YELP - Earnings call 3 2023

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Operator

Hello, and welcome to the Yelp's Third Quarter 2023 Earnings Call. [Operator Instructions]I'll now turn the conference over to James Miln, Senior Vice President, Finance and Investor Relations. Please go ahead.

James Miln

Good afternoon everyone, and thanks for joining us on Yelp's third quarter 2023 earnings conference call.

Joining me today are Yelp's Chief Executive Officer, Jeremy Stoppelman; Chief Financial Officer, David Schwarzbach; and Chief Operating Officer, Jed Nachman.We published the shareholder letter on our Investor Relations website and with the SEC, and hope everyone had a chance to read it. opening our then safe brief questions.Now to some read I'll harbor provide comments turn and your We'll statement. cause and We'll are make that risks forward-looking that to could uncertainties and involve materially. certain a number statements actual results today differ of information statements these to light and of the call, our opinions undertake results future publicly these release no in obligation or of Please the forward-looking only new of revision date forward-looking note statements of reflect that or any this we as events. to revise

flows turn shareholder well accordance will EBITDA from our I Accounting on cash each which website, income regarding over disclosures historical posted operating call as In are that to results. cash and number to EBITDA with may with net Accepted description EBITDA, our SEC as of call historical which find our from a discuss significantly that, this adjusted reconciliation to that activities detailed the financial a these should more filings as cash filings, will released reconciliations These to of refer flow, addition, the isolation to for and our today, adjusted shareholder GAAP both margin, risk non-GAAP free subject be of additional GAAP financial Principles. and may you EBITDA we adjusted a of letter financial margin, measures. the Generally as not of is flow.And or and Jeremy. substitute free as are measures well impact risks our In financial results.During adjusted Please for non-GAAP and SEC, measures our in with afternoon prepared in our business factors we'll considered affect information our letter

Jeremy Stoppelman

by net this our while revenue Thanks, James, grew net year margin innovate and ad delivered XX year-over-year. in product customers clearly against advertising both roadmap. adjusted high-quality to also year-over-year, value We with This record consistent percentage product delivered to revenue ad teams revenue the drove to EBITDA the $XXX of RR&O categories, initiatives X of remained demand and and product and led and growth growth everyone. prior and margin generated the XXth the a our performance in our formats our period.Profitable improvements our points, across quarter. in time, execution. by approximately third double-digit advertising its advertisers more We from systems quarter, by growth a in year-over-year strong, At broad With record to Yelp efforts XX% our record revenue XX% Retail, as was Services up to million. deliver to Other.Services advertising XX% particularly income was quarter has home testament continued clicks execute to revenue up XX% growth, percentage points more our made by year-over-year the consecutive advertising services. welcome resulted expanding resonated. same robust, and in The enhance we've Restaurants, our business

increased the combined ahead.In channel increased to a to see in year-over-year. revenue sales third through by multi-location At XX% another year-over-year, year-over-year flat we quarter, to initiative our average in each our year-over-year most by efficient revenue significant from period; grow of moderated years improvement the in made marked the continue a advertising revenue, XX% Yelp to by to year-over-year CPC growth, returned ad in XX% In compared delivered time, growth from great against summary, X%.We quarter. drive increasing second clicks fact, opportunities the while channels. performance Self-serve same the the quarter. second progress also X% At growth prior-year at

in conviction of our against our product-led our to even continues plan, our business and executes more growth. team Yelp's durability strategy we the consistent strengthen As have

continue that, and value.With turn growth, like long-term remain Looking focused shareholder it on to see opportunities ahead, generating profitable I tremendous I'd and innovation over for to to David.

David Schwarzbach

Thanks, Jeremy.

