Yelp(US:YELP)2025-05-09 20:18Part I. Financial Information Item 1. Financial Statements (Unaudited) Presents Yelp's unaudited Q1 2025 financials, with revenue up 8% to $358.5M and net income up 72% to $24.4M Condensed Consolidated Balance Sheets Total assets slightly increased to $985.2M, liabilities rose to $257.2M, and stockholders' equity decreased to $728.0M Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $985,203 | $983,567 | | Total Current Assets | $527,711 | $516,879 | | Goodwill | $133,809 | $130,980 | | Total Liabilities | $257,185 | $239,598 | | Total Current Liabilities | $182,394 | $154,974 | | Total Stockholders' Equity | $728,018 | $743,969 | Condensed Consolidated Statements of Operations Net revenue increased 8% to $358.5M, with net income rising significantly to $24.4M and diluted EPS reaching $0.36 Q1 2025 vs Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net revenue | $358,534 | $332,752 | | Total costs and expenses | $329,074 | $321,535 | | Income from operations | $29,460 | $11,217 | | Net income attributable to common stockholders | $24,391 | $14,154 | | Diluted net income per share | $0.36 | $0.20 | Condensed Consolidated Statements of Cash Flows Operating cash flow rose to $98.0M; investing used $12.0M, financing used $81.7M, including stock repurchases Q1 2025 vs Q1 2024 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $97,995 | $72,855 | | Net cash used in investing activities | $(12,003) | $(6,402) | | Net cash used in financing activities | $(81,713) | $(83,834) | | Change in cash, cash equivalents and restricted cash | $4,931 | $(17,866) | - The company repurchased $62.5 million of common stock in both Q1 2025 and Q1 202436 Notes to Condensed Consolidated Financial Statements Notes detail RepairPal acquisition ($81.2M), $268.3M stock repurchase authorization, and 14% Services revenue growth - On November 26, 2024, the Company acquired auto services platform RepairPal, Inc. for a preliminary total purchase consideration of $81.2 million The acquisition is intended to accelerate efforts in the Services categories6162 - The RepairPal acquisition resulted in $30.8 million of goodwill and $53.6 million of intangible assets, primarily business relationships and developed technology64 - As of March 31, 2025, $268.3 million remained available for stock repurchases under the board's authorized program The company repurchased $62.5 million of stock in Q1 20258687 Net Revenue by Product Line (in thousands) | Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Advertising Revenue: | | | | Services | $231,576 | $203,288 | | Restaurants, Retail & Other | $110,425 | $114,350 | | Total Advertising | $342,001 | $317,638 | | Other | $16,533 | $15,114 | | Total Net Revenue | $358,534 | $332,752 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses 8% revenue growth to $358.5M, driven by Services, and adjusted EBITDA growth to $84.9M Overview Q1 2025 net revenue reached $358.5M, net income $24.4M, and adjusted EBITDA $84.9M, with Services growth - Strategic initiatives for revenue growth include: Leading in Services, Driving advertiser value, and Transforming the consumer experience112113 - Services revenue grew 14% YoY, driven by Home and Auto Services, including contributions from the newly acquired RepairPal113 - The company is enhancing its platform with AI, including Yelp Assistant with photo recognition and AI-powered business summaries leveraging LLMs113 Key Metrics Ad clicks decreased 3% while average CPC increased 9%, with total paying advertising locations down 3% to 517K Year-over-Year Change in Ad Clicks and Average CPC | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Ad Clicks | (3)% | 8% | | Average CPC | 9% | (1)% | Paying Advertising Locations (in thousands) | Category | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Services | 261 | 252 | 3% | | Restaurants, Retail & Other | 256 | 278 | (8)% | | Total | 517 | 530 | (3)% | - The decrease in ad clicks was primarily driven by macroeconomic pressures in RR&O categories and reduced spend on paid search for Services projects120 Results of Operations Total net revenue rose 8% to $358.5M, with income from operations up 163% to $29.5M due to controlled expenses Q1 2025 vs Q1 2024 Results of Operations (in thousands) | Line Item | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total net revenue | $358,534 | $332,752 | $25,782 | 8% | | Cost of revenue | $34,828 | $27,355 | $7,473 | 27% | | Sales and marketing | $146,284 | $147,791 | $(1,507) | (1)% | | Product development | $83,905 | $91,227 | $(7,322) | (8)% | | General and administrative | $51,707 | $45,232 | $6,475 | 14% | | Total costs and expenses | $329,074 | $321,535 | $7,539 | 2% | | Income from operations | $29,460 | $11,217 | $18,243 | 163% | - Cost of revenue increased primarily due to higher advertising fulfillment costs, website infrastructure expense, and revenue share payments related to the RepairPal acquisition136143 Non-GAAP Financial Measures Adjusted EBITDA significantly increased to $84.9M (24% margin), and Free Cash Flow rose to $87.5M in Q1 2025 Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $24,391 | $14,154 | | Adjustments (Taxes, Other income, D&A, SBC, etc.) | $60,553 | $50,302 | | Adjusted EBITDA | $84,944 | $64,456 | | Net revenue | $358,534 | $332,752 | | Adjusted EBITDA margin | 24% | 19% | Reconciliation of Net Cash from Operations to Free Cash Flow (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $97,995 | $72,855 | | Purchases of property, equipment and software | $(10,531) | $(6,987) | | Free cash flow | $87,464 | $65,868 | Liquidity and Capital Resources Liquidity includes $222.0M cash, $102.4M marketable securities, and $111.0M available credit, sufficient for needs - As of March 31, 2025, the company had $222.0 million in cash and cash equivalents and $102.4 million in marketable securities160 - The company has a $125.0 million senior secured revolving credit facility, with $14.0 million of letters of credit outstanding and $111.0 million available162163 - Material cash requirements include $38.3 million for operating leases and approximately $167.5 million for purchase obligations, primarily website hosting166167 Item 3. Quantitative and Qualitative Disclosures About Market Risk Market risks, including interest rate, foreign exchange, and inflation, remain materially unchanged from year-end 2024 - The company's primary market risks include interest rate, foreign exchange, and inflation, which have not changed materially since year-end 2024177 Item 4. Controls and Procedures Disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - Based on an evaluation as of March 31, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level179 - No material changes to the company's internal control over financial reporting occurred during the first quarter of 2025180 Part II. Other Information Item 1. Legal Proceedings A $15.0M settlement for the CIPA Action was approved, and other legal proceedings are not expected to be material - On April 10, 2024, the Superior Court granted final approval of a $15.0 million settlement for the California Invasion of Privacy Act (CIPA) Action, resolving all claims against the company75 - The company does not believe the final outcome of any other ordinary course legal matters will have a material effect on its business or financial position184 Item 1A. Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's Annual Report - No material changes have occurred to the risk factors set forth in the company's Annual Report185 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 1.7M shares for $62.5M in Q1 2025, with $268.3M remaining for future repurchases Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased (thousands) | Average Price Paid per Share | | :--- | :--- | :--- | | January 2025 | 638 | $39.66 | | February 2025 | 114 | $35.44 | | March 2025 | 937 | $35.39 | - As of May 2, 2025, $238.7 million remained available under the company's $1.95 billion stock repurchase authorization186 Item 5. Other Information CTO Sam Eaton and board member Dan Jedda entered Rule 10b5-1 trading plans for future stock sales - On February 20, 2025, CTO Sam Eaton entered into a Rule 10b5-1 trading plan for the potential sale of up to approximately 63,116 shares189 - On March 6, 2025, board member Dan Jedda entered into a Rule 10b5-1 trading plan for the potential sale of up to 4,258 shares190