Yelp(US:YELP)2024-05-10 01:03Financial Data and Key Metrics Changes - Net revenue increased by 7% year-over-year to $333 million in Q1 2024 [8][12] - Net income was $14 million, reflecting a 4% margin, compared to a net loss of $1 million in Q1 2023 [12] - Adjusted EBITDA rose by 19% year-over-year to $64 million, representing a 19% margin [12][18] - Advertising revenue in services categories grew by 11% year-over-year to $203 million [12][18] Business Line Data and Key Metrics Changes - Home services revenue grew approximately 15% year-over-year, making it a standout performer [8][12] - Request-a-Quote projects increased by approximately 20% year-over-year, driven by paid project acquisition efforts [9][12] - Advertising revenue from restaurants, retail, and other categories grew modestly by 1% year-over-year to $114 million [13] Market Data and Key Metrics Changes - Overall paying advertising locations decreased by 4% year-over-year, while paying advertising locations in services categories increased by 6% [13] - Multi-location revenue increased by approximately 5% year-over-year, reflecting softness in restaurant, retail, and other categories [13][39] Company Strategy and Development Direction - The company continues to focus on enhancing its services categories, particularly in home services [8][11] - New AI-powered initiatives, including the Yelp Assistant and Yelp Fusion AI API, are expected to transform consumer-business interactions [10][11] - The company plans to invest $40 million or more in services project acquisition in 2024 to drive long-term growth [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging operating environment for businesses in restaurant and retail categories due to inflationary pressures and elevated input costs [13][32] - The company remains confident in its strategy to drive long-term profitable growth and shareholder value [11][20] - For Q2 2024, the company expects net revenue to be in the range of $350 million to $355 million, reaffirming full-year guidance of $1.42 billion to $1.44 billion [17][18] Other Important Information - The company repurchased $62.5 million worth of shares in Q1 2024, with $519 million remaining under its existing repurchase authorization [17][56] - Stock-based compensation expense was reduced to 13% of revenue, with a target to lower it below 8% by the end of 2025 [16] Q&A Session Summary Question: Any learnings from Q1 regarding paid search budget? - Management noted positive early results from expanding the paid search budget, with significant increases in project volume and ad clicks, and a decline in CPC [22][24] Question: Insights on the Yelp Assistant and consumer friction reduction? - Management highlighted that the Yelp Assistant is effectively guiding consumers through project submissions, leading to positive consumer engagement [25][26] Question: Future of the partnership with Perplexity and competition for ad dollars? - Management expressed excitement about the Perplexity partnership, emphasizing Yelp's strong local content and ongoing conversations for potential AI licensing opportunities [28][30] Question: Confidence in increased investment without revenue returns? - Management explained that early results from increased spending in Q1 showed significant project and click increases, which they expect to translate into higher ad budgets over time [35][37] Question: Trends in RR&O segment and expectations for the second quarter? - Management indicated continued weakness in the RR&O segment, with expectations for gradual improvement as macroeconomic conditions stabilize [39]