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, 2022

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 Incorporation or Organization)	(I.R.S. Employer Identification No.)

350 Mission Street, 10th Floor

San Francisco, California 94105

(Address of principal executive offices) (Zip Code)

(415) 908-3801

(Registrant’s Telephone Number, Including Area Code)

_________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.000001 per share	YELP	New York Stock Exchange LLC

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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☑  No ☐

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

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		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. ☐

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 April 29, 2022, there were 70,859,229 shares outstanding of the registrant’s common stock, par value $0.000001 per share.

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	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Loss	6
	Condensed Consolidated Statements of Stockholders' Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
Part II.	Other Information
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
Signatures

___________________________________

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.

1

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. All statements contained in this Quarterly Report that are not purely historical, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, 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 may include, but are not limited to, statements about:

•our financial performance, including our revenue, operating expenses and margins, as well as our ability to regain or maintain profitability;

•our ability to maintain and expand our advertiser base;

•our strategic initiatives to support revenue growth and margin expansion;

•our investment plans and priorities, including planned investments in product development, marketing and our sales channels, as well as our ability to execute against those priorities and the results thereof;

•our ability to operate with a primarily distributed workforce as well as the benefits and costs thereof;

•trends and expectations regarding customer and revenue retention;

•trends and expectations regarding our key metrics, including consumer traffic and engagement and the opportunity they present for growth;

•our liquidity and working capital requirements; and

•our plans with respect to our stock repurchase program.

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. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” included under Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”) and elsewhere in this Quarterly Report, such as:

•fluctuations in the number of COVID-19 cases, vaccination rates in the United States, any reimposition of pandemic-related business and travel restrictions, the emergence of COVID-19 variants and related public health and consumer responses, and the pace of economic recovery in local economies and the United States generally;

•our ability to maintain and expand our advertiser base, particularly as many businesses continue to face macroeconomic challenges, including labor and supply chain difficulties;

•our ability to execute on our strategic initiatives and the effectiveness thereof;

•our ability to hire, retain, motivate and effectively manage well-qualified employees in a primarily remote work environment;

•our ability to maintain and increase user engagement on our platform, including our ability to generate, maintain and recommend sufficient content that consumers find relevant, helpful and reliable;

•our reliance on third-party service providers and strategic partners;

2

•our reliance on search engines and application marketplaces, certain providers of which offer products and services that compete directly with our products;

•our ability to maintain the uninterrupted and proper operation of our technology and network infrastructure;

•actual or perceived security breaches as well as errors, vulnerabilities or defects in our software or in products of third-party providers;

•our ability to generate sufficient revenue to regain or maintain profitability, particularly in light of our limited operating history in an evolving industry, significant ongoing investments in our strategic initiatives, and the ongoing impact of the COVID-19 pandemic and macroeconomic challenges;

•our ability to accurately forecast revenue and appropriately plan expenses;

•our ability to operate effectively on mobile devices and other platforms beyond desktop computers;

•our actual or perceived failure to comply with laws and regulations applicable to our business;

•our ability to maintain, protect and enhance the Yelp brand and manage negative publicity that may arise; and

•our ability to successfully manage any strategic opportunities, including the acquisition and integration of any new businesses, solutions or technologies, as well as our ability to monetize the acquired products.

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” in this Quarterly Report and in our Annual Report for information on how we define our key metrics. Unless otherwise stated, these metrics do not include metrics from subscription products or our business-owner products.

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. Certain of our performance metrics, including the number of unique devices accessing our mobile app, ad clicks, average cost-per-click and active claimed local business locations, 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 discernible user action involved; this activity can cause our system to count the device associated with the app as an app unique device in a given period. Although we take steps to exclude such activity and, as a result, do not believe it has had a material impact on our reported metrics, our efforts may not successfully account for all such activity.

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. From time to time, we may discover inaccuracies in our metrics or make adjustments to improve their accuracy, including adjustments that may result in the recalculation of our historical metrics. We believe that any such inaccuracies or adjustments are immaterial unless otherwise stated.

3

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

YELP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

	March 31, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	465,121	$	479,783
Accounts receivable (net of allowance for doubtful accounts of $8,201 and $7,153 at March 31, 2022 and December 31, 2021, respectively)	111,762		107,358
Prepaid expenses and other current assets	60,458		57,536
Total current assets	637,341		644,677
Property, equipment and software, net	83,138		83,857
Operating lease right-of-use assets	132,029		140,785
Goodwill	104,317		105,128
Intangibles, net	10,020		10,673
Restricted cash	794		858
Other non-current assets	77,267		64,550
Total assets	$	1,044,906	$	1,050,528
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities	$	146,283	$	119,620
Operating lease liabilities — current	41,130		40,237
Deferred revenue	8,218		4,156
Total current liabilities	195,631		164,013
Operating lease liabilities — long-term	117,398		127,979
Other long-term liabilities	7,528		7,218
Total liabilities	320,557		299,210
Commitments and contingencies (Note 11)
Stockholders' equity:
Common stock, $0.000001 par value — 200,000 shares authorized, 71,641 shares issued and 71,559 shares outstanding at March 31, 2022, and 72,171 shares issued and outstanding at December 31, 2021	—		—
Additional paid-in capital	1,547,337		1,522,572
Treasury stock	(2,886)		—
Accumulated other comprehensive loss	(11,903)		(11,090)
Accumulated deficit	(808,199)		(760,164)
Total stockholders' equity	724,349		751,318
Total liabilities and stockholders' equity	$	1,044,906	$	1,050,528

See Notes to Condensed Consolidated Financial Statements.

