YELP - Earnings call transcript Q3 2024

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Operator

Thank you for standing by. My name is Briana, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Yelp Third Quarter 2024 Earnings Conference Call. Please note that this call is being recorded. [Operator Instructions] I will now turn the conference over to Kate Krieger, Director of Investor Relations. ahead. go Please

Kate Krieger

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

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

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

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

from with During in as margin financial prepared flow, isolation accounting EBITDA, which be a today, measures. not information may are substitute accepted financial accordance These adjusted our or call and principles. discuss in adjusted considered non-GAAP we for EBITDA free cash generally measures should

flow. Jeremy. margin historical with to both that, income will historical these find of and our cash adjusted regarding non-GAAP Relations each which and the of on of cash this operating disclosures In Investor well measures our turn I as SEC, shareholder will free you activities is and letter or our as loss financial GAAP filings the afternoon adjusted reconciliations with released over EBITDA GAAP from flows call website, net posted additional And a to reconciliation to EBITDA

Jeremy Stoppelman

welcome, in categories. everyone. million. and led revenue strong net X% profitability in Kate, services revenue Yelp year-over-year $XXX Net and by quarter, third strength Thanks, the increased record delivered by to

also We margin adjusted XX% management. through income XX% and margin delivered EBITDA disciplined an expense net

year-over-year We to we restaurant, even XX% other X% faced services performance of categories and environment increased a by Businesses category, this projects and third by in quarter. improvements a see primarily category home continue as a of approximately our We RR&O second our revenue performance spend retail increased challenging the the revenue have in in request XX% operating divergence growth. the year, stronger in declined double-digit growth the in saw XXth by we search year-over-year, our increased services result. the focused acquisition result We focus time, quarter. continued where approximately year-over-year initiative the product saw of project quarter the paid it even narrowed paid achieved making efforts, as from a year-over-year. our consecutive to business, and this year-over-year, same where our strong Request-A-Quote reduced momentum. half by by flow. as the Services quarter At revenue XX%

that narrowed we difficulty fewer quarter for established the initiative, this focus on target the with leads. businesses often advertisers in Zooming reviews in with more to competing experience

continue were of CPCs signals, third strong to not quarter. see warrant than more the ad they to to continue in and funnel, clicks the the sufficient at level. the quarter, while bottom the including metrics continued At positive investment projects, We top-of-funnel see ago lower current year in we

anticipate in use more XXXX, levels. our this on spending we initiative. will And learnings iterating to We at modest continue

product ingest approach This have focus where also the services increased more advertisers see aligns recently businesses, substantial volumes. opportunity we an have We our multi-location with multi-location efforts. demand to to deliver who capture our additional leads to to for and capacity sales lead

engineering increased continued higher content and X% third shift tend budgets to product ad to teams year-over-year, In reflecting consumers. year-over-year. CPC by clicks relevant most CPCs leverage to the clicks. our ad quarter, which optimize services mix by to towards time, a AI clicks, than displaying broadly, X% by further At the advertisers' More same RR&O increased average the have

to rolled out also experience and back-end a of user We number even our more search experience improvements make efficient.

for several service and growth revenue. delivering in home focus services significant Over on last best the our has consumers driven years, the pros services experience

this in categories. believe to our our services investing in in Looking auto that ahead, million the Today, advertising in multibillion-dollar accelerate drive announced will efforts opportunity approximately We vertical. growth services we auto an services acquire we additional we've services $XX cash. see to platform, other expanding offerings agreed acquisition by key for U.S. RepairPal by

and third term. With In it revenue to the run shareholder David. category our auto excited and profitable that, had rate focus In $XX annual continues drive growth our we advertising approximately long of an over opportunities ahead services services the strengthen to to the business, remain I'll value over quarter, million. summary, from turn our by on

