Yelp Inc.

Good afternoon, and thank you for attending today's Yelp fourth quarter and full year 2021 earnings call. My name is Austin, and I'll be the moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to our host, James Milne, Senior Vice President of Finance and Investor Relations. James, go ahead.

Good afternoon, everyone, and thanks for joining us on Yelp's fourth quarter and full year 2021 earnings conference call. Joining me today are Yelp's Chief Executive Officer, Jeremy Stoppelman, Chief Financial Officer, David Schwozbach, and Chief Operating Officer, Jed Knopfman. We published the shareholder letter on our investor relations website and with the SEC, and I hope everyone had a chance to read it. We'll provide some brief opening comments and then turn to your questions. Now, I'll read our safe harbor statement. We'll make certain statements today that are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. In addition, we are subject to a number of risks that may significantly impact our business and financial results. Please refer to our SEC filings, as well as our shareholder letter, for a more detailed description of the risk factors that may affect our results. During our call today, we'll discuss adjusted EBITDA and adjusted EBITDA margins. which are non-GAAP financial measures. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with generally accepted accounting principles. In our shareholder letter released this afternoon and our filings with the SEC, each of which is posted on our website, you will find additional disclosures regarding these non-GAAP financial measures, as well as historical reconciliations of GAAP net income to both Adjusted EBITDA and adjusted EBITDA margins. And with that, I will turn the call over to Jeremy.

Thanks, James, and welcome, everyone. Yelp had a record year. After entering 2021 as a structurally stronger business, our elevated pace of product innovation, together with the consistent execution of our strategic initiatives, led us to deliver record annual net revenue of $1.03 billion, an increase of 18% year-over-year and 2% from 2019. At the same time, we delivered $40 million of positive net income and record adjusted EBITDA of $246 million, representing a 24% adjusted EBITDA margin, up 3 percentage points from 2019. These results demonstrate how our transformed business model is able to drive structural efficiency through product innovation. Underlying the strong performance, we delivered record advertising revenue of $608 million from services businesses, which was up 19% from 2019, as our monetization efforts drove record revenue per paying location in these categories. The home services category proved particularly strong, increasing nearly 40% from 2019. At the same time, advertising revenue from restaurants, retail, and other businesses increased over the course of the year to $377 million, an increase of 18% year over year, despite the spread of new COVID-19 variants, as well as ongoing labor and supply chain headwinds. Advertising revenue in our R&O categories remained below 2019 levels at the end of the year, which we believe represents a substantial opportunity as local economies further recover. Ad clicks for the year increased by 24% year over year, while average CPCs decreased by 5% as we continued to deliver more value to advertisers through new ad formats and ongoing optimizations to our ad system. As a result of these efforts, we delivered a record retention rate of non-term advertiser budgets for the year. Both consumers and businesses continue to engage with Yelp as their go-to source of trusted content, and we expanded our rich local information in 2021. App unique devices rebounded organically to 91% of 2019 levels, growing 6% year-over-year despite the ongoing pandemic. Cumulative reviews increased by 9% year-over-year and 19% from 2019, exceeding $244 million. Active claimed local business locations grew by 8% year-over-year and 18% from 2019, reaching $5.8 million. We see exciting long-term opportunities to drive targeted engagement and grow our valuable audience by making Yelp an even better place to connect with local businesses. Looking ahead, we have a clear set of strategic initiatives to unlock new ways to further elevate the Yelp experience for consumers, business owners, and advertisers. As such, in 2022, we are focusing our product efforts in four areas. Grow quality leads and monetization and services, drive sales through the most efficient channels, deliver more value to advertisers, and enhance the consumer experience. Each of these investment priorities represents its own long-term opportunity, and we are confident that the strength and breadth of this portfolio will provide a significant runway for growth. With that, I'd like to turn it over to David.