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What changed in YELP INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of YELP INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+493 added−472 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-24)

Top changes in YELP INC's 2023 10-K

493 paragraphs added · 472 removed · 360 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

110 edited+33 added−45 removed84 unchanged
Biggest changeAs a result, we expect our Self-serve and Multi-location sales initiatives will continue to help improve our overall revenue retention over the long term as revenue from these channels makes up an increasing percentage of our total advertising revenue. • Reduce expenses through distributed work .
Biggest changeAccordingly, we believe our initiatives designed to deliver more value to advertisers through more and higher-quality ad clicks, as well as through product-driven customer support improvements, will also drive margin expansion over the long term. • Our Self-serve and Multi-location channels are more margin-accretive than Local sales; as a result, we expect that our plans to drive sales through these sales channels will also help improve our margins over time as revenue from these channels makes up an increasing percentage of our total advertising revenue. • In addition to providing our employees with increased flexibility and reducing our reliance on the San Francisco Bay Area, operating on a distributed basis has allowed us to reduce our real estate footprint, which we expect to continue to benefit margin going forward.
Once a business has claimed its listing page, it can update its listing information and has the option to purchase certain page upgrade features.
Once a business has claimed its page, it can update its listing information and has the option to purchase certain page upgrade features.
Our consumer alerts program warns consumers when we find evidence of extreme attempts to manipulate a business’s ratings and reviews or other egregious conduct that may harm consumers and unfairly put other businesses at a disadvantage.
Consumer Alerts Program . Our consumer alerts program warns consumers when we find evidence of extreme attempts to manipulate a business’s ratings and reviews or other egregious conduct that may harm consumers and unfairly put other businesses at a disadvantage.
Our automated recommendation software is our first line of defense against unreliable content and misinformation submitted to our platform. As described in more detail under " —Technology " above, our recommendation software analyzes billions of data points and hundreds of signals from all reviews, businesses and reviewers in an effort to recommend the most useful and reliable reviews.
Our automated recommendation software is our first line of defense against unreliable content and misinformation submitted to our platform. As described in more detail under “ —Technology ” above, our recommendation software analyzes billions of data points and hundreds of signals from all reviews, businesses and reviewers in an effort to recommend the most useful and reliable reviews.
These signals include the reviewer’s type and level of activity with Yelp (which might correspond to the reviewer’s reliability or suggest reviewer biases) and whether certain reviews originate from related Internet Protocol (“IP”) addresses (which might mean the reviews were submitted by the same person).
These signals include those related to the reviewer’s type and level of activity with Yelp (which might correspond to the reviewer’s reliability or suggest reviewer biases) and whether certain reviews originate from related Internet Protocol (“IP”) addresses (which might mean the reviews were submitted by the same person).
We control access to and distribution of our proprietary technology and algorithms, including our trade secrets, by entering into confidentiality and inventions assignment agreements with our employees and contractors, as well as confidentiality agreements with third parties and other reasonable precautions intended to prevent unauthorized disclosure.
We control access to and distribution of our trade secrets, including our proprietary technology and algorithms, by entering into confidentiality and inventions assignment agreements with our employees and contractors, as well as confidentiality agreements with third parties, and taking other reasonable precautions intended to prevent unauthorized disclosure.
The vast majority of our platform is currently hosted by Amazon Web Services from multiple locations, which allows us to scale our infrastructure dynamically according to demand as well as optimize the cost and performance of our infrastructure.
The vast majority of our platform is currently hosted by Amazon Web Services (“AWS”) from multiple locations, which allows us to scale our infrastructure dynamically according to demand as well as optimize the cost and performance of our infrastructure.
These products are backed by a scaled and extensible advertising technology platform. To establish the price of an individual ad click on our platform, we run an auction for each advertising unit displayed to a consumer on our website or mobile app, which resulted in an average of 19 million auctions per day in 2022.
These products are backed by a scaled and extensible advertising technology platform. To establish the price of an individual ad click on our platform, we run an auction for each advertising unit displayed to a consumer on our website or mobile app, which resulted in an average of 19 million auctions per day in 2023.
This technology, together with content moderation by our User Operations team and other consumer protection efforts, helps us detect and mitigate attempts to manipulate ratings and reviews. As of December 31, 2022, approximately 74% of the reviews submitted to our platform were recommended. • A strong brand and a large consumer audience .
This technology, together with content moderation by our User Operations team and other consumer protection efforts, helps us detect and mitigate attempts to manipulate ratings and reviews. As of December 31, 2023, approximately 74% of the reviews submitted to our platform were recommended. • A strong brand and a large consumer audience .
As in past years, advertising accounted for the vast majority of our revenue during the year ended December 31, 2022, contributing 95% of our revenue, which was fairly consistent with the years ended December 31, 2020 and 2021. We recognize revenue from our business listing and advertising products, including advertising sold by partners, as advertising revenue.
As in past years, advertising accounted for the vast majority of our revenue during the year ended December 31, 2023, contributing 95% of our revenue, which was fairly consistent with the years ended December 31, 2021 and 2022. We recognize revenue from our business listing and advertising products, including advertising sold by partners, as advertising revenue.
Talent Attraction and Retention Our future depends on our continuing ability to attract, develop, motivate, and retain highly qualified and skilled employees. Qualified individuals are in high demand and we expect to continue to face significant competition from other companies in hiring and retaining such personnel.
Talent Attraction and Retention Our success depends on our continuing ability to attract, develop, motivate, and retain highly qualified and skilled employees. Qualified individuals are in high demand and we expect to continue to face significant competition from other companies in hiring and retaining such personnel.
Among other obligations under the GDPR, businesses are required to make contractual privacy, data protection 11 Table of Contents and data security commitments; give detailed disclosures about how they collect, use and share personal information; maintain adequate security measures; notify regulators and affected individuals of certain personal information breaches; meet extensive governance and documentation requirements; and honor individuals’ rights to their personal information.
Among other obligations under the GDPR, businesses are required to make contractual privacy, data protection and data security commitments; give detailed disclosures about how they collect, use and share personal information; maintain adequate security measures; notify regulators and affected individuals of certain personal information breaches; meet extensive governance and documentation requirements; and honor individuals’ rights to their personal information.
To maintain our vibrant culture and address any areas of employee concern, we conduct annual employee engagement surveys covering a wide range of topics including: employee programs and benefits; manager effectiveness; feedback and recognition; company confidence; inclusion; learning and development; and remote work issues such as managing remotely, manager and team support, employee well-being in a remote environment, and remote growth and connection opportunities.
To maintain our vibrant culture and address any areas of employee concern, we conduct annual employee engagement surveys covering a wide range of topics including: manager effectiveness; feedback and recognition; company confidence; inclusion and belonging; learning and development; and remote work issues such as managing remotely, manager and team support, employee well-being in a remote environment, and remote growth and connection opportunities.
Enhanced Profile In addition to providing businesses with the same premium features and support options as our Branded Profile product, our Enhanced Profile product prevents ads from other businesses from appearing on the Yelp business pages of our Enhanced Profile customers.
Enhanced Profile In addition to providing multi-location businesses with the same premium features and support options as our Branded Profile product, our Enhanced Profile product prevents ads from other businesses from appearing on the Yelp business pages of our Enhanced Profile customers.
Our distributed workforce model has expanded our hiring reach, allowing us to access and attract great talent pools regardless of geography. We also focus on attracting early-in-career talent through university outreach and on-campus recruiting efforts, including at historically Black colleges and universities.
Our distributed workforce model has expanded our hiring reach, allowing us to access and attract great talent pools regardless of geography. We also focus on attracting early-in-career talent through university outreach and on-campus recruiting efforts, including at historically Black colleges and universities and Hispanic-serving institutions.
As of December 31, 2022, approximately 74% of the reviews submitted to our platform were recommended by our automated software and approximately 18% were not recommended but still accessible on secondary pages.
As of December 31, 2023, approximately 74% of the reviews submitted to our platform were recommended by our automated software and approximately 18% were not recommended but still accessible on secondary pages.
Item 1. Business. Company Overview Since Yelp's founding 18 years ago, our mission has remained the same — to connect consumers with great local businesses. Over that time, we have built one of the best-known Internet brands in the United States.
Item 1. Business. Company Overview Since Yelp’s founding nearly 20 years ago, our mission has remained the same — to connect consumers with great local businesses. Over that time, we have built one of the best-known Internet brands in the United States.
For example, if our models predict that relevant consumer traffic will meaningfully decrease for a period of time during an ad campaign, our bidding algorithms will dynamically allocate advertiser budget around that period to avoid spending a disproportionate amount of the budget while supply is constrained.
For example, if our models predict that relevant consumer traffic will meaningfully decrease for a period of time during an ad campaign, our bidding algorithms will dynamically allocate advertiser budget around that period to avoid spending a 6 Table of Contents disproportionate amount of the budget while supply is constrained.
We also established the Yelp Elite Squad to provide recognition to users who are active in the Yelp community and consistently contribute high-quality content. In addition to encouraging reliable content and fair play from the outset, our communities serve as additional layers of oversight.
We also established the Yelp Elite Squad to provide recognition to users who are active in the Yelp community and consistently contribute high-quality content. 7 Table of Contents In addition to encouraging reliable content and fair play from the outset, our communities serve as additional layers of oversight.
In addition to offering our employees the flexibility to work remotely, we offer competitive compensation and comprehensive benefits, including standard health, dental, vision, life and disability insurance benefits as well as a 401(k) plan with company matching.
In addition to offering our employees the flexibility to work remotely, we offer competitive compensation and comprehensive benefits, including standard health, dental, vision, life and disability insurance benefits as well as a 401(k) plan with company matching for our U.S. employees.
We also offer customized coaching resources to provide individual support and develop critical skills, as well as regular, ongoing training in compliance and workplace conduct matters to all employees. Seasonality and Cyclicality Our business is affected by seasonal fluctuations in Internet usage and advertising spending, as well as cyclicality in economic activity: Seasonality .
We also offer customized coaching resources to provide individual support and develop critical skills, as well as regular, ongoing training in compliance and workplace conduct matters to all employees. 15 Table of Contents Seasonality and Cyclicality Our business is affected by seasonal fluctuations in Internet usage and advertising spending, as well as cyclicality in economic activity: Seasonality .
Branded Profile Our Branded Profile product provides businesses with access to premium features in connection with their Yelp business pages, such as the ability to update listing information and select photos to highlight on the page through a slideshow feature.
Branded Profile Our Branded Profile is a multi-location product that provides businesses with access to premium features in connection with their Yelp business pages, such as the ability to update listing information and select photos to highlight on the page through a slideshow feature.
As we face increasing competition and as our business grows, we may face more such claims of infringement. Competition We compete in rapidly evolving and intensely competitive markets, and we expect competition to intensify further in the future with the emergence of new technologies and market entrants.
We may face more such claims of infringement as our business grows, we face increasing competition, and we increasingly use new or different technologies. Competition We compete in rapidly evolving and intensely competitive markets, and we expect competition to intensify further in the future with the emergence of new technologies and market entrants.
These features are primarily available through partner integrations, the largest of which — by both transaction volume and revenue — is our partnership with Grubhub, which allows consumers to place food orders for pickup and delivery through Yelp. We recognize revenue from these sources on a net basis as transactions revenue.
These features are primarily available through partner integrations, the largest of which — by both transaction volume and revenue — is our partnership with Grubhub, which allows consumers to place food orders for pickup and delivery through Yelp. We recognized revenue from these sources on a net basis as transactions revenue through December 31, 2023.
There is also discussion in Congress of new comprehensive federal data protection and privacy law to which we likely would be subject if it is enacted.
There has also been discussion in Congress of a new comprehensive federal data protection and privacy law to which we likely would be subject if it is enacted.
The competitive advantages we have established over the past 18 years, together with the product-led business model and improved cost structure we have implemented in recent years, provide us with the opportunity for consistent, long-term growth in this market. We have: • A proven engine to generate and recommend trusted content .
The competitive advantages we have established over nearly two decades, together with the product-led business model and improved cost structure we have implemented in recent years, provide us with the opportunity for consistent, long-term growth in this market. We have: • A proven engine to generate and recommend trusted content .
In addition to taking direct corrective action — such as recategorizing businesses to appropriately reflect their services, as in the example above — if we identify or confirm any such issues through our investigations, we typically pursue one or more of the courses of action described below (each of which we may also employ on a stand-alone basis). 7 Table of Contents Consumer Alerts Program .
In addition to taking direct corrective action — such as recategorizing businesses to appropriately reflect their services, as in the example above — if we identify or confirm any such issues through our investigations, we typically pursue one or more of the courses of action described below (each of which we may also employ on a stand-alone basis).
In addition to these contractual arrangements, we pursue the registration of our copyrights, trademarks, service marks and domain names in the United States and in certain locations internationally. Our registration efforts have focused on gaining trademark protection for the word mark “Yelp” and the Yelp burst logo, among others.
We pursue the registration of our copyrights, trademarks, service marks and domain names in the United States and in certain locations internationally. Our registration efforts have focused on gaining trademark protection for the word mark “Yelp” and the Yelp burst logo, among others.
In 2011, our board of directors approved the contribution and issuance to the Foundation of 520,000 shares of our common stock to fund grants to local non-profit organizations that are actively engaged in supporting community and small business growth. The Foundation held 187,500 shares as of December 31, 2022, which represented less than 1% of our outstanding common stock.
In 2011, our Board approved the contribution and issuance to the Foundation of 520,000 shares of our common stock to fund grants to local non-profit organizations that are actively engaged in supporting community and small business growth. The Foundation held 160,000 shares as of December 31, 2023, which represented less than 1% of our outstanding common stock.
As of December 31, 2022, approximately 8% of the reviews submitted to our platform had been removed. Coordination with Law Enforcement . We regularly cooperate with law enforcement and consumer protection agencies to investigate and identify businesses and individuals who may be engaged in false advertising or other deceptive practices relating to reviews. Legal Action .
As of December 31, 2023, approximately 9% of the reviews submitted to our platform had been removed. Coordination with Law Enforcement . We regularly cooperate with law enforcement and consumer protection agencies to investigate and identify businesses and individuals who may be engaged in false advertising or other deceptive practices relating to reviews.
Consumers trust us for our more than 240 million ratings and reviews of businesses across a broad range of categories. This consumer trust is the foundation of our business, from which we are able to empower other businesses to succeed.
Consumers trust us for the more than 260 million ratings and reviews available on our platform of businesses across a broad range of categories. This consumer trust is the foundation of our business, from which we are able to empower other businesses to succeed.
Casey , we introduced a new consumer notice on Yelp business pages categorized as crisis pregnancy centers to protect consumers from the potential of being misled when seeking reproductive health services.
Wade and Planned Parenthood v. Casey , we introduced a new consumer notice on Yelp business pages categorized as crisis pregnancy centers to protect consumers from the potential of being misled when seeking reproductive health services.
Yelp automatically promotes Yelp Connect posts to a business's followers. Logo Logo provides businesses with the ability to display their logos in high-visibility locations, including prominently at the top of Yelp business pages and in search results. Nearby Jobs Nearby Jobs provides businesses with the ability to see a dynamic feed of job quote requests in their area of business.
