YELP - Earnings call transcript Q2 2022

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Operator

Hello, and welcome to Yelp's Second Quarter 2022 Earnings Call. My name is Maxine, and I'll be coordinating today's call. [Operator Instructions] I will now hand you over to your host, James Miln, Senior Vice President, Finance and Investor Relations, to begin. James, please go ahead when you're ready.

James Miln

Good afternoon, everyone, and thanks for joining us on Yelp's Second Quarter 2022 Earnings Conference Call.

Yelp's Schwarzbach; Officer, Jed and are Financial Stoppelman; Nachman. today David Officer, Chief me Chief Jeremy Executive Chief Joining Operating Officer, and read it. We Investor hope letter shareholder had with website everyone to published and the chance on a SEC, a Relations our brief provide questions. some turn your comments opening We'll then and to

differ and that harbor could of number risks forward-looking uncertainties that Now safe make statements a statement. I'll read note today involve certain actual materially. results statements reflect to cause We'll these our that Please are forward-looking and opinions and only new of results forward-looking to publicly as this our these of the light the we revise information of date or release of call, to in obligation any future revision undertake events. no statements or

to significantly our may that subject more for results. of addition, detailed as SEC financial and letter of we impact that business refer as the a may affect to Please our a results. description well filings are risks number shareholder our our In risks

SEC, over both to margin. turn the financial as income will well measures and posted filings to on today, reconciliations our additional in are this considered non-GAAP non-GAAP these GAAP prepared with accounting During our These with Jeremy. our financial EBITDA each which net And EBITDA as substitute be measures. and is not the of which In I adjusted find released as with for regarding generally we'll adjusted and call accordance a website, call should principles. information measures you from financial that, disclosures will adjusted shareholder margin, or isolation letter in EBITDA adjusted afternoon of EBITDA accepted discuss our historical

Jeremy Stoppelman

welcome, and everyone. James, Thanks,

XX% them proud against Net of increased across reached Advertising the delivering quarter. consumer pre-pandemic category. second our Yelp's services revenue believe levels average driven advertising locations. Home spending, while by We advertisers levels advertisers our $XXX million. use an content from large provides a second Advertising U.S. consumers at high advertising leading of to time quarter. to record. year-over-year spending year-over-year results long extremely in Even performance, with surpassed in measurable that with that consistently strong product-led in decisions record by million, a when delivering strategic Our runway connect performance for increased large to revenue restaurants, strength XXX,XXX, ad uncertainty, revenue grew strategy that their in year-over-year, a Underlying businesses drove shifts products retail second and driven products also by category. high our a and a in in increase continue from to and trusted Yelp audience just I'm that to with to other businesses the show intent what this businesses. locations is a teams Paying for of economic we revenue $XXX turn per spent continuing need homes. paying have important in the our quarter reach still record initiatives platform line for our of top connect Yelp to of initiatives a great local quarterly this Yelp make record new XX% making location users XX% largely amid Services

with in Our revenue RR&O our the year-over-year. strong to growth continued Multi-location was a XX% recovery of channel the approximately contributor in quarter, second

helping of high-intent is ad attribution products valuable and on portfolio reach and Multi-location expanded off solutions our both Our audience, Yelp. advertisers

power and the our of the second owned ad quarter demonstrates platform. operated in performance Our

long-term we are profitable ever it to better consistently I'd opportunities turn over We to our that, significant, against have initiatives With The David. than to and drive strategic remain growth. ahead like transformed executed our business. equipped and

David Schwarzbach

million, $XXX the per location from Net year-over-year revenue first advertising a we our to X% Jeremy. the average year-over-year end from outlook record increased range. quarter by the and record high by X% paying XXX,XXX. performance, this above Thanks, to achieved Underlying revenue and by quarter strong $X grew first million XX% of locations and X%

period, year across we quarter. while from mentioned, elevated Services consumer XX% the revenue reopening of benefited year-over-year record. broad by set clicks the Ad from Jeremy and from while tailwinds, also consistent increased reached significant declined paying amplified our demand recovery, As At drove increased of from remained Ad the by first robust. spending. RR&O the with from advertising increasing XX% its quarter, second revenue a which growth ad CPC year-over-year but grew Average time, XX% XX% categories. remaining advertiser prior quarter RR&O XXXX. by had locations first XX% businesses same the year-over-year, continued our

Our product to to continued advertisers our ad optimizing have quality. and improving engineering deliver including by system, teams click value

record matched we quarter. retention As the the NTC rate a result, we delivered in first

believe Turning strong will cash the growth long over our expenses. growth product-driven generates drive strategy we to Yelp's profitable flow, and term. model

invest we example, to second fully to in For digital in quarter. to drive the marketing channel businesses Self-serve our continue

