YELP INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs, and involve risks and uncertainties. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those discussed in the section titled "Risk Factors" included under Part I, Item 1A in our Annual Report. See " Special Note Regarding Forward-Looking Statements " in this Quarterly Report. Overview As one of the best known internet brands inthe United States ,Yelp is a trusted local resource for consumers and a partner in success for businesses of all sizes. Consumers trust us for our more than 200 million ratings and reviews of businesses across a broad range of categories, while businesses advertise with us to reach our large audience of purchase-oriented and generally affluent consumers. We believe our ability to provide value to both consumers and businesses not only fulfills our mission to connect consumers with great local businesses, but also positions us well in the local, digital advertising market inthe United States . We generate substantially all of our revenue from the sale of performance-based advertising products, which our advertising platform matches to individual consumers through auctions priced on a cost-per-click ("CPC") basis. In the three months endedJune 30, 2021 , our net revenue was$257.2 million , up 52% from the three months endedJune 30, 2020 , and we recorded net income of$4.2 million and adjusted EBITDA of$63.8 million . In the six months endedJune 30, 2021 , our net revenue was$489.3 million , which represented an increase of 17% from the six months endedJune 30, 2020 , and we recorded a net loss of$1.6 million and adjusted EBITDA of$107.5 million . For information on how we define and calculate adjusted EBITDA, and a reconciliation of this non-GAAP financial measure to net income (loss), see " Non-GAAP Financial Measures " below. As a result of our investments in product, marketing and our Multi-location sales team, we made further progress on our revenue growth initiatives in the second quarter of 2021: •Improve monetization of our Services categories. Our investments in the product experience for businesses and consumers in our Services categories drove both sequential and year-over-year increases in the percentage of monetized leads in our Services categories in the second quarter. These efforts contributed to increases in advertising revenue from Services businesses in the second quarter of 39% year over year and of more than 8% compared to the first quarter of 2021. •Expand our Self-serve and Multi-location sales channels. Our continued investments in expanding our Multi-location product portfolio and attribution capabilities during the COVID-19 pandemic positioned us well to benefit from the return of Multi-location advertisers - particularly Restaurants, Retail & Other businesses - as local economies reopened in the second quarter. In the second quarter, advertising revenue from Multi-location customers increased by nearly 90% compared to the second quarter of 2020 and by more than 20% from the first quarter of 2021. Our product and marketing investments continued to drive strong performance in our Self-serve channel in the second quarter, with revenue attributable to that channel up nearly 100% year over year and nearly 70% compared to the second quarter of 2019. •Deliver more value to advertisers. Increasing our value proposition to advertisers by delivering more ad clicks at a lower average price is an important part of our strategy to drive long-term growth and has been a focus of our product investment in recent years. In the second quarter, improvements to our ad system and matching technology, together with further recovery in our consumer traffic, drove more ad clicks to advertisers at a lower average CPC than in both the second quarter of 2020 and the first quarter of 2021. Ad clicks returned to a year-over-year increase in the second quarter, up 87% from the second quarter of 2020, and average CPC declined 20% over the same period. In connection with plans to maintain a primarily remote workforce, we entered into sublease agreements for portions of our leased office space inSan Francisco andNew York . While these subleases resulted in non-cash impairment charges totaling$11.2 million in the second quarter related to right-of-use assets and leasehold improvements associated with the underlying operating leases, we expect the subleases, together with our decision not to renew the lease for a portion of ourPhoenix office space, to collectively result in annual expense savings of approximately$10.0 million to$12.0 million . Our continued expense management, our more efficient go-to-market approach and recovery in local economies drove a 52% increase in net revenue, a return to positive net income of$4 million and a 473% increase in adjusted EBITDA in the second quarter of 2021 compared to the year-ago quarter. These factors also contributed to certain of our financial results 25 -------------------------------------------------------------------------------- Table of Contents surpassing pre-COVID-19 pandemic levels in the second quarter: