Yelp Achieves Record Net Revenue and Strong Profitability in the Second Quarter 2024

Rhea-AI Summary

Yelp Inc. (NYSE: YELP) reported strong financial results for Q2 2024, with record net revenue of $357 million, up 6% year-over-year. Net income surged 158% to $38 million, reflecting an 11% margin. Adjusted EBITDA grew 9% to $91 million, with a 26% margin. The company's product-led strategy drove growth, particularly in home services (up ~15% YoY) and the self-serve channel (up ~20% YoY). Yelp updated its full-year outlook, projecting net revenue of $1.410-$1.425 billion and Adjusted EBITDA of $325-$335 million. Despite challenges in the restaurant and retail sectors, Yelp's focus on services and disciplined approach contributed to improved profitability.

Positive

• Record net revenue of $357 million, up 6% year-over-year
• Net income increased 158% to $38 million, with 11% margin
• Adjusted EBITDA grew 9% to $91 million, with 26% margin
• Home services segment grew approximately 15% year-over-year
• Self-serve channel revenue increased about 20% year-over-year to a record level
• Net income margin increased six percentage points from the previous year

Negative

• Challenges persisted in the operating environment for restaurants, retail and other businesses

Net Revenue increased by 6% year over year to $357 million

Net Income increased by 158% year over year to $38 million, reflecting an 11% margin

Adjusted EBITDA grew 9% year over year to $91 million, reflecting a 26% margin

Full-year outlook adjusted to $1.410 billion to $1.425 billion of Net Revenue and $325 million to $335 million of Adjusted EBITDA¹

SAN FRANCISCO--(BUSINESS WIRE)-- Yelp Inc. (NYSE: YELP), the trusted platform that connects people with great local businesses, today announced its financial results for the second quarter ended June 30, 2024 in the Q2 2024 Shareholder Letter available on its Investor Relations website at yelp-ir.com.

“Yelp delivered strong profitability and record net revenue in the second quarter,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “The execution of our product-led strategy continued to drive results, particularly in home services, which grew approximately 15% year over year in the second quarter, as well as in our self-serve channel, which saw revenue increase about 20% year over year to a record level. Looking ahead, we plan to build upon our strong momentum in services as we remain focused on executing against our robust product roadmap to deliver the best experience for consumers and service pros.”

“Yelp delivered a solid second quarter with net revenue increasing by 6% year over year to a record $357 million even as challenges persisted in the operating environment for restaurants, retail and other businesses,” said David Schwarzbach, Yelp’s chief financial officer. “Net income margin increased six percentage points and adjusted EBITDA margin increased one percentage point from the previous year, reflecting our disciplined approach. We’re particularly focused on the opportunity ahead in services to deliver shareholder value over the long term.”

Quarterly Conference Call

Yelp will host a live Q&A session today at 2:00 p.m. Pacific Time to discuss the second quarter financial results and outlook for the third quarter and full year 2024. The webcast of the Q&A can be accessed on the Yelp Investor Relations website at yelp-ir.com. A replay of the webcast will be available at the same website.

About Yelp

Yelp Inc. (yelp.com) is a community-driven platform that connects people with great local businesses. Millions of people rely on Yelp for useful and trusted local business information, reviews and photos to help inform their spending decisions. As a one-stop local platform, Yelp helps consumers easily discover, connect and transact with businesses across a broad range of categories by making it easy to request a quote for a service, book a table at a restaurant, and more. Yelp was founded in San Francisco in 2004.

Yelp intends to make future announcements of material financial and other information through its Investor Relations website. Yelp will also, from time to time, disclose this information through press releases, filings with the Securities and Exchange Commission, conference calls, or webcasts, as required by applicable law.

Forward-Looking Statements

This press release contains forward-looking statements relating to, among other things, Yelp’s future performance, including its expected financial results for 2024 and its ability to drive profitable growth and shareholder value over the long term, as well as its plans to execute against its product roadmap and the expected results of such plans, that are based on its current expectations, forecasts, and assumptions that involve risks and uncertainties.

