Earnings call transcript Q4 2022

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Operator

Good afternoon. Thank you for attending today's Yelp Fourth Quarter and Full Year 2022 Earnings Conference Call. My name is Megan, and I'll be your moderator for today's call. [Operator Instructions]

I would now like to pass the conference over to James Miln, Senior Vice President of Finance and Investor Relations. ahead. go please James,

James Miln

and full joining call. year everyone, fourth on quarter and XXXX thanks afternoon us for Yelp's Good earnings conference

me and Chief Financial Yelp's Nachman. today Jeremy Joining Chief Stoppelman; Executive Officer; Operating Chief Officer, Schwarzbach; Officer, Jed David are

letter provide a Investor our comments to then some SEC brief shareholder with chance to your Relations had turn hope opening everyone We a and questions. read the on published website and it. We'll and

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

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

EBITDA adjusted prepared in in accordance are should adjusted not substitute financial information During isolation a for Principles. today, we'll be from measures. with These our call Accepted discuss EBITDA which considered financial margin and non-GAAP measures or Accounting as Generally

net adjusted historical with on adjusted financial and afternoon non-GAAP additional GAAP EBITDA filings our well regarding find this the will is as each you disclosures released letter measures, of margin. our income shareholder EBITDA our as website, of SEC, both In which and posted to reconciliations these

Jeremy. will call over with that, turn the And I to

Jeremy Stoppelman

peers everyone. Yelp XXXX. strongest one in advertising James, marketplace and revenue growth and the performances among our Thanks of welcome delivered

products range audience Yelp. categories, demand performance broad Our and a and of generated on high intent advertiser across robust both off ad

this $X.X We team demonstrate strength platform performance under $XX of a the execute a excellent of conditions of in million by and deliver with revenue difficult EBITDA Yelp's billion our to and results to delivered income of increased XX% These year-over-year of adjusted to ad XXXX. ability durability record results. Net net million. range the and $XXX

our the record in grew our revenue and drove Yelp we in year. record strategy $XXX services, line share the We We differentiating top paying and locations resulting revenue XX% of greater product product businesses achieved growth. a In lead market led per experience Underlying results monetization from to to number record gained services year-over-year for a increasing location average succeeded XXXX. advertising advertising in as XXXX believe and service record quality value in million. other

approximately an services revenue rate of The Advertising XX% increased strong, category growth advertising year-over-year by to category Since Restaurants, for has XXXX, this annual was home from with XX%. million, revenue compounded growth paying XX%. in particularly locations. at driven & by nearly of Retail growth year-over-year businesses $XXX Other

and continue of deliver advertisers down intent clicks, in by products ad to value in categories up deliver funnel designed these Yelp. to suite both enhancing We on/off high the and to our

initiative million progress than the trustworthy our to unique App flat business, which reviews resulted our of XXXX. in the reduced pre-pandemic friction from helped devices were macro backdrop, content consumer at million as up process, more XXXX. early reviews of of XXX rewriting softer grow in million traffic December XXXX. from new by XX announced XX, the the of below environment on consumer cumulative Despite we This beginning We consumer contributed On as side compared to demand. levels made we this $XX the remained XXXX. focused X%

on to Yelp. leverage respond able This consumers in addition, a there advertisers. best-in-class number dynamically through that can near-term value consumer of is system. our deliver with are to we suggest language models to We applications match experience to technology changes our ad work efficiently early and In our supply to enhance with advertisers large sophisticated the demand

the a for tailwind of by year robust declined clicks benefited against ad spending, our from we demand reopening increased from had XXXX, X% XX% CPC by that consumer advertiser and improvements as executed year and While system ad remained roadmap elevated year-over-year. average

levels from on channels the through drive Self-serve XXXX. each progress in Multi-location made grew sales revenue to also Together, We approximately channels and of year-over-year advertising represented these XXXX, efficient four approximately percentage our record channels. points to in most XXXX. XX% XX% initiative up

Yelp the last across strategic year, progress all tremendous Looking of over our back team has made the initiatives.