net revenue increased 4% from the second quarter of 2019. While net income margin decreased slightly compared to the second quarter of 2019, from 5% to 2% due to the impairment charges in the second quarter of 2021, adjusted EBITDA margin improved by three percentage points over the same period. We plan to both continue exploring opportunities to reduce expenses associated with our leased office space and further invest in our growth initiatives in the third quarter. Key Metrics We regularly review a number of metrics, including the key metrics set forth below, to evaluate our business, measure our performance, identify trends in our business, prepare financial projections and make strategic decisions. Ad Clicks Ad clicks represent user interactions with our pay-for-performance advertising products, including clicks on advertisements on our website and mobile app, clicks on syndicated advertisements on third-party platforms and Request-A-Quote submissions. Ad clicks include only user interactions that we are able to track directly, and therefore do not include user interactions with ads sold through our advertising partnerships. We do not expect the exclusion of such user interactions to materially affect this metric. Because we generate revenue primarily from the sale of performance-based ads, our ability to increase our revenue depends largely on our ability to increase ad clicks. We report the year-over-year percentage change in ad clicks on a quarterly basis as a measure of our success in monetizing more of our consumer traffic and delivering more value to advertisers. The following table presents year-over-year changes in our ad clicks for the periods indicated (expressed as a percentage): Three Months Ended June 30, 2021 2020 Ad Clicks 87% (51)% Average CPC We define average CPC as revenue from our performance-based ad products - excluding certain revenue adjustments that do not impact the outcome of an auction for an individual ad click, such as refunds, as well as revenue from our advertising partnerships - divided by the total number of ad clicks for a given three-month period. Average CPC, when viewed together with ad clicks, provides important insight into the value we deliver to advertisers, which we believe is a significant factor in our ability to retain both revenue and customers. For example, a negative change in average CPC for a given three-month period combined with a positive change in ad clicks over the same period would indicate that we delivered more ad clicks at lower prices, thereby delivering more value to our advertisers; we would expect this to have a positive impact on retention. We believe that average CPC and ad clicks together reflect one of the largest dynamics affecting our advertising revenue performance. The following table presents year-over-year changes in our average CPC for the periods indicated (expressed as a percentage): Three Months Ended June 30, 2021 2020 Average CPC (20)% 35% Advertising Revenue by Category Our advertising revenue comprises revenue from the sale of our advertising products, including the resale of our advertising products by partners and syndicated ads appearing on third-party platforms. To reflect our strategic focus on creating two differentiated experiences onYelp , we provide a quarterly breakdown of our advertising revenue attributable to businesses in two high-level category groupings: Services and Restaurants, Retail & Other. Our Services categories consist of home, local, auto, professional, pets, events, real estate and financial services. Our Restaurants, Retail & Other categories consist of restaurants, shopping, beauty & fitness, health and other. 26 -------------------------------------------------------------------------------- Table of Contents The following table presents our advertising revenue by category for the periods indicated (in thousands, except percentages): Three Months Ended Six Months Ended June 30, June 30, 2021 2020 % Change 2021 2020 % Change Services$ 152,522 $ 109,583 39%$ 293,209 $ 242,665 21% Restaurants, Retail & Other 92,439 52,650 76% 173,739 159,661 9% Total Advertising Revenue$ 244,961 $ 162,233 51%$ 466,948 $ 402,326 16% Paying Advertising Locations By Category Paying advertising locations comprise all business locations associated with a business account from which we recognized advertising revenue in a given month, excluding business accounts that purchased advertising through partner programs other thanYelp Ads Certified Partners , averaged over a given three-month period. The following table presents the number of paying advertising locations by category during the periods presented (in thousands, except percentages): Three Months Ended June 30, 2021 2020 % Change Services 234 204 15% Restaurants, Retail & Other 294 174 69% Total Paying Advertising Locations 528 378
40%