4

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2022		2021
Net revenue	$	276,628	$	232,096
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below)	23,429		14,874
Sales and marketing	126,097		112,909
Product development	80,685		67,992
General and administrative	39,383		31,861
Depreciation and amortization	11,490		13,083
Restructuring	—		20
Total costs and expenses	281,084		240,739
Loss from operations	(4,456)		(8,643)
Other income, net	929		705
Loss before income taxes	(3,527)		(7,938)
Benefit from income taxes	(2,612)		(2,142)
Net loss attributable to common stockholders	$	(915)	$	(5,796)
Net loss per share attributable to common stockholders
Basic	$	(0.01)	$	(0.08)
Diluted	$	(0.01)	$	(0.08)
Weighted-average shares used to compute net loss per share attributable to common stockholders
Basic	71,639		75,245
Diluted	71,639		75,245

See Notes to Condensed Consolidated Financial Statements.

5

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2022		2021
Net loss	$	(915)	$	(5,796)
Other comprehensive loss:
Foreign currency translation adjustments, net of tax	(813)		(2,752)
Other comprehensive loss	(813)		(2,752)
Comprehensive loss	$	(1,728)	$	(8,548)

See Notes to Condensed Consolidated Financial Statements.

6

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)

	Common Stock			Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance as of December 31, 2020	75,371	$	—	$	1,398,248	$	(2,964)	$	(6,807)	$	(533,943)	$	854,534
Issuance of common stock upon exercises of employee stock options	524	—		6,049		—		—		—		6,049
Issuance of common stock upon vesting of restricted stock units ("RSUs")	670	—		—		—		—		—		—
Stock-based compensation (inclusive of capitalized stock-based compensation)	—	—		41,519		—		—		—		41,519
Shares withheld related to net share settlement of equity awards	—	—		(16,926)		—		—		—		(16,926)
Repurchases of common stock	—	—		—		(49,528)		—		—		(49,528)
Retirement of common stock	(1,412)	—		—		49,179		—		(49,179)		—
Foreign currency adjustments, net of tax	—	—		—		—		(2,752)		—		(2,752)
Net loss	—	—		—		—		—		(5,796)		(5,796)
Balance as of March 31, 2021	75,153	$	—	$	1,428,890	$	(3,313)	$	(9,559)	$	(588,918)	$	827,100
Balance as of December 31, 2021	72,171	$	—	$	1,522,572	$	—	$	(11,090)	$	(760,164)	$	751,318
Issuance of common stock upon exercises of employee stock options	27	—		588		—		—		—		588
Issuance of common stock upon vesting of RSUs	825	—		—		—		—		—		—
Stock-based compensation (inclusive of capitalized stock-based compensation)	—	—		42,767		—		—		—		42,767
Shares withheld related to net share settlement of equity awards	—	—		(18,590)		—		—		—		(18,590)
Repurchases of common stock	—	—		—		(50,006)		—		—		(50,006)
Retirement of common stock	(1,382)	—		—		47,120		—		(47,120)		—
Foreign currency adjustments, net of tax	—	—		—		—		(813)		—		(813)
Net loss	—	—		—		—		—		(915)		(915)
Balance as of March 31, 2022	71,641	$	—	$	1,547,337	$	(2,886)	$	(11,903)	$	(808,199)	$	724,349

See Notes to Condensed Consolidated Financial Statements.

7

YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2022		2021
Operating Activities
Net loss	$	(915)	$	(5,796)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	11,490		13,083
Provision for doubtful accounts	7,562		3,289
Stock-based compensation	41,060		39,245
Noncash lease cost	8,453		10,779
Deferred income taxes	(11,074)		(2,406)
Amortization of deferred cost	4,039		3,401
Other adjustments, net	248		14
Changes in operating assets and liabilities:
Accounts receivable	(11,968)		(3,639)
Prepaid expenses and other assets	(7,494)		491
Operating lease liabilities	(9,492)		(6,871)
Accounts payable, accrued liabilities and other liabilities	27,994		7,341
Net cash provided by operating activities	59,903		58,931
Investing Activities
Purchases of property, equipment and software	(6,636)		(6,005)
Other investing activities	61		29
Net cash used in investing activities	(6,575)		(5,976)
Financing Activities
Proceeds from issuance of common stock for employee stock-based plans	540		6,049
Taxes paid related to the net share settlement of equity awards	(18,487)		(16,803)
Repurchases of common stock	(50,006)		(49,528)
Net cash used in financing activities	(67,953)		(60,282)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(101)		68
Change in cash, cash equivalents and restricted cash	(14,726)		(7,259)
Cash, cash equivalents and restricted cash — Beginning of period	480,641		596,540
Cash, cash equivalents and restricted cash — End of period	$	465,915	$	589,281
Supplemental Disclosures of Other Cash Flow Information
Refunds received for income taxes, net	$	(1,005)	$	(704)
Supplemental Disclosures of Noncash Investing and Financing Activities
Purchases of property, equipment and software recorded in accounts payable and accrued liabilities	$	3,178	$	1,242
Tax liabilities related to equity awards included in accounts payable and accrued liabilities	$	5	$	43
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	$	—	$	4,497
Repurchases of common stock recorded in accounts payable and accrued liabilities	$	2,656	$	2,041

See Notes to Condensed Consolidated Financial Statements.

