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Yelp(YELP) - 2023 Q4 - Earnings Call Transcript
YELPYelp(YELP)2024-02-16 00:10
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Financial Data and Key Metrics Changes - Net revenue increased by 12% year-over-year to a record 1.34billionin2023[6]−Netincomenearlytripledyear−over−yearto1.34 billion in 2023 [6] - Net income nearly tripled year-over-year to 99 million, with a net income margin of 7% [6] - Adjusted EBITDA grew to 330million,resultinginarecordadjustedEBITDAmarginof25330 million, resulting in a record adjusted EBITDA margin of 25% [6][14] Business Line Data and Key Metrics Changes - Advertising revenue from services businesses grew 14% year-over-year to a record 793 million [7] - Advertising revenue from restaurants, retail, and other businesses increased by 10% year-over-year to a record 483million[8]−Monetizationofleadsinservicesincreasedtoapproximately30483 million [8] - Monetization of leads in services increased to approximately 30%, up 5 percentage points from 2022 [7] Market Data and Key Metrics Changes - Home services category revenue grew approximately 20% year-over-year, compounding at nearly 20% annually since 2019 [7] - Request to quote requests grew by approximately 5% year-over-year in Q4 [7] - Overall traffic levels remained flat in 2023, but user-generated reviews increased by 8% to 287 million [9] Company Strategy and Development Direction - The company plans to focus on the services category as a major part of its product-led strategy in 2024 [10][11] - Investments will be made to enhance consumer experience and drive more quality leads to advertisers [11] - The company aims to reduce stock-based compensation as a percentage of revenue to less than 8% by the end of 2025 [16] Management's Comments on Operating Environment and Future Outlook - Management noted weakness in the RR&O categories due to macroeconomic factors, including high input costs and inflationary pressures [18][34] - For Q1 2024, net revenue is expected to be in the range of 330 million to 335million,withfull−yearguidanceof335 million, with full-year guidance of 1.42 billion to 1.44billion[18]−AdjustedEBITDAforQ1isanticipatedtobebetween1.44 billion [18] - Adjusted EBITDA for Q1 is anticipated to be between 47 million and 52million,reflectingashiftfromequitytocashcompensation[19]OtherImportantInformation−Thecompanyrepurchasednearly52 million, reflecting a shift from equity to cash compensation [19] Other Important Information - The company repurchased nearly 1.4 billion worth of shares since the program's inception, including 200millionin2023[17]−TheBoardofDirectorsauthorizedanadditional200 million in 2023 [17] - The Board of Directors authorized an additional 500 million for share repurchases in February 2024 [17] Q&A Session Summary Question: Impact of search marketing initiatives on new users and traffic - Management highlighted strong advertiser demand, particularly within services, and noted that SCM initiatives could introduce new users to the platform [20][23] Question: Future goals for monetizing leads in services - Management expressed confidence in further increasing the monetization percentage beyond 30% through continued investment in ad technology and Request-a-Quote improvements [20][24] Question: Product roadmap focus in services - Management indicated that services revenue was up 14% year-over-year and emphasized ongoing enhancements to Request-a-Quote and ad matching technology [27][28] Question: Recovery expectations for RR&O categories - Management acknowledged current weakness in RR&O due to high input costs and inflation but remained optimistic about long-term growth [31][34] Question: Stock-based compensation changes for 2024 and beyond - Management explained that stock-based compensation would be linear throughout the year, with a significant reduction in grants expected [36][37] Question: Scaling SCM efforts in home services - Management stated that they are still in the experimentation stage for SCM and have increased spend modestly, with plans to provide updates as they progress [40][43]