Critical Accounting Policies and Estimates Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted inthe United States ("GAAP"). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates and assumptions are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from those estimates. Due to the COVID-19 pandemic and the uncertainty regarding the extent and duration of its impacts, certain estimates and assumptions have required and may continue to require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, these estimates may materially change in future periods. We believe that the assumptions and estimates associated with revenue recognition, website and internal-use software development costs, the incremental borrowing rate used with respect to leases, business combinations, allowance for doubtful accounts, income taxes and stock-based compensation expense have the greatest potential impact on our consolidated financial statements. There have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report. 27 -------------------------------------------------------------------------------- Table of Contents Results of Operations The following table sets forth our results of operations for the periods indicated (in thousands, except percentages). The period-to-period comparison of financial results is not necessarily indicative of the results of operations to be anticipated for the full year 2021 or any future period. Three Months Ended Six Months Ended June 30, June 30, 2021 2020 $ Change % Change(1) 2021 2020 $ Change % Change(1) Consolidated Statements of Operations Data: Net revenue by product: Advertising revenue by category: Services$ 152,522 $ 109,583 $ 42,939 39 %$ 293,209 $ 242,665 $ 50,544 21 % Restaurants, Retail & Other 92,439 52,650 39,789 76 % 173,739 159,661 14,078 9 % Advertising 244,961 162,233 82,728 51 % 466,948 402,326 64,622 16 % Transactions 3,525 3,968 (443) (11) % 7,329 6,607 722 11 % Other 8,702 2,829 5,873 208 % 15,007 9,998 5,009 50 % Total net revenue 257,188 169,030 88,158 52 % 489,284 418,931 70,353 17 % Costs and expenses: Cost of revenue (exclusive of depreciation and amortization shown separately below) 17,993 11,825 6,168 52 % 32,867 28,672 4,195 15 % Sales and marketing 113,641 96,289 17,352 18 % 226,550 233,586 (7,036) (3) % Product development 68,695 53,969 14,726 27 % 136,687 121,082 15,605 13 % General and administrative 45,095 26,402 18,693 71 % 76,956 69,938 7,018 10 % Depreciation and amortization 12,833 12,582 251 2 % 25,916 24,940 976 4 % Restructuring 12 3,312 (3,300) (100) % 32 3,312 (3,280) (99) % Total costs and expenses 258,269 204,379 53,890 26 % 499,008 481,530 17,478 4 % Loss from operations (1,081) (35,349) 34,268 (97) % (9,724) (62,599) 52,875 (84) % Other income, net 542 495 47 9 % 1,247 2,878 (1,631) (57) % Loss before income taxes (539) (34,854) 34,315 (98) % (8,477) (59,721) 51,244 (86) % Benefit from income taxes (4,751) (10,864) 6,113 (56) % (6,893) (20,228) 13,335 (66) % Net income (loss)$ 4,212 $ (23,990) $ 28,202 (118) %$ (1,584) $ (39,493) $ 37,909 (96) % (1) Percentage changes are calculated based on rounded numbers and may not recalculate exactly due to rounding. Three and Six Months EndedJune 30, 2021 and 2020 Net Revenue Advertising. We generate advertising revenue from the sale of our advertising products - including enhanced listing pages and performance and impression-based advertising in search results and elsewhere on our platform - to businesses of all sizes, from single-location local businesses to multi-location national businesses. Advertising revenue also includes revenue generated from the resale of our advertising products by certain partners and monetization of remnant advertising inventory through third-party ad networks. We present advertising revenue on a disaggregated basis for our high-level category groupings, Services and Restaurants, Retail & Other. Advertising revenue for the three and six months endedJune 30, 2021 increased compared to the prior-year periods. Revenue from businesses in our Services categories, particularly Home Services businesses, increased due to an improved retention rate of non-term advertisers' budgets, an increase in paying advertising locations and higher customer spend. Revenue from businesses in our Restaurants, Retail & Other categories increased due to growth in the number of paying advertising locations, reflecting our reduction of relief incentives as COVID-19 pandemic-related operating restrictions eased in the second quarter and businesses in these categories were able to operate at greater capacity. Transactions. We generate revenue from various transactions with consumers, primarily through our partnership integrations, which are mainly revenue-sharing arrangements that provide consumers with the ability to complete food ordering and delivery transactions through third parties directly onYelp . We earn a fee for acting as an agent for transactions placed through these integrations, which we record on a net basis and include in revenue upon completion of a transaction. 