Yelp Reports Third Quarter Results and Announces Strategic Acquisition

Rhea-AI Summary

Yelp reported its Q3 2024 financial results, showing a 4% increase in net revenue to $360 million and a net income of $38 million with an 11% margin. The adjusted EBITDA stood at $101 million, reflecting a 28% margin. The full-year outlook was adjusted to $1.397 billion to $1.402 billion in net revenue and $341 million to $346 million in adjusted EBITDA.

Yelp announced an agreement to acquire RepairPal for $80 million in cash, expected to close by year-end. CEO Jeremy Stoppelman highlighted a record advertising revenue from Services businesses, which grew by 11% year-over-year to $228 million, driven by a 15% increase in the Home Services category.

Yelp's CFO, David Schwarzbach, emphasized the company's disciplined expense management and strategic capital allocation. Yelp will host a live Q&A session to discuss these results and the outlook for Q4 and full-year 2024.

Positive

• Net revenue increased by 4% to $360 million.
• Net income of $38 million with an 11% margin.
• Adjusted EBITDA of $101 million with a 28% margin.
• Advertising revenue from Services businesses increased by 11% year-over-year to $228 million.
• Home Services category revenue grew by approximately 15% year-over-year.
• Acquisition of RepairPal for $80 million in cash, expected to enhance Services offerings.

Negative

• None.

Net Revenue increased by 4% to $360 million

Net Income of $38 million, reflecting an 11% margin

Adjusted EBITDA of $101 million, reflecting a 28% margin

Full-year outlook adjusted to $1.397 billion to $1.402 billion of Net Revenue and $341 million to $346 million of Adjusted EBITDA¹

Yelp has entered into an agreement to acquire RepairPal for $80 million in cash

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 third quarter ended Sept. 30, 2024 in the Q3 2024 Shareholder Letter available on its Investor Relations website at yelp-ir.com. Yelp also announced its agreement to acquire RepairPal, an auto services platform, for approximately $80 million in cash. This acquisition is expected to close by the end of the year, subject to customary closing conditions.

“Yelp delivered record net revenue in the third quarter, driven by continued momentum in our Services categories,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “Advertising revenue from Services businesses increased by 11% year over year to a record $228 million, with revenue growth of approximately 15% year over year in our Home Services category. As we continue to build on our progress in Home Services, we believe RepairPal will accelerate our broader Services efforts by expanding our offerings in the multi-billion dollar U.S. auto services advertising vertical.”

“Our results highlight Yelp's strong performance in its Services categories, which achieved double-digit year-over-year revenue growth for the 14th consecutive quarter, even as Restaurants, Retail and Other categories faced ongoing headwinds,” said David Schwarzbach, Yelp’s chief financial officer. “We continued to demonstrate disciplined expense management, with a net income margin of 11% and an adjusted EBITDA margin of 28% in the third quarter. Our planned acquisition aligns with our capital allocation strategy and demonstrates our ability to deploy balance sheet capital to support our business strategy.”

Quarterly Conference Call

Yelp will host a live Q&A session today at 2:00 p.m. Pacific Time to discuss the third quarter financial results and outlook for the fourth 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 capital allocation strategy, as well as its agreement to acquire RepairPal, the anticipated timing of the closing of the acquisition and the expected benefits thereof, 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 successfully complete and manage the acquisition and integration of RepairPal;

• 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)
	September 30, 2024				December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	261,588			$	313,911
Short-term marketable securities		135,426				127,485
Accounts receivable, net		155,131				146,147
Prepaid expenses and other current assets		38,083				36,673
Total current assets		590,228				624,216
Property, equipment and software, net		73,991				68,684
Operating lease right-of-use assets		28,380				48,573
Goodwill		104,433				103,886
Intangibles, net		6,638				7,638
Other non-current assets		176,538				161,726
Total assets	$	980,208			$	1,014,723
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	134,746			$	132,809
Operating lease liabilities — current		28,022				39,234
Deferred revenue		7,601				3,821
Total current liabilities		170,369				175,864
Operating lease liabilities — long-term		25,905				48,065
Other long-term liabilities		44,394				41,260
Total liabilities		240,668				265,189
Stockholders’ equity:
Common stock		—				—
Additional paid-in capital		1,873,678				1,786,667
Treasury stock		(2,907	)			(282	)
Accumulated other comprehensive loss		(10,535	)			(12,202	)
Accumulated deficit		(1,120,696	)			(1,024,649	)
Total stockholders’ equity		739,540				749,534
Total liabilities and stockholders’ equity	$	980,208			$	1,014,723