Logo Logo provides businesses with the ability to display their logos in high-visibility locations, including prominently at the top of Yelp business pages and in search results. Nearby Jobs Nearby Jobs provides businesses with the ability to see a dynamic feed of job quote requests in their area of business.
The breadth and depth of our high-quality content is the result of our significant investments over the past 18 years in both developing communities of users as well as providing a great consumer experience that enables and encourages consumers to share their everyday business experiences through reviews, photos and other content.
The breadth and depth of our high-quality content is the result of our significant investments over nearly two decades in both developing communities of users as well as providing a great consumer experience that enables and encourages consumers to share their everyday business experiences through reviews, photos, videos and other content.
Other Partnerships Other non-advertising partner arrangements include content licensing and allowing third-party data providers to update and manage business listing information on behalf of businesses. Sales We sell our advertising products directly through our sales force, indirectly through partners, and online through our website and our Yelp for Business app. Self-serve Ads .
Other Partnerships Other non-advertising partner arrangements include content licensing and allowing third-party data providers to update and manage business listing information on behalf of businesses. 4 Table of Contents Sales We sell our advertising products directly through our sales force as well as online through our website and our Yelp for Business app, and indirectly through partners.
Verified License Verified License is a badge that appears on Yelp business pages as a paid upgrade for certain eligible licensed advertisers, primarily in our home & local services category.
Verified License Verified License is a badge that appears on Yelp business pages as a paid upgrade for certain eligible licensed businesses, primarily in our home and local services subcategories.
Our targeting software leverages machine learning models that evaluate more than 350 signals about the user, business and search context to make sure consumers see the right ad at the right time and drive ad clicks. • Auction System . We use an auction system to determine the price we charge advertisers for ad clicks.
Our targeting software leverages neural networks that evaluate more than 4,000 signals about the user, business and search context to make sure consumers see the right ad at the right time and drive ad clicks. • Auction System . We use an auction system to determine the price we charge advertisers for ad clicks.
The convenience of our Self-serve platform has helped us improve revenue retention and reduce our reliance on sales and customer support headcount, and continues to be a strategic priority for us. In 2022, our performance marketing and continued improvements to the claim and ads purchase flows as well as the business owner platform drove record Self-serve customer acquisition.
The convenience of our Self-serve platform has helped us reduce our reliance on sales and customer support headcount, and continues to be a strategic priority for us. In 2023, our performance marketing as well as continued improvements to the claim and ads purchase flows, onboarding and the business owner experience drove another year of record Self-serve customer acquisition.
Many businesses reduce their advertising spending during challenging macroeconomic environments. SMBs in particular — which have historically experienced high failure rates and which make up a significant portion of our advertiser base — may be disproportionately affected by negative fluctuations in the business cycle.
Our traffic is also typically weakest in the fourth quarter of the year. Cyclicality . Many businesses reduce their advertising spending during challenging macroeconomic environments. SMBs in particular — which have historically experienced high failure rates and which make up a significant portion of our advertiser base — may be disproportionately affected by negative fluctuations in the business cycle.
Our competitors consist of companies that help businesses — particularly businesses in our strategically important Services categories and, to a lesser extent, restaurants category — connect and engage with consumers, including: • online search engines and directories, such as Google, as well as traditional, offline business guides and directories; • online and offline providers of consumer ratings, reviews and referrals, such as TripAdvisor; • providers of online marketing and tools for managing and optimizing advertising campaigns, such as Google, Instagram and TikTok, as well as various forms of traditional offline advertising, including radio, direct marketing campaigns, yellow pages and newspapers; • restaurant reservation and seating tools, such as OpenTable and Resy, as well as food ordering and delivery services; and • home and/or local services-related platforms and offerings, such as Angi.
Our competitors consist of companies that help businesses — particularly businesses in our strategically important Services categories and, to a lesser extent, restaurants category — connect and engage with consumers, including: • online search engines and directories, including those incorporating AI technologies, such as Google and ChatGPT, as well as traditional, offline business guides and directories; • online and offline providers of consumer ratings, reviews and referrals, such as TripAdvisor, as well as social media platforms and features where consumers are increasingly searching for and posting information about local businesses, such as TikTok and Snap Map; • providers of online marketing and tools for managing and optimizing advertising campaigns, such as Google, Instagram and TikTok, as well as various forms of traditional offline advertising, including radio, direct marketing campaigns, yellow pages and newspapers; • restaurant reservation and seating tools, such as OpenTable and Resy, as well as food ordering and delivery services; and • home and/or local services-related platforms and offerings, such as Angi.
For a discussion of our results for the year ended December 31, 2022, see the section titled “ Management ’ s Discussion and Analysis of Financial Condition and R esults of Operations ” included under Part II, Item 7 of this Annual Report.
For a discussion of our results for the year ended December 31, 2023, see the section titled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” included under Part II, Item 7 of this Annual Report.
There are also regular Congressional efforts to restrict the scope of the protections available to online platforms under CDA 230, and our current protections from liability for third-party content in the United States could decrease or change as a result. Claims and legislation applicable to user-generated content also regularly arise in other jurisdictions.
There are also regular Congressional efforts to restrict the scope of the protections available to online platforms under CDA 230, and our current protections from liability for third-party content in the United States could decrease or change as a result.
Our sophisticated ad system optimizes for value by matching consumers with the right advertisers at the right time, allowing us to deliver more value to our advertisers in the form of higher performing ad clicks. We believe that we can drive more value to advertisers and increase platform monetization through additional ad system improvements.
Our sophisticated ad system optimizes for value by matching consumers with the right advertisers at the right time, allowing us to deliver more value to our advertisers in the form of more and higher performing ad clicks. We believe that we can increase retention and platform monetization by further developing this proprietary ad technology.
If we are unable to implement a valid solution for personal information transfers from Europe, we will face increased exposure to regulatory actions, substantial fines, and injunctions against processing or transferring personal information from Europe and may be required to increase our data processing capabilities in Europe at significant expense.
If our solution for personal information transfers from Europe is deemed insufficient and no other valid solution can be readily implemented, we will face increased exposure to regulatory actions, substantial fines, and injunctions against processing or transferring personal information from Europe and may be required to increase our data processing capabilities in Europe at significant expense.
" Human Capital Management At Yelp, we deeply value our community of employees who sustain our culture through their dedication to our mission of connecting people with great local businesses and to living our values of authenticity, tenacity, creativity, collegiality, and prioritizing consumer trust.
Our actual or perceived failure to comply with such regulations and obligations could harm our business . ” Human Capital Management At Yelp, we deeply value our community of employees who sustain our culture through their dedication to our mission of connecting people with great local businesses and to living our values of authenticity, tenacity, creativity, collegiality, and prioritizing consumer trust.
Business Highlights Businesses in eligible categories can pay to highlight up to six attributes that make their business unique, such as “Family Owned” or “Pet Friendly.” Portfolio Portfolio allows businesses to showcase their work or services to prospective customers through a photo collection of projects. 3 Table of Contents Yelp Connect Yelp Connect provides advertisers with a channel to market new offerings, such as new menu items, or communicate business updates to customers.
Business Highlights Businesses in eligible categories can pay to highlight up to six attributes that make their business unique, such as “Family Owned” or “Pet Friendly.” 3 Table of Contents Portfolio Portfolio allows businesses to showcase their work or services to prospective customers through a collection of projects.
Our trusted content has attracted a large, high-intent consumer audience. This large audience of engaged consumers reflects the strength of our brand as the go-to source for reliable local business information as well as our availability across a wide range of platforms and devices. It also provides a compelling value proposition to advertisers.
Our trusted content has attracted a large, high-intent consumer audience. This large audience reflects the strength of our brand as a leading resource for consumers to search for and discover great local businesses across categories as well as our availability across a wide range of platforms and devices. It also provides a compelling value proposition to advertisers.
Other countries outside of Europe have enacted or are considering enacting similar cross-border data transfer restrictions and laws requiring local data residency as well, which could increase the cost and complexity of operating our business.
Other countries outside of Europe have enacted or are considering enacting similar cross-border data transfer restrictions and laws with more restrictive data protection obligations, which could increase the cost and complexity of operating our business.
We believe this model provides even greater flexibility to our employees, who now have the opportunity to relocate within the countries where we operate so they can live where they want to live and work where they will feel most effective.
We believe this model provides even greater flexibility to our employees, who now have the opportunity to relocate within the countries where we operate so they can live where they want to live and work where they will feel most effective. It also provides employees with more opportunities for flexible work schedules and reduces time spent commuting.
Other We generate other revenue through subscription services, licensing payments for access to Yelp data and other non-advertising, non-transaction arrangements. Yelp Guest Manager Yelp Guest Manager is a subscription-based suite of front-of-house management tools for restaurants, nightlife and certain other venues.
Other We generate other revenue through subscription services, licensing payments for access to Yelp data, other non-advertising arrangements and other non-advertising, non-transaction arrangements. Beginning in the three months ending March 31, 2024, other revenue will also include transactions revenue. Yelp Guest Manager Yelp Guest Manager is a subscription-based suite of front-of-house management tools for restaurants, nightlife and certain other venues.
The software evaluates each review based on hundreds of signals every day and, as a result, its analysis can change over time as new data becomes available; reviews that were previously recommended may become not recommended, and reviews that were previously not recommended may be restored to recommended status. 5 Table of Contents • Machine Learning, Artificial Intelligence and Large Language Models .
The software regularly evaluates each review and, as a result, its analysis can change over time as new data becomes available; reviews that were previously recommended may become not recommended, and reviews that were previously not recommended may be restored to recommended status. • Machine Learning, AI and Large Language Models .
Our Self-serve platform allows businesses to purchase and manage their Yelp Ads campaigns directly from our website or Yelp for Business app. Businesses can purchase sponsored CPC search advertising and business page upgrades such as Business Highlights and Yelp Portfolio directly through our Self-serve platform.
Our Self-serve platform allows businesses to purchase and manage their advertising products directly from our website or the Yelp for Business app. Businesses can purchase Yelp Ads and business page upgrades directly through our Self-serve platform.
In addition, we continue to explore additional opportunities to reduce our real estate footprint. 2 Table of Contents Our Products and Services Advertising We offer a range of free and paid advertising products to businesses of all sizes, including the products listed below, which provide the ability to deliver targeted advertising to our large and high-intent audience.
Our Products and Services Advertising We offer a range of free and paid advertising products to businesses of all sizes, including the products listed below, which provide the ability to deliver targeted advertising to our large and high-intent audience.
We believe our ability to compete successfully for users, content, and advertising and other customers depends upon many factors both within and beyond our control, including: • the popularity, usefulness, ease of use, performance and reliability of our products and services compared to those of our competitors; • our ability, in and of itself as well as in comparison to the ability of our competitors, to develop new products and services and enhancements to existing products and services; • the quantity, quality and reliability of our content, including its breadth, depth and timeliness; • our ad targeting and measurement capabilities, and those of our competitors; • the size, composition and level of engagement of our consumer audience relative to those of our competitors; • our marketing and selling efforts, and those of our competitors; • the pricing of our products and services relative to those of our competitors; • the actual or perceived return our customers receive from our products and services relative to returns from our competitors; • the frequency and relative prominence of the ads displayed by us or our competitors; • acquisitions or consolidation within our industry, which may result in more formidable competitors; and • our reputation and brand strength relative to our competitors. 10 Table of Contents Government Regulation As a company conducting business on the Internet, we are subject to a variety of laws and regulations in the United States and abroad that involve matters central to our business, including laws regarding privacy, data protection, data security, user-generated content and consumer protection, among others.
Certain competitors could also use strong or dominant positions in one or more markets to gain competitive advantage against us in markets in which we operate. 10 Table of Contents We believe our ability to compete successfully for users, content, and advertising and other customers depends upon many factors both within and beyond our control, including: • the popularity, usefulness, ease of use, performance and reliability of our products and services compared to those of our competitors; • our ability, in and of itself as well as in comparison to the ability of our competitors, to develop new products and services and enhancements to existing products and services; • the quantity, quality and reliability of our content, including its breadth, depth and timeliness; • our ad targeting and measurement capabilities, and those of our competitors; • the size, composition and level of engagement of our consumer audience relative to those of our competitors; • our marketing and selling efforts, and those of our competitors; • the pricing of our products and services relative to those of our competitors; • the actual or perceived return our customers receive from our products and services relative to returns from our competitors; • the frequency and relative prominence of the ads displayed by us or our competitors; • acquisitions or consolidation within our industry, which may result in more formidable competitors; and • our reputation and brand strength relative to our competitors.
For additional information, see the section titled " Risk Factors—Our business is subject to complex and evolving U.S. and foreign regulations and other legal obligations related to privacy, data protection and other matters. Our actual or perceived failure to comply with such regulations and obligations could harm our business .
For additional information, see the section titled “ R isk Factors—Our business is subject to complex and evolving U.S. and foreign regulations and other legal obligations related to privacy, data protection and other matters.
For example, we proactively work to identify businesses and individuals who offer or receive cash, discounts or other benefits in exchange for reviews, such as review solicitation and reputation management companies that offer to artificially inflate search rankings and online reputations.
For example, we proactively work to identify businesses and individuals who offer or receive cash, discounts or other benefits in exchange for reviews, such as reputation management companies that offer to artificially inflate search rankings and online reputations. Our human-powered moderation is also able to identify and thwart nuanced attempts to mislead consumers that other platforms may miss.
Advertising Products CPC Advertising (“Yelp Ads”) We allow businesses to promote themselves in sponsored search results on our platform, on the Yelp pages of businesses in the same or related categories, and other places on our platform.
Advertising Products CPC Advertising (“Yelp Ads”) We allow businesses to promote themselves in sponsored search results on our platform, on the Yelp pages of businesses in the same or related categories, and other key places on our platform. Yelp Ads can also be delivered through syndication on the Yelp Ads Network, a large collection of third-party sites.
Based on historical trends, our revenue is typically lowest in the first quarter and increases through the year to its highest level in the fourth quarter.
Based on historical trends, our revenue is typically lowest in the first quarter and increases sequentially through the third quarter. Fourth quarter revenue is typically similar to the third quarter as well as to the first quarter of the subsequent year.
These behind-the-scenes looks at top-rated businesses often include interacting with business owners, hearing their unique stories and engaging with other locals in their community; however, as users of our service, Yelp Elites do not receive compensation for their contributions.
These behind-the-scenes looks at top-rated businesses often include interacting with business owners, hearing their unique stories and engaging with other locals in their community; however, as users of our service, Yelp Elites do not receive compensation for their contributions. 9 Table of Contents Intellectual Property We rely on federal, state, and international statutory, common law and other legal rights, as well as contractual restrictions, to protect our intellectual property.
The Yelp Foundation (the “Foundation”), a non-profit organization established by our board of directors in 2011, directly supports consumers and local businesses in the communities in which we operate.
In addition, employees participated in virtual volunteer events in partnership with various nonprofit organizations. The Yelp Foundation . The Yelp Foundation (the “Foundation”), a non-profit organization established by our Board in 2011, directly supports consumers and local businesses in the communities in which we operate.