per advertising as quarter of revenue $X the year-over-year see positive million; income line and growth XX% high the outperformance XXXX, increased reflected In second above were XX% Net outlook to net quarter, by representing was through record XX% quarter location outlook a EBITDA were range, to end Paying of and driven RR&O, Top the above a of expenses, a We by XXX% pleased increased year-over-year increased XX% our year-over-year by the ad second revenue to representing $XXX million. the flat to by year-over-year million million.Turning in $XXX expenses record full revenue margin.Adjusted range. XX% increased categories. to revenue to year-over-year to X% the quarter line. Services, relatively margin. million, of this ad end $XX to record high million Third by our year-over-year $XXX increased million; to a record decreased third demand year-over-year. to decreasing $XX in locations bottom increased by advertiser average amount XXX,XXX.In across X% a increase an $X compared XX% from by flow

stated the we've to year-over-year expect headcount flat continue previously, will approximately by end of we XXXX. As be

in the In XX%, as adjusted X% organization. and target, our of overall percentage of by We adjusted reflecting record our compensation enhancing our development of the the focusing mix focused throughout high-quality we SBC of the as by the also reach to revenue than a the revenue less year-over-year as flat, third of remain while margin.To hiring percentage U.K. points EBITDA adjusting increased States, XXXX. percentage efforts end Canada, of by to as reducing compensation on quarter, a outside a incremental EBITDA quality product we well margin the are remained stock-based X United particularly

repurchases portion we million, in expense As and compensation cash of If at compensation made have our element plan of purchase worth of important a the through allocation XXXX. would remains would price overall shift to by decreased by $XX strategy. approximately an million substantial have our average XXXX, capital repurchased we these quarter, the compensation increased result, mix $XX.XX. cash equity the an third same we amount.Returning shareholders in In to of share capital $XX had shares to changes SBC

XX, $XXX repurchasing market share to we million under throughout authorization. economic conditions.Turning the September will results, reflecting compared outlook. previous remainder our and shares of the to the outlook to the $X.XXX following raising we expect existing midpoint We a We increase have year. range of plan for our revenue are the $X.XXX at in As billion year subject full our XXXX, repurchase billion, remaining to outlook, now million be QX $XX continue our of to our strong year, range

a drive for million margin, guidance greater to our the to to profitable the expect for to $XXX result IRS.In growth.With sustain long term double-digit increase demonstrate line the quarter items, GAAP tax term, compared as $XXX us be will please by uncertainties, discrete our the provided even margins. confidence has previous of closing, strengthen while continued strategy midpoint of in results third Yelp's revenue Turning full We adjusted macro the questions. to at $X Yelp continued million effective now before to a long our Amid the that, we beyond expanding outlook. product-led currently for of that rate, be our recent EBITDA will range in ability growth, XXXX giving operator, for open our XX% in ability year, reflecting estimate XX% to and million the range up

Operator

first question Kreyer [Operator of of Instructions] line Your the comes from Jason Craig-Hallum.

Jason Kreyer

talk And that part return of So, started in clicks, due I'm maybe to then curious, the just in in is growth budgets SEM? you've as that there what as deploy QX? you if you to regards budgets spend your the test more to to little you into just can those more are bit test a about SEM you expectations what maybe and saw deployed

Jeremy Stoppelman

your is growth, this We here. see Jeremy, up to clicks to Jason, pleased I'll X%. take were really question return

better that a into area that so And side. creating we've causes things in we've some was been clicks. pacing, there, to investing a been the where letter, in an of there's been doing Looking continuations tech are the inventory there product contributed we theme that has the on significantly. Ad additional noted few

We then, well ad UX to have have from mobile AI. side, that. we the also selector an We improvements improvement increased made saw web, And consumer on as leverages existing desktop website as the the photo working that in on engagement units. been some ad some

of in a off number advertisers, to to So we've the quarter. been paid things drive value there's additional they really doing and

or to second the do you So of we me something else? see talk were further SEM that.I guess delighted want question, to your the part about [indiscernible]

Jason Kreyer

No, ahead. go

Jeremy Stoppelman

but phase. again how up I so Okay, we're it's and very getting of and the well far, going Yes, going. would sort test in kind running you say that's SEM early budget things of days, great. just Obviously, early. mentioned

excited across the time, that has is some as into on an entire SEM. There ton we've entirely services in played. we an a daily strong and to companies opportunity whereas predicated we side, unique space, consumers to Yelp they value have in so operated area of are our have basis, excuse historically is position. organic the we'll think different whereas players and almost Yelp many XXXX that organic find look beyond. an talking such relevant by which to continue is opportunity, driven be this We this the model other categories brand traffic. not see especially business about their have been of that really within are to recognition. has on a consumers all Part Yelp broad And SEM, we but that of don't is on

this on So about to more I your it's unique a opportunities. driving that material not take percentage? is, gets the contributor, SEM which growth click no. us gives I original And back even guess I source question of is think say this space. your that a would me excited