$XX delivered of Even customer investments, these net with line as As the XX% million, increased outperformance channel flowed acquisition range bottom quarter. income EBITDA increased approximately adjusted the year-over-year another record $X drove our of in X% above by in revenue of while all to year-over-year the million outlook year-over-year. end a Self-serve our to we million, XX% and result, through revenue to $XX high growth

drive year, our opportunity across reduce the portion to realized space subleased of initiatives, both invested of more office provided previously have half savings with access we In $X million the operations as leverage In expense This space. executed the stock-based York revenue fully related office distributed behind United to enabled time. talent our and also outside July, our New us over of of of we States. has compensation and the approximately we've to reductions. As our first a percentage a us

an to savings the GAAP of end yield to will we an subleases worth aggregate related remains repurchased the quarter, an important In Returning capital the average shares million expect $XX.XX. of purchase $XX million the at and share annual reductions through shareholders $XX We second to date of approximately price through expense executed overall of leases. million our $XX capital strategy. we repurchases element allocation in have of

outlook. our to Turning

our in $XXX for Our have tightened In the the second growth the of year. second we range will results million. in expectations revenue be increase quarter third million net $XXX quarter quarter, to anticipate to the

fundamental are As raising quarter our revenue full $X.XX working outlook a a year result strategy to a performance, and we our believe billion well. range strong we of both At to are our $X.X level, execution billion. net of second

value that U.S. through the July, the with any in second In and of see outlook a advertisers. and seen environment continued increasing year. macro recessionary to have be the strong advertiser believe we a to challenging, same customers the by quarter environment We more our acquiring forecast. the to current uncertainty recognize we of are delivering continues the in second economic At them. that time, we We demand strength modestly balances outlook continued assumes the half demand

Turning margins. to

EBITDA compared adjusted a by to $XX driven quarter primarily increase million expect of small quarter. for be to range the third and million sales in total increase range reflects to We second expense $XX in marketing. the second This the the to quarter, from

previously, we have a focus shared As with on operate we ROI.

providing productively the product-led $XXX do rates. fall new the increase of our continue EBITDA us backdrop environment. drive enter ability between marketing year please Yelp's highs the the we increase our in million We expected the in of With XXXX. continued the of second We quarter open execution extent line shareholder as that second local adjusted the potential our with platform This to of further initiatives, our these half in expenses delivering again the positions for To consistent investment Overall, long-term well we volatile may to the the over against results questions. margin attractive so in can team believe improvement QX. for with marketing In second are $XXX investment we currently seeing million operator, broad-based conviction with channels, reflect us ad expect may quarter. our we to our macro course that, year, of closing, half and value. up performance the

Operator

Shweta first from question [Operator from Khajuria Our Instructions] Evercore ISI. comes

Shweta Khajuria

two, me please. Let try

revenue ad down year-over-year, XX% XX% Request and Quote up were A Services year-over-year. was So

How being could more think help us second you to that dynamic you're there? traveling, cetera, et segment, continuing meaningful And please together. growing revenue the if could we about is and about out us business? the the nicely. should drive for very about help think opportunity audiences but the maybe road So this revenue you So to in consumers that still overall that tie this are please and revenue ad is question then

Jeremy Stoppelman

is Jeremy. here. first take the I'll Shweta, one this

to especially revenue exists dollars And was ad think XX% environment, Services we demand very the I tune that out strong shifting Services, within really Home So that are looking to as noted, obviously, providers, services around. of consumer macro you at that the speaks see up year-over-year. the from

really And some they businesses, in were had busy. of XXXX, -- services these especially

came ROI the channels to to I were high they keep speak. so to as And for think they XXXX, into invest, trucks looking so rolling,

And up. demand so showed that

which got When the noteworthy allows we to noticed drive up, we business calling, communicate side, mix, considered Quote is which by super businesses. important into of we a there. innovate added a to is highest reduce also and We're to complex Request high-value be may consumer to the the think that from to consumer Request Call, On friction. which QX. value We've continue very projects, continues A have It you some also we can the leads lead. that's a owners it's

remain volume seeing up, sequentially, So XXXX above and levels. we

Audiences, maybe question that And of you Yelp in for one. your can part for the Jed, so hop second around

Jed Nachman

thing. Sure

adoption than reach rate. of a performance really up striving percentage also allows represents total budgets us the up brands creative, ad opens $XX brand in Ultimately, advertisers audience million year-over-year hadn't et allows to such direct-to-consumer and a Ultimately, are tap Yelp and audiences. different be That to to It pleased Audiences intent-driven with to that cetera. voice national and off QX, products able still strong been Yelp, that. can to XXX% it into before. provide product. companies run on to market Audiences said, to advertisers revenue. Yelp Yelp own with their continue its in the that very and We nonlocation-based more Audiences continued the our up to also of and It our CPG our and as we're of of we funnel do small down for our off reaching Yelp we opportunity

building it out focused to continue customers valuable we're to offering. for that as a scale ultimately, plan So our and on product

Operator

Justin from comes from Our next question Patterson KeyBanc.

