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, ~~2022~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period from to

Commission file number: 001-35444

YELP INC.

(Exact Name of Registrant as Specified in Its Charter)

______________________________________________________________________________________________________


Delaware			20-1854266
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

350 Mission Street, 10th Floor

San Francisco, California 94105

(Address of principal executive offices) (Zip Code)

(415) 908-3801

(Registrant’s Telephone Number, Including Area Code)

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

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, par value $0.000001 per share

YELP

New York Stock Exchange LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

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

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


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of July ~~29, 2022,~~28, 2023, there were ~~70,273,827~~68,713,576 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

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		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	2426
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3536
Item 4.	Controls and Procedures	3536
Part II.	Other Information
Item 1.	Legal Proceedings	3637
Item 1A.	Risk Factors	3637
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3738
Item 3.	Defaults Upon Senior Securities	3738
Item 4.	Mine Safety Disclosures	3738
Item 5.	Other Information	3738
Item 6.	Exhibits	3839
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 maintain profitability;

•our ability to maintain and expand our advertiser base;

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

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

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

•trends and expectations regarding customer and revenue retention;

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

•our liquidity and working capital requirements; and

•our plans with respect to our stock repurchase program.

Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements.

These statements are based on the beliefs and assumptions of our management, which are in turn based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” included under Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (the “Annual Report”), as updated by Part II, Item 1A of this Quarterly Report, and elsewhere in this Quarterly Report, such as:

•adverse macroeconomic conditions, including the uncertain and inflationary economic environment in the United States, and their impact on consumer behavior and advertiser spending;

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

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

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

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

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

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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 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 macroeconomic challenges;

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

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

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

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

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

Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

NOTE REGARDING METRICS

We review a number of performance metrics to evaluate our business, measure our performance, identify trends in our business, prepare financial projections and make strategic decisions. Please see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Metrics” in this Quarterly Report and in our Annual Report for information on how we define our key metrics. Unless otherwise stated, these metrics do not include metrics from subscription products or our business-owner products.

While our metrics are based on what we believe to be reasonable calculations, there are inherent challenges in measuring usage across our large user base. Certain of our performance metrics, including the number of unique devices accessing our mobile app, ad clicks, average cost-per-click and active claimed local business locations, are tracked with internal company tools, which are not independently verified by any third party and have a number of limitations. For example, our metrics may be affected by mobile applications that automatically contact our servers for regular updates with no discernible user action involved; this activity can cause our system to count the device associated with the app as an app unique device in a given period. Although we take steps to exclude such activity and, as a result, do not believe it has had a material impact on our reported metrics, our efforts may not successfully account for all such activity.

Our metrics that are calculated based on data from third parties — the number of desktop and mobile website unique visitors — are subject to similar limitations. Our third-party providers periodically encounter difficulties in providing accurate data for such metrics as a result of a variety of factors, including human and software errors. In addition, because these traffic metrics are tracked based on unique cookie identifiers, an individual who accesses our website from multiple devices with different cookies may be counted as multiple unique visitors, and multiple individuals who access our website from a shared device with a single cookie may be counted as a single unique visitor. As a result, the calculations of our unique visitors may not accurately reflect the number of people actually visiting our website.

Our measures of traffic and other key metrics may also differ from estimates published by third parties (other than those whose data we use to calculate such metrics) or from similar metrics of our competitors. We are continually seeking to improve our ability to measure these key metrics, and regularly review our processes to assess potential improvements to their accuracy. From time to time, we may discover inaccuracies in our metrics or make adjustments to improve their accuracy, including adjustments that may result in the recalculation of our historical metrics. We believe that any such inaccuracies or adjustments are immaterial unless otherwise stated.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

YELP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	421,162	$	479,783	Cash and cash equivalents	$	270,256	$	306,379

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
Short-term marketable securities						Short-term marketable securities	126,909		94,244
Accounts receivable (net of allowance for doubtful accounts of $8,162 and $9,277 at June 30, 2023 and December 31, 2022, respectively)						Accounts receivable (net of allowance for doubtful accounts of $8,162 and $9,277 at June 30, 2023 and December 31, 2022, respectively)	151,655		131,902
Prepaid expenses and other current assets	Prepaid expenses and other current assets	65,334		57,536		Prepaid expenses and other current assets	38,690		63,467
Total current assets	Total current assets	611,186		644,677		Total current assets	587,510		595,992

Property, equipment and software, net	Property, equipment and software, net	82,212		83,857		Property, equipment and software, net	75,588		77,224
Operating lease right-of-use assets	Operating lease right-of-use assets	122,698		140,785		Operating lease right-of-use assets	79,591		97,392
Goodwill	Goodwill	101,526		105,128		Goodwill	103,260		102,328
Intangibles, net	Intangibles, net	9,679		10,673		Intangibles, net	8,315		8,997
Restricted cash		1,052		858

Other non-current assets	Other non-current assets	94,815		64,550		Other non-current assets	179,024		133,989
Total assets	Total assets	$	1,023,168	$	1,050,528	Total assets	$	1,033,288	$	1,015,922
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	$	132,688	$	119,620	Accounts payable and accrued liabilities	$	171,871	$	137,950
Operating lease liabilities — current	Operating lease liabilities — current	41,177		40,237		Operating lease liabilities — current	38,246		39,674
Deferred revenue	Deferred revenue	6,141		4,156		Deferred revenue	5,414		5,200
Total current liabilities	Total current liabilities	180,006		164,013		Total current liabilities	215,531		182,824
Operating lease liabilities — long-term	Operating lease liabilities — long-term	105,809		127,979		Operating lease liabilities — long-term	67,777		86,661
Other long-term liabilities	Other long-term liabilities	18,749		7,218		Other long-term liabilities	41,378		36,113
Total liabilities	Total liabilities	304,564		299,210		Total liabilities	324,686		305,598
Commitments and contingencies (Note 11)		0		0
Commitments and contingencies (Note 12)						Commitments and contingencies (Note 12)
Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
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, 69,287 shares issued and outstanding at June 30, 2023, and 69,797 shares issued and outstanding at December 31, 2022						Common stock, $0.000001 par value — 200,000 shares authorized, 69,287 shares issued and outstanding at June 30, 2023, and 69,797 shares issued and outstanding at December 31, 2022	—		—
Additional paid-in capital	Additional paid-in capital	1,587,337		1,522,572		Additional paid-in capital	1,732,909		1,649,692
Treasury stock	Treasury stock	(3,138)		—		Treasury stock	(159)		—
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(15,657)		(11,090)		Accumulated other comprehensive loss	(13,876)		(15,545)
Accumulated deficit	Accumulated deficit	(849,938)		(760,164)		Accumulated deficit	(1,010,272)		(923,823)
Total stockholders' equity	Total stockholders' equity	718,604		751,318		Total stockholders' equity	708,602		710,324
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	1,023,168	$	1,050,528	Total liabilities and stockholders' equity	$	1,033,288	$	1,015,922

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,
		2022		2021		2022		2021			2023		2022		2023		2022
Net revenue	Net revenue	$	298,884	$	257,188	$	575,512	$	489,284	Net revenue	$	337,126	$	298,884	$	649,564	$	575,512
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)	26,988		17,993		50,417		32,867		Cost of revenue (exclusive of depreciation and amortization shown separately below)	30,184		26,988		56,243		50,417
Sales and marketing	Sales and marketing	129,412		113,641		255,509		226,550		Sales and marketing	139,150		129,412		286,605		255,509
Product development	Product development	76,848		68,695		157,533		136,687		Product development	85,030		76,848		173,227		157,533
General and administrative	General and administrative	38,377		45,095		77,760		76,956		General and administrative	53,405		38,377		99,914		77,760
Depreciation and amortization	Depreciation and amortization	11,258		12,833		22,748		25,916		Depreciation and amortization	10,615		11,258		21,420		22,748
Restructuring		—		12		—		32

Total costs and expenses	Total costs and expenses	282,883		258,269		563,967		499,008		Total costs and expenses	318,384		282,883		637,409		563,967
Income (loss) from operations		16,001		(1,081)		11,545		(9,724)
Income from operations										Income from operations	18,742		16,001		12,155		11,545
Other income, net	Other income, net	1,327		542		2,256		1,247		Other income, net	5,898		1,327		11,110		2,256
Income (loss) before income taxes		17,328		(539)		13,801		(8,477)
Provision for (benefit from) income taxes		9,319		(4,751)		6,707		(6,893)
Net income (loss) attributable to common stockholders		$	8,009	$	4,212	$	7,094	$	(1,584)
Net income (loss) per share attributable to common stockholders
Income before income taxes										Income before income taxes	24,640		17,328		23,265		13,801
Provision for income taxes										Provision for income taxes	9,911		9,319		9,714		6,707
Net income attributable to common stockholders										Net income attributable to common stockholders	$	14,729	$	8,009	$	13,551	$	7,094
Net income per share attributable to common stockholders										Net income per share attributable to common stockholders
Basic	Basic	$	0.11	$	0.06	$	0.10	$	(0.02)	Basic	$	0.21	$	0.11	$	0.19	$	0.10
Diluted	Diluted	$	0.11	$	0.05	$	0.10	$	(0.02)	Diluted	$	0.21	$	0.11	$	0.19	$	0.10
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders
Weighted-average shares used to compute net income per share attributable to common stockholders										Weighted-average shares used to compute net income per share attributable to common stockholders
Basic	Basic	71,217		74,807		71,427		75,025		Basic	69,256		71,217		69,537		71,427
Diluted	Diluted	72,835		78,983		73,572		75,025		Diluted	71,238		72,835		71,645		73,572

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,
		2022		2021		2022		2021			2023		2022		2023		2022
Net income (loss)		$	8,009	$	4,212	$	7,094	$	(1,584)
Net income attributable to common stockholders										Net income attributable to common stockholders	$	14,729	$	8,009	$	13,551	$	7,094
Other comprehensive (loss) income:	Other comprehensive (loss) income:									Other comprehensive (loss) income:
Foreign currency translation adjustments, net of tax	Foreign currency translation adjustments, net of tax	(3,754)		1,181		(4,567)		(1,571)		Foreign currency translation adjustments, net of tax	477		(3,754)		1,931		(4,567)

Unrealized loss on available-for-sale debt securities, net of tax										Unrealized loss on available-for-sale debt securities, net of tax	(595)		—		(262)		—

Other comprehensive (loss) income	Other comprehensive (loss) income	(3,754)		1,181		(4,567)		(1,571)		Other comprehensive (loss) income	(118)		(3,754)		1,669		(4,567)
Comprehensive income (loss)		$	4,255	$	5,393	$	2,527	$	(3,155)
Comprehensive income										Comprehensive income	$	14,611	$	4,255	$	15,220	$	2,527

See Notes to Condensed Consolidated Financial Statements.

