Yelp(US:YELP)2024-05-10 21:01Part I. Financial Information Financial Statements (Unaudited) Yelp's unaudited condensed consolidated financial statements for Q1 2024 report a $14.2 million net income, a significant improvement from a $1.2 million net loss in Q1 2023 Condensed Consolidated Statements of Operations Highlights (Q1 2024 vs Q1 2023) | Financial Metric | Q1 2024 (in $ thousands) | Q1 2023 (in $ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue | $332,752 | $312,438 | +6.5% | | Income (loss) from operations | $11,217 | $(6,587) | N/A | | Net income (loss) | $14,154 | $(1,178) | N/A | | Diluted EPS | $0.20 | $(0.02) | N/A | Condensed Consolidated Balance Sheet Highlights (As of March 31, 2024) | Balance Sheet Item | March 31, 2024 (in $ thousands) | December 31, 2023 (in $ thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $296,045 | $313,911 | | Total current assets | $606,900 | $624,216 | | Total assets | $993,477 | $1,014,723 | | Total current liabilities | $191,296 | $175,864 | | Total liabilities | $271,504 | $265,189 | | Total stockholders' equity | $721,973 | $749,534 | Condensed Consolidated Statements of Cash Flows Highlights (Q1 2024 vs Q1 2023) | Cash Flow Item | Q1 2024 (in $ thousands) | Q1 2023 (in $ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $72,855 | $74,244 | | Net cash used in investing activities | $(6,402) | $(37,280) | | Net cash used in financing activities | $(83,834) | $(54,706) | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2024 financial results, highlighting a 7% net revenue increase to $332.8 million, driven by Services, and strategic AI initiatives Q1 2024 Financial Highlights | Metric | Q1 2024 | YoY Change | | :--- | :--- | :--- | | Net Revenue | $332.8 million | +7% | | Net Income | $14.2 million | N/A (from loss) | | Adjusted EBITDA | $64.5 million | +19% | - Strategic investments in product and marketing drove progress, particularly in Home Services, which saw revenue grow approximately 15% YoY106 - The company launched Yelp Assistant, a conversational AI feature, and the Yelp Fusion AI API to improve user experience and expand content reach to third-party platforms106 - Revenue from the Self-serve channel grew approximately 20% YoY, driven by record customer acquisition106 Key Metrics Q1 2024 advertising revenue grew 7% due to 8% ad click increase, with Services revenue up 11% despite a 4% decrease in total paying advertising locations Ad Clicks and Average CPC (YoY Change) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Ad Clicks | 8% | 1% | | Average CPC | (1)% | 14% | Advertising Revenue by Category (Q1 2024) | Category | Revenue (in $ thousands) | YoY Change | | :--- | :--- | :--- | | Services | $203,288 | 11% | | Restaurants, Retail & Other | $114,350 | 1% | | Total Advertising Revenue | $317,638 | 7% | Paying Advertising Locations (Q1 2024) | Category | Locations (in thousands) | YoY Change | | :--- | :--- | :--- | | Services | 252 | 6% | | Restaurants, Retail & Other | 278 | (12)% | | Total Paying Advertising Locations | 530 | (4)% | Results of Operations Q1 2024 saw total net revenue increase 7% to $332.8 million, with operating income turning positive at $11.2 million due to controlled expense growth - Advertising revenue increased by 7% YoY, primarily due to an 8% increase in ad clicks126 - Sales and marketing expenses were flat YoY, as increased marketing spend on Services project acquisition was offset by reductions in workplace operating costs133 - General and administrative expenses decreased by 3% YoY, mainly because a $3.6 million impairment charge from Q1 2023 did not recur. This was partially offset by a $4.9 million increase in the provision for doubtful accounts138 Liquidity and Capital Resources As of March 31, 2024, Yelp's liquidity included $296.0 million cash and $124.7 million marketable securities, with $72.9 million cash from operations in Q1 Liquidity Position as of March 31, 2024 | Item | Amount (in $ millions) | | :--- | :--- | | Cash and cash equivalents | $296.0 | | Marketable securities | $124.7 | | Available under credit facility | $110.9 | - In Q1 2024, the company repurchased 1,526,366 shares for an aggregate price of $62.5 million172 - Future material cash requirements include $83.9 million for operating leases and approximately $198.9 million for purchase obligations, primarily for website hosting services163164 Quantitative and Qualitative Disclosures About Market Risk The company's exposure to market risks, including interest rate, foreign exchange, and inflation, remains materially unchanged since year-end 2023 - Primary market risks include interest rate, foreign exchange, and inflation175 - There have been no material changes in market risk exposure since the end of 2023175 Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2024177 - No material changes to internal control over financial reporting occurred during the first quarter of 2024178 Part II. Other Information Legal Proceedings The CIPA Action class action lawsuit was settled for $15.0 million, receiving final court approval on April 10, 2024, resolving all claims - The CIPA Action lawsuit was settled for $15.0 million, with final court approval granted on April 10, 202468 - The company had accrued the full $15.0 million for this loss contingency as of March 31, 2024, and expects to fund the settlement in Q2 202469 Risk Factors No material changes to the company's previously disclosed risk factors were identified since the Annual Report on Form 10-K - No material changes to risk factors were identified since the last Annual Report183 Issuer Purchases of Equity Securities In Q1 2024, Yelp repurchased 1.53 million shares for $62.5 million, with $492.2 million remaining for future repurchases Stock Repurchase Activity (Q1 2024) | Period | Total Shares Purchased (in thousands of shares) | Average Price Paid per Share | | :--- | :--- | :--- | | January 2024 | 541 | $45.04 | | February 2024 | 59 | $44.79 | | March 2024 | 927 | $38.31 | - The Board authorized an additional $500.0 million for the stock repurchase program in February 2024184 Other Information This section discloses that CTO Sam Eaton and COO Jed Nachman entered into Rule 10b5-1 trading plans in February and March 2024, respectively - On February 21, 2024, CTO Sam Eaton entered into a Rule 10b5-1 trading plan187 - On March 5, 2024, COO Jed Nachman entered into a Rule 10b5-1 trading plan188 Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents