YELP - Earnings call transcript Q1 2024

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Operator

Good afternoon. My name is Breanna, and I will be your conference operator today. At this time, I would like to welcome everyone to the Yelp Inc. Q1 2024 Earnings Conference Call. Please note that this call is being recorded. Instructions]. [Operator

turn go to ahead. now Investor Willis, call Please Relations. today's will Josh over Yelp I

Josh Willis

Call. Good joining First Conference us everyone, on afternoon, and Yelp's Quarter thank XXXX you for Earnings

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

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

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

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

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

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

Jeremy Stoppelman

everyone. Thanks, and welcome, Josh,

As businesses, of years many impact on helping serve. we connect people proud had Yelp am the great has local approach the of communities XX with we I

adjusted and seen revenue focus profitability in our We million, continue invest XX% on Net year-over-year to our increased million. was experience categories, a X% efforts even EBITDA improve $XX lean momentum strategic year-over-year a our income X% have the best Services growth already into to and efforts we strategic by by to Services first representing for continue the pros. as and we net quarter, deliver million, reflect initiatives. results to These $XX XX% our to reflecting $XXX to Home In margin increased margin. in consumers

the again businesses revenue operating strength revenue our growth. through a grew increased first from in was and Request-a-Quote continue projects marketing categories organic continued standout well Services While other face environment to as reflecting quarter, the in restaurant, performer, Services XX% Advertising challenging year-over-year in approximately with of a early approximately Home in categories, demand. year-over-year. our retail Services engine first XX% year-over-year by from positive results search XX% as consumer projects acquisition our quarter,

project a opportunity largely to driven in movers, as continue to result, like were and a our results acquisition in capture of in we large increases clicks categories Services. market more have and promising seen meaningful These Request-a-Quote well as significant efforts, plan CPCs. projects we the ad key average as by In paid investing decline

and deliver Assistant. Services in AI consumer's interpret LLM robust relevant collect execute way lead a accurately against to to road This than even powered service is new One can product new information conversational more map, continue an we in more Yelp XX project our April. introduced we in features needs, updates As and standout our targeted a user-friendly pros. more

This partners of Yelp solution, a Yelp's consumers also to on tap trusted map, drive our continue categories, bring on tool natural new long-term our platforms along ways. in and our Yelp. road particularly across LLM initiatives new to breadth quarter content to discovery utility language marked content. Services robust We powered opportunities and of start into Fusion broad enabling will on trusted through believe web. profitable reach broad RR&O, the in to Yelp's AI to our the our map we our first both We excited and range confident businesses includes including third-party across see set API, Overall, new and Yelp's the search these shareholder growth This enhances expanding dozens consumers and of other depth road of how results a Services. In and product offerings, remain AI-powered in be solid about with to transform summary, strategy year, I value. connect a

With that, it over to I'll turn David.

David Schwarzbach

XXXX, quarter to net revenue year-over-year of first increased million. by X% Jeremy. $XXX the saw Thanks, we In

Services first margin. was $XXX our was year-over-year performance for by increased Services the Our net solid from This Advertising Adjusted end million strength of income and EBITDA outlook year-over-year. in Services to $XX approximately to revenue in and was year-over-year XX% representing of $XX high a by quarter in driven our or growth led range, categories. XX% $X.XX XXXX million grew of a $X revenue by Home share, reflecting XX% where per XX% quarter the million, by loss a by increased million above million, net margin. improving which $XX the X%

locations year-over-year matching progress also responded quarter strategy increase of by Investments categories, first through in as our to Services Request-a-Quote, the in XX% advertising in paid by the overall and paying as positively decreased reflected search. Request-a-Quote our X% an improved year-over-year acquire increase product-led efforts X% these a Advertisers in drove advertising year-over-year. paying projects approximately effectiveness to early in our in locations underscoring our in even projects,

modest operating facing the in businesses to a other grew characterized X% categories from consumers. pressures and input these revenue costs, to inflationary pass year-over-year cost along $XXX quarter. by ability reflects our the higher Advertising in categories to environment challenging and an elevated million restaurants, This retail

from trends may be and associated we seeing Additionally, pallet off delivery. dining with impacts

in softness revenue Multi-location in to by approximately X% year-over-year RR&O. quarter, the first also increased attributable

We services to working the experience enhancing actively multi-location benefit this on more businesses future. valuable from are enable Request-a-Quote to