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YELP INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)


		Common Stock			Additional Paid-In Capital				Treasury Stock		Accumulated Other Comprehensive Loss			Accumulated Deficit				Total Stockholders' Equity				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, 2021		75,153	$	—			$	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	41	—		863				—		—			—				863			Issuance of common stock upon exercises of employee stock options	61			—		1,351				—				—				—				1,351
Issuance of common stock upon vesting of restricted stock units ("RSUs")	Issuance of common stock upon vesting of restricted stock units ("RSUs")	744	—		—				—		—			—				—			Issuance of common stock upon vesting of restricted stock units ("RSUs")	710			—		—				—				—				—				—
Issuance of common stock for employee stock purchase plan	Issuance of common stock for employee stock purchase plan	255	—		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		—	—		(18,112)				—		—			—				(18,112)
Taxes withheld related to net share settlement of equity awards																					Taxes 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	(1,603)	—		—				63,692		—			(63,692)				—			Retirement of common stock	(1,550)			—		—				49,748				—				(49,748)				—
Foreign currency adjustments, net of tax		—	—		—				—		1,181			—				1,181
Other comprehensive loss																					Other comprehensive loss	—			—		—				—				(3,754)				—				(3,754)
Net income	Net income	—	—		—				—		—			4,212				4,212			Net income	—			—		—				—				—				8,009				8,009
Balance as of June 30, 2021		74,590	$	—	$	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

Balance as of March 31, 2022		71,641	$	—	$	1,547,337			$	(2,886)	$	(11,903)		$	(808,199)			$	724,349
Balance as of March 31, 2023																					Balance as of March 31, 2023	69,649			$	—	$	1,692,923			$	(37)			$	(13,758)			$	(975,000)			$	704,128
Issuance of common stock upon exercises of employee stock options	Issuance of common stock upon exercises of employee stock options	61	—		1,351				—		—			—				1,351			Issuance of common stock upon exercises of employee stock options	31			—		956				—				—				—				956
Issuance of common stock upon vesting of RSUs	Issuance of common stock upon vesting of RSUs	710	—		—				—		—			—				—			Issuance of common stock upon vesting of RSUs	791			—		—				—				—				—				—
Issuance of common stock for employee stock purchase plan	Issuance of common stock for employee stock purchase plan	364	—		9,110				—		—			—				9,110			Issuance of common stock for employee stock purchase plan	379			—		10,894				—				—				—				10,894
Stock-based compensation (inclusive of capitalized stock-based compensation)	Stock-based compensation (inclusive of capitalized stock-based compensation)	—	—		43,224				—		—			—				43,224			Stock-based compensation (inclusive of capitalized stock-based compensation)	—			—		46,979				—				—				—				46,979
Shares withheld related to net share settlement of equity awards		—	—		(13,685)				—		—			—				(13,685)
Taxes withheld related to net share settlement of equity awards																					Taxes withheld related to net share settlement of equity awards	—			—		(18,843)				—				—				—				(18,843)
Repurchases of common stock	Repurchases of common stock	—	—		—				(50,000)		—			—				(50,000)			Repurchases of common stock	—			—		—				(50,123)				—				—				(50,123)
Retirement of common stock	Retirement of common stock	(1,550)	—		—				49,748		—			(49,748)				—			Retirement of common stock	(1,563)			—		—				50,001				—				(50,001)				—
Foreign currency adjustments, net of tax		—	—		—				—		(3,754)			—				(3,754)
Other comprehensive loss																					Other comprehensive loss	—			—		—				—				(118)				—				(118)
Net income	Net income	—	—		—				—		—			8,009				8,009			Net income	—			—		—				—				—				14,729				14,729
Balance as of June 30, 2022		71,226	$	—	$	1,587,337			$	(3,138)	$	(15,657)		$	(849,938)			$	718,604
Balance as of June 30, 2023																					Balance as of June 30, 2023	69,287			$	—	$	1,732,909			$	(159)			$	(13,876)			$	(1,010,272)			$	708,602

See Notes to Condensed Consolidated Financial Statements.

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~~YELP INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)~~

~~(In 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, 2020		75,371	$	—			$	1,398,248			$	(2,964)				$	(6,807)			$	(533,943)		$	854,534
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	565	—		6,912				—		—			—				6,912			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	1,414	—		—				—		—			—				—			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	255	—		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)	—	—		85,693				—		—			—				85,693			Stock-based compensation (inclusive of capitalized stock-based compensation)	—			—		85,991				—				—				—				85,991
Shares withheld related to net share settlement of equity awards		—	—		(35,038)				—		—			—				(35,038)
Taxes withheld related to net share settlement of equity awards																					Taxes withheld related to net share settlement of equity awards	—			—		(32,275)				—				—				—				(32,275)
Repurchases of common stock	Repurchases of common stock	—	—		—				(114,157)		—			—				(114,157)			Repurchases of common stock	—			—		—				(100,006)				—				—				(100,006)
Retirement of common stock	Retirement of common stock	(3,015)	—		—				112,871		—			(112,871)				—			Retirement of common stock	(2,932)			—		—				96,868				—				(96,868)				—
Foreign currency adjustments, net of tax		—	—		—				—		(1,571)			—				(1,571)
Net loss		—	—		—				—		—			(1,584)				(1,584)
Balance as of June 30, 2021		74,590	$	—	$	1,464,490			$	(4,250)	$	(8,378)		$	(648,398)			$	803,464
Other comprehensive loss																					Other comprehensive loss	—			—		—				—				(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

Balance as of December 31, 2021		72,171	$	—	$	1,522,572			$	—	$	(11,090)		$	(760,164)			$	751,318
Balance as of December 31, 2022																					Balance as of December 31, 2022	69,797			$	—	$	1,649,692			$	—			$	(15,545)			$	(923,823)			$	710,324
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 exercises of employee stock options	716			—		15,549				—				—				—				15,549
Issuance of common stock upon vesting of RSUs	Issuance of common stock upon vesting of RSUs	1,535	—		—				—		—			—				—			Issuance of common stock upon vesting of RSUs	1,658			—		—				—				—				—				—
Issuance of common stock for employee stock purchase plan	Issuance of common stock for employee stock purchase plan	364	—		9,110				—		—			—				9,110			Issuance of common stock for employee stock purchase plan	380			—		10,912				—				—				—				10,912
Stock-based compensation (inclusive of capitalized stock-based compensation)	Stock-based compensation (inclusive of capitalized stock-based compensation)	—	—		85,991				—		—			—				85,991			Stock-based compensation (inclusive of capitalized stock-based compensation)	—			—		95,162				—				—				—				95,162
Shares withheld related to net share settlement of equity awards		—	—		(32,275)				—		—			—				(32,275)
Taxes withheld related to net share settlement of equity awards																					Taxes withheld related to net share settlement of equity awards	—			—		(38,406)				—				—				—				(38,406)
Repurchases of common stock	Repurchases of common stock	—	—		—				(100,006)		—			—				(100,006)			Repurchases of common stock	—			—		—				(100,159)				—				—				(100,159)
Retirement of common stock	Retirement of common stock	(2,932)	—		—				96,868		—			(96,868)				—			Retirement of common stock	(3,264)			—		—				100,000				—				(100,000)				—
Foreign currency adjustments, net of tax		—	—		—				—		(4,567)			—				(4,567)
Other comprehensive income																					Other comprehensive income	—			—		—				—				1,669				—				1,669
Net income	Net income	—	—		—				—		—			7,094				7,094			Net income	—			—		—				—				—				13,551				13,551
Balance as of June 30, 2022		71,226	$	—	$	1,587,337			$	(3,138)	$	(15,657)		$	(849,938)			$	718,604
Balance as of June 30, 2023																					Balance as of June 30, 2023	69,287			$	—	$	1,732,909			$	(159)			$	(13,876)			$	(1,010,272)			$	708,602

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,
		2022		2021			2023		2022
Operating Activities	Operating Activities					Operating Activities
Net income (loss)		$	7,094	$	(1,584)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net income						Net income	$	13,551	$	7,094
Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	22,748		25,916		Depreciation and amortization	21,420		22,748
Provision for doubtful accounts	Provision for doubtful accounts	12,676		7,240		Provision for doubtful accounts	14,636		12,676
Stock-based compensation	Stock-based compensation	81,121		80,104		Stock-based compensation	89,837		81,121
Noncash lease cost		16,870		20,712
Amortization of right-of-use assets						Amortization of right-of-use assets	15,699		16,870
Deferred income taxes	Deferred income taxes	(24,114)		(7,755)		Deferred income taxes	(42,148)		(24,114)
Amortization of deferred cost		8,413		6,881
Amortization of deferred contract cost						Amortization of deferred contract cost	11,716		8,413
Asset impairment	Asset impairment	—		11,164		Asset impairment	3,555		—
Other adjustments, net	Other adjustments, net	717		386		Other adjustments, net	(64)		717
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(30,014)		(20,382)		Accounts receivable	(34,389)		(30,014)
Prepaid expenses and other assets	Prepaid expenses and other assets	(22,149)		(6,793)		Prepaid expenses and other assets	12,156		(22,149)
Operating lease liabilities	Operating lease liabilities	(19,813)		(22,489)		Operating lease liabilities	(20,943)		(19,813)
Accounts payable, accrued liabilities and other liabilities	Accounts payable, accrued liabilities and other liabilities	24,683		15,707		Accounts payable, accrued liabilities and other liabilities	37,225		24,683
Net cash provided by operating activities	Net cash provided by operating activities	78,232		109,107		Net cash provided by operating activities	122,251		78,232
Investing Activities	Investing Activities					Investing Activities

Purchases of marketable securities — available-for-sale						Purchases of marketable securities — available-for-sale	(82,491)		—
Sales and maturities of marketable securities — available-for-sale						Sales and maturities of marketable securities — available-for-sale	50,613		—

Purchases of property, equipment and software	Purchases of property, equipment and software	(14,498)		(13,286)		Purchases of property, equipment and software	(15,153)		(14,498)
Other investing activities	Other investing activities	19		90		Other investing activities	146		19
Net cash used in investing activities	Net cash used in investing activities	(14,479)		(13,196)		Net cash used in investing activities	(46,885)		(14,479)
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	11,026		15,587		Proceeds from issuance of common stock for employee stock-based plans	26,095		11,026
Taxes paid related to the net share settlement of equity awards	Taxes paid related to the net share settlement of equity awards	(32,046)		(34,824)		Taxes paid related to the net share settlement of equity awards	(38,201)		(32,046)
Repurchases of common stock	Repurchases of common stock	(100,006)		(114,157)		Repurchases of common stock	(100,000)		(100,006)

Payment of issuance costs for credit facility						Payment of issuance costs for credit facility	(799)		—
Net cash used in financing activities	Net cash used in financing activities	(121,026)		(133,394)		Net cash used in financing activities	(112,905)		(121,026)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1,154)		197		Effect of exchange rate changes on cash, cash equivalents and restricted cash	1,175		(1,154)
Change in cash, cash equivalents and restricted cash	Change in cash, cash equivalents and restricted cash	(58,427)		(37,286)		Change in cash, cash equivalents and restricted cash	(36,364)		(58,427)
Cash, cash equivalents and restricted cash — Beginning of period	Cash, cash equivalents and restricted cash — Beginning of period	480,641		596,540		Cash, cash equivalents and restricted cash — Beginning of period	307,138		480,641
Cash, cash equivalents and restricted cash — End of period	Cash, cash equivalents and restricted cash — End of period	$	422,214	$	559,254	Cash, cash equivalents and restricted cash — End of period	$	270,774	$	422,214
Supplemental Disclosures of Other Cash Flow Information	Supplemental Disclosures of Other Cash Flow Information					Supplemental Disclosures of Other Cash Flow Information
Cash paid (refund received) for income taxes, net		$	23,727	$	(586)
Cash paid for income taxes, net						Cash paid for income taxes, net	$	8,229	$	23,727
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	$	3,836	$	1,295	Purchases of property, equipment and software recorded in accounts payable and accrued liabilities	$	1,478	$	3,836
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		$	—	$	4,497

Repurchases of common stock recorded in accounts payable and accrued liabilities	Repurchases of common stock recorded in accounts payable and accrued liabilities	$	2,397	$	3,444	Repurchases of common stock recorded in accounts payable and accrued liabilities	$	2,442	$	2,397

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. Yelp has operations in the United States, United Kingdom, Canada, Ireland and Germany.

Basis of Presentation

The accompanying interim condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the U.S. Securities and Exchange Commission ("SEC") regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Annual Report.

The unaudited condensed consolidated balance sheet as of December 31, ~~2021~~2022 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures required by GAAP, including certain notes to the financial statements. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. Certain prior period amounts have been reclassified to conform to the current period presentation, including reclassifying amortization of deferred costs to a separate line item within the condensed consolidated statement of cash flows.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments of a normally recurring nature necessary for the fair presentation of the interim periods presented.

Principles of Consolidation

These unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation.

Use of Estimates

The preparation of the Company’s unaudited interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments 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. Items that require estimates, judgments or assumptions include, but are not limited to, determining variable consideration and identifying the nature and timing of satisfaction of performance obligations, allowance for doubtful accounts and credit losses, fair value and estimated useful lives of long- and indefinite-lived assets, litigation loss contingencies, liabilities related to incurred but not reported insurance claims, fair value and achievement of targets for performance-based restricted stock units (“PRSUs”) and income taxes. These estimates, judgments and assumptions are based on information available as of the date of the condensed consolidated financial statements; therefore, actual results could differ from management’s estimates due to ~~the~~macroeconomic uncertainty ~~of the extent of the impacts of macroeconomic conditions~~ and other factors.

Significant Accounting Policies

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

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2. CASH, CASH EQUIVALENTS AND RESTRICTED CASH

Cash, cash equivalents and restricted cash as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 consisted of the following (in thousands):


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Cash	Cash	$	30,147	$	89,407	Cash	$	70,708	$	56,304
Cash equivalents	Cash equivalents	391,015		390,376		Cash equivalents	199,548		250,075
Total cash and cash equivalents	Total cash and cash equivalents	$	421,162	$	479,783	Total cash and cash equivalents	$	270,256	$	306,379
Restricted cash	Restricted cash	1,052		858		Restricted cash	518		759
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	422,214	$	480,641	Total cash, cash equivalents and restricted cash	$	270,774	$	307,138

Restricted cash is included in other non-current assets on the Company’s condensed consolidated balance sheets.