8

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 is a trusted local resource for consumers and a partner in success for businesses of all sizes. Consumers trust Yelp for its extensive ratings and reviews of businesses across a broad range of categories, while businesses advertise on Yelp to reach its large audience of purchase-oriented and generally affluent consumers.

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 Annual Report.

The unaudited condensed consolidated balance sheet as of December 31, 2021 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. Certain prior period amounts have been reclassified to conform to the current period presentation, including reclassifying amortization of deferred costs to a separate line item within the condensed consolidated statement of cash flows.

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.

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 upon 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, 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 condensed consolidated financial statements; therefore, actual results could differ from management’s estimates due to the uncertainty of the extent of the impacts of macroeconomic conditions and other factors.

Significant Accounting Policies

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

9

2. CASH, CASH EQUIVALENTS AND RESTRICTED CASH

Cash, cash equivalents and restricted cash as of March 31, 2022 and December 31, 2021 consisted of the following (in thousands):

	March 31, 2022		December 31, 2021
Cash	$	74,694	$	89,407
Cash equivalents	390,427		390,376
Total cash and cash equivalents	$	465,121	$	479,783
Restricted cash	794		858
Total cash, cash equivalents and restricted cash	$	465,915	$	480,641

3. FAIR VALUE MEASUREMENTS

The Company’s investments in money market accounts are recorded as cash equivalents at fair value on the condensed consolidated balance sheets.

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 certificates of deposit 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 fair value of the Company’s financial instruments, including those measured at fair value on a recurring basis, as of March 31, 2022 and December 31, 2021 (in thousands):

	March 31, 2022								December 31, 2021
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	390,427	$	—	$	—	$	390,427	$	390,376	$	—	$	—	$	390,376
Other investments:
Certificates of deposit	—		10,000		—		10,000		—		10,000		—		10,000
Total cash equivalents and other investments	$	390,427	$	10,000	$	—	$	400,427	$	390,376	$	10,000	$	—	$	400,376

The certificates of deposit are reflected in prepaid expenses and other current assets on the condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021.

10

4. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets as of March 31, 2022 and December 31, 2021 consisted of the following (in thousands):

	March 31, 2022		December 31, 2021
Prepaid expenses	$	15,811	$	13,480
Certificates of deposit	10,000		10,000
Other current assets	34,647		34,056
Total prepaid expenses and other current assets	$	60,458	$	57,536

Prepaid expenses included $0.6 million of short-term capitalized implementation costs related to cloud computing arrangements that are service contracts. The long-term portion of capitalized cloud computing implementation costs of $0.9 million are included in other non-current assets. The Company recorded an immaterial amount of amortization expense during the three months ended March 31, 2022 related to capitalized implementation costs. As of March 31, 2022, other current assets primarily consisted of non-trade receivables and deferred costs related to unsettled share repurchases.

5. PROPERTY, EQUIPMENT AND SOFTWARE, NET

Property, equipment and software, net as of March 31, 2022 and December 31, 2021 consisted of the following (in thousands):

	March 31, 2022		December 31, 2021
Capitalized website and internal-use software development costs	$	209,685	$	202,169
Leasehold improvements	60,559		59,190
Computer equipment	48,802		48,264
Furniture and fixtures	12,277		12,573
Telecommunication	4,950		4,953
Software	1,703		1,703
Total	337,976		328,852
Less accumulated depreciation and amortization	(254,838)		(244,995)
Property, equipment and software, net	$	83,138	$	83,857

Depreciation and amortization expense related to property, equipment and software was $10.8 million and $12.4 million for the three months ended March 31, 2022 and 2021, respectively.

6. GOODWILL AND INTANGIBLE ASSETS

The Company’s goodwill is the result of its acquisitions of other businesses and represents the excess of purchase consideration over the fair value of assets acquired and liabilities assumed. The Company performed its annual goodwill impairment analysis as of August 31, 2021 and concluded that goodwill was not impaired, as the fair value of the reporting unit exceeded its carrying value.

The changes in carrying amount of goodwill during the three months ended March 31, 2022 were as follows (in thousands):

Balance as of December 31, 2021	$	105,128
Effect of currency translation	(811)
Balance as of March 31, 2022	$	104,317

11

Intangible assets that were not fully amortized as of March 31, 2022 and December 31, 2021 consisted of the following (dollars in thousands):

	March 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Life
Business relationships	$	9,918	$	(5,019)	$	4,899	6.9	years
Developed technology	7,709		(7,709)		—		0.0	years
Licensing agreements	6,129		(1,022)		5,107		7.9	years
Domains and data licenses	2,869		(2,855)		14		1.3	years
Total	$	26,625	$	(16,605)	$	10,020

	December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Life
Business relationships	$	9,918	$	(4,786)	$	5,132	7.1	years
Developed technology	7,709		(7,453)		256		0.2	years
Licensing agreements	6,129		(860)		5,269		8.2	years
Domain and data licenses	2,869		(2,853)		16		1.5	years
Total	$	26,625	$	(15,952)	$	10,673

Amortization expense was $0.7 million in each of the three months ended March 31, 2022 and 2021.