For rates example, customer directly are of their in by an we tracking connecting streamline the launching enterprise that aims process to conversion of customers software. to and relationship the enhance API leads and

we while clicks in valuable system declined advertisers continue increase We substantial deliver an quarter. ad advertisers by advertisers categories, in X%, ad contributed cost per the and X% decreases in in Our believe to We to these in saw our first quarter. increased retention the click in improved ad value delivered all increases quarter. rate more reflecting formats the first non-term the budgets year-over-year average to our with across for clicks year-over-year Services, lower CPCs to

advertiser flow annual the at of along has approximately customer in our marketing, growth rate our XX% Self-serve enhancements in channel acquisition with drove to since quarter a revenue ad record Improvements XXXX. purchase the for quarter compound of increased another Self-serve channel. first

of larger with tap an and identify off platforms audience. Yelp to start We like also intent high Facebook Firefox to opportunities with work the with even intent of matching local that goal searches with to into other advertisers our continue

resources first to This an have on our points drive the allocation to by In while in to opportunities margin focusing adjusted expenses. improvement resulted potential be year-over-year. our we disciplined incremental returns. continued EBITDA X Turning quarter, that of percentage of in our

reduce track expense We also to believe year last stock-based a are of revenue, on point compensation reduced we of percentage by X end X% to it and XX% the from decrease XXXX. below

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

capital In million of first of price we the shareholders Returning key share strategy. repurchased worth to be through a at allocation continues shares capital of average $XX.XX to $XX.X share. repurchases per an quarter, purchase element our

have we We As repurchase XXXX, of our repurchasing subject to and remained market under existing plan economic March authorization. $XXX conditions. in million XX, shares continue to XXXX,

our to Turning outlook.

initiatives our are shared, growth. confident drive in long-term strong we portfolio of to Jeremy As

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

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

margin. to Turning

in more our to driven investments project believe expenses expand increase paid term. expect can our area, acquisition. project incremental long in $XX now positive this We The which quarter us results to drive early acquisition quarter, million second marketing growth in project the to from expect We by particularly confidence XXXX. from given on investments, largely first Services we over the the spend or have paid cash program search

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

million XXXX We adjusted are EBITDA this reflect $XXX to to our $XXX increased million investment. also to narrowing guidance

we In a amount value, deliver are model an cost click advertisers compared over when have see found per Prices we that generally decline. time. as given remodel. advertising in our they CPCs past, the for per clicks cost increase as more through auction In average turn, set budget to spend the of more

decline there and an our significant in a lag However, between in CPC a typically is budget. increase

any this of for we project not XXXX. well our stage acquisition in revenue potential paid as as dynamics remain initiative, our fact reflected we that interaction the Given have at guidance early the an related in

our Yelp's reflect AI closing, of on application across multiyear product our In the first and results focus innovation quarter business.

value the ability strategic done to work proud particularly unlock our to greater service We of for consumers team's and our are execute pros. against even being initiatives

our We confidence value drive the to innovate, and long over in term. have continuing ability grow shareholder

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

Operator

first with [Operator Kreyer question Jason from Instructions] Craig-Hallum. comes Our

Cal Bartyzal

This Jason. is Cal for on

First for me. question

continue continue that see paid efficiencies new anything as you And further learnings, ramp any that. to do wondering, QX Just ramp opportunities that saw you search to for you as budget. in you what

Jeremy Stoppelman

Jeremy. this Cal, is

expanded about And efforts a particular, significant of has were our of had you and enhancements into that more And and we've paying and test getting there. portion that QX it's budget then that features. is we that can towards portion Services been and at period, off. budget then, and a QX, as volume, of course, I into building Request-a-Quote a say it moved. really multiyear would needle seems and could if our moment I see our the think I some engineering a you scale. project product paid is look in to pleased that. leading really think like take over we I paid This really was is We leaning been

a just continue that budget of started. then, we to getting of that make lot us. of it. out. think especially There's that I are a we've the ad standpoint, where and clicks, budget in project -- up, clicks I early CPCs are volume, these results And are looking the great. XX% put take optimizations can we added really friction It's amount paid early we're from And the can for we there's year-over-year think still results categories down, can headroom course, into

on how So offense think really it excited out across years the plays we're the I to on in the see one. this ahead. and I'm year

Cal Bartyzal

And Great. then for one last me.

touch you of reducing know friction on seeing the consumer as just you're Could you're color and Just in friction? those more but early, what wanted terms some provide on reducing Assistant. conversion to rates. seeing what I as increasing curious that Yelp far that point it's

