YELP - Earnings call 4 2023

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Operator

Good afternoon, and welcome to the Yelp Inc. Q4 2023 Earnings Conference Call. Please note that this call is being recorded. [Operator Instructions] Thank you. I will now turn the call over to James Miln, Senior Vice President, FP&A and Investor Relations.

conference. your begin may You

James Miln

Good afternoon, Fourth Call. us Yelp's for and and Full thanks Quarter Conference joining Year on everyone, XXXX Earnings

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

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

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

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

Jeremy Stoppelman

billion welcome, $XX XX% multiple to of the our EBITDA to million, year-over-year set XX% high-intent record grew local delivered and a Net strongest margin advertisers to record records We a company's $XXX James, increased financial the in margin. as delivering in year-over-year income audience. history a million, everyone. value of XXXX. nearly XXXX. by continue Thanks, performances revenue $X.XX see and income Net adjusted Yelp's adjusted tripled X% one EBITDA to net and strong in Yelp

These results updates demonstrate new the quality connect the our months We to of the out XX rolled last and against businesses. local best teams as more product-led strategy. delivered over with XX nearly execution help consumers by they effortlessly our features

initiatives Our Services businesses XX% leads to off a to pay advertising quality year-over-year in continued and and XXXX from as record services grew monetization million. grow $XXX to revenue

leads valuable leads We points trusted more to believe XXXX Services an differentiate enabled consumers share approximately by with experience increase to from We in gained XX% XXXX. the percentage product businesses. monetized X which us to to in that better Services, of continuing of pros, market approximately Yelp connect deliver

of approximately nearly at an remained And year-over-year compounded growth has in particularly from XX%. category with revenue XXXX, of Services Home strong revenue The category XXXX. growth Since this annual XX%. rate

growing the year-over-year. Request-to-Quote fourth quarter approximately consumer also requests, by with saw demand We in improved X%

across impacts half talk the that of funnel. have in RR&O, revenue record by quarter increased in where to XXXX retail from XX% into grew and fourth results Advertising weakness to million. offerings reach to and year-over-year throughout every more our driven up in about Average back location we new by per macro the a record year. $XXX revenue increased saw quarter businesses down spend restaurants, breadth continued other David level the of will December a quarter, the fourth due

more In with to with within the which XXXX, and XXXX, introduced connect guarantee, interactive invest consumers we Services. a to new writing see we a Services near-term Home trusted experience greater enhance AI-powered in search, and plan In discovery, consumer service features. more our engaging categories worked we review visual review pros. services opportunity, helps We particularly Yelp where confidently and experience

trusted to reviews, remained our users contributed While reach and attracts about valuable from a large traffic cumulative audience. million to XXX continue flat of total the levels XX X% a new in in up million the overall our XXXX, year content we grow Yelp that reviews XXXX.

to Our XXXX to with clicks against advertisers as returned road X% map ad advertisers. ad of year-over-year increasing growth, Ad efficiently valuable deliver consumers clicks initiatives. executed to system by in continued we system matching our

ad cost half clicks second the for Average demand year, and valuable which in were advertiser per CPCs X% typically retention. as positive result year-over-year increasing Yelp's of moderating increased impact of encouraged combination has clicks. click a robust of by the by a the high-intent We on

through We of channels, drive in XXXX. revenue initiative approximately the progress advertising sales our self-serve also channels and XX% efficient on represented multi-location. most to made Together, these

initiatives Self-serve established by a leading [Technical for consumers revenue for and to increased by grew multi-location our search approximately year-over-year, approximately Yelp XX% Investments XX% strategic resource year-over-year. have in Difficulty] revenue confidently as

Operator

allow Please moment We continue us to inconvenience. the conference. technical apologize the for a

patience. will conference The by. resume shortly. stand We thank you Please for your

Jeremy Stoppelman

and experience quality while Product leads enhance the road both to of marketing. and research to driving services. map continue more plan consumers advertisers, to We

have to quarters, drive scale long valuable term pros. our leads to coming the and project believe overall . potential expect to over the growth we more across Services service Home efforts SEM accelerate all they and Over categories the

plan deliver the to to to across on Services product advertisers our initiatives addition execute value we and set raise innovation, In bar categories. consumers continuing both Yelp's more to of to broad on strategic even

as increasingly are funnel off well Our as actively local Yelp. effectively more monetize audience, motivated Yelp advertising to the our on ways platform teams both testing down

and profitable plan growth We continue most channels, to self-serve efficient also to drive multi-location. our through

that focus strategy has we momentum our to our durable on build and can shown in this plan product-led upon growth, Our repeatedly team drive XXXX.