have Our also trusted a delivered revenue, with time. leader investments content ad sophisticated in Yelp's only not as local record strengthened but product in position

result, the and upon consumer advertisers efficient initiatives in has to value channels, aim initiatives we by more our leads to areas peers that local and in in, drive most better drive Yelp positioned We to delivering than growth monetization through to the increased to in differentiate advertisers. from profitable expand quarter, growing profitable to Yelp our experience. a and continue consumers believe execution consistent a each XXXX After enhancing growth. As ever XXXX continuing invest value sales quality these these to long-term bringing in and services, plan of driving the long-term to over and

like David. over With that, to I'd to turn it

David Schwarzbach

turn of our will I our recap to strong results. XXXX the now performance quarter journey. fourth for Thanks

tax to XX% end decreased increased outlook income Fourth quarter high net in year-over-year due of increase revenue $XXX range. year-over-year the to XX% a effective near Net significant million, to largely our by million, $XX by GAAP rate. our

revenue increased of $XX year-over-year range. midpoint to by the million, Paying the average locations XX% reached grew location in by record. Adjusted year-over-year fourth quarter, per $XXX,XXX while quarterly advertising outlook X% our which to is a at EBITDA

XX% to fourth Advertising quarter. revenue from in services the businesses increased by $XXX year-over-year million

XXth increased Our in high-quality pros advertisers Average record resonated quarter the and efforts to row. a service these to for categories. location drive revenue clearly reached with in have leads a per services and

to Retail XX% Advertising increased & million. $XXX from Restaurants, revenue Other year-over-year by businesses

quarter This year-over-year these softer outlook, more our season among growth demand in business categories. the in advertiser prior paying holiday muted to in Multi-location particularly locations than contributed in advertising was years, XXXX fourth anticipated As in advertisers.

our prudent long-term. to Turning investments made Since strategy drive significantly over the product-led to decrease in in our XXXX, headcount in growth we expenses. profitable have

increased our We and product the of development sales have holding relatively Multi-location size flat. headcount organizations, sales while local

approximately still As revenue and year ended same a by XX% but XX% full the we below result, increased a of while the year of total headcount net with XX% an year-over-year, people, XXXX, increase over representing XX% periods. X,XXX

mix and footprint reduced our approximately plan margin We over improvement sources will are of progress real product-led maintain to the leverage XXXX. the sales headcount total shift, be pleased strategy estate channel with currently in and same We this and long-term. believe

of decrease a percentage as percentage in In committed to XXXX. addition, an of decreased by we point percentage points two drive this revenue. stock-based we XXXX, reducing one to In are additional and approximately compensation percentage expect

ahead, Looking revenue believe we mix, as to as and by stock-based end continuing to less well particularly revenue location we XXXX, our of compensation driven optimize can development. than by product X% the growth lower of by within compensation

of we in purchase repurchases We In repurchase million repurchasing XXXX, year, capital million Returning conditions. of of remains at plan $XXX to end shares price important average subject economic $XX.XX. we market of capital to strategy. had the XXXX, through element authorization. on an $XXX remaining and the worth At continue to repurchased allocation our our shares overall shareholders share existing

our to Turning outlook.

enter we the to As long-term and our continue them. ability XXXX, ahead team's in believe opportunities significant capture we to

However, remains challenging. the macro environment

first for in $XXX the expect million We quarter, reflecting $XXX to range net the million revenue will of typical seasonality. be

$X.XX For to revenue billion our the we of drive initiatives $X.XX of growth to uncertainties. macro net range against ongoing as billion full year, in the continue the to backdrop expect be

to Turning margin.

quarter, our well the hiring as in to efforts the to by seasonal payroll first expense, taxes. expenses primarily fourth reflecting a as in We quarter expect driven increase increase from XXXX

EBITDA $XX to to first As $XX in million. a be we result, range the anticipate of million quarter adjusted

