Yelp (YELP) , the platform synonymous with connecting users to local businesses, has seen its shares plunge 11% over the past year. This underperformance compared with the Zacks Computer and Technology sector's 12.4% return and the Zacks Internet – Content industry’s 8.7% appreciation highlights challenges stemming from softness across its restaurant and retail business segments and rising competition.Yelp’s Restaurant, Retail and Other (RR&O) segment has been experiencing a deceleration in revenues for the ...

SCOTTSDALE, Ariz., March 06, 2025 (GLOBE NEWSWIRE) -- This award recognizes VIIRL’s efforts as a digital marketing agency generating great results for hundreds of clients ranging from home services to health and beauty. This includes building great Yelp profiles, captivating portfolios, optimizing ad campaigns, and leveraging Yelp’s APIs to provide real-time reporting to measure performance. “It’s amazing to be recognized as partner of the year by Yelp because of the results we are generating for our clien ...

The number-one catalyst that has sparked major stock declines over the past month: poor outlooks for FY25. Unfortunately, this has become more the rule than the exception, as many companies have issued soft forecasts while calling out continued macro challenges as the primary reasonWith combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping t ...

Financial Performance - Yelp achieved record annual revenue and profitable growth in 2024, demonstrating the effectiveness of its local advertising platform [29]. - Advertising revenue accounted for 96% of total revenue for the year ended December 31, 2024, consistent with previous years [34]. - Revenue increased from $12.1 million in 2008 to $1.41 billion in 2024, but growth rate has declined recently due to business maturation [191]. - The company has incurred significant operating losses in the past and may continue to do so if revenue growth does not keep pace with expenses [193]. - The company expects ongoing challenges in the RR&O sector to significantly impact results in 2025 [192]. Advertising and Revenue Sources - The Auto Services category, Yelp's second largest by revenue, is expected to see significant growth following the acquisition of RepairPal in November 2024 [33]. - Local sales revenue historically comprised nearly half of the company's advertising revenue, driven by growth in Local sales headcount [40]. - The Multi-location sales channel is viewed as a significant growth opportunity, with plans to expand full funnel ad products and attribution solutions in 2025 [40]. - The company’s advertising products must demonstrate material benefits to maintain and expand the advertiser base, particularly among small and medium-sized businesses (SMBs) [103]. - Advertising revenue from Restaurants, Retail & Other (RR&O) businesses decreased by 3% year over year due to challenging operating environments, including supply chain issues and inflation [100]. User Engagement and Content Moderation - As of December 31, 2024, approximately 76% of reviews submitted to Yelp's platform were recommended, indicating strong content moderation practices [30]. - Approximately 9% of the reviews submitted to the platform had been removed as of December 31, 2024, due to violations of terms of service [56]. - The company emphasizes the importance of user-generated content, which is critical for attracting consumer traffic and supporting local businesses [59]. - The company faces challenges in maintaining user-generated content quality, which is critical for attracting consumer traffic and revenue [143]. Technology and AI Investments - Yelp plans to invest in enhancing its Services experience in 2025, leveraging AI to improve lead quality and hiring processes [33]. - The company has invested significantly in AI technologies to enhance user experience and improve content moderation [43]. - The company plans to leverage AI in product initiatives, which poses risks related to investment returns and market competition [111]. - The company is increasingly utilizing AI technologies, which involves significant risks and may not yield the expected benefits [175]. Workforce and Culture - The company has committed to a fully remote working model since 2022, significantly reducing office footprint and operating costs [80]. - The company plans to hold headcount approximately flat in 2025 while expanding the use of AI to drive operational efficiencies [33]. - The company continues to invest in talent development programs, emphasizing continuous learning and leadership development to enhance employee success [90]. - The company has a strong focus on fostering a collaborative culture, which is considered a competitive strength [81]. Legal and Regulatory Challenges - The company is subject to evolving privacy and data protection regulations, which may increase compliance costs and liabilities [74]. - Ongoing legal and regulatory challenges may increase compliance costs and liability exposure for the company, particularly regarding content moderation and user-generated content [220]. - The enactment of the Digital Services Act and Online Safety Act in the EU and UK, respectively, imposes new obligations that could lead to fines up to 6% and 10% of worldwide annual turnover for non-compliance [217]. - The company faces potential legal actions and investigations due to perceived failures in compliance, which could adversely affect its reputation and financial condition [223]. Market Competition - The company faces intense competition from various online and offline platforms, including Google, TripAdvisor, and social media [68]. - The company faces intense competition from major players like Google and Meta, which may leverage their resources to gain market share [127]. - User engagement on the platform remained below pre-pandemic levels, particularly in certain U.S. geographies and RR&O categories, impacting advertising effectiveness [101]. Strategic Acquisitions - In November 2024, the company acquired RepairPal to expand its offerings in the auto services category, indicating a strategy of growth through acquisitions [152]. - Successful integration of acquired companies is crucial for realizing expected benefits and synergies, but poses significant operational challenges [155]. Financial Risks and Liabilities - The company may require additional capital for business growth, which might not be available on acceptable terms, potentially impacting operations and financial condition [201]. - Future issuances of equity or convertible debt securities could lead to significant dilution for existing stockholders and may involve restrictive covenants [202]. - The company has recorded a significant amount of goodwill related to acquisitions, and any impairment of goodwill or intangible assets could result in substantial charges to its financial statements [199]. Corporate Governance and Compliance - Being a public company increases legal and financial compliance costs, straining resources and management attention [224]. - Changes in corporate governance laws and standards create ongoing uncertainty and could lead to higher administrative expenses [224]. - The company's stock price has been highly volatile, influenced by macroeconomic conditions and fluctuations in financial performance [225].