In addition to our insurance benefits, our wellness program includes a monthly wellness subsidy, access to mental health support and services through Modern Health and our Employee Assistance Program, as well as financial wellness programs such as financial counseling and tools to help manage student loans. 15 Table of Contents Talent Development To help our employees succeed in their current roles and to aid their career development, we emphasize continuous learning and development opportunities.
In addition to our insurance benefits, our wellness program includes a monthly wellness subsidy, access to mental health support and services through Modern Health and our Employee Assistance Program, as well as financial wellness programs such as financial counseling and tools to help manage student loans.
Our recommendation software applies the same objective standards to each review, regardless of whether the business being reviewed advertises on Yelp, based on hundreds of signals associated with the business, review and reviewer.
Our recommendation software analyzes all reviews, reviewers and businesses, using hundreds of signals and billions of data points, and applies the same objective standards to each review, regardless of whether the business being reviewed advertises on Yelp.
Investors and others can receive notifications of new information posted on our investor relations website in real time by signing up for e-mail alerts and RSS feeds. 16 Table of Contents Information contained on or accessible through our websites is not incorporated into, and does not form a part of, this Annual Report or any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 17 Table of Contents
Information contained on or accessible through our websites is not incorporated into, and does not form a part of, this Annual Report or any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 16 Table of Contents
We also provide Services businesses with the ability to provide competing quotes for consumers using our Request-a-Quote feature and with a way for consumers to easily request a phone call from them through our Request-a-Call feature. We primarily sell performance-based ads, which our advertising platform matches to individual consumers through our automated auction system priced on a CPC basis.
We also provide Services businesses with the ability to provide competing quotes for consumers using our Request-a-Quote feature and with a way for consumers to easily request a phone call from them through our Request-a-Call feature.
Our sophisticated search platform delivers search results 30% to 50% faster than the industry-standard solution while costing as much as 40% less to run for some use cases, allowing better search matching and ad targeting.
Our sophisticated search platform delivers search results faster and at a lower cost than the industry-standard solution for some use cases, allowing better search matching and ad targeting.
Diversity, Inclusion and Belonging Every local business has a unique story; having a diverse workforce means our employees are better equipped to relate to and solve for the diverse needs of consumers and businesses.
The Foundation also took additional steps to ensure that its donation-matching platform does not give money to organizations engaged in discriminatory practices. Diversity, Inclusion and Belonging Every local business has a unique story; having a diverse workforce means our employees are better equipped to relate to and solve for the diverse needs of consumers and businesses.
Our platform provides the type of reliable and useful review content that consumers value, which is the basis for a positive feedback loop in which more content attracts more users, content and businesses in turn.
Our platform provides the type of reliable and useful review content that helps consumers make informed spending decisions and confidently transact with local businesses. This forms the basis for a positive feedback loop in which more content attracts users, who contribute more content, which in turn attracts more businesses to become advertisers.
We analyze the large volumes of data collected from our platform and apply our proprietary indexing and ranking techniques to provide our users with contextual, relevant and up-to-date information.
We provide scalable services across platforms and devices using a combination of proprietary, open source and third-party technology solutions and products: • Anticipating Consumer Needs . We analyze the large volumes of data collected from our platform and apply our proprietary indexing and ranking techniques to provide our users with contextual, relevant and up-to-date information.
To foster a sense of ownership and align the interests of our employees and stockholders, we also grant equity awards, primarily in the form of restricted stock units, to eligible employees under our equity incentive plans. We are committed to compensating all of our employees fairly for their contributions, regardless of gender, race or ethnicity.
To foster a sense of ownership and align the interests of our employees and stockholders, we offer an employee stock purchase plan and grant equity awards, primarily in the form of restricted stock units, to eligible employees under our equity incentive plans.
Any unauthorized disclosure or use of our intellectual property could make it more expensive to do business and harm our operating results.
Any unauthorized disclosure or use of our intellectual property, or significant impairment of our intellectual property rights, could make it more expensive to do business and harm our operating results. Protecting our intellectual property rights is costly and time consuming, and our efforts to do so may not be sufficient or effective.
Through these activities, we believe our Community Management team helps us increase awareness of our platform and grow avid communities who are willing to contribute content to our platform.
Through these activities, we believe our Community Management team helps us increase awareness of our platform and grow avid communities who are willing to contribute content to our platform. We plan to continue these community development efforts in 2024. Yelp Elite Squad Our Community Managers’ responsibilities include engaging with our most passionate users — Yelp Elite Squad members.
These marks are material to our business and essential to our brand identity as they enable others to easily identify us as the source of the services offered in connection with these marks. We currently have limited patent protection for our core business, which may make it more difficult to assert certain of our intellectual property rights.
These marks are material to our business and essential to our brand identity as they enable others to easily identify us as the source of the services offered in connection with these marks.
We also provide ongoing learning opportunities for individual contributors that focus on managing the self, emotional intelligence, and career and professional development. Through our professional development program, employees can partner with their managers to create career development plans and receive an annual development reimbursement to invest in their growth.
Through our professional development program, employees can partner with their managers to create career development plans and receive an annual development reimbursement to invest in their growth.
Yelp Elite Squad Our Community Managers' responsibilities include engaging with our most passionate users — Yelp Elite Squad members. From the earliest days of Yelp, it was clear that some of our users went above and beyond with their prolific reviews, thoughtful photos and commitment to supporting local businesses by sharing their experiences.
From the earliest days of Yelp, it was clear that some of our users went above and beyond with their prolific reviews, thoughtful photos and commitment to supporting local businesses by sharing their experiences. These users were not only active in their Yelp communities, but were also role models on and offline.
Our advertising products help businesses of all sizes reach a large audience, advertise their products and drive conversion of their services. Our performance in 2022 — which included record annual revenue and profitable growth — demonstrates our ability to execute on our strategic initiatives as well as the durability of our broad-based local advertising platform.
Our advertising products help businesses of all sizes reach a large audience, advertise their products and drive conversion of their services. Our performance in 2023 — which included record annual revenue and profitable growth — demonstrates that our product-led strategy can drive durable growth.
The underrepresented minority (“URM”) grouping includes Black, Latinx, Native American, and Native Hawaiian and other Pacific Islander employees. We also firmly believe that inclusion is just as important as diversity.
The underrepresented minority grouping includes Black, Latinx, Native American, and Native Hawaiian and other Pacific Islander employees.
With our most engaged users on our mobile app, we have invested significant resources into developing a comprehensive mobile platform for consumers. Although our platform supports both major smartphone operating systems available today, iOS and Android, our Android app has historically lagged our iOS app in feature parity.
LLMs also play an important role in analyzing user-generated content to protect consumers and business owners from malicious or harmful content. • Mobile Solutions . With our most engaged users on our mobile app, we have invested significant resources into developing a comprehensive mobile platform for consumers that supports both major smartphone operating systems available today, iOS and Android.
These users were not only active in their Yelp communities, but were also role models on and offline. Their voices helped make Yelp what it is today, and we started the Yelp Elite Squad to recognize these passionate individuals, signal our trust in them and their contributions, and encourage similar beneficial activities in our communities.
Their voices helped make Yelp what it is today, and we started the Yelp Elite Squad to recognize these passionate individuals, signal our trust in them and their contributions, and encourage similar beneficial activities in our communities. Beyond having well-written reviews, high-quality photos and a detailed personal profile, Yelp Elite Squad members are active evangelists for their Yelp communities.
It also allows us to access and attract great talent from a more diverse pool of candidates across the United States, Canada and in Europe.
In addition, our distributed operations allow us to access and attract great talent from a more diverse pool of candidates across North America and Europe.
We use advanced machine learning and artificial intelligence to power and enhance features across our platform. Deep learning neural networks model user behavior to select the most relevant ads to display as well as categorize user-generated photos to improve their usefulness.
We use advanced machine learning and AI to power and enhance features across our platform. Deep learning neural networks model user behavior to select the most relevant ads to display and predict which photo shown in an ad will generate the most clicks.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA number of factors could adversely affect our traffic and user engagement, including, but not limited to: • our reliance on Internet search engines ; • if users engage with other products, services or activities as an alternative to our platform; • if we fail to introduce new and improved products or features that users find engaging, or we introduce new products or features that do not effectively address consumer needs or otherwise alienate consumers; • the quantity and quality of the content contributed by our users, as well as the perceived distribution of such content across the categories of businesses on our platform ; • increasing competition in the market for information regarding local businesses ; • our ability to manage and prioritize information to ensure users are presented with content that is relevant and helpful to them, including through the effective operation of our automated recommendation software; • technical or other problems that negatively impact the availability and reliability of our platform or otherwise affect the user experience, including as a result of infrastructure performance problems and security breaches ; • if users have difficulty installing, updating or otherwise accessing our platform as a result of actions by us or third parties that we rely on to distribute our products, such as application marketplaces and device manufacturers ; • if users believe that their experience is diminished as a result of the decisions we make with respect to the frequency, relevance and prominence of the advertising we display; • adverse macroeconomic conditions and their negative impact on consumer spending at local businesses; • the adoption of any laws or regulations that adversely affect the growth, popularity or use of our platform or the Internet in general, such as the repeal of Internet neutrality regulations in the United States; • any actions taken by companies with significant market power in the broadband and Internet marketplace that degrade, disrupt or increase the cost of user access to our products and services; and • if we do not maintain our brand image or our reputation is damaged .
Biggest changeWe also cannot assure you that the value we ultimately derive from such traffic and downloads would exceed the cost of acquisition. 19 Table of Contents Other factors that could adversely affect our traffic and user engagement include, but are not limited to: • our reliance on Internet search engines ; • other adverse macroeconomic conditions and their negative impact on consumer spending at local businesses ; • if users have difficulty installing, updating or otherwise accessing our platform as a result of actions by us or third parties that we rely on to distribute our products, such as application marketplaces and device manufacturers ; • if users engage with other products, services or activities as an alternative to our platform; • if we fail to introduce new and improved products or features that users find engaging, or we introduce new products or features that do not effectively address consumer needs or otherwise alienate consumers; • the quantity and quality of the content contributed by our users, as well as the perceived distribution of such content across the categories of businesses on our platform ; • increasing competition in the market for information regarding local businesses ; • our ability to manage and prioritize information to ensure users are presented with content that is relevant and helpful to them, including through the effective operation of our automated recommendation software; • technical or other problems that negatively impact the availability and reliability of our platform or otherwise affect the user experience, including as a result of infrastructure performance problems and security breaches ; • if users believe that their experience is diminished as a result of the decisions we make with respect to the frequency, relevance and prominence of the advertising we display; • the adoption of any laws or regulations that adversely affect the growth, popularity or use of our platform or the Internet in general, such as the repeal of Internet neutrality regulations in the United States; • any actions taken by companies with significant market power in the broadband and Internet marketplace that degrade, disrupt or increase the cost of user access to our products and services; and • if we do not maintain our brand image or our reputation is damaged .
Any significant disruption of, limitation of our access to or other interference with our use of AWS would negatively impact our operations and business, including potentially causing harm to our reputation, results of operations and financial results.
Any significant disruption or limitation of our access to or other interference with our use of AWS would negatively impact our operations and business, including potentially causing harm to our reputation, results of operations and financial results.
As adverse macroeconomic conditions continue, our business is exposed to a variety of risks, including: • continued reduced demand for our products, lower retention rates, and increased challenges in or cost of acquiring new customers; • reductions in cash flows from operations and liquidity, which impacts our capital allocation strategy in turn; • setbacks on the progress of our strategic initiatives as we reallocate resources to responding to such adverse conditions; • reductions in traffic, engagement, and the quantity and quality of the content provided by our users, which may further harm traffic to our platform; • increased fluctuation in our operating results and volatility and uncertainty in our financial projections; • inefficiencies, delays and disruptions in our business due to the illness of key employees or a significant portion of our workforce; • additional restructuring and impairment charges; and • operational difficulties due to adverse effects of such conditions on our third-party service providers and strategic partners.
As macroeconomic uncertainties continue, our business is exposed to a variety of risks, including: • continued reduced demand for our products, lower retention rates, and increased challenges in or cost of acquiring new customers; • reductions in cash flows from operations and liquidity, which impacts our capital allocation strategy in turn; • setbacks on the progress of our strategic initiatives as we reallocate resources to responding to such adverse conditions; • reductions in traffic, engagement, and the quantity and quality of the content provided by our users, which may further harm traffic to our platform; • increased fluctuation in our operating results and volatility and uncertainty in our financial projections; • inefficiencies, delays and disruptions in our business due to the illness of key employees or a significant portion of our workforce; • additional restructuring and impairment charges; and • operational difficulties due to adverse effects of such conditions on our third-party service providers and strategic partners.
Similarly, if application marketplaces change their policies in a manner that adversely impacts the way in which we offer our services, or how we or our partners collect, use and share data from users, our ability to maintain and expand our base of advertisers will be harmed.
Similarly, if application marketplaces change their policies — or interpretations of their policies — in a manner that adversely impacts the way in which we offer our services, or how we or our partners collect, use and share data from users, our ability to maintain and expand our base of advertisers will be harmed.
Should the Internal Revenue Service or other taxing authorities assess additional taxes as a result of examinations or changes to applicable law or interpretations of the law, we may be required to record charges to our operations, which could harm our business, operating results and financial condition.
Should the Internal Revenue Service (“IRS”) or other taxing authorities assess additional taxes as a result of examinations or changes to applicable law or interpretations of the law, we may be required to record charges to our operations, which could harm our business, operating results and financial condition.
We cannot predict the remaining duration of the current adverse macroeconomic conditions or of the pandemic, or the duration or magnitude of their impact on our traffic, and we expect that our traffic levels will continue to fluctuate with consumers’ level of confidence, particularly in our RR&O categories.
We cannot predict the remaining duration of the current adverse macroeconomic conditions or the duration or magnitude of their impact on our traffic, and we expect that our traffic levels will continue to fluctuate with consumers’ level of confidence, particularly in our RR&O categories.
These factors could also make it more difficult for us to attract and retain qualified members of our board of directors and qualified executive officers. Risks Related to Ownership of Our Common Stock Our share price has been and will likely continue to be volatile.
These factors could also make it more difficult for us to attract and retain qualified members of our Board and qualified executive officers. Risks Related to Ownership of Our Common Stock Our share price has been and will likely continue to be volatile.
We have never declared or paid any cash dividends on our common stock and do not intend to pay any cash dividends in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors.
We have never declared or paid any cash dividends on our common stock and do not intend to pay any cash dividends in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our Board.
In addition, government authorities could also initiate legal or regulatory actions against us in connection with such incidents, which could cause us to incur significant expense and liability or result in orders or consent decrees forcing us to modify our business practices. 29 Table of Contents Failure to protect or enforce our intellectual property rights could harm our business and results of operations.
In addition, government authorities could also initiate legal or regulatory actions against us in connection with such incidents, which could cause us to incur significant expense and liability or result in orders or consent decrees forcing us to modify our business practices. 28 Table of Contents Failure to protect or enforce our intellectual property rights could harm our business and results of operations.