David Schwarzbach

of $X.XX end the per putting XX% representing a third share EBITDA disciplined Thanks, outlook our income on to $XX reached which $XXX a the high margin, representing million an or $XX was outlook approach, $XXX within above Jeremy. net at In million, record range. Driven million, diluted X% range. a our Adjusted margin. revenue basis, increased by XX% quarter, million was net by our

increased services in categories drove million. $XXX XX% a strength this to growth. Advertising record revenue Continued by year-over-year and services

in through in the XXX,XXX. the in decline grew an to resulting restaurants pressured of decline came RR&O. efficient mentioned, and services focused the year-over-year, RR&O Jeremy overall X% $XXX our retailers and most A was to continued We year-over-year Self-serve remained third RR&O revenue a softness approximately locations quarter. in quarter, strong advertising paying channels. on locations XX% in in in same driving remain revenue year-over-year resulted multi-location year-over-year offset approximately time, growth in reflecting the This in flat At in X% decrease million. quarter. in As locations growth

to Turning expenses.

end net the margin results spent Through third in our million we with EBITDA of Our disciplined an including paid third margin quarter, the spent XX% of margin through and a these the the quarter. strong project million adjusted achieved XX%. business We $X on quarter $XX expense demonstrate of acquisition, of income potential had management. results

we expect continue employees approximately be will As headcount will opportunities, allocate we the best who RepairPal resources to us. year-over-year be of efficiently excluding towards by flat our end XXXX, joining

reaching In percentage the X% by stock-based focused percentage the quarter, end than and reduced by revenue of less remain XXXX. points a we expense of third compensation X on as year-over-year

over and years the We expect stack EBITDA time, these improving GAAP efforts to profitability quality benefiting in our adjusted to of the come.

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

$XX.X repurchased shares price $XX.XX of average In per million the worth of at share. third purchase quarter, an we

the authorization. As existing continue through of XXXX, $XXX September subject economic repurchasing plan of XX, to we repurchase shares We remaining and market under to XXXX, have our remainder million conditions.

As acquisition of Jeremy planned today, we mentioned, RepairPal. announced our

cash to We this expect in $XX approximately acquisition. for pay million

the months revenue. XX, RepairPal generated $XX August For ended XXXX, approximately XX million in

same capital conditions, acquisition of expect support the of in were by cash we demonstrates approximately the year. from closing Subject to business our customary to our breakeven. Over This income close deploy end to strategy. ability balance the period, our net sheet and

continued When revenue advertisers quarter performance we in spend in in strength to our RR&O and outlook for typically as RR&O outlook. Turning their services our XXXX fourth the updated we better in seasonally. expected increase August,

services has challenges RR&O the businesses. to in quarter maintained RR&O persistence momentum, of revenue no operating its expect given While we impacting increase longer the fourth the

of revenue expect be now the midpoint. will to full million $XX billion $X.XXX of net a year, decrease we billion, For the the range at in $X.XXX

disciplined given quarter to We our did Turning that million our third on now management. experimentation not remain margin. spend achieve search, expense $XX expect returns. dedicated approximately We year paid the desired for to to

marketing of as headwinds third Going paid forward, the amount. our continue of adjusted break the we million longer be the expense, closing, EBITDA reflect quarter $XXX increase profitability more about now of to to RR&O. despite specific amounts expect modest to out an In Yelp's spending $XXX but for million, the business. range the in to underlying no our year results in plan We expect continued full part $XX million of search at midpoint overall on in

create areas ahead to we that, believe value continue please open operator, focus in up we in opportunities for performance. We term over that as our long line investments the shareholder the to questions. the will With believe drive business

Operator

Instructions] [Operator

Our comes Craig-Hallum. first question from of the Kreyer Jason with line

Cal Bartyzal

for is? And vertical? on Jason. in what now first Cal the is is heavily push of time why This this more the services kind to me, you're just opportunity curious into auto Maybe seeing for

Jeremy Stoppelman

Cal, Jeremy. right. All is this

balance I on that. sheet, do think We can I as capital maintain our David mentioned earlier. take

this acquisitions, services fits looking our we're always For and strategy. squarely opportunities, tuck-in within for

RepairPal categories top rate our experts it's for million If are folks annually you It's And Yelp. of at look a auto, services. auto. in the $XX run one real within

deep repairs particularly in the of seen about So it think industry, the this a repairs. as products lot that's brings of in knowledge Request-A-Quote where relationships, we lot we've as like of Yelp useful cost And those Assistant, and success well year. a

give the hold lot able sides that help bringing in of as see providers knowledge. may benefits like by pricing, clarity our shops hand they us them be auto both their their them, get issue, consumers' helping So to matched of a service marketplace describe with around for we