Core Insights - Yelp Inc. reported better-than-expected fourth-quarter 2024 results, with shares gaining 2.3% in extended trading [1] - The company's quarterly earnings increased by 67.6% to $0.62 per share, surpassing the Zacks Consensus Estimate by 21.6% [1][6] - Revenue for Q4 2024 rose 6% year over year to $362 million, exceeding the consensus mark by 3.2% [2][6] Financial Performance - Advertising revenues, which constitute 95.6% of total revenues, grew 6% year over year to $346 million, driven by increased ad clicks [3] - The Services business saw advertising revenues increase by 10.7% year over year to $224.8 million, while the RR&O division experienced a decline of 2.8% to $120.8 million due to macroeconomic challenges [4] - Total costs and expenses decreased by 3% year over year to $309 million, with adjusted EBITDA climbing 5% to $101 million, maintaining a margin of 28% [5] Annual Performance - For the full year 2024, Yelp's revenues increased by 6% to $1.41 billion, surpassing the Zacks Consensus Estimate of $1.4 billion [6] - The company's earnings for 2024 jumped 39.3% to $1.88 per share, exceeding the consensus estimate of $1.80 [6] Balance Sheet and Cash Flow - As of December 31, 2024, Yelp had cash and equivalents totaling $317.9 million with no debt [7] - The company generated operating cash flow of $71 million and free cash flow of $60 million in Q4, with annual figures of $285.8 million and $248.5 million, respectively [7] Guidance - For Q1 2025, Yelp anticipates revenues between $350 million and $355 million, with adjusted EBITDA projected at $65-$70 million [8] - For the full year 2025, the company expects revenues between $1.470 billion and $1.485 billion, with adjusted EBITDA in the range of $345-$360 million [9]