Although our board of directors has authorized this repurchase program, the program does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares.
Although our Board has authorized this repurchase program, the program does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares.
For example, we phased out our brand advertising products in part because demand in the brand advertising market 27 Table of Contents shifted toward products disruptive to the consumer experience. Any decisions we make that prioritize consumers may negatively impact our relationship with existing or prospective advertisers.
For example, we phased out our brand advertising products in part because demand in the brand advertising market shifted toward products disruptive to the consumer experience. Any decisions we make that prioritize consumers may 26 Table of Contents negatively impact our relationship with existing or prospective advertisers.
We regard the protection of our trade secrets, copyrights, trademarks, patent rights and domain names as critical to our success. In particular, we must maintain, protect and enhance the "Yelp" brand. We strive to protect our intellectual property rights by relying on federal, state and common law rights, as well as contractual restrictions.
We regard the protection of our trade secrets, copyrights, trademarks, patent rights and domain names as critical to our success. In particular, we must maintain, protect and enhance the “Yelp” brand. We strive to protect our intellectual property rights by relying on federal, state and common law rights, as well as contractual restrictions.
While we ultimately recorded only an immaterial impairment charge related to intangible assets as a result of this test, any further adverse changes in our business environment, stock price, market capitalization and future cash 33 Table of Contents flow projections could result in additional impairment charges to our intangible assets or goodwill, particularly if such change impacts any of our critical assumptions or estimates, and may have a negative impact on our financial position and operating results.
While we ultimately recorded only an immaterial impairment charge related to intangible assets as a result of this test, any further adverse changes in our business environment, stock price, market capitalization and future cash flow projections could result in additional impairment charges to our intangible assets or goodwill, particularly if such change impacts any of our critical assumptions or estimates, and may have a negative impact on our financial position and operating results.
In addition to the other risk factors discussed in this section, factors that may contribute to the volatility of our operating results include: • the impact of macroeconomic conditions, including the economic downturn caused by the COVID-19 pandemic, as well as the resulting effect on consumer spending at local businesses and the level of advertising spending by local businesses; • changes in advertiser budgets or their ability to pay for our products, including due to the impact of adverse macroeconomic conditions; • changes in consumer behavior with respect to local businesses, including as a result of adverse macroeconomic conditions; • changes in the products we offer and the market acceptance of those products and online advertising solutions generally; • changes or updates to our business strategies; • changes in our pricing policies and terms of contracts, whether initiated by us or as a result of competition; • changes in the markets in which we operate, such as the wind down of our international sales and marketing operations to focus on our core markets of the United States and Canada; • cyclicality and seasonality, which has become more pronounced since we transitioned to non-term contracts and may become further pronounced as our growth rate slows; • the effects of changes in search engine placement and prominence; • the adoption of any laws or regulations that adversely affect the growth, popularity or use of the Internet, such as the repeal of Internet neutrality regulations in the United States; • the success of our sales and marketing efforts; • adverse litigation judgments, settlements or other litigation-related costs, including the costs associated with investigating and defending claims; • interruptions in service and any related impact on our reputation; • changes in our tax rates or exposure to additional tax liabilities; • new accounting pronouncements or changes in existing accounting standards and practices; and • the effects of natural or man-made catastrophic events.
In addition to the other risk factors discussed in this section, factors that may contribute to the volatility of our operating results include: • the impact of macroeconomic conditions, including the current uncertain economic environment, as well as the resulting effect on consumer spending at local businesses and the level of advertising spending by local businesses; • changes in advertiser budgets or their ability to pay for our products, including due to the impact of adverse macroeconomic conditions; • changes in consumer behavior with respect to local businesses, including as a result of adverse macroeconomic conditions; • changes in the products we offer and the market acceptance of those products and online advertising solutions generally; • changes or updates to our business strategies; • changes in our pricing policies and terms of contracts, whether initiated by us or as a result of competition; • changes in the markets in which we operate, such as the wind down of our international sales and marketing operations to focus on our core markets of the United States and Canada; • cyclicality and seasonality, which has become more pronounced since we transitioned to non-term contracts and may become further pronounced as our growth rate slows; • the effects of changes in search engine placement and prominence; • the adoption of any laws or regulations that adversely affect the growth, popularity or use of the Internet, such as the repeal of Internet neutrality regulations in the United States; • the success of our sales and marketing efforts; • adverse litigation judgments, settlements or other litigation-related costs, including the costs associated with investigating and defending claims; • interruptions in service and any related impact on our reputation; • changes in our tax rates or exposure to additional tax liabilities; • new accounting pronouncements or changes in existing accounting standards and practices; and • the effects of natural or man-made catastrophic events.
Because the traffic from robots does not represent valid consumer traffic, our reported desktop unique visitor metric for impacted periods reflects an adjustment to the Google Analytics measurement of our traffic to remove traffic identified as originating from robots to provide greater accuracy and transparency.
Because the traffic from robots does not represent valid consumer traffic, our reported desktop unique visitor metric for impacted periods reflected an adjustment to the Google Analytics measurement of our traffic to remove traffic identified as originating from robots to provide greater accuracy and transparency.
For example, because these metrics are based on users with unique identifiers, an individual who accesses our website from multiple devices with different identifiers may be counted as multiple unique visitors, and multiple individuals who access our website from a shared device with a single identifier may be counted as a single unique visitor.
For example, because our traffic metrics are based on users with unique identifiers, an individual who accesses our website from multiple devices with different identifiers may be counted as multiple unique visitors, and multiple individuals who access our website from a shared device with a single identifier may be counted as a single unique visitor.
While our distributed operations may help to reduce this risk in the context of local catastrophic events, coordinating a response to a larger-scale event could be complex and we may not manage it successfully.
While our distributed operations may help to reduce this risk in the context of local or regional catastrophic events, coordinating a response to a larger-scale event could be complex and we may not manage it successfully.
Any resulting negative publicity could adversely affect our reputation and brand, regardless of whether the internal resources expended and expenses incurred in connection with such inquiries and their resolutions are material. The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.
Any resulting negative publicity could adversely affect our reputation and brand, regardless of whether the internal resources expended and expenses incurred in connection with such inquiries and their resolutions are material. 36 Table of Contents The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.
We expect further guidance regarding Section 174 may be forthcoming from the Financial Accounting Standards Board and the SEC, as well as regulations, interpretations and rulings from federal and state agencies, which could impact our consolidated financial statements.
We expect further guidance regarding Section 174 may be forthcoming from regulations, interpretations and rulings from federal and state agencies, the Financial Accounting Standards Board and the SEC, which could impact our consolidated financial statements.
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.
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 22 Table of Contents difficult to maintain, grow or maximize the benefit for each partnership.
These laws, regulations and standards are subject to varying interpretations, in many cases due 37 Table of Contents to their lack of specificity, and, as a result, their application in practice may evolve over time. This could result in continuing uncertainty regarding compliance matters, higher administrative expenses and a diversion of management’s time and attention.
These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time. This could result in continuing uncertainty regarding compliance matters, higher administrative expenses and a diversion of management’s time and attention.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any 39 Table of Contents of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.
Strong advertiser demand combined with less robust consumer activity significantly increased our average CPC in 2022 compared to 2021; if the value our products provide to advertisers does not keep pace with any further price increases, our revenue and results of operations could be harmed.
Strong advertiser demand combined with less robust consumer activity increased our average CPC in 2023 compared to 2022; if the value our products provide to advertisers does not keep pace with any further price increases, our revenue and results of operations could be harmed.
Our operating results could vary significantly from period to period as a result of a variety of factors, many of which may be outside of our control. This volatility increases the difficulty in predicting our future performance and means comparing our 30 Table of Contents operating results on a period-to-period basis may not be meaningful.
Our operating results could vary significantly from period to period as a result of a variety of factors, many of which may be outside of our control. This volatility increases the difficulty in predicting our future performance and means comparing our operating results on a period-to-period basis may not be meaningful.
From time to time, 35 Table of Contents we receive complaints that certain of our products and services may violate the intellectual property rights of others, and have previously been involved in patent lawsuits, including lawsuits involving plaintiffs targeting multiple defendants in the same or similar suits.
From time to time, we receive complaints that certain of our products and services may violate the intellectual property rights of others, and have previously been involved in patent lawsuits, including lawsuits involving plaintiffs targeting multiple defendants in the same or similar suits.
We further anticipate that our traffic growth rate will continue to slow over the medium and long term, and potentially decrease in certain periods due to the maturation of our business and our high penetration rates in most major geographic markets within the United States and Canada.
We also anticipate that our traffic growth rate will continue to slow over the medium and long term and decrease in certain periods due to the maturation of our business and our high penetration rates in most major geographic markets within the United States and Canada.
Item 1A. Risk Factors Risks Related to Our Business and Industry Adverse macroeconomic conditions — such as the COVID-19 pandemic and current uncertain economic environment — have had, and may continue to have, a significant adverse impact on our business and results of operations, and also exposes our business to other risks.
Item 1A. Risk Factors Risks Related to Our Business and Industry Adverse macroeconomic conditions — such as the current uncertain economic environment — have had, and may continue to have, a significant adverse impact on our business and results of operations, and also exposes our business to other risks.
Although we use these systems and services in a manner designed to achieve high reliability and minimize risk, large-scale outages affecting our service providers could negatively impact our ability to maintain the full functionality of our systems. • Catastrophic Occurrences .
Although we use these systems and services in a manner designed to achieve high reliability and minimize risk, large-scale outages affecting our service providers could negatively impact our ability to maintain the full functionality of our systems. 27 Table of Contents • Catastrophic Occurrences .
All but one of our officers and all of our other U.S. employees are at-will employees, which means they may terminate their employment relationship with us at any time, and their knowledge of our business and industry would be extremely difficult to replace.
All of our U.S. employees, including all but one of our executive officers, are at-will employees, which means they may terminate their employment relationship with us at any time, and their knowledge of our business and industry would be extremely difficult to replace.
For example, it can be difficult to train thousands of sales employees across multiple offices according to the same business standards, practices and laws, and we have been the subject of lawsuits alleging that we have failed to do so.
For example, it can be difficult to train thousands of sales employees across multiple offices according to the same business standards, practices and laws, and we 23 Table of Contents have been the subject of lawsuits alleging that we have failed to do so.
For example, in 2018, we discovered a software error that caused our previously reported claimed local business locations metric to be overstated for the third quarter of 2017 through the first quarter of 2018, and revised them accordingly.
For example, in 2018, we discovered a software error that caused our 30 Table of Contents previously reported claimed local business locations metric to be overstated for the third quarter of 2017 through the first quarter of 2018, and revised them accordingly.
We may be the target of additional litigation of this type in the 38 Table of Contents future as well. Securities litigation against us could result in substantial costs and divert our management’s time and attention from other business concerns, which could harm our business.
We may be the target of additional litigation of this type in the future as well. Securities litigation against us could result in substantial costs and divert our management’s time and attention from other business concerns, which could harm our business.
In addition to the factors discussed in these Risk Factors and elsewhere in this Annual Report, factors that may cause volatility in our share price include: • the short- and long-term impacts of the COVID-19 pandemic and related macroeconomic uncertainty, as well as the timing and pace of the recovery; • actual or anticipated fluctuations in our financial condition and operating results; • changes in projected operating and financial results; • actual or anticipated changes in our growth rate relative to our competitors; • repurchases of our common stock pursuant to our stock repurchase program, which could also cause our stock price to be higher that it would be in the absence of such a program and could potentially reduce the market liquidity for our stock; • announcements of changes in strategy; • announcements of technological innovations or new offerings by us or our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital-raising activities or commitments; • additions or departures of key personnel; • actions of securities analysts who cover our company, such as publishing research or forecasts about our business (and our performance against such forecasts), changing the rating of our common stock or ceasing coverage of our company; • investor sentiment, including that of derivatives traders, with respect to us or our competitors, business partners and industry in general; • any disruption to the proper operation of our network infrastructure or compromise of our security measures; • any failure to maintain effective controls or difficulties encountered in their implementation or improvement; • reporting on our business by the financial media, including television, radio and press reports and blogs; • fluctuations in the value of companies perceived by investors to be comparable to us; • changes in the way we measure our key metrics; • sales of our common stock; • changes in laws or regulations applicable to our solutions; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; and • general economic and market conditions such as recessions or interest rate changes.
In addition to the factors discussed in these Risk Factors and elsewhere in this Annual Report, factors that may cause volatility in our share price include: • the impact of the current adverse macroeconomic conditions, as well as the timing and pace of the recovery; • actual or anticipated fluctuations in our financial condition and operating results; • changes in projected operating and financial results; • actual or anticipated changes in our growth rate relative to our competitors; • repurchases of our common stock pursuant to our stock repurchase program, which could also cause our stock price to be higher that it would be in the absence of such a program and could potentially reduce the market liquidity for our stock; • announcements of changes in strategy; • announcements of technological innovations or new offerings by us or our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital-raising activities or commitments; • additions or departures of key personnel; • actions of securities analysts who cover our company, such as publishing research or forecasts about our business (and our performance against such forecasts), changing the rating of our common stock or ceasing coverage of our company; • investor sentiment, including that of derivatives traders, with respect to us or our competitors, business partners and industry in general; • any disruption to the proper operation of our network infrastructure or compromise of our security measures; • any failure to maintain effective controls or difficulties encountered in their implementation or improvement; • reporting on our business by the financial media, including television, radio and press reports and blogs; • fluctuations in the value of companies perceived by investors to be comparable to us; • changes in the way we measure our key metrics; • sales of our common stock; • changes in laws or regulations applicable to our solutions; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; and 37 Table of Contents • general economic and market conditions such as recessions or interest rate changes.
If we lose the ability to use a domain name, whether due to trademark claims, failure to renew the applicable registration or any other cause, we may be forced to market our products under a new domain name, which could cause us substantial harm or cause us to incur significant expense in order to purchase rights to the domain name in question.
If we lose the ability to use a domain name, whether due to trademark claims, failure to renew the applicable registration or any other cause, we may be forced to market our products under a new domain name, which could cause us substantial harm or cause us to incur significant 29 Table of Contents expense in order to purchase rights to the domain name in question.
The pursuit of potential future acquisitions or investments may divert the attention of management and cause us to incur expenses in identifying, investigating and pursuing transactions, whether or not they are consummated. Acquisitions that are consummated could result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our results of operations.
The pursuit of potential future acquisitions or investments may divert the attention of management and in many cases causes us to incur expenses in identifying, investigating and pursuing transactions, whether or not they are consummated. Acquisitions that are consummated could result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our results of operations.
Because traffic to our platform and user engagement on our platform together determine the number of ads we are able to show, affect the value of those ads to businesses and support the content creation that drives further traffic, our ability to attract, retain and engage visitors on our platform is critical to our business and financial success.
Because traffic to and user engagement on our platform together determine the number of ad clicks we are able to deliver, affect the value of those ads to businesses and support the content creation that drives further traffic, our ability to attract, retain and engage visitors on our platform is critical to our business and financial success.