3. MARKETABLE SECURITIES

Short-term investments and certain cash equivalents consist of investments in debt securities that are classified as available-for-sale. The amortized cost, gross unrealized gains and losses and fair value of investments as of June 30, 2023 and December 31, 2022 were as follows (in thousands):


	June 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value




Short-term marketable securities:
Certificates of deposit	$	7,688	$	—	$	—	$	7,688
Commercial paper	4,567		—		—		4,567
Corporate bonds	25,422		11		(279)		25,154
Agency bonds	20,820		2		(62)		20,760
U.S. government bonds	69,425		7		(692)		68,740
Total short-term marketable securities	$	127,922	$	20	$	(1,033)	$	126,909







	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

Cash equivalents:
Commercial paper	$	2,524	$	—	$	—	$	2,524
Total cash equivalents	2,524		—		—		2,524
Short-term marketable securities:
Certificates of deposit	10,651		—		—		10,651
Commercial paper	13,054		—		—		13,054
Corporate bonds	32,701		3		(353)		32,351
Agency bonds	3,010		—		(11)		2,999
U.S. government bonds	35,479		8		(298)		35,189
Total short-term marketable securities	94,895		11		(662)		94,244



Total	$	97,419	$	11	$	(662)	$	96,768

Table of Contents

The following tables present gross unrealized losses and fair values for those securities that were in an unrealized loss position as of June 30, 2023 and December 31, 2022, aggregated by investment category and the length of time that the individual securities have been in a continuous loss position (in thousands):


	June 30, 2023
	Less Than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss


Corporate bonds	$	21,595	$	(279)	$	—	$	—	$	21,595	$	(279)
Agency bonds	14,275		(62)		—		—		14,275		(62)
U.S. government bonds	64,754		(692)		—		—		64,754		(692)
Total	$	100,624	$	(1,033)	$	—	$	—	$	100,624	$	(1,033)

	December 31, 2022
	Less Than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss


Corporate bonds	$	29,428	$	(353)	$	—	$	—	$	29,428	$	(353)
Agency bonds	2,999		(11)		—		—		2,999		(11)
U.S. government bonds	27,368		(298)		—		—		27,368		(298)
Total	$	59,795	$	(662)	$	—	$	—	$	59,795	$	(662)

As of June 30, 2023 and December 31, 2022, the Company did not recognize any credit loss related to available-for-sale marketable securities.

The contractual maturities for marketable securities classified as available-for-sale as of June 30, 2023 were as follows (in thousands):


	Amortized Cost		Fair Value
Due in one year or less	$	72,972	$	72,468
Due in one to five years	54,950		54,441
Total	$	127,922	$	126,909

4. 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. Additionally, the Company carries its available-for-sale debt securities at fair value. See Note 3, "Marketable Securities," for further details.

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, commercial paper, corporate bonds, agency bonds and U.S. government bonds 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.

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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, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):


		June 30, 2022								December 31, 2021									June 30, 2023								December 31, 2022
		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents:	Cash equivalents:																	Cash equivalents:
Money market funds	Money market funds	$	391,015	$	—	$	—	$	391,015	$	390,376	$	—	$	—	$	390,376	Money market funds	$	174,178	$	—	$	—	$	174,178	$	247,551	$	—	$	—	$	247,551

Commercial paper																		Commercial paper	—		—		—		—		—		2,524		—		2,524
Marketable securities:																		Marketable securities:
Certificates of deposit																		Certificates of deposit	—		7,688		—		7,688		—		10,651		—		10,651
Commercial paper																		Commercial paper	—		4,567		—		4,567		—		13,054		—		13,054
Corporate bonds																		Corporate bonds	—		25,154		—		25,154		—		32,351		—		32,351
Agency bonds																		Agency bonds	—		20,760		—		20,760		—		2,999		—		2,999
U.S. government bonds																		U.S. government bonds	—		68,740		—		68,740		—		35,189		—		35,189
Other investments:	Other investments:																	Other investments:
Certificates of deposit	Certificates of deposit	—		10,000		—		10,000		—		10,000		—		10,000		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
Total cash equivalents, marketable securities and other investments																		Total cash equivalents, marketable securities and other investments	$	174,178	$	136,909	$	—	$	311,087	$	247,551	$	106,768	$	—	$	354,319

The certificates of deposit that are categorized as other investments are reflected in prepaid expenses and other current assets on the condensed consolidated balance sheets as of June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

The Company's long- and indefinite-lived assets, such as property, equipment and software, goodwill, other intangible assets and right-of-use ("ROU") 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 the write off of ROU assets and leasehold improvements associated with certain of its office space that it abandoned during the six months ended June 30, 2023 based on the Company's determination that the fair values of these impaired assets were zero. See Note 8, "Leases," for further details.

~~Table of~~ ~~Contents~~

4.5. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 consisted of the following (in thousands):


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Prepaid expenses	Prepaid expenses	$	14,538	$	13,480	Prepaid expenses	$	14,976	$	14,632
Certificates of deposit	Certificates of deposit	10,000		10,000		Certificates of deposit	10,000		10,000
Non-trade receivables						Non-trade receivables	4,382		31,338
Other current assets	Other current assets	40,796		34,056		Other current assets	9,332		7,497
Total prepaid expenses and other current assets	Total prepaid expenses and other current assets	$	65,334	$	57,536	Total prepaid expenses and other current assets	$	38,690	$	63,467

Prepaid expenses included $0.5 million of short-term capitalized implementation costs related to cloud computing arrangements that are service contracts. The long-term portion of capitalized cloud computing implementation costs of $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 capitalized implementation costs. As of June 30, ~~2022,~~2023, other current assets primarily consisted of ~~non-trade receivables, current tax receivables and~~ deferred costs related to subleases and unsettled share ~~repurchases.~~repurchases as well as income taxes receivable and short-term deposits.

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6. PROPERTY, EQUIPMENT AND SOFTWARE, NET

Property, equipment and software, net as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 consisted of the following (in thousands):


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Capitalized website and internal-use software development costs	Capitalized website and internal-use software development costs	$	216,468	$	202,169	Capitalized website and internal-use software development costs	$	245,129	$	229,638
Leasehold improvements(1)	Leasehold improvements(1)	61,515		59,190		Leasehold improvements(1)	57,917		60,407
Computer equipment	Computer equipment	50,685		48,264		Computer equipment	48,426		50,920
Furniture and fixtures	Furniture and fixtures	11,841		12,573		Furniture and fixtures	10,401		11,627
Telecommunication	Telecommunication	4,941		4,953		Telecommunication	4,171		4,930
Software	Software	1,702		1,703		Software	1,113		1,702
Total	Total	347,152		328,852		Total	367,157		359,224
Less accumulated depreciation and amortization(1)	Less accumulated depreciation and amortization(1)	(264,940)		(244,995)		Less accumulated depreciation and amortization(1)	(291,569)		(282,000)
Property, equipment and software, net	Property, equipment and software, net	$	82,212	$	83,857	Property, equipment and software, net	$	75,588	$	77,224

(1) Leasehold improvements, net was reduced to reflect an impairment of $1.0 million recorded during the six months ended June 30, 2023 as a result of the Company's abandonment of certain office space. For more information, see Note 8, "Leases."

Depreciation and amortization expense related to property, equipment and software was ~~$11.0~~$10.2 million and ~~$12.1~~$11.0 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$21.8~~$20.7 million and ~~$24.5~~$21.8 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

6.7. GOODWILL AND INTANGIBLE ASSETS

The Company’s goodwill is the result of its acquisitions of other businesses and represents the excess of purchase consideration over the fair value of assets acquired and liabilities assumed. The Company performed its annual goodwill impairment analysis as of August 31, ~~2021~~2022 and concluded that goodwill was not impaired, as the fair value of the reporting unit exceeded its carrying value. Additionally, no triggering events were identified as of June 30, 2023 or December 31, 2022 that would more likely than not reduce the fair value of goodwill below its carrying value.

The changes in carrying amount of goodwill during the six months ended June 30, ~~2022~~2023 were as follows (in thousands):


Balance as of December 31, ~~2021~~2022	$	~~105,128~~102,328
Effect of currency translation	~~(3,602)~~932
Balance as of June 30, ~~2022~~2023	$	~~101,526~~103,260

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Intangible assets that were not fully amortized as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 consisted of the following (dollars in thousands):


		June 30, 2022									June 30, 2023
		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	$	(5,196)	$	4,722	6.7	years	Business relationships	$	9,918	$	(5,904)	$	4,014	5.7 years
Developed technology		7,709		(7,709)		—		0.0	years

Licensing agreements	Licensing agreements	6,129		(1,183)		4,946		7.7	years	Licensing agreements	6,129		(1,828)		4,301		6.7 years

Domains and data licenses	Domains and data licenses	2,869		(2,858)		11		1.0	years	Domains and data licenses	2,869		(2,869)		—		0.0 years

Total	Total	$	26,625	$	(16,946)	$	9,679			Total	$	18,916	$	(10,601)	$	8,315


		December 31, 2021									December 31, 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	$	(4,786)	$	5,132	7.1	years	Business relationships	$	9,918	$	(5,550)	$	4,368	6.2 years
Developed technology		7,709		(7,453)		256		0.2	years

Licensing agreements	Licensing agreements	6,129		(860)		5,269		8.2	years	Licensing agreements	6,129		(1,505)		4,624		7.2 years

Domain and data licenses	Domain and data licenses	2,869		(2,853)		16		1.5	years	Domain and data licenses	2,869		(2,864)		5		0.5 years

Total	Total	$	26,625	$	(15,952)	$	10,673			Total	$	18,916	$	(9,919)	$	8,997

Amortization expense related to intangible assets was ~~$0.3~~$0.4 million and ~~$0.7~~$0.3 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$1.0~~$0.7 million and ~~$1.4~~$1.0 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

As of June 30, ~~2022,~~2023, estimated future amortization ~~expenses were~~expense was as follows (in thousands):


Remainder of 2022		$	682
2023		1,359
Remainder of 2023				Remainder of 2023	$	677
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		2027	1,353
2028				2028	1,353
Thereafter	Thereafter	2,226		Thereafter	873
Total amortization	Total amortization	$	9,679	Total amortization	$	8,315

7.8. LEASES

The components of lease cost, net for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were as follows (in thousands):

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

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	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease cost	$	9,222	$	10,499	$	18,753	$	21,166
Short-term lease cost (12 months or less)	98		270		203		524
Sublease income	(3,403)		(2,777)		(6,794)		(5,555)
Total lease cost, net	$	5,917	$	7,992	$	12,162	$	16,135

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.

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Supplemental cash flow information related to leases for the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 was as follows (in thousands):


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
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	$	25,511	$	27,784	Operating cash flows from operating leases	$	24,065	$	25,511

As of June 30, ~~2022,~~2023, maturities of lease liabilities were as follows (in thousands):


Remainder of 2022		$	23,967
2023		45,369
Remainder of 2023				Remainder of 2023	$	21,368
2024	2024	42,667		2024	42,715
2025	2025	22,134		2025	22,176
2026	2026	7,197		2026	7,239
2027	2027	6,386		2027	6,426
2028				2028	6,565
Thereafter	Thereafter	16,258		Thereafter	9,726
Total minimum lease payments	Total minimum lease payments	163,978		Total minimum lease payments	116,215
Less imputed interest	Less imputed interest	(16,992)		Less imputed interest	(10,192)
Present value of lease liabilities	Present value of lease liabilities	$	146,986	Present value of lease liabilities	$	106,023

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the weighted-average remaining lease ~~terms~~term and weighted-average discount ~~rates~~rate were as follows:


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Weighted-average remaining lease term (years) — operating leases	Weighted-average remaining lease term (years) — operating leases	4.4		4.8		Weighted-average remaining lease term (years) — operating leases	3.9		4.1
Weighted-average discount rate — operating leases	Weighted-average discount rate — operating leases	5.3	%	5.4	%	Weighted-average discount rate — operating leases	5.2	%	5.3	%

~~Subsequent to~~During the ~~quarter end, in July 2022,~~six months ended June 30, 2023, the Company ~~entered into a sublease agreement for a portion of its~~abandoned certain office space in ~~New York.~~San Francisco. The Company ~~expects~~evaluated the associated ROU assets and leasehold improvements for impairment as a result of the abandonment 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 carrying value of the impacted assets to ~~recognize~~the fair value to determine the impairment amount and recognized an impairment charge of ~~approximately $10.5~~$3.6 million induring the ~~three~~six months ~~ending September~~ended June 30, ~~2022,~~2023, which ~~will be~~is included in general and administrative expenses on its condensed consolidated statement of ~~operations, and will reduce~~operations. The Company reduced the carrying ~~amounts~~amount of the ~~associated right-of-use assets~~ROU asset and leasehold improvements ~~accordingly.~~by $2.6 million and $1.0 million, respectively. For more information on the fair values of the ROU asset and leasehold improvements used in the impairment analysis, see Note 4, "Fair Value Measurements."