For the end the of compared modestly expect to increase total maintain headcount to same we XXXX. as full the year-over-year approximately year, we expenses

range we in $XXX full adjusted EBITDA to million such, the year. be $XXX million anticipate As for to the of

requirement tax effective Cuts range XXXX XX% Act. Jobs development rate expenses to expect in our the Tax and under currently be XX%, and XXXX amortize research also to We to to the for of largely U.S. due GAAP the certain

and In one strongest growth among advertising revenue our XXXX. performances the in peers closing, marketplace of Yelp delivered

has Our broad-based local to execute its results. team our durability continued against ad initiatives driving excellent platform our and has proven

shareholder for value path While over macro in foundation with long-term. the environment profitable remains we've a the built strong confident the future are along growth to deliver uncertain, and Yelp's

please operator, open for that, up line With questions. the

Operator

Thank Instructions] you. [Operator

of with question Sebastian first Colin from comes the Our line Baird.

now is line open. Your

Colin Sebastian

Great. for me. Thanks for two questions. my I Thanks. Good taking afternoon. guess

First, regarding the outlook. some of expense

sales. to product flattish, development roughly headcount I think keeping adding

need you behind Just that. more the curious just like development detail standpoint, developer sounds from a product little you what about product or thought but strategy? sales It a process a on have the

more strength just up, about there's roadmap, it during pricing down, -- saw And then to you click the growth. of still the ad think terms but given talked secondly, shifts the I you clicks growth Pricing year, -- ad is curious where continuing we this a the more how about should year. beyond is in going mean flip maybe there

metrics, the how of you. that some on curious out. see Thank Just you playing

David Schwarzbach

question, the just we expense product and regard XXXX, the clarify, on to With added to Colin. for Thanks to in headcount side, engineering.

XXXX is about previously still team. sales around it higher, XXXX. modestly past had from the down to with but was line what headcount, of of about really We -- And also in half substantially with sales our we've being XXXX That’s the Multi-location in from you added shared been. range local what which in our

administrative. keep And general it's plan engineering, whether the all flat. areas, to overall For and true and we of or and sales marketing XXXX, functional across headcount approximately product that's

terms in So, no of mix XXXX. in in shift headcount expected

Jeremy Stoppelman

And it's engineering and company really Colin, of the thinking all there, and macro the Despite the this rest the the for year uncertainty, We been question product feel is execution on really engineering too, the and the take about but side, roadmap clean. the second on the team's of side, product great. Jeremy. specifically beyond. I'll

portfolio projects continuing We a have to deep improve. continue into ads of leading to

are as up started starting benefits towards tech as we well of that XXXX, a consumer. pivot. the obviously Recently makes the see request-a-quote We're turn driving -- more towards projects matching, it there. ad some Our to both number difference. quality the in leads, stack of that We

to see stack wins starting X% noticed reviews to You year-over-year some have up. those of grew may

then Self-serve we continues started a little color try out been have there. progress continue really And and about go to into further for see bit then go-to-market that great and a And conviction to more leaning continues Multi-location we've we leads from into amount perspective, afield, There's currently why share well, we One -- really we've the to at latter of is the in a at there, cite that CM participate a we future. grow we services and considerable can big all. in area of pool that for quality traffic. looking for time example [ph] don't

built back so, And if uniquely we've jobs, and we've like go assembling the look technology, at you play pieces nearby space. matching to with request-a-quote, been necessary that you slowly in what

I to considerable share over in why at gives its also job, the you brand and like sense if I that a we And look think that think strength we space beyond time. of single think of Yelp's you take value consumers some can

anything haven't We really year in It's area. think area. that's and years, this about this development really baked that product a is year. the But experimentation out interesting into I in --

Yelp It's wasn't out rapidly and And that that a another exist. growing that then intent Yelp it's we've funnel they see been down in-house area us. investment business and reaching to travel just very as and to a long the innovation more you to then taking point just didn't that It we for off opportunity considerable web, our from those even would of Yelp built ago audiences providing now for and value as consumers really That's consumers advertisers. Yelp it's us. on unique syndication I across

get, the the So, if over long-term. that in portfolio, host we future across growth as whole the you do, of there's opportunities look and confident you high

Colin Sebastian

Appreciate Great. guys. that. Thanks

Jeremy Stoppelman

Sure.