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

David Schwarzbach

I fourth Jeremy. an turn revenue fourth Adjusted XX% our increased quarter XX% million, year-over-year by by $XX million now X EBITDA $XX XX% year-over-year Net our by XXXX. to percentage will a Fourth quarter outlook of X% $XXX XX% of end increased up range. grew representing representing the margin margin. to high net to income year-over-year at points to from the results. million quarter Thanks,

advertiser valuable per locations location, Robust in by remained reflecting Services approximately quarter, fourth increased businesses overall million this average ad strong drove revenue to in record growth revenue in million the for Total while flat year. revenue Advertising a year-over-year the to advertising $XXX clicks $XXX for performance. year-over-year quarter. increased XX% the high-intent XX% demand from strong

and of million for multiple from deceleration was the on our X% the revenue, category of in businesses growth XX% product Restaurants, Yelp. and advertising main by Advertising our map driver a provides and QX. revenue represented This levers At QX. Retail from year-over-year revenue to Services growth $XXX road of our point X increased other percentage

for of disciplined expenses. drive increased XX% This year-over-year. XXXX demonstration a of year percentage net same XXXX, product-led ended This increase of how full growth. a revenue adjusted EBITDA strategy investments profitable to points to X our head a in with contributed year-over-year. approximately was We count clear year-over-year. an record total can past modestly At Turning by XX% time, down of the X,XXX margin year

Overall, to we plan search services, turn approximately of XXXX. to through be allocation while on to projects in in opportunities we we As acquire XXXX, marketing. engine remaining continue disciplined our our will focused count hold head resources to flat

the on adjusted focused remain We quality EBITDA. also increasing of

taken compensation have mix to significant cash. and We stock shift action our between

We of in expect to XXXX. XXXX approximately shares to granted subject lower be in than the XX% equity number and awards employee

expect to have this is increases revenue as it largely stock-based of We a the lowering of positive in begin on the profitability committed XXXX. by important to than X% stock-based remain benefit to of subsequent percentage less will to to end action the impact to this compensation XXXX, expenses expected in stacking in years. impact our of compensation GAAP While a by compensation note reduction offset cash that be we

Returning allocation overall capital to share our through capital of remains shareholders an element important repurchases strategy.

healthy elements: fund capital retaining to acquisitions; operations; a shareholders of our second, excess returning main share through allocation third, balance Our potential and maintaining X strategy to capital consists for capacity first, cash repurchases.

nearly we repurchased our repurchase have million $X.X of Since worth shares, in program, including $XXX billion we began share XXXX.

market As shares. to our XXXX, an Board $XXX remaining We us of Directors December million under conditions. plans, million subject shares economic had To of February, in $XX and our XX, in we additional ongoing to repurchase support worth repurchase authorization. XXXX, to continue repurchase authorized existing repurchasing these of plan

Turning our to outlook.

a to have As drive growth. initiatives revenue portfolio strong Jeremy of we shared,

opportunities long-term our significant to them. to We ability in the continue believe and team's ahead capture

weakness January. through We a well of this contrast, across higher and January, In we input RR&O factors, our performed variety traffic and as as QX a exited saw consumer costs. illnesses businesses As softness widespread slowdown pressure moved categories. margin weather from in from severe believe for respiratory reflects we including broad-based Services in

risks for expect net quarter. into range Taking will uncertainties the revenue of and these account, first $XXX be we to million million $XXX in the

we our billion $X.XX year, $X.XX the For initiatives to net be the gain expect as to of traction. range revenue full billion Services in

to margin. Turning

incremental particularly cash increase compensation for services reflecting the investments, to from through our fourth SEM. quarter acquiring the expenses expect to leads We first and quarter, adjustments marketing

increase seasonal benefits. expense, in by a and primarily expect driven taxes also We payroll