As of March 31, 2022, estimated future amortization expenses were as follows (in thousands):

Remainder of 2022	$	1,023
2023	1,359
2024	1,353
2025	1,353
2026	1,353
2027	1,353
Thereafter	2,226
Total amortization	$	10,020

7. LEASES

The components of lease cost, net for the three months ended March 31, 2022 and 2021 were as follows (in thousands):

	Three Months Ended March 31,
	2022		2021
Operating lease cost	$	10,667	$	13,763
Short-term lease cost (12 months or less)	254		137
Sublease income	(2,777)		(1,628)
Total lease cost, net	$	8,144	$	12,272

The Company's leases and subleases do not include any variable lease payments, residual value guarantees, related-party leases, or restrictions or covenants that would limit or prevent the Company from exercising its right to obtain substantially all of the economic benefits from use of the respective assets during the lease term.

12

Supplemental cash flow information related to leases for the three months ended March 31, 2022 and 2021 was as follows (in thousands):

	Three Months Ended March 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	11,899	$	9,590

As of March 31, 2022, maturities of lease liabilities were as follows (in thousands):

Remainder of 2022	$	36,515
2023	45,566
2024	42,840
2025	22,300
2026	7,365
2027	6,554
Thereafter	16,653
Total minimum lease payments	177,793
Less imputed interest	(19,265)
Present value of lease liabilities	$	158,528

As of March 31, 2022 and December 31, 2021, the weighted-average remaining lease terms and weighted-average discount rates were as follows:

	March 31, 2022		December 31, 2021
Weighted-average remaining lease term (years) — operating leases	4.6		4.8
Weighted-average discount rate — operating leases	5.3	%	5.4	%

8. OTHER NON-CURRENT ASSETS

Other non-current assets as of March 31, 2022 and December 31, 2021 consisted of the following (in thousands):

	March 31, 2022		December 31, 2021
Deferred tax assets	$	51,668	$	40,606
Deferred contract costs	19,093		16,931
Other non-current assets	6,506		7,013
Total other non-current assets	$	77,267	$	64,550

Deferred contract costs as of March 31, 2022 and December 31, 2021, and changes in deferred contract costs during the three months ended March 31, 2022, were as follows (in thousands):

	Three Months Ended March 31, 2022
Balance, beginning of period	$	16,931
Add: costs deferred on new contracts	6,180
Less: amortization recorded in sales and marketing expenses	(4,018)
Balance, end of period	$	19,093

13

9. CONTRACT BALANCES

The changes in the allowance for doubtful accounts during the three months ended March 31, 2022 and 2021 were as follows (in thousands):

	Three Months Ended March 31,
	2022		2021
Balance, beginning of period	$	7,153	$	11,559
Add: provision for doubtful accounts	7,562		3,289
Less: write-offs, net of recoveries	(6,514)		(5,168)
Balance, end of period	$	8,201	$	9,680

The net increase in the allowance for doubtful accounts in the three months ended March 31, 2022 was primarily related to an anticipated increase in customer delinquencies due to an increase in both advertisers and customer spend during the three month period. The net decrease in the allowance for doubtful accounts in the three months ended March 31, 2021 was primarily a result of a reduction in expected customer delinquencies as collection rates improved. In calculating the allowance for doubtful accounts as of March 31, 2022 and 2021, the Company considered expectations of probable credit losses, including probable credit losses associated with the COVID-19 pandemic, based on observed trends in cancellations, observed changes in the credit risk of specific customers, the impact of anticipated closures and bankruptcies using forecasted economic indicators in addition to historical experience and loss patterns during periods of macroeconomic uncertainty.

Contract liabilities consist of deferred revenue, which is recorded on the condensed consolidated balance sheets when the Company has received consideration, or has the right to receive consideration, in advance of transferring the performance obligations under the contract to the customer.

The changes in deferred revenue during the three months ended March 31, 2022 were as follows (in thousands):

	Three Months Ended March 31, 2022
Balance, beginning of period	$	4,156
Less: recognition of deferred revenue from beginning balance	(2,905)
Add: net increase in current period contract liabilities	6,967
Balance, end of period	$	8,218

The majority of the deferred revenue balance as of March 31, 2022 is expected to be recognized as revenue in the subsequent three-month period ending June 30, 2022. An immaterial amount of long-term deferred revenue is included in other long-term liabilities as of March 31, 2022. No other contract assets or liabilities were recorded on the Company's condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021.

10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities as of March 31, 2022 and December 31, 2021 consisted of the following (in thousands):

	March 31, 2022		December 31, 2021
Accounts payable	$	11,386	$	16,127
Employee-related liabilities	68,153		50,132
Accrued sales and marketing expenses	8,595		5,455
Accrued cost of revenue	9,092		9,537
Accrued legal settlements	26,000		26,037
Other accrued liabilities	23,057		12,332
Total accounts payable and accrued liabilities	$	146,283	$	119,620

As of March 31, 2022, other accrued liabilities primarily consisted of income taxes payable, accrued costs related to unsettled share repurchases and accrued workplace costs.