Jeremy Stoppelman

take of can important what I course, for And we're are doing. years. one, many incorporating part really that Sure. too. of many, LLMs a AI been, capabilities we've

able I think It's ultimately like a collects interact to a way through multiple they'd ask something then the in can submit they them to ago. When guides process, information exciting friendly talk wasn't a and few that a just, assistant reflects Yelp and if have them all possible that that with project for Assistant Yelp. mind, years get project consumers to frankly, a It the it. relevant there. really they as seeing tab it quotes the testing different step sure have entry well we'll We've to we're consumers desktop make evaluating the great does first leverage as the as project over maximum. resonate on and all mobile with we're it app and the to to be results and app, web seem within to to web, points that added

Operator

Eric next Goldman Sheridan Sachs. comes with Our from question

Eric Sheridan

as relationship sense what some might the saw when and ahead. And of the an the perplexity. if just how think increasing X, we that to evolve amount announcement in the rise you scope kind for AI and grow about you might if additional could give I curious of could, be us of type consumer-facing years Maybe partnerships with

pressure on delivery ad the little about like. secondary what Can competition of comment local deeper you dollars of teasing made either maybe in Second, the was of space the go seeing business. in some there that out some the for terms with providers the putting and a on the versus competitive cyclicality that you're dynamic bit some you

Jeremy Stoppelman

stab a on in Jed one. take the right. second question jump All can at I can first there, maybe the

innovator forward. happen. indeed perplexity company search trying And a So an deliver think to trying excited important the experience is search to early is partnership Yelp. content, great I turn great They're that a takeaway push the to local when obviously they see is of to

activity so having and that's lot validation We're lots us. of exciting general. AI space the data remains door in an licensing general And conversations. our the there's a space for in of open. in Certainly, And

experience as a Fusion licensing We sizable just released as new whole licensing spring And different a in in reminder, in area. with pretty search a which wide essentially. do a have we different AI API, of a our whole AI do, see the fact, delivers variety product data potentially a And array of Yelp we business conversational industries. release, partners

excited what with into interesting the market. to new applications. new we're content to AI bring that's and So that, see all Yelp and over are do happening, innovators web Conversations the

Joseph Nachman

inflationary of pay-to-play broader of then those you to Jed. the quarter, categories including delivery in on labor, platforms to not at to continued restaurant, in saw can really the the some consumer macroeconomic that costs cautious pass marginal I from retail remain the Businesses competition. kind first those is the the And given look input categories. days impact platforms. when pressure the This question able being and second the shifts on ended. take in and and these happens certainly, through off-premise, factors, the pressures we other Certainly, some of that some industry have a

tell. don't we market the the is conviction largely, will RR&O At those specific the believe going point, We At timing to But those some of timing, believe there conditions, platforms. it's as some do to a over dollars macro really margin, are given impact. to the hard we come have that back.

side. advantage the drivers some innovate the We are staffing via of We're well well take improve. economic positioned, to when as product underlying however, to the continuing opportunity against as

And in take really and share. to the services laser meantime, focused a in believe in stepping back the position opportunity broadly, that we're on we're strong

the acquisition systems strategy Specifically we Services going by integrate that's invest to believe initiatives side and and started better new the order for be around to the drive to enterprise, adoption, Services client with have CRM somewhat ways more the enterprise, really in in to impacted our well. certainly and including management underpenetrated on implement that RAQ we're and lead project as

Operator

question next with Sergio Our Segura KeyBanc. from comes

Sergio Segura

I Great. had X.

XXXX? of for EBITDA expectation through walk in just EBITDA year then the is was us guide after seeing the confidence the those outlook investment end can quarter guess, this I without So stepping for in high gives this for the also year lowered question. returns what contemplating was revenue and you That's your above first that the you the outlook unchanged. revenue was up

how then the that softness segment in this relative talked quarter, you first And last you the to weakness into And trends are some saw then second, RR&O, a what did quarter? on how you saw I play about versus your expectations? guess, out month quarter. in

