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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 September 30, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the Transition period from                 to

Commission file number: 001-35444
_____________________________________________________________________________________________________
YELP INC.

(Exact Name of Registrant as Specified in Its Charter)
______________________________________________________________________________________________________
Delaware 20-1854266
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
140 New Montgomery Street, 14th 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 October 29, 2021, there were 73,016,049 shares outstanding of the registrant’s common stock, par value $0.000001 per share.

YELP INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Page
Part I.
Item 1.
4
5
6
7
9
10
Item 2.
25
Item 3.
35
Item 4.
35
Part II.
Item 1.
36
Item 1A.
36
Item 2.
37
Item 3.
37
Item 4.
37
Item 5.
37
Item 6.
38
___________________________________
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.

1
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report contains forward-looking statements that involve risks, uncertainties and assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. All statements contained in this Quarterly Report that are not purely historical, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements may include, but are not limited to, statements about:
•our financial performance, including our revenue, operating expenses and margins, as well as our ability to sustain profitability;
•our ability to maintain and expand our advertiser base;
•our strategic initiatives to support revenue growth and margin expansion;
•our investment plans and priorities, including planned investments in product development, marketing and our sales channels, as well as our ability to execute against those priorities and the results thereof;
•our plans to operate with a primarily distributed workforce as well as the benefits and costs thereof;
•trends and expectations regarding customer and revenue retention;
•trends and expectations regarding our key metrics, including consumer traffic and engagement and the opportunity they present for growth;
•our liquidity and working capital requirements; and
•our plans with respect to our stock repurchase program.
Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements.
These statements are based on the beliefs and assumptions of our management, which are in turn based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” included under Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “Annual Report”) and elsewhere in this Quarterly Report, such as:
•our ability to hire, retain, motivate and effectively manage well-qualified employees in a primarily remote work environment;
2
•our ability to accurately forecast revenue and appropriately plan expenses;
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 our 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, 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.

3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
YELP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
September 30,
2021 		December 31,
2020
Assets
Current assets:
Cash and cash equivalents $ 531,620  $ 595,875 
Accounts receivable (net of allowance for doubtful accounts of $7,874 and $11,559 at September 30, 2021 and December 31, 2020, respectively)
105,843  88,400 
Prepaid expenses and other current assets 29,643  28,450 
Total current assets 667,106  712,725 
Property, equipment and software, net 92,429  101,718 
Operating lease right-of-use assets 140,758  168,209 
Goodwill 106,500  109,261 
Intangibles, net 11,384  13,521 
Restricted cash 1,054  665 
Other non-current assets 59,837  48,848 
Total assets $ 1,079,068  $ 1,154,947 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 106,408  $ 87,760 
Operating lease liabilities — current 39,625  51,161 
Deferred revenue 4,499  4,109 
Total current liabilities 150,532  143,030 
Operating lease liabilities — long-term 138,431  148,935 
 Other long-term liabilities
8,282  8,448 
Total liabilities 297,245  300,413 
Commitments and contingencies (Note 12)
Stockholders' equity:
Common stock, $0.000001 par value — 200,000,000 shares authorized, 73,651,980 shares issued and 73,546,380 shares outstanding at September 30, 2021, and 75,371,368 shares issued and 75,272,350 shares outstanding at December 31, 2020
—  — 
Additional paid-in capital 1,489,862  1,398,248 
Treasury stock (4,170) (2,964)
Accumulated other comprehensive loss (9,781) (6,807)
Accumulated deficit (694,088) (533,943)
Total stockholders' equity 781,823  854,534 
Total liabilities and stockholders' equity $ 1,079,068  $ 1,154,947 

See Notes to Condensed Consolidated Financial Statements.
4
YELP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
Net revenue $ 269,155  $ 220,807  $ 758,439  $ 639,738 
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below) 21,185  13,193  54,052  41,865 
Sales and marketing 114,295  101,301  340,845  334,887 
Product development 69,402  53,022  206,089  174,104 
General and administrative 30,001  30,887  106,957  100,825 
Depreciation and amortization 12,627  12,544  38,543  37,484 
Restructuring —  535  32  3,847 
Total costs and expenses 247,510  211,482  746,518  693,012 
Income (loss) from operations 21,645  9,325  11,921  (53,274)
Other income, net 331  399  1,578  3,277 
Income (loss) before income taxes 21,976  9,724  13,499  (49,997)
Provision for (benefit from) income taxes 3,911  10,744  (2,982) (9,484)
Net income (loss) attributable to common stockholders $ 18,065  $ (1,020) $ 16,481  $ (40,513)
Net income (loss) per share attributable to common stockholders
Basic $ 0.24  $ (0.01) $ 0.22  $ (0.56)
Diluted $ 0.23  $ (0.01) $ 0.21  $ (0.56)
Weighted-average shares used to compute net income (loss) per share attributable to common stockholders
Basic 73,904  73,514  74,647  72,495 
Diluted 77,422  73,514  79,007  72,495 

See Notes to Condensed Consolidated Financial Statements.

5
YELP INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
Three Months Ended
September 30, 		Nine Months Ended
September 30,
  2021 2020 2021 2020
Net income (loss) $ 18,065  $ (1,020) $ 16,481  $ (40,513)
Other comprehensive (loss) income:
Foreign currency translation adjustments, net of tax (1,403) 2,269  (2,974) 2,183 
Other comprehensive (loss) income (1,403) 2,269  (2,974) 2,183 
Comprehensive income (loss) $ 16,662  $ 1,249  $ 13,507  $ (38,330)

See Notes to Condensed Consolidated Financial Statements.


6
YELP INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share data)
(Unaudited)
Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity
Shares Amount
Balance as of June 30, 2020 73,121,229  $ —  $ 1,325,745  $ —  $ (11,845) $ (532,580) $ 781,320 
Issuance of common stock upon exercises of employee stock options 63,031  —  812  —  —  —  812 
Issuance of common stock upon vesting of restricted stock units ("RSUs") 792,227  —  —  —  —  —  — 
Stock-based compensation (inclusive of capitalized stock-based compensation) —  —  32,247  —  —  —  32,247 
Foreign currency adjustments, net of tax —  —  —  —  2,269  —  2,269 
Net loss —  —  —  —  —  (1,020) (1,020)
Balance as of September 30, 2020 73,976,487  $ —  $ 1,358,804  $ —  $ (9,576) $ (533,600) $ 815,628 
Balance as of June 30, 2021 74,589,907  $ —  $ 1,464,490  $ (4,250) $ (8,378) $ (648,398) $ 803,464 
Issuance of common stock upon exercises of employee stock options 68,626  —  1,220  —  —  —  1,220 
Issuance of common stock upon vesting of RSUs 658,796  —  —  —  —  —  — 
Stock-based compensation (inclusive of capitalized stock-based compensation) —  —  38,613  —  —  —  38,613 
Shares withheld related to net share settlement of equity awards —  —  (14,461) —  —  —  (14,461)
Repurchases of common stock —  —  —  (63,675) —  —  (63,675)
Retirement of common stock (1,665,349) —  —  63,755  —  (63,755) — 
Foreign currency adjustments, net of tax —  —  —  —  (1,403) —  (1,403)
Net income —  —  —  —  —  18,065  18,065 
Balance as of September 30, 2021 73,651,980  $ —  $ 1,489,862  $ (4,170) $ (9,781) $ (694,088) $ 781,823 

See Notes to Condensed Consolidated Financial Statements.

7
YELP INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)
(In thousands, except share data)
(Unaudited)
Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity
Shares Amount
Balance as of December 31, 2019 71,185,468  $ —  $ 1,259,803  $ —  $ (11,759) $ (493,053) $ 754,991 
Cumulative effect adjustment upon adoption of ASU 2016-13 —  —  —  —  —  (34) (34)
Issuance of common stock upon exercises of employee stock options 285,388  —  3,606  —  —  —  3,606 
Issuance of common stock upon vesting of RSUs 2,071,934  —  —  —  —  —  — 
Issuance of common stock for employee stock purchase plan 433,697  —  8,014  —  —  —  8,014 
Stock-based compensation (inclusive of capitalized stock-based compensation) —  —  99,133  —  —  —  99,133 
Shares withheld related to net share settlement of equity awards —  —  (11,752) —  —  —  (11,752)
Foreign currency adjustments, net of tax —  —  —  —  2,183  —  2,183 
Net loss —  —  —  —  —  (40,513) (40,513)
Balance as of September 30, 2020 73,976,487  $ —  $ 1,358,804  $ —  $ (9,576) $ (533,600) $ 815,628 
Balance as of December 31, 2020 75,371,368  $ —  $ 1,398,248  $ (2,964) $ (6,807) $ (533,943) $ 854,534 
Issuance of common stock upon exercises of employee stock options 633,549  —  8,132  —  —  —  8,132 
Issuance of common stock upon vesting of RSUs 2,073,098  —  —  —  —  —  — 
Issuance of common stock for employee stock purchase plan 254,449  —  8,675  —  —  —  8,675 
Stock-based compensation (inclusive of capitalized stock-based compensation) —  —  124,306  —  —  —  124,306 
Shares withheld related to net share settlement of equity awards —  —  (49,499) —  —  —  (49,499)
Repurchases of common stock —  —  —  (177,832) —  —  (177,832)
Retirement of common stock (4,680,484) —  —  176,626  —  (176,626) — 
Foreign currency adjustments, net of tax —  —  —  —  (2,974) —  (2,974)
Net income —  —  —  —  —  16,481  16,481 
Balance as of September 30, 2021 73,651,980  $ —  $ 1,489,862  $ (4,170) $ (9,781) $ (694,088) $ 781,823 

See Notes to Condensed Consolidated Financial Statements.