14

11. COMMITMENTS AND CONTINGENCIES

Legal Proceedings—In January 2018, a putative class action lawsuit alleging violations of the federal securities laws was filed in the U.S. District Court for the Northern District of California, naming as defendants the Company and certain of its officers (the “Securities Class Action”). The complaint, which the plaintiff amended on June 25, 2018, alleges violations of the Securities Exchange Act of 1934, as amended, by the Company and its officers for allegedly making materially false and misleading statements regarding its business and operations on February 9, 2017. The plaintiff seeks unspecified monetary damages and other relief. On November 27, 2018, the Court granted in part and denied in part the defendants’ motion to dismiss. On October 22, 2019, the Court approved a stipulation to certify a class in this action and, on September 9, 2021, it denied the defendants’ motion for summary judgment. The case was scheduled for trial to begin on February 7, 2022. However, on December 3, 2021, the defendants reached a preliminary agreement with the plaintiff to settle this matter for $22.25 million, which payment the Company expects to be funded by defendants’ insurers. The proposed settlement would resolve all claims asserted against all defendants in the Securities Class Action without any liability or wrongdoing attributed to them. The plaintiff submitted the proposed settlement to the Court for preliminary approval on April 21, 2022.

On December 2, 2021, the Company reached a preliminary agreement to settle a pending stockholder derivative lawsuit (the “Derivative Action”) asserting claims against certain current and former officers, and naming the Company as a nominal defendant, which arose out of the same facts as the Securities Class Action and is pending before the same Court in the U.S. District Court for the Northern District of California. The proposed settlement would resolve all claims asserted against all defendants in the Derivative Action without any liability or wrongdoing attributed to them personally or to the Company. Under the terms of the proposed settlement, the Company’s board of directors would adopt and implement certain corporate governance modifications and the Company would receive $18.0 million of insurance proceeds, of which the Company has agreed to pay $3.75 million to the plaintiff’s attorneys as fees. The plaintiff submitted the proposed settlement to the Court for preliminary approval on January 28, 2022.

The Company assesses, in conjunction with its legal counsel, the need to record a liability for litigation and contingencies, which it will accrue when it believes a loss is probable and the amount can be reasonably estimated. While the proposed settlement terms for both the Securities Class Action and the Derivative Action are subject to Court approval, the Company believes the loss for both are probable and the payment amounts described above, which total $26.0 million, represent reasonable estimates of loss contingencies. The Company also believes that the anticipated insurance proceeds related to each action described above, which also total $26.0 million, are probable and represent reasonable estimates for loss recovery. Accordingly, the Company recorded a $26.0 million accrual for loss contingency within accounts payable and accrued liabilities as well as a $26.0 million receivable for loss recovery within prepaid expenses and other current assets on its condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021.

The Company is subject to other 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 other matters will have a material effect on the Company’s business, financial position, results of operations or cash flows.

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 business, financial position, results of operations or cash flows.

15

Revolving Credit Facility—The Company is a party to a Credit Agreement with Wells Fargo Bank, National Association (the "Credit Agreement"), which provides for a three-year, $75.0 million senior unsecured revolving credit facility including a letter of credit sub-limit of $25.0 million. As of March 31, 2022, the Company had $21.5 million of letters of credit under the sub-limit related to lease agreements for certain office locations, which are required to be maintained and issued to the landlords of each facility, and $53.5 million remained available under the revolving credit facility as of this date. The Company was in compliance with all covenants associated with the credit facility and there were no loans outstanding under the Credit Agreement as of March 31, 2022. For additional information on the terms of the Credit Agreement, including fees payable by the Company, financial covenants, events of default and other limitations, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" included under Part II, Item 7 in our Annual Report.

got12. STOCKHOLDERS’ EQUITY

The following table presents the number of shares authorized and issued as of the dates indicated (in thousands):

	March 31, 2022		December 31, 2021
	Shares Authorized	Shares Issued	Shares Authorized	Shares Issued
Stockholders’ equity:
Common stock, $0.000001 par value	200,000	71,641	200,000	72,171
Undesignated preferred stock	10,000	—	10,000	—

Stock Repurchase Program

As of March 31, 2022, the Company's board of directors had authorized it to repurchase up to an aggregate of $1.2 billion of its outstanding common stock, $181.7 million of which remained available as of March 31, 2022. The Company may purchase shares at management’s discretion in the open market, in privately negotiated transactions, in transactions structured through investment banking institutions, or a combination of the foregoing.

During the three months ended March 31, 2022, the Company repurchased on the open market 1,464,614 shares for an aggregate purchase price of $50.0 million and retired 1,382,078 shares. As of March 31, 2022, the Company had a treasury stock balance of 82,536 shares, which were excluded from its outstanding share count as of such date and subsequently retired in April 2022.

During the three months ended March 31, 2021, the Company repurchased on the open market 1,401,000 shares for an aggregate purchase price of $49.5 million and retired 1,412,188 shares. As of March 31, 2021, the Company had a treasury stock balance of 87,830 shares, which were excluded from its outstanding share count as of such date and subsequently retired in April 2021.