28 -------------------------------------------------------------------------------- Table of Contents Transactions revenue for the three months endedJune 30, 2021 decreased compared to the prior-year period due to a lower volume of food takeout and delivery orders as many restaurants resumed or increased the capacity of their dine-in operations during the quarter. Transactions revenue for the six months endedJune 30, 2021 increased compared to the prior-year period due to an overall increase in the volume of food takeout and delivery orders due to the COVID-19 pandemic, which limited dine-in operations of many restaurants. Other. We generate revenue through our subscription services, including ourYelp Reservations andYelp Waitlist products. We also generate revenue through ourYelp Knowledge andYelp Fusion programs, which provide access toYelp data for a fee, as well as other non-advertising partnerships. Other revenue for the three and six months endedJune 30, 2021 increased compared to the prior-year periods primarily due to a reduction in the relief incentives that we provided to our customers impacted by the COVID-19 pandemic during the three and six months endedJune 30, 2020 , mainly in the form of waived subscription fees. Other revenue also reflected increased revenue from ourYelp Fusion program, which we introduced inMay 2020 . Trends and Uncertainties of Net Revenue. Net revenue increased in the three months endedJune 30, 2021 from the three months endedMarch 31, 2021 due to increased advertiser demand, as well as from the three months endedJune 30, 2020 , reflecting recovery from the impact of the COVID-19 pandemic and progress on our strategic initiatives. Net revenue also increased compared to the three months endedJune 30, 2019 , particularly revenue from Services categories, which increased by 23%. While the pace of recovery in our Restaurants, Retail & Other categories remains subject to the evolution of the COVID-19 pandemic and related public health restrictions, we expect our initiatives will continue to drive momentum in the third quarter. As such, we anticipate net revenue in the three months endingSeptember 30, 2021 will remain relatively consistent with or slightly increase from the second quarter of 2021. Costs and Expenses Cost of Revenue (exclusive of depreciation and amortization). Our cost of revenue consists primarily of credit card processing fees and website infrastructure expense, which includes website hosting costs and employee costs (including stock-based compensation expense) for the infrastructure teams responsible for operating our website and mobile app, and excludes depreciation and amortization expense. Cost of revenue also includes third-party advertising fulfillment costs. Cost of revenue for the three and six months endedJune 30, 2021 increased compared to the prior-year periods, primarily due to: •increases in website infrastructure expense of$2.6 million and$1.4 million , respectively, as a result of higher traffic; •increases in advertising fulfillment costs of$2.3 million and$2.4 million , respectively, driven by expanded efforts to syndicate advertising budgets on third-party sites; and •increases in merchant credit card fees of$1.3 million and$0.7 million , respectively, due to a higher volume of transactions associated with the increase in advertising revenue. Sales and Marketing. Our sales and marketing expenses primarily consist of employee costs (including sales commission and stock-based compensation expenses) for our sales and marketing employees. Sales and marketing expenses also include business and consumer acquisition marketing, community management, as well as allocated workplace and other supporting overhead costs. Sales and marketing expenses for the three months endedJune 30, 2021 increased compared to the prior-year periods due to: •an increase in marketing and advertising costs of$13.4 million , reflecting our investment in targeted business owner acquisition and regional consumer campaigns; and •an increase of$5.3 million in employee costs due to higher sales headcount as compared with the prior-year period. The increase in sales headcount was due to the impact of the restructuring plan we announced onApril 9, 2020 ("Restructuring Plan") on sales headcount in the prior-year period, as well as increased hiring efforts in the second half of 2020. These increases were partially offset by a decrease in allocated workplace operating costs of$1.3 million due to reductions in our amount of leased office space, which began in the first quarter of 2021. Sales and marketing expenses for the six months endedJune 30, 2021 decreased compared to the prior-year period due to: 29 -------------------------------------------------------------------------------- Table of Contents •a decrease of$20.4 million in employee costs, which was primarily due to lower sales headcount following the terminations associated with the Restructuring Plan; and •a decrease in allocated workplace operating costs of$4.9 million as a result of our office closures, which began at the end of the first quarter 2020, and the reduction of our office space in 2021. These decreases were largely offset by an increase in marketing and advertising costs of$18.3 million . Product Development. Our product development expenses primarily consist of employee costs (including stock-based compensation expense, net of capitalized employee