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 June 30, ~~2021~~2022


☐			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.)

~~140 New Montgomery~~350 Mission Street, 910th 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 ~~August 3, 2021,~~July 29, 2022, there were ~~73,564,964~~70,273,827 shares outstanding of the registrant’s common stock, par value $0.000001 per share.

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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 Income (Loss)	6
	Condensed Consolidated Statements of Stockholders' Equity	7
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2524
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35
Part II.	Other Information
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3637
Item 3.	Defaults Upon Senior Securities	3637
Item 4.	Mine Safety Disclosures	3637
Item 5.	Other Information	3637
Item 6.	Exhibits	3738
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.

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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 ~~sustain~~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 ~~plans~~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, ~~2020~~2021 (the ~~"Annual Report"~~“Annual Report”), as updated by Part II, Item 1A of this Quarterly Report, and elsewhere in this Quarterly Report, such as:

•~~fluctuations in the number of COVID-19 cases,~~ ~~vaccinationrates~~ ~~in the United States, the timeframe for lifting of pandemic-related~~ ~~business~~adverse macroeconomic conditions and ~~travel~~ ~~restrictions as well as the potential re~~-~~imposition thereof~~, ~~the emergence of COVID-19 variants~~their impact on consumer behavior and ~~related~~ ~~public health~~ ~~and consumer responses~~, ~~and the pace of economic recovery in local economies and the United States generally~~advertiser spending;

•our ability to maintain and expand our advertiser base, particularly as many businesses continue to ~~be subject to operating restrictions in connection with the COVID-19 pandemic~~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;

~~Table of Contents~~

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

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•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~~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 our relief initiatives~~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 ~~Yelp Reservations, Yelp Waitlist~~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.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

YELP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except ~~share data)~~par value)

(Unaudited)


		June 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	558,227	$	595,875	Cash and cash equivalents	$	421,162	$	479,783

Accounts receivable (net of allowance for doubtful accounts of $9,289 and $11,559 at June 30, 2021 and December 31, 2020, respectively)		101,542		88,400
Accounts receivable (net of allowance for doubtful accounts of $8,686 and $7,153 at June 30, 2022 and December 31, 2021, respectively)						Accounts receivable (net of allowance for doubtful accounts of $8,686 and $7,153 at June 30, 2022 and December 31, 2021, respectively)	124,690		107,358
Prepaid expenses and other current assets	Prepaid expenses and other current assets	29,413		28,450		Prepaid expenses and other current assets	65,334		57,536
Total current assets	Total current assets	689,182		712,725		Total current assets	611,186		644,677

Property, equipment and software, net	Property, equipment and software, net	92,627		101,718		Property, equipment and software, net	82,212		83,857
Operating lease right-of-use assets	Operating lease right-of-use assets	143,617		168,209		Operating lease right-of-use assets	122,698		140,785
Goodwill	Goodwill	107,630		109,261		Goodwill	101,526		105,128
Intangibles, net	Intangibles, net	12,095		13,521		Intangibles, net	9,679		10,673
Restricted cash	Restricted cash	1,027		665		Restricted cash	1,052		858
Other non-current assets	Other non-current assets	59,066		48,848		Other non-current assets	94,815		64,550
Total assets	Total assets	$	1,105,244	$	1,154,947	Total assets	$	1,023,168	$	1,050,528
Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity					Liabilities and Stockholders' Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	$	106,190	$	87,760	Accounts payable and accrued liabilities	$	132,688	$	119,620
Operating lease liabilities — current	Operating lease liabilities — current	47,858		51,161		Operating lease liabilities — current	41,177		40,237
Deferred revenue	Deferred revenue	5,175		4,109		Deferred revenue	6,141		4,156
Total current liabilities	Total current liabilities	159,223		143,030		Total current liabilities	180,006		164,013
Operating lease liabilities — long-term	Operating lease liabilities — long-term	134,448		148,935		Operating lease liabilities — long-term	105,809		127,979
Other long-term liabilities	Other long-term liabilities	8,109		8,448		Other long-term liabilities	18,749		7,218
Total liabilities	Total liabilities	301,780		300,413		Total liabilities	304,564		299,210
Commitments and contingencies (Note 12)		0		0
Commitments and contingencies (Note 11)						Commitments and contingencies (Note 11)	0		0
Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Common stock, $0.000001 par value — 200,000,000 shares authorized, 74,589,907 shares issued and 74,486,037 shares outstanding at June 30, 2021, and 75,371,368 shares issued and 75,272,350 shares outstanding at December 31, 2020		0		0
Common stock, $0.000001 par value — 200,000 shares authorized, 71,226 shares issued and 71,119 shares outstanding at June 30, 2022, and 72,171 shares issued and outstanding at December 31, 2021						Common stock, $0.000001 par value — 200,000 shares authorized, 71,226 shares issued and 71,119 shares outstanding at June 30, 2022, and 72,171 shares issued and outstanding at December 31, 2021	—		—
Additional paid-in capital	Additional paid-in capital	1,464,490		1,398,248		Additional paid-in capital	1,587,337		1,522,572
Treasury stock	Treasury stock	(4,250)		(2,964)		Treasury stock	(3,138)		—
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(8,378)		(6,807)		Accumulated other comprehensive loss	(15,657)		(11,090)
Accumulated deficit	Accumulated deficit	(648,398)		(533,943)		Accumulated deficit	(849,938)		(760,164)
Total stockholders' equity	Total stockholders' equity	803,464		854,534		Total stockholders' equity	718,604		751,318
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	1,105,244	$	1,154,947	Total liabilities and stockholders' equity	$	1,023,168	$	1,050,528

See Notes to Condensed Consolidated Financial Statements.

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YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net revenue	Net revenue	$	257,188	$	169,030	$	489,284	$	418,931	Net revenue	$	298,884	$	257,188	$	575,512	$	489,284
Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below)	Cost of revenue (exclusive of depreciation and amortization shown separately below)	17,993		11,825		32,867		28,672		Cost of revenue (exclusive of depreciation and amortization shown separately below)	26,988		17,993		50,417		32,867
Sales and marketing	Sales and marketing	113,641		96,289		226,550		233,586		Sales and marketing	129,412		113,641		255,509		226,550
Product development	Product development	68,695		53,969		136,687		121,082		Product development	76,848		68,695		157,533		136,687
General and administrative	General and administrative	45,095		26,402		76,956		69,938		General and administrative	38,377		45,095		77,760		76,956
Depreciation and amortization	Depreciation and amortization	12,833		12,582		25,916		24,940		Depreciation and amortization	11,258		12,833		22,748		25,916
Restructuring	Restructuring	12		3,312		32		3,312		Restructuring	—		12		—		32
Total costs and expenses	Total costs and expenses	258,269		204,379		499,008		481,530		Total costs and expenses	282,883		258,269		563,967		499,008
Loss from operations		(1,081)		(35,349)		(9,724)		(62,599)
Income (loss) from operations										Income (loss) from operations	16,001		(1,081)		11,545		(9,724)
Other income, net	Other income, net	542		495		1,247		2,878		Other income, net	1,327		542		2,256		1,247
Loss before income taxes		(539)		(34,854)		(8,477)		(59,721)
Benefit from income taxes		(4,751)		(10,864)		(6,893)		(20,228)
Income (loss) before income taxes										Income (loss) before income taxes	17,328		(539)		13,801		(8,477)
Provision for (benefit from) income taxes										Provision for (benefit from) income taxes	9,319		(4,751)		6,707		(6,893)
Net income (loss) attributable to common stockholders	Net income (loss) attributable to common stockholders	$	4,212	$	(23,990)	$	(1,584)	$	(39,493)	Net income (loss) attributable to common stockholders	$	8,009	$	4,212	$	7,094	$	(1,584)
Net income (loss) per share attributable to common stockholders	Net income (loss) per share attributable to common stockholders									Net income (loss) per share attributable to common stockholders
Basic	Basic	$	0.06	$	(0.33)	$	(0.02)	$	(0.55)	Basic	$	0.11	$	0.06	$	0.10	$	(0.02)
Diluted	Diluted	$	0.05	$	(0.33)	$	(0.02)	$	(0.55)	Diluted	$	0.11	$	0.05	$	0.10	$	(0.02)
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders	Weighted-average shares used to compute net income (loss) per share attributable to common stockholders									Weighted-average shares used to compute net income (loss) per share attributable to common stockholders
Basic	Basic	74,807		72,413		75,025		71,980		Basic	71,217		74,807		71,427		75,025
Diluted	Diluted	78,983		72,413		75,025		71,980		Diluted	72,835		78,983		73,572		75,025

See Notes to Condensed Consolidated Financial Statements.

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YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net income (loss)	Net income (loss)	$	4,212	$	(23,990)	$	(1,584)	$	(39,493)	Net income (loss)	$	8,009	$	4,212	$	7,094	$	(1,584)
Other comprehensive income (loss):
Other comprehensive (loss) income:										Other comprehensive (loss) income:
Foreign currency translation adjustments, net of tax	Foreign currency translation adjustments, net of tax	1,181		1,018		(1,571)		(86)		Foreign currency translation adjustments, net of tax	(3,754)		1,181		(4,567)		(1,571)

Other comprehensive income (loss)		1,181		1,018		(1,571)		(86)

Other comprehensive (loss) income										Other comprehensive (loss) income	(3,754)		1,181		(4,567)		(1,571)
Comprehensive income (loss)	Comprehensive income (loss)	$	5,393	$	(22,972)	$	(3,155)	$	(39,579)	Comprehensive income (loss)	$	4,255	$	5,393	$	2,527	$	(3,155)

See Notes to Condensed Consolidated Financial Statements.

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YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In ~~thousands, except share data)~~thousands)

(Unaudited)


		Common Stock			Additional Paid-In Capital				Treasury Stock		Accumulated Other Comprehensive Loss			Accumulated Deficit				Total Stockholders' Equity				Common Stock					Additional Paid-In Capital				Treasury Stock				Accumulated Other Comprehensive Loss				Accumulated Deficit				Total Stockholders' Equity
		Shares	Amount										Shares								Amount
Balance as of March 31, 2020		71,887,846	$	0			$	1,283,885			$	0				$	(12,863)			$	(508,590)		$	762,432
Balance as of March 31, 2021																					Balance as of March 31, 2021	75,153			$	—			$	1,428,890			$	(3,313)			$	(9,559)			$	(588,918)			$	827,100

Issuance of common stock upon exercises of employee stock options	Issuance of common stock upon exercises of employee stock options	21,510	—		209				—		—			—				209			Issuance of common stock upon exercises of employee stock options	41			—		863				—				—				—				863
Issuance of common stock upon vesting of restricted stock units ("RSUs")	Issuance of common stock upon vesting of restricted stock units ("RSUs")	778,176	—		—				—		—			—				—			Issuance of common stock upon vesting of restricted stock units ("RSUs")	744			—		—				—				—				—				—
Issuance of common stock for employee stock purchase plan	Issuance of common stock for employee stock purchase plan	433,697	—		8,014				—		—			—				8,014			Issuance of common stock for employee stock purchase plan	255			—		8,675				—				—				—				8,675
Stock-based compensation (inclusive of capitalized stock-based compensation)	Stock-based compensation (inclusive of capitalized stock-based compensation)	—	—		33,637				—		—			—				33,637			Stock-based compensation (inclusive of capitalized stock-based compensation)	—			—		44,174				—				—				—				44,174
Shares withheld related to net share settlement of equity awards																					Shares withheld related to net share settlement of equity awards	—			—		(18,112)				—				—				—				(18,112)
Repurchases of common stock																					Repurchases of common stock	—			—		—				(64,629)				—				—				(64,629)
Retirement of common stock																					Retirement of common stock	(1,603)			—		—				63,692				—				(63,692)				—
Foreign currency adjustments, net of tax																					Foreign currency adjustments, net of tax	—			—		—				—				1,181				—				1,181
Net income																					Net income	—			—		—				—				—				4,212				4,212
Balance as of June 30, 2021																					Balance as of June 30, 2021	74,590			$	—	$	1,464,490			$	(4,250)			$	(8,378)			$	(648,398)			$	803,464

Foreign currency adjustments, net of tax		—	—		—				—		1,018			—				1,018
Net loss		—	—		—				—		—			(23,990)				(23,990)
Balance as of June 30, 2020		73,121,229	$	0	$	1,325,745			$	0	$	(11,845)		$	(532,580)			$	781,320

Balance as of March 31, 2021		75,153,089	$	0	$	1,428,890			$	(3,313)	$	(9,559)		$	(588,918)			$	827,100
Balance as of March 31, 2022																					Balance as of March 31, 2022	71,641			$	—	$	1,547,337			$	(2,886)			$	(11,903)			$	(808,199)			$	724,349
Issuance of common stock upon exercises of employee stock options	Issuance of common stock upon exercises of employee stock options	40,979	—		863				—		—			—				863			Issuance of common stock upon exercises of employee stock options	61			—		1,351				—				—				—				1,351
Issuance of common stock upon vesting of RSUs	Issuance of common stock upon vesting of RSUs	744,337	—		—				—		—			—				—			Issuance of common stock upon vesting of RSUs	710			—		—				—				—				—				—
Issuance of common stock for employee stock purchase plan	Issuance of common stock for employee stock purchase plan	254,449	—		8,675				—		—			—				8,675			Issuance of common stock for employee stock purchase plan	364			—		9,110				—				—				—				9,110
Stock-based compensation (inclusive of capitalized stock-based compensation)	Stock-based compensation (inclusive of capitalized stock-based compensation)	—	—		44,174				—		—			—				44,174			Stock-based compensation (inclusive of capitalized stock-based compensation)	—			—		43,224				—				—				—				43,224
Shares withheld related to net share settlement of equity awards	Shares withheld related to net share settlement of equity awards	—	—		(18,112)				—		—			—				(18,112)			Shares withheld related to net share settlement of equity awards	—			—		(13,685)				—				—				—				(13,685)
Repurchases of common stock	Repurchases of common stock	—	—		—				(64,629)		—			—				(64,629)			Repurchases of common stock	—			—		—				(50,000)				—				—				(50,000)
Retirement of common stock	Retirement of common stock	(1,602,947)	—		—				63,692		—			(63,692)				0			Retirement of common stock	(1,550)			—		—				49,748				—				(49,748)				—
Foreign currency adjustments, net of tax	Foreign currency adjustments, net of tax	—	—		—				—		1,181			—				1,181			Foreign currency adjustments, net of tax	—			—		—				—				(3,754)				—				(3,754)
Net income	Net income	—	—		—				—		—			4,212				4,212			Net income	—			—		—				—				—				8,009				8,009
Balance as of June 30, 2021		74,589,907	$	0	$	1,464,490			$	(4,250)	$	(8,378)		$	(648,398)			$	803,464
Balance as of June 30, 2022																					Balance as of June 30, 2022	71,226			$	—	$	1,587,337			$	(3,138)			$	(15,657)			$	(849,938)			$	718,604

See Notes to Condensed Consolidated Financial Statements.