Financial Data and Key Metrics Changes - In 2024, net revenue increased by 6% year over year to $1.41 billion, with net income growing by 34% year over year to $133 million and adjusted EBITDA increasing by 8% year over year to $358 million [2][3][33] - The company expanded net income margin by two percentage points and adjusted EBITDA margin by one percentage point from 2023 [3][20] - For Q4 2024, net revenue was $362 million, net income was $42 million with a 12% margin, and adjusted EBITDA was $101 million with a 28% margin [16][46] Business Line Data and Key Metrics Changes - Revenue from services increased by 11% year over year to a record $879 million, while RRNO revenue declined by 3% year over year to $470 million [4][34] - Advertising revenue in services rose by 11% year over year in Q4 to $225 million, while RRNO locations decreased, leading to a 4% decline in paying advertising locations to 521,000 [17][47] - Self-serve advertising grew approximately 15% year over year in Q4, while multilocation revenue remained flat year over year [18][47] Market Data and Key Metrics Changes - The home services category showed strong performance with annual revenue growth of approximately 15% year over year [4][34] - Consumer projects increased by approximately 25% year over year, with project submissions through the AI chatbot Yelp Assistant up by more than 50% from Q3 to Q4 [6][35] - Yelp users contributed 21 million new reviews in 2024, reaching a total of 308 million cumulative reviews, up 7% from the prior year [9][39] Company Strategy and Development Direction - The company plans to focus on three strategic initiatives in 2025: leading in services, driving advertiser value, and transforming the consumer experience, leveraging AI capabilities [10][40] - Following the acquisition of RepairPal, the company aims to accelerate growth in the auto services category and enhance its product focus on multilocation services businesses [12][41] - The strategy emphasizes creating a best-in-class experience for consumers and service professionals, with a strong commitment to disciplined expense management [19][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth opportunities, particularly in the services sector, despite challenges in the RRNO category due to macroeconomic pressures [25][26] - For Q1 2025, the company expects net revenue to be in the range of $350 million to $355 million, reflecting typical seasonality, and for the full year, net revenue is expected to be between $1.470 billion and $1.485 billion [26][55] - Management acknowledged the impact of inflation and uncertainties in the economic environment on their guidance for 2025, reflecting a cautious outlook [96][97] Other Important Information - The company acquired RepairPal for approximately $80 million in cash, which is expected to contribute positively to the auto category [24][120] - Stock-based compensation expense was reduced as a percentage of revenue by two percentage points in 2024, with plans to further decrease it to less than 6% by the end of 2027 [22][53] Q&A Session Summary Question: What are the abilities to invest behind demand generation for RRNO? - Management acknowledged headwinds in RRNO due to inflationary pressures but emphasized ongoing investments in the business and alignment of product roadmaps towards services [63][64] Question: What are the key investment areas for growth in services? - Management highlighted strong performance in services, particularly home services, and the introduction of a leads API to enhance opportunities for multilocation services [66][67] Question: What is the contribution of RepairPal to the guidance? - Management indicated that RepairPal's performance is integrated into the overall guidance, with expectations for significant growth in the auto category [101][122] Question: How is AI impacting the business? - Management noted that AI has improved consumer experience and operational efficiencies, with specific mention of the Yelp Assistant driving project submissions [78][82] Question: What are the thoughts on Yelp's positioning in the current environment? - Management expressed optimism about leveraging trusted content in the evolving AI landscape, emphasizing the importance of local search capabilities [87][90] Question: What are the drivers behind the performance this quarter? - Management noted better-than-expected performance in Q4, with seasonal increases contributing to revenue growth [91][92] Question: How does the company view sustainable long-term growth in services? - Management is confident in the continued strong performance in services, supported by trusted content and AI applications [125][127] Question: What are the competitive dynamics in the restaurant and retail sectors? - Management attributed challenges in these sectors to macroeconomic factors rather than competitive pressures, expressing optimism for future recovery [131][132]

Core Insights - Yelp reported quarterly earnings of $0.62 per share, exceeding the Zacks Consensus Estimate of $0.51 per share, and up from $0.37 per share a year ago, representing an earnings surprise of 21.57% [1] - The company generated revenues of $361.95 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.20% and increasing from $342.38 million year-over-year [2] - Yelp has consistently surpassed consensus EPS estimates over the last four quarters, achieving this four times [2] Earnings Outlook - The immediate price movement of Yelp's stock will largely depend on management's commentary during the earnings call and future earnings expectations [3] - The current consensus EPS estimate for the upcoming quarter is $0.28 on revenues of $348.35 million, while for the current fiscal year, the estimate is $2.28 on revenues of $1.48 billion [7] Industry Context - The Internet - Content industry, to which Yelp belongs, is currently ranked in the top 16% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Core Insights - Yelp exceeded earnings expectations in Q4 2024, reporting an EPS of $0.62 against an estimate of $0.53 and revenue of $361.95 million compared to the forecast of $350 million, indicating strong growth in its Services segment despite challenges in other areas [2][3][6] Financial Performance - Q4 2024 results showed a diluted EPS of $0.62, a 67.6% increase year-over-year from $0.37 in Q4 2023 [3] - Net revenue reached $361.95 million, reflecting a 5.7% increase from $342.38 million in Q4 2023 [3] - Net income for the quarter was $42.22 million, up 54.0% from $27.41 million in the previous year [3] - Adjusted EBITDA was $101.06 million, a 5.2% increase from $96.05 million year-over-year [3] - Free cash flow decreased by 18.0% to $59.96 million from $73.17 million in Q4 2023 [3] Business Overview and Strategic Focus - Yelp operates as a platform for user-generated reviews and ratings, focusing on advertising for small and medium-sized businesses [4] - The company is investing in its Services segment and leveraging AI to enhance user engagement and product offerings [4][5] - Strategic initiatives include strengthening consumer trust and diversifying advertising capabilities, with a focus on high-margin growth through self-serve channels and investments in home services [5] Segment Performance - The Services segment achieved an 11% year-over-year growth in advertising revenue, totaling $879 million, marking the 15th consecutive quarter of double-digit growth [6] - However, the RR&O categories faced a decline, with advertising revenue dropping by 3% to $470 million [6][7] Operational Developments - Yelp introduced over 80 new features in 2024 to enhance business-user connections, supported by AI [8] - The platform recorded 21 million new reviews, bringing the total to 308 million, indicating a focus on improving consumer engagement [8] Cash Position and Future Outlook - Cash and equivalents decreased to $217.3 million from $313.9 million, influenced by acquisitions and increased goodwill [9] - For 2025, Yelp projects net revenue between $1.470 billion and $1.485 billion and adjusted EBITDA in the range of $345 million to $360 million, reflecting cautious optimism amid macroeconomic pressures [11]

