Yelp(US:YELP)2019-02-14 02:21Financial Data and Key Metrics Changes - In Q4 2018, Yelp reported revenue growth of 11% year-over-year to $244 million, with advertising revenue increasing by 12% to $235 million [32][33] - Adjusted EBITDA grew 27% year-over-year to $53 million, with adjusted EBITDA margin reaching 22%, an increase of nearly 3 percentage points from the previous year [33][25] - For the full year 2018, net revenue grew 11% to $943 million, with adjusted EBITDA increasing by 16% to $183 million, resulting in a margin of 19% [33][25] Business Line Data and Key Metrics Changes - Transaction revenue decreased from $5 million to $3 million due to the sale of Eat24, while other service revenue increased by 23% to $6 million, driven by growth in Yelp Reservations and Yelp Waitlist [32] - The Request-A-Quote service generated over 1.5 million leads in Q4, with a 41% year-over-year increase in project submissions [18][32] Market Data and Key Metrics Changes - Yelp's mobile app had an average of 33 million monthly users in Q4, reflecting a healthy growth rate of 14% year-over-year [42] - The local advertising market is valued at $150 billion annually, with Yelp currently capturing a small fraction of that market, indicating significant growth potential [15][36] Company Strategy and Development Direction - Yelp aims to renew double-digit revenue growth starting in 2020, focusing on enhancing advertiser relationships and diversifying its go-to-market strategy [12][13] - The company plans to optimize its cost structure and improve margins, targeting adjusted EBITDA margins of 30% to 35% in the long term [25][36] - Strategic initiatives include expanding product offerings, enhancing customer experience, and increasing partnerships to drive growth [26][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged 2019 as a transition year with expected slower revenue growth, but expressed confidence in returning to strong growth in subsequent years [35][36] - The company is optimistic about its ability to capitalize on opportunities in the local advertising market and improve customer retention through product enhancements [15][45] Other Important Information - Yelp announced the election of three new board members to enhance its governance and strategic execution [29][30] - The company has increased its share repurchase authorization to $500 million, reflecting confidence in its long-term potential [28] Q&A Session Summary Question: What is driving the near-term slowdown in revenue growth? - Management noted greater than anticipated seasonality in ad budgets during December, impacting January's advertiser base and growth rate [40][41] Question: What are the challenges in optimizing consumer marketing spend? - The company is shifting to more efficient marketing channels and focusing on organic growth through product features rather than paid traffic [44] Question: What opportunities exist in partnerships, particularly in home services? - Yelp is open to partnerships across various verticals, with successful monetization seen in the home services category through Request-A-Quote [48][49] Question: What justifies increasing the national sales team by 20%? - The national advertising segment has shown consistent growth, and expanding the sales team is necessary to cover a large market opportunity [50][52] Question: What are the biggest learnings from the non-term contract transition? - The transition has opened up the funnel for trial users, leading to a more dynamic relationship with advertisers and increased sensitivity to CPC pricing [57][58]