Although our revenues have grown over time, increasing from $12.1 million in 2008 to $1.19 billion in 2022, our revenue growth rate has declined in certain recent periods as a result of a variety of factors, including the maturation of our business.
Although our revenues have grown over time, increasing from $12.1 million in 2008 to $1.34 billion in 2023, our revenue growth rate has declined in certain recent periods as a result of a variety of factors, including the maturation of our business.
In addition, if we encounter widespread consumer withholding of consent, adoption of “do not track” mechanisms or adoptions of “ad-blocking” software to prevent the collection of personal information for targeted advertising purposes, we may be required to change the way we market our products, our ability to reach new or existing customers may be materially impaired or our operations may be otherwise harmed.
In addition, if we encounter widespread consumer withholding of consent, opt-outs of targeted advertising, or adoption of universal opt-out signals, “do not track” mechanisms or “ad-blocking” software to prevent the collection of personal information for targeted advertising purposes, we may be required to change the way we market our products, our ability to reach new or existing customers may be materially impaired or our operations may be otherwise harmed.
We compete in rapidly evolving and intensely competitive markets, and we expect competition to intensify further in the future with the emergence of new technologies and market entrants.
We compete in rapidly evolving and intensely competitive markets, and we expect competition to intensify further in the future with the emergence of new technologies, such as AI, and market entrants.
Changes to CDA 230, whether the result of legislative or judicial action, could also cause us to remove more third-party content from our platform, particularly critical consumer commentary, in response to takedown demands that may or may not be legitimate, which would negatively affect the quality and quantity of information available through our service.
Changes to CDA 230 or new interpretations of its application, whether the result of legislative or judicial action, could also cause us to remove more content from our platform, particularly critical consumer commentary, in response to takedown demands that may or may not be legitimate, which would negatively affect the quality and quantity of information available through our service.
Our advertising revenue could be impacted by a number of other factors, including, but not limited to: • the perceived effectiveness and acceptance of online advertising generally, particularly among SMBs that may have less experience with it; • our ability to drive traffic to our platform, which remains below pre-pandemic levels, and increase user engagement, including engagement with the ads displayed on our platform; • challenging macroeconomic conditions or trends that negatively impact consumer demand, such as the current inflationary environment and consumers visiting many types of businesses less frequently than prior to the pandemic; • the effectiveness of our ad targeting technology and tools for advertisers to optimize their campaigns; • our ability to innovate and introduce enhanced products meeting advertiser expectations; • product changes or inventory management decisions we may make that change the size, format, frequency or relative prominence of ads displayed on our platform; • the widespread adoption of any technologies that make it more difficult for us to deliver ads, such as ad-blocking programs; • loss of advertising business to our competitors, including if competitors offer lower priced or more integrated products; • the prevalence of low-quality or invalid traffic on our platform, such as robots and spiders, which we have discovered in the past and expect to discover in the future, and our ability to detect and prevent click fraud or other invalid clicks on ads; • our reputation and perceptions regarding our platform, including of the ratings and reviews that businesses receive from our users — favorable ratings and reviews could be perceived as obviating the need to advertise, while unfavorable ratings and reviews could discourage businesses from advertising to an audience that they perceive as hostile; • the size and effectiveness of our sales force, which may be affected by a range of factors, not all of which are within our control, including our sales force's ability to connect with potential customers’ key decision makers as well as catastrophic occurrences, such as earthquakes or fires, and major public health crises like the COVID-19 pandemic that negatively impact the productivity of our sales force; 19 Table of Contents • the degree to which businesses choose to reach users through our free products in lieu of our paid products and services; and • the pricing of our products, including the CPC ad prices determined by our auction system, which have increased in recent quarters even as we have delivered fewer ad clicks.
Our advertising revenue could be impacted by a number of other factors, including, but not limited to: • the perceived effectiveness and acceptance of online advertising generally, particularly among SMBs that may have less experience with it; • our ability to drive traffic to our platform, which remains below pre-pandemic levels, and increase user engagement, including engagement with the ads displayed on our platform; • challenging macroeconomic conditions or trends that negatively impact consumer demand, such as the current inflationary environment and consumers visiting many types of businesses less frequently than prior to the pandemic; • the effectiveness of our ad targeting technology and tools for advertisers to optimize their campaigns; • our ability to innovate and introduce enhanced products meeting advertiser expectations; • product changes or inventory management decisions we may make that change the size, format, frequency or relative prominence of ads displayed on our platform; • the widespread adoption of any technologies that make it more difficult for us to deliver ads, such as ad-blocking programs; • loss of advertising business to our competitors, including if competitors offer lower priced or more integrated products; • the prevalence of low-quality or invalid traffic on our platform, such as robots and spiders, which we have discovered in the past and expect to discover in the future, and our ability to detect and prevent click fraud or other invalid clicks on ads; • our reputation and perceptions regarding our platform, including of the ratings and reviews that businesses receive from our users — favorable ratings and reviews could be perceived as obviating the need to advertise, while unfavorable ratings and reviews could discourage businesses from advertising to an audience that they perceive as hostile; • the size and productivity of our sales force, which may be affected by a range of factors, not all of which are within our control; • the degree to which businesses choose to reach users through our free products in lieu of our paid products and services; and • the pricing of our products, including the CPCs determined by our auction system, which have increased in recent quarters even as we have delivered fewer ad clicks.
Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could adversely affect our business and operating results. Some of our products contain open source software, which may pose particular risks to our proprietary software and solutions.
Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could adversely affect our business and operating results. Some of our products contain open source software or incorporate AI, each of which may pose particular risks to our business.
Similarly, we do not phase out or remove dated reviews, and consumers may view older reviews as less relevant or reliable than more recent reviews.
For example, we do not phase out or remove dated reviews, and consumers may view older reviews as less relevant or reliable than more recent reviews.
Even if we are able to integrate the operations of any acquired company successfully, we may not realize the full benefits of synergies, cost savings, innovation and operational efficiencies that may be possible from the transaction, or we may not achieve these benefits within a reasonable period of time.
We cannot assure you that these investments will be successful. Even if we are able to integrate the operations of any acquired company successfully, we may not realize the full benefits of synergies, cost savings, innovation and operational efficiencies that may be possible from the transaction, or we may not achieve these benefits within a reasonable period of time.
Although such partners are 23 Table of Contents contractually obligated to observe certain standards and best practices while selling our advertising products, our ability to ensure their compliance is limited.
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.
It is important to our success that users in all geographies be able to access our platform at all times.
It is important to our success that users in all geographies in which we operate be able to access our platform at all times.
We face competition for users, content, and advertising and other customers, including from: online search engines and directories; traditional, offline business guides and directories; online and offline providers of consumer ratings, reviews and referrals; providers of online marketing and tools for managing and optimizing advertising campaigns; various forms of traditional offline advertising; restaurant reservation and seating tools; food ordering and delivery services; and home and/or local services-related platforms and offerings.
We face competition for users, content, and customers, including from: online search engines and directories, including those incorporating AI technologies; traditional, offline business guides and directories; online and offline providers of consumer ratings, reviews and referrals; social media platforms and features; providers of online marketing and tools for managing and optimizing advertising campaigns; various forms of traditional offline advertising; restaurant reservation and seating tools; food ordering and delivery services; and home and/or local services-related platforms and offerings.
If we fail to comply with the covenants under the revolving credit facility, Wells Fargo would have a right to, among other things, terminate the commitments to provide additional loans under the facility, declare all outstanding loans and accrued interest and fees to be due and payable and require us to post cash collateral to be held as security for any reimbursement obligations in respect of any outstanding letters of credit issued under the facility.
If we fail to comply with the covenants under the Credit Agreement, lenders would have a right to, among other things, terminate the commitments to provide additional loans under the facility, enforce any liens on collateral securing the obligations under the facility, declare all outstanding loans and accrued interest and fees to be due and payable and require us to post cash collateral to be held as security for any reimbursement obligations in respect of any outstanding letters of credit issued under the facility.
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.
For example, we have historically relied on the integration of our content into Apple Maps to drive a significant amount of traffic to our website and downloads of our application.
We may also discover liabilities or deficiencies associated with the companies or assets we acquire or invest in that we did not identify in advance, which may result in significant unanticipated costs or losses.
We have in the past and may in the future discover liabilities or deficiencies associated with the companies or assets we acquire or invest in that we did not identify in advance, which may result in significant unanticipated costs or losses.
Although our app remained available in the app store, the resolution of this issue was time consuming and required additional expenditures. We cannot guarantee that similar issues will not arise again in the future or that, if they do, we would be able to resolve them at a reasonable cost or in a timely manner.
Although our apps have remained available in the Apple app store, resolving these issues was time consuming and required additional expenditures. We cannot guarantee that similar issues will not arise again in the future or that, if they do, we would be able to resolve them at a reasonable cost or in a timely manner.
While these numbers are based on what we believe to be reasonable calculations for the applicable periods of measurement, 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.
While these numbers are based on what we believe to be reasonable calculations for the applicable periods of measurement, Google Analytics periodically encounters difficulties in providing accurate data for such metrics as a result of a variety of factors, including human and software errors.
For example, we rely on Amazon Web Services’ (“AWS”) cloud computing infrastructure to host our website, mobile app and many of the internal tools we use to operate our business.
For example, we rely on AWS cloud computing infrastructure to host our website, mobile app and many of the internal tools we use to operate our business.
Certain competitors could also use strong or dominant positions in one or more markets to gain competitive advantage against us in areas in which we operate, including by: • integrating review platforms or features into products they control, such as search engines, web browsers or mobile device operating systems; 22 Table of Contents • making acquisitions; • changing their unpaid search result rankings to promote their own products; • refusing to enter into or renew licenses on which we depend; • limiting or denying our access to advertising measurement or delivery systems; • limiting our ability to target or measure the effectiveness of ads; or • making access to our platform more difficult.
Certain competitors could also use strong or dominant positions in one or more markets to gain competitive advantage against us in areas in which we operate, including by: • integrating review platforms, local offerings or other competitive products into products they control, such as search engines, web browsers or mobile device operating systems; • leveraging their control of products to induce third parties to preference products that compete with ours; • making acquisitions; • changing their unpaid search result rankings to preference or promote their own products; • refusing to enter into or renew licenses on which we depend; • limiting or denying our access to advertising measurement or delivery systems; • limiting our ability to target or measure the effectiveness of ads; or • making access to our platform more difficult.
In addition, certain of our other key metrics — the number of our desktop unique visitors and mobile website unique visitors — are calculated based on data from third parties.
In addition, certain of our other key metrics — the number of our desktop unique visitors and mobile website unique visitors — are currently calculated based on data from Google Analytics.
Since we implemented our stock repurchase program in July 2017, our board of directors has authorized the repurchase of up to an aggregate of $1.45 billion of our common stock, of which $254.7 million remained available as of February 17, 2023 and which does not have an expiration date.
Since we implemented our stock repurchase program in July 2017, our Board has authorized the repurchase of up to an aggregate of $1.95 billion of our common stock, of which $554.7 million remained available as of February 20, 2024 and which does not have an expiration date.
Our employee operations are complex and place substantial demands on management and our operational infrastructure. These operations may be negatively affected by a range of external factors that are not within our control, including catastrophic events, such as earthquakes or fires, and public health crises, such as the COVID-19 pandemic.
These operations may be negatively affected by a range of external factors that are not within our control, including catastrophic events, such as earthquakes or fires, and public health crises, such as the COVID-19 pandemic.
If we fail to maintain and expand our base of advertisers, our revenue and our business will be harmed. In order to maintain and expand our advertiser base, we must convince existing and prospective advertisers alike that our advertising products offer them a material benefit and generate a competitive return relative to other alternatives.
In order to maintain and expand our advertiser base, we must convince existing and prospective advertisers alike that our advertising products offer them a material benefit and generate a competitive return relative to other alternatives.
We do not intend to pay dividends for the foreseeable future, and as a result, our stockholders’ ability to achieve a return on their investment will depend on appreciation in the price of our common stock.
In addition, this program could diminish our cash and cash equivalents, and marketable securities. We do not intend to pay dividends for the foreseeable future, and as a result, our stockholders’ ability to achieve a return on their investment will depend on appreciation in the price of our common stock.
It contains a number of covenants that limit our ability and our subsidiaries’ ability to, among other things, incur additional indebtedness, pay dividends, make redemptions and repurchases of stock, make investments, loans and acquisitions, incur liens, engage in transactions with affiliates, merge or consolidate with other companies, sell material businesses or assets, or license or transfer certain of our intellectual property.
It contains a number of covenants that limit our ability to, among other things, incur indebtedness, grant liens, make distributions, pay dividends, repurchase shares, make investments, or engage in transactions with our affiliates, merge or consolidate with other companies, sell material businesses or assets, or license or transfer certain of our intellectual property.
Any of these or other factors could result in a reduction in demand for our products, which may reduce the prices we are able to charge, either of which would negatively affect our revenue and operating results. Our strategy to grow our business may not be successful and may expose us to additional risks.
Any of these or other factors could result in a reduction in demand for our products, which would negatively affect our revenue and operating results. 18 Table of Contents Our strategy to grow our business may not be successful and may expose us to additional risks.
We will also face industry challenges in our efforts to monetize more of the leads we deliver to Services businesses. In addition to being a highly competitive, fragmented market, it has not yet fully embraced online solutions of the type we offer. Many of our consumers continue to search for, select and hire service professionals offline through word-of-mouth and referrals.
In addition to being a highly competitive, fragmented market, it has not yet fully embraced online solutions of the type we offer. Many of our consumers continue to search for, select and hire service professionals offline through word-of-mouth and referrals.
We expect to continue to make similar adjustments in the future if we determine that our traffic metrics are materially impacted by robot or other invalid traffic. 32 Table of Contents There are also inherent challenges in measuring usage across our large user base.
We expect these challenges to continue to occur for the duration of our use of Google Analytics and that we will make similar adjustments in the future if we determine that our traffic metrics are materially impacted by robot or other invalid traffic. There are also inherent challenges in measuring usage across our large user base.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, up to 10,000,000 shares of undesignated preferred stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our board of directors, the Chair of our board of directors or our Chief Executive Officer; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • establish that our board of directors is divided into classes, with directors serving staggered terms, until our 2023 annual meeting of stockholders when the classes will be fully phased out; • prohibit cumulative voting in the election of directors; • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; and • require the approval of our board of directors or the holders of a supermajority of our outstanding shares of capital stock to amend our bylaws and certain provisions of our amended and restated certificate of incorporation.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • authorize our Board to issue, without further action by the stockholders, up to 10,000,000 shares of undesignated preferred stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our Board, the Chair of our Board or our Chief Executive Officer; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our Board; • prohibit cumulative voting in the election of directors; • provide that vacancies on our Board may be filled only by a majority of directors then in office, even though less than a quorum; and • require the approval of our Board or the holders of a supermajority of our outstanding shares of capital stock to amend our bylaws and certain provisions of our amended and restated certificate of incorporation. 38 Table of Contents These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our Board, which is responsible for appointing the members of our management.