Jason Kreyer

I that's anonymous a And and just during competition. changes wanted Okay, started restrict the to helpful. Google I some follow-up know, made very reviews. to on ask quarter,

of, behavior. I any have that, guys quite done sort you had impact some consumer that on just think time. curious think I'm for you But if already

Jeremy Stoppelman

content Certainly, that how as that that see leaned of into local monopoly I a star frustrating, waking then, are in pretend simple most star different And to an guess leading trying folks levels industry paying how the belief, mislead belief to We've with and the anonymous the Google not trusted that reviews standout rating think position and We fact would on created to review frankly, and consumers. finally We've are always positive has, all really to think question comes Certainly, its had off always for that. equal. in trust best system that FTC consumers more advantage. understand never a are think Thanks it that especially more is point content I the that content up would paper ratings side the allowed now And as waking we differentiates and important and industry, Yelp rating folks across something systems just our possible. balanced all trust. is. those I up review came our really I us. always have found that we We've Yelp out real what the it highlighted really when I to to that is the a but you are not like that really see and ratings. is

Operator

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

Eric Sheridan

the on X Maybe space. services

that against think lot about in into services? aligning the of see in we of couple as move the momentum services set and side the you next potential that of the You've we landscape in as of How in revenue of of quarters. pool last shown year or given in the opportunity competitive momentum and sort you, what the momentum should business behind and exit front investments this year the growth sits a

Jeremy Stoppelman

in think up as in And QX. I would into if that XX% to well. space. point just Services. performance very in home folks can We're I happy revenue I up guess, you take year-over-year services, I then, Eric, services with year-over-year one XX% further the delve

really that. good feel we So about

other from it from our continuing vantage players. take market to think like point, we're I share feels

expansion and buck it's how the seasonal project do from the Yelp we going coming volume innovation. saw QX. product-led seeing the of far well. we the through what's up here. nationwide in have we driving as we And launched trend, That's end were As think and Guaranteed QX. category momentum, I the Request-a-Quote, more that continue it year We

that innovations that's things, quarters, we've So about taking have friction, other talked recent great.As been in improving out log-in flows, streamlined phone really there's numbers. masked the

going is new our into landing we that This is growth of quarter, as our to we be into think that inventory to all introduced dynamic element SEM pages of to part that 'XX. us, going additional effort tap an

organic we're set strong between up product opportunity, think I SEM Services think well I growth. our traffic, execution, and brand for the strong So our our really

Operator

Cory Your next of comes line question JPMorgan. of from Carpenter the

Cory Carpenter

ask to multi-location you dynamics secondly, multi-location of Could you're slowed of X then a wanted channels. XQ self-serve XX%; macro impacting could know macro, what you you in growth I I the the called kind uncertainties. landscape macro those the that of categories? bit talk incorporating little gaping now. been down right just just And X: Was in self-serve of on about bit. are the a There's out and those seeing you the out talk about hoping

Joseph Nachman

guess multi-loc. is were sub-channels can take with enterprise that in-line as are it And most in is the there. the channels. business at obviously, being of with this saw question of on growth advertisers. self-serve what the sophisticated up approximately well, importantly, rate. terms well with majority more largest I some a side, multi-loc And our XX%, in both grew those as that we and channel of saw QX. one We performance And made the I pleased performance first healthy Cory, Jed. the starting in as fact,

And most kind begun and really multi-loc of pleased some with some identified the fact, out demand so.But in the can sophisticated do did continues overall, products have, side. so advertisers action strong. that marketplace, see we've we're areas take demand are be to resonating and to we on with very our channel, mid-market weakness the the in the that We it on and slight of

on our We capabilities. continue progress attribution make to

they Our off-Yelp quality in receive down-funnel-way are in ad -- folks new and offerings want formats, to and very marketplace, are resonating look money macroeconomy, we them leads. when for type you the at ultimately of this spend

in pipeline multi-location a happy XX% that have of terms future.In of product recommending with both ads, forward claiming really are of now are SMB, of healthy, conversion Yelp, made we're we of for acquisition business look flows to purchasing we self-serve, of self-serve going of then, on course, improvements at our makes the more opportunities the product the drive really as we you host of and a and So down half used effective that were really, have that path about up for a we And growth where have self-serve When to drive kind looking have page year-over-year, suggestions we've side, also of growth channel there. in paid deep the out and on in-product marketing a folks well. through their on spend. course, kind way, had to a lot that

look core So drive to forward, for to forward continue they to the very strategic moving continue future. pillars to us and in growth remain them