Equity Incentive Plans

Stock Options

Stock options are granted at a price per share not less than the fair value of a share of the Company’s common stock on the grant date. Options generally vest over a four-year period, on one of two schedules: (a) 25% vesting at the end of one year and the remaining shares vesting monthly thereafter or (b) ratably on a monthly basis. Options granted are generally exercisable for contractual terms of up to 10 years. The Company issues new shares when stock options are exercised.

16

A summary of stock option activity for the three months ended March 31, 2022 is as follows:

	Number of Shares (in thousands)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2021	3,979	$	32.59	4.4	$	24,580
Exercised	(27)	22.45
Canceled	(14)	11.68
Outstanding at March 31, 2022	3,938	$	32.68	4.2	$	19,264
Options vested and exercisable at March 31, 2022	3,693	$	32.49	4.0	$	19,000

Aggregate intrinsic value represents the difference between the closing price of the Company’s common stock as quoted on the New York Stock Exchange on a given date and the exercise price of outstanding, in-the-money options. The total intrinsic value of options exercised was approximately $0.3 million and $11.1 million for the three months ended March 31, 2022 and 2021, respectively.

There were no options granted during the three months ended March 31, 2022 and 2021.

As of March 31, 2022, total unrecognized compensation costs related to nonvested stock options were approximately $3.7 million, which the Company expects to recognize over a weighted-average time period of 1.7 years.

RSUs

RSUs generally vest over a four-year period, on one of two schedules: (a) 25% vesting at the end of one year and the remaining vesting quarterly thereafter or (b) ratably on a quarterly basis.

RSUs also include performance-based restricted stock units ("PRSUs"), which are subject to either (a) a market condition or (b) the achievement of performance goals. PRSUs may also be subject to a time-based vesting schedule of quarterly over four years (the "Time-Based Vesting Schedule"). For PRSUs subject to a market condition, the Company recognizes expense from the date of grant. For PRSUs subject to performance goals, the Company recognizes expense when it is probable that the performance condition will be achieved.

The Company granted PRSUs subject to market conditions in 2019 and 2022. The shares underlying each PRSU award granted in 2019 will be eligible to vest only if the average closing price of the Company's common stock equals or exceeds $45.3125 over any 60-day trading period during the four years following the grant date of February 7, 2019. If this market condition is met, the shares underlying each PRSU award will vest according to the Time-Based Vesting Schedule. Any shares subject to the PRSUs that have met the Time-Based Vesting Schedule at the time the market condition is achieved will fully vest as of such date; thereafter, any remaining nonvested shares subject to the PRSUs will continue vesting solely according to the Time-Based Vesting Schedule, subject to the applicable employee's continued service as of each such vesting date.

The shares underlying each PRSU award granted in 2022 that is subject to market conditions vest based on the relative performance of the Company's total stockholder return ("TSR") over a three-year period. A percentage of the target number of shares underlying each award, ranging from zero to 200%, will vest based on the percentile rank of the Company's TSR relative to that of the other companies in the Russell 2000 Index over the period beginning January 1, 2022 and ending December 31, 2024. The Company’s TSR, as well as the TSR of the other companies in the Russell 2000 Index, will be calculated based on the average closing price of each company's stock over the last 20 trading days of the performance period compared to the average closing price over the first 20 trading days of the performance period. Any shares that become eligible to vest based on the Company's level of achievement of the market goal will fully vest on or following certification of the Company's performance on February 20, 2025 or, if certification occurs following such date, March 15, 2025, subject to the applicable employee's continued service as of such vesting date.

For PRSUs subject to performance goals, a percentage of the target number of shares, ranging from zero to 200%, will become eligible to vest based on the Company's level of achievement of certain financial targets, subject to the Time-Based Vesting Schedule. The shares subject to performance goals become eligible to vest once the achievement against the financial targets is known, which will be no later than March of the following year. On the quarterly vest date immediately following such determination (or a vest date otherwise specified in the agreement), the eligible shares, if any, will vest to the extent that the employee has met the Time-Based Vesting Schedule as of such date. Thereafter, the eligible shares will continue to vest in accordance with the Time-Based Vesting Schedule, subject to the applicable employee's continued service as of each such

17

vesting date. The Company performed an analysis as of March 31, 2022 to assess the probability of achievement of the PRSU financial targets and, as a result, recorded compensation costs in the three months ended March 31, 2022 for the PRSUs that it expected to vest.

As the PRSU activity during the three months ended March 31, 2022 was not material, it is presented together with the RSU activity in the table below. A summary of RSU and PRSU activity for the three months ended March 31, 2022 is as follows (in thousands, except per share amounts):

	Number of Shares	Weighted-Average Grant Date Fair Value
Nonvested at December 31, 2021	10,016	$	32.39
Granted	4,818	36.06
Vested(1)	(1,371)	33.80
Canceled	(728)	32.93
Nonvested at March 31, 2022	12,735	$	33.59

(1) Includes 545,701 shares that vested but were not issued due to net share settlement for payment of employee taxes.

The aggregate fair value as of the vest date of RSUs and PRSUs that vested during the three months ended March 31, 2022 and 2021 was $46.7 million and $42.1 million, respectively. As of March 31, 2022, the Company had approximately $403.4 million of unrecognized stock-based compensation expense related to RSUs and PRSUs, which it expects to recognize over the remaining weighted-average vesting period of approximately 2.8 years.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan ("ESPP") allows eligible employees to purchase shares of the Company’s 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, employees are able to purchase shares at 85% of the fair market value of the Company’s common stock on the last day of the offering period, based on the closing sales price of the Company's common stock as quoted on the New York Stock Exchange on such date.

