Yelp(US:YELP)2024-08-09 20:34Part I. Financial Information Item 1. Financial Statements (Unaudited) The company presents its unaudited condensed consolidated financial statements for the quarter ended June 30, 2024 Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $252,435 | $313,911 | | Total current assets | $583,679 | $624,216 | | Total assets | $964,978 | $1,014,723 | | Total current liabilities | $158,073 | $175,864 | | Total liabilities | $229,631 | $265,189 | | Total stockholders' equity | $735,347 | $749,534 | Condensed Consolidated Statements of Operations Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2024 | Q2 2023 | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $357,016 | $337,126 | $689,768 | $649,564 | | Income from operations | $39,747 | $18,742 | $50,964 | $12,155 | | Net income | $38,036 | $14,729 | $52,190 | $13,551 | | Diluted EPS | $0.54 | $0.21 | $0.73 | $0.19 | Condensed Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $112,544 | $122,251 | | Net cash used in investing activities | ($23,046) | ($46,885) | | Net cash used in financing activities | ($150,411) | ($112,905) | | Change in cash, cash equivalents and restricted cash | ($61,208) | ($36,364) | Notes to Condensed Consolidated Financial Statements - The California Invasion of Privacy Act (CIPA) lawsuit was settled, with the company making a $15.0 million payment in Q2 20247273 - In the first six months of 2024, the company repurchased and retired 3,198,097 shares for an aggregate price of $125.9 million, with $455.7 million remaining available for future repurchases8485 - For Q2 2024, Services advertising revenue was $223.0 million, while Restaurants, Retail & Other was $118.4 million101102 Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes Q2 2024 financial results, highlighting revenue growth, strategic initiatives, and operational performance Overview and Key Metrics - Strategic initiatives in Q2 2024 drove progress in key areas, including 15% YoY revenue growth in Home Services and 20% YoY revenue growth in the Self-serve channel108109 - Total Paying Advertising Locations decreased 6% YoY to 531,000 in Q2 2024, as a 7% growth in Services locations was offset by a 15% decline in RR&O locations124 Key Performance Metrics (YoY % Change) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Ad Clicks | 9% | 0% | | Average CPC | (1)% | 14% | Advertising Revenue by Category (in thousands) | Category | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Services | $222,955 | $200,274 | 11% | | Restaurants, Retail & Other | $118,383 | $121,698 | (3)% | | Total Advertising Revenue | $341,338 | $321,972 | 6% | Results of Operations - Total net revenue increased 6% YoY in Q2 2024, driven by an 11% growth in Services advertising revenue, partially offset by a 3% decline in RR&O advertising revenue126 - Sales and marketing expenses rose 8% YoY in Q2 2024, primarily due to a $10.3 million increase in marketing spend to acquire Services projects135 - General and administrative expenses decreased 16% YoY in Q2 2024, mainly because a prior-year $11.0 million loss contingency for the CIPA settlement did not recur142143145 - Income from operations more than doubled to $39.7 million in Q2 2024 from $18.7 million in Q2 2023, reflecting revenue growth and lower G&A expenses126 Non-GAAP Financial Measures Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net income | $38,036 | $14,729 | | Adjusted EBITDA | $91,115 | $83,937 | | Net income margin | 11% | 4% | | Adjusted EBITDA margin | 26% | 25% | Free Cash Flow (in thousands) | Metric | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $112,544 | $122,251 | | Purchases of property, equipment and software | (16,574) | (15,153) | | Free cash flow | $95,970 | $107,098 | Liquidity and Capital Resources - As of June 30, 2024, principal liquidity sources included $252.4 million in cash and cash equivalents and $132.4 million in marketable securities162164165 - Material cash requirements include $73.2 million for operating leases and approximately $189.7 million for purchase obligations, primarily for website hosting169170 - Net cash from operating activities for the first six months of 2024 was $112.5 million, a decrease from $122.3 million in the prior-year period172 Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure remains materially unchanged from the prior year-end disclosure - Market risks related to interest rates, foreign exchange, and inflation have not changed materially since year-end 2023180 Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - Based on an evaluation as of June 30, 2024, the CEO and CFO concluded that the company's disclosure controls and procedures were effective182 - No material changes in internal control over financial reporting occurred during Q2 2024183 Part II. Other Information Legal Proceedings The company provides an update on material legal proceedings, referencing details in the financial statement notes - For material legal proceedings, the report refers to Note 12, which details the CIPA Action settlement; other matters are not expected to have a material impact187 Risk Factors No material changes to the company's previously disclosed risk factors were reported during the period - No material changes have been made to the risk factors disclosed in the company's Annual Report188 Unregistered Sales of Equity Securities and Use of Proceeds The company details its stock repurchase activity for the second quarter of 2024 Issuer Purchases of Equity Securities (Q2 2024) | Period | Total Shares Purchased (thousands) | Average Price Paid per Share | | :--- | :--- | :--- | | April 2024 | 614 | $40.09 | | May 2024 | 343 | $37.23 | | June 2024 | 714 | $36.44 | Other Information The company discloses the establishment of a Rule 10b5-1 trading plan by its Chief Executive Officer - On May 14, 2024, CEO Jeremy Stoppelman established a Rule 10b5-1 trading plan to sell up to 865,000 shares of common stock192 Exhibits This section lists all exhibits filed in conjunction with the Form 10-Q report