David Schwarzbach

Cory, it's David.

macro the Just to on follow up question.

on to $X.XXX with billion put $X.XXX and guide our of raise the third million $XXX adjusted First the which of pleased super our XX% $X above previous to obviously, above performance the growth our on margin, all, between top which billion the of the a EBIDTA line, and for EBIDTA year. to guide $XXX million the midpoint is to it's position XX% us in guide and million previous quarter adjusted in the $XX midpoint million

overall, very obviously performance. with So, level pleased that of

and the for provide implied revenue that usual, whenever guidance, with is million the the we the are expenses, expenses expense risks $XX on to around have which also $XXX it's them in that million some side quarter. side, I the on line we think like and it items million, in vacation can to is line see.On fourth guide As the give care uncertainties quarter. third volatility move got there is $XXX account the between we health $XX certain implies third that to to important taking what and And we which in into on million, quarters underscore do with expense. quarter

that guidance reflected we've So for we've provided the the year. of remainder in the that

Operator

of Segura of line the from comes question next Your Sergio KeyBanc.

Sergio Segura

Curious, increase advertising continue turned and that that platform the would for off the the traits point spend. if spend you to your quarter, in then any for on and remain advertisers relatedly to the common advertisers

runway [ of much how continue a ventures ]? greater percentage to you Just ad do their see capturing

Joseph Nachman

to with one, I overall quality we profile the say company our the of in been XX% per year-over-year, a with in where third continuing forward do probably And saw a from perspective.Ultimately, largely advertisers forward. where the second not at the from Yelp across share, referring third spend can efficient the demand quarter. of flight is particularly did quarter, of kind margins. the I this customers that as the [ EBIDTA I ultimately, a our would XX% due are we of we as growing believe gains advertise drive our to tell see terms self-serve polls can of in that spend. share businesses. enterprise few base saw at that strong. we we in highly moving across and see and to customers. to that's polls total average Yes, sophisticated Sergio. with and of paying has wallet a across the we feel a ] in strategy revenue. and what year-over-year the of take resonated very -- across about The we location the quarter.And We it I [ customers multi-loc believe is unique is an And not SMB, overall multi-loc with see product-led you're profile quality advertising the lot but channel really demand part not reflected a XX% such detailed position record locations concentrating leads of those broad most are see really about targeted it the of question of customers. wallet reps-sold lot now, in we've kind our that's mean it of manner deliver you both number these terms we right pretty on revenue as going growing did ] in talking to of well And Those positive was who channel, in folks are locations kind and expanding I

positioned like going growth we to So we're forward. kind well of feel capture

Operator

next Your Instructions] Khajuria line of from [Operator the question Shweta comes of Evercore.

Shweta Khajuria

products perhaps year specific terms next growth to acceleration, ones you were sustainable or potentially drive you that features will to double-digit even and most to X in which top Jeremy, that believe point line growth meaningful to if X point excites you of would product you why? or the

Jeremy Stoppelman

Shweta, the question. for thanks

lot As optimistic things about. be ahead we look of and I there's think a here, to excited

which the first execution operate and The we is that way our consistent these days.

everywhere an it's else, of and gone annual ROI. on the We're just all end that at incredibly in really focus to planning have tries from ideas well process. then best tail that, engineering generates and product the We

limited best so gift want have staff giving. what investment have with areas, innovative our -- to the the at areas I going people course, I resources tech We to of to, great projects and are continued to advertisers.When the that's connect to most local been help as that value more drive some of most we are that excitement, keeps look of businesses ad on very the well as the point obvious

much a really It's area high area projects paid for invested have us. of that in have that off. very we pretty All in, the ROI

up. ideas the as staffing add and try to continue bubble We

banked UX as LLM, which for, getting think some think quarter We've there. X% selector well drive I all innovation, that up innovation improvement certainly some there, deep So still think just this you started. you'll see continue it's better to to a pacing, photo impact to ad I continued fantastic.I early days. areas with there's wins We're as but worked well and clicks other watch already out was saw