Yelp’s actual results could differ materially from those predicted or implied by such forward-looking statements and reported results should not be considered as an indication of future performance. Factors that could cause or contribute to such differences include, but are not limited to:

• macroeconomic uncertainty — including related to inflation, interest rates and supply chain issues, as well as severe weather events — and its effect on consumer behavior, user activity and advertiser spending;

• the prevalence of seasonal respiratory illnesses, impact of fears or actual outbreaks of disease and any resulting changes in consumer behavior, economic conditions or governmental actions;

• Yelp’s ability to maintain and expand its base of advertisers, particularly if advertiser turnover substantially worsens and/or consumer demand significantly degrades;

• Yelp’s ability to drive continued growth through its strategic initiatives;

• Yelp’s ability to continue to operate effectively with a primarily remote work force and attract and retain key talent;

• Yelp’s limited operating history in an evolving industry; and

• Yelp’s ability to generate and maintain sufficient high-quality content from its users.

Factors that could cause or contribute to such differences also include, but are not limited to, those factors that could affect Yelp’s business, operating results and stock price included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Yelp’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q at yelp-ir.com or the SEC’s website at sec.gov.

_______________________________
¹ Yelp has not reconciled its Adjusted EBITDA outlook to GAAP Net income (loss) under generally accepted accounting principles in the United States (“GAAP”) because it does not provide an outlook for GAAP Net income (loss) due to the uncertainty and potential variability of Other income, net and Provision for (benefit from) income taxes, which are reconciling items between Adjusted EBITDA and GAAP Net income (loss). Because Yelp cannot reasonably predict such items, a reconciliation of the non-GAAP financial measure outlook to the corresponding GAAP measure is not available without unreasonable effort. We caution, however, that such items could have a significant impact on the calculation of GAAP Net income (loss). For more information regarding the non-GAAP financial measures discussed in this release, please see “Non-GAAP Financial Measures” below.

YELP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
	June 30, 2024				December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	252,435			$	313,911
Short-term marketable securities		132,376				127,485
Accounts receivable, net		153,869				146,147
Prepaid expenses and other current assets		44,999				36,673
Total current assets		583,679				624,216
Property, equipment and software, net		70,616				68,684
Operating lease right-of-use assets		40,679				48,573
Goodwill		102,488				103,886
Intangibles, net		6,974				7,638
Other non-current assets		160,542				161,726
Total assets	$	964,978			$	1,014,723
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	117,762			$	132,809
Operating lease liabilities — current		35,082				39,234
Deferred revenue		5,229				3,821
Total current liabilities		158,073				175,864
Operating lease liabilities — long-term		32,535				48,065
Other long-term liabilities		39,023				41,260
Total liabilities		229,631				265,189
Stockholders’ equity:
Common stock		—				—
Additional paid-in capital		1,848,677				1,786,667
Treasury stock		(806	)			(282	)
Accumulated other comprehensive loss		(14,134	)			(12,202	)
Accumulated deficit		(1,098,390	)			(1,024,649	)
Total stockholders’ equity		735,347				749,534
Total liabilities and stockholders’ equity	$	964,978			$	1,014,723

YELP INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
		2024			2023			2024			2023
Net revenue	$	357,016		$	337,126		$	689,768		$	649,564
Costs and expenses:
Cost of revenue(1)		30,677			30,184			58,032			56,243
Sales and marketing(1)		150,293			139,150			298,084			286,605
Product development(1)		82,080			85,030			173,307			173,227
General and administrative(1)		44,634			53,405			89,866			99,914
Depreciation and amortization		9,585			10,615			19,515			21,420
Total costs and expenses		317,269			318,384			638,804			637,409
Income from operations		39,747			18,742			50,964			12,155
Other income, net		10,322			5,898			18,046			11,110
Income before income taxes		50,069			24,640			69,010			23,265
Provision for income taxes		12,033			9,911			16,820			9,714
Net income attributable to common stockholders	$	38,036		$	14,729		$	52,190		$	13,551
Net income per share attributable to common stockholders
Basic	$	0.56		$	0.21		$	0.77		$	0.19
Diluted	$	0.54		$	0.21		$	0.73		$	0.19
Weighted-average shares used to compute net income per share attributable to common stockholders
Basic		67,815			69,256			68,187			69,537
Diluted		70,444			71,238			71,574			71,645
(1) Includes stock-based compensation expense as follows:
	Three Months Ended June 30,						Six Months Ended June 30,
		2024			2023			2024			2023
Cost of revenue	$	1,397		$	1,346		$	2,798		$	2,728
Sales and marketing		8,618			8,607			17,317			17,721
Product development		22,534			24,974			46,187			50,841
General and administrative		8,665			8,653			17,622			18,547
Total stock-based compensation	$	41,214		$	43,580		$	83,924		$	89,837