Operator

Thank you.

from of next Shweta comes Khajuria ISI. Our question Evercore the with line

open. Your line now is

Shweta Khajuria

I questions. my couple, taking have for a you Thank please.

revenue It terms like experience want to leads specifically are sounds driving and least at one. industry share services based revenue services your maintain in Would peers. what the of to you quality about the model, on on the versus the double-click talked year plans drive you shareholder you for of That's and growth? improving So, in gained question the you letter. XX%

if you David, cadence And question the the EBITDA. is, about second please talk could of

your of had the So comments get you. full rest letter. in about some sequentially, year as the But prepared well for EBITDA the in you should how cadence guide? of we to the remarks to year think as Thank

Jeremy Stoppelman

happy I the and Shweta. the is leads. see was one on Great all monetize Yelp. particularly Really XX% touch services to believe in I growth growth maybe that within services, Hi, there, happening see activity can that home the This year-over-year. Jeremy. to on first of

host request-a-quote. consumers We a the One with will improvements request-a-quote in of brand project leverage Yelp's have particular really soon help whole in engage continued give particular. confidence within to launching to

do portfolio within we really there. healthy really -- a So, development product see healthy our

a like from leads isn't over had the up the monetized on we lead there getting want feel advertiser lead ROI. there. the to obviously, headroom is [indiscernible] keep an perspective, make that lot opportunity certainly could then side. high but question, them, XX% isn't the where actionable do there's move from that now, works up, we But advertisers that demand On that years. come sure felt We making considerable drive And the given they're a right quality there's tradeoffs for think, to to there's they number like improvements really that value a if on

we So, believe to we're go not will that quality that drive over that year, were continue but We're do up. focused up as to on immediately. number we last time, rushing

David Schwarzbach

your XXXX. in also expense see addressing due bit through of the do on higher payroll There's EBITDA a of first we in first layering of headcount expense taxes. the the half again, Once quarter, hired question cadence we just in Shweta, to of additional that the year. significantly the

to to year, moderate for from also increase of move through quarter the the and So, course first the expenses we we would down the year. as EBITDA expect over

profile to the $XXX the -- expect yeah, the for that for deliver that's -- order to $XXX we million So million $XXX to me from in million XXXX. $XXX -- million excuse

Shweta Khajuria

David. Thanks Jeremy. Okay. Thanks

Just a quick follow-up though.

help of terms should for So, of representative for XXXX any Any year? modeling thoughts seasonality, versus perhaps Is purposes, more just but follow wanting a particular David, with it we in XXXX? there.

David Schwarzbach

of in that compare the top to Shweta, my head, a thought seasonality I have a year don't, off for terms of to.

say, So, in for in order to actually at can we'll us of terms take move down But what expenses is payroll EBITDA the profile. year and to a again, look tax look as think we year go the a through deliver of we that is I and because do higher accountable overall year. and the see take adjusted we QX expect moderate let back What is for this that. meaningfully

we XXXX know, things I a headcount and large And changed movements have out would don't anticipate just little in seeing in makes large you through do XXXX. It XXXX movements harder it we XXXX, As considerably not comparisons. headcount is or to thing the are in XXXX. other point in

different to profile also that's very just compared years. So a prior

Shweta Khajuria

Okay. David. Appreciate Thanks it.

Operator

you. Thank

comes from with of question next the Our Sheridan line Goldman Sachs. Eric

open. now is line Your

Eric Sheridan

that QX, sort get on headwind how you Ex of give so of two, your much Coming questions. underlying Maybe of love so What back could are would detail business I taking might we out. I Thanks have for control? out. about to willing the the of if within the comments created to to can. to as outside them your you're versus macro, macro, the as the just the QX, better size thinking control the things beginning much

mix as shift And thinking or in elements back towards towards Thanks we the Multi-location, you ad through targets can so about frameworks exit Self-serve then are of of into there about XXXX velocity and coming shift XXXX. us the any terms much. to give or elements and those an think business mix move

