UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): February 4, 2016

 

YELP INC.

(Exact name of registrant as specified in its charter)

 

Delaware   001-35444   20-1854266
(State of incorporation)   (Commission File No.)   (IRS Employer Identification No.)

 

140 New Montgomery Street, 9 th Floor

San Francisco, CA 94105

(Address of principal executive offices and zip code)

 

Registrant’s telephone number, including area code: (415) 908-3801

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

  

 

 

  

Item 2.02. Results of Operations and Financial Condition.

 

On February 8, 2016, Yelp Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and year ended December 31, 2015. A copy of the press release, entitled “Yelp Announces Fourth Quarter and Full Year 2015 Financial Results,” is furnished pursuant to Item 2.02 as Exhibit 99.1 to this Current Report.

 

The information in this Item 2.02 and the press release attached as Exhibit 99.1 hereto are furnished to, but not “filed” with, the Securities and Exchange Commission (“SEC”) and shall not be deemed to be incorporated by reference into any of the Company’s filings with the SEC under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

On February 4, 2016, Rob Krolik and the Company’s Board of Directors (the “Board”) mutually agreed that Mr. Krolik will step down from his position as Chief Financial Officer upon the earlier of (a) the start date of his successor in that role or (b) December 15, 2016 (the “Regular End Date”). The Company and Mr. Krolik also entered into a transition agreement (the “Agreement”) on February 4, 2016, which is included as Exhibit 10.1 to this Current Report.

 

To facilitate a smooth transition, Mr. Krolik has also agreed to remain employed by the Company in an advisory capacity after the position has been filled, through the earlier of (a) the date he begins providing similar services to another company or (b) December 15, 2016 (the “Separation Date”).

 

Mr. Krolik will continue receiving his current base salary and benefits, and continue vesting in his outstanding equity awards, through the Separation Date so long as he remains employed by the Company through such date. If the Regular End Date occurs after June 30, 2016, he will also be entitled to receive a lump-sum payment equal to his monthly base salary multiplied by the number of full calendar months between June 30, 2016 and the date that the Regular End Date actually occurs. In addition, he will be entitled to receive a lump-sum payment of $13,500 if he signs a release of claims following the Separation Date.

 

The Board also granted Mr. Krolik a restricted stock unit award covering 30,000 shares of the Company’s Class A common stock (the “RSUs”) pursuant to the Company’s 2012 Equity Incentive Plan, as amended (the “Plan”). The RSUs will be subject to an RSU Agreement and Grant Notice (together, the “RSU Agreement”) between Mr. Krolik and the Company, the form of which is included as Exhibit 10.2 to this Current Report. One quarter of the RSUs will vest on each of February 20, 2016, May 20, 2016, August 20, 2016 and November 20, 2016, provided that (i) Mr. Krolik remains employed as of each vesting date that occurs prior to the Regular End Date and (ii) as of each vesting date thereafter, Mr. Krolik’s employment has not terminated as a result of his resignation (other than to accept alternative employment), misconduct or breach of his agreements with the Company.

 

The foregoing is only a brief description of the Agreement and RSUs, does not purport to be complete and is qualified in its entirety by reference to the Agreement, the Plan and RSU Agreement.

 

Item 9.01.    Financial Statements and Exhibits.

 

(d) Exhibits.

  

Exhibit Number   Description
10.1   Transition Agreement, dated February 4, 2016, by and between Yelp Inc. and Rob Krolik.
10.2   Form of Restricted Stock Unit Agreement and Grant Notice.
99.1   Press Release, dated February 8, 2016, entitled “Yelp Announces Fourth Quarter and Full Year 2015 Financial Results.”

  

 

 

 

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 hereunto duly authorized.

 

Date: February 8, 2016 Yelp INC.  
   
  By:   /s/ Laurence Wilson
    Laurence Wilson
    Senior Vice President & General Counsel

 

 

 

  

INDEX TO EXHIBITS

 

Exhibit Number   Description
10.1   Transition Agreement, dated February 4, 2016, by and between Yelp Inc. and Rob Krolik.
10.2   Form of Restricted Stock Unit Agreement and Grant Notice.
99.1   Press Release, dated February 8, 2016, entitled “Yelp Announces Fourth Quarter and Full Year 2015 Financial Results.”

  

 

 

 

Exhibit 10.1

 

 

February 4, 2016

 

Rob Krolik

140 New Montgomery, 9 th Floor

San Francisco, CA 94105

 

Re: Terms of Transition

 

Dear Rob:

 

As we discussed, this letter agreement (the “ Agreement ”) between you and Yelp Inc. (“ Yelp ” or the “ Company ”) sets forth the terms of your mutually agreed-upon transition from Yelp.

 

1. Transition Period. Your regular employment as the Company’s Chief Financial Officer will continue through the earlier of the start date of your successor in that role or December 15, 2016 (the “ Regular End Date ”). After that date, you agree to make yourself available, as requested by Yelp from time to time, in an advisory capacity (the “ Transition Period ”). You will remain a full-time employee during the Transition Period, which will end on the earlier of (a) the date you begin providing similar executive management services (whether as employee, consultant or otherwise) to another business or entity or (b) December 15, 2016. The actual last day of your employment with Yelp is your “ Separation Date ,” and is intended to be the date when your Transition Period ends, but may be an earlier date if your employment is terminated pursuant to paragraph 6 below. You agree to notify the Company promptly of your agreement to provide services to another business or entity.

 

2. Compensation. You will continue to be paid your current base salary ($325,000 annualized) through the Separation Date. However, you agree that, after the Regular End Date, you will cease accruing paid time off (“ PTO ”) and earning any additional benefits except as may be expressly set forth in this Agreement or as required by law. Yelp will pay you any PTO that you accrue through the Regular End Date, and compensation that you earn through the Separation Date, subject to Yelp’s standard payroll practices.

 

In addition, you will be entitled to an additional payment equal to your monthly base salary multiplied by the number of full calendar months after July 31, 2016 that the Regular End Date occurs. This amount will be paid to you in a lump sum within three (3) weeks after the Regular End Date.

 

3. Severance Payment. If you (a) sign, date and return to Yelp the Release attached hereto as Exhibit A on or within seven (7) days after the Separation Date, and (b) you fully comply with your obligations under this Agreement, Yelp will pay you cash severance in the amount of $13,500, less applicable payroll deductions and withholdings (the “ Severance Payment ”). The Severance Payment will be paid to you in a lump sum within three (3) weeks after Yelp receives your signed copy of the Release and in any case on or before March 15, 2017.

 

4. Equity Awards. Yelp will recommend that its board of directors (or a committee thereof) grant you Restricted Stock Units covering 30,000 shares of Yelp’s Class A common stock (the “ RSUs ”). One quarter of the RSUs will vest on each of February 20, 2016, May 20, 2016, August 20, 2016 and November 20, 2016, provided that (a) you remain an employee of the Company as of each vesting date that occurs prior to the Regular End Date and (b) your employment has not terminated pursuant to paragraph six (6) of this Agreement as of each vesting date that occurs thereafter. The RSUs will also be subject to the terms of Yelp’s stock plan and a separate Restricted Stock Unit Agreement between you and Yelp. All other awards you have been granted under the Company’s equity plans will continue to be governed by the terms of your operative agreements with Yelp and the applicable equity plans.

