Yelp Q4 Earnings Beat Estimates, Stock Dips on Tepid Sales Guidance

Core Insights - Yelp Inc. reported better-than-expected fourth-quarter 2025 results with earnings of 61 cents per share, surpassing the Zacks Consensus Estimate by 29.1% despite a year-over-year decline of 1.6% from 62 cents [1][11] - The company's revenues decreased by 1% year over year to $360 million but exceeded the consensus mark by 0.5%, primarily due to a decline in advertising revenues [2][11] Financial Performance - Advertising revenues, which account for 94% of total revenues, fell by 2% year over year to $338 million, driven by a decrease in ad clicks [3][11] - The Services business saw advertising revenues grow by 2.9% year over year to $231.4 million, while the Restaurants, Retail & Other (RR&O) division's revenues dropped by 11.6% to $106.8 million due to macroeconomic challenges [4] - Total costs and expenses increased by 1% year over year to $311 million, with adjusted EBITDA plunging 15% to $86 million, resulting in a margin decrease from 28% to 24% [6] Balance Sheet and Cash Flow - As of December 31, 2025, Yelp held $319 million in cash and equivalents with no debt, generating an operating cash flow of $84.5 million and free cash flow of $72.3 million in the fourth quarter [7] Guidance - For Q1 2026, Yelp anticipates revenues between $350 million and $355 million, which is below the Zacks Consensus Estimate of $360.4 million and the previous year's revenues of $359 million [8][11] - For the full year 2026, the company expects revenues between $1.455 billion and $1.475 billion, compared to 2025 revenues of $1.465 billion and the consensus estimate of $1.5 billion [9]