8
YELP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2021 2020
Operating Activities
Net income (loss) $ 16,481  $ (40,513)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 38,543  37,484 
Provision for doubtful accounts 9,834  26,802 
Stock-based compensation 116,546  92,590 
Noncash lease cost 30,676  31,545 
Deferred income taxes (6,400) (6,505)
Asset impairment 11,164  — 
Other adjustments, net 103  1,316 
Changes in operating assets and liabilities:
Accounts receivable (27,279) (4,783)
Prepaid expenses and other assets (4,261) 1,552 
Operating lease liabilities (32,891) (34,284)
Accounts payable, accrued liabilities and other liabilities 15,219  23,181 
Net cash provided by operating activities 167,735  128,385 
Investing Activities
Sales and maturities of marketable securities — available-for-sale —  290,395 
Purchases of marketable securities — held-to-maturity —  (87,438)
Maturities of marketable securities — held-to-maturity —  93,200 
Purchases of property, equipment and software (21,600) (24,072)
Other investing activities 341  329 
Net cash (used in) provided by investing activities (21,259) 272,414 
Financing Activities
Proceeds from issuance of common stock for employee stock-based plans 16,807  11,620 
Taxes paid related to the net share settlement of equity awards (49,180) (12,557)
Repurchases of common stock (177,832) — 
Other financing activities —  (433)
Net cash used in financing activities (210,205) (1,370)
Effect of exchange rate changes on cash, cash equivalents and restricted cash (137) (132)
Change in cash, cash equivalents and restricted cash (63,866) 399,297 
Cash, cash equivalents and restricted cash — Beginning of period 596,540  192,318 
Cash, cash equivalents and restricted cash — End of period $ 532,674  $ 591,615 
Supplemental Disclosures of Other Cash Flow Information
(Refund received) cash paid for income taxes, net $ (349) $ 109 
Supplemental Disclosures of Noncash Investing and Financing Activities
Purchases of property, equipment and software recorded in accounts payable and accrued liabilities $ 2,336  $ 2,168 
Tax liabilities related to equity awards included in accounts payable and accrued liabilities $ 23  $ — 
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities $ 11,712  $ 11,833 
Repurchases of common stock recorded in accounts payable and accrued liabilities $ 2,130  $ — 