David Schwarzbach

Thanks David. it's the question. Sergio, for

we obviously, saw We we And where We spend we end projects. that saw QX. went we the with $X first, million $X the and in of cost have meaningful is QX buying increases we at as in increases clicks, in per example, saw in So saw movers in an projects from significant million. what declines categories the to are click. significant increased

are the budget have for time, in what deliver leads, movers time in increases, those more budget higher seeing see where that consumers think price they auction values, that the is adding at but and when clicks past, first we system then pricing, the paying, to they're quarter. In the which more is we in very ad about seeing better leads in because advertisers for Now valuable way their us much then quality we're more been and it time. we the over through mechanism takes that adjust the value able we

obviously, good to shows when up want time just we elongated up has past, returns. when budget. actually you in spend seen ad and But broadly, between Now when have it I But underscore to economic we past. done the want this the show the we've in that in budget frame drive been in

to So call. to updates the call sharing and QX forward when the get with we'll look obviously, we you QX

strong saw of fact because wanted we that and that into the into still to years In going terms in made the how we've past guidance, the through of paid think, first I absorb results broad efficiency year some do early drive of spend to quarter, that we we the the the provide we efforts want were acquisition, insight the intend continue. overall, to several EBITDA over to project that underscore the did to we

points. just last at QX a expenses, a as to And X% We In you XX% year. obviously couple they're if adjusted of only EBITDA up achieved XXXX, look important compared of margin. QX

expenses just So overall in to just give think underscore in But that continue to ourselves type want of this to given ourselves year, up We this QX of X% type to of efficiency investment. this compared we that make flexibility. I capacity operational drive again, we've order to QX.

Joseph Nachman

And This the it and the quarter, in are from of fourth the is to in second take terms in a moving see Yes, fourth our into RR&O Jed. quarter mentioned second in as in I reflected what in guide. can we first question. the continuation terms we quarter, expectations started was the quarter of weakness call. the

the of obviously, local that take revenue think the as RR&O both mix. mention, run seeing as we we're impact well I the it's on into And multi-lo too, that multi-location important the in to channel.

Operator

comes Our Colantuoni with question from John next Jefferies.

John Colantuoni

SEM efforts. the a to zoom little wanted on bit I in

of since on isn't click return that paid think SEM, profiles I profitable. repeat across in behavior initial dependent sort often general

and initial the return and term. characterize Or how and long of payback would profitability into how SEM? the you revenue you near payback characterize would return KPIs SEM Yelp, For the of specifically, profile and profile translate those initial and in

Jeremy Stoppelman

Jeremy. that. can Yes. take is this I John,

As brand, we projects we're very do approach a we're obviously have to strong unique cross here, ramping really has space. Yelp -- this we believe paid category. a unique projects take, a

And so the variety for unlike have cases. consumers that a use wide reason other significantly players to different space, this to invested in talk maybe of have we

repeat to just think we're very and that test so I does And a a in QX. ramping economics early. to it's got that to in now, have give drive of conversation. continuing obviously us outsized very going We And out unique think in quarter certainly I provide advantage we're right, behavior. Right QX,

what so as And we're for of data. early early well down. But at sure is that can CPC metrics clicks being we looking XX%, is with projects sort up working the with are looking good and up ad say being being and I very think

what historically out of wanted point see And then the We gate. and that's guess Yelp other has is invest lot a very I'd we So the to to been that R&D. in driven. engineering product thing I

provide And I frankly, the that think that across across web, will across in our unparalleled space. the is allows us web, mobile be, consumer and a experience app, to

Assistant that. space Yelp like a one No in of fantastic example is think I the else that has period. anything

there. We expect can think you that I the future. more are like see goodness just the in innovator And to

Operator

from Raymond next Josh Beck Our comes James. question with

Kishan Patel

around or Josh terms managing Gen can you tracking for monetization around color on of Patel results. Services? an of impact share towards And improving the in Kishan metrics consumer is are what engagement Beck. This you Any

Jeremy Stoppelman

in been This the our significantly product. services investing From we've Jeremy. obviously is side, -- on

where great project Yelp It's consumers from think I in the talked the response really positive. Assistant, be as is we're I app. seeing And that, within there. example the innovative about, of just tab trying a to we're is

to folks think streamlining to in owner the invest that important business to I side on equation. our functionality, continue Request-a-Quote reflect for it's making the use. of also We easier

is think thinking responses, businesses lot really that quotes for a to of whether one the opportunity it good itself and us be I to as also improving lends there a well. consumers, great reply about well, AI going or provide to back as I making and to there's opportunity for easier even think, improvements correspondence it's

way, we in services, we're we're excellent that doing the to shows we've some things, the project as So improvements, right? projects continue you we'll but and being of of features is and and reflected that And Request-a-Quote make of driving, is I paid a that's again, long our streamlining posted think XX% innovation performance the project continued keep up and part that functionality. come part