 

Yelp Inc. ● 140 New Montgomery Street, San Francisco, California 94105 ● Telephone: 415.908.3801 ● Fax: 415.908.3833

 

 

 

 

 

5. Benefits. Your group health insurance coverage will remain in effect until the last day of the month in which the Separation Date occurs.

 

6. Termination. The Transition Period (and your employment) may be terminated at any time if (a) you resign for any reason other than to begin providing services to another business or entity as described in paragraph 1(a) of this Agreement, or (b) Yelp terminates your employment due to your (i) material breach of Yelp policy or procedure or other misconduct, (ii) material breach of any written agreement with Yelp, including, but not limited to, this Agreement, or (iii) failure to perform your job duties as assigned to you in a timely and satisfactory manner during the Transition Period. In the event of an Early Termination, you will receive no further compensation or benefits from Yelp other than as expressly provided herein or as required by applicable law. Nothing in this Agreement is intended to affect the at-will status of your employment with Yelp.

 

7. Subsidiary and Affiliate Positions. Your signature below constitutes your resignation as an officer and director of all subsidiaries and affiliates of Yelp that you hold as a result of your service as Chief Financial Officer. Such resignation will be effective as of the Regular End Date, and you agree that you will take any and all actions necessary to ensure an orderly transition of such positions.

 

8. Proprietary Information Obligations. You acknowledge and reaffirm your obligation to comply with the Confidentiality and Inventions Assignment Agreement you signed as a condition of your employment with Yelp.

 

9. Non-Disparagement . You agree that you will not take any actions that could be reasonably expected to disrupt Yelp’s client/user base or business, or tarnish Yelp’s reputation, including, but not limited to, making statements about Yelp or any of its subsidiaries, affiliates, current or former officers, directors, clients, users, products or services — including statements about your role at Yelp or your mutually agreed upon departure from Yelp — to any person orally or in writing that would tend to lessen his/her/its integrity, quality, standing, stature or reputation in the eyes of an ordinary citizen, except for truthful statements that are required by law. Yelp agrees (through its officers and directors) not to disparage you in any manner that could reasonably be expected to harm your business or professional reputation, except for truthful statements that are required by law.

 

10. Executive Severance Benefit Plan . You agree that the benefits set forth in this Agreement replace in their entirety any benefits you may now or in the future be entitled to under the Company’s Executive Severance Benefits Plan established effective January 6, 2012 (the “ Severance Plan ”), and you waive all rights thereunder.

 

11. Section 409A. The severance benefits under this Agreement are intended to satisfy an exemption from application of section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and other guidance thereunder and any state law of similar effect (collectively, “ Section 409A ”), including, but not limited to, the exemption provided under Treasury Regulations Section 1.409A-1(b)(4), and this Agreement and any definitions herein will be construed to the greatest extent possible to be consistent with those exemptions. However, if such exemptions are not available and you are, upon your separation from service under Section 409A, a “specified employee” for purposes of Section 409A, then, solely to the extent necessary to avoid adverse personal tax consequences under Section 409A, the timing of the severance benefits payment shall be delayed until the earlier of (a) six (6) months and one day after your separation from service or (b) your death.

 

12. Release of Claims .

 

a. General Release . You hereby generally and completely release Yelp and its predecessors, successors, affiliates, parent and subsidiary entities, as well as each of their current and former directors, officers, employees, shareholders, partners, agents, attorneys, insurers, affiliates and assigns (collectively, the “ Released Parties ”) of and from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct or omissions that occurred prior to or on the date that you sign this Agreement (collectively, the “ Released Claims ”).

 

Yelp Inc. ● 140 New Montgomery Street, San Francisco, California 94105 ● Telephone: 415.908.3801 ● Fax: 415.908.3833

 

 

 

 

 

b. Scope of Release. The Released Claims include, but are not limited to: (i) all claims arising out of or in any way related to your employment with Yelp, or the termination of that employment; (ii) all claims related to your compensation and benefits from Yelp, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, restricted stock units or any other ownership interests in Yelp; (iii) all claims for breach of contract, wrongful termination and breach of the implied covenant of good faith and fair dealing; (iv) all tort claims, including, without limitation, claims for fraud, defamation, emotional distress and discharge in violation of public policy; and (v) all federal, state and local statutory claims, including, without limitation, claims for discrimination, harassment, retaliation, privacy, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964, the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (the “ ADEA ”), the federal National Labor Relations Act of 1935, the federal Family and Medical Leave Act, the federal Fair Credit Reporting Act, the federal Employee Retirement Income Security Act, the California Investigative Consumer Reporting Agencies Act, the California Labor Code, the California Civil Code, the California Business and Professions Code, the California Fair Employment and Housing Act, the California Family Rights Act, the Wage Orders of the California Industrial Welfare Commission, in each case as amended, and, in each case, similar laws in other jurisdictions. If, notwithstanding the above, you are awarded any money or other relief under such a claim, you hereby assign the money or other relief to Yelp.

 

c. Excluded Claims. Notwithstanding the foregoing, the following are not included in the Released Claims (collectively, the “ Excluded Claims ”): (i) any rights or claims for indemnification you may have pursuant to any written indemnification agreement with Yelp to which you are a party, the certificate of incorporation and bylaws of Yelp, or under applicable law; (ii) any rights that are not waivable as a matter of law; and (iii) any rights you have under this Agreement. In addition, nothing in this Agreement prevents you from filing, cooperating with or participating in any proceeding before the Equal Employment Opportunity Commission, the Department of Labor or the California Department of Fair Employment and Housing, except that you hereby waive your right to any monetary benefits in connection with any such claim, charge or proceeding with regard to any claim released herein.

 

d. ADEA Waiver. You acknowledge that you are knowingly and voluntarily waiving and releasing any rights you may have under the ADEA (“ ADEA Waiver ”), and that the benefits given under this Agreement for the ADEA Waiver are in addition to anything of value to which you were already entitled. You further acknowledge that you have been advised by this writing, as required by the ADEA, that: (i) your ADEA Waiver does not apply to any rights or claims that may arise after the date you sign this Agreement; (ii) you should consult with an attorney prior to signing this Agreement (although you may choose voluntarily not to do so); (iii) you have twenty-one (21) days to consider this Agreement (although you may choose voluntarily to sign this Agreement earlier); (iv) you have seven (7) days following the date you sign this Agreement to revoke the Agreement by providing written notice to Yelp; and (v) this Agreement will not be effective until the date upon which the revocation period has expired, which will be the eighth day after you sign this Agreement (the “ Effective Date ”).

 

13. Section 1542 Waiver. In giving the releases herein, which include claims that may be unknown to you at present, you acknowledge that you have read and understand Section 1542 of the California Civil Code, which reads as follows:

 

Yelp Inc. ● 140 New Montgomery Street, San Francisco, California 94105 ● Telephone: 415.908.3801 ● Fax: 415.908.3833

 

 

 

 

 

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”

 

You hereby expressly waive and relinquish all rights and benefits under that section and any law of any other jurisdiction of similar effect with respect to your release of claims herein, including, but not limited to, your release of unknown claims.