8.9. OTHER NON-CURRENT ASSETS

Other non-current assets as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 consisted of the following (in thousands):


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Deferred tax assets	Deferred tax assets	$	64,597	$	40,606	Deferred tax assets	$	139,651	$	97,426
Deferred contract costs	Deferred contract costs	23,000		16,931		Deferred contract costs	27,028		25,946
Other non-current assets	Other non-current assets	7,218		7,013		Other non-current assets	12,345		10,617
Total other non-current assets	Total other non-current assets	$	94,815	$	64,550	Total other non-current assets	$	179,024	$	133,989

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


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

9.10. CONTRACT BALANCES

The changes in the allowance for doubtful accounts during the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were as follows (in thousands):


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Balance, beginning of period	Balance, beginning of period	$	7,153	$	11,559	Balance, beginning of period	$	9,277	$	7,153
Add: provision for doubtful accounts	Add: provision for doubtful accounts	12,676		7,240		Add: provision for doubtful accounts	14,636		12,676
Less: write-offs, net of recoveries	Less: write-offs, net of recoveries	(11,143)		(9,510)		Less: write-offs, net of recoveries	(15,751)		(11,143)
Balance, end of period	Balance, end of period	$	8,686	$	9,289	Balance, end of period	$	8,162	$	8,686

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 as collection rates improved. In calculating the allowance for doubtful accounts as of June 30, ~~2022~~2023 and ~~2021,~~2022, the Company considered expectations of probable credit losses, including ~~probable credit losses~~those associated with the COVID-19 pandemic for the 2022 period, 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. The increases in the provision for doubtful accounts and write-offs, net of recoveries in the six months ended June 30, 2023, as compared to the prior-year period, were a result of the ordinary course of business, reflecting the increase in net revenue as well as higher aggregate customer delinquencies.

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

The changes in deferred revenue during the six months ended June 30, ~~2022~~2023 were as follows (in thousands):


	Six Months Ended June 30, ~~2022~~2023
Balance, beginning of period	$	~~4,156~~5,200
Less: recognition of deferred revenue from beginning balance	~~(3,508)~~(4,310)
Add: net increase in current period contract liabilities	~~5,493~~4,524
Balance, end of period	$	~~6,141~~5,414

The majority of the Company's deferred revenue balance as of June 30, ~~2022~~2023 is classified as short-term and is expected to be recognized as revenue in the subsequent three-month period ending September 30, ~~2022.~~2023. An immaterial amount of long-term deferred revenue is included in other long-term liabilities as of June 30, ~~2022.~~2023. No other contract assets or liabilities were recorded on the Company's condensed consolidated balance sheets as of June 30, ~~2022~~2023 and December 31, ~~2021.~~

2022.

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~~10.~~11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 consisted of the following (in thousands):


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Accounts payable	Accounts payable	$	17,485	$	16,127	Accounts payable	$	11,981	$	14,525
Employee-related liabilities	Employee-related liabilities	60,285		50,132		Employee-related liabilities	72,622		66,929
Accrued sales and marketing expenses		8,582		5,455

Accrued cost of revenue		7,058		9,537
Taxes payable						Taxes payable	46,233		6,218

Accrued legal settlements	Accrued legal settlements	26,011		26,037		Accrued legal settlements	15,000		26,250
Other accrued liabilities	Other accrued liabilities	13,267		12,332		Other accrued liabilities	26,035		24,028
Total accounts payable and accrued liabilities	Total accounts payable and accrued liabilities	$	132,688	$	119,620	Total accounts payable and accrued liabilities	$	171,871	$	137,950

As of June 30, ~~2022,~~2023, other accrued liabilities primarily consisted of accrued ~~costs related to unsettled share repurchases~~cost of revenue and operating expenses as well as ~~accrued general and administrative, product development and workplace costs.~~unsettled share repurchases.

~~11.~~

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12. COMMITMENTS AND CONTINGENCIES

Legal Proceedings~~—In~~

Securities Class Action and Derivative Action

On January 18, 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 (the “Securities Class Action”). ~~The complaint, which~~Following the ~~plaintiff amended on June 25, 2018, alleges violations~~Court's approval of the Securities Exchange Act of 1934, as amended, by the Company and its officers for allegedly making materially false and misleading statements regarding its business and operations on February 9, 2017. The plaintiff seeks unspecified monetary damages and other relief. On November 27, 2018, the Court granted in part and denied in part the defendants’ motion to dismiss. On October 22, 2019, the Court approved a stipulation to certify a class ~~in this action~~ and ~~on September 9, 2021, it denied~~denial of the defendants’ motion for summary ~~judgment. The case was scheduled for trial to begin on February 7, 2022. However, on December 3, 2021,~~judgment, the defendants reached ~~a preliminary~~an agreement with the plaintiff to settle this matter for $22.25 ~~million, which the Company expects to be funded by defendants’ insurers.~~million. The proposed settlement was subsequently filed with the Court, which ~~was~~ preliminarily approved ~~by the Court~~it on July 25, ~~2022, will resolve~~2022. The settlement was then funded by defendants' insurers during the three months ended September 30, 2022. The Court entered an order granting final approval to the settlement on January 27, 2023 and, on the same day, entered judgment in the Securities Class Action. The settlement resolved all claims asserted against all defendants in the Securities Class Action without any liability or wrongdoing attributed to them.

On ~~June 22,~~August 26, 2022, the Court granted ~~preliminary~~final 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~~was pending before the Court. The ~~proposed~~ settlement ~~will resolve~~resolved 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~~adopted certain corporate governance modifications and the Company ~~will receive~~received $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 ~~has agreed to pay~~paid $3.75 million of such insurance proceeds to the plaintiff’s attorneys as fees. The remaining insurance proceeds partially funded the Securities Class Action settlement.

In 2021, the Company recorded an accrual for loss contingency within accounts payable and accrued liabilities in the aggregate amount of $26.0 million, which represented the total settlement amount for both the Securities Class Action and the Derivative Action, as well as a $26.0 million receivable for loss recovery within prepaid expenses and other current assets for the anticipated insurance proceeds related to these settlements. As of December 31, 2022, following payment to the plaintiff's attorneys in the Derivative Action, the Company had $22.25 million remaining for the settlement of the Securities Class Action on its condensed consolidated balance sheets for the loss contingency accrual and loss recovery receivable. In January 2023, the Company released the remaining receivable and accrual upon the Court granting final approval of these settlements.

CIPA Action

On October 12, 2016, a putative class action lawsuit asserting claims under the California Invasion of Privacy Act was filed against the Company (the "CIPA Action") in the Superior Court of California for the County of San Francisco (the "Superior Court"), in which the plaintiff sought statutory damages and other relief based on alleged unlawful call recording. The Company filed a motion for summary judgment on the basis that it had never recorded the plaintiff, which the Superior Court granted. The plaintiff appealed and, in October 2020, the California Court of Appeal for the First District (the "Court of Appeal") reversed the decision of the Superior Court, holding that the recording of only the Company's consenting sales representatives could violate CIPA, even if the plaintiff was not recorded. The California Supreme Court subsequently denied review of the Court of Appeal's decision and the case was remanded to the Superior Court. On January 18, 2023, the Superior Court granted the plaintiffs’ motion for class certification. In February 2023, the Company filed a petition for a writ with the Court of Appeal seeking reversal of the Superior Court’s class certification decision. The Court of Appeal summarily denied the writ petition on May 25, 2023, following which the Company filed a petition with the California Supreme Court on June 2, 2023 seeking an order directing the Court of Appeal to review the merits of the Company's writ petition. On July 17, 2023, the Company reached a preliminary agreement with the plaintiffs to settle the CIPA Action for $15.0 million, which payment the Company expects to be partially funded by insurance proceeds. The proposed settlement would resolve all claims asserted against the Company in the CIPA Action without any liability or wrongdoing attributed to it. The parties are currently negotiating the definitive terms of the settlement, which will then be presented to the Superior Court for approval.

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The Company assesses, in conjunction with its legal counsel, the need to record a liability for litigation and contingencies, which it will accrue when it believes a loss is probable and the amount can be reasonably estimated. Although ~~final approval of~~ the proposed settlement ~~agreements~~terms for the ~~Securities Class~~CIPA Action ~~and the Derivative Action remains pending,~~remain to be finalized (and will also be subject to court approval), the Company believes the loss ~~for both are~~is probable and the payment ~~amounts described above, which total $26.0~~amount of $15.0 million ~~represent~~represents a reasonable ~~estimates~~estimate of loss ~~contingencies.~~contingency as of June 30, 2023. The Company ~~also believes that the anticipated insurance proceeds~~had previously recorded a $4.0 million accrual for loss contingency related to ~~each action described above,~~the CIPA Action as of December 31, 2022, which ~~also total $26.0~~it increased by $11.0 million ~~are probable and represent reasonable estimates for loss recovery. Accordingly,~~during the ~~Company recorded~~three months ended June 30, 2023, resulting in a ~~$26.0~~$15.0 million accrual for loss contingency within accounts payable and accrued liabilities on the Company's condensed consolidated balance sheet as ~~well~~of June 30, 2023. The Company also believes that its anticipated insurance proceeds of approximately $3.3 million related to the CIPA Action settlement are probable and represent a reasonable estimate for loss recovery as of June 30, 2023. Accordingly, the Company recorded a ~~$26.0~~$3.3 million receivable for loss recovery within prepaid expenses and other current assets on its condensed consolidated balance ~~sheets~~sheet as of June 30, ~~2022 and December 31, 2021.~~2023.

Other Legal Proceedings

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—

On April 28, 2023, the Company entered into a Revolving Credit and Guaranty Agreement with certain lenders and JPMorgan Chase Bank, N.A., as administrative and collateral agent, which provides for a five-year $125.0 million senior secured revolving credit facility (the "2023 credit facility"). The ~~Company is a party to a Credit Agreement~~2023 credit facility replaced the Company’s previous $75.0 million revolving credit facility entered into on May 5, 2020 with Wells Fargo Bank, ~~National Association~~N.A. (the ~~"Credit Agreement"~~“2020 credit facility”), which ~~provides for a three-year, $75.0 million senior unsecured revolving~~terminated concurrently with the establishment of the 2023 credit facility. The 2023 credit facility ~~including~~includes a letter of credit sub-limit of $25.0 ~~million.~~ million, a bilateral letter of credit facility of $25.0 million and an accordion option, which, if exercised, would allow the Company to increase the aggregate commitments by up to $250.0 million, plus additional amounts if the Company is able to satisfy a leverage test, subject to certain conditions. The commitments under the 2023 credit facility expire on April 28, 2028.

Loans under the 2023 credit facility bear interest, at the Company’s election, at either (a) an adjusted term Secured Overnight Financing Rate plus 0.10% plus a margin of 1.25% - 1.50%, depending on the Company’s total leverage ratio, or (b) an alternative base rate plus a margin of 0.25% - 0.50%, depending on the Company’s total leverage ratio. The Company is required to pay a commitment fee on the undrawn portion of the aggregate commitments that accrues at 0.20% - 0.25% per annum, depending on the Company’s total leverage ratio, as well as a letter of credit fee on any outstanding letters of credit that accrues at 1.25% - 1.50% per annum, depending on the Company’s total leverage ratio.

The 2023 credit facility contains customary conditions to borrowing, events of default and covenants, including covenants that restrict the Company’s ability to incur indebtedness, grant liens, make distributions, pay dividends, repurchase shares, make investments, or engage in transactions with the Company’s affiliates, in each case subject to certain exceptions. The 2023 credit facility also requires the Company to maintain a total leverage ratio of no greater than 3.75 to 1.00, subject to an increase up to 4.25 to 1.00 for a certain period following significant acquisitions, and an interest coverage ratio of no less than 3.00 to 1.00. The obligations under the 2023 credit facility are secured by liens on substantially all of the Company’s domestic assets, including certain domestic intellectual property assets and the equity of its domestic subsidiaries, as well as a portion of the equity interests the Company holds directly in its foreign subsidiaries.