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YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)

(In ~~thousands, except share data)~~thousands)

(Unaudited)


		Common Stock			Additional Paid-In Capital				Treasury Stock		Accumulated Other Comprehensive Loss			Accumulated Deficit				Total Stockholders' Equity				Common Stock					Additional Paid-In Capital				Treasury Stock				Accumulated Other Comprehensive Loss				Accumulated Deficit				Total Stockholders' Equity
		Shares	Amount										Shares								Amount
Balance as of December 31, 2019		71,185,468	$	0			$	1,259,803			$	0				$	(11,759)			$	(493,053)		$	754,991
Cumulative effect adjustment upon adoption of ASU 2016-13		—	—		—				—		—			(34)				(34)
Issuance of common stock upon exercises of employee stock options		222,357	—		2,794				—		—			—				2,794
Issuance of common stock upon vesting of RSUs		1,279,707	—		—				—		—			—				—
Issuance of common stock for employee stock purchase plan		433,697	—		8,014				—		—			—				8,014
Stock-based compensation (inclusive of capitalized stock-based compensation)		—	—		66,886				—		—			—				66,886
Shares withheld related to net share settlement of equity awards		—	—		(11,752)				—		—			—				(11,752)
Balance as of December 31, 2020																					Balance as of December 31, 2020	75,371			$	—			$	1,398,248			$	(2,964)			$	(6,807)			$	(533,943)			$	854,534

Foreign currency adjustments, net of tax		—	—		—				—		(86)			—				(86)
Net loss		—	—		—				—		—			(39,493)				(39,493)
Balance as of June 30, 2020		73,121,229	$	0	$	1,325,745			$	0	$	(11,845)		$	(532,580)			$	781,320

Balance as of December 31, 2020		75,371,368	$	0	$	1,398,248			$	(2,964)	$	(6,807)		$	(533,943)			$	854,534
Issuance of common stock upon exercises of employee stock options	Issuance of common stock upon exercises of employee stock options	564,923	—		6,912				—		—			—				6,912			Issuance of common stock upon exercises of employee stock options	565			—		6,912				—				—				—				6,912
Issuance of common stock upon vesting of RSUs	Issuance of common stock upon vesting of RSUs	1,414,302	—		—				—		—			—				—			Issuance of common stock upon vesting of RSUs	1,414			—		—				—				—				—				—
Issuance of common stock for employee stock purchase plan	Issuance of common stock for employee stock purchase plan	254,449	—		8,675				—		—			—				8,675			Issuance of common stock for employee stock purchase plan	255			—		8,675				—				—				—				8,675
Stock-based compensation (inclusive of capitalized stock-based compensation)	Stock-based compensation (inclusive of capitalized stock-based compensation)	—	—		85,693				—		—			—				85,693			Stock-based compensation (inclusive of capitalized stock-based compensation)	—			—		85,693				—				—				—				85,693
Shares withheld related to net share settlement of equity awards	Shares withheld related to net share settlement of equity awards	—	—		(35,038)				—		—			—				(35,038)			Shares withheld related to net share settlement of equity awards	—			—		(35,038)				—				—				—				(35,038)
Repurchases of common stock	Repurchases of common stock	—	—		—				(114,157)		—			—				(114,157)			Repurchases of common stock	—			—		—				(114,157)				—				—				(114,157)
Retirement of common stock	Retirement of common stock	(3,015,135)	—		—				112,871		—			(112,871)				0			Retirement of common stock	(3,015)			—		—				112,871				—				(112,871)				—
Foreign currency adjustments, net of tax	Foreign currency adjustments, net of tax	—	—		—				—		(1,571)			—				(1,571)			Foreign currency adjustments, net of tax	—			—		—				—				(1,571)				—				(1,571)
Net loss	Net loss	—	—		—				—		—			(1,584)				(1,584)			Net loss	—			—		—				—				—				(1,584)				(1,584)
Balance as of June 30, 2021	Balance as of June 30, 2021	74,589,907	$	0	$	1,464,490			$	(4,250)	$	(8,378)		$	(648,398)			$	803,464		Balance as of June 30, 2021	74,590			$	—	$	1,464,490			$	(4,250)			$	(8,378)			$	(648,398)			$	803,464

Balance as of December 31, 2021																					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																					Issuance of common stock upon exercises of employee stock options	88			—		1,939				—				—				—				1,939
Issuance of common stock upon vesting of RSUs																					Issuance of common stock upon vesting of RSUs	1,535			—		—				—				—				—				—
Issuance of common stock for employee stock purchase plan																					Issuance of common stock for employee stock purchase plan	364			—		9,110				—				—				—				9,110
Stock-based compensation (inclusive of capitalized stock-based compensation)																					Stock-based compensation (inclusive of capitalized stock-based compensation)	—			—		85,991				—				—				—				85,991
Shares withheld related to net share settlement of equity awards																					Shares withheld related to net share settlement of equity awards	—			—		(32,275)				—				—				—				(32,275)
Repurchases of common stock																					Repurchases of common stock	—			—		—				(100,006)				—				—				(100,006)
Retirement of common stock																					Retirement of common stock	(2,932)			—		—				96,868				—				(96,868)				—
Foreign currency adjustments, net of tax																					Foreign currency adjustments, net of tax	—			—		—				—				(4,567)				—				(4,567)
Net income																					Net income	—			—		—				—				—				7,094				7,094
Balance as of June 30, 2022																					Balance as of June 30, 2022	71,226			$	—	$	1,587,337			$	(3,138)			$	(15,657)			$	(849,938)			$	718,604

See Notes to Condensed Consolidated Financial Statements.

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YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


		Six Months Ended June 30,					Six Months Ended June 30,
		2021		2020			2022		2021
Operating Activities	Operating Activities					Operating Activities
Net loss		$	(1,584)	$	(39,493)
Adjustments to reconcile net loss to net cash provided by operating activities:
Net income (loss)						Net income (loss)	$	7,094	$	(1,584)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:						Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	25,916		24,940		Depreciation and amortization	22,748		25,916
Provision for doubtful accounts	Provision for doubtful accounts	7,240		21,897		Provision for doubtful accounts	12,676		7,240
Stock-based compensation	Stock-based compensation	80,104		62,335		Stock-based compensation	81,121		80,104
Noncash lease cost	Noncash lease cost	20,712		20,984		Noncash lease cost	16,870		20,712
Deferred income taxes	Deferred income taxes	(7,755)		(14,263)		Deferred income taxes	(24,114)		(7,755)
Amortization of deferred cost						Amortization of deferred cost	8,413		6,881
Asset impairment	Asset impairment	11,164		0		Asset impairment	—		11,164
Other adjustments, net	Other adjustments, net	386		876		Other adjustments, net	717		386
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(20,382)		12,910		Accounts receivable	(30,014)		(20,382)
Prepaid expenses and other assets	Prepaid expenses and other assets	88		604		Prepaid expenses and other assets	(22,149)		(6,793)
Operating lease liabilities	Operating lease liabilities	(22,489)		(22,520)		Operating lease liabilities	(19,813)		(22,489)
Accounts payable, accrued liabilities and other liabilities	Accounts payable, accrued liabilities and other liabilities	15,707		(11,021)		Accounts payable, accrued liabilities and other liabilities	24,683		15,707
Net cash provided by operating activities	Net cash provided by operating activities	109,107		57,249		Net cash provided by operating activities	78,232		109,107
Investing Activities	Investing Activities					Investing Activities
Sales and maturities of marketable securities — available-for-sale		0		290,395
Purchases of marketable securities — held-to-maturity		0		(87,438)
Maturities of marketable securities — held-to-maturity		0		93,200

Purchases of property, equipment and software	Purchases of property, equipment and software	(13,286)		(17,004)		Purchases of property, equipment and software	(14,498)		(13,286)
Other investing activities	Other investing activities	90		328		Other investing activities	19		90
Net cash (used in) provided by investing activities		(13,196)		279,481
Net cash used in investing activities						Net cash used in investing activities	(14,479)		(13,196)
Financing Activities	Financing Activities					Financing Activities
Proceeds from issuance of common stock for employee stock-based plans	Proceeds from issuance of common stock for employee stock-based plans	15,587		10,808		Proceeds from issuance of common stock for employee stock-based plans	11,026		15,587
Taxes paid related to the net share settlement of equity awards	Taxes paid related to the net share settlement of equity awards	(34,824)		(12,557)		Taxes paid related to the net share settlement of equity awards	(32,046)		(34,824)
Repurchases of common stock	Repurchases of common stock	(114,157)		0		Repurchases of common stock	(100,006)		(114,157)
Other financing activities		0		(356)

Net cash used in financing activities	Net cash used in financing activities	(133,394)		(2,105)		Net cash used in financing activities	(121,026)		(133,394)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	197		(340)		Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1,154)		197
Change in cash, cash equivalents and restricted cash	Change in cash, cash equivalents and restricted cash	(37,286)		334,285		Change in cash, cash equivalents and restricted cash	(58,427)		(37,286)
Cash, cash equivalents and restricted cash — Beginning of period	Cash, cash equivalents and restricted cash — Beginning of period	596,540		192,318		Cash, cash equivalents and restricted cash — Beginning of period	480,641		596,540
Cash, cash equivalents and restricted cash — End of period	Cash, cash equivalents and restricted cash — End of period	$	559,254	$	526,603	Cash, cash equivalents and restricted cash — End of period	$	422,214	$	559,254
Supplemental Disclosures of Other Cash Flow Information	Supplemental Disclosures of Other Cash Flow Information					Supplemental Disclosures of Other Cash Flow Information
Refunds received for income taxes, net		$	(586)	$	(298)
Cash paid (refund received) for income taxes, net						Cash paid (refund received) for income taxes, net	$	23,727	$	(586)
Supplemental Disclosures of Noncash Investing and Financing Activities	Supplemental Disclosures of Noncash Investing and Financing Activities					Supplemental Disclosures of Noncash Investing and Financing Activities
Purchases of property, equipment and software recorded in accounts payable and accrued liabilities	Purchases of property, equipment and software recorded in accounts payable and accrued liabilities	$	1,295	$	615	Purchases of property, equipment and software recorded in accounts payable and accrued liabilities	$	3,836	$	1,295
Tax liabilities related to equity awards included in accounts payable and accrued liabilities	Tax liabilities related to equity awards included in accounts payable and accrued liabilities	$	21	$	0	Tax liabilities related to equity awards included in accounts payable and accrued liabilities	$	39	$	21
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	$	4,497	$	11,833	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	Repurchases of common stock recorded in accounts payable and accrued liabilities	$	3,444	$	0	Repurchases of common stock recorded in accounts payable and accrued liabilities	$	2,397	$	3,444

See Notes to Condensed Consolidated Financial Statements.

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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, ~~2020~~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, except as set forth under "Recently Adopted Accounting Pronouncements" below.~~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.~~

In early March 2020, COVID-19 was declared a global pandemic by the World Health Organization. Governments around the world, including in the United States, have implemented extensive measures in an effortestimates due to ~~control the spread of COVID-19, including travel restrictions, limitations on business activity, quarantines and shelter-in-place orders. Due to the COVID-19 pandemic and~~ the uncertainty of the extent of the impacts ~~certain estimates~~of macroeconomic conditions and assumptions have required and may continue to require increased judgment and carry a higher degree of variability and volatility than they did prior to the pandemic. As events continue to evolve and additional information becomes available, these estimates may materially change in future periods.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.

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~~Recently Adopted Accounting Pronouncements~~

In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" ("ASU 2019-12"), which simplifies the accounting for income taxes by removing certain exceptions to the general principles for recording income taxes, while also simplifying certain recognition and allocation approaches to accounting for income taxes. The Company adopted ASU 2019-12 on January 1, 2021, and the adoption did not have a material impact on its consolidated financial statements.

2. CASH, CASH EQUIVALENTS AND RESTRICTED CASH

Cash, cash equivalents and restricted cash as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 consisted of the following (in thousands):


		June 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Cash	Cash	$	47,911	$	85,750	Cash	$	30,147	$	89,407
Cash equivalents	Cash equivalents	510,316		510,125		Cash equivalents	391,015		390,376
Total cash and cash equivalents	Total cash and cash equivalents	$	558,227	$	595,875	Total cash and cash equivalents	$	421,162	$	479,783
Restricted cash	Restricted cash	1,027		665		Restricted cash	1,052		858
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	559,254	$	596,540	Total cash, cash equivalents and restricted cash	$	422,214	$	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 June 30, ~~2021~~2022 and December 31, ~~2020~~2021 (in thousands):

June 30, 2021 December 31, 2020
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Cash equivalents:
Money market funds $ 510,316 $ 0 $ 0 $ 510,316 $ 510,125 $ 0 $ 0 $ 510,125
Other investments:
Certificates of deposit 0 10,000 0 10,000 0 10,933 0 10,933
Total cash equivalents and other investments $ 510,316 $ 10,000 $ 0 $ 520,316 $ 510,125 $ 10,933 $ 0 $ 521,058

~~Table of Contents~~


	June 30, 2022								December 31, 2021
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	391,015	$	—	$	—	$	391,015	$	390,376	$	—	$	—	$	390,376






Other investments:
Certificates of deposit	—		10,000		—		10,000		—		10,000		—		10,000
Total cash equivalents and other investments	$	391,015	$	10,000	$	—	$	401,015	$	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 June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

The Company's long- and indefinite-lived assets, such as property, equipment and software, goodwill and other intangible assets, are measured at fair value on a non-recurring basis if the assets are determined to be impaired. The Company recognized an impairment charge related to right-of-use ("ROU") assets and leasehold improvements associated with certain of its operating leases that it subleased during the three months ended June 30, 2021. See ~~Note 8, "Leases,~~" for further details. The Company estimated the fair value of these assets as of the effective dates of the agreements using an income approach based on expected future cash flows from the subleased properties, which relied on certain assumptions made by management based on both internal and external data, such as the incremental borrowing rates used to discount these cash flows to its present values. As a result, these assets are classified within Level 3 of the fair value hierarchy.

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4. ~~MARKETABLE SECURITIES~~

In March 2020, the Company changed its investment strategy in response to uncertainties resulting from the COVID-19 pandemic to allow for more flexibility in preserving liquidity, which led to the transfer of $300.2 million of amortized cost of its investment portfolio from a held-to-maturity classification to available-for-sale. As a result of this transfer, in March 2020, the Company reversed the allowance for credit loss that had been previously recorded upon adoption of Accounting Standards Update No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," and measured the securities at fair value as of the transfer date by recording an immaterial allowance for credit loss to other income, net and the remaining adjustment as an immaterial unrealized loss recorded to other comprehensive income.

Following this transfer, during the six months ended June 30, 2020, the Company liquidated its investment portfolio, which consisted of available-for-sale short- and long-term marketable securities, for proceeds of $253.4 million. The Company recorded an immaterial net realized gain to other income, net and reinvested the proceeds from the sales, along with $73.0 million from maturities and redemptions of marketable securities, into money market funds.

