ACQUISITIONS | 3 Months Ended |
Mar. 31, 2015 |
ACQUISITIONS [Abstract] | |
ACQUISITIONS | 4. ACQUISITIONS |
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2015 Acquisition |
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On February 9, 2015, the Company acquired Eat24Hours.com, Inc. (“Eat24”). In connection with the acquisition, all of the outstanding capital stock of Eat24 was converted into the right to receive an aggregate of approximately $75.0 million in cash, less certain transaction expenses, and 1,402,844 shares of Yelp Class A common stock with an aggregate fair value of approximately $59.2 million, as determined on the basis of the closing market price of the Company's Class A common stock on the acquisition date. Of the total consideration paid in connection with the acquisition, $16.5 million in cash and 308,626 shares were initially held in escrow to secure indemnification obligations. The key factor underlying the acquisition was to obtain an online food ordering solution to drive daily engagement in its key restaurant vertical. |
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The acquisition was accounted for as a business combination in accordance with Accounting Standards Codification Topic 805, “Business Combinations” (“ASC 805”), with the results of Eat24's operations included in the Company's consolidated financial statements from February 9, 2015. The Company's allocation of the purchase price is preliminary as the amounts related to contingent consideration, identifiable intangible assets, the effects of income taxes resulting from the transaction, and the effects of any net working capital adjustments are still being finalized. Any material measurement period adjustments will be recorded retroactively to the acquisition date. The purchase price allocation, subject to finalization during the measurement period, is as follows (in thousands): |
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| 9-Feb-15 | | | | | | | |
Fair value of purchase consideration: | | | | | | | | |
Cash: | | | | | | | | |
Distributed to Eat24 stockholders | $ | 56,624 | | | | | | | | |
Held in escrow account | | 16,500 | | | | | | | | |
Payable on behalf of Eat24 stockholders | | 1,876 | | | | | | | | |
Total cash | | 75,000 | | | | | | | | |
Class A common stock: | | | | | | | | | | |
Distributed to Eat24 stockholders | | 46,143 | | | | | | | | |
Held in escrow account | | 13,015 | | | | | | | | |
Total purchase consideration | $ | 134,158 | | | | | | | | |
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Fair value of net assets acquired: | | | | | | | | | | |
Cash and cash equivalents | $ | 1,578 | | | | | | | | |
Intangibles | | 39,600 | | | | | | | | |
Goodwill | | 110,927 | | | | | | | | |
Other assets | | 6,031 | | | | | | | | |
Total assets acquired | | 158,136 | | | | | | | | |
Deferred tax liability | | (15,207 | ) | | | | | | | |
Other liabilities | | (8,771 | ) | | | | | | | |
Total liabilities assumed | | (23,978 | ) | | | | | | | |
Net assets acquired | $ | 134,158 | | | | | | | | |
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Estimated useful lives and the amount assigned to each class of intangible assets acquired are as follows: |
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Intangible Type | | Amount Assigned | | Useful Life | | | | | | |
Restaurant relationships | | 17,400 | | 12.0 years | | | | | | |
Developed technology | | 7,400 | | 5.0 years | | | | | | |
User relationships | | 12,000 | | 7.0 years | | | | | | |
Trade name | | 2,800 | | 4.0 years | | | | | | |
Weighted average | | | | 8.6 years | | | | | | |
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The intangible assets are being amortized on a straight-line basis, which reflects the pattern in which the economic benefits of the intangible assets are being utilized. The goodwill results from the Company's opportunity to drive daily engagement in its restaurant vertical and potentially expand Eat24's offering to the approximately 1 million U.S. restaurants listed on the Company's platform. None of the goodwill is deductible for tax purposes. |
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For the quarter ended March 31, 2015, the Company recorded acquisition-related transaction costs of approximately $0.2 million, which were included in general and administrative expense in the accompanying consolidated statement of operations. |
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The unaudited pro forma financial information in the table below summarizes the combined results of operations for the Company and Eat24, as though the companies had been combined as of January 1, 2014, and includes the accounting effects resulting from the acquisition, including transaction, integration costs, amortization charges from acquired intangible assets, and changes in depreciation due to differing asset values and depreciation lives. The unaudited pro forma financial information, as presented below, is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place as of January 1, 2014 (in thousands, except per share data): |
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| Pro Forma for the Three Months Ended March 31, | | | |
| 2015 | | 2014 |