There were no shares purchased by employees under the ESPP in the three months ended March 31, 2022 or 2021. The Company recognized stock-based compensation expense related to the ESPP of $0.8 million in each of the three months ended March 31, 2022 and 2021.

Stock-Based Compensation

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

	Three Months Ended March 31,
	2022		2021
Cost of revenue	$	1,305	$	1,108
Sales and marketing	8,655		8,397
Product development	23,125		20,753
General and administrative	7,975		8,987
Total stock-based compensation recorded to loss before income taxes	41,060		39,245
Benefit from income taxes	(9,138)		(10,065)
Total stock-based compensation recorded to net loss	$	31,922	$	29,180

During the three months ended March 31, 2022 and 2021, the Company capitalized $2.5 million and $2.8 million, respectively, of stock-based compensation expense as website development costs and, to a lesser extent, implementation costs incurred related to cloud computing arrangements that are service contracts.

18

13. OTHER INCOME, NET

Other income, net for the three months ended March 31, 2022 and 2021 consisted of the following (in thousands):

	Three Months Ended March 31,
	2022		2021
Interest income (expense), net	$	22	$	(18)
Transaction gain on foreign exchange, net	71		257
Other non-operating income, net	836		466
Other income, net	$	929	$	705

14. INCOME TAXES

The Company is subject to income taxes 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 taxes. The benefit from income taxes for the three months ended March 31, 2022 was $2.6 million, which was due to $1.6 million of U.S. federal, state and foreign benefit from income taxes, and $1.0 million of net discrete tax benefit primarily related to stock-based compensation. The benefit from income taxes for the three months ended March 31, 2021 was $2.1 million, which was due to $1.8 million of U.S. federal, state and foreign income tax expense, offset by $3.9 million of net discrete tax benefit.

Accounting for income taxes for interim periods generally requires the provision for income taxes to be determined by applying an estimate of the annual effective tax rate for the full fiscal year to income or loss before income taxes, excluding unusual or infrequently occurring discrete items, for the reporting period. For the three months ended March 31, 2022, the difference between the effective tax rate and the federal statutory tax rate primarily related to stock-based compensation and the inclusion of global intangible low-taxed income ("GILTI"), offset by tax credits. As currently enacted, beginning in 2022, the Tax Cuts and Jobs Act (the "Tax Act") requires taxpayers to capitalize research and development expenses with amortization periods over five and fifteen years, which is expected to increase the amount of the Company's GILTI. For the three months ended March 31, 2021, the difference between the effective tax rate and the federal statutory tax rate primarily related to tax credits, offset by non-deductible expenses.

As of March 31, 2022, the total amount of gross unrecognized tax benefits was $55.3 million, $28.1 million of which was subject to a full valuation allowance and would not affect the Company’s effective tax rate if recognized. In the three months ended March 31, 2022, the Company recorded an immaterial amount of interest and penalties.

As of March 31, 2022, the Company estimated that it had accumulated undistributed earnings generated by its foreign subsidiaries of approximately $11.7 million. Any taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of the Company's foreign investments would generally be limited to foreign and state taxes. The Company has not recognized a deferred tax liability related to unremitted foreign earnings, as it intends to indefinitely reinvest these earnings, and expects future U.S. cash generation to be sufficient to meet future U.S. cash needs.

In addition, the Company is subject to the continuous examination of its income tax returns by the Internal Revenue Service and other tax authorities. The Company’s federal and state income tax returns for tax years subsequent to 2003 remain open to examination. In the Company’s foreign jurisdictions — Canada, Germany, Ireland and the United Kingdom — the tax years subsequent to 2016 remain open to examination. 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. As of March 31, 2022, 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 $0.9 million over the next 12 months.

19

15. NET LOSS PER SHARE

Basic net loss per share is computed using the weighted-average number of outstanding shares of common stock during the period. Diluted net loss per share is computed using the weighted-average number of outstanding shares of common stock and, when dilutive, potential shares of common stock outstanding during the period. Potential common shares consist of the incremental shares of common stock issuable upon the exercise of stock options, shares issuable upon the vesting of RSUs (including PRSUs) and, to a lesser extent, purchase rights related to the ESPP.

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

	Three Months Ended March 31,
	2022		2021
Basic net loss per share:
Net loss	$	(915)	$	(5,796)
Shares used in computation:
Weighted-average common shares outstanding	71,639		75,245
Basic net loss per share attributable to common stockholders	$	(0.01)	$	(0.08)

	Three Months Ended March 31,
	2022		2021
Diluted net loss per share:
Net loss	$	(915)	$	(5,796)
Shares used in computation:
Weighted-average common shares outstanding	71,639		75,245
Diluted net loss per share attributable to common stockholders	$	(0.01)	$	(0.08)

The following 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,
	2022	2021
Stock options	3,938	4,089
RSUs	12,735	12,199
ESPP	226	213

16. INFORMATION ABOUT REVENUE AND GEOGRAPHIC AREAS

The Company considers operating segments to be components of the Company for which separate financial information is available and 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 determined that it has a single operating and reporting segment. When the Company communicates results externally, it disaggregates net revenue into major product lines and primary geographical markets, which is based on the billing address of the customer. The disaggregation of net revenue by major product lines is based on the type of service provided and also aligns with the timing of revenue recognition for each. To reflect the Company's strategic focus on creating differentiated experiences for its Services categories and Restaurants, Retail & Other categories, the Company further disaggregates advertising revenue to reflect these two high-level category groupings. The Services categories consist of the following businesses: home, local, auto, professional, pets, events, real estate and financial services. The Restaurants, Retail & Other categories consist of the following businesses: restaurants, shopping, beauty & fitness, health and other.