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As of June 30, ~~2022,~~2023, the Company had ~~$20.5~~$17.0 million of letters of credit outstanding under the 2023 credit facility sub-limit, which were moved from the 2020 credit facility. The letters of credit are primarily related to lease agreements for certain office locations ~~which~~and are required to be maintained and issued to the landlords of each facility. No loans were outstanding under the 2023 credit facility and ~~$54.5 million remained available under~~ the ~~revolving credit facility as of this date. The~~ Company was in compliance with all conditions and covenants ~~associated with the credit facility and there were no loans outstanding under the Credit Agreement~~thereunder as of June 30, ~~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.~~2023.

~~12.~~13. STOCKHOLDERS’ EQUITY

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


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
		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	71,226	200,000	72,171	Common stock, $0.000001 par value	200,000	69,287	200,000	69,797
Undesignated preferred stock	Undesignated preferred stock	10,000	—	10,000	—	Undesignated preferred stock	10,000	—	10,000	—

Stock Repurchase Program

As of June 30, ~~2022,~~2023, the Company's board of directors had authorized it to repurchase up to an aggregate of ~~$1.2~~$1.45 billion of its outstanding common stock, ~~$131.7~~$181.7 million of which remained available as of June 30, ~~2022.~~2023. 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, 2023, the Company repurchased on the open market and subsequently retired 3,264,260 shares for an aggregate purchase price of $100.0 million. Although no shares were held in treasury stock as of June 30, 2023, an immaterial balance that remained was comprised of excise tax under the Inflation Reduction Act of 2022 on stock repurchases, net of shares issued, during the six-month period. The Company expects to pay the excise tax in early 2024.

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.

Equity Incentive Plans

Stock Options

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

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A summary of stock option activity for the six months ended June 30, ~~2022~~2023 is as follows:

Number of Shares (in thousands) Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2021 3,979 $ 32.59 4.4 $ 24,580
Granted 10 31.42
Exercised (88) 21.80
Canceled (20) 36.86
Outstanding at June 30, 2022 3,881 $ 32.82 3.8 $ 9,017
Options vested and exercisable at June 30, 2022 3,673 $ 32.69 3.5 $ 9,017


	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, 2022	3,543	$	32.81	3.6	$	7,507

Exercised	(716)	21.73
Canceled	(83)	34.56
Outstanding at June 30, 2023	2,744	$	35.64	4.0	$	10,671
Options vested and exercisable at June 30, 2023	2,681	$	35.66	3.9	$	10,480

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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 ~~$0.6~~$0.1 million and ~~$0.7~~$0.6 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$0.9~~$5.5 million and ~~$11.8~~$0.9 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

There were no options granted during the six months ended June 30, 2023. 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.~~

As of June 30, ~~2022,~~2023, total unrecognized compensation costs related to nonvested stock options were approximately ~~$3.1~~$1.0 million, which the Company expects to recognize over a weighted-average time period of 1.7 years.

RSUs

RSUs generally vest over a four-year period, on one of 2two schedules: (a) 25% vesting at the end of one year and the remaining vesting quarterly or annually thereafter or (b) ratably on a quarterly basis.

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

The Company granted PRSUs subject to market conditions in ~~2019~~2022 and ~~2022.~~2023. The shares underlying each of these PRSU award granted in 2019 will be eligible to vest only if the average closing price of the Company's common stock equals or exceeds $45.3125 over any 60-day trading period during the four years following the grant date of February 7, 2019. If this market condition is met, the shares underlying each PRSU award will vest according to the Time-Based Vesting Schedule. Any shares subject to the PRSUs that have met the Time-Based Vesting Schedule at the time the market condition is achieved will fully vest as of such date; thereafter, any remaining nonvested shares subject to the PRSUs will continue vesting solely according to the Time-Based Vesting Schedule, subject to the applicable employee's continued service as of each such vesting date.

~~The shares underlying each PRSU award granted in 2022 that is subject to market conditions~~awards 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~~st of the year of grant and ending ~~December 31, 2024.~~three years later (the "Performance Period"). 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~~Performance Period compared to the average closing price over the first 20 trading days of the ~~performance period.~~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 and 2026, respectively, or, if certification occurs following such date, March 15, 2025 and 2026, respectively, for the 2022 and 2023 grants, subject to the applicable employee's continued service as of such vesting ~~date.~~dates.

For PRSUs subject to performance goals, a percentage of the target number of shares, ranging from zero to 200%, will become eligible to vest based on the Company's level of achievement of certain financial targets, subject to the Time-Based Vesting Schedule. The shares subject to performance goals become eligible to vest once the achievement against the financial

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targets is known, which will be no later than March of the year following 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, ~~2022~~2023 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, ~~2022~~2023 for the PRSUs that it expected to vest.

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As the PRSU activity during the six months ended June 30, ~~2022~~2023 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, ~~2022~~2023 is as 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, 2021		10,016	$	32.39
Nonvested at December 31, 2022					Nonvested at December 31, 2022	9,962	$	33.48
Granted	Granted	5,489	35.62		Granted	6,207	29.42
Vested(1)	Vested(1)	(2,543)	33.62		Vested(1)	(2,873)	31.61
Canceled	Canceled	(1,395)	33.21		Canceled	(718)	32.01
Nonvested at June 30, 2022		11,567	$	33.55
Nonvested at June 30, 2023(2)					Nonvested at June 30, 2023(2)	12,578	$	31.99

(1) Includes ~~1,007,743~~1,211,815 shares that vested but were not issued due to the Company's use of net share ~~settlement~~withholding for payment of employee taxes.

(2) Includes 880,856 PRSUs.

The aggregate fair value as of the vest date of RSUs and PRSUs that vested during the six months ended June 30, 2023 and 2022 ~~and 2021~~ was ~~$81.4~~$91.2 million and ~~$88.7~~$81.4 million, respectively. As of June 30, ~~2022,~~2023, the Company had approximately ~~$363.8~~$377.0 million of unrecognized stock-based compensation expense related to RSUs and PRSUs, which it expects to recognize over the remaining weighted-average vesting period of approximately ~~2.7~~2.6 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 six-month 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 379,656 and 380,332 shares purchased by employees under the ESPP at a weighted-average purchase price per share of $28.70 and $28.69 during the three and six months ended June 30, 2023, respectively. There were 364,436 shares purchased by employees under the ESPP at a weighted-average purchase price per share of $25.00 induring 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.~~ The Company recognized stock-based compensation expense related to the ESPP of $0.9 million and $0.7 million ~~in each of~~during the three months ended June 30, 2023 and 2022, ~~and 2021~~respectively. The Company recognized stock-based compensation expense related to the ESPP of $1.8 million and $1.5 million ~~in each of~~during the six months ended June 30, 2023 and 2022, ~~and 2021.~~

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respectively.

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,
		2022		2021		2022		2021			2023		2022		2023		2022
Cost of revenue	Cost of revenue	$	1,248	$	1,094	$	2,553	$	2,202	Cost of revenue	$	1,346	$	1,248	$	2,728	$	2,553
Sales and marketing	Sales and marketing	8,200		8,441		16,855		16,838		Sales and marketing	8,607		8,200		17,721		16,855
Product development	Product development	22,304		20,674		45,429		41,427		Product development	24,974		22,304		50,841		45,429
General and administrative	General and administrative	8,309		10,650		16,284		19,637		General and administrative	8,653		8,309		18,547		16,284
Total stock-based compensation recorded to income (loss) before income taxes		40,061		40,859		81,121		80,104
Total stock-based compensation recorded to income before income taxes										Total stock-based compensation recorded to income before income taxes	43,580		40,061		89,837		81,121
Benefit from income taxes	Benefit from income taxes	(8,819)		(9,501)		(17,957)		(19,566)		Benefit from income taxes	(9,271)		(8,819)		(18,875)		(17,957)
Total stock-based compensation recorded to net income (loss)		$	31,242	$	31,358	$	63,164	$	60,538
Total stock-based compensation recorded to net income attributable to common stockholders										Total stock-based compensation recorded to net income attributable to common stockholders	$	34,309	$	31,242	$	70,962	$	63,164

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The Company capitalized ~~$2.3~~$2.4 million and ~~$2.8~~$2.3 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, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$4.8~~$5.3 million and ~~$5.5~~$4.8 million in the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

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

Other income, net for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 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,
		2022		2021		2022		2021			2023		2022		2023		2022
Interest income (expense), net		$	529	$	(34)	$	551	$	(51)
Transaction (loss) gain on foreign exchange, net		(94)		11		(23)		268
Interest income, net										Interest income, net	$	4,656	$	529	$	8,663	$	551
Transaction gain (loss) on foreign exchange, net										Transaction gain (loss) on foreign exchange, net	101		(94)		31		(23)
Other non-operating income, net	Other non-operating income, net	892		565		1,728		1,030		Other non-operating income, net	1,141		892		2,416		1,728
Other income, net	Other income, net	$	1,327	$	542	$	2,256	$	1,247	Other income, net	$	5,898	$	1,327	$	11,110	$	2,256

~~14.~~15. INCOME TAXES

The Company is subject to income taxes in the United States as well as other tax jurisdictions in which it conducts business. Earnings from non-U.S. activities are subject to local country income taxes. The provision for income taxes for the six months ended June 30, 2023 was $9.7 million, which was due to $12.5 million of U.S. federal, state and foreign income tax expense, partially offset by $2.8 million of net discrete tax benefit primarily related to a one-time litigation settlement expense in connection with the preliminary settlement of the CIPA Action, as detailed in Note 12, "Commitment and Contingencies." 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~~partially offset by $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.

Accounting for income taxes for interim periods generally requires the provision for income taxes to be determined by applying an estimate of the annual effective tax rate for the full fiscal year to income or loss before income taxes, excluding unusual or infrequently occurring discrete items, for the reporting period. For the three and six months ended June 30, 2023 and 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.~~

As of June 30, ~~2022,~~2023, the total amount of gross unrecognized tax benefits ~~was $57.5~~was $63.9 million, ~~$29.3~~$30.3 million ofof 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, ~~2022,~~2023, the Company recorded an immaterial amount of interest and penalties.

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As of June 30, ~~2022,~~2023, the Company estimated that it had accumulated undistributed earnings generated by its foreign subsidiaries of approximately ~~$12.9~~ $21.1 million. ~~Any~~Any taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of the Company's foreign investments would generally be limited to foreign and state taxes. The Company has not recognized a deferred tax liability related to unremitted foreign earnings, as it intends to indefinitely reinvest these earnings, and expects future U.S. cash generation to be sufficient to meet future U.S. cash needs.

In addition, the Company is subject to the continuous examination of its income tax returns by the Internal Revenue Service and other tax authorities. The Company’s federal and state income tax returns for tax years subsequent to 2003 ~~remain~~remain open to examination. In the Company’s foreign jurisdictions — Canada, Germany, Ireland and the United Kingdom — the tax years subsequent to ~~2016~~ 2017 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, ~~2022,~~2023, 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~~ will not be reduced ~~by $0.9 million over~~within the next 12 months.

~~15.~~

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16. NET INCOME ~~(LOSS)~~ PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS

Basic net income (loss) per share attributable to common stockholders is computed using the weighted-average number of outstanding shares of common stock during the period. Diluted net income (loss) per share attributable to common stockholders is computed using the weighted-average number of outstanding shares of common stock and ~~when~~the effect of potentially dilutive ~~potential shares of common stock~~securities outstanding during the period. ~~Potential common shares consist of the incremental shares of common~~Potentially dilutive securities include 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~~ESPP shares. If dilutive, such potentially dilutive securities are reflected in net income (loss) per share attributable to common stockholders using the ~~ESPP.~~treasury stock method.