costs associated with capitalized website and internal-use software development) for our engineers, product management and corporate infrastructure employees. In addition, product development expenses include allocated workplace and other supporting overhead costs. Product development expenses for the three and six months endedJune 30, 2021 increased compared to the prior-year periods due to increases in employee costs of$13.0 million and$14.2 million , respectively, primarily reflecting lower costs in the prior-year periods due to the reduced-hour work weeks implemented in the second quarter of 2020 under the Restructuring Plan, which ended during the third quarter of 2020. The increase in employee costs also reflected higher stock-based compensation expenses in 2021. General and Administrative. Our general and administrative expenses primarily consist of employee costs (including stock-based compensation expense) for our executive, finance, user operations, legal, people operations and other administrative employees. Our general and administrative expenses also include our provision for doubtful accounts, consulting costs, as well as workplace and other supporting overhead costs. General and administrative expenses for the three and six months endedJune 30, 2021 increased compared to the prior-year periods due to: •an impairment charge of$11.2 million related to the right-of-use assets and leasehold improvements for office space that was subleased during the three months ended June 30, 2021 (see Note 8, " Leases , " of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 in this Quarterly Report for further detail); and •increases in employee costs of$9.5 million and$10.8 million , respectively, which were primarily the result of our determination that the performance conditions for performance-based restricted stock units had either been met or were expected to be met. These increases were partially offset by decreases in our provision for doubtful accounts of$2.0 million and$14.7 million , respectively, due to our release of a portion of our COVID-19-related bad debt reserves following a decline in the rate of customer delinquencies. Depreciation and Amortization. Depreciation and amortization expense primarily consists of depreciation on computer equipment, software, leasehold improvements, capitalized website and software development costs, and amortization of purchased intangible assets. Depreciation and amortization expense for the three and six months endedJune 30, 2021 slightly increased, primarily due to increases in depreciation associated with capitalized website and internal use software development costs as we invested in new and enhanced products for business owners and consumers. Restructuring. InApril 2020 , we announced the Restructuring Plan to help manage the near-term financial impacts of the COVID-19 pandemic. We incurred$3.3 million in restructuring costs during the three and six months endedJune 30, 2020 , which consisted of severance, payroll taxes and related benefits costs for terminated employees. See Note 1 8 , " Restructuring , " of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 in this Quarterly Report for further detail. Trends and Uncertainties of Costs and Expenses. A majority of our expenses increased during the three months endedJune 30, 2021 compared to the three months endedMarch 31, 2021 , primarily reflecting the impairment charge we recorded in the second quarter, as well as higher cost of revenue. We expect costs and expenses to further increase in the three months endingSeptember 30, 2021 as we seek further opportunities to sublease portions of our leased office space, which may result in additional impairment charges, and continue to make strategic investments in our product development, marketing and sales teams to support the growth of our business. 30 -------------------------------------------------------------------------------- Table of Contents Other Income, Net Other income, net consists primarily of the interest income earned on our cash, cash equivalents and previously held marketable securities, the portion of our sublease income in excess of our lease cost, amortization of debt issuance costs, credit facility fees and foreign exchange gains and losses. Other income, net for the six months endedJune 30, 2021 decreased compared to the prior-year period, primarily driven by lower interest income as a result of the change in our investment strategy in the first quarter of 2020 to reduce our holdings of marketable securities in favor of holdings that are more liquid, mainly money market funds, which offer lower interest rates. For more information on this change, see Note 4, " Marketable Securities ,"
of
