Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello and welcome to the Yelp Second Quarter 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]

I'll now turn the conference over Mr. President, Investor Vice Senior Miln, Finance Relations. and James go ahead. Please

James Miln

and Good call. us thanks on everyone Yelp’s conference joining earnings for afternoon, XXXX second quarter

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

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

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

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

with on and afternoon filings our this the is each released letter our shareholder our website. of SEC, In which posted

both and EBITDA these measures, income reconciliations non-GAAP GAAP as EBITDA financial well will adjusted to historical You of additional disclosures as net margin. regarding find adjusted

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

Jeremy Stoppelman

quarter, by of in to grew net welcome number delivered performance a a income philosophy execution two increased while and adjusted consecutive We also representing revenue across margin $XXX of and double-digit ninth period. EBITDA product We margin record the from prior results James each XX% quarter by record to the a net company. consistent and Yelp year-over-year testament expanding million, year the growth. percentage everyone. the points delivered our Thanks this second

Yelp's for the second In deliver into elevated the leaned our quarter, pace to to strengthen value the to roadmap product continues of company advertisers. innovation long-term. we

more result, a ever than spent businesses categories. on before Yelp As across

Advertising year-over-year year-over-year revenue by increased from in businesses from retail, category. approximately and home XX% other XX% Advertising services services XX% growth with year-over-year. restaurants, increased businesses the revenue

efficient rates Our initiative portfolio respectively. against advertisers, continued XX% ad funnel of down maintain progress Self-serve strong channels. year-over-year their growth multi-location most sales multi-location, resonate products we to with our and and made to and drive our XX%, SMB through approximately and of

As advertising a revenue the these for the for time. our together of channels majority first XX% accounted at result,

to for AI our improve the alike. and over of continue the we've to about be to better system. With the present past projects XXXX Turning our I pipeline robust most overall beyond, opportunities home determine provide a useful upgrading with continues ad the able year, been for ahead. to remainder enhance as the product as them After new targeted which ads, the to experience advertisers performance of the well of and feed, consumers consumers on opportunities leverage display to to product. to to infrastructure networks content neural excited

advertising Yelp by execution growth peers. revenue in to enabled entire summary, the Yelp consistently deliver many which has demonstrated incredibly with performance than In results. another faster of delivered us quarter strong second the proud the standout team, I'm our of

growing remain long-term. revenue we focused strong pipeline delivering on ahead, we through and our product the shareholder value As look over

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

David Schwarzbach

Jeremy. Thanks

flow of above to see outperformance of bottom through pleased to million, range. amount the $X year-over-year were line. revenue net high-end the increased full million quarter outlook Second $XXX to this XX% the We by

to margin. year-over-year locations EBITDA high-end line and record quarter. year-over-year X% XX% increased a of by location, outlook which $XX growth in by XX% the $XX were year-over-year. $XX Paying range, down increased to representing second million in a Top our level an reached income the relatively XX% million. per revenue above was million, Adjusted Net by flat, average increase driven advertising

In by average In to to ad increased per revenue and in services, XX% location. by revenue year-over-year increased also revenue ad record $XXX primarily per other, a growth $XXX year-over-year average million, driven revenue growth XX% million, a in by by driven retail, location. record restaurants,

clicks rates value the quarter. were quarter, by through average to average advertisers In soft year-over-year. year-over-year, XX% the our first flat CPC high-quality ad and metrics second delivered compared clicks while and CPCs of growth to we the in year-over-year increased clicks stability Ad