~~As of June 30, 2021 and December 31, 2020, the Company did not have any marketable securities and a majority of the Company's investments were in highly liquid money market funds.~~

5. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 consisted of the following (in thousands):


		June 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Prepaid expenses	Prepaid expenses	$	12,026	$	10,438	Prepaid expenses	$	14,538	$	13,480
Certificates of deposit	Certificates of deposit	10,000		10,930		Certificates of deposit	10,000		10,000
Other current assets	Other current assets	7,387		7,082		Other current assets	40,796		34,056
Total prepaid expenses and other current assets	Total prepaid expenses and other current assets	$	29,413	$	28,450	Total prepaid expenses and other current assets	$	65,334	$	57,536

Prepaid expenses included ~~$0.8~~$0.5 million of short-term capitalized implementation costs ~~incurred~~ related to cloud computing arrangements that are service contracts. The long-term portion of capitalized cloud computing implementation costs of $1.4 million are included in other non-current assets. The Company recorded an immaterial amount of amortization expense during the three and six months ended June 30, 2022 and 2021 related to ~~these~~ capitalized implementation costs. As of June 30, ~~2021,~~2022, other current assets primarily consisted of non-trade receivables, current tax receivables and deferred costs related to unsettled share ~~repurchases, short-term deposits and non-trade receivables.~~

repurchases.

~~Table of Contents~~

6.5. PROPERTY, EQUIPMENT AND SOFTWARE, NET

Property, equipment and software, net as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 consisted of the following (in thousands):

June 30,
2021 December 31,
2020
Capitalized website and internal-use software development costs $ 187,418 $ 171,831
Leasehold improvements(1)
81,776 88,687
Computer equipment 46,223 46,581
Furniture and fixtures 16,466 18,339
Telecommunication 4,965 4,951
Software 1,718 1,717
Total 338,566 332,106
Less accumulated depreciation (245,939) (230,388)
Property, equipment and software, net $ 92,627 $ 101,718

~~(1)~~ ~~The cost basis was reduced to reflect an impairment of $2.7 million recorded during the three months ended June 30, 2021. For more information, see~~ N ~~ote 8, "Leases~~."


	June 30, 2022		December 31, 2021
Capitalized website and internal-use software development costs	$	216,468	$	202,169
Leasehold improvements	61,515		59,190
Computer equipment	50,685		48,264
Furniture and fixtures	11,841		12,573
Telecommunication	4,941		4,953
Software	1,702		1,703
Total	347,152		328,852
Less accumulated depreciation and amortization	(264,940)		(244,995)
Property, equipment and software, net	$	82,212	$	83,857

Depreciation and amortization expense related to property, equipment and software was ~~$12.1~~$11.0 million and ~~$12.0~~$12.1 million for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$24.5~~$21.8 million and ~~$23.7~~$24.5 million for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

7.6. 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, ~~2020~~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 six months ended June 30, ~~2021~~2022 were as follows (in thousands):


Balance as of December 31, ~~2020~~2021	$	~~109,261~~105,128
Effect of currency translation	~~(1,631)~~(3,602)
Balance as of June 30, ~~2021~~2022	$	~~107,630~~101,526

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Intangible assets that were not fully amortized as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 consisted of the following (dollars in thousands):


		June 30, 2021									June 30, 2022
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Life			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Life
Business relationships	Business relationships	$	9,918	$	(4,299)	$	5,619	7.4	years	Business relationships	$	9,918	$	(5,196)	$	4,722	6.7	years
Developed technology	Developed technology	7,709		(6,846)		863		0.7	years	Developed technology	7,709		(7,709)		—		0.0	years
Licensing agreements	Licensing agreements	6,129		(538)		5,591		8.7	years	Licensing agreements	6,129		(1,183)		4,946		7.7	years

Domains and data licenses	Domains and data licenses	2,869		(2,847)		22		2.0	years	Domains and data licenses	2,869		(2,858)		11		1.0	years

Total	Total	$	26,625	$	(14,530)	$	12,095			Total	$	26,625	$	(16,946)	$	9,679


		December 31, 2020									December 31, 2021
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Life			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Life
Business relationships	Business relationships	$	9,918	$	(3,814)	$	6,104	7.8	years	Business relationships	$	9,918	$	(4,786)	$	5,132	7.1	years
Developed technology	Developed technology	7,709		(6,238)		1,471		1.2	years	Developed technology	7,709		(7,453)		256		0.2	years
Licensing agreements	Licensing agreements	6,129		(215)		5,914		9.2	years	Licensing agreements	6,129		(860)		5,269		8.2	years

Domain and data licenses	Domain and data licenses	2,869		(2,837)		32		2.2	years	Domain and data licenses	2,869		(2,853)		16		1.5	years

Total	Total	$	26,625	$	(13,104)	$	13,521			Total	$	26,625	$	(15,952)	$	10,673

Amortization expense was ~~$0.7~~$0.3 million and ~~$0.6~~$0.7 million for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$1.4~~$1.0 million and ~~$1.2~~$1.4 million for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

As of June 30, ~~2021,~~2022, estimated future amortization expenses were as follows (in thousands):


Remainder of 2021		$	1,422
2022		1,676
Remainder of 2022				Remainder of 2022	$	682
2023	2023	1,359		2023	1,359
2024	2024	1,353		2024	1,353
2025	2025	1,353		2025	1,353
2026	2026	1,353		2026	1,353
2027				2027	1,353
Thereafter	Thereafter	3,579		Thereafter	2,226
Total amortization	Total amortization	$	12,095	Total amortization	$	9,679

8.7. LEASES

The components of lease cost, net for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 were as follows (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Operating lease cost	Operating lease cost	$	12,631	$	13,987	$	26,394	$	27,798	Operating lease cost	$	10,499	$	12,631	$	21,166	$	26,394
Short-term lease cost (12 months or less)	Short-term lease cost (12 months or less)	136		341		273		701		Short-term lease cost (12 months or less)	270		136		524		273
Sublease income	Sublease income	(1,778)		(1,954)		(3,406)		(3,914)		Sublease income	(2,777)		(1,778)		(5,555)		(3,406)
Total lease cost, net	Total lease cost, net	$	10,989	$	12,374	$	23,261	$	24,585	Total lease cost, net	$	7,992	$	10,989	$	16,135	$	23,261

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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.

Supplemental cash flow information related to leases for the six months ended June 30, ~~2021~~2022 and ~~2020~~2021 was as follows (in thousands):


		Six Months Ended June 30,					Six Months Ended June 30,
		2021		2020			2022		2021
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Operating cash flows from operating leases	$	27,784	$	29,749	Operating cash flows from operating leases	$	25,511	$	27,784

As of June 30, ~~2021,~~2022, maturities of lease liabilities were as follows (in thousands):


Remainder of 2021		$	24,602
2022		48,688
Remainder of 2022				Remainder of 2022	$	23,967
2023	2023	45,801		2023	45,369
2024	2024	43,028		2024	42,667
2025	2025	22,459		2025	22,134
2026	2026	7,502		2026	7,197
2027				2027	6,386
Thereafter	Thereafter	17,075		Thereafter	16,258
Total minimum lease payments	Total minimum lease payments	209,155		Total minimum lease payments	163,978
Less imputed interest	Less imputed interest	(26,849)		Less imputed interest	(16,992)
Present value of lease liabilities	Present value of lease liabilities	$	182,306	Present value of lease liabilities	$	146,986

As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the weighted-average remaining lease terms and weighted-average discount rates were as follows:


		June 30, 2021	December 31, 2020			June 30, 2022		December 31, 2021
Weighted-average remaining lease term (years) — operating leases	Weighted-average remaining lease term (years) — operating leases	4.8	5.1		Weighted-average remaining lease term (years) — operating leases	4.4		4.8
Weighted-average discount rate — operating leases	Weighted-average discount rate — operating leases	5.9 %	6.0	%	Weighted-average discount rate — operating leases	5.3	%	5.4	%

~~In October 2020,~~Subsequent to the quarter end, in July 2022, the Company entered into a ~~lease~~sublease agreement for an office facility in Toronto, Canada for which the lease term is expected to commence in August 2021 and expire in 2031. The Company expects to classify this as an operating lease and, as of June 30, 2021, expected to recognize operating lease cost of approximately $9.7 million over the life of the lease.

~~During the three months ended June 30, 2021, the Company entered into sublease agreements for portions~~a portion of its office space in ~~San Francisco and~~ New York. The Company evaluated the associated ROU assets and leasehold improvements for impairment as a result of the subleases in accordance with Accounting Standards Codification Topic 360, "Property, Plant, and Equipment" because the change in circumstances indicated that the carrying amount of such assets may not be recoverable. The Company compared the future undiscounted cash flows under the sublease agreementsexpects to ~~the carrying amounts of the respective ROU assets and leasehold improvements and determined that an impairment existed.~~

~~The Company compared the carrying values of the impacted assets to the fair values to determine the impairment amount. The Company recognized~~recognize an impairment charge of ~~$11.2~~approximately $10.5 million ~~during~~in the three months ~~ended June~~ending September 30, ~~2021,~~2022, which iswill be included in general and administrative expenses on its condensed consolidated statement of operations, and ~~reduced~~will reduce the carrying ~~amount~~amounts of the ~~ROU~~associated right-of-use assets and leasehold improvements ~~by $8.5 million and $2.7 million, respectively. For more information on the fair values of the ROU assets and leasehold improvements used in the impairment analysis, see~~ ~~Note 3,~~ "~~Fair Value Measurements~~."

accordingly.

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9.8. OTHER NON-CURRENT ASSETS

Other non-current assets as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 consisted of the following (in thousands):


		June 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Deferred tax assets	Deferred tax assets	$	39,013	$	31,163	Deferred tax assets	$	64,597	$	40,606
Deferred contract costs	Deferred contract costs	15,413		14,522		Deferred contract costs	23,000		16,931
Other non-current assets	Other non-current assets	4,640		3,163		Other non-current assets	7,218		7,013
Total other non-current assets	Total other non-current assets	$	59,066	$	48,848	Total other non-current assets	$	94,815	$	64,550

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Deferred contract costs as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, and changes in deferred contract costs during the six months ended June 30, ~~2021,~~2022, were as follows (in thousands):


	Six Months Ended June 30, ~~2021~~2022
Balance, beginning of period	$	~~14,522~~16,931
Add: costs deferred on new contracts	~~7,721~~14,482
Less: amortization recorded in sales and marketing expenses	~~(6,830)~~(8,413)
Balance, end of period	$	~~15,413~~23,000

~~10.~~9. CONTRACT BALANCES

The changes in the allowance for doubtful accounts during the six months ended June 30, ~~2021~~2022 and ~~2020~~2021 were as follows (in thousands):


		Six Months Ended June 30,					Six Months Ended June 30,
		2021		2020			2022		2021
Balance, beginning of period	Balance, beginning of period	$	11,559	$	7,686	Balance, beginning of period	$	7,153	$	11,559
Add: provision for doubtful accounts	Add: provision for doubtful accounts	7,240		21,897		Add: provision for doubtful accounts	12,676		7,240
Less: write-offs, net of recoveries	Less: write-offs, net of recoveries	(9,510)		(17,876)		Less: write-offs, net of recoveries	(11,143)		(9,510)
Balance, end of period	Balance, end of period	$	9,289	$	11,707	Balance, end of period	$	8,686	$	9,289

The net increase in the allowance for doubtful accounts in the six months ended June 30, 2022 was primarily related to an anticipated increase in customer delinquencies due to an increase in both advertisers and customer spend during the six month period. The net decrease in the allowance for doubtful accounts in the six months ended June 30, 2021 was primarily a result of a reduction in expected customer delinquencies ~~compared to June 30, 2020,~~ as collection rates continued to improve. The net increase in the allowance for doubtful accounts in the six months ended June 30, 2020 primarily related to an anticipated increase in customer delinquencies due to the COVID-19 pandemic.improved. In calculating the allowance for doubtful accounts as of June 30, ~~2021~~2022 and ~~2020,~~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.

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The changes in deferred revenue during the six months ended June 30, ~~2021~~2022 were as follows (in thousands):


	Six Months Ended June 30, ~~2021~~2022
Balance, beginning of period	$	~~4,109~~4,156
Less: recognition of deferred revenue from beginning balance	~~(2,759)~~(3,508)
Add: net increase in current period contract liabilities	~~3,825~~5,493
Balance, end of period	$	~~5,175~~6,141

The majority of the deferred revenue balance as of June 30, ~~2021~~2022 is expected to be recognized as revenue in the subsequent three-month period ending September 30, ~~2021.~~2022. An immaterial amount of long-term deferred revenue is included in other long-term liabilities as of June 30, 2022. No other contract assets or liabilities were recorded on the Company's condensed consolidated balance sheets as of June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

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10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities as of June 30, ~~2021~~2022 and December 31, ~~2020~~2021 consisted of the following (in thousands):


		June 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Accounts payable	Accounts payable	$	14,373	$	8,853	Accounts payable	$	17,485	$	16,127
Employee-related liabilities	Employee-related liabilities	66,225		57,684		Employee-related liabilities	60,285		50,132
Accrued sales and marketing expenses	Accrued sales and marketing expenses	8,042		2,137		Accrued sales and marketing expenses	8,582		5,455

Accrued cost of revenue	Accrued cost of revenue	5,381		8,269		Accrued cost of revenue	7,058		9,537

Accrued legal settlements						Accrued legal settlements	26,011		26,037
Other accrued liabilities	Other accrued liabilities	12,169		10,817		Other accrued liabilities	13,267		12,332
Total accounts payable and accrued liabilities	Total accounts payable and accrued liabilities	$	106,190	$	87,760	Total accounts payable and accrued liabilities	$	132,688	$	119,620

As of June 30, 2022, other accrued liabilities primarily consisted of accrued costs related to unsettled share repurchases as well as accrued general and administrative, product development and workplace costs.

~~12.~~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 (the "Court"), naming as defendants the Company and certain of its ~~officers.~~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 ~~August 2,~~November 27, 2018, the ~~Company and the other defendants filed a motion to dismiss the amended complaint, which the court~~Court granted in part and denied in part ~~on November 27, 2018.~~the defendants’ motion to dismiss. On October 22, 2019, the Court approved a stipulation to certify a class in this ~~action.~~action and, on September 9, 2021, it denied the defendants’ motion for summary judgment. The case ~~remains pending.~~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 the Company expects to be funded by defendants’ insurers. The proposed settlement, which was preliminarily approved by the Court on July 25, 2022, will resolve all claims asserted against all defendants in the Securities Class Action without any liability or wrongdoing attributed to them.

On June 22, 2022, the Court granted preliminary approval of the settlement of a stockholder derivative action (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 also pending before the Court. The proposed settlement will 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 will adopt and implement certain corporate governance modifications and the Company will receive $18.0 million of insurance proceeds. Subsequent to the quarter end, the proceeds were placed in escrow in July 2022 pending final approval of the settlement. The Company ~~is unable~~has agreed to ~~reasonably estimate either~~pay $3.75 million of such insurance proceeds to the ~~probability of incurring~~plaintiff’s attorneys as fees.

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 ~~or an estimated range~~is probable and the amount can be reasonably estimated. Although final approval of ~~such~~the settlement agreements for the Securities Class Action and the Derivative Action remains pending, the Company believes the loss ~~if any, from~~for both are probable and the ~~lawsuit.~~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 June 30, 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

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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.