See Notes to Condensed Consolidated Financial Statements.
9
YELP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. DESCRIPTION OF BUSINESS AND BASIS FOR PRESENTATION
Yelp Inc. was incorporated in Delaware on September 3, 2004. Except where specifically noted or the context otherwise requires, the use of terms such as the "Company" and "Yelp" in these Notes to Condensed Consolidated Financial Statements refers to Yelp Inc. and its subsidiaries.
Yelp is a trusted local resource for consumers and a partner in success for businesses of all sizes. Consumers trust Yelp for its extensive ratings and reviews of businesses across a broad range of categories, while businesses advertise on Yelp to reach its large audience of purchase-oriented and generally affluent consumers.
Basis of Presentation
The accompanying interim condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the U.S. Securities and Exchange Commission ("SEC") regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Annual Report.
The unaudited condensed consolidated balance sheet as of December 31, 2020 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures required by GAAP, including certain notes to the financial statements. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements, except as set forth under "Recently Adopted Accounting Pronouncements" below.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments of a normally recurring nature necessary for the fair presentation of the interim periods presented.
Principles of Consolidation
These unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation.
Use of Estimates
The preparation of the Company’s unaudited interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the condensed consolidated financial statements; therefore, actual results could differ from management’s estimates.
In early March 2020, COVID-19 was declared a global pandemic by the World Health Organization. Governments around the world, including in the United States, have implemented extensive measures in an effort to control the spread of COVID-19, including travel restrictions, limitations on business activity, quarantines and shelter-in-place orders. Due to the COVID-19 pandemic — including existing variants and any possible future variants — and the uncertainty of the extent of the impacts, certain estimates and assumptions have required and may continue to require increased judgment and carry a higher degree of variability and volatility than they did prior to the pandemic. As events continue to evolve and additional information becomes available, these estimates may materially change in future periods.
Significant Accounting Policies
There have been no material changes to the Company's significant accounting policies from those described in the Annual Report.
10
Recently Adopted Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" ("ASU 2019-12"), which simplifies the accounting for income taxes by removing certain exceptions to the general principles for recording income taxes, while also simplifying certain recognition and allocation approaches to accounting for income taxes. The Company adopted ASU 2019-12 on January 1, 2021, and the adoption did not have a material impact on its consolidated financial statements.
2. CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash, cash equivalents and restricted cash as of September 30, 2021 and December 31, 2020 consisted of the following (in thousands):
September 30,
2021 		December 31,
2020
Cash $ 51,274  $ 85,750 
Cash equivalents 480,346  510,125 
Total cash and cash equivalents $ 531,620  $ 595,875 
Restricted cash 1,054  665 
Total cash, cash equivalents and restricted cash $ 532,674  $ 596,540 
3. FAIR VALUE MEASUREMENTS
The Company’s investments in money market accounts are recorded as cash equivalents at fair value on the condensed consolidated balance sheets.
The accounting guidance for fair value measurements prioritizes the inputs used in measuring fair value in the following hierarchy:
Level 1—Observable inputs, such as quoted prices in active markets,
Level 2—Inputs other than quoted prices in active markets that are observable either directly or indirectly, or
Level 3—Unobservable inputs in which there are little or no market data, which require the Company to develop its own assumptions.
This hierarchy requires the Company to use observable market data, when available, to minimize the use of unobservable inputs when determining fair value. The Company’s money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted prices in active markets. The Company's certificates of deposit are classified within Level 2 of the fair value hierarchy because they have been valued using inputs other than quoted prices in active markets that are observable directly or indirectly.
The following table represents the fair value of the Company’s financial instruments, including those measured at fair value on a recurring basis, as of September 30, 2021 and December 31, 2020 (in thousands):
September 30, 2021 December 31, 2020
  Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Cash equivalents:  
Money market funds $ 480,346  $ —  $ —  $ 480,346  $ 510,125  $ —  $ —  $ 510,125 
Other investments:
Certificates of deposit —  10,000  —  10,000  —  10,933  —  10,933 
Total cash equivalents and other investments $ 480,346  $ 10,000  $ —  $ 490,346  $ 510,125  $ 10,933  $ —  $ 521,058 
11
The certificates of deposit are reflected in prepaid expenses and other current assets on the condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020.
The Company's long- and indefinite-lived assets, such as property, equipment and software, goodwill and other intangible assets, are measured at fair value on a non-recurring basis if the assets are determined to be impaired. The Company recognized an impairment charge related to right-of-use ("ROU") assets and leasehold improvements associated with certain of its operating leases that it subleased during the nine months ended September 30, 2021. See Note 8, "Leases," for further details. The Company estimated the fair value of these assets as of the effective dates of the agreements using an income approach based on expected future cash flows from the subleased properties, which relied on certain assumptions made by management based on both internal and external data, such as the incremental borrowing rates used to discount these cash flows to its present values. As a result, these assets are classified within Level 3 of the fair value hierarchy.
4. MARKETABLE SECURITIES
In March 2020, the Company changed its investment strategy in response to uncertainties resulting from the COVID-19 pandemic to allow for more flexibility in preserving liquidity, which led to the transfer of $300.2 million of amortized cost of its investment portfolio from a held-to-maturity classification to available-for-sale. As a result of this transfer, in March 2020, the Company reversed the allowance for credit loss that had been previously recorded upon adoption of Accounting Standards Update No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," and measured the securities at fair value as of the transfer date by recording an immaterial allowance for credit loss to other income, net and the remaining adjustment as an immaterial unrealized loss recorded to other comprehensive income.
Following this transfer, during the six months ended June 30, 2020, the Company liquidated its investment portfolio, which consisted of available-for-sale short- and long-term marketable securities, for proceeds of $253.4 million. The Company recorded an immaterial net realized gain to other income, net and reinvested the proceeds from the sales, along with $73.0 million from maturities and redemptions of marketable securities, into money market funds.
As of September 30, 2021 and December 31, 2020, the Company did not have any marketable securities and a majority of the Company's investments were in highly liquid money market funds.
5. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets as of September 30, 2021 and December 31, 2020 consisted of the following (in thousands):
September 30,
2021 		December 31,
2020
Prepaid expenses $ 13,866  $ 10,438 
Certificates of deposit 10,000  10,930 
Other current assets 5,777  7,082 
Total prepaid expenses and other current assets $ 29,643  $ 28,450 
Prepaid expenses included $0.7 million of capitalized implementation costs incurred related to cloud computing arrangements that are service contracts. The Company recorded an immaterial amount of amortization expense during the three and nine months ended September 30, 2021 related to these capitalized implementation costs. As of September 30, 2021, other current assets primarily consisted of deferred costs related to unsettled share repurchases, non-trade receivables and short term deposits.
12
6. PROPERTY, EQUIPMENT AND SOFTWARE, NET
Property, equipment and software, net as of September 30, 2021 and December 31, 2020 consisted of the following (in thousands):
September 30,
2021 		December 31,
2020
Capitalized website and internal-use software development costs $ 195,713  $ 171,831 
Leasehold improvements(1)
68,056  88,687 
Computer equipment 49,261  46,581 
Furniture and fixtures 12,590  18,339 
Telecommunication 4,967  4,951 
Software 1,727  1,717 
Total 332,314  332,106 
Less accumulated depreciation (239,885) (230,388)
Property, equipment and software, net $ 92,429  $ 101,718 
(1) The cost basis was reduced to reflect an impairment of $2.7 million recorded during the nine months ended September 30, 2021. For more information, see Note 8, "Leases."
Depreciation expense was $11.9 million for each of the three months ended September 30, 2021 and 2020, and $36.4 million and $35.6 million for the nine months ended September 30, 2021 and 2020, respectively.
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 and concluded that goodwill was not impaired, as the fair value of the reporting unit exceeded its carrying value.
The changes in carrying amount of goodwill during the nine months ended September 30, 2021 were as follows (in thousands):
Balance as of December 31, 2020 $ 109,261 
Effect of currency translation (2,761)
Balance as of September 30, 2021 $ 106,500 
13
Intangible assets that were not fully amortized as of September 30, 2021 and December 31, 2020 consisted of the following (dollars in thousands):
September 30, 2021
Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Life
Business relationships $ 9,918  $ (4,543) $ 5,375  7.3 years
Developed technology 7,709  (7,149) 560  0.5 years
Licensing agreements 6,129  (699) 5,430  8.4 years
Domains and data licenses 2,869  (2,850) 19  1.8 years
Total $ 26,625  $ (15,241) $ 11,384 
December 31, 2020
Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Life
Business relationships $ 9,918  $ (3,814) $ 6,104  7.8 years
Developed technology 7,709  (6,238) 1,471  1.2 years
Licensing agreements 6,129  (215) 5,914  9.2 years
Domain and data licenses 2,869  (2,837) 32  2.2 years
Total $ 26,625  $ (13,104) $ 13,521 
Amortization expense was $0.7 million and $0.6 million for the three months ended September 30, 2021 and 2020, respectively, and $2.1 million and $1.8 million for the nine months ended September 30, 2021 and 2020, respectively.
As of September 30, 2021, estimated future amortization expenses were as follows (in thousands):
Remainder of 2021 $ 711 
2022 1,676 
2023 1,359 
2024 1,353 
2025 1,353 
2026 1,353 
Thereafter 3,579 
Total amortization $ 11,384 
8. LEASES
The components of lease cost, net for the three and nine months ended September 30, 2021 and 2020 were as follows (in thousands):
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
Operating lease cost $ 12,323  $ 13,714  $ 38,717  $ 41,512 
Short-term lease cost (12 months or less) 133  369  406  1,070 
Sublease income (2,308) (1,954) (5,714) (5,868)
Total lease cost, net $ 10,148  $ 12,129  $ 33,409  $ 36,714 
14
The Company's leases and subleases do not include any variable lease payments, residual value guarantees, related-party leases, or restrictions or covenants that would limit or prevent the Company from exercising its right to obtain substantially all of the economic benefits from use of the respective assets during the lease term.
Supplemental cash flow information related to leases for the nine months ended September 30, 2021 and 2020 was as follows (in thousands):
Nine Months Ended
September 30,
2021 2020
Cash paid for amounts included in the measurement of lease liabilities:
     Operating cash flows from operating leases $ 41,274  $ 44,181 
As of September 30, 2021, maturities of lease liabilities were as follows (in thousands):
Remainder of 2021 $ 11,704 
2022 49,416 
2023 46,550 
2024 43,811 
2025 23,272 
2026 8,340 
Thereafter 21,437 
Total minimum lease payments 204,530 
Less imputed interest (26,474)
Present value of lease liabilities $ 178,056 
As of September 30, 2021 and December 31, 2020, the weighted-average remaining lease terms and weighted-average discount rates were as follows:
September 30,
2021 		December 31,
2020
Weighted-average remaining lease term (years) — operating leases 4.8 5.1
Weighted-average discount rate — operating leases 5.8  % 6.0  %
During the nine months ended September 30, 2021, the Company entered into sublease agreements for portions of its office space in San Francisco and New York. The Company evaluated the associated ROU assets and leasehold improvements for impairment as a result of the subleases in accordance with Accounting Standards Codification Topic 360, "Property, Plant, and Equipment" because the change in circumstances indicated that the carrying amount of such assets may not be recoverable. The Company compared the future undiscounted cash flows under the sublease agreements to the carrying amounts of the respective ROU assets and leasehold improvements and determined that an impairment existed.
The Company compared the carrying values of the impacted assets to the fair values to determine the impairment amount. The Company recognized an impairment charge of $11.2 million during the nine months ended September 30, 2021, which is included in general and administrative expenses on its condensed consolidated statement of operations, and reduced the carrying amount of the ROU assets and leasehold improvements by $8.5 million and $2.7 million, respectively. For more information on the fair values of the ROU assets and leasehold improvements used in the impairment analysis, see Note 3, "Fair Value Measurements."
In September 2021, the Company entered into a lease agreement for new office space in San Francisco, the term of which commenced on October 1, 2021 and is expected to expire in 2030. The Company will classify this as an operating lease and, as of September 30, 2021, expected to make aggregate rent payments of approximately $29.5 million over the life of the lease.