Financial Performance - 2024 Net Revenue reached a record high of $1.41 billion, representing a 6% year-over-year increase[4] - 2024 Net Income increased by 34% to $133 million, with a net income margin of 9%[4] - Adjusted EBITDA for 2024 grew by 8% to $358 million, achieving a 25% adjusted EBITDA margin[4] - Net income for the year ended December 31, 2024, increased to $132,850,000 from $99,173,000 in 2023, representing a growth of 34%[18] - Adjusted EBITDA for the year ended December 31, 2024, was $357,993,000, compared to $330,493,000 in 2023, reflecting an increase of 8%[23] - The net revenue for the year ended December 31, 2024, reached $1,412,064,000, up from $1,337,062,000 in 2023, indicating a growth of 6%[23] - The net income margin improved to 9% for the year ended December 31, 2024, compared to 7% in 2023[23] - Free cash flow for the year ended December 31, 2024, was $248,468,000, down from $279,433,000 in 2023, a decrease of 11%[23] - Net cash provided by operating activities for the year ended December 31, 2024, was $285,815,000, compared to $306,280,000 in 2023, a decline of 7%[18] Revenue Projections - The company expects 2025 Net Revenue to be in the range of $1.470 billion to $1.485 billion[5] - 2025 Adjusted EBITDA is projected to be between $345 million and $360 million[5] Advertising Revenue - Advertising revenue from services increased by 11% year over year to a record $879 million[4] - Advertising revenue from Restaurants, Retail & Other businesses decreased by 3% year over year to $470 million[9] - Total paying advertising locations decreased by 5% year over year, while average revenue per location reached an annual record[9] User Engagement - Yelp users contributed 21 million new reviews in 2024, resulting in a total of 308 million cumulative reviews, up 7% from the prior year[9] Company Initiatives - The company introduced more than 80 new features and updates leveraging AI to enhance connections between consumers and service professionals[2] Stock and Cash Management - The company repurchased common stock totaling $251,181,000 in 2024, an increase from $199,999,000 in 2023[18] - Cash, cash equivalents, and restricted cash at the end of the period decreased to $217,682,000 from $314,002,000 in 2023, a decline of 31%[18] - The company incurred $66,199,000 in acquisition costs during the year ended December 31, 2024[18]

Core Viewpoint - Yelp Inc. is expected to report its fourth-quarter 2024 results on February 13, with anticipated revenues and earnings showing positive year-over-year growth [1][2]. Revenue Expectations - The company forecasts revenues between $347 million and $352 million, with a Zacks Consensus Estimate of $350.7 million, indicating a year-over-year increase of 2.4% [2]. - The consensus estimate for earnings is set at 51 cents per share, suggesting a significant year-over-year increase of 37.8% [2]. Historical Performance - Yelp's earnings have outperformed estimates in three of the last four quarters, with an average surprise of 143.7% [3]. Factors Influencing Q4 Performance - Increased advertising revenues are expected to positively impact Yelp's fourth-quarter performance, driven by improved ad formats and retention rates for non-term advertisers [4]. - The company's strategy to offer products at various price points is likely to enhance the number of advertising customers [5]. - Growth in the home services category and Request-a-Quote projects, which saw a 25% year-over-year increase in the last quarter, is anticipated to continue [6]. - Ongoing investments in AI and machine learning to optimize ad content for consumers are expected to attract more advertisers [7]. Earnings Prediction - The earnings model indicates a likely earnings beat for Yelp, supported by a positive Earnings ESP of +12.87% and a Zacks Rank of 3 (Hold) [8][9].