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

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letter of credit sub-limit of $25.0 million. As of June 30, ~~2021,~~2022, the Company had ~~$21.5~~$20.5 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~~$54.5 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 0no loans outstanding under the Credit Agreement as of June 30, ~~2021.~~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.

~~13.~~12. STOCKHOLDERS’ EQUITY

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


		June 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
		Shares Authorized	Shares Issued	Shares Authorized	Shares Issued		Shares Authorized	Shares Issued	Shares Authorized	Shares Issued
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Common stock, $0.000001 par value	Common stock, $0.000001 par value	200,000,000	74,589,907	200,000,000	75,371,368	Common stock, $0.000001 par value	200,000	71,226	200,000	72,171
Undesignated preferred stock	Undesignated preferred stock	10,000,000	0	10,000,000	0	Undesignated preferred stock	10,000	—	10,000	—

Stock Repurchase Program

~~In July 2017,~~As of June 30, 2022, the ~~Company’s board of directors authorized a stock repurchase program under which the Company was authorized to repurchase up to $200.0 million of its outstanding common stock. The~~ Company's board of directors had authorized ~~the Company~~it to repurchase up to an ~~additional $250.0 million~~aggregate of $1.2 billion of its outstanding common stock, ~~in each of November 2018, February 2019, and January 2020, bringing the total amount of authorized repurchases to $950.0 million as of June 30, 2021, $130.4~~$131.7 million of which remained available as of June 30, ~~2021.~~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 six months ended June 30, 2022, the Company repurchased on the open market 3,039,203 shares for an aggregate purchase price of $100.0 million and retired 2,932,305 shares. As of June 30, 2022, the Company had a treasury stock balance of 106,898 shares, which were excluded from its outstanding share count as of such date and subsequently retired in July 2022.

During the six months ended June 30, 2021, the Company repurchased on the open market 3,019,987 shares for an aggregate purchase price of $114.2 million and retired 3,015,135 shares. As of June 30, 2021, the Company had a treasury stock balance of 103,870 shares, which were excluded from its outstanding share count as of such date and subsequently retired in July 2021.

~~The Company did 0t repurchase any shares during the six months ended June 30, 2020.~~

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 2two 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.

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A summary of stock option activity for the six months ended June 30, ~~2021~~2022 is as follows:


		Number of Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)			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, 2020		4,622,828	$	29.89	4.7	$	30,451
Outstanding at December 31, 2021								Outstanding at December 31, 2021	3,979	$	32.59	4.4	$	24,580
Granted	Granted	80,000	39.17					Granted	10	31.42
Exercised	Exercised	(564,923)	12.24					Exercised	(88)	21.80
Canceled	Canceled	(29,275)	49.09					Canceled	(20)	36.86
Outstanding at June 30, 2021		4,108,630	$	32.36	4.8	$	38,326
Options vested and exercisable at June 30, 2021		3,632,114	$	31.80	4.4	$	36,462
Outstanding at June 30, 2022								Outstanding at June 30, 2022	3,881	$	32.82	3.8	$	9,017
Options vested and exercisable at June 30, 2022								Options vested and exercisable at June 30, 2022	3,673	$	32.69	3.5	$	9,017

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 ~~$0.7~~$0.6 million and ~~$0.2~~$0.7 million for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$11.8~~$0.9 million and ~~$4.4~~$11.8 million for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

The weighted-average grant date fair value of options granted during the three and six months ended June 30, 2022 was $16.07 per share. The weighted-average grant date fair value of options granted during the three and six months ended June 30, 2021 was $18.55 per share. ~~There were 0 options granted during the three months ended June 30, 2020. The weighted-average grant date fair value of options granted during the six months ended June 30, 2020 was $11.13 per share.~~

As of June 30, ~~2021,~~2022, total unrecognized compensation costs related to nonvested stock options were approximately ~~$7.5~~$3.1 million, which the Company expects to recognize over a weighted-average time period of ~~2.0~~1.7 years.

RSUs

RSUs generally vest over a four-year period, on one of 2 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 ~~both a time-based vesting schedule and~~ either (a) a market condition or (b) the achievement of performance goals. ~~The~~PRSUs may also be subject to a time-based vesting schedule isof 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 ~~subject to a market condition~~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 0zero 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

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targets is known, which will be no later than March of the year following ~~year.~~the year in which the PRSUs are granted. 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 vesting date. The Company performed an analysis as of June 30, ~~2021~~2022 to assess the probability of achievement of the PRSU financial targets and, as a result, recorded compensation costs in the three and six months ended June 30, ~~2021~~2022 for the PRSUs that it expected to vest.

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As the PRSU activity during the six months ended June 30, ~~2021~~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 six months ended June 30, ~~2021~~2022 is as ~~follows:~~follows (in thousands, except per share amounts):


		Number of Shares	Weighted-Average Grant Date Fair Value			Number of Shares	Weighted-Average Grant Date Fair Value
Nonvested at December 31, 2020		9,757,787	$	29.22
Nonvested at December 31, 2021					Nonvested at December 31, 2021	10,016	$	32.39
Granted	Granted	4,909,615	36.10		Granted	5,489	35.62
Vested(1)	Vested(1)	(2,337,449)	31.84		Vested(1)	(2,543)	33.62
Canceled	Canceled	(1,331,918)	31.62		Canceled	(1,395)	33.21
Nonvested at June 30, 2021		10,998,035	$	31.44
Nonvested at June 30, 2022					Nonvested at June 30, 2022	11,567	$	33.55

(1) Includes ~~923,147~~1,007,743 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 six months ended June 30, 2022 and 2021 ~~and 2020~~ was ~~$88.7~~$81.4 million and ~~$46.1~~$88.7 million, respectively. As of June 30, ~~2021,~~2022, the Company had approximately ~~$336.6~~$363.8 million of unrecognized stock-based compensation expense related to RSUs and ~~PRUSs,~~PRSUs, which it expects to recognize over the remaining weighted-average vesting period of approximately ~~2.8~~2.7 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 364,436 shares purchased by employees under the ESPP at a weighted-average price of $25.00 in the three and six months ended June 30, 2022. There were 254,449 shares purchased by employees under the ESPP at a weighted-average price of $34.09 in the three and six months ended June 30, 2021. ~~There were 433,697 shares purchased by employees under the ESPP at a weighted-average price of $18.48 in the three and six months ended June 30, 2020.~~ The Company recognized stock-based compensation expense related to the ESPP of $0.7 million ~~and $0.5 million~~ in each of the three months ended June 30, ~~2021~~2022 and ~~2020, respectively,~~2021 and $1.5 million ~~and $1.3 million for~~in each of the six months ended June 30, ~~2021~~2022 and ~~2020, respectively.~~2021.

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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 June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Cost of revenue	Cost of revenue	$	1,094	$	943	$	2,202	$	1,986	Cost of revenue	$	1,248	$	1,094	$	2,553	$	2,202
Sales and marketing	Sales and marketing	8,441		7,302		16,838		14,998		Sales and marketing	8,200		8,441		16,855		16,838
Product development	Product development	20,674		16,827		41,427		34,582		Product development	22,304		20,674		45,429		41,427
General and administrative	General and administrative	10,650		5,513		19,637		10,769		General and administrative	8,309		10,650		16,284		19,637
Total stock-based compensation recorded to loss before income taxes		40,859		30,585		80,104		62,335
Total stock-based compensation recorded to income (loss) before income taxes										Total stock-based compensation recorded to income (loss) before income taxes	40,061		40,859		81,121		80,104
Benefit from income taxes	Benefit from income taxes	(9,501)		(11,652)		(19,566)		(24,209)		Benefit from income taxes	(8,819)		(9,501)		(17,957)		(19,566)
Total stock-based compensation recorded to net income (loss)	Total stock-based compensation recorded to net income (loss)	$	31,358	$	18,933	$	60,538	$	38,126	Total stock-based compensation recorded to net income (loss)	$	31,242	$	31,358	$	63,164	$	60,538

The Company capitalized ~~$2.8~~$2.3 million and ~~$2.2~~$2.8 million 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 in the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$5.5~~$4.8 million and ~~$4.5~~$5.5 million in the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

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~~14.~~13. OTHER INCOME, NET

Other income, net for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 consisted of the following (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Interest (expense) income, net		$	(34)	$	191	$	(51)	$	2,297
Transaction gain (loss) on foreign exchange		11		8		268		(60)
Interest income (expense), net										Interest income (expense), net	$	529	$	(34)	$	551	$	(51)
Transaction (loss) gain on foreign exchange, net										Transaction (loss) gain on foreign exchange, net	(94)		11		(23)		268
Other non-operating income, net	Other non-operating income, net	565		296		1,030		641		Other non-operating income, net	892		565		1,728		1,030
Other income, net	Other income, net	$	542	$	495	$	1,247	$	2,878	Other income, net	$	1,327	$	542	$	2,256	$	1,247

~~15.~~14. INCOME TAXES

The Company is subject to income ~~tax~~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 ~~tax.~~taxes. The provision for income taxes for the six months ended June 30, 2022 was $6.7 million, which was due to $6.8 million of U.S. federal, state and foreign income tax expense and $0.1 million of net discrete tax benefit primarily related to stock-based compensation. The benefit from income taxes for the six months ended June 30, 2021 was $6.9 million, which was due to $1.5 million of U.S. federal, state and foreign income tax benefit and $5.4 million of net discrete tax benefit primarily related to stock-based compensation. The benefit from income taxes for the six months ended June 30, 2020 was $20.2 million, which was due to $24.3 million of U.S. federal, state and foreign income tax benefit, offset by $4.1 million of net discrete tax expense.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was signed into law. The CARES Act includes, among other items, provisions relating to refundable payroll tax credits, deferral of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.

The CARES Act allows losses incurred in 2018, 2019 and 2020 to be carried back to each of the five preceding tax years and to offset 100% of regular taxable income. Additionally, the CARES Act accelerates the Company’s ability to receive refunds of alternative minimum tax credits generated in prior tax years.

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, ~~("Ordinary" income),~~ for the reporting period. For the three and six months ended June 30, 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 and six months ended June 30, 2021, the difference between the effective tax rate and the federal statutory tax rate primarily related to tax credits, offset by non-deductible expenses. For the three and six months ended June 30, 2020, the difference between the effective tax rate and the federal statutory tax rate primarily related to net operating loss provisions adopted under the CARES Act and tax credits.

As of June 30, ~~2021,~~2022, the total amount of gross unrecognized tax benefits was ~~$52.4~~$57.5 million, ~~$22.8~~$29.3 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 and six months ended June 30, ~~2021,~~2022, the Company recorded an immaterial amount of interest and penalties.

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As of June 30, ~~2021,~~2022, the Company estimated that it had accumulated undistributed earnings generated by its foreign subsidiaries of approximately ~~$8.0~~$12.9 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 ~~un-remitted~~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 ~~2015~~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 June 30, ~~2021,~~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 ~~$6.3~~$0.9 million over the next 12 months.

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~~16.~~15. NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed using the weighted-average number of outstanding shares of common stock during the period. Diluted net income (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 income (loss) per share for the periods presented (in thousands, except per share data):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Basic net income (loss) per share:	Basic net income (loss) per share:									Basic net income (loss) per share:
Net income (loss)	Net income (loss)	$	4,212	$	(23,990)	$	(1,584)	$	(39,493)	Net income (loss)	$	8,009	$	4,212	$	7,094	$	(1,584)
Shares used in computation:	Shares used in computation:									Shares used in computation:
Weighted-average common shares outstanding	Weighted-average common shares outstanding	74,807		72,413		75,025		71,980		Weighted-average common shares outstanding	71,217		74,807		71,427		75,025
Basic net income (loss) per share attributable to common stockholders	Basic net income (loss) per share attributable to common stockholders	$	0.06	$	(0.33)	$	(0.02)	$	(0.55)	Basic net income (loss) per share attributable to common stockholders	$	0.11	$	0.06	$	0.10	$	(0.02)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Diluted net income (loss) per share:	Diluted net income (loss) per share:									Diluted net income (loss) per share:
Net income (loss)	Net income (loss)	$	4,212	$	(23,990)	$	(1,584)	$	(39,493)	Net income (loss)	$	8,009	$	4,212	$	7,094	$	(1,584)
Shares used in computation:	Shares used in computation:									Shares used in computation:
Weighted-average common shares outstanding	Weighted-average common shares outstanding	74,807		72,413		75,025		71,980		Weighted-average common shares outstanding	71,217		74,807		71,427		75,025
Stock options	Stock options	877		0		0		0		Stock options	445		877		505		—
RSUs	RSUs	3,291		0		0		0		RSUs	1,163		3,291		1,635		—
ESPP	ESPP	8		0		0		0		ESPP	10		8		5		—
Number of shares used in diluted calculation	Number of shares used in diluted calculation	78,983		72,413		75,025		71,980		Number of shares used in diluted calculation	72,835		78,983		73,572		75,025
Diluted net income (loss) per share attributable to common stockholders	Diluted net income (loss) per share attributable to common stockholders	$	0.05	$	(0.33)	$	(0.02)	$	(0.55)	Diluted net income (loss) per share attributable to common stockholders	$	0.11	$	0.05	$	0.10	$	(0.02)

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The following stock-based instruments were excluded from the calculation of diluted net income (loss) per share because their effect would have been anti-dilutive for the periods presented (in thousands):


		Three Months Ended June 30,		Six Months Ended June 30,			Three Months Ended June 30,		Six Months Ended June 30,
		2021	2020	2021	2020		2022	2021	2022	2021
Stock options	Stock options	1,497	5,947	4,109	5,947	Stock options	2,444	1,497	2,447	4,109
RSUs	RSUs	145	7,876	10,998	7,876	RSUs	7,958	145	6,734	10,998
ESPP	ESPP	0	48	41	48	ESPP	—	—	—	41

~~17.~~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.

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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.

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 June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net revenue by product:	Net revenue by product:									Net revenue by product:
Advertising revenue by category:
Advertising revenue by category(1):										Advertising revenue by category(1):
Services	Services	$	152,522	$	109,583	$	293,209	$	242,665	Services	$	174,298	$	152,522	$	334,561	$	293,209
Restaurants, Retail & Other	Restaurants, Retail & Other	92,439		52,650		173,739		159,661		Restaurants, Retail & Other	109,220		92,439		212,194		173,739
Advertising	Advertising	244,961		162,233		466,948		402,326		Advertising	283,518		244,961		546,755		466,948
Transactions	Transactions	3,525		3,968		7,329		6,607		Transactions	3,940		3,525		7,120		7,329
Other	Other	8,702		2,829		15,007		9,998		Other	11,426		8,702		21,637		15,007
Total net revenue	Total net revenue	$	257,188	$	169,030	$	489,284	$	418,931	Total net revenue	$	298,884	$	257,188	$	575,512	$	489,284

(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 and six months ended June 30, ~~2021~~2022 and ~~2020,~~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 ~~$0.7~~$0.1 million and ~~$13.3~~$0.7 million during the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$2.9~~$0.4 million and ~~$17.9~~$2.9 million during the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. These incentives were primarily in the form of waived ~~advertising fees~~subscription and ~~waived subscription~~advertising fees. The Company accounted for these incentives

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as price concessions and reduced net revenue recognized in the three and six months ended June 30, 2022 and 2021 ~~and 2020~~ accordingly. During the three months ended June 30, 2020, the Company also paused certain advertising campaigns that were scheduled to run from April to May 2020 and offered certain free advertising products during those months with a total value of $14.5 million. All paused advertising campaigns that were not cancelled by customers resumed by the end of May 2020.