 

14. Representations. You hereby represent that (a) you have been paid all compensation owed and for all hours worked, and, as to any further alleged wages, you agree that there is a good-faith dispute as to whether such wages are due, and based on this good-faith dispute, you release and waive any and all further claims regarding unpaid wages and any corresponding penalties, interest or attorneys’ fees, in exchange for the benefits provided by this Agreement; (b) you have received all the leave and leave benefits and protections for which you are eligible, pursuant to the Family and Medical Leave Act, the California Family Rights Act or otherwise; and (c) have not suffered any on-the-job injury for which you have not already filed a workers’ compensation claim.

 

15. Dispute Resolution. Any dispute, claim or controversy of whatever nature arising out of or relating to this Agreement (including any other agreement(s) contemplated hereunder), including, without limitation, any action or claim based on tort, contract or statute, or concerning the interpretation, performance or execution of this Agreement, will be resolved by confidential, final and binding arbitration administered by Judicial Arbitration and Mediation Services, Inc. (“ JAMS ”), in San Francisco, California, before a single arbitrator, in accordance with JAMS’ then-applicable arbitration rules. You acknowledge that by agreeing to this arbitration procedure, you and Yelp waive the right to resolve any such dispute, claim or demand through a trial by jury or judge or by administrative proceeding. You will have the right to be represented by legal counsel at any arbitration proceeding. The arbitrator will: (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be available under applicable law in a court proceeding; and (b) issue a written statement signed by the arbitrator regarding the disposition of each claim and the relief, if any, awarded as to each claim, the reasons for the award and the arbitrator’s essential findings and conclusions on which the award is based. Yelp will bear all JAMS fees for the arbitration. Nothing in this Agreement will prevent any of the parties from obtaining injunctive relief in court if necessary to prevent irreparable harm pending the conclusion of any arbitration. Any awards or orders in such arbitrations may be entered and enforced as judgments in any court of competent jurisdiction.

 

16. Miscellaneous. This Agreement constitutes the complete, final and exclusive embodiment of the entire agreement between you and Yelp with regard to its subject matter. It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations (including your employment offer letter and the Severance Plan). This Agreement may not be modified or amended except in a writing signed by both you and a duly authorized officer of Yelp. This Agreement will bind the heirs, personal representatives, successors and assigns of both you and Yelp, and inure to the benefit of both you and Yelp, their heirs, successors and assigns. If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this Agreement and the provision in question will be modified so as to be rendered enforceable to the fullest extent permitted by law. This Agreement will be deemed to have been entered into and will be construed and enforced in accordance with the laws of the State of Delaware, without regard to conflict of laws principles. Any ambiguity in this Agreement will not be construed against either party as the drafter. Any waiver of a breach of this Agreement must be in writing to be effective and will not be deemed to be a waiver of any successive or other breach. This Agreement may be executed in counterparts, and facsimile and electronic image signatures will be equivalent to original signatures

 

Yelp Inc. ● 140 New Montgomery Street, San Francisco, California 94105 ● Telephone: 415.908.3801 ● Fax: 415.908.3833

 

 

 

 

 

If these terms are acceptable to you, please sign and date in the space indicated below and return the signed copy to me within twenty-one (21) calendar days. After you sign the Agreement, you may revoke your acceptance by notifying me in writing. Such written notice must be received no later than the close of business on the seventh (7 th ) calendar day after you signed the Agreement. If you revoke the Agreement, then you will not be entitled to any of its benefits except those required by law.

 

Sincerely,

Yelp Inc.

 

By: /s/ Jeremy Stoppelman  
     
  Jeremy Stoppelman  
  Chief Executive Officer  

 

I have read, understood and hereby agree to the terms as set forth above, and further acknowledge that no other commitments were made to me in connection with my transition from the Company except as specifically set forth in this Agreement.

 

/s/ Rob Krolik   2/4/2016  
Rob Krolik   Date  

 

Yelp Inc. ● 140 New Montgomery Street, San Francisco, California 94105 ● Telephone: 415.908.3801 ● Fax: 415.908.3833

 

 

 

 

 

EXHIBIT A

 

RELEASE

 

(To be signed and returned within seven (7) days after the Separation Date.)

 

I understand that my employment with Yelp Inc. (“ Company ”) terminated effective ____________, _____ (“ Separation Date ”). The Company has agreed that if I choose to sign this Separation Date Release (“ Release ”), the Company will pay me a certain Severance Payment pursuant to the terms of the transition letter agreement between the Company and me dated ____________ (“ Agreement ”). I understand that I am not entitled to the Severance Payment unless I sign this Release within the stated time period and it becomes fully effective. I understand that, regardless of whether I sign this Release, the Company will pay me all of my accrued salary and PTO (if any) through the Separation Date, to which I am entitled by law.

 

In exchange for the Severance Payment to be provided to me under the Agreement, I hereby generally and completely release the Company and its predecessors, successors, affiliates, parent and subsidiary entities, as well as each of their current and former directors, officers, employees, shareholders, partners, agents, attorneys, insurers, affiliates and assigns (collectively, “ Released Parties ”) of and from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to or on the date I sign this Release (collectively, the “ Released Claims ”). The Released Claims include, but are not limited to: (a) all claims arising out of or in any way related to my employment with the Company or the termination of that employment; (b) all claims related to my compensation or benefits from the Company, including salary, bonuses, commissions, paid time off, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the Company; (c) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964, the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967, the federal National Labor Relations Act of 1935, the federal Family and Medical Leave Act, the federal Fair Credit and Reporting Act, the federal Employee Retirement Income Security Act, the California Investigative Consumer Reporting Agencies Act, the California Labor Code, the California Business and Professions Code, the California Fair Employment and Housing Act, the California Family Rights Act, the Wage Orders of the California Industrial Welfare Commission, in each case as amended, and, in each case, similar laws in other jurisdictions. Notwithstanding the release in the preceding sentence, I am not releasing any right of indemnification I may have in my capacity as an employee of the Company pursuant to any express indemnification agreement or under applicable law, and I am not releasing any rights which are not waivable as a matter of law (collectively, “ Excluded Claims ”). In addition, I understand that nothing in this Release prevents me from filing, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission, the Department of Labor, or any other government agency, except that I acknowledge and agree that I hereby waive my right to any monetary benefits in connection with any such claim, charge or proceeding. I hereby represent and warrant that, other than the Excluded Claims, I am not aware of any claims I have or might have against any of the Released Parties that are not included in the Released Claims.

 

In giving the general release herein, which includes claims which may be unknown to me at present, I acknowledge that I have read and understand Section 1542 of the California Civil Code, which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” I hereby expressly waive and relinquish all rights and benefits under that section and any law of any other jurisdiction of similar effect with respect to my release of claims contained herein, including but not limited to any unknown or unsuspected claims.

 

Yelp Inc. ● 140 New Montgomery Street, San Francisco, California 94105 ● Telephone: 415.908.3801 ● Fax: 415.908.3833

 

 

 

 

 

I hereby represent that I have been paid all compensation owed and for all hours worked, I have received all the leave and leave benefits and protections for which I am eligible, pursuant to FMLA, the Company’s policies, applicable law, or otherwise, and I have not suffered any on-the-job injury or illness for which I have not already filed a workers’ compensation claim.