Justin Patterson

pressures we've you forward? macro also the we Great. but years? growth curious persistence of immune the at more say And just going I'm Jeremy about of lot SMB should environment, there seen from and Yelp products you've a looked how prior David, makes what certain in going out the just versus today think think

Jeremy Stoppelman

think I one. take lead on that can I the Justin,

Our shown great has business really durability.

I searching When somebody need to primarily think why that find on that? We our our they a to They first-party rely own think data. a -- seeing. are is they it's the transact. actually I ROI Well, customers Yelp, on is for locksmith need locksmith.

advertisers of great their get And for and that make consumer so opportunity a pitch. front that's in to

I'd So the down And performance. high It's breadth the of point we're Yelp. to thing other is funnel.

trusted in a hit And certain categories other highly may and categories. then often tough across take array better. macroeconomic a categories perform We content of wide environments, have these

In And speaks to the then second the the speaks a We've look really that So resilience ad years, that we've XXXX, we revenue our think which briefly, well. came especially and think stepping been is back decline XXXX, few that part the through back. you over took been roaring product even testing. as I of pressure put execution. question, your I last further, to And steep rigor. -- just

in execution has of performance into in we've executing Self-serve, had Multi-location. quarter our the better. last in over opinion, think to I leading that the of front the been system, into see years. We've the this my been that the strategy, Our reflects growth areas of few the never really, improving are extent leaning more ad really you team on And driving us,

Operator

question next comes from Sebastian Our from Colin Baird.

Colin Sebastian

I perpetuity? guess, the you're moderate dynamic that's Maybe of sort or add or increasing Then per as compounding of location, any revenue When a advertising if that continues big-picture shift of you which locations with location, curious thoughts a more see bit a in question to per benefits on I will Or you monetization sort that? expecting a I'm have you have locations, think higher it you impact follow-up. start. if

Jed Nachman

first of fluctuate quarter-to-quarter, the of we locations as of grow customers to but a record We terms advertisers. PALs especially that And record paying far. and there levels lies another XXX,XXX our as revenue can feel driving to for that in take also while new opportunity these can go there's or Sure. also new our deliver of pre-pandemic revenue that per only kind very saw ARPU. in that Obviously, we as value we expand, continue for we Colin, the we're focused we driving our metrics well per out I ultimately RR&O to on kind one both. categories, average believe could achieving up location. more driving land TAM advertising in We thus drive the acquisition. one after But to average can thus long location more in continue value large that that term, a beyond think advertisers,

Colin Sebastian

And But to focus Jeremy, a mentioned a this more and larger are A they seems I be of to existing the your messaging formats ads, own. Okay. with maybe cannibalistic guess for Request follow-up. of with some Request then or with do There Or I you a local platforms even paying think more potentially are of mean locations, lot with really ad things these on you example? click-to-call Call. businesses is incremental unlocking like Quote? your

Jeremy Stoppelman

take for question. Yes, this. can I Thanks the

started. friction, businesses. messaging service, simple the that to evolved asking and we of Request to It questions, very quality to messaging increasingly leads for You leads of really great businesses. been reducing it, sophisticated the speak Quote was, us. that And the be was out to it's there as small driving for some trying there's designed right drive A aspects are a And a channel frankly, point

you that, The Yelp. clear get when message, really other I it's is is think, it's that very piece a helpful for

attribution what might we some of really it's A the is in. Request And hey, that implement most SMBs, It's the ecosystem create And calls for work we're where have Call, are that additive. you from were some of driving It's us of value. absolutely highly were that we with our plus it take really X a bring leads into built so you the in to friction. So metrics know able And we Request away additional around, and a is kind able and valued going way this it attention reducing to paying Quote. X. to found to for a X equals imagine we

Operator

next question Trevor Barclays. from [Operator Instructions] comes Our Young from

Trevor Young

Great.