If they fail to drive sufficient traffic to our platform, we may need to increase our marketing spend to acquire additional traffic. We cannot assure you that the value we ultimately derive from any such additional traffic would exceed the cost of acquisition, and any increase in marketing expense may in turn harm our operating results.
We cannot assure you that the value we ultimately derive from any such additional traffic would exceed the cost of acquisition, and the resulting increase in marketing expense may in turn harm our operating results.
Failure to address these risks and difficulties adequately could harm our business and cause our operating results to suffer. We rely on data from both internal tools and third parties to calculate certain of our performance metrics. Real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.
We rely on data from both internal tools and third parties to calculate certain of our performance metrics. Real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.
For example, we have encountered instances of reputation management companies falsely representing themselves as being affiliated with us when soliciting customers; this practice could be contributing to the perception that business owners can pay to manipulate reviews, rankings and ratings. We are committed to providing a great consumer experience, which may cause us to forgo short-term gains and advertising revenue.
For example, we have encountered instances of reputation management companies falsely representing themselves as being affiliated with us when soliciting customers; this practice could be contributing to the perception that business owners can pay to manipulate reviews, rankings and ratings.
Although this program is functional, if our primary data center shuts down, there will be a period of time that our services will remain shut down while the transition to the back-up data center takes place. During this time, our platform may be unavailable in whole or in part to our users.
Our disaster recovery program contemplates transitioning our platform and data to a backup center in the event of a catastrophe. Although this program is functional, if our primary data center shuts down, there will be a period of time that our services will remain shut down while the transition to the back-up data center takes place.
Companies in the Internet, technology and media industries own large numbers of patent and other intellectual property rights, and frequently enter into litigation. Various “non-practicing entities” that own patents and other intellectual property rights also often aggressively attempt to assert claims in order to extract value from technology companies.
Various “non-practicing entities” that own patents and other intellectual property rights also often aggressively attempt to assert claims in order to extract value from technology companies.
In addition, a significant portion of our advertiser base consists of SMBs, which are subject to increased challenges and risks. SMBs often have limited advertising budgets and view online advertising products like ours as experimental and unproven; as a result, we may need to devote additional time and resources to educate them about our products and services.
SMBs often have limited advertising budgets and view online advertising products like ours as experimental and unproven; as a result, we may need to devote additional time and resources to educate them about our products and services.
Search engines have made changes in the past to their ranking algorithms, methodologies and design layouts that have reduced the prominence of links to our platform and negatively impacted our traffic, and we expect they will continue to make such changes from time to time in the future.
Search engines have made changes in the past to their ranking algorithms, methodologies and design layouts that have reduced the prominence of links to our platform and negatively impacted our traffic, and we expect they will continue to make such changes from time to time in the future. 20 Table of Contents We may not know how or otherwise be in a position to influence search results or our treatment in application marketplaces.
We cannot predict the remaining duration of the current adverse economic conditions or the pandemic, the severity of future COVID-19 variants and resulting restrictions, or the duration or magnitude of the adverse impact on our revenue. 31 Table of Contents Historically, our costs have increased each year and we expect our costs to increase in future periods as we continue to expend substantial financial resources on: • product and feature development; • sales and marketing; • our technology infrastructure; • market development efforts; • strategic opportunities, including commercial relationships and acquisitions; • our stock repurchase program; and • general administration, including legal and accounting expenses related to being a public company.
Historically, our costs have increased each year and we expect our costs to increase in future periods as we continue to expend substantial financial resources on: • product and feature development; • sales and marketing; • our technology infrastructure; • market development efforts; • strategic opportunities, including commercial relationships and acquisitions; • our stock repurchase program; and • general administration, including legal and accounting expenses related to being a public company.
To the extent that we do not address capacity constraints, upgrade our systems as needed and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology in a cost-effective manner, while at the same time maintaining the reliability and integrity of our systems and infrastructure, our business and operating results may be harmed. 28 Table of Contents If our security measures are compromised, or if our platform is subject to attacks that degrade or deny the ability of users to access our content, users may curtail or stop use of our platform.
To the extent that we do not address capacity constraints, upgrade our systems as needed and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology in a cost-effective manner, while at the same time maintaining the reliability and integrity of our systems and infrastructure, our business and operating results may be harmed.
In addition, the taxing authorities in the United States and other jurisdictions where we do business regularly examine our income and other tax returns. The ultimate outcome of these examinations cannot be predicted with certainty.
We will continue to monitor the developments and assess any impacts on our long-term tax planning and consolidated financial statements. In addition, the taxing authorities in the United States and other jurisdictions where we do business regularly examine our income and other tax returns. The ultimate outcome of these examinations cannot be predicted with certainty.
We also publish privacy policies, marketing materials and other statements, such as compliance with certain third-party certifications, regarding data privacy and security. If these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair or not representative of our practices, we may be subject to investigation, enforcement actions by regulators or other adverse consequences.
If these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair or not representative of our practices, we may be subject to investigation, enforcement actions by regulators or other adverse consequences.
It is not uncommon for taxing authorities in different countries to have conflicting views, for instance, with respect to, among other things, the manner in which the arm’s-length standard is applied for transfer pricing purposes, or with respect to the valuation of intellectual property. 34 Table of Contents Changes in tax laws or tax rulings, or the examination of our tax positions, could materially affect our financial position and results of operations.
It is not uncommon for taxing authorities in different countries to have conflicting views, for instance, with respect to, among other things, the manner in which the arm’s-length standard is applied for transfer pricing purposes, or with respect to the valuation of intellectual property.
We expect to continue to make significant investments to maintain and improve the availability of our platform and to enable rapid releases of new features and products.
During this time, our platform may be unavailable in whole or in part to our users. We expect to continue to make significant investments to maintain and improve the availability of our platform and to enable rapid releases of new features and products.
For example, users may be unwilling to contribute content as a result of concerns that they may be harassed or sued by the businesses they review, instances of which have occurred in the past and may occur again in the future.
For example, users may be unwilling to contribute content as a result of concerns that they may be harassed or sued by the businesses they review, instances of which have occurred in the past and may occur again in the future. 24 Table of Contents Consumers also may not find the content on our platform to be valuable if they do not perceive it as relevant, helpful or reliable.
We are subject to numerous domestic and foreign laws and regulations that involve matters central to our business, including laws regarding privacy, data protection, data security, user-generated content and consumer protection, among others, as described in more detail under “ Business—Government Regulation ” under Item 1 of this Annual Report.
We are subject to numerous domestic and foreign laws and regulations that involve matters central to our business, including laws regarding privacy, data protection, data security, user-generated content and consumer protection, among others, as described in more detail under the section titled “ Business—Government Regulation .” For example, we are subject to numerous laws around the world that restrict the collection, use, storing, processing and disclosure of personal information and other user data.
Our measures of traffic and other key metrics may differ from estimates published by third parties (other than those whose data we use to calculate our key 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.
Our measures of traffic and other key metrics may differ from estimates published by third parties (other than those whose data we use to calculate our key metrics) or from similar metrics of our competitors.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. Our principal executive offices in North America are currently located at 350 Mission Street, San Francisco, California, where we lease office space pursuant to a lease agreement that expires in 2030. We also lease office space in multiple cities across North America and Europe.
Biggest changeItem 2. Properties. Our principal executive offices in North America are currently located at 350 Mission Street, San Francisco, California, where we lease office space pursuant to a lease agreement that expires in 2030. We also lease office space in Canada and Europe.
We believe that our properties are generally suitable to meet our needs for the foreseeable future and, to the extent we require additional space in the future, we believe that it would be available on commercially reasonable terms. 40 Table of Contents
We believe that our properties are generally suitable to meet our needs for the foreseeable future and, to the extent we require additional space in the future, we believe that it would be available on commercially reasonable terms.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The following table summarizes our stock repurchase activity for the three months ended December 31, 2022 (in thousands except for price per share): Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program October 1 - October 31, 2022 685 $ 35.99 685 $ 57,007 November 1 - November 30, 2022 298 $ 31.52 298 $ 297,626 December 1 - December 31, 2022 573 $ 27.86 573 $ 281,658 (1) Since its initial authorization in July 2017, our board of directors authorized us to repurchase up to an aggregate of $1.45 billion of our outstanding common stock, of which $254.7 million remained available as of February 17, 2023.
Biggest changeIssuer Purchases of Equity Securities The following table summarizes our stock repurchase activity for the three months ended December 31, 2023 (in thousands except for price per share): Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program October 1 - October 31, 2023 596 $ 42.34 596 $ 106,423 November 1 - November 30, 2023 208 $ 44.60 208 $ 97,159 December 1 - December 31, 2023 342 $ 45.35 342 $ 81,659 (1) Between its initial authorization in July 2017 and November 2022, our Board authorized us to repurchase up to an aggregate of $1.45 billion of our outstanding common stock.
Any future determination as to the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors that our board of directors may deem relevant.
Any future determination as to the declaration and payment of dividends, if any, will be at the discretion of our Board and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors that our Board may deem relevant.
Performance Graph We have presented below the cumulative total return to our stockholders during the period from December 31, 2017 through December 31, 2022 in comparison to the NYSE Composite Index and NYSE Arca Tech 100 Index.
Performance Graph We have presented below the cumulative total return to our stockholders during the period from December 31, 2018 through December 31, 2023 in comparison to the NYSE Composite Index and NYSE Arca Tech 100 Index.
Market Information Our common stock, par value $0.000001 per share, is listed on the New York Stock Exchange LLC ("NYSE") under the symbol “YELP.” Stockholders As of the close of business on February 17, 2023, there were 34 stockholders of record of our common stock.
Market Information Our common stock, par value $0.000001 per share, is listed on the New York Stock Exchange LLC (“NYSE”) under the symbol “YELP.” Stockholders As of the close of business on February 20, 2024, there were 31 stockholders of record of our common stock.
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 II, Item 7 in this Annual Report.
The actual timing and amount of repurchases depend on a variety of factors, including liquidity, cash flow and market conditions. See the section titled “ Management ’ s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Stock Repurchase Program .” (2) Average price paid per share includes costs associated with the repurchases.
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(2) Average price paid per share includes costs associated with the repurchases. Item 6. [Reserved]. 43 Table of Contents
Added
On February 13, 2024, our Board authorized a $500.0 million increase to our stock repurchase program, bringing the total amount of repurchases authorized under our stock repurchase program since its inception to $1.95 billion. We repurchased $27.0 million of shares subsequent to December 31, 2023, resulting in approximately $554.7 million remaining available for future repurchases on February 20, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe believe this was because we delivered more value to advertisers in 2022 in the form of higher performing clicks — rather than simply a greater number of clicks as in certain previous periods — contributing to a record retention rate of non-term advertisers’ budgets in 2022 despite a modest increase in churn in the second half of the year. 47 Table of Contents The following table presents year-over-year changes in our average CPC for the periods indicated (expressed as a percentage): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Average CPC 23% 7% 27% (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.
Biggest changeConversely, growth in average CPC paired with a negative or lower growth rate in ad clicks would indicate we charged more without delivering more ad clicks; we would expect this to have a negative impact on retention unless we are able to increase the value we deliver through higher performing ad clicks. 47 Table of Contents The following table presents year-over-year changes in our ad clicks and average CPC for the periods presented (each expressed as a percentage): Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Ad Clicks 9% (7)% 5% (8)% Average CPC 4% 23% 9% 27% In the three and twelve months ended December 31, 2023, advertising revenue grew 11% and 13% year over year, respectively, due to year-over-year increases in both ad clicks and average CPC.
Because traffic to our platform and user engagement on our platform together determine the number of ads we are able to show, affect the value of those ads to businesses and support the content creation that drives further traffic, our ability to attract, retain and engage visitors on our platform is critical to our business and financial success.
Because traffic to and user engagement on our platform together determine the number of ads we are able to show, affect the value of those ads to businesses and support the content creation that drives further traffic, our ability to attract, retain and engage visitors on our platform is critical to our business and financial success.
Income Taxes —Significant judgment is required to determine our provision (benefit) for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles, complex tax laws, or variances between our actual and anticipated operating results. Therefore, actual income taxes could materially vary from these estimates.
Income Taxes —Significant judgment is required to determine our provision for (benefit from) for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles, complex tax laws, or variances between our actual and anticipated operating results. Therefore, actual income taxes could materially vary from these estimates.
We may not realize the full benefits of synergies, innovation and operational efficiencies that may be possible from a corporate transaction; 46 Table of Contents similarly, if our relationships with partners deteriorate, we could suffer increased costs and delays in our ability to provide consumers and advertisers with our content or services. Seasonality and Cyclicality .
We may not realize 46 Table of Contents the full benefits of synergies, innovation and operational efficiencies that may be possible from a corporate transaction; similarly, if our relationships with partners deteriorate, we could suffer increased costs and delays in our ability to provide consumers and advertisers with our content or services. Seasonality .
We calculate desktop unique visitors as the number of “users,” as measured by Google Analytics, who have visited our desktop website at least once in a given month, averaged over a given twelve-month period.
We currently calculate desktop unique visitors as the number of “users,” as measured by Google Analytics, who have visited our desktop website at least once in a given month, averaged over a given twelve-month period.
We generate substantially all of our revenue through the sale of performance-based advertising products, which our advertising platform matches to individual consumers through auctions priced on a CPC basis.
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 CPC basis.
A full discussion of 2020 items and year-over-year comparisons between 2021 and 2020 can be found in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021.
A full discussion of 2021 items and year-over-year comparisons between 2022 and 2021 can be found in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022.
We expect cost of revenue to increase on an absolute dollar basis in 2023 compared to 2022. Sales and Marketing. Our sales and marketing expenses primarily consist of employee costs (including sales commission and stock-based compensation expenses) for our sales and marketing employees.
We expect cost of revenue to increase on an absolute dollar basis in 2024 compared to 2023. 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.
Therefore, unless we are able to generate sufficient taxable income from our operations, a substantial valuation allowance to reduce our U.S. DTAs may be required, which materially increase our expenses in the period in which we recognize the allowance and have a materially adverse impact on our consolidated financial statements.
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 ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Valuation 51 Table of Contents allowances are provided to reduce deferred tax assets to the amount that is more likely than not to be realized.
The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Valuation allowances are provided to reduce deferred tax assets to the amount that is more likely than not to be realized.
We also provide a breakdown of paying advertising locations between our Services categories and RR&O categories. We provide our paying advertising locations on a quarterly basis as a measure of the reach and scale of our business; however, this metric may exhibit short-term volatility as a result of factors such as seasonality and macroeconomic conditions.
We also provide a breakdown of paying advertising locations between our Services categories and RR&O categories. We provide our paying advertising locations as a measure of the reach and scale of our business; however, this metric may exhibit short-term volatility as a result of factors such as seasonality and macroeconomic conditions.
The total lease obligations are partially offset by our future minimum rental receipts to be received under non-cancelable subleases of $42.9 million. See Note 9, “ Leases , ” of the Notes to Consolidated Financial Statements for further detail on our operating lease obligations.
The total lease obligations are partially offset by our future minimum rental receipts to be received under non-cancelable subleases of $27.1 million. See Note 9, “ Leases ,” of the Notes to Consolidated Financial Statements for further detail on our operating lease obligations.