YELP INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
	Six Months Ended June 30,
		2024				2023
Operating Activities
Net income	$	52,190			$	13,551
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		19,515				21,420
Provision for doubtful accounts		23,957				14,636
Stock-based compensation		83,924				89,837
Amortization of right-of-use assets		7,662				15,699
Deferred income taxes		(2,109	)			(42,148	)
Amortization of deferred contract cost		12,321				11,716
Asset impairment		—				3,555
Other adjustments, net		(2,995	)			(64	)
Changes in operating assets and liabilities:
Accounts receivable		(31,679	)			(34,389	)
Prepaid expenses and other assets		(14,914	)			12,156
Operating lease liabilities		(19,434	)			(20,943	)
Accounts payable, accrued liabilities and other liabilities		(15,894	)			37,225
Net cash provided by operating activities		112,544				122,251
Investing Activities
Purchases of marketable securities — available-for-sale		(53,301	)			(82,491	)
Sales and maturities of marketable securities — available-for-sale		49,095				50,613
Purchases of other investments		(2,500	)			—
Purchases of property, equipment and software		(16,574	)			(15,153	)
Other investing activities		234				146
Net cash used in investing activities		(23,046	)			(46,885	)
Financing Activities
Proceeds from issuance of common stock for employee stock-based plans		13,436				26,095
Taxes paid related to the net share settlement of equity awards		(41,190	)			(38,201	)
Repurchases of common stock		(122,657	)			(100,000	)
Payment of issuance costs for credit facility		—				(799	)
Net cash used in financing activities		(150,411	)			(112,905	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(295	)			1,175
Change in cash, cash equivalents and restricted cash		(61,208	)			(36,364	)
Cash, cash equivalents and restricted cash — Beginning of period		314,002				307,138
Cash, cash equivalents and restricted cash — End of period	$	252,794			$	270,774

Non-GAAP Financial Measures

This press release and statements made during the above referenced webcast may include information relating to Adjusted EBITDA, Adjusted EBITDA margin and Free cash flow, each of which the Securities and Exchange Commission has defined as a “non-GAAP financial measure.”

We define Adjusted EBITDA as net income (loss), adjusted to exclude: provision for (benefit from) income taxes; other income, net; depreciation and amortization; stock-based compensation expense; and, in certain periods, certain other income and expense items, such as material litigation settlements, impairment charges and fees related to shareholder activism, and other items that we deem not to be indicative of our ongoing operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net revenue. We define Free cash flow as net cash provided by (used in) operating activities, less cash used for purchases of property, equipment and software.

Adjusted EBITDA and Free cash flow, which are not prepared under any comprehensive set of accounting rules or principles, have limitations as analytical tools and you should not consider them in isolation or as substitutes for analysis of Yelp’s financial results as reported in accordance with generally accepted accounting principles in the United States (“GAAP”). In particular, Adjusted EBITDA and Free cash flow should not be viewed as substitutes for, or superior to, net income (loss) or net cash provided by (used in) operating activities prepared in accordance with GAAP as measures of profitability or liquidity. Some of these limitations are:

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
• Adjusted EBITDA does not reflect changes in, or cash requirements for, Yelp’s working capital needs;
• Adjusted EBITDA does not reflect the impact of the recording or release of valuation allowances or tax payments that may represent a reduction in cash available to Yelp;
• Adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;
• Adjusted EBITDA does not take into account certain income and expense items, such as material litigation settlements, impairment charges and fees related to shareholder activism, or other costs that management determines are not indicative of ongoing operating performance;
• Free cash flow does not represent the total residual cash flow available for discretionary purposes because it does not reflect our contractual commitments or obligations; and
• other companies, including those in Yelp’s industry, may calculate Adjusted EBITDA and Free cash flow differently, which reduces their usefulness as comparative measures.

Because of these limitations, you should consider Adjusted EBITDA, Adjusted EBITDA margin and Free cash flow alongside other financial performance measures, including net income (loss), net cash provided by (used in) operating activities and Yelp’s other GAAP results.

The following is a reconciliation of net income to Adjusted EBITDA, as well as the calculation of net income margin and Adjusted EBITDA margin, for each of the periods indicated (in thousands, except percentages; unaudited):

	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Reconciliation of Net Income to Adjusted EBITDA:
Net income	$	38,036			$	14,729			$	52,190			$	13,551
Provision for income taxes		12,033				9,911				16,820				9,714
Other income, net(1)		(10,322	)			(5,898	)			(18,046	)			(11,110	)
Depreciation and amortization		9,585				10,615				19,515				21,420
Stock-based compensation		41,214				43,580				83,924				89,837
Litigation settlement(2)(3)		—				11,000				—				11,000
Asset impairment(2)		—				—				—				3,555
Fees related to shareholder activism(2)		569				—				1,168				—
Adjusted EBITDA	$	91,115			$	83,937			$	155,571			$	137,967
Net revenue	$	357,016			$	337,126			$	689,768			$	649,564
Net income margin		11	%			4	%			8	%			2	%
Adjusted EBITDA margin		26	%			25	%			23	%			21	%

(1)	Includes the release of a $3.1 million reserve related to a one-time payroll tax credit.
(2)	Recorded within general and administrative expenses on our condensed consolidated statements of operations.
(3)	Represents the loss contingency recorded in connection with the agreement to settle a putative class action lawsuit asserting claims under the California Invasion of Privacy Act. For additional information, see our most recently filed Quarterly Report on Form 10-Q.

The following is a reconciliation of net cash provided by operating activities to Free cash flow for each of the periods indicated (in thousands; unaudited):

	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow:
Net cash provided by operating activities	$	39,689			$	48,007			$	112,544			$	122,251
Purchases of property, equipment and software		(9,587	)			(7,635	)			(16,574	)			(15,153	)
Free cash flow	$	30,102			$	40,372			$	95,970			$	107,098
Net cash used in investing activities	$	(16,644	)		$	(9,605	)		$	(23,046	)		$	(46,885	)
Net cash used in financing activities	$	(66,577	)		$	(58,199	)		$	(150,411	)		$	(112,905	)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240808033964/en/

Investor Relations Contact:

Kate Krieger

ir@yelp.com

Press Contact:

Amber Albrecht

press@yelp.com

Source: Yelp Inc.

FAQ

What was Yelp's (YELP) net revenue for Q2 2024?

Yelp's net revenue for Q2 2024 was $357 million, a 6% increase year-over-year and a record for the company.

How much did Yelp's (YELP) net income grow in Q2 2024?

Yelp's net income grew by 158% year-over-year to $38 million in Q2 2024, reflecting an 11% margin.

What is Yelp's (YELP) updated full-year outlook for 2024?

Yelp updated its full-year 2024 outlook to $1.410-$1.425 billion in net revenue and $325-$335 million in Adjusted EBITDA.

How did Yelp's (YELP) home services segment perform in Q2 2024?

Yelp's home services segment grew approximately 15% year-over-year in Q2 2024.

What was the growth rate of Yelp's (YELP) self-serve channel in Q2 2024?

Yelp's self-serve channel revenue increased about 20% year-over-year to a record level in Q2 2024.