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

Three Months Ended
June 30, Six Months Ended
June 30,
2021 2020 2021 2020
United States $ 254,954 $ 167,270 $ 484,949 $ 413,797
All other countries 2,234 1,760 4,335 5,134
Total net revenue $ 257,188 $ 169,030 $ 489,284 $ 418,931

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	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
United States	$	296,876	$	254,954	$	571,520	$	484,949
All other countries	2,008		2,234		3,992		4,335
Total net revenue	$	298,884	$	257,188	$	575,512	$	489,284

Long-Lived Assets

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

June 30,
2021 December 31,
2020
United States $ 88,688 $ 97,548
All other countries 3,939 4,170
Total long-lived assets $ 92,627 $ 101,718

~~18. RESTRUCTURING~~

In April 2020, the Company announced a restructuring plan to help manage the near-term financial impacts of the COVID-19 pandemic (the "Restructuring Plan"). In addition to reductions and deferrals in spending, the Restructuring Plan’s cost-cutting measures included workforce reductions affecting approximately 1,000 employees and furloughs affecting approximately 1,100 additional employees, as well as salary reductions and reduced-hour work weeks. In July 2020, the Company announced an additional workforce reduction (separate from the Restructuring Plan) affecting approximately 60 employees.

~~During the three months ended September 30, 2020, the Company restored reduced salaries and returned many of its furloughed employees.~~

The Company incurred an immaterial amount of restructuring costs during the three and six months ended June 30, 2021 and does not expect to incur any material additional restructuring costs. The Company incurred $3.3 million in restructuring costs during the three and six months ended June 30, 2020 in connection with terminations under the Restructuring Plan, which represent expenditures for severance, payroll taxes and related benefits costs. These costs were recorded as restructuring expenses on the Company's condensed consolidated statements of operations.

~~19. SUBSEQUENT EVENTS~~

On August 3, 2021, the Company's board of directors authorized a $250.0 million increase to its stock repurchase program, bringing the total amount of repurchases authorized under our stock repurchase program since its inception in 2017 to $1.2 billion. The Company repurchased $35.8 million of shares subsequent to June 30, 2021, resulting in approximately $344.6 million remaining available for future repurchases following the increase on August 3, 2021.


	June 30, 2022		December 31, 2021
United States	$	77,367	$	79,027
All other countries	4,845		4,830
Total long-lived assets	$	82,212	$	83,857

2423

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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, as updated by Part II, Item 1A of this Quarterly 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 ~~200~~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 June 30, ~~2021,~~2022, our net revenue was ~~$257.2~~$298.9 million, up ~~52%~~16% from the three months ended June 30, ~~2020,~~2021, and we recorded net income of ~~$4.2~~$8.0 million and adjusted EBITDA of ~~$63.8~~$67.3 million. In the six months ended June 30, ~~2021,~~2022, our net revenue was ~~$489.3~~$575.5 million, which represented an increase of ~~17%~~18% from the six months ended June 30, ~~2020,~~2021, and we recorded a net ~~loss~~income of ~~$1.6~~$7.1 million and adjusted EBITDA of ~~$107.5~~$115.4 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.

~~As a result~~In the second quarter of 2022, our strategic investments in product and marketing ~~and our Multi-location sales team, we made~~continued to drive further progress on our revenue growth ~~initiatives in the second quarter of 2021:~~initiatives:

•~~Improve~~Grow quality leads and monetization ~~of our~~in Services ~~categories~~. Our ~~investments in the~~efforts to create a differentiated product experience ~~for businesses and consumers~~ in ~~our~~ Services ~~categories~~ drove ~~both sequential and~~a 14% year-over-year ~~increases in the percentage of monetized leads in our Services categories in the second quarter. These efforts contributed to increases~~increase in advertising revenue from Services businesses in the second quarter. We achieved this growth despite a shift in U.S. consumer spending towards travel and leisure, which led to softer consumer demand for Services categories on Yelp in the second quarter. As a result, Request-a-Quote requests decreased by approximately 10% year over year, though they remained above pre-pandemic levels. We continued working to drive more high-quality leads to Services businesses in the second quarter, including through the launch of ~~39%~~Request-a-Call, a product designed to help remove friction in the hiring process, and the expansion of project-specific search filters to better match consumers with the right service providers.

•Drive sales through the most efficient channels. Revenue from our Self-serve and Multi-location channels reached 49% of advertising revenue in the second quarter. Performance marketing and product improvements to the claim and ads purchase flows again 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 approximately 30% year over year. To drive additional business owner engagement, we modernized several elements of the business owner platform and made billing and budget optimizations that increased new advertiser retention. Our expanded portfolio of ad products and attribution solutions helped drive both record revenue from our Multi-location channel as well as record paying advertising locations in the second quarter, which increased 30% year over year and ~~of more than~~ 8% ~~compared to the first quarter of 2021.~~

•~~Expand~~year over year, respectively. To support continued growth in this channel, we further enhanced our ~~Self-serve and Multi-location sales channels~~. Our continued investments in expanding our Multi-location product portfolio and attribution capabilities during the COVID-19 pandemic positioned us well to benefit from the return of Multi-location advertisers — particularly Restaurants, Retail & Other businesses — as local economies reopened in the second quarter. In the second quarter, advertising revenue from Multi-location customers increased by nearly 90% compared to the second quarter of 2020 and by more than 20% from the first quarter of 2021. Our product and marketing investments continued to drive strong performance in our Self-serve channelmulti-location products in the second quarter ~~with revenue attributable~~through new themed ads designed to ~~that channel up nearly 100% year over year~~drive takeout orders and ~~nearly 70% compared to~~ the ~~second quarter~~addition of ~~2019.~~a new attribution partner.

•Deliver more value to advertisers. ~~Increasing our value proposition to advertisers by delivering more~~Amid a volatile macroeconomic environment, ad clicks ~~at a lower~~increased from the first quarter but declined by 11% from the prior year period, when the reopening of businesses had led to elevated consumer spending and engagement; while average ~~price is an important part of our strategy to drive long-term growth and has been a focus of our product investment in recent years.~~CPC remained consistent with the first quarter, it increased by 32% year over year. In the second quarter, ~~improvements~~we continued to focus on improving our ad system ~~and matching technology, together~~to match consumers with ~~further recovery~~the right advertisers at the right time; our efforts in this area drove greater value to our ~~consumer traffic, drove more~~advertisers in the form of higher performing clicks in the first half of 2022 compared to 2021, as reflected in the greater average percentage of ad clicks converted to ~~advertisers at a lower average CPC than~~leads.

•Enhance the consumer experience. With an increased focus on consumer experience, we are investing in ~~both~~various product and marketing initiatives designed to expand Yelp's trusted content and drive targeted user engagement and growth over the long term. In the second quarter, ~~of 2020~~we worked to improve search matching and ~~the first quarter of 2021. Ad clicks returned to a year-over-year increase in the second quarter, up 87% from the second quarter of 2020, and average CPC declined 20% over the same period.~~

~~In connection with plans to maintain a primarily remote workforce, we entered into sublease agreements for portions of~~relevancy on our leased office space in San Francisco and New York. While these subleases resulted in non-cash impairment charges totaling $11.2 million in the second quarter related to right-of-use assets and leasehold improvements associated with the underlying operating leases, we expect the subleases, together with our decision not to renew the lease for a portion of our Phoenix office space, to collectively result in annual expense savings of approximately $10.0 million to $12.0 million.

Our continued expense management, our more efficient go-to-market approach and recovery in local economies drove a 52% increase in net revenue, a return to positive net income of $4 million and a 473% increase in adjusted EBITDA in the second quarter of 2021 compared to the year-ago quarter. These factors also contributed to certain of our financial resultsAndroid

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~~surpassing pre-COVID-19 pandemic levels~~app, which led to an increase in Android engagement per session in the second ~~quarter: net revenue increased 4% from~~quarter. We also continue to invest in expanding our trusted content, including by reducing friction in the ~~second quarter of 2019. While net income margin decreased slightly compared~~review writing process and prompting users to ~~the second quarter of 2019, from 5% to 2% due to the impairment charges~~review recently visited businesses using smart push notifications.

Our product initiatives drove growth across our business in the second quarter despite a highly volatile macroeconomic environment. We believe that our broad-based local ad platform and rich first-party data position us well for the second half of ~~2021,~~the year: we expect both net revenue and adjusted EBITDA ~~margin improved by three percentage points over the same period. We plan~~ to ~~both continue exploring opportunities to reduce expenses associated with our leased office space and further invest in our growth initiatives~~increase sequentially in the third quarter. As a result of our ongoing efforts to reduce our real estate footprint, we also expect to incur an impairment charge of approximately $10.5 million in the third quarter related to the sublease of a portion of our New York office space.

Key Metrics

We regularly review a number of metrics, including the key metrics set forth below, to evaluate our business, measure our performance, identify trends in our business, prepare financial projections and make strategic decisions.

Ad Clicks

Ad clicks represent user interactions with our pay-for-performance advertising products, including clicks on advertisements on our website and mobile app, clicks on syndicated advertisements on third-party platforms and ~~Request-A-Quote~~Request-a-Quote submissions. Ad clicks include only user interactions that we are able to track directly, and therefore do not include user interactions with ads sold through our advertising partnerships. We do not expect the exclusion of such user interactions to materially affect this metric.

Because we generate revenue primarily from the sale of performance-based ads, our ability to increase our revenue depends largely on our ability to increase the number and/or price of ad clicks. We report the year-over-year percentage change in ad clicks on a quarterly basis as a measure of our success in monetizing more of our consumer traffic and delivering more value to advertisers.

The following table presents year-over-year changes in our ad clicks for the periods indicated (expressed as a percentage):

Three Months Ended
June 30,
2021 2020
Ad Clicks 87% (51)%


	Three Months Ended June 30,
	2022	2021
Ad Clicks	(11)%	87%

Average CPC

We define average CPC as revenue from our performance-based ad products — excluding certain revenue adjustments that do not impact the outcome of an auction for an individual ad click, such as refunds, as well as revenue from our advertising partnerships — divided by the total number of ad clicks for a given three-month period.

Average CPC, when viewed together with ad clicks, provides important insight into the value we deliver to advertisers, which we believe is a significant factor in our ability to retain both revenue and customers. For example, a ~~negative~~positive change in ~~average CPC~~ad clicks for a given three-month period combined with lower growth or a ~~positive~~negative change in ~~ad clicks~~average CPC over the same period would indicate that we delivered more ad clicks at lower prices, thereby delivering more value to our advertisers; we would typically expect this to have a positive impact on retention. In the three months ended June 30, 2022, ad clicks increased from the first quarter but declined 11% year over year, reflecting the current uncertain macroeconomic environment and the significant benefits in the prior-year period from reopening tailwinds and elevated consumer spending. However, advertiser demand remained robust and, as a result, average CPC in the three months ended June 30, 2022 was relatively consistent with the first quarter and increased 32% year over year.

We believe that average CPC and ad clicks together reflect one of the largest dynamics affecting our advertising revenue performance. These metrics reflect, among other things, the interplay of advertiser demand and consumer behavior on our platform, each of which is currently subject to complex macro economic pressures that we expect to continue to cause volatility in these metrics in the near term.

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The following table presents year-over-year changes in our average CPC for the periods indicated (expressed as a percentage):

Three Months Ended
June 30,
2021 2020
Average CPC (20)% 35%


	Three Months Ended June 30,
	2022	2021
Average CPC	32%	(20)%

Advertising Revenue by Category

Our advertising revenue comprises revenue from the sale of our advertising products, including the resale of our advertising products by partners and syndicated ads appearing on third-party platforms.

To reflect our strategic focus on creating two differentiated experiences on Yelp, we provide a quarterly breakdown of our advertising revenue attributable to businesses in two high-level category groupings: Services and Restaurants, Retail & Other. Our Services categories consist of home, local, auto, professional, pets, events, real estate and financial services. Our Restaurants, Retail & Other categories consist of restaurants, shopping, beauty & fitness, health and other.

~~Table~~Advertising revenue by category for the three and six months ended June 30, 2022 reflects our updated methodology for determining the business category with which advertising revenue is associated based on the business category of ~~Contents~~each advertising location rather than the business category of the business account that paid for the advertising. While business locations associated with a single payment account are generally part of the same business, they may offer a variety or a combination of services that differ by location; accordingly, we believe our updated methodology provides a more precise breakdown of our advertising revenue between our Services and Restaurants, Retail & Other categories.

The categorization of business locations can change over time and historical business categories for individual business locations are not available; as a result, it is impracticable to apply our updated methodology to prior-year amounts based on the business categorizations in effect during the prior-year period. However, applying our updated methodology to the three and six months ended June 30, 2021 based on the current business categories of the associated advertising locations does not result in a materially different breakdown than previously reported for such periods. Due to the differences between the types of business categories comprising our Services and Restaurants, Retail & Other categories, we do not believe a significant number of businesses are re-categorized such that they move from one high-level category grouping to the other, and so do not believe the result would be materially different based on the then-current categorizations.

The following table presents our advertising revenue by category for the periods indicated (in thousands, except percentages):


		Three Months Ended June 30,				% Change		Six Months Ended June 30,									% Change		Three Months Ended June 30,								% Change		Six Months Ended June 30,				% Change
		2021		2020			2021			2020						2022				2021					2022				2021
Services	Services	$	152,522	$	109,583		39%			$	293,209			$	242,665				21%		Services	$	174,298			$		152,522	14%		$	334,561	$	293,209	14%
Restaurants, Retail & Other	Restaurants, Retail & Other	92,439		52,650		76%		173,739				159,661					9%	Restaurants, Retail & Other	109,220				92,439				18%		212,194		173,739		22%
Total Advertising Revenue	Total Advertising Revenue	$	244,961	$	162,233	51%		$	466,948			$	402,326				16%	Total Advertising Revenue	$	283,518			$	244,961			16%		$	546,755	$	466,948	17%

Paying Advertising Locations By Category

Paying advertising locations comprise all business locations associated with a business account from which we recognized advertising revenue in a given month, excluding business accounts that purchased advertising through partner programs other than Yelp Ads Certified Partners, averaged over a given three-month period. We also provide a breakdown of paying advertising locations between our Services categories and Restaurants, Retail & Other categories.

We provide our paying advertising locations on a quarterly basis as a measure of the reach and scale of our business; however, this metric may exhibit short-term volatility as a result of factors such as seasonality and macroeconomic conditions. For example, macroeconomic factors, such as ongoing concerns about COVID-19 and its variants as well as labor and supply chain challenges, have had a predominant negative impact on Restaurants, Retail & Other paying advertising locations in recent quarters. Short-term fluctuations in paying advertising locations may also reflect the acquisition or loss of single advertising accounts associated with large numbers of locations, or the pausing/restarting of advertising campaigns by such multi-location advertisers.