I is of as can audiences. On stability costs because fulfillment the And with bigger associated the as compression side, margin of are then from size you year-on-year? investments gross relative in investments point? the at some the as well infrastructure deleverage picture, X-point far both so how rollout audiences that of gross the along maybe appreciate we help those that infrastructure to ad coming expect Can each impact as margin the well I

David Schwarzbach

so the for question. Thanks David. it's Trevor, much

you're on costs. the of a portion begin of to from coming YA that is X significant Just that syndication with, in terms points focused the

are on expenses simply delivering are modestly Yelp. side infrastructure We seeing the higher who

us the say, services, talk also CPG, advertisers we well, that, Yelp OEM further we Audience on this And It to us given with advertiser the we know, conversation we enables advertise of -- a strong way have I other only us a as As place. advertiser. a enables And is captured go a have have the enables like who Yelp there Yelp you think to offer that natural way Audiences today, that in context at products automotive to is overall not Audience financial more those we important, a after in Yelp broader gives though, audience us chance the of look the very but think One, first monetize companies. to the national really product, don't advertisers, that to margin profitability in we national look them. broader to Audiences. by budget. and and it's a opportunity have. that that at That's Yelp And to

where we to infrastructure efficiency have do Yelp of the on that of a perspective a well we revenue to drive I team we from in side. Audiences So of of tremendous actually amount where Yelp as would both the asked from but terms infrastructure and already say applies, of cost that as really here, essentially are proud maturity sophistication run. that, room cost of And revenue. still in you things just head We're the

improvements, ways operate give opportunity drive So AWS to underlying terms still to particularly us manage, that's various probably we that. stream there's more that continue in that potential of and middle an and

Yelp the believe Audiences. Audiences opportunity that we there's Yelp Jed side, ahead On said, still for large as a

So of of we there lower-margin grow That product. it's do revenue intend that to do component product. in side, we of think cost those the going buy terms are early. in in place It sense, the significant we being that to a and drive said, place. we think we be is that the sort in sophistication But can there continue efficiency to that are that ads way ways first that that and margin increase and the

also that's I say early. would So relatively that,

a we quarter of quarter rate run $XX year run over in $XX second scaled during from million talked million of product we rate the XXXX. to As the this just last just about, over second

to in a of for still fraction like certainly And of opportunity. is revenue so we this. product the scaling fraction that and the continue this million of we're available product, $XX drive and much phase very a budget to Obviously, total want total our

Operator

Goldman Sheridan question next Eric Our comes from from Sachs.

Eric Sheridan

of the That excited as a the are would local what more But bigger product align and road digital you funnel when between about audience just a of most sort ask a talking avenues levels commerce? lines of increasing the is bottom one. about with some picture blur the in top you see digital into closer of retailers we've just commerce map across and of been some can question. funnel. moving the local forward to platforms, could channels of digital of that big different if Yelp the going lot Maybe know off-line these of I terms be I picture

Jeremy Stoppelman

of there? I Yes, been I are hear guess DTC digital when talking before you answer. my that Is I kind commerce, into some about happening scratching of innovation you're -- mean, at the launch I that's local what

Eric Sheridan

DTC Yes, search retailers of expressed. local tapping intent elements element into innovation, local being of and

So evolving map just the topics. how change you road see consumer some against those of

Jeremy Stoppelman

Definitely, ads. Yes. takeout a there. allows businesses particular make digital attention close ad And to we're paying quarter, to customers That's valued highlight purchase. fact, by online, new in we in this really highly this website to case, go their go Multi-location some our purchasing unit, a and pointed and

Audiences Yelp some newer also think for very natural engage, like the product I DTC side the especially of a way is our of us areas to equation.

mattress case, on And build audience orders. up. about could or offer seller have that And that an in group people so can for in that say, mattresses interested mattress some tenders, targeting we up to, and Casper that's digital driving suddenly Yelp, that's like you searched think a a we can

to to area well in would continue forward flush as participate are we side general, drive as general in well to on And the on to really ads. have audience consumer broad the continues out. portfolio I innovate as say, a So we positioned this

Eric Sheridan

one follow-up. ask if could I Maybe just

much build How and you make of over you the tech the of term? stack medium there's to continuing 'XX, right think in industry investments to stack. attribution about to key do beyond some getting measurement in want sort about attribution refine guys measurement ad conversation tech so advertising continue to own the out out Looking your and

Jeremy Stoppelman

that of question. list key again for is has our our area of on been frankly years, been This very and number investments Yes. for it's for the Thanks business. an the high of one drivers a

absolutely side, On attribution the Multi-location is critical.

Yelp own first-party Visits. data, our Store have We

our we're the we ad tech understand spend. help in an that stack in-house an seeing their keep extracting general, them to folks that product Multi-location And from able And they're value. offer where so is that's area lift to to ad

large very a team have We there.

have what and no can terms to continue We We're current drive of to area business. end portfolio. broad a at see the time we we of the in that deep in going out of -- sight

Operator

concludes no have We Ladies further That Instructions] session for Thank gentlemen, for [Operator joining. call. you today's our Q&A questions. concludes all and this today.

your disconnect now may You lines.

Yelp (YELP) 5 Aug 222022 Q2 Earnings call transcript