Other one-time general due second expenses. and include administrative and expenses of Turning first were from quarter expected than marketing lower related expenses, factors, a decreased including expenses which settlement, than litigation number to spend. and the quarter to employee a lower

and than quarter, first continue anticipate total by slightly it decreased year-over-year lower of end be anticipated, flat while from addition, XXXX. attrition that In headcount remains we approximately will the to employee the

well United the as percentage less remain particularly the X% and by the of than mix target, focused UK focusing revenue reducing adjusting product adjusted we efforts Canada, organization. overall stock-based of our the end in of on our outside enhancing EBITDA development, To compensation hiring to quality by We XXXX. of are as our throughout also as States, compensation of reach the a

repurchased strategy. element capital Returning the an overall important purchase quarter, shareholders of allocation average our remains we through shares In second of at capital an million to worth of repurchases $XX share $XX.XX. price

share continue remaining shares the year to remainder the economic of had under plan throughout we repurchasing and subject XXXX, to market conditions. repurchase million XXth, June our existing of As We authorization. $XXX

outlook. Turning to our

narrowing Now halfway our we outlook adjusted year, are for revenue the through EBITDA. ranges and

range quarter. million will second to third to of revenue the net expect the We $XXX increase the million quarter $XXX be in in from

midpoint billion are previous our net reflecting outlook. to For $X.XX million the in the range of a compared we be billion, expect to our $X.XX range raising full year, $XX to now outlook and at increase revenue the

Turning the margin.

in anticipated third $XX expect expenses EBITDA adjusted be compared settlement, excluding million to will result, to as second approximately will expenses, flat quarter million. $XX range quarter of the we a the be litigation and We

the year, of the will of $XX For now at midpoint range we to increase our be adjusted million in million an compared $XXX outlook. $XXX the full expect million, to previous EBITDA

double-digit In Yelp's second sustain closing, to quarters with delivering growth, while healthy profitability. nine sequential quarter revenue of demonstrate growth, ability our top results line

business across our amid durability supports product of macro Our velocity continued our initiative uncertainties. strategic the

to As second year, half we the executing priorities product focused and on of roadmap. we remain strategic against our look the

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

Operator

Thank you. [Operator Instructions]

with of line Goldman Your Sachs. first question comes Sheridan from the Eric

open. is line Your

Eric Sheridan

end taking Is platform be Thanks this, surfacing around through out I this might into very optimization terms the or one. as be to question. able qualitatively content a number elements want year to either in back company come re-acceleration, be revenue the platform to that your in momentum and about targeting of overall. you comments might much to the looking next the could in for different on to move build quantitatively you talk ad way there well would like so optimized respect for a of the as to of both with us year under the how direction

implied the year. I about or your the might the tougher a the Just wanted in much. of revenue sure And comps can against then characterization trajectory make through make want of full sure Thanks of QX that way little to understand the so the be conservatism revenue to QX we there tracks. bit implied just understand implied year? elements the Is end

Jeremy Stoppelman

question question. take the for your second half I'll Thanks hop Eric. Hi, can the maybe and there. David in for first

So, to ad the and have in we tackle ad for to targeting a improve projects ad stack us. incredibly in and area years, years efficiency for been super executing expansive continue matching. to and our deep general has there tech been our well and We've portfolio this

absolutely So, there's down. no slowing

put It besides ads, we we upgrade place us quarter. That how the helped in using with also -- proved a matching about helping the neural be allowed leveraging ad our talked well. positive enhanced photo as to the in selection our nets. in also that infrastructure nets neural algorithm to ranking, We

If you quarter, initial efforts continue We we Last of lot you about a have technologies, entire the talked AI these of sphere, category look with LOMs. advanced our in across the also sort to and expanding instance, see and to there really LOMs. of are course, for opportunities taking all green of a LOMs, query possible great shoots, of at across synonyms. LOMs. leverage a lot the summarizing content,

very And concerted maximum a within so, to we have possible. that leverage to the effort Yelp

will We So, -- side. able were home well nets. our running ad continue also to to optimization a speed the full is are ranking impacts we on impactful not to better the the there had the limited great be opportunities a ad limited not just with also the There's where We using consumer that It's app, we side. side. anticipate feed, which choose impacts neural on are as on win ahead.