 

  By:  
    Rob Krolik
     
  Date: _______________

 

Yelp Inc. ● 140 New Montgomery Street, San Francisco, California 94105 ● Telephone: 415.908.3801 ● Fax: 415.908.3833

 

 

 

 

 

 

Exhibit 10.2

 

Yelp Inc.
Restricted Stock Unit Grant Notice
2012 Equity Incentive Plan

 

Yelp Inc. (the “ Company ”) hereby awards to Participant the number of restricted stock units (“ RSUs ”) set forth below (the “ Award ”). The Award is subject to all of the terms and conditions as set forth in this Notice, the 2012 Equity Incentive Plan (the “ Plan ”) and the Restricted Stock Unit Agreement (the “ Award Agreement ”), both of which are attached hereto and incorporated herein in their entirety. Capitalized terms not explicitly defined herein but defined in the Plan or the Award Agreement will have the same definitions as in the Plan or the Award Agreement. In the event of any conflict between the terms of the Award and the Plan, the terms of the Plan will control.

 

Participant: Rob Krolik  
Date of Grant:    
Vesting Commencement Date:    
Number of RSUs: 30,000  

 

Vesting Schedule : One quarter (1/4) of the RSUs will vest on each of February 20, 2016, May 20, 2016, August 20, 2016 and November 20, 2016, provided that Participant remains employed through each vesting date that occurs prior to the Regular End Date (as defined in the Transition Agreement between Participant and the Company dated February 4, 2016 (the “ Transition Agreement ”)) and, with respect to each vesting date that occurs after the Regular End Date, Participant’s employment has not terminated pursuant to paragraph 6 of the Transition Agreement.
   
Issuance Schedule: Subject to any change on a Capitalization Adjustment, one share of Common Stock will be issued for each RSU which vests at the time set forth in Section 6 of the Award Agreement.  

 

Additional Terms/Acknowledgements: Participant acknowledges receipt of, and understands and agrees to, this Restricted Stock Unit Grant Notice, the Award Agreement, the Plan and the stock plan prospectus for this Plan. As of the Date of Grant, this Restricted Stock Unit Grant Notice, the Award Agreement and the Plan set forth the entire understanding between Participant and the Company regarding the Award and supersede all prior oral and written agreements on the terms of the Award, with the exception, if applicable, of (i) the Transition Agreement and (ii) any compensation recovery policy that is adopted by the Company or is otherwise required by applicable law. By accepting this Award, you consent to receive Plan documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

 

Yelp Inc.   Participant:
         
By:        
Signature   Signature
         
Title:      Date:  
         
Date:        

 

Attachments :      Award Agreement, 2012 Equity Incentive Plan

 

 

 

 

Yelp Inc.

2012 Equity Incentive Plan

 

Restricted Stock Unit Agreement

 

Pursuant to the Restricted Stock Unit Grant Notice (the “ Grant Notice ”) and this Restricted Stock Unit Agreement (the “ Agreement ”) and in consideration of your services, Yelp Inc. (the “ Company ”) has awarded you a Restricted Stock Unit award (the “ Award ”) under its 2012 Equity Incentive Plan (the “ Plan ”) for the number of Restricted Stock Units indicated in the Grant Notice. Capitalized terms not explicitly defined in this Agreement or in the Grant Notice but defined in the Plan will have the same definitions as in the Plan. In the event of any conflict between the terms in this Agreement and the Plan, the terms of the Plan will control.

 

The details of your Award, in addition to those set forth in the Grant Notice and the Plan, are as follows.

 

1.             Grant of the Award. This Award represents your right to be issued on a future date one share of the Company’s Common Stock for each Restricted Stock Unit that vests. This Award was granted in connection with the Transition Agreement between you and the Company dated February 4, 2016 (the “ Transition Agreement ”).

 

2.             Vesting . Your Restricted Stock Units will vest as provided in the Grant Notice. Vesting will cease upon the termination of your employment prior to the Regular End Date (as defined in the Transition Agreement) and, after the Regular End Date, upon the termination of your employment under the circumstances described in paragraph 6 of the Transition Agreement. Any Restricted Stock Units that have not yet vested as of the date vesting ceases pursuant to the preceding sentence will be forfeited immediately.

 

3.             Number of Restricted Stock Units & Shares of Common Stock.

 

(a)           The Restricted Stock Units subject to your Award will be adjusted for Capitalization Adjustments, as provided in the Plan.

 

(b)           Any additional Restricted Stock Units and any shares, cash or other property that become subject to the Award pursuant to this Section 3 will be subject, in a manner determined by the Board, to the same forfeiture restrictions, restrictions on transferability, and time and manner of delivery as applicable to the other Restricted Stock Units and shares covered by your Award.

 

(c)           No fractional shares or rights for fractional shares of Common Stock will be created pursuant to this Section 3. Any fraction of a share will be rounded down to the nearest whole share.

 

1 .

 

 

4.           Securities Law Compliance . You will not be issued any Common Stock underlying the Restricted Stock Units or other shares with respect to your Restricted Stock Units unless either (i) the shares are registered under the Securities Act, or (ii) the Company has determined that such issuance would be exempt from the registration requirements of the Securities Act. Your Award also must comply with other applicable laws and regulations governing the Award, and you will not receive shares underlying your Restricted Stock Units if the Company determines that such receipt would not be in material compliance with such laws and regulations.

 

5.           Transferability. Prior to the time that shares of Common Stock have been delivered to you, you may not transfer, pledge, sell or otherwise dispose of any portion of the Restricted Stock Units or the shares in respect of your Restricted Stock Units. For example, you may not use shares that may be issued in respect of your Restricted Stock Units as security for a loan, nor may you transfer, pledge, sell or otherwise dispose of such shares. This restriction on transfer will lapse upon delivery to you of shares in respect of your vested Restricted Stock Units.

 

(a)          Death. Your Restricted Stock Units are not transferable other than by will and by the laws of descent and distribution. Upon receiving written permission from the Board or its duly authorized designee, you may, by delivering written notice to the Company, in a form provided by or otherwise satisfactory to the Company and any broker designated by the Company to effect transactions under the Plan, designate a third party who, in the event of your death, will thereafter be entitled to receive any distribution of Common Stock or other consideration to which you were entitled at the time of your death pursuant to this Agreement. In the absence of such a designation, your executor or administrator of your estate will be entitled to receive, on behalf of your estate, such Common Stock or other consideration.

 

(b)          Domestic Relations Orders. Upon receiving written permission from the Board or its duly authorized designee, and provided that you and the designated transferee enter into transfer and other agreements required by the Company, you may transfer your right to receive the distribution of Common Stock or other consideration under your Restricted Stock Units, pursuant to the terms of a domestic relations order or official marital settlement agreement that contains the information required by the Company to effectuate the transfer. You are encouraged to discuss with the Company’s General Counsel the proposed terms of any such transfer prior to finalizing the domestic relations order or marital settlement agreement to help ensure the required information is contained within the domestic relations order or marital settlement agreement. The Company is not obligated to allow you to transfer your Award in connection with your domestic relations order or marital settlement agreement.