15
9. OTHER NON-CURRENT ASSETS
Other non-current assets as of September 30, 2021 and December 31, 2020 consisted of the following (in thousands):
September 30,
2021 		December 31,
2020
Deferred tax assets $ 37,636  $ 31,163 
Deferred contract costs 16,385  14,522 
Other non-current assets 5,816  3,163 
Total other non-current assets $ 59,837  $ 48,848 
Deferred contract costs as of September 30, 2021 and December 31, 2020, and changes in deferred contract costs during the nine months ended September 30, 2021, were as follows (in thousands):
Nine Months Ended
September 30, 2021
Balance, beginning of period $ 14,522 
Add: costs deferred on new contracts 12,499 
Less: amortization recorded in sales and marketing expenses (10,636)
Balance, end of period $ 16,385 
10. CONTRACT BALANCES
The changes in the allowance for doubtful accounts during the nine months ended September 30, 2021 and 2020 were as follows (in thousands):
Nine Months Ended
September 30,
2021 2020
Balance, beginning of period $ 11,559  $ 7,686 
Add: provision for doubtful accounts 9,834  26,802 
Less: write-offs, net of recoveries (13,519) (23,172)
Balance, end of period $ 7,874  $ 11,316 
The net decrease in the allowance for doubtful accounts in the nine months ended September 30, 2021 was primarily a result of a reduction in expected customer delinquencies compared to September 30, 2020, as collection rates continued to improve. The net increase in the allowance for doubtful accounts in the nine months ended September 30, 2020 primarily related to an anticipated increase in customer delinquencies due to the COVID-19 pandemic. In calculating the allowance for doubtful accounts as of September 30, 2021 and 2020, the Company considered expectations of probable credit losses, including probable credit losses associated with the COVID-19 pandemic, based on observed trends in cancellations, observed changes in the credit risk of specific customers, the impact of anticipated closures and bankruptcies using forecasted economic indicators in addition to historical experience and loss patterns during periods of macroeconomic uncertainty.
Contract liabilities consist of deferred revenue, which is recorded on the condensed consolidated balance sheets when the Company has received consideration, or has the right to receive consideration, in advance of transferring the performance obligations under the contract to the customer.
16
The changes in deferred revenue during the nine months ended September 30, 2021 were as follows (in thousands):
Nine Months Ended
September 30, 2021
Balance, beginning of period $ 4,109 
      Less: recognition of deferred revenue from beginning balance (3,065)
      Add: net increase in current period contract liabilities 3,455 
Balance, end of period $ 4,499 
The majority of the deferred revenue balance as of September 30, 2021 is expected to be recognized as revenue in the subsequent three-month period ending December 31, 2021. No other contract assets or liabilities were recorded on the Company's condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020.
11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities as of September 30, 2021 and December 31, 2020 consisted of the following (in thousands):
September 30,
2021 		December 31,
2020
Accounts payable $ 17,815  $ 8,853 
Employee-related liabilities 60,118  57,684 
Accrued sales and marketing expenses 5,751  2,137 
Accrued cost of revenue 9,273  8,269 
Other accrued liabilities 13,451  10,817 
Total accounts payable and accrued liabilities $ 106,408  $ 87,760 
12. COMMITMENTS AND CONTINGENCIES
Legal Proceedings—In January 2018, a putative class action lawsuit alleging violations of the federal securities laws was filed in the U.S. District Court for the Northern District of California, naming as defendants the Company and certain of its officers. The complaint, which the plaintiff amended on June 25, 2018, alleges violations of the Exchange Act by the Company and its officers for allegedly making materially false and misleading statements regarding its business and operations on February 9, 2017. The plaintiff seeks unspecified monetary damages and other relief. On August 2, 2018, the Company and the other defendants filed a motion to dismiss the amended complaint, which the court granted in part and denied in part on November 27, 2018. On October 22, 2019, the Court approved a stipulation to certify a class in this action and subsequently set a trial date of February 7, 2022. The case remains pending. The Company is unable to reasonably estimate either the probability of incurring a loss or an estimated range of such loss, if any, from the lawsuit.
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 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.
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Revolving Credit Facility—The Company is a party to a Credit Agreement with Wells Fargo Bank, National Association (the "Credit Agreement"), which provides for a three-year, $75.0 million senior unsecured revolving credit facility including a letter of credit sub-limit of $25.0 million. As of September 30, 2021, the Company had $21.5 million of letters of credit under the sub-limit related to lease agreements for certain office locations, which are required to be maintained and issued to the landlords of each facility, and $53.5 million remained available under the revolving credit facility as of this date. The Company was in compliance with all covenants associated with the credit facility and there were no loans outstanding under the Credit Agreement as of September 30, 2021. For additional information on the terms of the Credit Agreement, including fees payable by the Company, financial covenants, events of default and other limitations, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" included under Part II, Item 7 in our Annual Report.
13. STOCKHOLDERS’ EQUITY
The following table presents the number of shares authorized and issued as of the dates indicated:
September 30, 2021 December 31, 2020
Shares Authorized Shares Issued Shares Authorized Shares Issued
Stockholders’ equity:    
Common stock, $0.000001 par value
200,000,000  73,651,980  200,000,000  75,371,368 
Undesignated preferred stock 10,000,000  —  10,000,000  — 
Stock Repurchase Program
In July 2017, the Company’s board of directors authorized a stock repurchase program under which the Company was authorized to repurchase up to $200.0 million of its outstanding common stock. The Company's board of directors authorized the Company to repurchase up to an additional $250.0 million of its outstanding common stock in each of November 2018, February 2019, January 2020 and August 2021, bringing the total amount of authorized repurchases to $1.2 billion as of September 30, 2021, $316.8 million of which remained available as of September 30, 2021. 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 nine months ended September 30, 2021, the Company repurchased on the open market 4,687,066 shares for an aggregate purchase price of $177.8 million and retired 4,680,484 shares. As of September 30, 2021, the Company had a treasury stock balance of 105,600 shares, which were excluded from its outstanding share count as of such date and subsequently retired in October 2021.
The Company did not repurchase any shares during the nine months ended September 30, 2020.
Equity Incentive Plans
Stock Options
Stock options are granted at a price per share not less than the fair value of a share of the Company’s common stock on the grant date. Options generally vest over a four-year period, on one of 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 nine months ended September 30, 2021 is as follows:
Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2020 4,622,828  $ 29.89  4.7 $ 30,451 
Granted 80,000  39.17 
Exercised (633,549) 12.84   
Canceled (52,729) 47.86 
Outstanding at September 30, 2021 4,016,550  $ 32.53  4.6 $ 28,236 
Options vested and exercisable at September 30, 2021 3,619,770  $ 32.13  4.3 $ 27,406 
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 $1.4 million and $0.7 million for the three months ended September 30, 2021 and 2020, respectively, and $13.2 million and $5.1 million for the nine months ended September 30, 2021 and 2020, respectively.
There were no options granted during the three months ended September 30, 2021. The weighted-average grant date fair value of options granted during the three months ended September 30, 2020 was $7.61 per share. The weighted-average grant date fair value of options granted during the nine months ended September 30, 2021 and 2020 were $18.55 and $9.69 per share, respectively.
As of September 30, 2021, total unrecognized compensation costs related to nonvested stock options were approximately $6.1 million, which the Company expects to recognize over a weighted-average time period of 1.9 years.
RSUs
RSUs generally vest over a four-year period, on one of two schedules: (a) 25% vesting at the end of one year and the remaining vesting quarterly thereafter or (b) ratably on a quarterly basis.
RSUs also include performance-based restricted stock units ("PRSUs"), which are subject to both a time-based vesting schedule and either (a) a market condition or (b) the achievement of performance goals. The time-based vesting schedule is 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 shares underlying each PRSU award subject to a market condition 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.
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 targets is known, which will be no later than March of the following year. 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 September 30, 2021 to assess the probability of achievement of the PRSU financial targets and, as a result, recorded compensation costs in the three and nine months ended September 30, 2021 for the PRSUs that it expected to vest.
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As the PRSU activity during the nine months ended September 30, 2021 was not material, it is presented together with the RSU activity in the table below. A summary of RSU and PRSU activity for the nine months ended September 30, 2021 is as follows:
Number of Shares Weighted-Average Grant Date Fair Value
Nonvested at December 31, 2020 9,757,787  $ 29.22 
Granted 6,099,102  36.39 
Vested(1)
(3,385,410) 31.97 
Canceled (1,832,358) 31.60 
Nonvested at September 30, 2021 10,639,121  $ 32.04 
(1) Includes 1,312,312 shares that vested but were not issued due to net share settlement for payment of employee taxes.
The aggregate fair value as of the vest date of RSUs and PRSUs that vested during the nine months ended September 30, 2021 and 2020 was $127.7 million and $64.1 million, respectively. As of September 30, 2021, the Company had approximately $324.4 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 years.
Employee Stock Purchase Plan
The Employee Stock Purchase Plan ("ESPP") allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations, during designated offering periods. At the end of each offering period, employees are able to purchase shares at 85% of the fair market value of the Company’s common stock on the last day of the offering period, based on the closing sales price of the Company's common stock as quoted on the New York Stock Exchange on such date.
There were no shares purchased by employees under the ESPP in the three months ended September 30, 2021 or 2020. There were 254,449 shares purchased by employees under the ESPP at a weighted-average price of $34.09 in the nine months ended September 30, 2021. There were 433,697 shares purchased by employees under the ESPP at a weighted-average price of $18.48 in the nine months ended September 30, 2020. The Company recognized stock-based compensation expense related to the ESPP of $0.8 million and $0.6 million in the three months ended September 30, 2021 and 2020, respectively, and $2.3 million and $1.9 million in the nine months ended September 30, 2021 and 2020, 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
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
Cost of revenue $ 1,071  $ 849  $ 3,273  $ 2,835 
Sales and marketing 7,794  7,196  24,632  22,194 
Product development 20,380  15,551  61,807  50,133 
General and administrative 7,197  6,659  26,834  17,428 
Total stock-based compensation recorded to loss before income taxes 36,442  30,255  116,546  92,590 
(Benefit from) provision for income taxes (8,529) 378  (28,095) (23,831)
Total stock-based compensation recorded to net income (loss) $ 27,913  $ 30,633  $ 88,451  $ 68,759 
The Company capitalized $2.9 million and $2.6 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 September 30, 2021 and 2020, respectively, and $8.5 million and $7.1 million in the nine months ended September 30, 2021 and 2020, respectively.
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14. OTHER INCOME, NET
Other income, net for the three and nine months ended September 30, 2021 and 2020 consisted of the following (in thousands):
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
Interest (expense) income, net $ (31) $ 7  $ (83) $ 2,304 
Transaction (loss) gain on foreign exchange, net (32) 28  237  (32)
Other non-operating income, net 394  364  1,424  1,005 
Other income, net $ 331  $ 399  $ 1,578  $ 3,277 
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 benefit from income taxes for the nine months ended September 30, 2021 was $3.0 million, which was due to $2.7 million of U.S. federal, state and foreign income tax provision, offset by $5.7 million of net discrete tax benefit primarily related to stock-based compensation. The benefit from income taxes for the nine months ended September 30, 2020 was $9.5 million, which was due to $17.1 million of U.S. federal, state and foreign income tax benefit, partially offset by $7.6 million of net discrete tax expense.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was signed into law. The CARES Act includes, among other items, provisions relating to refundable payroll tax credits, deferral of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.
The CARES Act allows losses incurred in 2018, 2019 and 2020 to be carried back to each of the five preceding tax years and to offset 100% of regular taxable income. Additionally, the CARES Act accelerates the Company’s ability to receive refunds of alternative minimum tax credits generated in prior tax years.