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

shift anticipate to $XXX $XXX the cash EBITDA in For our the range adjusted compensation. part to million equity full year, to from be of million, in reflecting we

in maintaining of our execute for discipline which results We to that beyond product-led rate focus our a long-term closing, deliver proud shareholder while XXXX currently of value. be are and discrete innovation. the intend to to continue We was will we strategy on XX% In performance our tax XX%. on estimate to in in XXXX range and items product services effective record filled before XXXX, with with financial GAAP

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

Operator

Baird. first question comes Sebastian [Operator Colin Instructions] from Your with

Colin Sebastian

first year? that with the platform, you outlook the of And in impact top how growth in Congrats terms an factored the are new I is users much year. for line the the guess, of marketing on from demand initiatives driving for off, the expecting advertiser the in growth of or search majority traffic? driving

step to bit, nice I'm Services leads guess And And the initiatives a up of X what contextualize unlock most as is from to that's improvements today, value? in then category. monetizing that that X goal there a make curious these I important are And secondly, a maybe what you XX%. reasonable the XX% or

Jeremy Stoppelman

I'll this Colin, stab. take is Jeremy. a

your here. it's think I both questions

advertiser Request-to-Quote. mentioned, And with particularly significant with made progress said, to So have monetizing as connections. demand, within you progress as we continued strong made do we've And you Services. we've respect

is we tap of could for us do space. this to really many are haven't in leads advertisers there millions there really millions, that it. us do out where the revenue that we've and of into really a What platform. businesses There's hundreds lot of to new our in a and allows introduce And SEM greenfield opportunity approached that users benefit in hundreds not dollars played of area,

that's particular, because to we've partially, we up. working strides made incredible all this really got in building been Request-a-Quote, we've plumbing. And in the We've now on We're moment, out market. wired And the it there.

buying by We, spend million. our leads. We in upped $X are fact, level

services. really excited about particularly for mean, we're SEM so could And what

note think to a is amount I important compared it of overall the traffic to relatively services small picture. overall that is

say, positive there think by And benefit coming is definition, valuable request, which the So is, going very to be services do a it in much well extremely a may introducing restaurant users to more be platform. in new they're because does for those we searcher. than, people valuable --

overall there's think to the a funnel value shape do again, the it's in dramatically services potential category, numbers picture. there. because really aren't we So leads high the benefit But down going traffic

question, second it's 'XX, that had monetized you're that we noting up connections, your about and moved for XX%, 'XX, saw in asking then in And we XX%.

We are the there. progress with happy really

that success the area. going And to ad have that investing investment speaks 'XX a had in significant in platform. into think we I the we've that

within and feel matching projects headroom what seem then there both we can users flows, push Request-A-Quote XX% with does know projects is. percentage? significant successfully exactly is then more far ceiling that high. into the also It doesn't in I And that like there. improvements converting the advertisers. those don't How

experience on to And pushing we without, us high so the keep well. that can consumer course, going we're that important see to push to of really how as compromising that's

David Schwarzbach

million during compared it's follow-up the still obviously small Jeremy quarter question $X first mentioned. the regard but David. small that Colin, outlook. overall, to Yes, by to as And on just it's Obviously, still to your increasing spend. quarter, are with the We relatively fourth amount, a

the certainly in very of year, the there, our understanding still move as them is more is we'll guidance, we total we provide uncertainties through that but on the performance see there we updates as So modest. on . level this spend reflected

Operator

Your comes Eric Sheridan next with from question Sachs. Goldman

Eric Sheridan

Maybe X space. Services the on

letter a the road a in how is thinking about little Services going said Services? on and us in remarks in map You strategy. you're your the of the major to that give focus you color product Can product-led more be

XXXX? road competitive in And the second in might coming have the XXXX, appear be little you piece bit a we out share it the to dynamics product market how gaining about of Talk about of broadly and map momentum sort that thinking Services or was of landscape. in be how should you share inform Services that