 

6.            Date of Issuance.

 

(a)           The issuance of shares in respect of the Restricted Stock Units is intended to comply with Treasury Regulation Section 1.409A-1(b)(4) and will be construed and administered in such a manner.

 

(b)           Subject to the satisfaction of the withholding obligations set forth in Section 10 of this Agreement, in the event one or more Restricted Stock Units vests, the Company will issue to you, on the applicable vesting date, one share of Common Stock for each Restricted Stock Unit that vests and such issuance date is referred to as the “ Original Issuance Date .” If the Original Issuance Date falls on a date that is not a business day, delivery will instead occur on the next following business day.

 

2 .

 

  

(c)           However, if (i) the Original Issuance Date does not occur (1) during an “open window period” applicable to you, as determined by the Company in accordance with the Company’s then-effective policy on trading in Company securities, or (2) on a date when you are otherwise permitted to sell shares of Common Stock on an established stock exchange or stock market (including but not limited to under a previously established Company-approved 10b5-1 trading plan), and (ii) the Company elects, prior to the Original Issuance Date, (1) not to satisfy the Withholding Taxes described in Section 10 by withholding shares of Common Stock from the shares otherwise due, on the Original Issuance Date, to you under this Award, (2) not to permit you to enter into a “same day sale” commitment with a broker-dealer pursuant to Section 10 of this Agreement (including but not limited to a commitment under a previously established Company-approved 10b5-1 trading plan), and (3) not to permit you to pay your Withholding Taxes in cash, then the shares that would otherwise be issued to you on the Original Issuance Date will not be delivered on such Original Issuance Date and will instead be delivered on the first business day when you are not prohibited from selling shares of the Company’s Common Stock in the open public market, but in no event later than December 31 of the calendar year in which the Original Issuance Date occurs (that is, the last day of your taxable year in which the Original Issuance Date occurs), or, if and only if permitted in a manner that complies with Treasury Regulation Section 1.409A-1(b)(4), no later than the date that is the 15th day of the third calendar month of the year following the year in which the shares of Common Stock under this Award are no longer subject to a “substantial risk of forfeiture” within the meaning of Treasury Regulation Section 1.409A-1(d).

 

7.           Dividends. You will receive no benefit or adjustment to your Restricted Stock Units with respect to any cash dividend, stock dividend or other distribution except as provided in the Plan with respect to a Capitalization Adjustment.

 

8.           Restrictive Legends. The Common Stock issued with respect to your Restricted Stock Units will be endorsed with appropriate legends determined by the Company.

 

9.           Award not a Service Contract . Your Continuous Service is not for any specified term and may be terminated by you or by the Company or an Affiliate at any time, for any reason, with or without cause and with or without notice.  Nothing in this Agreement (including, but not limited to, the vesting of your Restricted Stock Units or the issuance of the shares subject to your Restricted Stock Units), the Plan or any covenant of good faith and fair dealing that may be found implicit in this Agreement or the Plan shall:  (i) confer upon you any right to continue in the employ or service of, or affiliation with, the Company or an Affiliate; (ii) constitute any promise or commitment by the Company or an Affiliate regarding the fact or nature of future positions, future work assignments, future compensation or any other term or condition of employment or affiliation; (iii) confer any right or benefit under this Agreement or the Plan unless such right or benefit has specifically accrued under the terms of this Agreement or Plan; or (iv) deprive the Company of the right to terminate you at will and without regard to any future vesting opportunity that you may have.

 

3 .

 

  

10.          Withholding Obligations.

 

(a)           On each vesting date, and on or before the time you receive a distribution of the shares underlying your Restricted Stock Units, and at any other time as reasonably requested by the Company in accordance with applicable tax laws, you agree to make adequate provision for any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or any Affiliate that arise in connection with your Award (the “ Withholding Taxes ”). Specifically, the Company or an Affiliate may, in its sole discretion, satisfy all or any portion of the Withholding Taxes relating to your Award by any of the following means or by a combination of such means: (i) withholding from any compensation otherwise payable to you by the Company or an Affiliate; (ii) causing you to tender a cash payment; (iii) permitting or requiring you to enter into a “same day sale” commitment with a broker-dealer that is a member of the Financial Industry Regulatory Authority (a “ FINRA Dealer ”) whereby you irrevocably elect to sell a portion of the shares to be delivered in connection with your Restricted Stock Units to satisfy the Withholding Taxes and whereby the FINRA Dealer irrevocably commits to forward the proceeds necessary to satisfy the Withholding Taxes directly to the Company and/or its Affiliates; or (iv) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to you in connection with your Restricted Stock Units with a Fair Market Value (measured as of the date shares of Common Stock are issued to you) equal to the amount of such Withholding Taxes; provided, however , that the number of such shares of Common Stock so withheld will not exceed the amount necessary to satisfy the Company’s required tax withholding obligations using the minimum statutory withholding rates for federal, state, local and foreign tax purposes, including payroll taxes, that are applicable to supplemental taxable income.

 

(b)           Unless the Withholding Taxes of the Company and/or any Affiliate are satisfied, the Company will have no obligation to deliver to you any Common Stock.

 

(c)           In the event the Company’s obligation to withhold arises prior to the delivery to you of Common Stock or it is determined after the delivery of Common Stock to you that the amount of the Company’s withholding obligation was greater than the amount withheld by the Company, you agree to indemnify and hold the Company harmless from any failure by the Company to withhold the proper amount.

 

11.          Unsecured Obligation. Your Award is unfunded, and as a holder of vested Restricted Stock Units, you will be considered an unsecured creditor of the Company with respect to the Company’s obligation, if any, to issue shares or other property pursuant to this Agreement. You will not have voting or any other rights as a stockholder of the Company with respect to the shares to be issued pursuant to this Agreement until such shares are issued to you. Upon such issuance, you will obtain full voting and other rights as a stockholder of the Company. Nothing contained in this Agreement, and no action taken pursuant to its provisions, will create or be construed to create a trust of any kind or a fiduciary relationship between you and the Company or any other person.

 

12.          Other Documents . You hereby acknowledge receipt of and the right to receive a document providing the information required by Rule 428(b)(1) promulgated under the Securities Act, which includes the Plan prospectus. In addition, you acknowledge receipt of the Company’s policy permitting certain individuals to sell shares only during certain “window” periods and the Company’s insider trading policy, in effect from time to time.

 

4 .

 

  

13.          Notices . Any notices provided for in this Agreement or the Plan will be given in writing (including electronically) and will be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to the Company. The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan and this Award by electronic means or to request your consent to participate in the Plan by electronic means. By accepting this Award, you consent to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

 

14.          Miscellaneous .

 

(a)           The rights and obligations of the Company under your Award will be transferable to any one or more persons or entities, and all covenants and agreements hereunder will inure to the benefit of, and be enforceable by the Company’s successors and assigns.

 

(b)           You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to carry out the purposes or intent of your Award.

 

(c)           You acknowledge and agree that you have reviewed your Award in its entirety, have had an opportunity to obtain the advice of counsel prior to executing and accepting your Award, and fully understand all provisions of your Award.