Jed Nachman

both is Jed. I questions. This take Eric. Hi, can

business uncertainty pleased the revenue and of terms experienced overall really and solid. the business remained the the visibility, with We've, of past, we far. thus QX periods in has resilience of macro In the remain

both revenue and category and a We down performance ads. funnel by have really diverse high-quality base based channel

in rate Our most previous holiday which Self-serve from year-over-year at muted a years. you in resulted see QX, increased And both XX% the efficient XXXX. mentioned, grew we in Multi-loc, edges, channels, Multi-locations more and the as did advertisers in spend at a than some caution

with really business labor run. Multi-loc These dealing room of the number rising we a cost. that has macro really, have obviously been Multi-location remain to our issues believe But supply relationship businesses channel input with And strong. to from

of now SMBs, side, on the local our On executing We're advertiser our against those high-quality in past. that comprised which SMB control really and resilience has the in focused base what's demonstrated is right initiatives.

of between at growing And Self-serve in revenue. terms four approximately XX% our XX% the Self-serve up of of to between mix revenue We've points total terms and two those you increased Multi-location, year-over-year XX% channels over have clip. in Multi-location. the of And out our of and --

make channels. those sponsored improvements portfolio, So, product audiences, which in on resonating we're Yelp to pleased collections, two ads, Multi-location are the We've continued really with spotlight really the marketplace.

to terms Self-serve improvements you important matching side, center advertisers leads in our message and we're the improved advertisers. on And in terms really what local customer insights giving most of make our with continue of and the

shift mix room both a channels going perspective, both to lean believe into to and to from had those run. So, of have they continue we're

Eric Sheridan

much. so Thanks

Operator

Thank you.

of Carpenter Our next the question comes Cory JP Morgan. from line with

Your line open. now is

Cory Carpenter

you. thank question, more want macro. on I A I Hey, two. have to

Just specifically, the of you coming staying Or more of levels? improvement steady as you Multi-location base characterize holiday maybe perhaps out have advertiser seen kind lower those the at season? would it in

per unique consumer then you I levels. on that Jeremy, remains then Curious that's mentioned Thank think, you. you pre-pandemic the a And to? how trending? attribute it called user that engagement what demand, but what are lower, and little secondly, you devices below out And about

Jed Nachman

to able have to trends. Multi-location to out. whether are of spend folks and we are were spend that shot strong as think and it's saw we example into of XXXX. in based that a And muted kind the in party our YSP to macro pleased can we in money but they Ultimately, place showcase an were lead right we from in like of at Yelp the is really down really that really well continued take where attribution. type another funnel -- that that able we quarter, fourth I first now. third really attribution and/or the going which terms in our a in their in Obviously, uncertainty, those yielding solutions spot we're ROI and use prove want good with really from and we That's feel macro way Multi-location we really, -- of this they're order times kind have of derived parties data environment, positioned a conversations all advertisers with

Of course, out there as our we there. but feel we to the are macro of are XXXX that head uncertainties competition into well-positioned control, relative

what so And Multi-location would on that's side. I the say

Jeremy Stoppelman

Hi, engagement of much Cory. about there flat are not obviously Jeremy, again. contributing the consumer got transacting. just consumers we're it at and sitting macro But Talking think looking factor, I kind app, how getting around. a and and year-over-year, out

of pivoted have year-over-year. We consumer. a X% resources contributions see lot We rise did towards

So, that's the signs I there. early from think efforts of success

We a We've engagement. XXXX Android on on keep focused experience, some on. the we'll that's in a improving deep things have home of iterating got executing like mentioned, improving to you we're fee that these roadmap be going that new

search have there's technology their to regards may language there. in book win You Large within new out models also noticed leveraging LOM. from first

lot stack wins. think, there's to our I starting of gearing a effort up. Last year opportunity. first was kind We're just of So,

web worth that continue. And Also up think was see noting, we'll well. as so, mobile I

early quite one perspective. during think driving I is was now we confident. return pulled And and things spend, And especially pay so, on, a to installs back engineering installs marketing and the we the feel product timeframe, investment pandemic from with significant, then of that also the

some something to that's provides well. upside we've so and so that as audience returned And that

Cory Carpenter

you. that call there's years. projects, Thank just one would If maybe you what for if Jed. specifically the can maybe seen sales that you you interesting Curious to well. I more, two call I customer And you're attribute new doing out was working out you've is that best you've acquisition local changed if in or that something