20

Net Revenue

The following table presents the Company’s net revenue by major product line (and by category for advertising revenue) for the periods presented (in thousands):

	Three Months Ended March 31,
	2022		2021
Net revenue by product:
Advertising revenue by category(1):
Services	$	160,263	$	140,687
Restaurants, Retail & Other	102,974		81,300
Advertising	263,237		221,987
Transactions	3,180		3,804
Other	10,211		6,305
Total net revenue	$	276,628	$	232,096

(1) Advertising revenue by category in 2022 reflects an updated method of disaggregation. Prior-period amounts have not been updated as it is impracticable to do so, given certain historical information was not available.

During the three months ended March 31, 2022 and 2021, no individual customer accounted for 10% or more of consolidated net revenue.

As a result of the COVID-19 pandemic, the Company considered whether there was any impact to the manner in which revenue is recognized, in particular with respect to the collectability criteria for recognizing revenue from contracts with customers. The Company did not change the manner in which it recognizes revenue as a result of that assessment.

The Company offered a number of relief incentives to advertising and other revenue customers most impacted by the COVID-19 pandemic totaling $0.3 million and $2.2 million during the three months ended March 31, 2022 and 2021, respectively. These incentives were primarily in the form of waived subscription and advertising fees. The Company accounted for these incentives as price concessions and reduced net revenue recognized in the three months ended March 31, 2022 and 2021 accordingly.

The following table presents the Company’s net revenue by major geographic region for the periods presented (in thousands):

	Three Months Ended March 31,
	2022		2021
United States	$	274,644	$	229,995
All other countries	1,984		2,101
Total net revenue	$	276,628	$	232,096

Long-Lived Assets

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

	March 31, 2022		December 31, 2021
United States	$	77,992	$	79,027
All other countries	5,146		4,830
Total long-lived assets	$	83,138	$	83,857

21

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 I, Item 1A in our Annual Report. See “Special Note Regarding Forward-Looking Statements” in this Quarterly Report.

Overview

As one of the best known internet brands in the United States, Yelp is a trusted local resource for consumers and a partner in success for businesses of all sizes. Consumers trust us for our more than 220 million ratings and reviews of businesses across a broad range of categories, while businesses advertise with us to reach our large audience of purchase-oriented and generally affluent consumers. We believe our ability to provide value to both consumers and businesses not only fulfills our mission to connect consumers with great local businesses, but also positions us well in the local, digital advertising market in the United States.

We generate substantially all of our revenue from the sale of performance-based advertising products, which our advertising platform matches to individual consumers through auctions priced on a cost-per-click ("CPC") basis. In the three months ended March 31, 2022, our net revenue was $276.6 million, up 19% from the three months ended March 31, 2021, and we recorded net loss of $0.9 million and adjusted EBITDA of $48.1 million. For information on how we define and calculate adjusted EBITDA, and a reconciliation of this non-GAAP financial measure to net income (loss), see "Non-GAAP Financial Measures" below.

In the first quarter of 2022, our strategic investments in product and marketing drove further progress on our revenue growth initiatives:

•Grow quality leads and monetization in Services. We continued working to drive more high-quality leads to Services businesses in the first quarter, including through enhancements to Request-a-Quote. Product improvements to reduce friction in the Request-a-Quote flow and better match consumers with the right businesses for their projects drove increases in both the number of submitted projects and consumer response rates following their implementation in the first quarter, and contributed to advertising revenue from Services businesses increasing 14% year over year and 38% from the first quarter of 2019.

•Drive sales through the most efficient channels. Revenue from our Self-serve and Multi-location channels reached 46% of advertising revenue in the first quarter. Marketing investments and product improvements to the claim and ads purchase flows contributed to record Self-serve customer acquisition, which, together with continued strength in retention, resulted in advertising revenue from our Self-serve channel increasing by more than 30% year over year to reach a new record. Our Multi-location channel also gained momentum in the first quarter; revenue from this channel increased 35% year over year and paying advertising locations reached its highest quarterly level since the COVID-19 pandemic began in the first quarter of 2020.

•Deliver more value to advertisers. Ad clicks increased by 4% year over year while Average CPC increased by 17% year over year. Growth in average CPC outpaced growth in ad clicks due to higher advertising demand than consumer engagement, particularly in Services. We believe this dynamic was driven by a combination of macroeconomic conditions, including inflation. Despite this, the first quarter marked another record in our retention rate for non-term advertiser budgets, demonstrating our continued ability to deliver more relevant, high-quality ad clicks to advertisers as we work to improve the efficiency of our ad system to better match consumers with the right advertisers.