Yelp Inc. (NYSE:YELP), the company that connects people with great local businesses, today announced financial results for the third quarter ended September 30, 2016.
- Net revenue was $186.2 million in the third quarter of 2016, reflecting 30% growth over the third quarter of 2015.
- Cumulative reviews grew 29% year over year to approximately 115 million.
- App Unique Devices grew 24% year over year to approximately 25 million on a monthly average basis1.
- Local advertising accounts grew 30% year over year to approximately 135 thousand.
GAAP net income in the third quarter of 2016 was $2.1 million, or $0.02 per diluted share, compared to a GAAP net loss of ($8.1) million, or ($0.11) per share, in the third quarter of 2015. Adjusted EBITDA for the third quarter of 2016 was $33.7 million compared to $12.5 million in the third quarter of 2015. Non-GAAP net income, which consists of net income excluding stock-based compensation and amortization, was $18.4 million for the third quarter, or $0.22 per diluted share, compared to $2.7 million, or $0.03 per diluted share, in the third quarter of 2015.
“We had an outstanding quarter in which Local revenue grew 41% year over year and we recorded the highest adjusted EBITDA in company history,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “We continue to pursue our mission of connecting consumers with great local businesses everywhere, and our local business in the U.S. has accelerated this year. We have not yet achieved the same level of traction internationally and we have decided to redirect our resources towards the domestic opportunity for now. This was not an easy decision as it affects our valued colleagues abroad, however it allows us to sharpen our focus on the large, profitable and rapidly growing domestic business.”
Third Quarter Operating Summary
- Local revenue totaled $163.6 million, representing 41% growth compared to the third quarter of 2015.
- Transactions revenue totaled $15.9 million, representing 33% growth compared to the third quarter of 2015.
- Other revenue totaled $6.8 million which grew 1% compared to the third quarter of 2015.
- Local revenue: Local revenue increased 41% year over year to $163.6 million driven by strong productivity across all sales channels and accelerating revenue growth in the self-serve channel.
- Request-A-Quote: Consumer adoption of the Request-A-Quote feature continued to grow, with consumers making 20% more requests in the third quarter of 2016 than the previous quarter. Business owner response rates are high and nearly three-quarters of all messages in the third quarter were replied to within 24 hours. Request-A-Quote has helped drive engagement on the business owner app, with business owner logins more than doubling in the quarter compared to the same quarter in the prior year.
- Transactions: In the third quarter of 2016, Yelp began integrating Nowait into Yelp Platform and, as of today, consumers can now add themselves remotely to waitlists for over 3,200 restaurants nationwide via the Yelp app. Total transaction volume, which consists of completed transactions and bookings through Eat24, Yelp Reservations and Yelp Platform, grew 39% in the quarter over the same quarter in 2015.
As of today, Yelp is providing its outlook for the fourth quarter of 2016 and updated outlook for revenue and adjusted EBITDA for the full year of 2016.
- For the fourth quarter of 2016, net revenue is expected to be in the range of $191 million to $195 million, representing growth of approximately 26% compared to the fourth quarter of 2015 at the midpoint of the range. Adjusted EBITDA is expected to be in the range of $36 million to $40 million. Stock-based compensation is expected to be in the range of $24 million to $25 million, and depreciation and amortization is expected to be approximately 5% of revenue.
- For the full year of 2016, net revenue is expected to be in the range of $709 million to $713 million, representing growth of approximately 29% compared to full year 2015 at the midpoint of the range. Adjusted EBITDA is expected to be in the range of $111 million to $115 million. Stock-based compensation is expected to be in the range of $86 million to $87 million, and depreciation and amortization is expected to be approximately 5% of revenue.
- The company currently anticipates recording a restructuring charge of $2 million to $4 million in the fourth quarter of 2016 associated with the planned wind down of its sales and marketing activities outside the U.S. and Canada. The majority of the anticipated expense relates to severance for up to 175 of Yelp’s 4,350 employees.