And a better so that in was that retention. user resulted positive

So, great see. that was to

then talked little bit about this finally, quarter. And last a we

are were human on and involved before what's to may things really there difficult and think to that summarizing continue -- opportunities I things be with do there'll a have LOMs expensive like page.

great gist of think that they And say, but want a about? or do able offering? this maybe -- there's the reviews you what's the to lots just are What of you trivially. like, business what about to business, reviews, we really get So, have now essence the well, are we're

that now have the So boom, that's just example -- get technology upgrade. we an another where you

handing maybe David off So, to part the second here. on

David Schwarzbach

Eric. Hi,

on strong So, year. guide first quarter, quarter. growth the in for the able obviously, And growth we raise top full second obviously, to through XX% the the XX% we were momentum saw of

the as all rest to those the guidance, expect for providing and through past whether we want we've of we uncertainties inflation seen of second take consumer risks the still into we're account While quarter, the the the couple are year. over for data usual, as go we There or weeks, to number remainder whenever through it's sentiment. macroeconomic very perform of encouraging how year. GDP uncertainties the And

Eric Sheridan

Thanks so much.

Operator

with Your from comes line next Justin of the Patterson question KeyBanc.

open. line Your is

Sergio Segura

We This you. two for is Thank on had Sergio Great. questions. Justin.

the for right noted of decrease you quarter the the Request-a-Quote. just and in were on on now. and engagement a letter clicks First that flat views consumer XX% demand Yelp In

out how on with some how So, of then new interacting that rolled this to just consumers guys you year. seeing you're engagement just wondering are demand that, platform. relatedly and features earlier the And

monetization, services been around second And improved looks question by it then like driven matching. the that's

So, color how matching just the providers service is improved quantify any that much has improvements Thank matching that you've to how to for has make? improved? due workflow maybe Or you. there way to on some got

Jeremy Stoppelman

Hi, Sergio.

and handle both can here. I your questions think I try

quarter. I So, on last the would consumer steady, demand continued characterize much as side, like

up. are in of we see some of opportunity success. And side. the resources signs have past of lot a We and pivoted a over space consumer Contributions the to lot year white early

happy so, see And to that. we're

like mentioned We continue I earlier, improvements of improvements. letter got that the some showing retention home just and in to we've make the we user are improvements talked feed

seeing the projects impacts. So, launching. We're are

there's course, with seeing we're bit here we've but -- I bit a a little had of -- seeing a backdrop headwind of headwinds a is a we're the from got well, a we've what of economy. macro. think -- Of what But macro,

I think the consensus is actually improving. that's

And was a is a potentially now headwind so tailwind. what

things And of and there's shipping ahead so, investments between terms opportunity I consumer that in think, side, the lot the on a consumer and of of some demand. we're

in fact of there. and On there. execute to you continue QX, been years. click the for chip services services, a away, improvements -- up to and great the to side year-over-year winner invest us to in see. gears Switching to deeply that second And were you number Request-a-Quote, continue was we That's tech so ad our ad monetization, Continue if we stack. to there. on had well for question With we a make

to that we're hand consumers and improves highlight the from masking to advertisers, of it they're in able the numbers we're extent to numbers, We which our willing to capture the so quality volunteer phone letter, phone lead. the then

been strong. of while And remain And doing some or was fact, of the project at look see boost the could or you growth. year-over-year into when those quality softness revenue, so, look things in you you the think which to for quality, a forward terms into, has I softness XX% there quality we're of services leads volume, while, in home that revenue And was -- leads. those power of look

looking a headwinds. those for so, folks has clearly -- best earned invest. Maybe been time And the this there seeing advertisers There looked think I for business at slow and little a clearly macro opportunities are with positive and of they've to they're are been to ROI lot turning value, are hard Yelp. dollars what out

see. that's to great And so

Operator

the with Craig-Hallum. from Jason comes question line next Kreyer Your of

open. Your line is

Jason Kreyer

guys. you, Thank Great.

add grown dissect you you but limits there, lot. to revenue grow Curious CPCs. upward wanted have can think there's or Clicks relatively been in a terms have Just to recently, any if of CPCs and forward. clicks CPCs continue flat going if

David Schwarzbach

David. It's Jason. Hey,

step maybe clicks moment. on if one and CPCs, So, back just I can for

provide Importantly, looking at we up Yelp, do to come on to visitor budget and then claim an price geography. that that in by it's behalf. us when advertisers category, with and that find optimize their they to The that really is to in that that budget market we're running way time for the us auction,