Revenue | $ | 121,753 | | | $ | 81,860 | | | | |
Net loss | $ | (2,402 | ) | | $ | (3,518 | ) | | | |
Basic and diluted net loss per share attributable to common stockholders | $ | (0.03 | ) | | $ | (0.05 | ) | | | |
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Since the acquisition date, $5.3 million of revenue and $0.4 million of net loss attributable to Eat24 are included in the consolidated statement of operations for the three months ended March 31, 2015. |
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2014 Acquisitions |
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In October 2014, the Company, through its wholly-owned subsidiary, Yelp Ireland Ltd., completed the acquisition of all of the outstanding equity interests in Cityvox SAS. Also in October 2014, the Company, through its wholly-owned subsidiaries Yelp Ireland Ltd. and Qype GmbH, acquired the assets comprising the business conducted under the name Restaurant Kritik from Kabukiman Ltd. The aggregate purchase price of these businesses was $15.3 million, net of $0.1 million cash acquired; the purchase price did not include stock in either transaction. Each of these acquisitions has been accounted for as a business combination in accordance with ASC 805, under the acquisition method. Accordingly, the aggregate purchase price is allocated to the tangible and intangible assets acquired and the liabilities assumed based on their respective fair values on the acquisition dates, and is subject to adjustment based on purchase price adjustment provisions contained in the acquisition agreements. The results of operations of the acquired companies have been included in the Company's consolidated financial statements from the respective acquisition dates. Net revenues, earnings since the acquisition and pro forma results of operations for these acquisitions have not been presented because they are not material to the consolidated results of operations, either individually or in aggregate. During the quarter ended December 31, 2014, the Company recorded acquisition-related transaction costs of $0.6 million, which were included in general and administrative expense. |
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Under the Restaurant Kritik asset purchase agreement, the Company agreed to pay an additional $0.9 million in consideration if the migration of Restaurant Kritik's content to Yelp is completed within one year of the acquisition date. The estimated fair value of the contingent consideration was approximately $0.8 million as of the acquisition date and $0.8 million as of March 31, 2015, and is included in current liabilities on the Company's consolidated balance sheet. |
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The following table presents the aggregate purchase price allocations of these individually immaterial acquisitions recorded in the Company's condensed consolidated balance sheets as of their acquisition dates (in thousands): |
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Net tangible assets | $ | (277 | ) | | | | | | | |
Goodwill | | 13,995 | | | | | | | | |
Intangible assets | | 1,546 | | | | | | | | |
Total purchase price (excluding contingent consideration) | | 15,264 | | | | | | | | |
Contingent consideration | | 826 | | | | | | | | |
Total purchase price | $ | 16,090 | | | | | | | | |
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Estimated useful lives as of the acquisition dates of the intangible assets acquired are as follows: |
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Intangible Type | Useful Life | | | | | | | | | |
Content | 5 years | | | | | | | | | |
Developed technology | 0.5 years | | | | | | | | | |
Trade name | 2 years | | | | | | | | | |
Weighted average | 4.3 years | | | | | | | | | |
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The intangible assets are being amortized on a straight-line basis, which reflects the pattern in which the economic benefits of the intangible assets are being utilized. The goodwill represents the excess value over both tangible and intangible assets acquired. The goodwill in these transactions is primarily attributable to traffic and the opportunity for expansion. None of the goodwill is deductible for tax purposes. |
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2012 Acquisition |
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On October 23, 2012, the Company, through Yelp Ireland Ltd., completed the acquisition of all the outstanding equity interests of Qype GmbH and its subsidiaries (collectively, “Qype”) for approximately $24.3 million in cash and Yelp Class A common stock with an approximate fair value of $23.3 million. Of the total consideration paid in connection with the acquisition, $10.3 million was held in the form of cash in escrow to secure indemnification obligations. In March 2015, approximately $0.7 million was released to the Company from the escrow fund relating to this acquisition, and is included in other income (expense), net. The remaining funds were distributed to the former Qype shareholders; accordingly, the balance remaining in the escrow fund was zero as of March 31, 2015. |
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