Accounting for income taxes for interim periods generally requires the provision for income taxes to be determined by applying an estimate of the annual effective tax rate for the full fiscal year to income or loss before income taxes, excluding unusual or infrequently occurring discrete items ("Ordinary" income), for the reporting period. For the three and nine months ended September 30, 2021, the difference between the effective tax rate and the federal statutory tax rate primarily related to tax credits, offset by non-deductible expenses. For the three and nine months ended September 30, 2020, 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 September 30, 2021, the total amount of gross unrecognized tax benefits was $55.9 million, $23.4 million of which was subject to a full valuation allowance and would not affect the Company’s effective tax rate if recognized. In the three and nine months ended September 30, 2021, the Company recorded an immaterial amount of interest and penalties.
As of September 30, 2021, the Company estimated that it had accumulated undistributed earnings generated by its foreign subsidiaries of approximately $8.1 million. Any taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of the Company's foreign investments would generally be limited to foreign and state taxes. The Company has not recognized a deferred tax liability related to unremitted foreign earnings, as it intends to indefinitely reinvest these earnings, and expects future U.S. cash generation to be sufficient to meet future U.S. cash needs.
In addition, the Company is subject to the continuous examination of its income tax returns by the Internal Revenue Service and other tax authorities. The Company’s federal and state income tax returns for tax years subsequent to 2003 remain open to examination. In the Company’s foreign jurisdictions — Canada, Germany, Ireland and the United Kingdom — the tax years subsequent to 2015 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 September 30, 2021, although the timing of the resolution or closure of audits is not certain, the Company believes it is reasonably possible that its unrecognized tax benefits could be reduced by $6.2 million over the next 12 months.
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16. NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed using the weighted-average number of outstanding shares of common stock during the period. Diluted net income (loss) per share is computed using the weighted-average number of outstanding shares of common stock and, when dilutive, potential shares of common stock outstanding during the period. Potential common shares consist of the incremental shares of common stock issuable upon the exercise of stock options, shares issuable upon the vesting of RSUs (including PRSUs) and, to a lesser extent, purchase rights related to the ESPP.
The following table presents the calculation of basic and diluted net income (loss) per share for the periods presented (in thousands, except per share data):
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
Basic net income (loss) per share:
Net income (loss) $ 18,065  $ (1,020) $ 16,481  $ (40,513)
Shares used in computation:
Weighted-average common shares outstanding 73,904  73,514  74,647  72,495 
Basic net income (loss) per share attributable to common stockholders $ 0.24  $ (0.01) $ 0.22  $ (0.56)
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
Diluted net income (loss) per share:
Net income (loss) $ 18,065  $ (1,020) $ 16,481  $ (40,513)
Shares used in computation:
    Weighted-average common shares outstanding 73,904  73,514  74,647  72,495 
    Stock options 769  —  808  — 
    RSUs 2,631  —  3,510  — 
    ESPP 118  —  42  — 
        Number of shares used in diluted calculation 77,422  73,514  79,007  72,495 
Diluted net income (loss) per share attributable to common stockholders $ 0.23  $ (0.01) $ 0.21  $ (0.56)
The following stock-based instruments were excluded from the calculation of diluted net income (loss) per share because their effect would have been anti-dilutive for the periods presented (in thousands):
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
Stock options 1,562  5,889  1,539  5,889 
RSUs 275  7,248  45  7,248 
ESPP —  228  —  228 
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
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
Net revenue by product:
Advertising revenue by category:
Services $ 157,319  $ 133,467  $ 450,528  $ 376,132 
Restaurants, Retail & Other 99,511  77,700  273,250  237,361 
Advertising 256,830  211,167  723,778  613,493 
Transactions 3,001  4,412  10,330  11,019 
Other 9,324  5,228  24,331  15,226 
Total net revenue $ 269,155  $ 220,807  $ 758,439  $ 639,738 
During the three and nine months ended September 30, 2021 and 2020, 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 $0.3 million and $2.9 million during the three months ended September 30, 2021 and 2020, respectively, and $3.2 million and $20.8 million during the nine months ended September 30, 2021 and 2020, respectively. These incentives were primarily in the form of waived advertising fees and waived subscription fees. The Company accounted for these incentives as price concessions and reduced net revenue recognized in the three and nine months ended September 30, 2021 and 2020 accordingly. During the nine months ended September 30, 2020, the Company also paused certain advertising campaigns that were scheduled to run from April to May 2020 and offered certain free advertising products during those months with a total value of $14.5 million. All paused advertising campaigns that were not canceled by customers resumed by the end of May 2020.
The following table presents the Company’s net revenue by major geographic region for the periods presented (in thousands):
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
United States $ 266,913  $ 218,563  $ 751,862  $ 632,360 
All other countries 2,242  2,244  6,577  7,378 
Total net revenue $ 269,155  $ 220,807  $ 758,439  $ 639,738 
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Long-Lived Assets
The following table presents the Company’s long-lived assets by major geographic region for the periods presented (in thousands):
September 30,
2021 		December 31,
2020
United States $ 87,877  $ 97,548 
All other countries 4,552  4,170 
Total long-lived assets $ 92,429  $ 101,718 
18. RESTRUCTURING
In April 2020, the Company announced a restructuring plan to help manage the near-term financial impacts of the COVID-19 pandemic (the "Restructuring Plan"). In addition to reductions and deferrals in spending, the Restructuring Plan’s cost-cutting measures included workforce reductions affecting approximately 1,000 employees and furloughs affecting approximately 1,100 additional employees, as well as salary reductions and reduced-hour work weeks. In July 2020, the Company announced an additional workforce reduction (separate from the Restructuring Plan) affecting approximately 60 employees.
During the three months ended September 30, 2020, the Company restored reduced salaries and returned many of its furloughed employees.
The Company did not incur any restructuring costs for the three months ended September 30, 2021 and incurred an immaterial amount of restructuring costs for the nine months ended September 30, 2021. The Company incurred $0.5 million and $3.8 million in restructuring costs during the three and nine months ended September 30, 2020, respectively, in connection with terminations under the Restructuring Plan, which represent expenditures for severance, payroll taxes and related benefits costs. These costs were recorded as restructuring expenses on the Company's condensed consolidated statements of operations. The Company does not expect to incur any additional restructuring costs related to the Restructuring Plan.
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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. See “Special Note Regarding Forward-Looking Statements” in this Quarterly Report.
Overview
As one of the best known internet brands in the United States, Yelp is a trusted local resource for consumers and a partner in success for businesses of all sizes. Consumers trust us for our more than 200 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 September 30, 2021, our net revenue was $269.2 million, up 22% from the three months ended September 30, 2020, and we recorded net income of $18.1 million and adjusted EBITDA of $70.7 million. In the nine months ended September 30, 2021, our net revenue was $758.4 million, which represented an increase of 19% from the nine months ended September 30, 2020, and we recorded net income of $16.5 million and adjusted EBITDA of $178.2 million. For information on how we define and calculate adjusted EBITDA, and a reconciliation of this non-GAAP financial measure to net income (loss), see "Non-GAAP Financial Measures" below.
As a result of our investments in product, marketing and our Multi-location sales team, we made further progress on our revenue growth initiatives in the third quarter of 2021:
•Improve monetization of our Services categories. We continued to differentiate the product experience for businesses and consumers in our Services categories in the third quarter. In addition to adding custom search filters to better match consumers with the right Services businesses for their projects, we launched Yelp Project Cost Guides based on data from Request-A-Quote to help consumers make informed decisions when hiring a service professional. We also rolled out a new ad format, Themed Ads, which enables advertisers to highlight their ads in a carousel above search results based on attributes that make their businesses unique, such as "fast responding." These efforts contributed to advertising revenue from our Services categories increasing 18% compared to the third quarter of 2020 and 17% compared to the third quarter of 2019.
•Expand our Self-serve and Multi-location sales channels. Advertising revenue from our Self-serve channel increased by more than 45% year over year in the third quarter, as marketing investments such as improvements to our ads purchase flow and business owner platform helped increase the retention rate for non-term advertiser budgets. Advertising revenue from Multi-location customers increased by more than 30% compared to the third quarter of 2020 and by nearly 10% from the second quarter of 2021 due to continued strong interest in recently launched products, such as Yelp Audiences, and improvements to established products, such as Spotlight Ads.
•Deliver more value to advertisers. Increasing our value proposition to advertisers by delivering more ad clicks at a lower average price is an important part of our strategy to drive long-term growth and has been a focus of our product investment in recent years. In the third quarter, improvements to our ad system and matching technology, as well as front-end merchandising, drove a 28% year-over-year increase in ad clicks and a 1% year-over-year decrease in average CPC.
Our consistent execution and more strategic initiatives drove a 22% year-over-year increase in net revenue in the third quarter, equal to our record quarterly performance, despite revenue from our Restaurants, Retail & Other categories remaining below pre-pandemic levels due to COVID-19 surges and nationwide labor and supply chain issues. As a result of the structural improvements to our business and continued expense management, our strong revenue performance in the third quarter benefited our bottom line: we delivered net income margin of 7% and adjusted EBITDA margin of 26%. We plan to further invest in our growth initiatives in the remainder of the year.
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Key Metrics
We regularly review a number of metrics, including the key metrics set forth below, to evaluate our business, measure our performance, identify trends in our business, prepare financial projections and make strategic decisions.
Ad Clicks
Ad clicks represent user interactions with our pay-for-performance advertising products, including clicks on advertisements on our website and mobile app, clicks on syndicated advertisements on third-party platforms and Request-A-Quote submissions. Ad clicks include only user interactions that we are able to track directly, and therefore do not include user interactions with ads sold through our advertising partnerships. We do not expect the exclusion of such user interactions to materially affect this metric.
Because we generate revenue primarily from the sale of performance-based ads, our ability to increase our revenue depends largely on our ability to increase ad clicks. We report the year-over-year percentage change in ad clicks on a quarterly basis as a measure of our success in monetizing more of our consumer traffic and delivering more value to advertisers.
The following table presents year-over-year changes in our ad clicks for the periods indicated (expressed as a percentage):
Three Months Ended
September 30,
2021 2020
Ad Clicks 28% (25)%
Average CPC
We define average CPC as revenue from our performance-based ad products — excluding certain revenue adjustments that do not impact the outcome of an auction for an individual ad click, such as refunds, as well as revenue from our advertising partnerships — divided by the total number of ad clicks for a given three-month period.
Average CPC, when viewed together with ad clicks, provides important insight into the value we deliver to advertisers, which we believe is a significant factor in our ability to retain both revenue and customers. For example, a negative change in average CPC for a given three-month period combined with a positive change in ad clicks over the same period would indicate that we delivered more ad clicks at lower prices, thereby delivering more value to our advertisers; we would expect this to have a positive impact on retention. We believe that average CPC and ad clicks together reflect one of the largest dynamics affecting our advertising revenue performance.
The following table presents year-over-year changes in our average CPC for the periods indicated (expressed as a percentage):
Three Months Ended
September 30,
2021 2020
Average CPC (1)% 5%
Advertising Revenue by Category
Our advertising revenue comprises revenue from the sale of our advertising products, including the resale of our advertising products by partners and syndicated ads appearing on third-party platforms.
To reflect our strategic focus on creating two differentiated experiences on Yelp, we provide a quarterly breakdown of our advertising revenue attributable to businesses in two high-level category groupings: Services and Restaurants, Retail & Other. Our Services categories consist of home, local, auto, professional, pets, events, real estate and financial services. Our Restaurants, Retail & Other categories consist of restaurants, shopping, beauty & fitness, health and other.