The following ~~table presents~~tables present the calculation of basic and diluted net income ~~(loss)~~ per share attributable to common stockholders for the periods presented (in thousands, except per share data):

Three Months Ended
June 30, Six Months Ended
June 30,
2022 2021 2022 2021
Basic net income (loss) per share:
Net income (loss) $ 8,009 $ 4,212 $ 7,094 $ (1,584)
Shares used in computation:
Weighted-average common shares outstanding 71,217 74,807 71,427 75,025
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,
	2023		2022		2023		2022
Basic net income per share:
Net income attributable to common stockholders	$	14,729	$	8,009	$	13,551	$	7,094
Shares used in computation:
Weighted-average common shares outstanding	69,256		71,217		69,537		71,427
Basic net income per share attributable to common stockholders:	$	0.21	$	0.11	$	0.19	$	0.10

Three Months Ended
June 30, Six Months Ended
June 30,
2022 2021 2022 2021
Diluted net income (loss) per share:
Net income (loss) $ 8,009 $ 4,212 $ 7,094 $ (1,584)
Shares used in computation:
    Weighted-average common shares outstanding 71,217 74,807 71,427 75,025
    Stock options 445 877 505 —
    RSUs 1,163 3,291 1,635 —
    ESPP 10 8 5 —
        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 $ 0.11 $ 0.05 $ 0.10 $ (0.02)

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	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Diluted net income per share:
Net income attributable to common stockholders	$	14,729	$	8,009	$	13,551	$	7,094
Shares used in computation:
Weighted-average common shares outstanding	69,256		71,217		69,537		71,427
Stock options	189		445		194		505
RSUs	1,783		1,163		1,909		1,635
ESPP	10		10		5		5
Number of shares used in diluted calculation	71,238		72,835		71,645		73,572
Diluted net income per share attributable to common stockholders:	$	0.21	$	0.11	$	0.19	$	0.10

The following stock-based instruments were excluded from the calculation of diluted net income ~~(loss)~~ per share attributable to common stockholders 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,
		2022	2021	2022	2021		2023	2022	2023	2022
Stock options	Stock options	2,444	1,497	2,447	4,109	Stock options	2,140	2,444	2,230	2,447
RSUs	RSUs	7,958	145	6,734	10,998	RSUs	4,764	7,958	4,147	6,734
ESPP		—	—	—	41

~~16.~~17. 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,
2022 2021 2022 2021
Net revenue by product:
Advertising revenue by category(1):
Services $ 174,298 $ 152,522 $ 334,561 $ 293,209
Restaurants, Retail & Other 109,220 92,439 212,194 173,739
Advertising 283,518 244,961 546,755 466,948
Transactions 3,940 3,525 7,120 7,329
Other 11,426 8,702 21,637 15,007
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.


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net revenue by product:
Advertising revenue by category:
Services	$	200,274	$	174,298	$	383,794	$	334,561
Restaurants, Retail & Other	121,698		109,220		235,321		212,194
Advertising	321,972		283,518		619,115		546,755
Transactions	3,380		3,940		6,936		7,120
Other	11,774		11,426		23,513		21,637
Total net revenue	$	337,126	$	298,884	$	649,564	$	575,512

During the three and six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, 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 $0.1 million and $0.7 million during the three months ended June 30, 2022 and 2021, respectively, and $0.4 million and $2.9 million during the six months ended June 30, 2022 and 2021, respectively. These incentives were primarily in the form of waived subscription and 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 accordingly.~~

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,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
United States	United States	$	296,876	$	254,954	$	571,520	$	484,949	United States	$	334,713	$	296,876	$	644,935	$	571,520
All other countries	All other countries	2,008		2,234		3,992		4,335		All other countries	2,413		2,008		4,629		3,992
Total net revenue	Total net revenue	$	298,884	$	257,188	$	575,512	$	489,284	Total net revenue	$	337,126	$	298,884	$	649,564	$	575,512

Long-Lived Assets

The following table presents the Company’s long-lived assets by major geographic region ~~for the periods presented~~as of June 30, 2023 and December 31, 2022 (in thousands):


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
United States	United States	$	77,367	$	79,027	United States	$	68,638	$	72,325
All other countries	All other countries	4,845		4,830		All other countries	6,950		4,899
Total long-lived assets	Total long-lived assets	$	82,212	$	83,857	Total long-lived assets	$	75,588	$	77,224

2325

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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~~best-known internet brands in the United States, Yelp is a trusted local resource for consumers and a partner in success for businesses of all sizes. Consumers trust us for our more than ~~220~~240 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, ~~2022,~~2023, our net revenue was ~~$298.9~~$337.1 million, up ~~16%~~13% from the three months ended June 30, ~~2021,~~2022, and we recorded net income of ~~$8.0~~$14.7 million and adjusted EBITDA of ~~$67.3~~$83.9 million. In the six months ended June 30, ~~2022,~~2023, our net revenue was ~~$575.5~~$649.6 million, ~~which represented an increase of 18%~~up 13% from the six months ended June 30, ~~2021,~~2022, and we recorded net income of ~~$7.1~~$13.6 million and adjusted EBITDA of ~~$115.4~~$138.0 million. For information on how we define and calculate adjusted EBITDA, and a reconciliation of this non-GAAP financial measure to net income, ~~(loss),~~ see "Non-GAAP Financial Measures" below.

In the second quarter of ~~2022,~~2023, our strategic investments in product and marketing continued to drive further progress on our revenue growth initiatives:

•Grow quality leads and monetization in Services. Our ~~efforts~~ability to ~~create a differentiated~~drive quality connections between our high-intent audience and service professionals contributed to 15% year-over-year revenue growth in our Services categories. In the second quarter, we remained focused on differentiating the product experience in ~~Services drove a 14% year-over-year increase~~these categories through further improvements to the Request-a-Quote flow, including by experimenting with new ways to enable consumers to opt in ~~advertising revenue~~to receiving calls and texts from Services businesses through masked phone numbers to maintain their privacy. Although consumer demand remained relatively muted 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,quarter, with Request-a-Quote requests ~~decreased by~~down approximately 10% year over year, ~~though they remained above pre-pandemic levels. We continued working to drive~~we drove more ~~high-quality leads~~ad clicks to Services ~~businesses~~advertisers than in the ~~second quarter, including through the launch~~prior-year period as a result of ~~Request-a-Call, a product designed~~improvements 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.~~our matching technology.

•Drive sales through the most efficient channels. Revenue from our Self-serve and Multi-location channels ~~reached 49%~~together comprised the majority of our advertising revenue for the first time in the second quarter. ~~Performance~~Efficient performance marketing and product improvements to the claim and ads purchase flows ~~again~~continued to drive strong Self-serve customer acquisition. We also improved the experience for existing advertisers by providing additional in-product recommendations. These efforts contributed to ~~record Self-serve customer acquisition, which, together with continued strength~~an approximately 25% year-over-year increase 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 revenuerevenue. Revenue from our Multi-location channel ~~as well as record paying advertising locations in the second quarter, which increased 30%~~grew by approximately 15% both sequentially and year over year and 8% year over year, respectively. To support continued growth in this channel, we further enhanced our multi-location products in the second quarter through new themed ads designed to drive takeout orders and the addition of a new attribution partner.year.

•Deliver more value to advertisers. Amid a volatile macroeconomic environment, ad clicks 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 CPC remained consistent with the first quarter, it increased by 32% year over year. In the second quarter, we delivered value to advertisers through high-quality ad clicks. We continued to ~~focus on improving~~enhance our ad system and ad formats, including by optimizing our ad system to ~~match consumers with~~give new and lightly reviewed businesses more exposure to leads and improving the ~~right advertisers at the right time;~~user experience of ads on our ~~efforts in this area drove greater value~~mobile site. We also rolled out an update to our ~~advertisers in~~ad system that leverages neural networks to more accurately predict consumer engagement and optimize ad placement for a given consumer. This enhancement, together with other upgrades over the ~~form~~past year utilizing neural networks, has improved the performance of ~~higher performing clicks in the first half of 2022 compared to 2021, as reflected in the greater average percentage of~~our ad ~~clicks converted to leads.~~system.

•Enhance the consumer experience. ~~With an increased focus on~~We continued improving the consumer experience ~~we are investing~~through the use of advanced technologies in ~~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. We experimented with a new ranking model for the home feed that utilizes neural networks to determine the most useful content to display to consumers, which drove greater engagement. We have seen strong adoption of our new video functionality since we incorporated it into the review flow in the first quarter, with submissions more than doubling from the fourth quarter. We also began displaying a numerical rating out to one decimal place in addition to our traditional star rating for each business page on Yelp, which we ~~worked~~believe makes it easier for consumers to ~~improve search matching and relevancy on our Android~~compare multiple businesses.

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~~app, which led~~Our performance-based ad products and high-intent audience continued to ~~an increase in Android engagement per session~~generate robust advertiser demand in the second quarter. We also continue to invest in expanding our trusted content, including by reducing friction in the review writing process and prompting users to 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 adadvertising platform and ~~rich first-party data~~product-led strategy position us well ~~for~~in the ~~second half of the year:~~current uncertain macroeconomic environment and we expect ~~both~~ net revenue ~~and adjusted EBITDA~~ to 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 and Average CPC

The amount of revenue we generate from our pay-for-performance advertising products is determined by the number of ad clicks we deliver to advertisers and the CPCs we charge for those 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 ~~submissions.~~submissions, among others. 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~~activity 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,
2022 2021
Ad Clicks (11)% 87%

Average CPC

~~We define average CPC~~ is calculated 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~~represents the average amount we charge advertisers for each ad click.

We believe that ad clicks ~~provides~~and average CPC together reflect one of the most significant dynamics affecting our advertising revenue performance: the interplay of advertiser demand and consumer activity. At the level of an auction for an individual ad click, advertiser demand — consisting of advertiser budgets and the number of advertisers competing to purchase the ad click — intersects with the supply of consumer activity — consisting of the predicted levels of relevant consumer traffic and engagement — to determine CPC, with higher advertiser demand putting upward pressure on the CPC and higher consumer activity putting downward pressure on the CPC. In aggregate, advertiser demand consists of the number of business locations advertising with us (which we refer to as paying advertising locations, as discussed below) and the aggregate budget they allocate to purchasing our advertising products. Aggregate monetizable consumer activity depends on the levels of consumer traffic and engagement with our ads, the numbers of locations where we can display ads and other monetizable features, and our click-through rate, which is the ratio of ad clicks to the number of times the ads were displayed to consumers. The relative strengths of these factors in aggregate are reflected in average CPC.

Ad clicks and average CPC also provide 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 positive change in ad clicks for a given ~~three-month~~ period combined with lower growth or a negative change in 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,~~Conversely, growth in average CPC paired with a negative or lower growth rate in ad clicks ~~increased from~~would indicate we charged more without delivering more ad clicks; we would expect this to have a negative impact on retention unless we are able to increase 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~~value we deliver through higher performing 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 macroeconomic~~ ~~pressures~~ ~~that we expect to continue to cause volatility in these metrics in the near term.~~

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clicks.

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

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


	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Ad Clicks	—%	(11)%	—%	(4)%
Average CPC	14%	32%	14%	25%

In the three and six months ended June 30, 2023, advertising revenue grew 14% and 13% year over year, respectively, despite ad clicks remaining flat over the same periods, primarily as a result of increases in average CPC due to strong advertiser demand. We believe this was because we continued to deliver more value to advertisers in the form of higher performing clicks, rather than simply a greater number of clicks as in certain previous periods.

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Although both advertiser demand and consumer activity have been subject to complex macroeconomic pressures that have caused volatility in ad clicks and average CPC in recent quarters, the quarter-to-quarter fluctuations in these metrics stabilized from the first to the second quarter. Ad clicks were flat in the second quarter, compared to a 1% increase in the first quarter of 2023, and average CPC increased by 14% year over year in both quarters. While macroeconomic challenges may continue to cause volatility in the near term, we believe this moderation from quarter-to-quarter fluctuations in 2022 reflects a normalizing macro environment.

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.~~RR&O. Our Services categories consist of home, local, auto, professional, pets, events, real estate and financial services. Our ~~Restaurants, Retail & Other~~RR&O categories consist of restaurants, shopping, beauty & fitness, health and other.

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 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
		2022		2021			2022			2021						2023				2022				2023				2022
Services	Services	$	174,298	$	152,522		14%			$	334,561			$	293,209				14%		Services	$	200,274		$		174,298			15%	$	383,794	$	334,561			15%
Restaurants, Retail & Other	Restaurants, Retail & Other	109,220		92,439		18%		212,194				173,739					22%	Restaurants, Retail & Other	121,698				109,220			11%		235,321			212,194					11%
Total Advertising Revenue	Total Advertising Revenue	$	283,518	$	244,961	16%		$	546,755			$	466,948				17%	Total Advertising Revenue	$	321,972			$	283,518		14%		$	619,115		$	546,755				13%

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~~three- or six-month period. We also provide a breakdown of paying advertising locations between our Services categories and ~~Restaurants, Retail & Other~~RR&O 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~~impacts of COVID-19, inflationary pressures and ~~its variants as well as~~ labor and supply chain challenges, have had a predominant negative impact on ~~Restaurants, Retail & Other~~RR&O 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 indicated (in thousands, except percentages):


		Three Months Ended June 30,		% Change		Three Months Ended June 30,		% Change	Six Months Ended June 30,		% Change
		2022	2021			2023	2022		2023	2022
Services	Services	232	234	(1)%	Services	238	232	3%	238	227	5%
Restaurants, Retail & Other	Restaurants, Retail & Other	337	294	15%	Restaurants, Retail & Other	325	337	(4)%	320	330	(3)%
Total Paying Advertising Locations	Total Paying Advertising Locations	569	528	8%	Total Paying Advertising Locations	563	569	(1)%	558	557	—%

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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 condensed 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 macroeconomic conditions and 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 and income taxes 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 ~~2022~~2023 or any future period.