And to so, optimize using into learning we to all and budget. stack determine machine are the the has tools We're ad about or the really have tech talked that the of deployment not been that trying CPC the that of actually clicks. built Jeremy

valuable that believe delivering leads have able the been value things important the that That to that continue are are we is that of leads advertisers, provided very being being one to we to advertisers. we increase those to is and said, of

we advertising services One location paying has and second is revenue the ways record advertising a quarter, second did reach overall reached been We the in revenue of quarter. location that whether the in propane that assess a record particularly and increasing. per

is provide se to want again, to that can But we as just we per continue try deliver headroom the don't CPCs. does valuable on it to belief CPC. Our leads, set I underscore, meaningful

way advertiser to We are to budget. given deliver optimize trying their the to value best the

Jason Kreyer

from In Perfect. -- Yelp Thanks early clarification. nationwide the you the positive rollout. letter for also in Guaranteed the results highlighted

unpack can what or you saw returns wondering you early if testing. those during Just

Jeremy Stoppelman

Yeah. there. I'm Yelp to happy touch Hi, Guaranteed. on

are we As today, of nationwide.

the that's exciting really clicks. in an on We're results to provide or some early to as ad increase to have So, updates as And showed submissions up project rolled come Yelp Guaranteed. proud out. that well

built is Request-a-Quote. top on of this So,

allows is continued really the Consumer information. I to provide they think experience. it the feel provides side in information that their it's on about Request-a-Quote, consumers as with pros, well great them our investment think consumer in start the touch conversations. Puts of way part which to contact multiple necessary is as can own project

we -- We live to the that phone is phone maintains all so in letter, they in know the skills provides number number the a the in they quarter. that pros but consumer's highlighted also can to phone, important launch that want they them love, really that privacy, the had We something getting masking to we try feel. opportunity strong that business. close so have pitch pitch sales on That and that to give

is to commitment. invest think Request-a-Quote. Guaranteed great in So, that we significantly continue And Yelp of I demonstration a

Jason Kreyer

Thank you.

Operator

Your next comes Sebastian line Baird. the question from Colin with of

is line open. Your

Colin Sebastian

Thanks trends on up just a on go-to-market that what's sequentially maybe you. of may strategy? that velocity Request-a-Quote, you want perhaps that if focused Maybe Congrats curious the just be on you what there. more guys sales and invest your audience more, following really the of are there that the afternoon. kind good business. this dedicate network, on has Good guys. Is wondering in driving in then, to on terms And looking just Thank at influence to the larger or What approach? on on thoughts the a something quarter.

Jeremy Stoppelman

Hey, Jeremy. Colin. is This

I one can trends here and Request-a-Quote tackle think I first generally. the on services

Really I Yelp it XX% think, year-over-year services. revenue revenue home looking and the fantastic, appears on year-over-year growth in growth back in the share. quarter, is performance stepping services, taking XX% at pretty like

Ad were see in up to we're growing. the so, from So, that services QX, very year-over-year is that. pie excited clicks perspective, and

headwinds. The in overall see But And view of out I face were of as early the I look you been performance second you the half, look that. the for think is XXXX. I can macro, we as as consumer half that think shape. in XXXX, bold strong there's consensus the in the incredibly still, if at hasn't economy been is decent is consumer in is improving, think the Yelp they and

that tailwind. headwind a and so And could turn the it into take

David Schwarzbach

clarify sure David. referring you on is asking. Audience make Just This mean were you were what network, just we marketing? you understood, to want to SEM perhaps did or Maybe Colin. Hey, Yelp audience to

Colin Sebastian

Network. -- Audiences Audience the Yeah. Yelp The Yelp

Jed Nachman

I couple This progress was -- pleased to look rate moved last if that rate we and Great. is made can Overall, $XX were a a at that a $XX a you we've back in our million years, -- that run it this rate run and approximately, with one. Yelp This largely an year. run is million $XX on Hi, year Colin. really the approximately million audiences. product incremental with take we -- Jed.