David Schwarzbach

this add, is can I And David.

we going economics monetized On see monetization we And is continue continue in search, see X you're paid adding One progress make front, we bring through quarter. that the first as that metric -- the traffic, clicks we want are or off leads in, of increased there you Yelp connections from improvements to happening. when and drive the and make make to move we things on are to to to because acquire someone obviously, work. connections,

a But you're better to the So seeing Yelp. just it valuable strength that's projects to increasing additional if on we the connections, the denominator makes monetizing little the say to both see are get and obvious, increase and bring numerator to more going we And to that there. and going better percentage both. at in

So there. there's positive a loop

go we're more we'll And of So number updates course, connection progress give then year making. that as through we the on the monetized the provide we annually.

numbers strength projects those get we in in the and product you to first we the saw XXXX. through there, the call We'll give the both purchasing. improvements when driven were but by that So QX quarter

Operator

[Operator Instructions] Jian Our Li with Evercore. from question next comes

Jian Li

Great.

First, double I click to want CPC. the just comment your on on

into investment. leaning You're

Services pretty the specifically anything maybe And talk nature condition? day-to-day kind you just targeting. doing volatility? on what of ad of is the sector, it Or competitive improving of about seeing seeing the ad you're ad Is muted. market tech you're bidding can but of really in intensity side this outside that's CPC You're kind in the the conversion, there of current the your is

David Schwarzbach

This David. question. is the for Thanks Yes.

change is one dynamic report the at So -- CPCs. one here blended we the play thing obviously, in

have encouraged have each what and then we and project obviously, of there Now are acquisition those. other. are that we subcategories very just by And start where the that. seen, and Services we and paid I What purchasing to subcategories retail meaningful consists want to with of restaurant, we're seen piece. broadly in is the reductions And obviously, projects,

also technology, saw consumer continuous the the in which is the that's X% a pros from improvement of in CPCs coming itself the those better greater improvement information as as algorithm we the plus, having well to broadly, in service from But really minus continued declines us. available than Services in ad-matching combination obviously,

the So that's overall, fourth Services minus just meaningful number we've made as move pleased. progress a the we in very in very being we're out, growing front you much aggregate, to that and on point well much from have on is CPCs of went where very I'd and the X% quarter, and still quarter first in driven that clicks. a side smaller X%

So happy with that. super

In willing Obviously, obviously, the terms where And types projects on those projects. so to targeting were we at. these acquire projects. been to price intensity we're to a of 'XX, far more. able And point we $XX of pleased in or for like the increase to bidding are we've the return by spend that million

matching. also at job back, obviously them experience for see have a with they So them. very And a the information Assistant get think that. want with with we're specific something better pleased talked we the about but we the final and engaging as great that creating make really Jeremy as and helps overall when more better -- come consumer, like Yelp to to really us comment, getting just maybe about, I We has improvements,

cost into improved which results for information per in CPCs, directly translates that service quite increased in lead pros. And economics turn better

And happy improve room yet So and go we're with of underway on of actually overall that projects to a we're underscore to I just lots progress continuing making. the and there's that. lot lots

Jian Li

a helpful. just Great. And follow-up. maybe super That's

changes You guess, you're shared green innovation cadence general still the our shoots product consider helpful. there's of that like a the allocation. share investment in expectations. pipeline. near-term should like Any I buybacks? there But Is to given sounds like anything lot that's we share That's and of really near-term your in buyback capital into leaning it

David Schwarzbach

Thanks for that question.

So did in we million back first quarter, of buy $XX.X the stock.

million. in prior been have We consistently quite $XX buying quarters,

saw in we first in additional million in million quarter free the with cash cash. in also, quarter, and capital. first we to, return the flow, generated And the So ended an $XXX we $XX opportunity quarter,

committed of As that. that you excess our on cash our we're and to doing in remain capital has not target to committed perspective know, returning we changed, balance,

We just only continued So that go real the quarter again, earlier. I reflection compared Yelp drive the just back made have XXXX -- X% comment first a that. as efficiency to I point out, several think we I'd I'd to of being years. think expenses in to the up at And over of overall a past XXXX

So we at what the the same are creating capacity time strong driving still we're the that for business. are economics to invest think we

Operator

may in questions no will further queue. conference are all There the today's This participation, you and now you disconnect. conclude call. Thank for your

Yelp (YELP) 9 May 242024 Q1 Earnings call transcript