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The following table presents the number of paying advertising locations by category during the periods ~~presented~~indicated (in thousands, except percentages):


		Three Months Ended June 30,		% Change		Three Months Ended June 30,		% Change
		2021	2020			2022	2021
Services	Services	234	204	15%	Services	232	234	(1)%
Restaurants, Retail & Other	Restaurants, Retail & Other	294	174	69%	Restaurants, Retail & Other	337	294	15%
Total Paying Advertising Locations	Total Paying Advertising Locations	528	378	40%	Total Paying Advertising Locations	569	528	8%

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates and assumptions are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from those estimates. Due to ~~the COVID-19 pandemic~~macroeconomic conditions and ~~the uncertainty regarding the extent and duration of its impacts,~~other factors, certain estimates and assumptions have required and may continue to require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, these estimates may materially change in future periods.

We believe that the assumptions and estimates associated with revenue recognition, website and internal-use software development costs ~~the incremental borrowing rate used with respect to leases, business combinations, allowance for doubtful accounts,~~and income taxes ~~and stock-based compensation expense~~ have the greatest potential impact on our consolidated financial statements. There have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report.

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Results of Operations

The following table sets forth our results of operations for the periods indicated (in thousands, except percentages). The period-to-period comparison of financial results is not necessarily indicative of the results of operations to be anticipated for the full year ~~2021~~2022 or any future period.


		Three Months Ended June 30,								Six Months Ended June 30,									Three Months Ended June 30,								Six Months Ended June 30,
		2021		2020		$ Change		% Change(1)		2021		2020		$ Change		% Change(1)			2022		2021		$ Change		% Change(1)		2022		2021		$ Change		% Change(1)
Consolidated Statements of Operations Data:
Condensed Consolidated Statements of Operations Data:																		Condensed Consolidated Statements of Operations Data:
Net revenue by product:	Net revenue by product:																	Net revenue by product:
Advertising revenue by category:
Advertising revenue by category(3):																		Advertising revenue by category(3):
Services	Services	$	152,522	$	109,583	$	42,939	39	%	$	293,209	$	242,665	$	50,544	21	%	Services	$	174,298	$	152,522	$	21,776	14	%	$	334,561	$	293,209	$	41,352	14	%
Restaurants, Retail & Other	Restaurants, Retail & Other	92,439		52,650		39,789		76	%	173,739		159,661		14,078		9	%	Restaurants, Retail & Other	109,220		92,439		16,781		18	%	212,194		173,739		38,455		22	%
Advertising	Advertising	244,961		162,233		82,728		51	%	466,948		402,326		64,622		16	%	Advertising	283,518		244,961		38,557		16	%	546,755		466,948		79,807		17	%
Transactions	Transactions	3,525		3,968		(443)		(11)	%	7,329		6,607		722		11	%	Transactions	3,940		3,525		415		12	%	7,120		7,329		(209)		(3)	%
Other	Other	8,702		2,829		5,873		208	%	15,007		9,998		5,009		50	%	Other	11,426		8,702		2,724		31	%	21,637		15,007		6,630		44	%
Total net revenue	Total net revenue	257,188		169,030		88,158		52	%	489,284		418,931		70,353		17	%	Total net revenue	298,884		257,188		41,696		16	%	575,512		489,284		86,228		18	%
Costs and expenses:	Costs and expenses:																	Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below)	Cost of revenue (exclusive of depreciation and amortization shown separately below)	17,993		11,825		6,168		52	%	32,867		28,672		4,195		15	%	Cost of revenue (exclusive of depreciation and amortization shown separately below)	26,988		17,993		8,995		50	%	50,417		32,867		17,550		53	%
Sales and marketing	Sales and marketing	113,641		96,289		17,352		18	%	226,550		233,586		(7,036)		(3)	%	Sales and marketing	129,412		113,641		15,771		14	%	255,509		226,550		28,959		13	%
Product development	Product development	68,695		53,969		14,726		27	%	136,687		121,082		15,605		13	%	Product development	76,848		68,695		8,153		12	%	157,533		136,687		20,846		15	%
General and administrative	General and administrative	45,095		26,402		18,693		71	%	76,956		69,938		7,018		10	%	General and administrative	38,377		45,095		(6,718)		(15)	%	77,760		76,956		804		1	%
Depreciation and amortization	Depreciation and amortization	12,833		12,582		251		2	%	25,916		24,940		976		4	%	Depreciation and amortization	11,258		12,833		(1,575)		(12)	%	22,748		25,916		(3,168)		(12)	%
Restructuring	Restructuring	12		3,312		(3,300)		(100)	%	32		3,312		(3,280)		(99)	%	Restructuring	—		12		(12)		(100)	%	—		32		(32)		(100)	%
Total costs and expenses	Total costs and expenses	258,269		204,379		53,890		26	%	499,008		481,530		17,478		4	%	Total costs and expenses	282,883		258,269		24,614		10	%	563,967		499,008		64,959		13	%
Loss from operations		(1,081)		(35,349)		34,268		(97)	%	(9,724)		(62,599)		52,875		(84)	%
Income (loss) from operations																		Income (loss) from operations	16,001		(1,081)		17,082		NM(2)		11,545		(9,724)		21,269		(219)	%
Other income, net	Other income, net	542		495		47		9	%	1,247		2,878		(1,631)		(57)	%	Other income, net	1,327		542		785		145	%	2,256		1,247		1,009		81	%
Loss before income taxes		(539)		(34,854)		34,315		(98)	%	(8,477)		(59,721)		51,244		(86)	%
Benefit from income taxes		(4,751)		(10,864)		6,113		(56)	%	(6,893)		(20,228)		13,335		(66)	%
Income (loss) before income taxes																		Income (loss) before income taxes	17,328		(539)		17,867		NM(2)		13,801		(8,477)		22,278		(263)	%
Provision for (benefit from) income taxes																		Provision for (benefit from) income taxes	9,319		(4,751)		14,070		(296)	%	6,707		(6,893)		13,600		(197)	%
Net income (loss)	Net income (loss)	$	4,212	$	(23,990)	$	28,202	(118)	%	$	(1,584)	$	(39,493)	$	37,909	(96)	%	Net income (loss)	$	8,009	$	4,212	$	3,797	90	%	$	7,094	$	(1,584)	$	8,678	(548)	%

(1) Percentage changes are calculated based on rounded numbers and may not recalculate exactly due to rounding.

(2) Percentage change is not meaningful.

(3) Please refer to “—Key Metrics—Ad Revenue by Category” for information on a methodology change adopted in 2021.

Three and Six Months Ended June 30, ~~2021~~2022 and ~~2020~~2021

Net Revenue

Advertising. We generate advertising revenue from the sale of our advertising products — including enhanced listing pages and performance and impression-based advertising in search results and elsewhere on our platform — to businesses of all sizes, from single-location local businesses to multi-location national businesses. Advertising revenue also includes revenue generated from the resale of our advertising products by certain partners and monetization of remnant advertising inventory through third-party ad networks. We present advertising revenue on a disaggregated basis for our high-level category groupings, Services and Restaurants, Retail & Other.

Advertising revenue for the three and six months ended June 30, ~~2021~~2022 increased compared to the prior-year ~~periods. Revenue~~periods primarily due to higher customer spend and higher average revenue per location in both our Services and Restaurants, Retail & Other categories. The increases in revenue from businesses in our Services categories ~~particularly Home Services businesses, increased due to an improved retention rate of non-term advertisers' budgets, an increase~~were primarily driven by growth in ~~paying advertising locations and higher customer spend. Revenue~~our home services category. The increases in revenue from ~~businesses in our~~ Restaurants, Retail & Other ~~categories increased due~~businesses were primarily attributable to growth in ~~the number of~~ paying advertising ~~locations, reflecting our reduction~~locations.

Table of ~~relief incentives as COVID-19 pandemic-related operating restrictions eased in the second quarter and businesses in these categories were able to operate at greater capacity.~~Contents

Transactions. We generate revenue from various transactions with consumers, primarily through our partnership integrations, which are mainly revenue-sharing arrangements that provide consumers with the ability to complete food ordering and delivery transactions through third parties directly on Yelp. We earn a fee for acting as an agent for transactions placed through these integrations, which we record on a net basis and include in revenue upon completion of a transaction.

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Transactions revenue for the three months ended June 30, ~~2021~~2022 increased compared to the prior-year period primarily due to an increase in the per-order transaction fee that we receive from Grubhub following the renewal of our partnership in March 2022. This increase was partially offset by a lower volume of food takeout and delivery orders compared to the prior-year period. Transactions revenue for the six months ended June 30, 2022 decreased compared to the prior-year period primarily due to a lower volume of food takeout and delivery ~~orders as many restaurants resumed or increased~~orders. This decrease was partially offset by the ~~capacity of their dine-in operations during the quarter. Transactions revenue for the six months ended June 30, 2021 increased compared to the prior-year period due to an overall~~ increase in the ~~volume of food takeout and delivery orders due to the COVID-19 pandemic, which limited dine-in operations of many restaurants.~~per-order transaction fee we receive from Grubhub.

~~Other.~~Other Revenue. We generate revenue through our subscription services, including our Yelp Reservations and Yelp ~~Waitlist~~Guest Manager products. We also generate revenue through our Yelp Knowledge and Yelp Fusion programs, which provide access to Yelp data for a fee, as well as other non-advertising partnerships.

Other revenue for the three and six months ended June 30, ~~2021~~2022 increased compared to the prior-year periods, primarily ~~due to a reduction in~~reflecting higher revenue from the continued growth of our Yelp Fusion program. The increases also reflect lower COVID-19 relief incentives ~~that we provided to our customers impacted by the COVID-19 pandemic during the three and six months ended June 30, 2020,~~— mainly in the form of waived subscription ~~fees. Other revenue also reflected increased revenue from~~fees — for our ~~Yelp Fusion program, which we introduced~~subscription product customers in ~~May 2020.~~the current-year periods.

Trends and Uncertainties of Net Revenue. Net revenue increased in the three months ended June 30, ~~2021 from~~2022 compared to the three months ended March 31, ~~2021~~2022 due to increased advertiser demand ~~as well as from~~and the ~~three months ended June 30, 2020, reflecting recovery from the impact~~continued execution of ~~the COVID-19 pandemic and progress on~~ our strategic initiatives. ~~Net revenue also increased compared to the three months ended June 30, 2019, particularly revenue from Services categories, which increased by 23%. While the pace of recovery~~Based on continued strength in our Restaurants, Retail & Other categories remains subject to the evolution of the COVID-19 pandemic and related public health restrictions, we expect our initiatives will continue to drive momentum in the third quarter. As such,advertiser demand, we anticipate net revenue in the three months ending September 30, ~~2021 will remain relatively consistent with or slightly~~2022 to increase from the second quarter of ~~2021.~~2022 despite a modestly recessionary environment in the second half of 2022; provided, however, that significantly worsening macroeconomic conditions could negatively impact our ability to achieve this sequential revenue growth.

Costs and Expenses

Cost of Revenue (exclusive of depreciation and amortization). Our cost of revenue consists primarily of credit card processing fees and website infrastructure expense, which includes website hosting costs and employee costs (including stock-based compensation expense) for the infrastructure teams responsible for operating our website and mobile app, and excludes depreciation and amortization expense. Cost of revenue also includes third-party advertising fulfillment costs.

Cost of revenue for the three and six months ended June 30, ~~2021~~2022 increased compared to the prior-year periods, primarily due to:

•increases in ~~website infrastructure expense of $2.6 million and $1.4 million, respectively, as a result of higher traffic;~~

•~~increases in~~ advertising fulfillment costs of ~~$2.3~~$3.8 million and ~~$2.4~~$7.0 million, respectively, ~~driven by expanded~~largely attributable to the expansion of Yelp Audiences and efforts to syndicate advertising budgets on third-party sites;

•increases in website infrastructure expense of $3.6 million and $7.6 million, respectively, as a result of investments in maintaining and improving our infrastructure; and

•increases in merchant credit card fees of ~~$1.3~~$0.9 million and ~~$0.7~~$1.8 million, respectively, primarily due to a higher volume of transactions associated with the increase in advertising revenue.

We expect cost of revenue to increase on an absolute dollar basis in 2022 compared to 2021.

Sales and Marketing. Our sales and marketing expenses primarily consist of employee costs (including sales commission and stock-based compensation expenses) for our sales and marketing employees. Sales and marketing expenses also include business and consumer acquisition marketing, community management, as well as allocated workplace and other supporting overhead costs.

Sales and marketing expenses for the three and six months ended June 30, ~~2021~~2022 increased compared to the prior-year periods due to:

•~~an increase in marketing~~increases of $12.0 million and ~~advertising costs of $13.4~~$19.5 million, ~~reflecting our investment in targeted business owner acquisition and regional consumer campaigns; and~~

•~~an increase of $5.3 million~~respectively, in employee costs due to higher average sales headcount as compared with the prior-year ~~period. The increase~~periods; and

•increases in sales headcount was due to the impact of the restructuring plan we announced on April 9, 2020 ("Restructuring Plan") on sales headcount in the prior-year period, as well as increased hiring efforts in the second half of 2020.

~~These increases were partially offset by a decrease in allocated workplace operating~~marketing and advertising costs of ~~$1.3~~$5.7 million ~~due to reductions~~and $14.0 million, respectively, primarily reflecting our investment in ~~our amount of leased office space, which began in the first quarter of 2021.~~

~~Sales and marketing expenses for the six months ended June 30, 2021 decreased compared to the prior-year period due to:~~consumer marketing.

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•~~a decrease of $20.4 million in employee costs, which was primarily due to lower sales headcount following the terminations associated with the Restructuring Plan; and~~

•~~a decrease~~These increases were partially offset by decreases in allocated workplace operating costs of ~~$4.9~~$1.9 million and $4.5 million, respectively, from reductions in our leased office space.

We expect sales and marketing expenses to continue to increase in 2022 compared to 2021 as we hire across our sales and marketing teams and invest in marketing initiatives. However, we expect sales and marketing expenses to decrease as a ~~result~~percentage of ~~our office closures, which began at the end of the first quarter 2020, and the reduction of our office space~~net revenue in 2022 compared to 2021.

~~These decreases were largely offset by an increase in marketing and advertising costs of $18.3 million.~~

Product Development. Our product development expenses primarily consist of employee costs (including stock-based compensation expense, net of capitalized employee costs associated with capitalized website and internal-use software development) for our engineers, product management and corporate infrastructure employees. In addition, product development expenses include allocated workplace and other supporting overhead costs.

Product development expenses for the three and six months ended June 30, ~~2021~~2022 increased compared to the prior-year periods primarily due to increases in employee costs of ~~$13.0~~$9.1 million and ~~$14.2~~$22.2 million, respectively, ~~primarily reflecting lower costs in the prior-year periods due~~which include bonuses and stock-based compensation, as a result of higher average headcount.

We expect product development expenses to ~~the reduced-hour work weeks implemented in the second quarter of 2020 under the Restructuring Plan, which ended during the third quarter of 2020. The~~ increase in ~~employee costs also reflected higher stock-based compensation expenses in 2021.~~2022 compared to 2021 as we expand our product and engineering teams and invest to support our product initiatives, but decrease as a percentage of net revenue as our distributed operations and growth strategy provide leverage.