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The following table presents our advertising revenue by category for the periods indicated (in thousands, except percentages):
Three Months Ended
September 30, 		% Change Nine Months Ended
September 30, 		% Change
2021 2020 2021 2020
Services $ 157,319  $ 133,467  18% $ 450,528  $ 376,132  20%
Restaurants, Retail & Other 99,511  77,700  28% 273,250  237,361  15%
Total Advertising Revenue $ 256,830  $ 211,167  22% $ 723,778  $ 613,493  18%
Paying Advertising Locations By Category
Paying advertising locations comprise all business locations associated with a business account from which we recognized advertising revenue in a given month, excluding business accounts that purchased advertising through partner programs other than Yelp Ads Certified Partners, averaged over a given three-month period.
The following table presents the number of paying advertising locations by category during the periods presented (in thousands, except percentages):
Three Months Ended
September 30, 		% Change
2021 2020
Services 231 218 6%
Restaurants, Retail & Other 304 289 5%
Total Paying Advertising Locations 535 507 6%
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates and assumptions are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from those estimates. Due to the COVID-19 pandemic — including existing variants and any possible future variants — and the uncertainty regarding the extent and duration of its impacts, certain estimates and assumptions have required and may continue to require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, these estimates may materially change in future periods.
We believe that the assumptions and estimates associated with revenue recognition, website and internal-use software development costs, the incremental borrowing rate used with respect to leases, business combinations, allowance for doubtful accounts, income taxes and stock-based compensation expense have the greatest potential impact on our consolidated financial statements. There have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report.
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Results of Operations
The following table sets forth our results of operations for the periods indicated (in thousands, except percentages). The period-to-period comparison of financial results is not necessarily indicative of the results of operations to be anticipated for the full year 2021 or any future period.
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 $ Change
% Change(1)
2021 2020 $ Change
% Change(1)
Consolidated Statements of Operations Data:
Net revenue by product:
Advertising revenue by category:
Services $ 157,319  $ 133,467  $ 23,852  18  % $ 450,528  $ 376,132  $ 74,396  20  %
Restaurants, Retail & Other 99,511  77,700  21,811  28  % 273,250  237,361  35,889  15  %
Advertising 256,830  211,167  45,663  22  % 723,778  613,493  110,285  18  %
Transactions 3,001  4,412  (1,411) (32) % 10,330  11,019  (689) (6) %
Other 9,324  5,228  4,096  78  % 24,331  15,226  9,105  60  %
Total net revenue 269,155  220,807  48,348  22  % 758,439  639,738  118,701  19  %
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below) 21,185  13,193  7,992  61  % 54,052  41,865  12,187  29  %
Sales and marketing 114,295  101,301  12,994  13  % 340,845  334,887  5,958  2  %
Product development 69,402  53,022  16,380  31  % 206,089  174,104  31,985  18  %
General and administrative 30,001  30,887  (886) (3) % 106,957  100,825  6,132  6  %
Depreciation and amortization 12,627  12,544  83  1  % 38,543  37,484  1,059  3  %
Restructuring —  535  (535) (100) % 32  3,847  (3,815) (99) %
Total costs and expenses 247,510  211,482  36,028  17  % 746,518  693,012  53,506  8  %
Income (loss) from operations 21,645  9,325  12,320  132  % 11,921  (53,274) 65,195  (122) %
Other income, net 331  399  (68) (17) % 1,578  3,277  (1,699) (52) %
Income (loss) before income taxes 21,976  9,724  12,252  126  % 13,499  (49,997) 63,496  (127) %
Provision for (benefit from) income taxes 3,911  10,744  (6,833) (64) % (2,982) (9,484) 6,502  (69) %
Net income (loss) $ 18,065  $ (1,020) $ 19,085 
NM(2)
$ 16,481  $ (40,513) $ 56,994  (141) %
(1) Percentage changes are calculated based on rounded numbers and may not recalculate exactly due to rounding.
(2) Percentage change is not meaningful.
Three and Nine Months Ended September 30, 2021 and 2020
Net Revenue
Advertising. We generate advertising revenue from the sale of our advertising products — including enhanced listing pages and performance and impression-based advertising in search results and elsewhere on our platform — to businesses of all sizes, from single-location local businesses to multi-location national businesses. Advertising revenue also includes revenue generated from the resale of our advertising products by certain partners and monetization of remnant advertising inventory through third-party ad networks. We present advertising revenue on a disaggregated basis for our high-level category groupings, Services and Restaurants, Retail & Other.
Advertising revenue for the three and nine months ended September 30, 2021 increased compared to the prior-year periods. Revenue from businesses in our Services categories, particularly Home Services businesses, increased due to an increase in paying advertising locations, higher customer spend and an improved retention rate of non-term advertisers' budgets. Although recovery in our Restaurants, Retail & Other categories slowed in the third quarter due to the spread of the COVID-19 delta variant and ongoing labor and supply chain issues nationwide, businesses in these categories were able to operate at a greater capacity than in the year-ago periods. As a result, revenue from Restaurants, Retail & Other businesses increased year over year in both periods due to improved retention rates for non-term advertisers' budgets and higher customer spend. An increase in paying advertising locations also contributed to the increase in the three months ended September 30, 2021, while our phase out of relief incentives beginning in the third quarter of 2020 also contributed to the increase in the nine months ended September 30, 2021.
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Transactions. We generate revenue from various transactions with consumers, primarily through our partnership integrations, which are mainly revenue-sharing arrangements that provide consumers with the ability to complete food ordering and delivery transactions through third parties directly on Yelp. We earn a fee for acting as an agent for transactions placed through these integrations, which we record on a net basis and include in revenue upon completion of a transaction.
Transactions revenue for the three months ended September 30, 2021 decreased compared to the prior-year period primarily due to a lower volume of food takeout and delivery orders as restaurants' dine-in capacity was greater than in the three months ended September 30, 2020. Transactions revenue for the nine months ended September 30, 2021 decreased compared to the prior-year period primarily due to a reduction in the per-order transaction fee that we receive from Grubhub, which took effect in October 2020. This decrease was partially offset by a higher volume of food takeout and delivery orders during the nine months ended September 30, 2021, primarily reflecting a significant year-over-year increase in food orders during the three months ended March 31, 2021, when the COVID-19 pandemic continued to drastically limit the dine-in operations of many restaurants.
Other. We generate revenue through our subscription services, including our Yelp Reservations and Yelp Waitlist products. We also generate revenue through our Yelp Knowledge and Yelp Fusion programs, which provide access to Yelp data for a fee, as well as other non-advertising partnerships.
Other revenue for the three and nine months ended September 30, 2021 increased compared to the prior-year periods primarily reflecting substantially lower COVID-19 relief incentives — mainly in the form of waived subscription fees — for customers in the current-year periods. The year-over-year increases also reflected increased revenue from our Yelp Fusion program, which we introduced in May 2020.
Trends and Uncertainties of Net Revenue. Net revenue increased in the three months ended September 30, 2021 from the three months ended June 30, 2021 due to increased advertiser demand, as well as from the three months ended September 30, 2020, reflecting recovery from the impact of the COVID-19 pandemic and progress on our strategic initiatives. Net revenue also increased compared to the three months ended September 30, 2019, particularly revenue from Services categories, which increased by 17% over that period. While our business proved to be resilient and the macro impact of COVID-19 surges was less severe than in previous waves, paying advertising locations decreased in August and September compared to July as some Multi-location advertisers in our Restaurants, Retail & Other categories paused their spend. As a result of these trends, continued macro uncertainty related to the COVID-19 pandemic and seasonality in our Services categories, we anticipate net revenue in the three months ending December 31, 2021 will remain relatively consistent with the third quarter of 2021.
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 nine months ended September 30, 2021 increased compared to the prior-year periods, primarily due to:
•increases in advertising fulfillment costs of $3.5 million and $5.9 million, respectively, driven by expanded efforts to syndicate advertising budgets on third-party sites;
•increases in website infrastructure expense of $3.1 million and $4.5 million, respectively, as a result of higher traffic; and
•increases in merchant credit card fees of $1.0 million and $1.7 million, respectively, due to a higher volume of transactions associated with the increases in advertising revenue.
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 months ended September 30, 2021 increased compared to the prior-year period due to:
•an increase in marketing and advertising costs of $9.7 million, reflecting our investment in targeted business owner acquisition and regional consumer campaigns; and
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•an increase of $4.4 million in employee costs due to higher sales headcount as compared with the prior-year period, reflecting the completion of the staggered return of employees who had been furloughed under the restructuring plan we announced on April 9, 2020 ("Restructuring Plan"), which began in August 2020, and increased hiring efforts that began in the second half of 2020.
These increases were partially offset by a decrease in allocated workplace operating costs of $1.2 million due to reductions in our amount of leased office space, which began in the first quarter of 2021.
Sales and marketing expenses for the nine months ended September 30, 2021 increased compared to the prior-year period due to an increase in marketing and advertising costs of $28.0 million, reflecting our investment in targeted business owner acquisition and regional consumer campaigns. This increase was partially offset by:
•a decrease of $16.0 million in employee costs, which was primarily due to lower sales headcount following the terminations associated with the Restructuring Plan, which took place during the prior-year period; and
•a decrease in allocated workplace operating costs of $6.1 million as a result of our office closures, which began at the end of the first quarter 2020, and the reduction of our leased office space in 2021.
Product Development. Our product development expenses primarily consist of employee costs (including stock-based compensation expense, net of capitalized employee costs associated with capitalized website and internal-use software development) for our engineers, product management and corporate infrastructure employees. In addition, product development expenses include allocated workplace and other supporting overhead costs.
Product development expenses for the three and nine months ended September 30, 2021 increased compared to the prior-year periods due to increases in employee costs of $15.8 million and $30.1 million, respectively, primarily reflecting lower costs in the prior-year periods due to the reduced-hour work weeks implemented in the second quarter of 2020 under the Restructuring Plan, which remained in place for a portion of the three months ended September 30, 2020. The increases in employee costs also reflected higher stock-based compensation expenses and increases in headcount during the three and nine months ended September 30, 2021.
General and Administrative. Our general and administrative expenses primarily consist of employee costs (including stock-based compensation expense) for our executive, finance, user operations, legal, people operations and other administrative employees. Our general and administrative expenses also include our provision for doubtful accounts, consulting costs, as well as workplace and other supporting overhead costs.
General and administrative expenses for the three months ended September 30, 2021 decreased compared to the prior-year period due to a decrease of $2.3 million in our provision for doubtful accounts, reflecting continued improvement in our collection rates and a release of a portion of our COVID-19-related bad debt reserves following a decline in the rate of customer delinquencies. This decrease was partially offset by an increase in employee costs of $0.8 million, primarily the result of higher headcount.
General and administrative expenses for the nine months ended September 30, 2021 increased compared to the prior-year period due to:
•an increase of $11.6 million in employee costs, which was primarily the result of our determination that the performance conditions for certain performance-based restricted stock units had either been met or were expected to be met and, to a lesser extent, an increase in headcount; and
•an impairment charge of $11.2 million related to the right-of-use assets and leasehold improvements for office space that we subleased during the nine months ended September 30, 2021.
These increases were partially offset by a decrease of $17.0 million in our provision for doubtful accounts due to continued improvement in collection rates and our release of a portion of our COVID-19-related bad debt reserves following a decline in the rate of customer delinquencies.
Depreciation and Amortization. Depreciation and amortization expense primarily consists of depreciation on computer equipment, software, leasehold improvements, capitalized website and software development costs, and amortization of purchased intangible assets.