Jeremy Stoppelman

We're stab requests revenue up up up X% particular, in QX. jump then in actually had pleased was monetized XX% I noted we Thanks, Eric. a the year-over-year, take as took that a our XX%. with Request-to-Quote earlier, Home a one connections year, there XX% year-over-year as performance I'll over Services, well. really And at to year-over-year. Services. in were

is great the think, Quote. ad So -- the with team work a of all the some stack, of on is also doing, reflecting, Request that tech I with but again, the

our that product We we and whole may winter number showcasing functionality that. have of noticed had were You a release. features

phone on and continue in Yelp actually the request We've enhanced both with improvements. to continued intermediation. We added And work tab SMS projects -- guaranteed. there we merchandising

consumers so business. in make their business middle a a text now phone to call with And the maintain Yelp or a is can And standing a to privacy.

getting they with time. off at not them don't they're calls, turn can any want, barraged So inbound phone they

And a of to request quote doing so this really is the work stand type out. make that we're

for this to, And momentum SEM. we It good area. it to think you working, The that appear I this in really think area. XXXX, to leads a focus us as us. Yelp alluded in this feels that is like gain in continues I does share real is business have and

There is a side. significant opportunity SEM on the

mentioned to millions I unique companies horizontal leads. of in off a comes but I doing multiple a request. in person opportunity good we an of this If think service at someone the think, future I introduce Yelp there's of coming also educate As both, these Yelp third perspective, there's can that incredible that nature least, Yelp back about think revenue hundreds And dollars, and then into to of request, consumer earlier, during experience, a Yelp. for second, using us I for the with fourth also or

really excited some positive. we've QX, going got Obviously, into early are opening we're signs up SEM the and spend about opportunity. the So incremental

that. So we'll keep you on posted

Operator

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

Jason Kreyer

kind RR&O Just out of on the you in January. December, weakness called

you what front? as happens side? think give guidance? can that's your far expectations months what why you that transparency the And to if as curious next couple do embedded on there? are Or of your did the What Just any on RR&O unique recovery then over

Joseph Nachman

first. has can the Services. the are mentioned, performance in This Jeremy while business, weakness our we see and we that in take did categories that Home December, of pleased January. is Jed. December, trend Obviously, late resilient, the with Jason, continued remained overall And as some into quarter, business I in the particularly RR&O in particularly

driving continue costs to be in spend. for have believe input think conservatism Restaurants. which marketing situation I some we high And we a that's on very

in also of inflationary on I the effect dining. there's think it an consumers terms

So seeing Restaurants, we're particularly that. in

Restaurants of a being that what side, we're the investments lot really a we're of we're Obviously, forward. all services to important going on be the said, That stuff but continue doing part making Restaurants really is I drivers RR&O, side the impacting about growth also When on on continuing doing consumer it's customer that as focus that experience. think about improving well. trusted for and the content

the released LLMs using new that We experience. and have feed, customer to we're just homepage improve

conservatism how that do worth, but this of is For we we state, marketers in terms are at what see spend. it's pressure believe some permanent looking don't a macro in

consumer and as and well well. investments a opportunity the for as about we off tech future an We store tech of And believe ad as -- have we Yelp. before across across lot there's ad audiences in multi-location talked consumer

on term in coming long So January. we general, the into just bullish and RR&O, over some are for weakness are facing very

David Schwarzbach

And David. Jason, is this

Sorry, say, early going very have Jason. it's expected terms obviously, I outlook, performance year. in our to year. for was in just here And QX full we through in the of the the through flowed

and clarity. year, the information As more obviously we we'll better go through have

components backdrop here, of see restaurants. inflationary certainly mentioned, on transitory seen are broader pressures, some a some and There terms just are as things then in we'd Jed there

sense full risk and the current what So we're QX. in moment, again, at guidance year uncertainties our seeing the and here the reflects for

Jason Kreyer

you. David, maybe And a follow-up for

we modeling going stock-based I linear year. 'XX. we sure just But that we obviously, Just to 'XX. but the for as from how as pretty get level -- want into to compensation as set that's you assuming changes or we right. 'XX, get purposes can the I on stock-based should about compensation and 'XX just we're cash go throughout into to maybe sure make I'm want we get make think not guide, into expenses you're in