the Notes to Condensed Consolidated Financial Statements. Benefit from Income Taxes Benefit from income taxes consists of: federal and state income taxes inthe United States and income taxes in certain foreign jurisdictions; deferred income taxes reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes; and the realization of net operating loss carryforwards. The decreases in benefit from income taxes during the three and six months endedJune 30, 2021 compared to the prior-year periods were primarily due to a decrease in quarter-to-date and year-to-date pre-tax losses in 2021 as well as net operating loss benefits in the prior-year periods under the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") that did not recur in 2021. The CARES Act, which was enacted onMarch 27, 2020 in response to the COVID-19 pandemic, allowed for net operating losses incurred in 2018, 2019 and 2020 to be carried back to tax years with a 35.0% tax rate. See Note 15, " Income Taxes , " of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 in this Quarterly Report for further detail. As ofDecember 31, 2020 , we had approximately$31.2 million in net deferred tax assets ("DTAs"). As ofJune 30, 2021 , we consider it more likely than not that we will have sufficient taxable income in the future that will allow us to realize these DTAs. However, it is possible that some or all of these DTAs will not be realized. Therefore, unless we are able to generate sufficient taxable income from our operations, a substantial valuation allowance may be required to reduce our DTAs, which would materially increase our expenses in the period in which we recognize the allowance and have a materially adverse impact on our consolidated financial statements. The exact timing and amount of the valuation allowance recognition are subject to change on the basis of the net income that we are able to actually achieve. We will continue to evaluate the possible recognition of a valuation allowance on a quarterly basis. Beginning in 2022, we expect additional changes under theU.S. Tax Cuts and Jobs Act (the "Tax Act") to come into effect that could adversely impact our effective tax rate and cash flows in future years. The Tax Act, which was enacted onDecember 22, 2017 , made broad and complex changes to theU.S. tax code, including, among other things, reducing the federal corporate tax rate. We will continue to evaluate the impacts and monitor the issuance of additional regulatory or accounting guidance in addition to any executive or legislative updates. Non-GAAP Financial Measures Our condensed consolidated financial statements are prepared in accordance with GAAP. However, we have also disclosed below adjusted EBITDA and adjusted EBITDA margin, each of which is a non-GAAP financial measure. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. In particular, adjusted EBITDA should not be viewed as a substitute for, or superior to, net income (loss) prepared in accordance with GAAP as a measure of profitability or liquidity. Some of these limitations are: •although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements; •adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; •adjusted EBITDA does not reflect the impact of the recording or release of valuation allowances or tax payments that may represent a reduction in cash available to us; •adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation; 31 -------------------------------------------------------------------------------- Table of Contents •adjusted EBITDA does not take into account any income or costs that management determines are not indicative of ongoing operating performance, such as restructuring costs and impairment charges; and •other companies, including those in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure. Because of these limitations, you should consider adjusted EBITDA and adjusted EBITDA margin alongside other financial performance measures, net income (loss) and our other GAAP results. Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure that we calculate as net income (loss), adjusted to exclude: provision for (benefit from) income taxes; other income, net; depreciation and amortization; stock-based compensation expense; and, in certain periods, certain other income and expense items, such as restructuring costs and impairment charges. Adjusted EBITDA margin. Adjusted EBITDA margin is a non-GAAP financial measure that we calculate as Adjusted EBITDA divided by net revenue. The following is a reconciliation of net income (loss) to adjusted EBITDA, as well as the calculation of net income (loss) margin and adjusted EBITDA margin, for each of the periods indicated (in thousands, except percentages): Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2019 2021 2020 Reconciliation of Net Income (Loss) to Adjusted EBITDA: Net income (loss)$ 4,212 $ (23,990)
(10,864) 3,785 (6,893) (20,228)
Other income, net (542) (495) (3,891) (1,247) (2,878)
Depreciation and amortization 12,833 12,582 12,240 25,916 24,940
Stock-based compensation 40,859 30,585 30,452 80,104 62,335
Restructuring 12 3,312 - 32 3,312
Asset impairment(1) 11,164 - - 11,164 -
Adjusted EBITDA $ 63,787 $ 11,130 $ 54,889 $ 107,492 $ 27,988
Net revenue $ 257,188 $ 169,030 $ 246,955 $ 489,284 $ 418,931
Net income (loss) margin 2 % (14) % 5 % - % (9) %
Adjusted EBITDA margin 25 % 7 % 22 % 22 % 7 %
(1) Recorded within general and administrative expenses on our Condensed
Consolidated Statements of Operations.
