Yelp: Strong Q4, Beats on Revenue

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]