		Three Months Ended June 30,								Six Months Ended June 30,									Three Months Ended June 30,								Six Months Ended June 30,
		2022		2021		$ Change		% Change(1)		2022		2021		$ Change		% Change(1)			2023		2022		$ Change		% Change(1)		2023		2022		$ Change		% Change(1)
Condensed 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(3):
Advertising revenue by category:																		Advertising revenue by category:
Services	Services	$	174,298	$	152,522	$	21,776	14	%	$	334,561	$	293,209	$	41,352	14	%	Services	$	200,274	$	174,298	$	25,976	15	%	$	383,794	$	334,561	$	49,233	15	%
Restaurants, Retail & Other	Restaurants, Retail & Other	109,220		92,439		16,781		18	%	212,194		173,739		38,455		22	%	Restaurants, Retail & Other	121,698		109,220		12,478		11	%	235,321		212,194		23,127		11	%
Advertising	Advertising	283,518		244,961		38,557		16	%	546,755		466,948		79,807		17	%	Advertising	321,972		283,518		38,454		14	%	619,115		546,755		72,360		13	%
Transactions	Transactions	3,940		3,525		415		12	%	7,120		7,329		(209)		(3)	%	Transactions	3,380		3,940		(560)		(14)	%	6,936		7,120		(184)		(3)	%
Other	Other	11,426		8,702		2,724		31	%	21,637		15,007		6,630		44	%	Other	11,774		11,426		348		3	%	23,513		21,637		1,876		9	%
Total net revenue	Total net revenue	298,884		257,188		41,696		16	%	575,512		489,284		86,228		18	%	Total net revenue	337,126		298,884		38,242		13	%	649,564		575,512		74,052		13	%
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)	26,988		17,993		8,995		50	%	50,417		32,867		17,550		53	%	Cost of revenue (exclusive of depreciation and amortization shown separately below)	30,184		26,988		3,196		12	%	56,243		50,417		5,826		12	%
Sales and marketing	Sales and marketing	129,412		113,641		15,771		14	%	255,509		226,550		28,959		13	%	Sales and marketing	139,150		129,412		9,738		8	%	286,605		255,509		31,096		12	%
Product development	Product development	76,848		68,695		8,153		12	%	157,533		136,687		20,846		15	%	Product development	85,030		76,848		8,182		11	%	173,227		157,533		15,694		10	%
General and administrative	General and administrative	38,377		45,095		(6,718)		(15)	%	77,760		76,956		804		1	%	General and administrative	53,405		38,377		15,028		39	%	99,914		77,760		22,154		28	%
Depreciation and amortization	Depreciation and amortization	11,258		12,833		(1,575)		(12)	%	22,748		25,916		(3,168)		(12)	%	Depreciation and amortization	10,615		11,258		(643)		(6)	%	21,420		22,748		(1,328)		(6)	%
Restructuring		—		12		(12)		(100)	%	—		32		(32)		(100)	%

Total costs and expenses	Total costs and expenses	282,883		258,269		24,614		10	%	563,967		499,008		64,959		13	%	Total costs and expenses	318,384		282,883		35,501		13	%	637,409		563,967		73,442		13	%
Income (loss) from operations		16,001		(1,081)		17,082		NM(2)		11,545		(9,724)		21,269		(219)	%
Income from operations																		Income from operations	18,742		16,001		2,741		17	%	12,155		11,545		610		5	%
Other income, net	Other income, net	1,327		542		785		145	%	2,256		1,247		1,009		81	%	Other income, net	5,898		1,327		4,571		344	%	11,110		2,256		8,854		392	%
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		9,319		(4,751)		14,070		(296)	%	6,707		(6,893)		13,600		(197)	%
Net income (loss)		$	8,009	$	4,212	$	3,797	90	%	$	7,094	$	(1,584)	$	8,678	(548)	%
Income before income taxes																		Income before income taxes	24,640		17,328		7,312		42	%	23,265		13,801		9,464		69	%
Provision for income taxes																		Provision for income taxes	9,911		9,319		592		6	%	9,714		6,707		3,007		45	%
Net income attributable to common stockholders																		Net income attributable to common stockholders	$	14,729	$	8,009	$	6,720	84	%	$	13,551	$	7,094	$	6,457	91	%

(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, ~~2022~~2023 and ~~2021~~2022

Net Revenue

Advertising. We generate advertising revenue from the sale of our advertising products — including enhanced ~~listing~~business pages and ~~performance and impression-based~~performance-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

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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.~~RR&O.

Advertising revenue for the three and six months ended June 30, ~~2022~~2023 increased ~~compared to~~14% and 13% year over year, respectively, primarily as a result of the ~~prior-year~~14% year-over-year increase in average CPC in each period, despite ad clicks remaining flat over the same periods, ~~primarily due to~~as discussed above. The average CPC increases were the result of interrelated factors including 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 were primarily drivenadvertiser demand, the impact of which was partially offset by ~~growth in our home services category. The increases in revenue from Restaurants, Retail & Other businesses were primarily attributable to growth~~declines in paying advertising ~~locations.~~

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locations for RR&O businesses.

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~~place food ~~ordering~~orders for pickup 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.

Transactions revenue for the three and six months ended June 30, ~~2022 increased~~2023 decreased by immaterial amounts compared to the prior-year ~~period~~periods primarily due to decreases in the volume of food takeout and delivery orders compared to the prior-year periods. For the six months ended June 30, 2023, the decrease was partially offset by 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. This decrease was partially offset by the increase in the per-order transaction fee we receive from Grubhub.

Other Revenue. We generate revenue through our subscription services, including our Yelp ~~Reservations and Yelp~~ Guest Manager ~~products.~~product. We also generate revenue through our Yelp ~~Knowledge~~Fusion and Yelp ~~Fusion~~Knowledge 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, ~~2022~~2023 increased compared to the prior-year periods primarily reflecting higher revenue from the continued growth of our Yelp Fusion program. ~~The increases also reflect lower COVID-19 relief incentives — mainly in the form of waived subscription fees — for our subscription product customers in the current-year periods.~~

Trends and Uncertainties of Net Revenue. Net revenue increased in the three months ended June 30, ~~2022~~2023 compared to the three months ended March 31, ~~2022~~2023 due to higher average CPC as a result of increased advertiser demand and the continued execution of our strategic initiatives. ~~Based~~Despite continued macroeconomic uncertainties and their impacts on ~~continued strength in advertiser demand,~~consumer behavior, we expect our strategic initiatives to contribute to our business momentum and anticipate net revenue will increase sequentially in the three months ending September 30, 2022 to increase from the second quarter of 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.2023.

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, ~~2022~~2023 increased compared to the prior-year periods, primarily due to:

•increases in advertising fulfillment costs of ~~$3.8~~$2.0 million and ~~$7.0~~$3.2 million, respectively, 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~~Audiences;

•increases in merchant credit card fees of ~~$0.9~~$0.6 million and ~~$1.8~~$1.4 million, respectively, ~~primarily~~ due to a higher volume of transactions associated with the increase in advertising ~~revenue.~~revenue; and

•increases in website infrastructure expense of $0.5 million and $1.0 million, respectively, as a result of investments in maintaining and improving our infrastructure.

We expect cost of revenue to increase on an absolute dollar basis in ~~2022~~2023 compared to ~~2021.~~2022.

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, ~~2022~~2023 increased compared to the prior-year periods, primarily due ~~to:~~

•to increases of ~~$12.0~~$16.3 million and ~~$19.5~~$38.6 million, respectively, in employee costs ~~due to~~resulting from higher average sales headcount as ~~compared with~~well as increased productivity of our Local sales team.

The increases during the ~~prior-year periods;~~three- and six- month periods were partially offset by:

•~~increases~~decreases in marketing ~~and advertising costs~~spend of ~~$5.7~~$5.3 million and ~~$14.0~~$4.8 million, respectively, primarily ~~reflecting our investment in~~for consumer ~~marketing.~~marketing; and

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~~These increases were partially offset by~~ •decreases in ~~allocated~~ workplace operating costs of ~~$1.9~~$1.3 million and ~~$4.5~~2.7 million, respectively, ~~from~~due to reductions in our leased office space.

We expect sales and marketing expenses to ~~continue to~~ increase in ~~2022~~2023 compared to ~~2021~~2022 as we ~~hire across~~maintain the headcount on our sales and marketing ~~teams and invest in marketing initiatives.~~teams. However, we expect sales and marketing expenses to decrease as a percentage of net revenue in ~~2022~~2023 compared to ~~2021.~~2022.

Product Development. Our product development expenses primarily consist of employee costs (including bonuses and 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, ~~2022~~2023 increased compared to the prior-year periods primarily due to increases in employee costs of ~~$9.1~~$7.7 million and ~~$22.2~~$15.2 million, respectively, ~~which include bonuses and stock-based compensation,~~ as a result of higher average headcount.

We expect product development expenses to increase in ~~2022~~2023 compared to ~~2021~~2022 as we ~~expand~~maintain our ~~product and engineering teams and invest~~headcount to support our product ~~initiatives, but decrease~~initiatives. We expect product development expenses as a percentage of net revenue ~~as our distributed operations and growth strategy provide leverage.~~to remain relatively consistent in 2023 compared to 2022.

General and Administrative. Our general and administrative expenses primarily consist of employee costs (including bonuses and 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 allocated workplace and other supporting overhead costs.

General and administrative expenses for the three and six months ended June 30, ~~2022 decreased~~2023 increased compared to the prior-year ~~period primarily~~periods due ~~to impairment charges~~to:

•a one-time litigation settlement expense of $11.0 million incurred in the ~~prior-year period~~current-year periods in connection with the preliminary settlement of ~~$11.2 million related~~a legal case (see Note 12 , "Commitments and Contingencies," of the Notes to ~~the right-of-use assets and leasehold improvements~~Condensed Consolidated Financial Statements included under Part I, Item 1 in this Quarterly Report for office space that was subleased, which did not recur in the 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 increasefurther detail);

•increases in our provision for doubtful accounts ~~as a result~~ of ~~the increase~~$2.7 million and $2.0 million, respectively, due to increases in advertising revenue and the release of a higher amount of ~~COVID-19-related~~ bad debt reserves in the ~~prior year.~~prior-year periods; and

~~General~~•increases in employee costs of $1.9 million and ~~administrative expenses for~~$7.1 million, respectively, resulting from higher average headcount.

For the ~~six months ended June 30, 2022 remained relatively consistent~~six-month period, the increase compared to the prior-year ~~period. An increase in employee costs of $6.5 million resulting from higher average headcount and~~period was also attributable to an increase in our provision for doubtful accounts of $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~~of $3.6 million incurred during the current-year ~~period.~~period related to the abandonment of certain office space in San Francisco. See Note 8, "Leases," of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 in this Quarterly Report for further detail.

We expect general and administrative expenses to increase in ~~2022~~2023 compared to ~~2021~~2022 to support the continued growth of our business, including in part as a result of the approximately $10.5 million impairment charge we expect to incur in the third quarter related to the sublease of a portion of our New York office space. Excluding the impact of impairment charges in both years, webusiness. We expect general and administrative expenses as a percentage of net revenue to remain relatively consistent in ~~2022~~2023 compared to ~~2021.~~2022.

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

Depreciation and amortization expense for the three and six months ended June 30, ~~2022~~2023 decreased compared to the prior-year periods primarily due to decreases in depreciation expense of leasehold improvements from asset retirements related to lease terminations and expirations and, to a lesser extent, lower amortization expense resulting from intangiblecertain assets ~~that had become~~becoming fully ~~amortized~~depreciated since ~~prior year.~~the prior-year periods.

Other Income, Net

Other income, net consists primarily of the interest income earned on our cash, ~~and~~ cash equivalents and marketable securities, research and development tax credits, the portion of our sublease income in excess of our lease cost, accretion of discounts and amortization of ~~debt issuance costs,~~premiums on investments, credit facility fees and foreign exchange gains and losses.

Other income, net for the three and six months ended June 30, ~~2022~~2023 increased compared to the prior-year periods, primarily driven by $3.5 million and $7.0 million, respectively, of higher interest income from our investments in money market funds and our portfolio of marketable securities due to ~~increasing~~increased federal interest ~~rates, as well as higher tax incentives related to research and development activity in the United Kingdom.~~rates.

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

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.~~purposes.