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 primarily consists of depreciation on computer equipment, software, leasehold improvements, capitalized website and internal-use software development costs, and amortization of purchased intangible assets.
However, we cannot assure you that we will be able to identify all such traffic for any particular period. For additional information, please see the risk factor included under Part I, Item 1A under the heading “ We rely on data from both internal tools and third parties to calculate certain of our performance metrics.
However, we cannot assure you that we have identified or will be able to identify all such traffic for any particular period. For additional information, please see the risk factor included under Part I, Item 1A titled “ We rely on data from both internal tools and third parties to calculate certain of our performance metrics.
Our ability to execute on our strategic initiatives depends on our continuing ability to attract, develop, motivate and retain highly qualified and skilled employees. Qualified individuals are in high demand and we expect to continue to face significant competition from other companies in hiring such personnel, particularly for technical roles.
Our ability to execute on our strategic initiatives depends on our continuing ability to attract, develop, motivate and retain highly qualified and skilled employees. Qualified individuals are in high demand and we expect to continue to face significant competition from other companies in hiring such personnel.
Our actual results could differ from those estimates. 50 Table of Contents We consider the estimates discussed below to be critical as we believe that the assumptions and estimates associated with these policies have the greatest potential impact on our consolidated financial statements.
Our actual results could differ from those estimates. We consider the estimates discussed below to be critical as we believe that the assumptions and estimates associated with these policies have the greatest potential impact on our consolidated financial statements.
We believe our decision to maintain distributed operations will provide even greater flexibility to our employees, who now have the opportunity to relocate within the countries where we operate so they can live where they want to live and work where they will feel most effective, will allow us to access and attract great talent from a more diverse pool of candidates across the United States, Canada and in Europe.
We believe our decision to maintain distributed operations will provide even greater flexibility to our employees, who now have the opportunity to relocate within the countries where we operate so they can live where they want to live and work where they will feel most effective, and will allow us to access and attract great talent from a more diverse pool of candidates across North America and Europe.
We capitalize our costs to develop software when: preliminary development efforts are successfully completed; management has authorized and committed project funding; and it is probable that the project will be completed and the software will be used as intended.
We capitalize our costs to develop software when: 58 Table of Contents preliminary development efforts are successfully completed; management has authorized and committed project funding; and it is probable that the project will be completed and the software will be used as intended.
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.
Costs and Expenses Cost of Revenue (exclusive of depreciation and amortization). Our cost of revenue consists primarily of 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.
Adverse macroeconomic conditions have historically been particularly challenging for the SMBs on which we rely and any protracted economic downturn would have significant negative effects on our business. 45 Table of Contents Investment in Growth .
Adverse macroeconomic conditions have historically been particularly challenging for the SMBs on which we rely and any protracted economic downturn would have significant negative effects on our business. Investment in Growth .
However, we have also disclosed below adjusted EBITDA and adjusted EBITDA margin, each of which is a non-GAAP financial measure.
However, we have also disclosed below adjusted EBITDA, adjusted EBITDA margin and free cash flow, each of which is a non-GAAP financial measure.
Other Income, Net Other income, net consists primarily of the interest income earned on our cash, cash equivalents and marketable securities, research and development tax credits, 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 Other income, net consists primarily of the interest income earned on our cash, cash equivalents and marketable securities, research and development tax credits, the portion of our sublease income in excess of our lease cost, accretion of discounts and amortization of premiums on investments, credit facility fees and foreign exchange gains and losses.
We have included adjusted EBITDA and adjusted EBITDA margin because they are key measures used by our management and board of directors to understand and evaluate our operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans.
We have included adjusted EBITDA, adjusted EBITDA margin and free cash flow because they are key measures used by our management and Board to understand and evaluate our operating performance and trends, to prepare and approve our annual budget, to develop short- and long-term operational plans, and to assess our sources of liquidity.
Consumers trust us for our more than 240 million ratings and reviews of businesses across a broad range of categories, while businesses advertise with us to reach our large audience of purchase-oriented and generally affluent consumers.
Consumers trust us for the more than 260 million ratings and reviews available on our platform 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.
Sales and marketing expenses also include 53 Table of Contents business and consumer acquisition marketing, community management, as well as allocated workplace and other supporting overhead costs.
Sales and marketing expenses also include business and consumer acquisition marketing, community management, as well as allocated workplace and other supporting overhead costs.
During the year ended December 31, 2022, we repurchased on the open market 6,195,093 shares for an aggregate purchase price of $200.0 million. The actual timing and amount of repurchases remain subject to a variety of factors, including liquidity, cash flow and market conditions.
During the year ended December 31, 2023, we repurchased on the open market 5,626,851 shares for an aggregate purchase price of $200.0 million. The actual timing and amount of repurchases remain subject to a variety of factors, including liquidity, cash flow and market conditions.
However, this estimate is based on a number of assumptions that may prove to be materially different and we could exhaust our available cash and cash equivalents earlier than presently anticipated. We are not able to reasonably estimate the timing of future cash flows related to $31.0 million of uncertain tax positions.
However, this estimate is based on a number of assumptions that may prove to be materially different and we could fully utilize our available cash, cash equivalents and marketable securities earlier than presently anticipated . We are not able to reasonably estimate the timing of future cash flows related to $35.4 million of uncertain tax positions.
Our cash requirements related to purchase obligations consisting of non-cancelable agreements to purchase goods and services required in the ordinary course of business — primarily website hosting services — are approximately $33.0 million, of which approximately $31.4 million is expected to be paid within the next 12 months.
Our cash requirements related to purchase obligations consisting of non-cancelable agreements to purchase goods and services required in the ordinary course of business — primarily website hosting services — are approximately $214.5 million, of which approximately $90.1 million is expected to be paid within the next 12 months.
Net cash used in investing activities during the year ended December 31, 2022 increased compared to 2021 primarily due to the purchase of marketable securities. In July 2022, we began investing in highly rated debt securities as we changed our investment strategy in order to earn a higher overall rate of return for our cash position.
Net cash used in investing activities during the year ended December 31, 2023 decreased compared to 2022 primarily due to a decrease in net purchases of marketable securities. In July 2022, we began investing in highly rated debt securities as we changed our investment strategy in order to earn a higher overall rate of return on our cash position.
We believe that our existing cash and cash equivalents, together with any cash generated from operations, will be sufficient to meet our material cash requirements in the next 12 months and beyond, including: working capital requirements; our anticipated repurchases of common stock pursuant to our stock repurchase program; payment of taxes related to the net share settlement of equity awards; payment of lease costs related to our operating leases; the potential payment of a higher amount of income taxes in 2023 and beyond, primarily due to the requirement to amortize certain research and development expenses under the Tax Act; and purchases of property, equipment and software and website hosting services.
We believe that our existing cash, cash equivalents and marketable securities, together with any cash generated from operations, will be sufficient to meet our material cash requirements in the next 12 months and beyond, including: working capital requirements; our anticipated repurchases of common stock pursuant to our stock repurchase program; payment of taxes related to the net share settlement of equity awards; payment of lease costs related to our operating leases; the potential payment of a higher amount of income taxes in 2024 and beyond due to, among other things, the requirement to capitalize and amortize certain research and development expenses under the Tax Act and the other factors discussed in “ —Results of Operations— Provision for Income Taxes ” above; and purchases of property, equipment and 56 Table of Contents software and website hosting services.
The following section also includes information regarding 2022 and 2021, year-over-year comparisons between these periods and certain information regarding 2020.
The following section also includes information regarding 2023 and 2022 and year-over-year comparisons between these periods.
Stock Repurchases . Since July 2017, our board of directors has authorized us to repurchase up to an aggregate of $1.45 billion of our outstanding common stock, $254.7 million of which remained available as of February 17, 2023 and which does not have an expiration date.
Stock Repurchases . Since July 2017, our Board has authorized us to repurchase up to an aggregate of $1.95 billion of our outstanding common stock, $554.7 million of which remained available as of February 20, 2024 and which does not have an expiration date.
For example, new products may fail to generate sufficient revenue, operating margin or other value to justify the investments we made in them, which is a particular risk for new products that are unproven or that are outside of our historical core business.
For example, new products and initiatives may fail to generate sufficient revenue, operating margin or other value to justify the investments we made in them, which is a particular risk for new products and initiatives that are unproven or that are outside of our historical core business, such as our planned acquisition of Services leads through SEM.
The following table presents the number of cumulative reviews as of the dates indicated (in thousands): As of December 31, 2022 2021 Reviews 265,288 244,435 Traffic Traffic to our website and mobile app has three components: mobile devices accessing our mobile app, visitors to our non-mobile optimized website, which we refer to as our desktop website, and visitors to our mobile-optimized website, which we refer to as our mobile website.
The following table presents the number of cumulative reviews as of December 31, 2023 and 2022 (in thousands): As of December 31, % Change 2023 2022 Reviews 287,364 265,288 8% Traffic Traffic to our website and mobile app has three components: mobile devices accessing our mobile app, visitors to our non-mobile optimized website, which we refer to as our desktop website, and visitors to our mobile-optimized website, which we refer to as our mobile website.
Multiple individuals who access our mobile app from a shared device will be counted as a single app unique device. 49 Table of Contents The following table presents app unique devices for the periods indicated (in thousands): Year Ended December 31, 2022 2021 App Unique Devices 33,026 33,085 Desktop and Mobile Website Unique Visitors .
Multiple individuals who access our mobile app from a shared device will be counted as a single app unique device. The following table presents app unique devices for the periods presented (in thousands): Year Ended December 31, % Change 2023 2022 App Unique Devices 31,909 33,026 (3)% Desktop and Mobile Website Unique Visitors .
Similarly, we calculate mobile website unique visitors as the number of “users” who have visited our mobile website at least once in a given month, averaged over a given twelve-month period. Google Analytics, a product from Google Inc. that provides digital marketing intelligence, measures “users” based on unique identifiers.
Similarly, we have calculated mobile website unique visitors as the number of “users” who have visited our mobile website at least once in a given month, averaged over a given twelve-month period. Google Analytics measures “users” based on unique identifiers.
Cost of revenue increased in 2022 compared to 2021, primarily as a result of: • an increase in website infrastructure expense of $12.1 million as a result of investments in maintaining and improving our infrastructure; • an increase in advertising fulfillment costs of $11.1 million largely attributable to the expansion of Yelp Audiences; and • an increase in merchant credit card processing fees of $3.4 million primarily due to a higher volume of transactions associated with the increase in advertising revenue.
Cost of revenue increased in 2023 compared to 2022, primarily as a result of: • an increase in merchant credit card processing fees of $2.9 million, primarily due to the increase in advertising revenue; • an increase in advertising fulfillment costs of $2.7 million largely attributable to the expansion of Yelp Audiences; and • an increase in website infrastructure expense of $2.1 million, primarily as a result of higher labor costs associated with maintaining and improving our infrastructure.
As of December 31, 2022, we had approximately $97.4 million in net DTAs. At this time, we consider it more likely than not that we will have sufficient taxable income in the future to allow us to realize these DTAs. However, it is possible that some or all of these DTAs will not be realized.
As of December 31, 2023, we consider it more likely than not that we will have sufficient taxable income in the future that will allow us to realize these DTAs. However, it is possible that some or all of these DTAs will not be realized.
We lease office facilities under operating lease agreements that expire from 2023 to 2031. Our cash requirements related to these lease agreements are $139.6 million, of which $45.3 million is expected to be paid within the next 12 months.
We lease office facilities under operating lease agreements that expire from 2024 to 2031. Our cash requirements related to these lease agreements are $94.9 million, of which $42.7 million is expected to be paid within the next 12 months.
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; 55 Table of Contents • 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, impairment charges and net gain on lease termination; and • other companies, including those in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
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 material litigation settlements, impairment charges and fees related to shareholder activism; 54 Table of Contents • free cash flow does not represent the total residual cash flow available for discretionary purposes because it does not reflect our contractual commitments or obligations; and • other companies, including those in our industry, may calculate adjusted EBITDA and free cash flow differently, which reduces their usefulness as comparative measures.
Real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business .” Active Claimed Local Business Locations The number of active claimed local business locations represents the number of claimed local business locations — business addresses for which a business representative has visited our platform and claimed the free business page for the business located at that address — that are both (a) active on Yelp and (b) associated with an active business owner account as of a given date.
The number of active claimed local business locations represents the number of claimed local business locations — business addresses for which a business representative has visited our platform and claimed the free business page for the business located at that address — that are both (a) active on Yelp and (b) associated with an active business owner account as of a given date.
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 (expense), net; depreciation and amortization; stock-based compensation expense; and, in certain periods, certain other income and expense items, such as restructuring costs, impairment charges and net gain on lease termination. Adjusted EBITDA margin .
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 material litigation settlements, impairment charges and fees related to shareholder activism. Adjusted EBITDA margin .
Our business is affected by seasonal fluctuations in Internet usage and advertising spending. Based on historical trends, our revenue is typically lowest in the first quarter and increases through the year to its highest level in the fourth quarter.
Our business is affected by seasonal fluctuations in Internet usage and advertising spending. Based on historical trends, our revenue is typically lowest in the first quarter and increases sequentially through the third quarter. Fourth quarter revenue is typically similar to the third quarter as well as to the first quarter of the subsequent year.
For example, macroeconomic factors, such as ongoing concerns about COVID-19 and its variants as well as inflationary pressures and labor and supply chain challenges, have had a predominant negative impact on RR&O paying advertising locations in recent quarters.
For example, macroeconomic factors, such as the current inflationary pressures and labor and supply chain challenges, have had a predominant negative impact on RR&O paying advertising locations in recent quarters.
We generate revenue through our subscription services, which include our Yelp Guest Manager product. We also generate revenue through our Yelp Fusion and Yelp Knowledge programs, which provide access to Yelp data for a fee, as well as other non-advertising partnerships.
Other Revenue. We generate revenue through our subscription services, including our Yelp Guest Manager product. We also generate revenue through our Yelp Fusion and Yelp Knowledge programs, which provide access to Yelp data for a fee, as well as other non-advertising partnerships. Beginning in the three months ending March 31, 2024, other revenue will also include transactions revenue.
The following table presents our web traffic for the periods indicated (in thousands): Year Ended December 31, 2022 2021 Desktop Unique Visitors 38,046 45,990 Mobile Web Unique Visitors 59,172 56,668 We have discovered in the past, and expect to discover in the future, that portions of our desktop traffic, as measured by Google Analytics, have been attributable to robots and other invalid sources.
The following table presents our web traffic for the periods presented (in thousands): Year Ended December 31, % Change 2023 2022 Desktop Unique Visitors 36,301 38,046 (5)% Mobile Web Unique Visitors 60,282 59,172 2% We have discovered in the past, and expect to discover in the future for the duration of our use of Google Analytics, that portions of our desktop traffic measured by Google Analytics have been attributable to robots and other invalid sources.
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. Non-GAAP Financial Measures Our consolidated financial statements are prepared in accordance with GAAP.
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.