to to And For location-based buying, actually built have our team of kind and we've extent, within over place. penetration it businesses, existing there. past wallet see in we us and they're share what it's the business. And further of the that blended to into go-to-market already year, continue up allows book expand

also side. those purchases, we're work. friction of it's in cases, things involved of we've multi-location. the the we really an front talked And multi-location but job educate brand now, them understanding agency And Avenue And Number out about, agencies. of and channel as helps things. the and is of traditional really in we've that the businesses, some get Madison a that is not of within particularly to products, whose out i.e. -- on those One what product with two, strategy of that have two those number service kind agencies is advertising that we important a master on on the kind that only to how one, broad it grown, there take some more location-based development released in more agencies team do kind agreements

we've environment side. the the current performance of seen, that pleased especially with particularly early, some macro It's peers still by brands and we're to brand growth our on for in the compared but with the

of we're out Yelp continue signals encouraged Audiences we'll getting by to going invest are forward. the We and the that

Colin Sebastian

Thank you.

Operator

with comes next of Your Fargo. question Stan from line the Wells Velikov

Your line is open.

Stan Velikov

question. first your which to growth on just among those expect you I opportunities? Hi. Thanks the latest all, lowest do fruits most kind product of taking think the are initiative, And for my there? provide guess, do you which

Jeremy Stoppelman

Hi, there. Stan, this is Jeremy.

XX%, So, us, some nine think clear see double-digit opportunity been for strategy and growth. leaning of We're consecutive really a multi-location We've into and about looking short-term We're feel and now ahead our for continues quarters at multi-location so we long-term. the growth, the I revenue lot part and self-serve Leaning in our part into big product-led that. of really of now, of at revenues, both our first time of strategy, has time. Self-serve working. it's a we a it's channels the our a of good majority to been be big strategy.

of terms were fruit to tech In on topics leverage, get of we like and of where earlier lot the do of to hanging continue the back a that our the some low ad call, innovation. it's

with well highlighted the own capabilities we have We as letter. which LLM of in our addition neural capabilities, stack tech the net ad as

This wasting the matching lead efficient at less better inventory consumer because because we're we we the getting quarter, we matching is a continue looking the a just that provider. goes advertisers We're them the quality up. of to know air, our our essentially what of make The make algorithms thin more the experience consumer algorithms for and is better inventory for. really with generates efficiency improvements that in and actually

strong. that running It's in portfolio bottom continue out the going tech and really it. We're there. we of for the barrel. of side We're to deep the not So, we're again, extent it's feedback sort And wins the ideas. to of not a find going keep scraping well, on positive to our loop is a ad

call exciting really on Yelp that's leads something SCM It's for Yelp. a that there's haven't some on area that last services And But public in rely newer, companies touched we the in. us. participated opportunity there. hanging not highlighted as sector. pursued. an we area a out off know we've just even on that's Audiences, SCM, have that's the big We also We opportunities Jed, exciting

of yet leads, It's investments it's the when tap our provides another And to -- into so, Yelp and tapping think towards only that's well. paid but which look as growth. and one, to we one exciting we all avenue into SCM building some not at there, Request-a-Quote an for -- another for that the Guaranteed us

as strides login Last we owner is outta great Yelp streamlining and continue the Request-a-Quote Guaranteed was highlight as there experience the to quarter to and got masking flow side, just make the well consumer as, the business friction improvement improvement. obviously taking as number experience. yet phone well we've another side

plenty there's side, consumer of the on then opportunity. And

We're into many we for We our and contributions video we improve review in example. that now getting -- flow, as flows. contribution continue incorporated were contribution to video as twice contributions the now

And that letter our finally, we we improved talked improvements, that about released engagement. in just feed the user home

perspective, quick a paths in. So kind from of a confidence which different all that's growth, lot us there's of and just investing areas towards in there's tour the a gives around the lot, we're my long-term. But

Stan Velikov

Thank Great. All right. you.

Operator

Instructions] [Operator

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

is line Your open.