 

(d)           This Agreement will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

 

(e)           All obligations of the Company under the Plan and this Agreement will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

 

15.          Governing Plan Document . Your Award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your Award, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. Except as expressly provided in this Agreement, in the event of any conflict between the provisions of your Award and those of the Plan, the provisions of the Plan will control.

 

16.          Severability. If all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid. Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

 

5 .

 

  

17.          Effect on Other Employee Benefit Plans. The value of the Award subject to this Agreement will not be included as compensation, earnings, salaries, or other similar terms used when calculating the Employee’s benefits under any employee benefit plan sponsored by the Company or any Affiliate, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company’s or any Affiliate’s employee benefit plans.

 

18.          Amendment. Any amendment to this Agreement must be in writing, signed by a duly authorized representative of the Company. The Board reserves the right to amend this Agreement in any way it may deem necessary or advisable to carry out the purpose of the grant as a result of any change in applicable laws or regulations or any future law, regulation, interpretation, ruling, or judicial decision.

 

19.          Compliance with Section 409A of the Code . This Award is intended to comply with the “short-term deferral” rule set forth in Treasury Regulation Section 1.409A-1(b)(4). However, if this Award fails to satisfy the requirements of the short-term deferral rule and is otherwise not exempt from, and therefore deemed to be deferred compensation subject to, Section 409A of the Code, and if you are a “Specified Employee” (within the meaning set forth Section 409A(a)(2)(B)(i) of the Code) as of the date of your separation from service (within the meaning of Treasury Regulation Section 1.409A-1(h)), then the issuance of any shares that would otherwise be made upon the date of the separation from service or within the first six months thereafter will not be made on the originally scheduled dates and will instead be issued in a lump sum on the date that is six months and one day after the date of the separation from service, with the balance of the shares issued thereafter in accordance with the original vesting and issuance schedule set forth above, but if and only if such delay in the issuance of the shares is necessary to avoid the imposition of taxation on you in respect of the shares under Section 409A of the Code. Each installment of shares that vests is a “separate payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2).

 

20.          No Obligation to Minimize Taxes. The Company has no duty or obligation to minimize the tax consequences to you of this Award and will not be liable to you for any adverse tax consequences to you arising in connection with this Award. You are hereby advised to consult with your own personal tax, financial and/or legal advisors regarding the tax consequences of this Award and by signing the Grant Notice, you have agreed that you have done so or knowingly and voluntarily declined to do so.

 

*    *    *

 

This Restricted Stock Unit Agreement will be deemed to be signed by you upon the signing by you of the Restricted Stock Unit Grant Notice to which it is attached.

 

6 .

 

 

Exhibit 99.1

Yelp Announces Fourth Quarter and Full Year 2015 Financial Results



Revenue Increases 46% Over Full Year 2014; Company Announces CFO Transition

SAN FRANCISCO, Feb. 8, 2016 /PRNewswire/ -- Yelp Inc. (NYSE: YELP), the company that connects consumers with great local businesses, today announced financial results for the fourth quarter and full year ended December 31, 2015.

YELP LOGO. (PRNEWSFOTO)
  • Net revenue was $153.7 million in the fourth quarter of 2015, reflecting 40% growth over the fourth quarter of 2014.
  • Cash flow from operations was $3.8 million in the fourth quarter. Adjusted EBITDA for the fourth quarter of 2015 was $17.5 million.
  • Cumulative reviews grew 34% year over year to approximately 95 million.
  • App Unique Devices grew 38% year over year to approximately 20 million on a monthly average basis 1 .
  • Local advertising accounts grew 32% year over year to approximately 111,000.

Net loss in the fourth quarter of 2015 was ($22.2) million, or ($0.29) per share, compared to net income of $32.7 million, or $0.42 per share, in the fourth quarter of 2014. Net loss for the fourth quarter of 2015 included an income tax expense of $20.3 million due to the recording of a valuation allowance against our deferred tax assets. Non-GAAP net income, which consists of net income excluding stock-based compensation, amortization and valuation allowance and release, was $9.0 million for the fourth quarter, or $0.11 per share, compared to $14.5 million, or $0.19 per share, in the fourth quarter of 2014.

Net revenue for the full year ended December 31, 2015 was $549.7 million, an increase of 46% compared to $377.5 million in the prior year. Adjusted EBITDA for the full year 2015 was $69.1 million compared to $70.9 million for the prior year. Net loss for the full year ended December 31, 2015 was ($32.9) million, or ($0.44) per share, compared to a net income of $36.5 million, or $0.48 per share, in 2014. Non-GAAP net income for the full year ended December 31, 2015 was $28.9 million, or $0.37 per share, compared to $36.3 million, or $0.47 per share in 2014.

"We are pleased with the progress we made on the key initiatives we set at the beginning of 2015," said Jeremy Stoppelman, Yelp's co-founder and chief executive officer. "We have evolved to a mobile-centric company and have successfully completed our transition to a performance-based advertising business. In 2016, our priorities are to continue to build our core local advertising business, further increase engagement and awareness and grow transactions. With our rich, relevant review content and highly engaged consumer traffic, we are well-positioned to capture the enormous opportunity ahead of us."

"We delivered strong topline growth of 46% year over year as we surpassed half a billion dollars of revenue in 2015," added Rob Krolik, Yelp's chief financial officer.

Fourth Quarter Operating Summary

  • Local advertising revenue totaled $125.9 million, representing 35% growth compared to the fourth quarter of 2014.
  • Transactions revenue totaled $14.0 million, compared to $1.4 million in the fourth quarter of 2014, primarily due to the acquisition of Eat24 in the first quarter of 2015.
  • Brand advertising revenue totaled $7.1 million, representing an 18% decrease compared to the fourth quarter of 2014. Yelp has completed the phase out of its brand advertising product and will have no Brand advertising revenue in 2016.
  • Other revenue totaled $6.8 million which was flat compared to the fourth quarter of 2014.

Business Highlights

  • App engagement: Approximately 20 million unique devices accessed Yelp via the mobile app on a monthly average basis in the fourth quarter of 2015, an increase of 38% compared to the same period in 2014. In the fourth quarter of 2015, Yelp app users were more than 10 times as engaged as website users based on number of pages viewed.
  • Performance-based advertising: In 2015, Yelp completed its transition to a performance-based advertising business. As of the fourth quarter of 2015, 61% of local advertising revenue came from CPC advertisers, compared to 32% in the fourth quarter of 2014.
  • Eat24 & SeatMe: In 2015, Yelp acquired leading web and app-based online food ordering service Eat24. In the fourth quarter, Eat24 revenue growth accelerated, with revenue up approximately 80% compared to the fourth quarter of 2014. In the fourth quarter of 2015, over 15 million diners were seated through SeatMe, an increase of approximately 120% over the fourth quarter of 2014.

CFO Transition

The company announced that chief financial officer Rob Krolik will be stepping down and departing the company in the coming months. Krolik, who joined the company in 2011, will continue as chief financial officer until the earlier of the date a replacement is hired and December 15, 2016, and will assist in the search and transition. The company intends to immediately begin a search for a new chief financial officer.

