Yelp (YELP, Financial) announced impressive financial results for the first quarter, with revenue reaching $358.5 million, surpassing expectations of $353.1 million. According to Jeremy Stoppelman, the company's co-founder and CEO, Yelp's services segment demonstrated robust performance, with a 14% year-over-year increase. This marks the 16th straight quarter of double-digit growth, driven by their strategic focus on product innovations.
The company introduced 15 new features designed to enhance user experience and improve business operations. Looking forward, Yelp is eager to integrate AI advancements to further refine its platform, aiming to create more opportunities for growth and sustained shareholder value.
David Schwarzbach, Yelp's CFO, highlighted that the first-quarter revenue grew by 8% compared to the previous year, alongside a significant 32% increase in adjusted EBITDA, reaching $85 million. This figure exceeded the company’s highest outlook by $15 million and improved the adjusted EBITDA margin by four percentage points year-over-year. Yelp's continuous effort in executing strategic initiatives and managing expenses effectively positions it well for enduring growth in a challenging market environment.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 8 analysts, the average target price for Yelp Inc (YELP, Financial) is $38.26 with a high estimate of $48.00 and a low estimate of $30.00. The average target implies an upside of 7.06% from the current price of $35.74. More detailed estimate data can be found on the Yelp Inc (YELP) Forecast page.
Based on the consensus recommendation from 12 brokerage firms, Yelp Inc's (YELP, Financial) average brokerage recommendation is currently 3.0, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Yelp Inc (YELP, Financial) in one year is $45.26, suggesting a upside of 26.64% from the current price of $35.74. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Yelp Inc (YELP) Summary page.
YELP Key Business Developments
Release Date: February 13, 2025
- Net Revenue: Increased by 6% year over year to $1.41 billion for 2024.
- Net Income: Grew by 34% year over year to $133 million for 2024.
- Adjusted EBITDA: Increased by 8% year over year to $358 million for 2024.
- Net Income Margin: Expanded by 2 percentage points from 2023.
- Adjusted EBITDA Margin: Expanded by 1 percentage point from 2023.
- Services Revenue: Up 11% year over year to $879 million in 2024.
- Home Services Revenue Growth: Approximately 15% year over year in 2024.
- RR&O Revenue: Declined by 3% year over year to $470 million in 2024.
- Q4 Net Revenue: Increased by 6% year over year to $362 million.
- Q4 Net Income: Increased by 54% year over year to $42 million, representing a 12% margin.
- Q4 Adjusted EBITDA: Increased by 5% year over year to $101 million, representing a 28% margin.
- Advertising Revenue in Services: Increased by 11% year over year to $225 million in Q4.
- RR&O Revenue in Q4: Declined by 3% year over year to $121 million.
- Paying Advertising Locations: Declined by 4% year over year to 521,000 in Q4.
- Self-Serve Growth: Approximately 15% year over year in Q4.
- Stock-Based Compensation Expense: Reduced by 2 percentage points as a percentage of revenue in 2024.
- Diluted Earnings Per Share: Increased by 40% year over year to $1.88 in 2024.
- Share Repurchases: $251 million worth of shares repurchased in 2024.
- 2025 Revenue Outlook: Expected to be in the range of $1.470 billion to $1.485 billion.
- 2025 Adjusted EBITDA Outlook: Expected to be in the range of $345 million to $360 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Yelp Inc (YELP, Financial) delivered record net revenue and strong profitability in 2024, with net revenue increasing by 6% year over year to $1.41 billion.
- The company achieved its 15th consecutive quarter of double-digit year-over-year revenue growth in services categories, with services revenue up 11% year over year to a record $879 million.
- Yelp Inc (YELP) introduced more than 80 new features and updates in 2024, including the AI chatbot Yelp Assistant, which increased project submissions by over 50% from Q3 to Q4.
- Disciplined expense management led to a 34% year-over-year increase in net income to $133 million and an 8% increase in adjusted EBITDA to $358 million.
- The company expanded its net income margin by 2 percentage points and adjusted EBITDA margin by 1 percentage point from 2023, reflecting strong financial management.
Negative Points
- Revenue from restaurants, retail, and other categories declined by 3% year over year to $470 million, indicating challenges in these sectors.
- Overall traffic levels were relatively flat compared to 2023, despite improvements in mobile and desktop website experiences.
- Paying advertising locations declined by 4% year over year to 521,000, driven by a decrease in RR&O locations.
- The company reduced its spend on acquiring services projects through paid search due to unsatisfactory returns, highlighting challenges in marketing efficiency.
- Yelp Inc (YELP) anticipates continued pressure on RR&O revenue in 2025, reflecting ongoing challenges in these categories.