Provision for income taxes for the three and six months ended June 30, ~~2022~~2023 increased from ~~a recorded benefit in each of~~ the prior-year periods primarily due to an increase in the ~~annual effective tax rate estimated~~pre-tax book income for ~~2022 and increases in quarter-to-date and year-to-date pre-tax income,~~2023, partially offset by ~~decreases in year-to-date excess tax benefits from stock-based compensation~~a decrease in the ~~current periods.~~annual estimated effective tax rate.

As of December 31, ~~2021,~~2022, we had approximately ~~$40.5~~$97.4 million in net deferred tax assets ("DTAs"). As of June 30, ~~2022,~~2023, 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 condensed 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.

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~~2023 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 capitalize and amortize research and development expenses, which may result in a substantially lower rate if successful, as well as the amount of our 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~~2023 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~~2023 as well as future years.

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;

•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~~litigation settlement expenses 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~~litigation settlement expenses and impairment charges.

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Adjusted EBITDA margin. Adjusted EBITDA margin is a non-GAAP financial measure that we calculate as 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,
		2022			2021				2022				2021				2023			2022			2023			2022
Reconciliation of Net Income (Loss) to Adjusted EBITDA:
Net income (loss)		$	8,009		$	4,212			$	7,094			$	(1,584)
Provision for (benefit from) income taxes		9,319			(4,751)				6,707				(6,893)
Reconciliation of Net Income to Adjusted EBITDA:																Reconciliation of Net Income to Adjusted EBITDA:
Net income																Net income	$	14,729		$	8,009		$	13,551		$	7,094
Provision for income taxes																Provision for income taxes	9,911			9,319			9,714			6,707
Other income, net	Other income, net	(1,327)			(542)				(2,256)				(1,247)			Other income, net	(5,898)			(1,327)			(11,110)			(2,256)
Depreciation and amortization	Depreciation and amortization	11,258			12,833				22,748				25,916			Depreciation and amortization	10,615			11,258			21,420			22,748
Stock-based compensation	Stock-based compensation	40,061			40,859				81,121				80,104			Stock-based compensation	43,580			40,061			89,837			81,121

Restructuring		—			12				—				32

Litigation settlement expense(1)																Litigation settlement expense(1)	11,000			—			11,000			—
Asset impairment(1)	Asset impairment(1)	—			11,164				—				11,164			Asset impairment(1)	—			—			3,555			—
Adjusted EBITDA	Adjusted EBITDA	$	67,320		$	63,787			$	115,414			$	107,492		Adjusted EBITDA	$	83,937		$	67,320		$	137,967		$	115,414

Net revenue	Net revenue	$	298,884		$	257,188			$	575,512			$	489,284		Net revenue	$	337,126		$	298,884		$	649,564		$	575,512
Net income (loss) margin		3		%	2		%		1		%		—		%
Net income margin																Net income margin	4		%	3		%	2		%	1		%
Adjusted EBITDA margin	Adjusted EBITDA margin	23		%	25		%		20		%		22		%	Adjusted EBITDA margin	25		%	23		%	21		%	20		%

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

Liquidity and Capital Resources

Sources of ~~Cash~~Liquidity

Our principal sources of liquidity are our cash and cash equivalents, marketable securities and cash generated from operations. As of June 30, ~~2022,~~2023, we had cash and cash equivalents of ~~$421.2~~$270.3 million ~~which consisted~~and marketable securities of $126.9 million. Cash and cash equivalents consist of cash, ~~and~~ money market ~~funds.~~funds and investments with original maturities of three months or less. Our cash held internationally as of June 30, ~~2022~~2023 was ~~$13.2~~$26.6 million. As of June 30, ~~2022,~~2023, we also had $10.0 million of investments in certificates of deposit with minority-owned financial institutions.

In ~~June~~July 2022, we ~~changed our investment strategy to invest the majority of our cash in a mix of money market funds and~~began purchasing highly rated debt securities ~~in order to earn a higher overall rate of return.~~which are classified as available-for-sale on our condensed consolidated balance sheets. Our investment portfolio comprises highly rated marketable securities, and our investment policy limits the amount of credit exposure to any one ~~issuer and it~~issuer. The policy 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

On April 28, 2023, we entered into a Revolving Credit and Guaranty Agreement with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, which provides for a five-year $125.0 million senior secured revolving credit facility (the "2023 credit facility"). The 2023 credit facility replaced our previous $75.0 million revolving credit facility entered into on May 5, 2020 with Wells Fargo Bank, N.A. (the “2020 credit facility”), which terminated concurrently with the establishment of ~~June 30, 2022,~~the 2023 credit facility. The 2023 credit facility includes a $25.0 million letter of credit sub-limit, a $25.0 million bilateral letter of credit facility and an accordion option, which, if exercised, would allow us to increase the aggregate commitments by up to $250.0 million, plus additional amounts if 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~~are 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,satisfy a leverage test, subject 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 have~~certain conditions. The 2023 credit facility provides us with 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"). needed.

As of June 30, ~~2022,~~2023, we were in compliance with all covenants and there were no loans outstanding under the 2023 credit facility. We had ~~$20.5~~$17.0 million of letters of credit under the sub-limit primarily related to lease agreements for certain office locations, which are required to be maintained and issued to the landlords of each facility, and $108.0 million remained available under the 2023 credit facility as of June 30, 2023.

For additional details regarding the 2023 credit facility, see Note 12, "Commitments and Contingencies" of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 in this Quarterly Report.

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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, 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 our existing cash, ~~and~~ cash equivalents and marketable securities, together with any cash generated from operations, will be sufficient to meet our material cash 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,~~2023 and beyond, 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. However, this estimate is based on a number of assumptions that may prove to be materially different and we could ~~exhaust~~fully utilize our available cash, ~~and~~ cash equivalents and marketable securities earlier than presently anticipated. We are not able to reasonably estimate the timing of future cash ~~flow~~flows related to ~~$13.5~~$36.4 million of uncertain tax ~~position.~~positions. We may be required to draw down funds from our revolving credit facility or seek additional funds through equity or debt financings to respond to business challenges associated with ~~adverse~~the uncertain macroeconomic ~~conditions, including the ongoing COVID-19 pandemic,~~environment 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~~2023 to 2031. Our cash requirements related to these lease agreements are ~~$164.0~~$116.2 million, of which ~~$48.0~~$42.8 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~~$35.1 million. See Note 7,8, "Leases," of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 in this Quarterly Report 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~~$13.3 million, of which approximately ~~$35.1~~$11.3 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 ~~impact~~effects of macroeconomic conditions on our business. 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 and marketable securities 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,
		2022		2021			2023		2022
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	$	78,232	$	109,107	Net cash provided by operating activities	$	122,251	$	78,232
Net cash used in investing activities	Net cash used in investing activities	$	(14,479)	$	(13,196)	Net cash used in investing activities	$	(46,885)	$	(14,479)
Net cash used in financing activities	Net cash used in financing activities	$	(121,026)	$	(133,394)	Net cash used in financing activities	$	(112,905)	$	(121,026)

Operating Activities. Net cash provided by operating activities during the six months ended June 30, ~~2022 decreased~~2023 increased compared to the prior-year period primarily due to an increase in cash received from customers as a result of higher revenue, a decrease in cash paid for income taxes ~~paid~~ and ~~the timing of payments to vendors and employees. These movements were~~an increase in interest income received from our investments, partially offset by an increase in cash ~~provided by customers due to~~paid for higher ~~revenue and increases in accrued commissions due to higher performance of sales representatives.~~employee costs.

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Investing Activities. Net cash used in investing activities during the six months ended June 30, ~~2022~~2023 increased compared to the prior-year period primarily due to ~~an increase~~the purchase of marketable securities. In July 2022, we began investing in ~~purchases~~highly rated debt securities as we changed our investment strategy in order to earn a higher overall rate of ~~property, equipment and software, partially offset by a decrease in capitalized software and website development costs.~~return from our cash position.

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Financing Activities.Net cash used in financing activities during the six months ended June 30, ~~2022~~2023 decreased compared to the prior-year period primarily due to ~~a decrease~~an increase in ~~repurchases of the Company's common stock, partially offset by a decrease in cash~~ proceeds from stock option exercises, ~~as there were fewer options exercised~~partially offset by an increase in taxes paid related to the net share settlement of equity awards during the six months ended June 30, ~~2022 as~~2023 compared to the prior-year period.

Stock Repurchase Program

~~As of June 30, 2022,~~Since its initial authorization in July 2017, our board of directors ~~had~~has authorized us to repurchase up to an aggregate of ~~$1.2~~$1.45 billion of our outstanding common stock, ~~since it initially authorized our stock repurchase program in July 2017. As~~$158.4 million of which remained available as of July ~~29, 2022, approximately $107.0 million remained available for stock repurchases under these authorizations.~~28, 2023.

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.

During the six months ended June 30, 2023, we repurchased 3,264,260 shares on the open market for an aggregate purchase price of $100.0 million. During the six months ended June 30, 2022, we repurchased 3,039,203 shares on the open market for an aggregate purchase price of $100.0 million.

We have funded all repurchases to date and expect to fund any future repurchases with cash and cash equivalents available on our condensed consolidated balance sheet. During the six months ended June 30, 2022, we repurchased on the open market 3,039,203 shares for an aggregate purchase price of $100.0 million. During the six months ended June 30, 2021, we repurchased on the 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, ~~2021.~~2022.

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, ~~2022.~~2023. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, ~~2022,~~2023, 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, ~~2022~~2023 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 ~~11,~~12, "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

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~~If we default on our credit obligations, our business, revenue and financial results could be harmed.

Our 2023 credit facility provides our lenders with a first-priority lien against substantially all of ~~operations,~~our domestic assets, including certain domestic intellectual property, and ~~also expose us to~~contains financial covenants and 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 impactrestrictions on our ~~business and~~actions that may limit our operational flexibility or otherwise adversely affect our results of operations. ~~For example, adverse macroeconomic conditions have had, and may continue to have,~~It contains 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~~covenants that limit our ability to, ~~fluctuate; this impact was particularly pronounced~~among other things, incur indebtedness, grant liens, make distributions, pay dividends, repurchase shares, make investments, or engage in transactions with our affiliates, merge or consolidate with other companies, sell material businesses or assets, or license or transfer certain ~~geographies within the United States and in~~of our ~~Restaurants, Retail & Other categories. Subsequent increases in economic uncertainty and inflationary pressures, ongoing concerns related~~intellectual property. We are also required 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~~maintain certain financial covenants. Complying with these covenants may ~~also~~ make it more difficult for us to ~~convince existing~~successfully execute our business strategy and ~~prospective advertisers~~compete against companies who are not subject to such restrictions.

If we fail to comply with the covenants under the 2023 credit facility, lenders would have a right to, among other things, terminate the commitments to provide additional loans under the facility, enforce any liens on collateral securing the obligations under the facility, declare all outstanding loans and accrued interest and fees to be due and payable and require us to post cash collateral to be held as security for any reimbursement obligations in respect of any outstanding letters of credit issued under the facility. If any remedies under the facility were exercised, we may not have sufficient cash or be able to borrow sufficient funds to refinance the debt or sell sufficient assets to repay the debt, which could immediately materially and adversely affect our business, cash flows, operations and financial condition. Even if we were able to obtain new financing, it may not be on commercially reasonable terms or on terms that are acceptable to us.

Additionally, our ~~products offer them~~2023 credit facility utilizes Secured Overnight Financing Rate ("SOFR") or various alternative methods to calculate the amount of accrued interest on any loans. If a published U.S. dollar SOFR is unavailable, the interest rates on our debt indexed to SOFR will be determined using one of the alternative methods, any of which could, if the revolver is drawn, result in interest obligations that are more than the current form, which could have 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~~effect 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;~~financing costs.

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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, ~~2022~~2023 (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, 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


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, 2023	811	$	30.08	811	$	207,271
May 1 - May 31, 2023	303	$	32.15	303	$	197,529
June 1 - June 30, 2023	450	$	35.29	450	$	181,658

(1) ~~Between~~Since the initial authorization of our Stock Repurchase Program in July 2017, ~~and September 2021,~~ our board of directors authorized us to repurchase up to ~~$1.2~~an aggregate of $1.45 billion of our outstanding common stock, ~~$107.0 million~~ of which $158.4 million remained available as of July ~~29, 2022.~~28, 2023. 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

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).
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.

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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

3/15/2023

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

10.1

Revolving Credit and Guaranty Agreement dated as of April 28, 2023, by and between Yelp Inc., the lenders party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent.

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.

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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 ~~5, 2022~~4, 2023	/s/ David Schwarzbach
		David Schwarzbach
		Chief Financial Officer
		(Principal Financial and Accounting Officer and Duly Authorized Signatory)