General and Administrative. Our general and administrative expenses primarily consist of employee costs (including stock-based compensation expense) for our executive, finance, user operations, legal, people operations and other administrative employees. Our general and administrative expenses also include our provision for doubtful accounts, consulting costs, as well as workplace and other supporting overhead costs.

General and administrative expenses for the three ~~and six~~ months ended June 30, ~~2021 increased~~2022 decreased compared to the prior-year ~~periods~~period primarily due ~~to:~~

•anto impairment ~~charge~~charges incurred in the prior-year period of $11.2 million related to the right-of-use assets and leasehold improvements for office space that was subleased, ~~during~~which did not recur in the ~~three~~current-year period. This decrease was partially offset by an increase in employee costs of $3.3 million resulting from higher average headcount, a $1.2 million increase in our provision for doubtful accounts as a result of the increase in advertising revenue and the release of a higher amount of COVID-19-related bad debt reserves in the prior year.

General and administrative expenses for the six months ended June 30, ~~2021 (see~~ ~~Note 8, "Leases~~," of2022 remained relatively consistent compared to the ~~Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 in this Quarterly Report for further detail); and~~

•~~increases~~prior-year period. An increase in employee costs of ~~$9.5~~$6.5 million resulting from higher average headcount and $10.8 million, respectively, which were primarily the result of our determination that the performance conditions for performance-based restricted stock units had either been met or were expected to be met.

~~These increases were partially offset by decreases~~an increase in our provision for doubtful accounts of ~~$2.0~~$5.4 million, primarily reflecting a higher amount of COVID-19-related bad debt reserves released in the prior year, were substantially offset by the $11.2 million impairment charge in the prior-year period that did not recur in the current-year period.

We expect general and ~~$14.7~~administrative expenses to increase in 2022 compared to 2021 to support the continued growth of our business, including in part as a result of the approximately $10.5 million ~~respectively, due~~impairment charge we expect to ~~our release~~incur in the third quarter related to the sublease of a portion of our ~~COVID-19-related bad debt reserves following~~New York office space. Excluding the impact of impairment charges in both years, we expect general and administrative expenses as a ~~decline~~percentage of net revenue to remain relatively consistent in ~~the rate of customer delinquencies.~~2022 compared to 2021.

Depreciation and Amortization. Depreciation and amortization expense primarily consists of depreciation on computer equipment, software, leasehold improvements, capitalized website and software development costs, and amortization of purchased intangible assets.

Depreciation and amortization expense for the three and six months ended June 30, ~~2021 slightly increased,~~2022 decreased compared to the prior-year periods, primarily due to ~~increases~~decreases in depreciation ~~associated with capitalized website~~expense of leasehold improvements from asset retirements related to lease terminations and ~~internal use software development costs as we invested in new~~expirations and, ~~enhanced products for business owners and consumers.~~

~~Restructuring. In April 2020, we announced the Restructuring Plan~~ to help manage the near-term financial impacts of the COVID-19 pandemic. We incurred $3.3 million in restructuring costs during the three and six months ended June 30, 2020, which consisted of severance, payroll taxes and related benefits costs for terminated employees. See ~~Note 1~~8 ~~, "Restructuring~~," ~~of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 in this Quarterly Report for further detail.~~

~~Trends and Uncertainties of Costs and Expenses.~~ A majority of our expenses increased during the three months ended June 30, 2021 compared to the three months ended March 31, 2021, primarily reflecting the impairment charge we recorded in the second quarter, as well as higher cost of revenue. We expect costs and expenses to further increase in the three months ending September 30, 2021 as we seek further opportunities to sublease portions of our leased office space, which may result in additional impairment charges, and continue to make strategic investments in our product development, marketing and sales teams to support the growth of our business.

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a lesser extent, lower amortization expense resulting from intangible assets that had become fully amortized since prior year.

Other Income, Net

Other income, net consists primarily of the interest income earned on our cash and cash equivalents, ~~and previously held marketable securities,~~ the portion of our sublease income in excess of our lease cost, amortization of debt issuance costs, credit facility fees and foreign exchange gains and losses.

Other income, net for the three and six months ended June 30, ~~2021 decreased~~2022 increased compared to the prior-year ~~period,~~periods, primarily driven by ~~lower~~higher interest income ~~as a result of the change~~from our investments in ~~our investment strategy in the first quarter of 2020 to reduce our holdings of marketable securities in favor of holdings that are more liquid, mainly~~ money market funds ~~which offer lower~~due to increasing federal interest ~~rates. For more information on this change, see~~ rates, as well as higher tax incentives related to research and development activity in the United Kingdom.

~~Note 4, "~~Table of Contents~~Marketable Securities~~," ~~of the Notes to Condensed Consolidated Financial Statements.~~

~~Benefit from~~Provision for (Benefit from) Income Taxes

~~Benefit from~~Provision for (benefit from) income taxes consists of: federal and state income taxes in the United States and income taxes in certain foreign jurisdictions; deferred income taxes reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes; and the realization of net operating loss carryforwards.

~~The decreases in benefit from~~Provision for income taxes ~~during~~for the three and six months ended June 30, ~~2021 compared to~~2022 increased from a recorded benefit in each of the prior-year periods ~~were~~ primarily due to ~~a decrease~~an increase in the annual effective tax rate estimated for 2022 and increases in quarter-to-date and year-to-date pre-tax ~~losses~~income, partially offset by decreases in ~~2021 as well as net operating loss~~year-to-date excess tax benefits from stock-based compensation in the prior-year periods under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) that did not recur in 2021. The CARES Act, which was enacted on March 27, 2020 in response to the COVID-19 pandemic, allowed for net operating losses incurred in 2018, 2019 and 2020 to be carried back to tax years with a 35.0% tax rate. See ~~Note 15, "Income Taxes~~," ~~of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 in this Quarterly Report for further detail.~~current periods.

As of December 31, ~~2020,~~2021, we had approximately ~~$31.2~~$40.5 million in net deferred tax assets ("DTAs"). As of June 30, ~~2021,~~2022, we consider it more likely than not that we will have sufficient taxable income in the future that will allow us to realize these DTAs. However, it is possible that some or all of these DTAs will not be realized. Therefore, unless we are able to generate sufficient taxable income from our operations, a substantial valuation allowance may be required to reduce our DTAs, which would materially increase our expenses in the period in which we recognize the allowance and have a materially adverse impact on our consolidated financial statements. The exact timing and amount of the valuation allowance recognition are subject to change on the basis of the net income that we are able to actually achieve. We will continue to evaluate the possible recognition of a valuation allowance on a quarterly basis.

~~Beginning~~Our GAAP tax rate is impacted by a number of factors that are not in our direct control and that are subject to quarterly variability, which limits our visibility into the applicable rate for future fiscal periods. While we currently expect our GAAP tax rate for 2022 ~~we expect additional changes~~to be a substantial positive rate — potentially exceeding our previous estimate of 38% — it ultimately depends on, among other things, the status of legislative efforts to repeal the requirement under the U.S. Tax Cuts and Jobs Act (the "Tax Act") to ~~come into effect that could adversely impact~~capitalize and amortize research and development expenses, which may result in a substantially lower rate if successful, as well as the amount of our ~~effective~~stock-based compensation expense, which fluctuates based on our stock price. We do not plan to provide regular updates to our estimate of our 2022 GAAP tax rate given the uncertainty inherent in it as a result of these factors; however, we note that it may have a material and adverse impact on our cash flows in 2022 as well as future years. The Tax Act, which was enacted on December 22, 2017, made broad and complex changes to the U.S. tax code, including, among other things, reducing the federal corporate tax rate. We will continue to evaluate the impacts and monitor the issuance of additional regulatory or accounting guidance in addition to any executive or legislative updates.

Non-GAAP Financial Measures

Our condensed consolidated financial statements are prepared in accordance with GAAP. However, we have also disclosed below adjusted EBITDA and adjusted EBITDA margin, each of which is a non-GAAP financial measure.

Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. In particular, adjusted EBITDA should not be viewed as a substitute for, or superior to, net income (loss) prepared in accordance with GAAP as a measure of profitability or liquidity. 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 adjusted EBITDA does not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

•adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

•adjusted EBITDA does not reflect the impact of the recording or release of valuation allowances or tax payments that may represent a reduction in cash available to us;

•adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;

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•adjusted EBITDA does not take into account any income or costs that management determines are not indicative of ongoing operating performance, such as restructuring costs and impairment charges; and

•other companies, including those in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider adjusted EBITDA and adjusted EBITDA margin alongside other financial performance measures, net income (loss) and our other GAAP results.

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Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure that we calculate as net income (loss), adjusted to exclude: provision for (benefit from) income taxes; other income, net; depreciation and amortization; stock-based compensation expense; and, in certain periods, certain other income and expense items, such as restructuring costs and impairment charges.

Adjusted EBITDA margin. Adjusted EBITDA margin is a non-GAAP financial measure that we calculate as ~~Adjusted~~adjusted EBITDA divided by net revenue.

The following is a reconciliation of net income (loss) to adjusted EBITDA, as well as the calculation of net income (loss) margin and adjusted EBITDA margin, for each of the periods indicated (in thousands, except percentages):


		Three Months Ended June 30,									Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2021			2020			2019			2021			2020				2022			2021				2022			2021
Reconciliation of Net Income (Loss) to Adjusted EBITDA:	Reconciliation of Net Income (Loss) to Adjusted EBITDA:																Reconciliation of Net Income (Loss) to Adjusted EBITDA:
Net income (loss)	Net income (loss)	$	4,212		$	(23,990)		$	12,303		$	(1,584)		$	(39,493)		Net income (loss)	$	8,009		$	4,212			$	7,094		$	(1,584)
(Benefit from) provision for income taxes		(4,751)			(10,864)			3,785			(6,893)			(20,228)
Provision for (benefit from) income taxes																	Provision for (benefit from) income taxes	9,319			(4,751)				6,707			(6,893)
Other income, net	Other income, net	(542)			(495)			(3,891)			(1,247)			(2,878)			Other income, net	(1,327)			(542)				(2,256)			(1,247)
Depreciation and amortization	Depreciation and amortization	12,833			12,582			12,240			25,916			24,940			Depreciation and amortization	11,258			12,833				22,748			25,916
Stock-based compensation	Stock-based compensation	40,859			30,585			30,452			80,104			62,335			Stock-based compensation	40,061			40,859				81,121			80,104

Restructuring	Restructuring	12			3,312			—			32			3,312			Restructuring	—			12				—			32
Asset impairment(1)	Asset impairment(1)	11,164			—			—			11,164			—			Asset impairment(1)	—			11,164				—			11,164
Adjusted EBITDA	Adjusted EBITDA	$	63,787		$	11,130		$	54,889		$	107,492		$	27,988		Adjusted EBITDA	$	67,320		$	63,787			$	115,414		$	107,492

Net revenue	Net revenue	$	257,188		$	169,030		$	246,955		$	489,284		$	418,931		Net revenue	$	298,884		$	257,188			$	575,512		$	489,284
Net income (loss) margin	Net income (loss) margin	2		%	(14)		%	5		%	—		%	(9)		%	Net income (loss) margin	3		%	2		%		1		%	—		%
Adjusted EBITDA margin	Adjusted EBITDA margin	25		%	7		%	22		%	22		%	7		%	Adjusted EBITDA margin	23		%	25		%		20		%	22		%

(1) Recorded within general and administrative expenses on our Condensed Consolidated Statements of Operations.

Liquidity and Capital Resources

Sources of Cash

As of June 30, ~~2021,~~2022, we had cash and cash equivalents of ~~$558.2~~$421.2 million, which consisted of cash and money market funds. Our cash held internationally as of June 30, ~~2021~~2022 was ~~$11.2~~$13.2 million. As of June 30, 2022, we also had $10.0 million of investments in certificates of deposit with minority-owned financial institutions.

In June 2022, we changed our investment strategy to invest the majority of our cash in a mix of money market funds and highly rated debt securities in order to earn a higher overall rate of return. Our investment policy limits the amount of credit exposure to any one issuer and it generally requires securities to be investment grade (i.e., rated ‘A’ or higher by bond rating firms) with the objective of minimizing the potential risk of principal loss. As of June 30, 2022, we held the majority of our investments in highly liquid money market funds. Our remaining investments that were not held in money market funds as of June 30, 2022 were held in certificates of deposit. Subsequent to the quarter end, through July 29, 2022, we purchased approximately $85.9 million of highly-rated marketable securities, net of maturities, which we expect to classify as available-for-sale as we do not have the intent to hold these securities to maturity to allow flexibility to respond to potential liquidity needs.

To date, we have been able to finance our operations and our acquisitions through proceeds from private and public financings, including our initial public offering in March 2012 and our follow-on offering in October 2013, cash generated from operations, and, to a lesser extent, cash provided by the exercise of employee stock options and purchases under the Employee Stock Purchase Plan, as amended, as well as proceeds from our sale of Eat24 to Grubhub in October 2017.

We continue to hold the majority of our investments in highly liquid money market funds following the liquidation of our portfolio of marketable securities in the first half of 2020, which we undertook as a result of our change in investment strategy to preserve liquidity in response to the COVID-19 pandemic. Our remaining investments that were not held in money market funds as of June 30, 2021 were held in certificates of deposit. See ~~Note 4, "Marketable Securities~~," ~~of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 in this Quarterly Report for further details about the liquidation of our portfolio of marketable securities.~~

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We have the ability to access backup liquidity to fund working capital and for other capital requirements, as needed, through a three-year, $75.0 million senior unsecured revolving credit facility (including a $25.0 million letter of credit sub-limit) as part of our Credit Agreement with Wells Fargo Bank, National Association which we entered into in May 2020 (the "Credit Agreement"). As of June 30, ~~2021,~~2022, we had ~~$21.5~~$20.5 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~~

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$54.5 million remained available under the revolving credit facility as of that date. The cost of capital associated with this credit facility was not significantly more than the cost of capital that we would have expected prior to the onset of the COVID-19 pandemic. As of June 30, ~~2021,~~2022, we were in compliance with all covenants and there were no loans outstanding under the Credit Agreement. For more information about the terms of the Credit Agreement, including 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.

Material Cash Requirements

Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth under "Risk Factors" included under Part I, Item 1A in our Annual Report, as updated by Part II, Item 1A of this Quarterly Report. We believe that ~~as a result of the steps we have taken in response to the COVID-19 pandemic,~~ our existing cash and cash equivalents, together with any cash generated from operations, will be sufficient to meet our material cash ~~commitments,~~requirements in the next 12 months and beyond, including: working capital requirements; our anticipated repurchases of common stock pursuant to our stock repurchase program; payment of taxes related to the net share settlement of equity awards; payment of lease costs related to our operating leases; the potential payment of a higher amount of income taxes beginning in 2022, primarily due to the new requirement to amortize certain research and development expenses under the Tax Act; and purchases of property, equipment and software and website hosting ~~services for at least the next 12 months.~~services. However, this estimate is based on a number of assumptions that may prove to be materially different and we could exhaust our available cash and cash equivalents earlier than presently anticipated. We are not able to reasonably estimate the timing of future cash flow related to $13.5 million of uncertain tax position. We may be required to draw down funds from our revolving credit facility or seek additional funds through equity or debt financings ~~in the next 12 months~~ to respond to business challenges associated with adverse macroeconomic conditions, including the ongoing COVID-19 pandemic, or other challenges, including the need to develop new features and products or enhance existing services, improve our operating infrastructure or acquire complementary businesses and technologies.

