Yelp(YELP) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net revenue increased by 13% year-over-year to a record $337 million, marking the ninth consecutive quarter of double-digit growth [8][11] - Net income rose by 84% year-over-year to$ 15 million, while adjusted EBITDA increased by 25% year-over-year to $84 million, representing a 25% margin [11][12] - Average revenue per location reached a record level in the second quarter, although paying advertising locations were relatively flat, down 1% year-over-year [11][12] Business Line Data and Key Metrics Changes - Advertising revenue from services businesses increased by 15% year-over-year to a record$ 200 million, driven by growth in average revenue per location [11] - Advertising revenue from restaurants, retail, and other businesses increased by 11% year-over-year to a record $122 million, also driven by growth in average revenue per location [11] - Self-serve and multi-location channels maintained strong year-over-year growth rates of approximately 25% and 15%, respectively, accounting for 51% of total advertising revenue for the first time [9][11] Market Data and Key Metrics Changes - The home services category saw approximately 25% year-over-year growth in advertising revenue [8] - Ad clicks were flat year-over-year, while average cost per click (CPC) increased by 14% year-over-year [12] Company Strategy and Development Direction - The company is focused on product innovation and enhancing the advertising experience through AI and neural networks, which have improved ad targeting and content display [9][19] - The strategic priority includes growing revenue through a strong product pipeline and delivering long-term shareholder value [10][15] - The company plans to continue share repurchases, having repurchased$ 50 million worth of shares in the second quarter [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the macroeconomic environment, noting strong advertising demand from small and medium-sized businesses (SMBs) [53][54] - The company raised its full-year revenue outlook, now expecting net revenue to be in the range of $1.32 billion to$ 1.33 billion [14][15] - Management acknowledged uncertainties in the economic environment but emphasized their focus on delivering value to advertisers [54] Other Important Information - The company is working to reduce stock-based compensation as a percentage of revenue to less than 8% by the end of 2025 [13] - The company highlighted the successful rollout of Yelp Guaranteed, which has shown early positive results in project submissions and ad clicks [32] Q&A Session Summary Question: Optimization of content and ad targeting - Management discussed ongoing improvements in ad tech and targeting, leveraging neural networks to enhance ad ranking and user experience [18][19] Question: Q4 revenue trajectory - Management acknowledged uncertainties but noted strong momentum and raised full-year guidance, indicating a cautious approach to Q4 expectations [21] Question: Consumer demand and engagement - Management characterized consumer demand as steady, with improvements in user retention and contributions due to recent product enhancements [24][25] Question: Services monetization and matching improvements - Management highlighted ongoing improvements in ad tech and the quality of leads, which have positively impacted services revenue [25][26] Question: Clicks and CPC growth - Management explained that while clicks have been flat, CPCs have increased due to the optimization of advertiser budgets and the value of leads provided [29][30] Question: Multi-location opportunities - Management noted strong growth in the multi-location channel and emphasized the importance of attribution and ROI for advertisers [50] Question: Macro uncertainties - Management acknowledged the complexity of the macroeconomic environment but noted strength in SMB advertising demand [53][54]