		29,194			25,309			85,732			75,007
Restructuring and integration costs		-			35			-			286
Adjusted EBITDA	$	50,288		$	42,891		$	130,155		$	116,121
Net revenue	$	241,096		$	223,287		$	699,033		$	631,406
Adjusted EBITDA margin		21	%		19	%		19	%		18	%

Yelp Inc.
Third Quarter Net Revenue Adjusted for Eat24
(In thousands)
(Unaudited)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2018		2017			2018		2017
Net revenue as reported	$	241,096	$	223,287		$	699,033	$	631,406
Eat24 revenue		-		(17,550	)		-		(52,079	)
Net revenue excluding Eat24	$	241,096	$	205,737		$	699,033	$	579,327

Investor Relations Contact

Yelp Inc.
Kate Krieger
415-266-3513
ir@yelp.com

EX-99.2