We lease office facilities under operating lease agreements that expire from 2022 to 2031. Our cash requirements related to these lease agreements are $164.0 million, of which $48.0 million is expected to be paid within the next 12 months. The total lease obligations are partially offset by our future minimum rental receipts to be received under non-cancelable subleases of $38.4 million. See Note 7, "Leases," of the Notes to Condensed Consolidated Financial Statements for further detail on our operating lease obligations.

Our cash requirements related to purchase obligations consisting of non-cancelable agreements to purchase goods and services required in the ordinary course of business — primarily website hosting services — are approximately $41.7 million, of which approximately $35.1 million is expected to be paid within the next 12 months.

The cost of capital associated with any additional funds sought in the future might be adversely impacted by the ~~extent and duration of the~~ impact of ~~the COVID-19 pandemic~~macroeconomic conditions on our business.

~~Amounts~~ Additionally, amounts deposited with third-party financial institutions exceed the Federal Deposit Insurance Corporation and Securities Investor Protection Corporation insurance limits, as applicable. These cash and cash equivalents could be impacted if the underlying financial institutions fail or are subjected to other adverse conditions in the financial markets. To date, we have experienced no loss or lack of access to our cash and cash equivalents; however, we can provide no assurances that access to our invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

Cash Flows

The following table summarizes our cash flows for the periods indicated (in thousands):


		Six Months Ended June 30,					Six Months Ended June 30,
		2021		2020			2022		2021
Condensed Consolidated Statements of Cash Flows Data:	Condensed Consolidated Statements of Cash Flows Data:					Condensed Consolidated Statements of Cash Flows Data:
Net cash provided by operating activities	Net cash provided by operating activities	$	109,107	$	57,249	Net cash provided by operating activities	$	78,232	$	109,107
Net cash (used in) provided by investing activities		$	(13,196)	$	279,481
Net cash used in investing activities						Net cash used in investing activities	$	(14,479)	$	(13,196)
Net cash used in financing activities	Net cash used in financing activities	$	(133,394)	$	(2,105)	Net cash used in financing activities	$	(121,026)	$	(133,394)

Operating Activities. Net cash provided by operating activities during the six months ended June 30, ~~2021 increased~~2022 decreased compared to the prior-year period primarily ~~as a result~~due to an increase in income taxes paid and the timing of payments to vendors and employees. These movements were partially offset by an increase in cash ~~inflows from~~provided by customers due to higher revenue and ~~a decrease~~increases in ~~cash outflows~~accrued commissions due to ~~the timing~~higher performance of ~~payments to our vendors and employees.~~sales representatives.

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Investing Activities. Net cash used in investing activities during the six months ended June 30, ~~2021~~2022 increased compared to the prior-year period primarily ~~reflects~~due to an increase in purchases of property, equipment and ~~software. Net cash provided~~software, partially offset by ~~investing activities during the prior-year period primarily reflects the sale of our marketable securities portfolio following the change~~a decrease in ~~our investment strategy to preserve liquidity.~~capitalized software and website development costs.

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Financing Activities. Net cash used in financing activities during the six months ended June 30, ~~2021 increased~~2022 decreased compared to the prior-year period primarily due to a decrease in repurchases of the Company's common stock, ~~pursuant to our~~partially offset by a decrease in cash proceeds from stock ~~repurchase program and, to a lesser extent, an increase in~~option exercises as there were fewer options exercised during the amount of taxes paid in connection with the settlement of employee tax liabilities upon the vesting of restricted stock units ("RSUs"). The increase in taxes paid primarily resulted from our use of the net share withholding method of settling employee tax liabilities for RSUs in the current year,six months ended June 30, 2022 as compared to the ~~sell-to-cover method, which we used during a portion of the year-ago~~prior-year period. ~~Increases in both the number of shares released upon the vesting of RSUs and the average stock price upon release in 2021 also contributed to this increase in taxes paid.~~

Stock Repurchase Program

As of June 30, ~~2021,~~2022, our board of directors had authorized us to repurchase up to an aggregate of ~~$950.0 million~~$1.2 billion of our outstanding common stock since it initially authorized our stock repurchase program in July 2017. ~~During the six months ended June 30, 2021, we repurchased on the open market 3,019,987 shares for an aggregate purchase price~~As of ~~$114.2 million. We did not repurchase any shares during the six months ended June 30, 2020.~~

~~On August 3, 2021, our board of directors authorized a $250.0~~July 29, 2022, approximately $107.0 million increase to our stock repurchase program, bringing the total amount of repurchases authorized under our stock repurchase program since its inception to $1.2 billion. We repurchased $35.8 million of shares subsequent to June 30, 2021, resulting in approximately $344.6 million remainingremained available for ~~future~~stock repurchases ~~following the increase on August 3, 2021.~~under these authorizations.

We may repurchase shares at our discretion in the open market, privately negotiated transactions, in transactions structured through investment banking institutions, or a combination of the foregoing. The program is not subject to any time limit and may be modified, suspended or discontinued at any time. The amount and timing of repurchases are subject to a variety of factors, including liquidity, cash flow and market conditions.

We have funded all repurchases to date and expect to fund any future repurchases with cash available on our balance sheet.

~~Off-Balance Sheet Arrangements~~

~~We do not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii)~~ During the six months ended June 30, 2022, we repurchased on the open market 3,039,203 shares for an aggregate purchase price of ~~Regulation S-K promulgated by~~$100.0 million. During the ~~U.S. Securities and Exchange Commission ("SEC") under~~six months ended June 30, 2021, we repurchased on the ~~Securities Act.~~

~~Contractual Obligations~~

~~There have been no material changes to our contractual obligations and other commitments as disclosed in our Annual Report.~~open market 3,019,987 shares for an aggregate purchase price of $114.2 million.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of business. These risks primarily include interest rate, foreign exchange risks and inflation, and have not changed materially from the market risks we were exposed to in the year ended December 31, ~~2020.~~2021.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, ~~2021.~~2022. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, ~~2021,~~2022, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended June 30, ~~2021~~2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and our Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by the collusion of two or more people or by management override of controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For information regarding material legal proceedings in which we are involved, see "Legal Proceedings" in Note ~~12,~~11, "Commitments and Contingencies," of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report, which is incorporated herein by reference. We are also subject to legal proceedings arising in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently do not believe that the final outcome of any of these other matters will have a material effect on our business, financial position, results of operations or cash flows.

ITEM 1A. RISK FACTORS

~~There~~Except as set forth below, there have been no material changes to the risks factors set forth in the section titled "Risk Factors" included under Part I, Item 1A of our Annual Report, which describes various risks and uncertainties that could adversely affect our business, financial condition, results of operations, cash flows and the trading price of our common stock. You should carefully consider the risks and uncertainties described in the Annual Report and below before making an investment decision.

Adverse macroeconomic conditions — such as the COVID-19 pandemic and current uncertain economic environment — have had, and may continue to have, a significant adverse impact on our business and results of operations, and also expose us to other risks.

There is currently an uncertain and inflationary economic environment in the United States, partially as a result of the COVID-19 pandemic and efforts to contain it and manage its impacts, which have created significant macroeconomic disruption and volatility. These challenging macroeconomic conditions have had, and may continue to have, a significant adverse impact on our business and results of operations. For example, adverse macroeconomic conditions have had, and may continue to have, a negative impact on the ability and willingness of advertisers to spend on our products and services. In 2020, businesses reduced their spending with us as a result of pandemic-related closures and restrictions, resulting in a 14% decrease in net revenue compared to 2019. Although public health restrictions eased in 2021, many businesses continued operating at a limited capacity as a safety precaution or in response to reduced consumer demand, which continued to negatively impact their advertising spending with us as a result. While our business has now surpassed its pre-pandemic performance in many areas and advertiser demand has been strong in 2022, many businesses continue to face supply chain issues, rising commodity prices, and inventory and labor shortages.

Changes in consumer behavior due to adverse economic conditions may also negatively impact our business. For example, although vaccines became available and public health restrictions eased in 2021, consumer traffic to our platform remained below pre-pandemic 2019 levels as the number of COVID-19 cases continued to fluctuate; this impact was particularly pronounced in certain geographies within the United States and in our Restaurants, Retail & Other categories. Subsequent increases in economic uncertainty and inflationary pressures, ongoing concerns related to COVID-19 and its variants, and the non-renewal of government stimulus programs have continued to negatively impact consumer traffic and user activity in 2022 compared to 2019.

Because traffic to and user engagement on our platform together impact the number of ads we are able to show as well as the value of those ads to businesses, such negative impacts on consumer activity may also make it more difficult to convince existing and prospective advertisers that our products offer them a material benefit and generate a competitive return relative to other alternatives. Strong advertiser demand combined with less robust consumer activity has significantly increased our average CPC in the first and second quarters of 2022 compared to the prior-year periods; if the value our products provide to advertisers does not keep pace with any further price increases, our revenue and results of operations could be harmed. This dynamic may be exacerbated if lower consumer activity is combined with a shift in consumer activity from categories with higher advertiser demand to those with lower advertiser demand, which we believe occurred in the first half of 2022 as consumer activity shifted away from our Services categories towards travel and leisure.

As adverse macroeconomic conditions continue, our business is also exposed to a variety of other risks, including:

•reductions in cash flows from operations and liquidity, which impact our capital allocation strategy in turn;

•setbacks on our progress on our strategic initiatives as we reallocate resources to responding to such adverse conditions;

•increased fluctuation in our operating results and volatility and uncertainty in our financial projections;

•reductions in the quantity and quality of content provided by users, which may further harm traffic to our platform;

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•inefficiencies, delays and disruptions in our business due to the illness of key employees or a significant portion of our workforce;

•additional restructuring and impairment charges; and

•operational difficulties due to adverse effects of such conditions on our third-party service providers and strategic partners.

It is not possible for us to predict the remaining duration of the ongoing adverse macroeconomic conditions or of the pandemic, the severity of future COVID-19 variants and resulting restrictions, or the duration or magnitude of any resulting adverse impact on our business.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table summarizes our stock repurchase activity for the three months ended June 30, ~~2021~~2022 (in thousands, except for price per share):

Period
Total Number
of Shares Purchased(1)
Average Price Paid per Share(2)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program
April 1 – April 30, 2021 570 $ 40.02 570 $ 172,262
May 1 – May 31, 2021 215 $ 38.97 215 $ 163,879
June 1 – June 30, 2021 834 $ 40.09 834 $ 130,436


Period	Total Number of Shares Purchased(1)	Average Price Paid per Share(2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program
April 1 – April 30, 2022	723	$	34.27	723	$	156,891
May 1 – May 31, 2022	265	$	29.85	265	$	148,984
June 1 – June 30, 2022	587	$	29.52	587	$	131,658

(1) Between July 2017 and ~~June~~September 2021, our board of directors authorized us to repurchase up to ~~$950.0 million~~$1.2 billion of our outstanding common stock, ~~$130.4~~$107.0 million of which remained available as of ~~June 30, 2021.~~

On August 3, 2021, our board of directors authorized a $250.0 million increase to our stock repurchase program, bringing the total amount of repurchases authorized under our stock repurchase program since its inception to $1.2 billion. We repurchased $35.8 million of shares subsequent to June 30, 2021, resulting in approximately $344.6 million remaining available for future repurchases following the increase on August 3, 2021.July 29, 2022. The actual timing and amount of repurchases depend on a variety of factors, including liquidity, cash flow and market conditions. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Stock Repurchase Program" included under Part I, Item 2 in this Quarterly Report.

(2) Average price paid per share includes costs associated with the repurchases.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Diane Irvine, chairperson of our board of directors and chairperson of the audit committee of the board of directors (the "Audit Committee"), currently serves on the audit committees of more than three public companies. Our board of directors has affirmatively determined that Ms. Irvine's simultaneous service on the audit committees of more than three public companies does not impair her ability to effectively serve on our Audit Committee, as disclosed on our Investor Relations website at www.yelp-ir.com under the section entitled "Board Composition" within the "Governance" menu.

~~Table of Contents~~

~~ITEM 6. EXHIBITS~~.
Exhibit Incorporated by Reference Filed Herewith
Number Exhibit Description Form File No. Exhibit Filing Date
3.1
Amended and Restated Certificate of Incorporation of Yelp Inc., as Amended.
8-K 001-35444 3.1 7/8/2020
3.2
Amended and Restated Bylaws of Yelp Inc.
8-K 001-35444 3.2 7/8/2020
4.1
Reference is made to Exhibits 3.1 and 3.2.
4.2
Form of Common Stock Certificate.
8-A/A 001-35444 4.1 9/23/2016
31.1
Certification pursuant to Rule 13a-14(a)/15d-14(a).
X
31.2
Certification pursuant to Rule 13a-14(a)/15d-14(a).
X
32.1†
Certifications of Chief Executive Officer and Chief Financial Officer.
X
101.INS Inline XBRL Instance Document (embedded within the Inline XBRL document).
101.SCH Inline XBRL Taxonomy Extension Schema Document. X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. X
101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document. X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. X
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
†
The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q, are not deemed filed with the SEC and are not to be incorporated by reference into any filing of Yelp Inc. under the Securities Act or the Exchange Act, whether made before or after the date of this Quarterly Report, irrespective of any general incorporation language contained in such filing.

None.

Table of Contents

ITEM 6. EXHIBITS.

Exhibit

Incorporated by Reference

Filed Herewith

Number

Exhibit Description

Form

File No.

Exhibit

Filing Date

3.1

Amended and Restated Certificate of Incorporation of Yelp Inc., as Amended.

8-K

001-35444

3.1

7/8/2020

3.2

Amended and Restated Bylaws of Yelp Inc.

8-K

001-35444

3.1

1/31/2022

4.1

Reference is made to Exhibits 3.1 and 3.2.

4.2

Form of Common Stock Certificate.

8-A/A

001-35444

4.1

9/23/2016

31.1

Certification pursuant to Rule 13a-14(a)/15d-14(a).

31.2

Certification pursuant to Rule 13a-14(a)/15d-14(a).

32.1†

Certifications of Chief Executive Officer and Chief Financial Officer.

101.INS

Inline XBRL Instance Document (embedded within the Inline XBRL document).

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).

†

The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q, are not deemed filed with the SEC and are not to be incorporated by reference into any filing of Yelp Inc. under the Securities Act or the Exchange Act, whether made before or after the date of this Quarterly Report, irrespective of any general incorporation language contained in such filing.

Table of Contents

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 thereunto duly authorized.


		YELP INC.
Date:	August ~~6, 2021~~5, 2022	/s/ David Schwarzbach
		David Schwarzbach
		Chief Financial Officer
		(Principal Financial and Accounting Officer and Duly Authorized Signatory)