David Schwarzbach

Thanks the question. for

important are to a that components X. mind, So keep perhaps in there few are

X-year that past The the are a we've issued first obviously, is, on best. component in grants

roll off. And -- so That's piece. will quarterly those those have to the vest and first

for that's terms linear So those very in grants. of timing

in we of come employee cycle second is that the made reduction beginning majority the The compensation at great of of XXXX part grants as piece grants the the year. the

from that perspective, you as play reflected be just that, will timing out. So a

near from compensation equity And then did of to to want fact lose cash the I third don't sight to shift the in is, term. have we the that

expense modeling for stock-based stock-based itself, be you perspective, as linear down expect it a GAAP go we respect and in to year. comp. an you of because of timing still the the of So There's years. from grants the comp of little the should have bit the up prior through EBITDA overall relatively But in

to the going 'XX, But by extend here this, just expectation. 'XX be having reduced our case Obviously, XX% that's 'XX. as about certainly, to time grants in maybe 'XX, the in by, goes is also

So vesting employee steep next out years. over you in the a model stock I can reduction several think

Operator

question Evercore comes Shweta ISI. with next from Your Khajuria

Shweta Khajuria

any SEM are way? quantify talk the over following about us efforts in that scaling across quarters, you to Home Whether spend you able Services help

David Schwarzbach

question. of We did the the it? miss beginning repeat you Can just

Shweta Khajuria

Sorry. Yes.

terms us subcategories, quantify Home efforts for SEM spend help that in Services can of in Just you the scaling XXXX?

David Schwarzbach

for just Yes. were to we what increase not by ready quantify the obviously 'XX, We're to $X first also at underscore us to that experimentation through quarter we since efficiently has million not as and Thanks to the significant really saw the very and direct We stage. Pro. encouraged to And still yet about I product spend buy do them that question. we're want moved leads, the taken we I fourth effort very mentioned, to from it them the as a spend to lead but by enable quarter. through did Service

as think spend. -- financially that's we and around goodness all we we So regardless the intend disciplined to remain

So we've as prove EBITDA for the way, on that there. to adjusted expect would year, given execute spend a components financially to increase ability our we out continue X guide this disciplined in are the to there we doing in

QX think I on important acknowledge. compensation, equity reflects which shift the about cash we significantly call talked from is the very that to One, to

that's in our as on spend we the portion how of we some also for financially year, spend through again, overall updates held provide SEM. think we'll absorb year beneficial much a And have move the how can on and guidance going increasing that We spend we or in way. out

Operator

from comes question Segura Sergio next Your Instructions] with KeyBanc. [Operator

Sergio Segura

X. I have

guys be jump lot if of leads little you've first, that follow-up bit to So services. maybe a made Wondering the that will percentage monetized that on low-hanging and to of see a going there tougher pick? Or fruit still forward? you is XX%, a

the is to have beginning but on really Audiences. cookie? any Chrome I Yelp And as the expect impact it's early, Or would from then impact progresses? the third-party know year you question deprecate any you seen second

Jeremy Stoppelman

this Jeremy. Sergio, is

I can think I in hop here.

mentioned, have that. great we XX% We're connections, monetized from the up XX% you a So before. reached That's as proud of leap. year

I we'd for up . Again, think as side against the ad win as I to don't where it's us Request-a-Quote point that. helping to well tech say. hard is, the ceiling ceiling. think right achieve on we're the

headroom. it's think doing And Services we're how there? doing I what think do we have side. the Well, get I we plenty continued on of

we So our we in of significantly have continue And ad year. to this Request-a-Quote as portfolio deep well invest coming improvements as matching a technology.

of we'll So product-led feeling strategy on that guess, side. revenue is investment, grand I on progresses, posted first our deprecation in the things, we're product overall think or like how of about scheme and cookie our not the Yelp grand you things, it requires off, comes I the confident When on Services further but cookies, that the to very audiences material. scheme comes keep

with on with the solutions. post-cookie But cookies do that working all rely advertising said, sort There's we are working approaches, and over for of those are industry different teams the our clients a few us. on that

If is migration. last kind lot going? about like in of phase of you were of serious asked of getting kind how year, procrastination terms A the the me in clients that midyear

lot are client I more now, But is side. in, away. the deportation a motivation when more cookies come on has There's on as there going clarity think cookie

term. do from a we're go eye close something we But forward on make feel confident revenue that here? So going and for you sure about it's the that the to keep long can solutions that wide keeping the

Operator

at no conference for This questions are further There time. will joining you today. conclude today's Thank this all call. us

disconnect. now may You

Yelp (YELP) 15 Feb 242023 Q4 Earnings call transcript