"Rob has played a crucial role in Yelp's successful transition from startup to public company, bringing his professionalism and experience to bear in setting Yelp on a firm financial foundation and headed in the right direction," said Jeremy Stoppelman. "I am grateful for his counsel, his leadership and work on our public offerings and five acquisitions, and his efforts in opening facilities around the world to accommodate our more than 4,000 employees. I will miss his passion for Yelp and wish him continued success in his next endeavor."

"I am a strong believer in the power of Yelp to help consumers and local businesses alike, which is why it has been such a tremendous opportunity and privilege to serve as CFO," said Krolik. "It's been a rewarding experience taking Yelp public, diversifying our offerings through acquisitions, and seeing our team deliver significant and consistent revenue growth year after year. After almost five years with Yelp, I am ready to take some time off to spend more time with family, but expect us to seamlessly transition to a new chief financial officer in the meantime."

Business Outlook

As of today, Yelp is providing its outlook for the first quarter and full year of 2016.

  • For the first quarter of 2016, net revenue is expected to be in the range of $154 million to $157 million, representing growth of approximately 31% compared to the first quarter of 2015 at the the midpoint. Adjusted EBITDA is expected to be in the range of $10 million to $12 million. Stock-based compensation is expected to be in the range of $19 million to $21 million, and depreciation and amortization is expected to be approximately 5% of revenue.
  • For the full year of 2016, net revenue is expected to be in the range of $685 million to $700 million, representing growth of approximately 26% compared to full year 2015 at the midpoint. Adjusted EBITDA is expected to be in the range of $90 million to $105 million. Stock-based compensation is expected to be in the range of $83 million to $87 million, and depreciation and amortization is expected to be approximately 5% of revenue.

Quarterly Conference Call

To access the call, please dial 1 (866) 776-8879, or outside the U.S. 1 (440) 996-5670, with Passcode 29597481, at least five minutes prior to the 1:30 p.m. PT start time. A live webcast of the call will also be available at http://www.yelp-ir.com under the Events & Presentations menu. An audio replay will be available between 4:00 p.m. PT February 8, 2016 and 11:59 p.m. PT February 15, 2016 by calling 1 (855) 859-2056 or 1 (800) 585-8367, with Passcode 29597481. The replay will also be available on the Company's website at http://www.yelp-ir.com.

About Yelp

Yelp Inc. (http://www.yelp.com) connects people with great local businesses. Yelp was founded in San Francisco in July 2004. Since then, Yelp communities have taken hold in major metros across more than 30 countries. Approximately 20 million unique devices 1 accessed Yelp via the Yelp app, approximately 75 million unique visitors visited Yelp via desktop computer 2 and approximately 66 million unique visitors visited Yelp via mobile website 3 on a monthly average basis during the fourth quarter of 2015. By the end of the same quarter, Yelpers had written approximately 95 million rich, local reviews, making Yelp the leading local guide for real word-of-mouth on everything from boutiques and mechanics to restaurants and dentists.

1 Calculated as the number of unique devices accessing the app on a monthly average basis over a given three-month period, according to internal Yelp logs.

2 Calculated as the number of "users," as measured by Google Analytics, accessing Yelp via desktop computer on an average monthly basis over a given three-month period.

3 Calculated as the number of "users," as measured by Google Analytics, accessing Yelp via mobile website on a monthly average basis over a given three-month period.

Non-GAAP Financial Measures

This press release includes information relating to adjusted EBITDA, non-GAAP net income and non-GAAP net income per share, each of which the Securities and Exchange Commission has defined as a "non-GAAP financial measure." Adjusted EBITDA, non-GAAP net income and non-GAAP net income per share have been included in this press release because they are key measures used by Yelp management and board of directors to understand and evaluate core operating performance and trends, to prepare and approve its annual budget and to develop short- and long-term operational plans. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles in the United States ("GAAP").

Adjusted EBITDA and non-GAAP net income have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of Yelp's financial results as reported under GAAP. 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 and non-GAAP net income do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
  • adjusted EBITDA does not reflect changes in, or cash requirements for, Yelp's working capital needs;
  • adjusted EBITDA and non-GAAP net income do not consider the potentially dilutive impact of equity-based compensation;
  • non-GAAP net income does not reflect the impact of the valuation allowance release in the fourth quarter of 2014 or the recording of the valuation allowance in the fourth quarter of 2015;
  • adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to Yelp; and
  • other companies, including those in Yelp's industry, may calculate adjusted EBITDA and non-GAAP net income differently, which reduces their usefulness as comparative measures.

Because of these limitations, you should consider adjusted EBITDA, non-GAAP net income and non-GAAP net income per share alongside other financial performance measures, including various cash flow metrics, net income (loss) and Yelp's other GAAP results. Additionally, Yelp has not reconciled its adjusted EBITDA outlook for the first quarter and full year 2016 to its net income (loss) outlook because it does not provide an outlook for other income (expense) and provision for income taxes, which are reconciling items between net income (loss) and adjusted EBITDA. As items that impact net income (loss) are out of Yelp's control and cannot be reasonably predicted, Yelp is unable to provide such an outlook. Accordingly, reconciliation to net income (loss) outlook for the first quarter and full year 2016 is not available without unreasonable effort. For a reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see the non-GAAP reconciliations included below in this press release.

Forward-Looking Statements

This press release contains forward-looking statements relating to, among other things, the future performance of Yelp and its consolidated subsidiaries that are based on Yelp's current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding expected financial results for the first quarter and full year 2016, Yelp's priorities for 2016 and its ability to execute against those priorities, CFO transition and timing thereof, Yelp's ability to improve its margins, Yelp's ability to capture a meaningful share of the large local market, the future growth in Yelp revenue and continued investing by Yelp in its future growth, Yelp's ability to drive daily usage and engagement (particularly on mobile), increase awareness of Yelp among consumers, and deliver value to local businesses, Yelp's ability to increase transactions completed on its platform, Yelp's ability to take advantage of trends toward app usage and native advertising and to become the leading destination for consumers connecting with great local businesses. Yelp's actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Factors that could cause or contribute to such differences include, but are not limited to: Yelp's limited operating history in an evolving industry; Yelp's ability to generate sufficient revenue to regain profitability, particularly in light of its significant ongoing sales and marketing expenses; Yelp's ability to successfully manage acquisitions of new businesses, solutions or technologies, such as Eat24, and to integrate those businesses, solutions or technologies; Yelp's reliance on traffic to its website from search engines like Google and Bing; Yelp's ability to generate and maintain sufficient high quality content from its users; maintaining a strong brand and managing negative publicity that may arise; maintaining and expanding Yelp's base of advertisers; changes in political, business and economic conditions, including any European or general economic downturn or crisis and any conditions that affect ecommerce growth; fluctuations in foreign currency exchange rates; Yelp's ability to deal with the increasingly competitive local search environment; Yelp's need and ability to manage other regulatory, tax and litigation risks as its services are offered in more jurisdictions and applicable laws become more restrictive; the competitive and regulatory environment while Yelp continues to expand geographically and introduce new products and as new laws and regulations related to Internet companies come into effect; Yelp's ability to timely upgrade and develop its systems, infrastructure and customer service capabilities. The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof.