Liquidity and Capital Resources
As of June 30, 2021 , we had cash and cash equivalents of $558.2 million , which
consisted of cash and money market funds. Our cash held internationally as of
June 30, 2021 was $11.2 million .
To date, we have been able to finance our operations and our acquisitions
through proceeds from private and public financings, including our initial
public offering in March 2012 and our follow-on offering in October 2013 , cash
generated from operations, and, to a lesser extent, cash provided by the
exercise of employee stock options and purchases under the Employee Stock
Purchase Plan, as well as proceeds from our sale of Eat24 to Grubhub in October
2017 .
We continue to hold the majority of our investments in highly liquid money
market funds following the liquidation of our portfolio of marketable securities
in the first half of 2020, which we undertook as a result of our change in
investment strategy to preserve liquidity in response to the COVID-19 pandemic.
Our remaining investments that were not held in money market funds as of
June 30, 2021 were held in certificates of deposit. See Note 4,
" Marketable Securities , " of the Notes to Condensed Consolidated
Financial Statements included under Part I, Item 1 in this Quarterly Report for
further details about the liquidation of our portfolio of marketable securities.
32--------------------------------------------------------------------------------
Table of Contents We have the ability to access backup liquidity to fund working capital and for other capital requirements, as needed, through a three-year,$75.0 million senior unsecured revolving credit facility (including a$25.0 million letter of credit sub-limit) as part of our Credit Agreement withWells Fargo Bank, National Association which we entered into inMay 2020 (the "Credit Agreement"). As ofJune 30, 2021 , we had$21.5 million of letters of credit under the sub-limit related to lease agreements for certain office locations, which are required to be maintained and issued to the landlords of each facility, and$53.5 million remained available under the revolving credit facility as of that date. The cost of capital associated with this credit facility was not significantly more than the cost of capital that we would have expected prior to the onset of the COVID-19 pandemic. As ofJune 30, 2021 , we were in compliance with all covenants and there were no loans outstanding under the Credit Agreement. For more information about the terms of the Credit Agreement, including financial covenants, events of default and other limitations, see "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources" included under Part II, Item 7 in our Annual Report. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth under "Risk Factors" included under Part I, Item 1A in our Annual Report. We believe that, as a result of the steps we have taken in response to the COVID-19 pandemic, our existing cash and cash equivalents, together with any cash generated from operations, will be sufficient to meet our material cash commitments, including: working capital requirements; our anticipated repurchases of common stock pursuant to our stock repurchase program; payment of taxes related to the net share settlement of equity awards; payment of lease costs related to our operating leases; and purchases of property, equipment and software and website hosting services for at least the next 12 months. However, this estimate is based on a number of assumptions that may prove to be materially different and we could exhaust our available cash and cash equivalents earlier than presently anticipated. We may be required to draw down funds from our revolving credit facility or seek additional funds through equity or debt financings in the next 12 months to respond to business challenges associated with the COVID-19 pandemic or other challenges, including the need to develop new features and products or enhance existing services, improve our operating infrastructure or acquire complementary businesses and technologies. The cost of capital associated with any additional funds sought in the future might be adversely impacted by the extent and duration of the impact of the COVID-19 pandemic on our business. Amounts deposited with third-party financial institutions exceed theFederal Deposit Insurance Corporation andSecurities Investor Protection Corporation insurance limits, as applicable. These cash and cash equivalents could be impacted if the underlying financial institutions fail or are subjected to other adverse conditions in the financial markets. To date, we have experienced no loss or lack of access to our cash and cash equivalents; however, we can provide no assurances that access to our invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets. Cash Flows The following table summarizes our cash flows for the periods indicated (in thousands):
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