Shweta Khajuria

multi-location. for Thanks and Jeremy. on follow-up that thanks for guess, -- well I question. put. is I my That summary, taking was my guess

would maybe do a you are Yelp you have, see how in as for years You you -- Or do of offerings where the biggest but when suite opportunity? versus or two were the there? the So, you terms much where maybe the is, opportunity fruit where the you low better what product multi-location that about think market you biggest hanging today ago? has see is where

Jed Nachman

as the can of QX. of Hi, and the to blocking enterprise over Shweta. mid-market channel, section-- the up kind Obviously, comp goes spectrum sequentially. time XX% really a the year. ends to actually channel the in client relatively performing, tackle relationships quarter-over-quarter We've on of tackling in kind those team deeper able partner it to side. from as multi-location is deeper kind the obviously And team Jed. last year-over-year And And out. of a at start really team the it's the is world-class invested mid-market think in course tough the be I directly and the point. in by. and all continue This at the XX% a of this It was channel channel, well. of up It we're on I performance i.e. pleased was lot, we're with in

in, to highlighted kind kind as of of of are never some and as that sure at the the improvements before. of ton of terms on and we've cases advertisers the UI able some innovate have ads. growth for access really Yelp as continue local of larger location-based We've Multi-location well the of need those for Also customers. a that product been a driver a what lot in both the Audiences a than, customers brand -- on to advertisers different we advertisers versus local, making of advertisers side in of terms our looking made

third also area completely we're have particularly few in YSV, real Folks to various asset a able its kind just I into are show we own to of I that we various on that show reliant attribution continue through parties be attribution to their positioned we is -- that spend channel Overall, not of in of think as kind has But Store advertising, is which first they're channel goes have Yelp that our efficacy feel economic a the want last have we're Off another we're is the own that years. know on Clearly Visits, And really environments ROI in ads. in multi-location our becomes take Yelp data, attribution. getting ways. which that would we like top highlight we party and we and over to of important that Yelp it's that forward. there's order and to and obviously go of And do come of on the in. it's through the well really important. general, our lot in --

Shweta Khajuria

Jed. Thanks Okay.

Operator

question Jefferies. Your next comes Colantuoni line from John of the of

open. line Your is

Unidentified Analyst

a is there. taking John. Thanks Hi, for Chris on question. This for

macro say -- headwinds unpack staffing You've each called impact subsiding us a RRO, fair the on it about detail kind seeing that few maybe times segments, a of of and might versus talk in and measure Thank it? you services and kind be macro to you're you specifically what how latter. your with you. shareholder in the out for of just uncertainty little maybe is [ph] more those Could

Jeremy Stoppelman

Chris, for question. the thanks

economy, think just pleased we consumers, their our with ability businesses support have both in we durable to demand. in advertising. their advertisers, underscore advertising On very complex. very underscore proven SMB want we the that, forecast where help SMB, generate And it's in strengthen we're seen the US second quarter, look saw the broadly but did to Obviously, nicely. because SMB they hard the been to reach side well we I folks been we've on the It's in in for obviously local we'll strength want local And we front, particular, business when macro and to I think that we're up advertising broadly very placed to and demand. in land. economy obviously we Clearly, holding just demand see for

we've definitely seeing. that that's strength So been a

I enabled delivering of is around EBITDA growth to margin. executing on the us our insights I'm to there. much what of sure we in overall just that XX% want I we In -- delivered improvement look may to terms more out we the value it how the not point just so our two focus QX advertisers that the think But deliver who's us, best underscore this. coming to than play perform That's else months, and for paying among unfortunately, percentage adjusted attention everybody economy companies at peers. and you we have has XX% And

the our do of the through stay pleased were are rest the to in that's with we So, we're things year. ability going obviously focused that on to really our what control, and

Unidentified Analyst

Great. Thanks so much.

Operator

call. Thank well session as conference today's the as concludes This question-and-answer for you joining.

disconnect lines. now You may your

Yelp (YELP) 3 Aug 232023 Q2 Earnings call transcript