YELP INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
	Three Months Ended September 30,							Nine Months Ended September 30,
		2024			2023				2024			2023
Net revenue	$	360,344		$	345,122			$	1,050,112		$	994,686
Costs and expenses:
Cost of revenue(1)		32,382			28,370				90,414			84,613
Sales and marketing(1)		144,631			137,703				442,715			424,308
Product development(1)		77,748			81,020				251,055			254,247
General and administrative(1)		49,605			45,695				139,471			145,609
Depreciation and amortization		9,326			10,461				28,841			31,881
Total costs and expenses		313,692			303,249				952,496			940,658
Income from operations		46,652			41,873				97,616			54,028
Other income, net		7,231			6,154				25,277			17,264
Income before income taxes		53,883			48,027				122,893			71,292
Provision for (benefit from) income taxes		15,443			(10,189	)			32,263			(475	)
Net income attributable to common stockholders	$	38,440		$	58,216			$	90,630		$	71,767
Net income per share attributable to common stockholders
Basic	$	0.57		$	0.84			$	1.34		$	1.03
Diluted	$	0.56		$	0.79			$	1.27		$	0.98
Weighted-average shares used to compute net income per share attributable to common stockholders
Basic		67,219			69,030				67,862			69,366
Diluted		69,163			73,566				71,109			72,920
(1) Includes stock-based compensation expense as follows:
	Three Months Ended September 30,							Nine Months Ended September 30,
		2024			2023				2024			2023
Cost of revenue	$	1,301		$	1,298			$	4,099		$	4,026
Sales and marketing		8,588			9,200				25,905			26,921
Product development		20,887			24,047				67,074			74,888
General and administrative		8,696			8,922				26,318			27,469
Total stock-based compensation	$	39,472		$	43,467			$	123,396		$	133,304

YELP INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
	Nine Months Ended September 30,
		2024				2023
Operating Activities
Net income	$	90,630			$	71,767
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		28,841				31,881
Provision for doubtful accounts		35,111				26,664
Stock-based compensation		123,396				133,304
Amortization of right-of-use assets		11,363				22,848
Deferred income taxes		(17,408	)			(8,845	)
Amortization of deferred contract cost		18,604				17,818
Asset impairment		5,914				3,555
Other adjustments, net		(2,717	)			(229	)
Changes in operating assets and liabilities:
Accounts receivable		(44,095	)			(54,395	)
Prepaid expenses and other assets		(14,302	)			3,101
Operating lease liabilities		(29,333	)			(30,255	)
Accounts payable, accrued liabilities and other liabilities		8,838				9,896
Net cash provided by operating activities		214,842				227,110
Investing Activities
Purchases of marketable securities — available-for-sale		(89,251	)			(115,388	)
Sales and maturities of marketable securities — available-for-sale		83,380				89,613
Purchases of other investments		(2,500	)			—
Purchases of property, equipment and software		(26,337	)			(20,850	)
Other investing activities		268				160
Net cash used in investing activities		(34,440	)			(46,465	)
Financing Activities
Proceeds from issuance of common stock for employee stock-based plans		13,436				28,958
Taxes paid related to the net share settlement of equity awards		(58,044	)			(61,142	)
Repurchases of common stock		(188,399	)			(149,999	)
Payment of issuance costs for credit facility		—				(1,049	)
Net cash used in financing activities		(233,007	)			(183,232	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		580				903
Change in cash, cash equivalents and restricted cash		(52,025	)			(1,684	)
Cash, cash equivalents and restricted cash — Beginning of period		314,002				307,138
Cash, cash equivalents and restricted cash — End of period	$	261,977			$	305,454

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 September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Reconciliation of Net Income to Adjusted EBITDA:
Net income	$	38,440			$	58,216			$	90,630			$	71,767
Provision for (benefit from) income taxes		15,443				(10,189	)			32,263				(475	)
Other income, net(1)		(7,231	)			(6,154	)			(25,277	)			(17,264	)
Depreciation and amortization		9,326				10,461				28,841				31,881
Stock-based compensation		39,472				43,467				123,396				133,304
Litigation settlement(2)(3)		—				—				—				11,000
Asset impairment(2)		5,914				—				5,914				3,555
Fees related to shareholder activism(2)		—				671				1,168				671
Adjusted EBITDA	$	101,364			$	96,472			$	256,935			$	234,439
Net revenue	$	360,344			$	345,122			$	1,050,112			$	994,686
Net income margin		11	%			17	%			9	%			7	%
Adjusted EBITDA margin		28	%			28	%			24	%			24	%

(1)		Includes the release of a $3.1 million reserve related to a one-time payroll tax credit in the nine months ended September 30, 2024.
(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 September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow:
Net cash provided by operating activities	$	102,298			$	104,859			$	214,842			$	227,110
Purchases of property, equipment and software		(9,763	)			(5,697	)			(26,337	)			(20,850	)
Free cash flow	$	92,535			$	99,162			$	188,505			$	206,260
Net cash used in investing activities	$	(11,394	)		$	420			$	(34,440	)		$	(46,465	)
Net cash used in financing activities	$	(82,596	)		$	(70,327	)		$	(233,007	)		$	(183,232	)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241107085157/en/

Investor Relations Contact:

Kate Krieger

ir@yelp.com

Press Contact:

Amber Albrecht

press@yelp.com

Source: Yelp Inc.

FAQ

What were Yelp's Q3 2024 financial results?

Yelp reported a 4% increase in net revenue to $360 million and a net income of $38 million with an 11% margin. Adjusted EBITDA was $101 million, reflecting a 28% margin.

What is the value of Yelp's acquisition of RepairPal?

Yelp has agreed to acquire RepairPal for $80 million in cash.

When is Yelp's acquisition of RepairPal expected to close?

The acquisition is expected to close by the end of the year, subject to customary closing conditions.

How did Yelp's Services advertising revenue perform in Q3 2024?

Advertising revenue from Services businesses increased by 11% year-over-year to $228 million.

What is Yelp's full-year outlook for 2024?

Yelp's full-year outlook is adjusted to $1.397 billion to $1.402 billion in net revenue and $341 million to $346 million in adjusted EBITDA.