on We consumer the already owner, we've tech, lot all We've of that as well. the SEM will a initiatives business got a talking as been ad tied to throughout that do, well side excited in about of have helping dynamic trends. pages work there We area testing to that lot we're as this we're new helping layer that's LLM products about out landing that. early launched and excited the There's quarter about. we're but this

that side. then, investing We by web you home keep think there. to there's on that.And nets early innovate posted neural one well adding consumer as the feed. So days. plenty on finally We I opportunity we'll to some mobile the just impact desktop made We on to of saw is returned getting improvement web still as some and

see been of see look, growth. really I We've to everywhere consistent opportunity, that's able I team revenue quarters lot I lot execute. now, of a XX a excitement of So and a double-digit

best back. And going so 'XX to we're try to not We're the beyond. momentum going keep into our going to hold and

Shweta Khajuria

that. ask Okay, please If that's question helpful. I could follow-up a on

it side, point the the for this I knows imagine, looking Is that about front? in Is are consumer what spent? everybody point, Yelp it. making, on at it downloaded the on you that time U.S., So last -- would it and you were probably has Is engagement? almost

some success they often come back, what are how metrics you are tracking? that So

Jeremy Stoppelman

consumers Yes. content Certainly, some with is like we pointed reviews, of of success which more reviews, mobile on to the web that. as driven We've component photos of lot also and contributions feed has driving contribution there to web. allowing side, quarter well additional wins attach had as desktop more and to those home a this video types. the And a engagement

that all So good also of you to of different about the there's activity. not home. those audience, spent, look the have the tree. But very could a a in are Yelp time their it. and that their the where in a we categories check and the types bigger fix or or of is at the consumers you to cat tech-driven things. we more a stuck of of place city number where services It's down-funnel want best trying to ways the you Certainly, are just think photos want find to important your family a need out in very course,

about innovate one of to guess the didn't improved going lot that.I been we've where driving talk on we a continue area added projects to We Request-A-Quote, was sequentially. innovation that We saw move mean phone up And really And masked there. we so numbers. I we're log-in.

So backing photo that's for, pros, able with we're and and the of trusted review that conversations area, I known think powerful And it's have interaction differentiated. content think, another Yelp it's into have having combination to quality excitement. 'XX. frankly, I of Being those Guaranteed a going the

Operator

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

Stanislav Velikov

is for Stan Velikov This Brian.

If at but was home up versus And for nicely pricing home you look tell the same Request-a-Quote services in in trend can the you thinking indicator quarter, how then And services Request-a-Quote time, volumes the that at us that are overall you about category? of volumes were health click Anything leading that? down. how specifically? been is about basically, a has

Jeremy Stoppelman

This your here. is take try question and Jeremy. I'll

been volume seasonal stepping to is when were what think has the specifically able macro at we us. last up, sequentially, services But back, especially than I a a bit Request-a-Quote, see year. Request-a-Quote, largely broke you trend project So go in softer demand for I think which look

And so that that, is our is think, I a clear What's driving innovation. positive.

experience, phone we've the have the We we're service, added Yelp other and added categories. improved we've moving nationwide, masked improved log-in into numbers, Guaranteed we

which Request-a-Quote terms lot think of year-over-year a X% positive volume.And overall, at signs and they portion, ad of step if clicks up there's Request-a-Quote you project of and reversing back then, trend. is a were in look So I

we're our is advertisers. that's more that product-led ultimately We're for value to the strategy And more think showing drive positive, to advertisers, and inventory, creating we're leads have so what working. we here I is driving for, another that that's

David Schwarzbach

moment, I guide to for the $XXX If on million million quarter just to can $XX on guide EBITDA. on misspoke XXXX. case and million earlier back I fourth for the million in $XXX implied to back answer, going a The step revenue just my is implied adjusted in $XX

earlier. make to case clarify to I wanted misspoke that, in sure Just

Operator

There to time. the I call (sic) the at remarks. will pass Jeremy, now ], CFO closing further [ CEO are questions for no this over

Jeremy Stoppelman

Thanks call. see on everyone quarter. for you us the next We'll joining

Operator

call. conference today's concludes This

disconnect. now may You

Yelp (YELP) 2 Nov 232023 Q3 Earnings call transcript