Jed Nachman

for the Yeah. Thanks question.

also the the that in From have being year are Self-serve that's which been now a a and feel there as channel, people past that both giving to in been an the salesforce few our sales our really distributed sure to get right salesforce productivity product and value of for the know a evolve can making out they is seats. includes perspective, local product of past us level top really, we on rep have which able team. remote both and years reps have been watch retain important we as more really ages, real than them. of We terms you're you kind well we're pleased benefits portfolio the we're And which as ever to the talk too, success more sold who over sell as in going across the country, And to certainly our ultimately, businesses, are business. boon the of that's with and confidence with the delivering local our we part performing we local includes important them really --

Cory Carpenter

you. Thank

Operator

you. Thank

from the comes of John Our Colantuoni Jefferies. with next question line

Your now open. line is

Christopher Suchecki

Chris is the taking for Suchecki John. This Thanks for Hi. question. on

then load? adjustment how we on? category. you. permanent about experience in on particularly comments an picked loads you're we able a ad we Was you the So, picked ad are the made you've some just could Yelp impact Or load talk to if to think up testing just consumer across Thank And monetization. up then services the lead on thinking greater ad services app, and this in maybe about uptick some

Jeremy Stoppelman

Hi, search running are Chris. very the We're experiments This is constantly good Jeremy. that experience.

to think far within report than as to lot a something the do of massively there as different services, request-a-quote. activity within note I it's And historical. important nothing so,

within you're the fulfill within project your consumer from more and And and you're us actually hearing a can telling fully request-a-quote great Because that And ideally so or near experience. of monetized. it's is fully people lot happening that a what's reasonable a about timeframe.

consumer. with win and a responsive and facilitate The businesses opportunity progress, So, all gets Yelp kind it in we engage and as that paid. the consumer the around to valuable of leads see gets that

and that's services. a the is lot value of focus of where the lot So is a within

Christopher Suchecki

Got it. so Thanks much.

Operator

you. Thank

comes question with of Brian the next Fitzgerald line Our from Wells Fargo.

is Your now line open.

Brian Fitzgerald

question. Last you almost Thanks guys. guys quarter, interesting, for taking countercyclical trends in services. out called Hi, some the

I saw maybe think cool. if even increasing they ad first demand room it spend was

up So, quarter. you noted XX% home services year-over-year was this

if can out So, any anything you there call other maybe else Curious strong. looks continued. or services especially it there's like that weak categories, or trend

Jeremy Stoppelman

Hi, unpack Brian. This more don't remember have I about But environment. hard part boom slowed time is given it, going to the I'm it on the seen keeping XXXX. yeah, advertisers not themselves and macro a fully What's on demand trucks to I continue did we specific Jeremy. from services think, remain recruits. year of robust sure strange, we have that. -- I even did and there, so. rolling home business great on call But spend have of think as is to busy. keeping is -- down, Businesses their has services

a a return from looking and get And invest which channels their reliable perspective. on in investment they're to so, leads for

turn We're over quantity quality lead theme hard work last of on on the up to that And think as so delivering. turned from our focused focused a out We're Quality -- we Yelp of really a monetize. really also for it's needs. reliable on see making for businesses, convenient. because can is we're leads. we've and many themselves whether on percentage And can and I these test working They And big that's high-quality They driving quality. off very needed. have just we're it was perspective, it why source year. been request-a-quote driving

to I they hit we're service then, when of think or on through. you look to Times taking demand us syndication. the with Yelp the opportunity able at tail that's one And somewhere requests, these of if when the maybe that through York longer coming Yelp, them the infrequent someone consumer web we're New reach comes else

a And so powerful well. as that's tool

think I continuing is together to spend to deliver coming valuable and local which these great. to with us, leads they're is everything So, businesses

Brian Fitzgerald

Thank you. Awesome.

Operator

Thank waiting this additional you. There time. no questions at are

earnings year fourth now quarter So, conference participation. Thank call. for XXXX Yelp I the conclude you and your full will

a day. have You wonderful

Yelp (YELP) 9 Feb 232022 Q4 Earnings call transcript