As of December 31, 2022 , we had $20.5 million of letters of credit under the sub-limit related to lease agreements for certain office locations, which are required to be maintained and issued to the landlords of each facility, and $54.5 million remained available under the revolving credit facility as of that date.
We had $14.1 million of letters of credit under the sub-limit primarily related to lease agreements for certain office locations, which are required to be maintained and issued to the landlords of each facility, and $110.9 million remained available under the 2023 credit facility as of December 31, 2023.
As of December 31, 2022, 265.3 million reviews had been submitted to our platform, of which 243.0 million reviews were available on business pages, including 48.0 million reviews that were not recommended, and 22.3 million reviews had been removed from our platform, either by us for violation of our terms of service or by the users who contributed them.
As of December 31, 2023, 287.4 million reviews had been submitted to our platform, of which 262.8 million reviews were available on business pages, including 51.4 million reviews that were not recommended, and 24.6 million reviews had been removed from our platform, either by us for violation of our terms of service or by the users who contributed them.
We also expect that our revenue will grow year over year in 2023 as the benefits of our initiatives build; however, we expect revenue in the first quarter of 2023 to be flat to slightly down sequentially, reflecting seasonal trends. Factors Affecting Our Performance Macroeconomic Conditions .
We also expect that our revenue will grow year over year in 2024 as our initiatives gain traction; however, we expect revenue in the first quarter of 2024 to be slightly down sequentially, reflecting seasonal trends and the macroeconomic challenges facing our RR&O categories. Factors Affecting Our Performance Macroeconomic Conditions .
If any issues addressed in our tax audits are resolved in a manner not consistent with our expectations, we could be required to adjust our provision for income taxes in the period such resolution occurs. Results of Operations The following tables set forth our results of operations for 2022 and 2021 (in thousands, except percentages).
If any issues addressed in our tax audits are resolved in a manner not consistent with our expectations, we could be required to adjust our provision for income taxes in the period such resolution occurs.
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 .
Because of these limitations, you should consider adjusted EBITDA, adjusted EBITDA margin and free cash flow alongside other financial performance measures, including net income (loss), net cash provided by (used in) operating activities and our other GAAP results. Adjusted EBITDA .
Advertising revenue increased in 2022 compared to 2021 driven by higher aggregate customer spend and an increase in paying advertising locations. 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 place food orders for pickup and delivery through third parties directly on Yelp.
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 place food orders for pickup and delivery through third parties directly on Yelp.
The following table presents our advertising revenue by category for the periods presented (in thousands): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Services $ 178,292 $ 157,242 $ 693,810 $ 607,770 Restaurants, Retail & Other 115,692 104,205 440,593 377,455 Total Advertising Revenue $ 293,984 $ 261,447 $ 1,134,403 $ 985,225 Paying Advertising Locations 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- or twelve-month period.
The following table presents our advertising revenue by category for the periods presented (in thousands, except percentages): Three Months Ended December 31, % Change Year Ended December 31, % Change 2023 2022 2023 2022 Services $ 203,140 $ 178,292 14% $ 793,112 $ 693,810 14% Restaurants, Retail & Other 124,231 115,692 7% 483,406 440,593 10% Total Advertising Revenue $ 327,371 $ 293,984 11% $ 1,276,518 $ 1,134,403 13% Paying Advertising Locations 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- or twelve-month period.
We have funded the repurchases, and expect to fund future repurchases under the stock repurchase program, with cash available on our balance sheet. As a result, this program could diminish our cash reserves and reduce our ability to invest in our business, in addition to affecting the trading price and volatility of our stock. Corporate Development Activities .
As a result, this program could diminish our cash reserves and reduce our ability to invest in our business, in addition to affecting the trading price and volatility of our stock. Corporate Development Activities .
Cost of revenue also includes third-party advertising fulfillment costs.
Cost of revenue also includes third-party advertising fulfillment costs and credit card processing fees.
Since the early stages of the COVID-19 pandemic in 2020, traffic levels, particularly in our RR&O categories, have fluctuated as consumer confidence levels changed in response to the pandemic and COVID-19 variants, as well as other macroeconomic conditions. As a result, although our traffic recovered in 2021 compared to the prior year, it remained below our pre-pandemic 2019 traffic.
Since the early stages of the COVID-19 pandemic in 2020, traffic levels, particularly in our RR&O categories, have fluctuated as consumer confidence levels changed in response to the pandemic and other macroeconomic conditions.
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, among others.
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, among others. Ad clicks include only user interactions that we are able to track directly, and therefore do not include user interactions with ads sold through our advertising partnerships.
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.
The relative strengths of these factors in aggregate are reflected in average CPC. Ad clicks and average CPC also provide important insight into the value we deliver to advertisers, which we believe is a significant factor in our ability to retain both revenue and customers.
While our business has now surpassed its pre-pandemic performance in many areas and advertiser demand was strong in 2022, many businesses continue to face supply chain issues, rising commodity prices, and inventory and labor shortages, which has negatively impacted their advertising spending with us.
Although advertiser demand was generally strong in 2023, many businesses — particularly in our RR&O categories — continue to face supply chain issues, rising commodity prices, and inventory and labor shortages, which has negatively impacted their advertising spending with us.
Strong advertiser demand combined with less robust consumer activity has significantly increased our average CPC in 2022 compared to 2021; if the value our products provide to advertisers does not keep pace with any further price increases, our revenue and results of operations could be harmed.
Strong advertiser demand combined with less robust consumer activity has increased our average CPC in 2023 compared to 2022; if the value our products provide to advertisers does not keep pace with any further price increases, our revenue and results of operations could be harmed. 45 Table of Contents It is not possible for us to predict the remaining duration of the ongoing adverse macroeconomic conditions or the duration or magnitude of any resulting adverse impact on our business.
Advertising revenue also includes revenue generated from the resale of our advertising products by certain partners and monetization of advertising inventory through third-party ad networks. We present advertising revenue on a disaggregated basis for our high-level category groupings, Services and RR&O.
Advertising revenue also includes revenue generated from the resale of our advertising products by certain partners and monetization of advertising inventory through third-party ad networks.
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.
Other income, net increased in 2023 compared to 2022, primarily driven by $12.4 million of higher interest income due to increased federal interest rates. 53 Table of Contents Provision for Income Taxes Provision for 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.
In the year ended December 31, 2022, our net revenue was $1.19 billion, up 16% from the year ended December 31, 2021 and 37% from the year ended December 31, 2020, and we recorded net income of $36.3 million and adjusted EBITDA of $269.8 million.
In the year ended December 31, 2023, our net revenue was $1.34 billion, up 12% from the year ended December 31, 2022 and 30% from the year ended December 31, 2021, and we recorded net income of $99.2 million and adjusted EBITDA of $330.5 million.
Our product development expenses primarily consist of employee costs (including bonuses and stock-based compensation expense, net of capitalized employee costs associated with capitalized website and internal-use software development) for our engineers, product management and corporate infrastructure employees. In addition, product development expenses include allocated workplace and other supporting overhead costs.
However, we expect sales and marketing expenses to decrease as a percentage of net revenue in 2024 compared to 2023. Product Development. Our product development expenses primarily consist of employee costs (including bonuses and stock-based compensation expense, net of capitalized employee costs associated with capitalized website and internal-use software development) for our engineers, product management and corporate infrastructure employees.
We report the year-over-year percentage change in ad clicks on a quarterly and annual basis as a measure of our success in monetizing more of our consumer traffic and delivering more value to advertisers.
We do not expect the exclusion of such user interactions to materially affect this metric. We report the year-over-year percentage change in ad clicks as a measure of our success in monetizing more of our consumer activity and delivering more value to advertisers.
We have funded all repurchases to date and expect to fund future repurchases with cash available on our balance sheet.
We have funded all repurchases to date and expect to fund any future repurchases with cash and cash equivalents available on our consolidated balance sheet. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with GAAP.
The following is a reconciliation of net income to adjusted EBITDA, as well as the calculation of net income margin and adjusted EBITDA margin, for each of the periods indicated (in thousands, except percentages): Year Ended December 31, 2022 2021 Reconciliation of Net Income to Adjusted EBITDA: Net income $ 36,347 $ 39,671 Provision for (benefit from) income taxes 30,431 (5,953) Other income, net (8,425) (2,204) Depreciation and amortization 44,852 55,683 Stock-based compensation 156,090 151,679 Restructuring — 32 Asset impairment (1) 10,464 11,164 Gain on lease termination, net (1) — (3,748) Adjusted EBITDA $ 269,759 $ 246,324 Net revenue $ 1,193,506 $ 1,031,839 Net income margin 3 % 4 % Adjusted EBITDA margin 23 % 24 % (1) Recorded within general and administrative expenses on our consolidated statements of operations.
The following is a reconciliation of net income to adjusted EBITDA, as well as the calculation of net income margin and adjusted EBITDA margin, for the periods presented (in thousands, except percentages): Year Ended December 31, 2023 2022 Reconciliation of Net Income to Adjusted EBITDA: Net income $ 99,173 $ 36,347 Provision for income taxes 5,909 30,431 Other income, net (26,039) (8,425) Depreciation and amortization 42,184 44,852 Stock-based compensation 173,451 156,090 Litigation settlement (1)(2) 11,000 — Asset impairment (1) 23,563 10,464 Fees related to shareholder activism (1) 1,252 — Adjusted EBITDA $ 330,493 $ 269,759 Net revenue $ 1,337,062 $ 1,193,506 Net income margin 7 % 3 % Adjusted EBITDA margin 25 % 23 % (1) Recorded within general and administrative expenses on our consolidated statements of operations.
In particular, the exclusion of certain expenses in calculating adjusted EBITDA can provide a useful measure for period-to-period comparisons of our primary business operations. Accordingly, we believe that adjusted EBITDA and adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
Accordingly, we believe that adjusted EBITDA, adjusted EBITDA margin and free cash flow provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board.
We expect sales and marketing expenses to increase in 2023 compared to 2022 as we continue to invest in our marketing initiatives. However, we expect sales and marketing expenses to decrease as a percentage of net revenue in 2023 compared to 2022. Product Development.
We expect product development expenses to increase in 2024 compared to 2023 to support our product initiatives. We expect product development expenses as a percentage of net revenue to remain relatively consistent in 2024 compared to 2023. General and Administrative.
See Note 9, “ Leases , ” of the Notes to Consolidated Financial Statements for further detail. We expect general and administrative expenses to increase in 2023 compared to 2022 to support the continued growth of our business. We expect general and administrative expenses as a percentage of net revenue to remain relatively consistent in 2023 compared to 2022.
Adjusting for these non-recurring items in 2023, we expect general and administrative expenses to increase in 2024 compared to 2023 to support the continued growth of our business and remain relatively consistent as a percentage of net revenue in 2024 compared to 2023. Depreciation and Amortization.
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.
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.
Net revenue in the year ended December 31, 2022 increased by 16% year over year, driven by strong advertiser demand in both our Services and RR&O categories despite a challenging macroeconomic environment.
Net revenue in the year ended December 31, 2023 increased by 12% year over year, as our execution of our strategic initiatives drove strong advertiser demand in both our Services and RR&O categories.
The following table presents year-over-year changes in our ad clicks for the periods indicated (expressed as a percentage): Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Ad Clicks (7)% 14% (8)% 24% 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 quarterly or annual period.
Average CPC is calculated as revenue from our performance-based ad products — excluding certain revenue adjustments that do not impact the outcome of an auction for an individual ad click, such as refunds, as well as revenue from our advertising partnerships — divided by the total number of ad clicks for a given period.
Cash and cash equivalents consist of cash, money market funds and investments with original maturities of three month or less. Our cash held internationally as of December 31, 2022 was $31.7 million. As of December 31, 2022, we also had $10.0 million of investments in certificates of deposit with minority-owned financial institutions.
As of December 31, 2023, we had cash and cash equivalents of $313.9 million and marketable securities of $127.5 million. Cash and cash equivalents consist of cash, money market funds and investments with original maturities of three month or less. Our cash held internationally as of December 31, 2023 was $43.9 million.
Stock Repurchase Program Since its initial authorization in July 2017, our board of directors has authorized us to repurchase up to an aggregate of $1.45 billion of our outstanding common stock, $254.7 million of which remained available as of February 17, 2023.
Stock Repurchase Program As of December 31, 2023, our Board had authorized us to repurchase up to an aggregate of $1.45 billion of our outstanding common stock since it initially authorized our stock repurchase program in July 2017.
We believe that average CPC and ad clicks together reflect one of the largest dynamics affecting our advertising revenue performance.
Average CPC represents the average amount we charge advertisers for each ad click. We believe that ad clicks and average CPC together reflect one of the most significant dynamics affecting our advertising revenue performance: the interplay of advertiser demand and consumer activity.
Although we anticipate that net revenue in the first quarter of 2023 will decrease from or remain relatively consistent with the fourth quarter of 2022, reflecting historical seasonal trends, we also expect that net revenue will grow in the first quarter and full year of 2023 compared to the prior-year periods as our initiatives continue to drive growth.
Although we anticipate that net revenue in the first quarter of 2024 will decrease slightly from the fourth quarter of 2023, reflecting typical seasonality in Services and macroeconomic challenges facing our RR&O categories, we also expect that net revenue will grow in the first quarter and full year of 2024 compared to the prior-year periods as our 2024 strategic initiatives gain traction.
In 2022, we continued to deliver value to our advertisers in the form of higher performing clicks by optimizing our ad system to better match consumers with the right advertisers at the right time.
Deliver More Value to Advertisers • In 2023, we delivered more valuable clicks to our advertisers by upgrading our ad system and technology to more efficiently match consumers with the right advertisers at the right time.
Depreciation and amortization expense decreased in 2022 compared to 2021, primarily due to a decrease in depreciation expense of leasehold improvements from asset retirements related to lease terminations and expirations and, to a lesser extent, lower amortization expense resulting from intangible assets that had become fully amortized since prior year. Restructuring.
Depreciation and amortization expense decreased in 2023 compared to 2022, primarily due to a decrease in depreciation expense of leasehold improvements, furniture and fixtures from asset retirements related to lease abandonment and expirations as well as certain other assets becoming fully depreciated since the prior-year period.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe believe a hypothetical 100 basis point increase in interest rates as of December 31, 2022 would not have a material impact on our marketable securities portfolio. 58 Table of Contents Foreign Currency Exchange Risk We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar, principally in the British pound sterling, Canadian dollar and the Euro.
Biggest changeForeign Currency Exchange Risk We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar, principally in the British pound sterling, Canadian dollar and the Euro. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy.
These risks include primarily interest rate, foreign exchange risks and inflation, and have not changed materially from the market risks we were exposed to in the year ended December 31, 2021. Interest Rate Fluctuation The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk.
These risks include primarily 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, 2022. Interest Rate Fluctuation The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk.
Treasury; as such, their fair value may be affected by fluctuations in interest rates in the broader economy.
Treasury; as such, their fair value may be affected by fluctuations in interest rates in the broader economy. We believe a 59 Table of Contents hypothetical 100 basis point increase in interest rates as of December 31, 2023 would not have a material impact on our marketable securities portfolio.
Removed
The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy.

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