Depreciation and amortization expense for the nine months ended September 30, 2021 increased, primarily due to increases in depreciation associated with capitalized website and internal use software development costs as we invested in new and enhanced products for business owners and consumers.
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Restructuring. In April 2020, we announced the Restructuring Plan to help manage the near-term financial impacts of the COVID-19 pandemic. We incurred $0.5 million and $3.8 million in restructuring costs during the three and nine months ended September 30, 2020, which consisted of severance, payroll taxes and related benefits costs for terminated employees. See Note 18, "Restructuring," of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 in this Quarterly Report for further detail.
Trends and Uncertainties of Costs and Expenses. A majority of our expenses increased during the three months ended September 30, 2021 compared to the prior-year period, primarily reflecting higher employee costs, as well as higher cost of revenue and marketing costs. We expect costs and expenses to further increase in the three months ending December 31, 2021 as we plan to further increase our strategic investments and work toward catching up on sales hiring in the fourth quarter.
Other Income, Net
Other income, net consists primarily of the interest income earned on our cash, cash equivalents and previously held marketable securities, the portion of our sublease income in excess of our lease cost, amortization of debt issuance costs, credit facility fees and foreign exchange gains and losses.
Other income, net for the nine months ended September 30, 2021 decreased compared to the prior-year period, primarily driven by lower interest income as a result of the change in our investment strategy in the first quarter of 2020 to reduce our holdings of marketable securities in favor of holdings that are more liquid, mainly money market funds, which offer lower interest rates. For more information on this change, see Note 4, "Marketable Securities," of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 in this Quarterly Report.
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.
The decrease in benefit from income taxes for the nine months ended September 30, 2021 compared to the prior-year period was primarily due to an increase in year-to-date pre-tax income in 2021. The decrease in the provision for income taxes for the three months ended September 30, 2021 compared to the prior-year period was primarily due to a greater amount of excess tax benefits from stock-based compensation in the current-year period. This decrease offset the increase in the provision from higher pre-tax income. The provision for income taxes in the prior-year period also reflected the impact of not recognizing any net operating loss carryback benefits allowed under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) as a result of a decrease in pre-tax losses in 2020. The CARES Act, which was enacted on March 27, 2020 in response to the COVID-19 pandemic, allowed for net operating losses incurred in 2018, 2019 and 2020 to be carried back to tax years with a 35.0% tax rate. See Note 15, "Income Taxes," of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 in this Quarterly Report for further detail.
As of December 31, 2020, we had approximately $31.2 million in net deferred tax assets ("DTAs"). As of September 30, 2021, we consider it more likely than not that we will have sufficient taxable income in the future that will allow us to realize these DTAs. However, it is possible that some or all of these DTAs will not be realized. Therefore, unless we are able to generate sufficient taxable income from our operations, a substantial valuation allowance may be required to reduce our DTAs, which would materially increase our expenses in the period in which we recognize the allowance and have a materially adverse impact on our consolidated financial statements. The exact timing and amount of the valuation allowance recognition are subject to change on the basis of the net income that we are able to actually achieve. We will continue to evaluate the possible recognition of a valuation allowance on a quarterly basis.
Beginning in 2022, we expect additional changes under the U.S. Tax Cuts and Jobs Act (the "Tax Act") to come into effect that could adversely impact our effective tax rate and cash flows in future years. The Tax Act, which was enacted on December 22, 2017, made broad and complex changes to the U.S. tax code, including, among other things, reducing the federal corporate tax rate. We will continue to evaluate the impacts and monitor the issuance of additional regulatory or accounting guidance in addition to any executive or legislative updates.
Non-GAAP Financial Measures
Our condensed consolidated financial statements are prepared in accordance with GAAP. However, we have also disclosed below adjusted EBITDA and adjusted EBITDA margin, each of which is a non-GAAP financial measure.
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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 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.
Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure that we calculate as net income (loss), adjusted to exclude: provision for (benefit from) income taxes; other income, net; depreciation and amortization; stock-based compensation expense; and, in certain periods, certain other income and expense items, such as restructuring costs and impairment charges.
Adjusted EBITDA margin. Adjusted EBITDA margin is a non-GAAP financial measure that we calculate as Adjusted 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
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
Reconciliation of Net Income (Loss) to Adjusted EBITDA:
Net income (loss) $ 18,065  $ (1,020) $ 16,481  $ (40,513)
Provision for (benefit from) income taxes 3,911  10,744  (2,982) (9,484)
Other income, net (331) (399) (1,578) (3,277)
Depreciation and amortization 12,627  12,544  38,543  37,484 
Stock-based compensation 36,442  30,255  116,546  92,590 
Restructuring —  535  32  3,847 
Asset impairment(1)
—  —  11,164  — 
Adjusted EBITDA $ 70,714  $ 52,659  $ 178,206  $ 80,647 
Net revenue $ 269,155  $ 220,807  $ 758,439  $ 639,738 
Net income (loss) margin 7  % —  % 2  % (6) %
Adjusted EBITDA margin 26  % 24  % 23  % 13  %
(1) Recorded within general and administrative expenses on our Condensed Consolidated Statements of Operations.
Liquidity and Capital Resources
As of September 30, 2021, we had cash and cash equivalents of $531.6 million, which consisted of cash and money market funds. Our cash held internationally as of September 30, 2021 was $9.3 million.
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To date, we have been able to finance our operations and our acquisitions through proceeds from private and public financings, including our initial public offering in March 2012 and our follow-on offering in October 2013, cash generated from operations, and, to a lesser extent, cash provided by the exercise of employee stock options and purchases under the Employee Stock Purchase Plan, as well as proceeds from our sale of Eat24 to Grubhub in October 2017.
We continue to hold the majority of our investments in highly liquid money market funds following the liquidation of our portfolio of marketable securities in the first half of 2020, which we undertook as a result of our change in investment strategy to preserve liquidity in response to the COVID-19 pandemic. Our remaining investments that were not held in money market funds as of September 30, 2021 were held in certificates of deposit. See Note 4, "Marketable Securities," of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 in this Quarterly Report for further details about the liquidation of our portfolio of marketable securities.
We have the ability to access backup liquidity to fund working capital and for other capital requirements, as needed, through a three-year, $75.0 million senior unsecured revolving credit facility (including a $25.0 million letter of credit sub-limit) as part of our Credit Agreement with Wells Fargo Bank, National Association which we entered into in May 2020 (the "Credit Agreement"). As of September 30, 2021, we had $21.5 million of letters of credit under the sub-limit related to lease agreements for certain office locations, which are required to be maintained and issued to the landlords of each facility, and $53.5 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 September 30, 2021, 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.
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 and elsewhere in this Quarterly Report. We believe that, as a result of the steps we have taken in response to the COVID-19 pandemic, our existing cash and cash equivalents, together with any cash generated from operations, will be sufficient to meet our material cash commitments, 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; and purchases of property, equipment and software and website hosting services for at least the next 12 months. However, this estimate is based on a number of assumptions that may prove to be materially different and we could exhaust our available cash and cash equivalents earlier than presently anticipated. We may be required to draw down funds from our revolving credit facility or seek additional funds through equity or debt financings in the next 12 months to respond to business challenges associated with the COVID-19 pandemic or other challenges, including the need to develop new features and products or enhance existing services, improve our operating infrastructure or acquire complementary businesses and technologies. The cost of capital associated with any additional funds sought in the future might be adversely impacted by the extent and duration of the impact of the COVID-19 pandemic on our business.
Amounts deposited with third-party financial institutions exceed the Federal Deposit Insurance Corporation and Securities Investor Protection Corporation insurance limits, as applicable. These cash and cash equivalents could be impacted if the underlying financial institutions fail or are subjected to other adverse conditions in the financial markets. To date, we have experienced no loss or lack of access to our cash and cash equivalents; however, we can provide no assurances that access to our invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets.
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Cash Flows
The following table summarizes our cash flows for the periods indicated (in thousands):
Nine Months Ended
September 30,
2021 2020
Condensed Consolidated Statements of Cash Flows Data:
Net cash provided by operating activities $ 167,735  $ 128,385 
Net cash (used in) provided by investing activities $ (21,259) $ 272,414 
Net cash used in financing activities $ (210,205) $ (1,370)
Operating Activities. Net cash provided by operating activities during the nine months ended September 30, 2021 increased compared to the prior-year period primarily as a result of an increase in cash inflows from customers due to higher revenue, partially offset by an increase in cash outflows due to the timing of payment of payroll taxes.
Investing Activities. Net cash used in investing activities during the nine months ended September 30, 2021 primarily reflects purchases of property, equipment and software. Net cash provided by investing activities during the prior-year period primarily reflects the sale of our marketable securities portfolio following the change in our investment strategy to preserve liquidity.
Financing Activities. Net cash used in financing activities during the nine months ended September 30, 2021 increased compared to the prior-year period primarily due to repurchases of common stock pursuant to our stock repurchase program and, to a lesser extent, an increase in the amount of taxes paid in connection with the settlement of employee tax liabilities upon the vesting of restricted stock units ("RSUs"). The increase in taxes paid primarily resulted from our use of the net share withholding method of settling employee tax liabilities for RSUs in the current year, compared to the sell-to-cover method, which we used during a portion of the year-ago period. Increases in both the number of shares released upon the vesting of RSUs and the average stock price upon release in 2021 also contributed to this increase in taxes paid.
Stock Repurchase Program
As of September 30, 2021, our board of directors had authorized us to repurchase up to an aggregate of $1.2 billion of our outstanding common stock since it initially authorized our stock repurchase program in July 2017. As of October 29, 2021, approximately $295.4 million remained available for stock repurchases under these authorizations.
We may repurchase shares at our discretion in the open market, privately negotiated transactions, in transactions structured through investment banking institutions, or a combination of the foregoing. The program is not subject to any time limit and may be modified, suspended or discontinued at any time. The amount and timing of repurchases are subject to a variety of factors, including liquidity, cash flow and market conditions.
We have funded all repurchases to date and expect to fund any future repurchases with cash available on our balance sheet. During the nine months ended September 30, 2021, we repurchased on the open market 4,687,066 shares for an aggregate purchase price of $177.8 million. We did not repurchase any shares during the nine months ended September 30, 2020.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the U.S. Securities and Exchange Commission ("SEC") under the Securities Act.
Contractual Obligations
There have been no material changes to our contractual obligations and other commitments as disclosed in our Annual Report.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of business. These risks primarily include interest rate, foreign exchange risks and inflation, and have not changed materially from the market risks we were exposed to in the year ended December 31, 2020.
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 September 30, 2021. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2021, 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 September 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and our Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by the collusion of two or more people or by management override of controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For information regarding material legal proceedings in which we are involved, see "Legal Proceedings" in Note 12, "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.