More information about factors that could affect Yelp's operating results is included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Yelp's most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q at http://www.yelp-ir.com or the SEC's website at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to Yelp on the date hereof. Yelp assumes no obligation to update such statements.

Investor Relations Contact Information
Wendy Lim, Ronald Clark, Allie Dalglish
(415) 635-2412
ir@yelp.com

Media Contact Information
Shannon Eis
(415) 635-2478
seis@yelp.com

Yelp Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)









December 31,



December 31,



2015



2014

Assets






Current assets:






Cash and cash equivalents


$         171,613



$        247,312

Short-term marketable securities


199,214



118,498

Accounts receivable, net


52,755



35,593

Prepaid expenses and other current assets


19,700



19,355

Total current assets


443,282



420,758







Long-term marketable securities


-



38,612

Property, equipment and software, net


80,467



62,761

Goodwill


172,197



67,307

Intangibles, net


39,294



5,786

Restricted cash


16,486



17,943

Other assets


3,701



16,483

Total assets


$         755,427



$        629,650







Liabilities  and stockholders' equity






Current liabilities:






Accounts payable


$             3,388



$            1,398

Accrued liabilities


43,458



29,581

Deferred revenue


2,931



2,994

Total current liabilities


49,777



33,973

Long-term liabilities


12,030



7,527

Total liabilities


61,807



41,500







Stockholders' equity






Common stock


-



-

Additional paid-in capital


774,022



627,742

Accumulated other comprehensive loss


(13,519)



(5,609)

Accumulated deficit


(66,883)



(33,983)

Total stockholders' equity


693,620



588,150

Total liabilities and stockholders' equity


$          755,427



$         629,650

Yelp Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)




Three Months Ended


Twelve Months Ended



December 31,


December 31,



2015


2014


2015


2014










Net revenue


$ 153,731


$ 109,887


$ 549,711


$ 377,536










Costs and expenses









Cost of revenue (1)


15,000


7,286


51,015


24,382

Sales and marketing (1)


87,535


53,580


301,764


201,050

Product development (1)


28,970


19,076


107,786


65,181

General and administrative (1)


20,659


16,662


80,866


58,274

Depreciation and amortization


7,980


5,291


29,604


17,590










Total costs and expenses


160,144


101,895


571,035


366,477

Income (Loss) from operations


(6,413)


7,992


(21,324)


11,059

Other income (expense), net


40


38


386


221

Income (Loss) before income taxes


(6,373)


8,030


(20,938)


11,280

Benefit (Provision) for income taxes


(15,856)


24,698


(11,962)


25,193

Net income (loss) attributable to common stockholders


$ (22,229)


$   32,728


$ (32,900)


$   36,473










Net income (loss) per share attributable to common stockholders:









Basic


$     (0.29)


$       0.45


$     (0.44)


$       0.51

Diluted


$     (0.29)


$       0.42


$     (0.44)


$       0.48



















Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:









Basic


75,372


72,645


74,683


71,936

Diluted


75,372


77,211


74,683


76,712




























(1) Includes stock-based compensation expense as follows:











Three Months Ended


Twelve Months Ended



December 31,


December 31,



2015


2014


2015


2014

Cost of revenue


$        336


$        207


$     1,117


$        729

Sales and marketing


5,803


4,038


21,962


15,083

Product development


6,314


4,508


23,431


14,804

General and administrative


3,519


3,063


14,332


11,657

Total stock-based compensation


$   15,972


$   11,816


$   60,842


$   42,273

Yelp Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



Twelve Months Ended



December 31,



2015


2014

Operating activities





Net income (loss)


$ (32,900)


$  36,473

 Adjustments to reconcile net income (loss) to net cash provided by operating activities:





  Depreciation and amortization


29,604


17,590

  Provision for doubtful accounts and sales returns


16,788


7,238

  Stock-based compensation


60,842


42,273

  Recording (Release) of valuation allowance


20,341


(28,197)

  Loss on disposal of assets and website development costs


213


4

  Premium amortization, net, on securities held-to-maturity


1,190


349

  Excess tax benefit from share-based award activity


(6,583)


(1,834)

  Realized (gain) on investments


(4)


-






Changes in operating assets and liabilities:





Accounts receivable


(25,279)


(21,291)

Prepaid expenses and other assets


(22,703)


(4,011)

Accounts payable, accrued expenses and other liabilities


15,894


8,927

Deferred revenue


(41)


411

Net cash provided by operating activities


57,362


57,932






Investing activities





Acquisition, net of cash received


(73,422)


(14,340)

Purchases of property, equipment and software


(31,127)


(29,054)

Capitalized website and software development costs


(11,734)


(11,349)

Change in restricted cash


1,404


(14,764)

Purchase of intangibles


(647)


(1,724)

Proceeds from sale of property and equipment


134


14

Purchases of marketable securities


(246,160)


(210,459)

Maturities of marketable securities


202,870


53,002











Net cash used in investing activities


(158,682)


(228,674)






Financing activities





Issuance of common stock upon exercise of employee stock options


12,255


-

Proceeds from issuance of common stock from share-based awards


-


20,164

Proceeds from issuance of common stock for Employee Stock Purchase Plan


8,911


8,869

Repurchase of common stock


(482)


(1,318)

Excess tax benefit from stock-based award activity


6,583


1,834

Contingent consideration payments


(825)


-











Net cash provided by financing activities


26,442


29,549






Effect of exchange rate changes on cash and cash equivalents


(821)


(1,259)






Change in cash and cash equivalents


(75,699)


(142,452)

Cash and cash equivalents - Beginning of period


247,312


389,764

Cash and cash equivalents - End of period


$ 171,613


$ 247,312

Yelp Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands)

(Unaudited)













Three Months Ended


Twelve Months Ended




December 31,


December 31,




2015


2014


2015


2014











Adjusted EBITDA:










Net income (loss)


$ (22,229)


$ 32,728


$ (32,900)


$ 36,473


(Benefit) provision for income taxes


15,856


(24,698)


11,962


(25,193)


Other (income) expense, net


(40)


(38)


(386)


(221)


Depreciation and amortization


7,980


5,291


29,604


17,590


Stock-based compensation


15,972


11,816


60,842


42,273


Adjusted EBITDA


$  17,539


$ 25,099


$  69,122


$ 70,922











Non-GAAP Net Income (Loss) and Income (Loss) per share:









GAAP net income (loss)


$ (22,229)


$ 32,728


$ (32,900)


$ 36,473


   Add back: stock-based compensation


15,972


11,816


60,842


42,273


   Add back: amortization of intangible assets


1,718


550


6,475


2,448


   Less: tax effect of stock-based compensation & amortization of intangible assets


 

(6,827)


 

(4,422)


 

(25,853)


 

(16,654)


   Add back: recording (release) of valuation allowance (net of tax)


20,341


(26,197)


20,341


(28,197)


NON-GAAP NET INCOME


$    8,975


$ 14,475


$  28,905


$ 36,343












GAAP diluted shares


78,166


77,211


78,078


76,712











NON-GAAP NET INCOME PER SHARE


$      0.11


$     0.19


$      0.37


$     0.47

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