We rely on third-party service providers and strategic partners for many aspects of our business, and any failure to maintain these relationships could harm our business.
We rely on relationships with various third parties to grow our business, including strategic partners and technology and content providers. For example, we rely on third parties for data about local businesses, mapping functionality, payment processing, information technology and systems, network infrastructure and administrative software solutions. We also rely on partnership integrations for various transactions available through Yelp, including Grubhub for food-ordering services. Identifying, negotiating and maintaining relationships with third parties require significant time and resources, as does integrating their data, services and technologies onto our platform. This may divert the attention of our management and employees from other aspects of our business operations, and there can be no assurance that we will be able to continue to realize the intended benefits of any given partnership.
It is possible that third-party providers and strategic partners may not be able to devote the resources we expect to the relationships. We may also have competing interests and obligations with respect to certain of our partners, which may make it difficult to maintain, grow or maximize the benefit for each partnership. For example, we rely on the integration of our content into Apple Maps to drive a significant amount of traffic to our website and downloads of our application. If Apple were to offer products competitive with ours, such as local business reviews, our relationship with Apple would be negatively impacted and our longstanding partnership may be difficult to maintain as a result; if our partnership with Apple ended, we would be required to increase our marketing spend to drive traffic and downloads from alternate sources, which would adversely affect our financial results. Similarly, our entry into the online reservations space with our acquisition of SeatMe, Inc. in 2013 put us in competition with OpenTable, which led to the end of our partnership with OpenTable in 2015. If our relationships with our partners and providers deteriorate, we could suffer increased costs and delays in our ability to provide consumers and advertisers with content or similar services. As in the case of the expiration or termination of any of our agreements with third-party providers, transitioning from one partner or provider to another could subject us to operational delays and inefficiencies and we may not be able to replace the services provided to us in a timely manner or on terms that are favorable to us, if at all.
In addition, we exercise limited control over our third-party partners and vendors, which makes us vulnerable to any errors, interruptions or delays in their operations. If these third parties experience any service disruptions, financial distress or other business disruption, or difficulties meeting our requirements or standards, it could make it difficult for us to operate some aspects of our business. For example, we rely on a single supplier to process payments of all transactions made through Yelp. Any disruption or problems with this supplier or its services could have an adverse effect on our reputation, results of operations and financial results. Similarly, the actions of our partners may affect our brand if users or customers do not have a positive experience interacting with or through them. For example, if advertisers do not have a positive experience purchasing our advertising products through our resale partners, such as Thryv, or the agency participants in our Yelp Ads Certified Partners Program, they may not continue advertising with us, which would negatively affect our revenue and operating results. Although such partners are contractually obligated to observe certain standards and best practices while selling our advertising products, our ability to ensure their compliance is limited. Any disagreements or disputes with these or other partners about our respective contractual obligations — which we have had in the past and may have again from time to time in the future — could result in legal proceedings or negatively affect our brand and reputation.

36
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 September 30, 2021 (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
July 1 – July 31, 2021 842  $ 38.61  842  $ 97,938 
August 1 – August 31, 2021 242  $ 38.30  242  $ 338,660 
September 1 – September 30, 2021 583  $ 37.54  583  $ 316,761 
(1)    Between July 2017 and September 2021, our board of directors authorized us to repurchase up to $1.2 billion of our outstanding common stock, $295.4 million of which remained available as of October 29, 2021. 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.
37
ITEM 6. EXHIBITS.
Exhibit Incorporated by Reference Filed Herewith
Number Exhibit Description Form File No. Exhibit Filing Date
3.1
8-K 001-35444 3.1 7/8/2020
3.2
8-K 001-35444 3.2 7/8/2020
4.1
Reference is made to Exhibits 3.1 and 3.2.
4.2
8-A/A 001-35444 4.1 9/23/2016
X
X
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.

38
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: November 5, 2021 /s/ David Schwarzbach
David Schwarzbach
Chief Financial Officer
  (Principal Financial and Accounting Officer and Duly Authorized Signatory)


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