SEM SEO our our knowledge We leverage capabilities some also well strengths, as our audience, see of knowledge. our an opportunity to it as and be

a this So it's grow from excited win-win. We're point. really together to

Cal Bartyzal

Great. up commentary. I of And for want kind then the to of on follow just some me. just RR&O last

this kind call of of gotten if you've seen Just to there's if trend curious anything a have or if headwinds year? just the throughout out RR&O, is new continuation better worse the or in

Joseph Nachman

can headwinds story really This R&O facing throughout input costs. same categories. Cal. R&O businesses with are I Thanks, XXXX the consistent operating businesses Obviously, It's Yes. take macro been that. elevated the Jed. for in is

are delivery category. environment It's external of kind are at factors and consumers cost some are cost that feeling on There a food compounded fees, labor, cetera. other many -- some by et restaurant, the You this and one look just been the inflationary the has retail also hitting and of obviously factors, of margin, that squeeze. what of impacted the

that that do don't of we when capture is turn have a we've positioned does cyclical We maintained and believe a very a relationships ball lot that and this that, this well opportunity. on strong we're crystal and to believe -- moment we ultimately, really

to continue invest invest a perspective and We a relationship perspective. from product from

Operator

Our the Wolfe Shweta next Research. of comes line Khajuria with from question

Shweta Khajuria

year. you was the about more response. and little the EBITDA bit stepped kind a in rest of for bit has your kind up could I guide a wondering little if And revenue you've brought talk of in of

be be there. And line so Any items? you're helpful measures discipline would maybe taking, what to what or specific going wondering color

David Schwarzbach

David. is This Great.

back of in the stepping just on guidance terms So revenue.

increase typically we As my remarks, to spend restaurant, retail expect I the seasonally. case. longer on other advertisers And side, said the that these be of their and in types no

So shared. dynamic that's on out just a playing plus Jed what RR&O

third And worth front, underscoring, XX% the continue there. though, strength it's grew see services on quarter, to we and we the in

In components, we're terms believe of the our efficient. is margin expense strong showing discipline getting up. more We believe that we

a again flat XXXX. reminder, headcount here planning to hold in As we're

On terms of on full marketing the with saw an what be efficient back pull and previously did from more year marketing spend, spend to search. front, in we opportunity had paid we that we shared

those So up. showing are

and the addition, some other positive of capitalized development, that in in being areas we ended there expense up quarter. like In healthcare terms were saw some goodness third software

the the just third term, guidance focused making sure ROI as all just reflection that both very, we're the I'd increase expense And the are very quarter on and obviously, overall year, folks our growth. the very, just focused we in that say, driving places able of overall, And the team a discipline. and We're we're dollars, drive very to on of profitable to performance for continuing marketing right long resources, the performance. allocating on in for

guidance that's put updated what XXXX. for when together, So you that all the informs

Shweta Khajuria

for And That's talk could seeing of paid Okay. ask search Could if funnel you're one about you a I Request-A-Quote? and more. growth in bit what top little helpful. maybe

Jeremy Stoppelman

those We our were rest at ton improve product the a of prices. we working year can paid into the and efforts projects on the in been projects in year, as take to funnel, Yes, think into 'XX. I The happy bring with. reasonable will and driving, lots a particular, go as definitely we're of learnings for quality Quote. of Request able well We've that. top to this really search, learned projects, we've Sure.

advertiser it's higher the really Where retention, saw hard. impact needed ad see much was we bit from to opportunity on on driving behavior. a folks. those little budgets And better We anecdotally,

to spool right projects, away. be able suddenly If you're you up a getting might a bunch truck not more

challenges there. some there's And so

So work do. have we to

So we're we're going to and keep levels spend already to those brought bring going down or we iterating. have those levels, spend down

this having sure bring one that there believe But there to leads Yelp. we there there We're pool that is we're do that is effectively We ROI want significant excited a can is with. of validated at and there-there. them we that about make and happy

not that scale to the going adjusted that we through that we'll flow were, at spend and meantime, we're in So shareholders. the for money EBITDA to

Operator

comes Raymond the from Beck with James. next question Our of line Josh

Josh Beck

also ask space. to the in about wanted acquisition the auto I

you think around I of that mentioned $XX revenue. it was million

think vertical. run million there rate $XX I your kind that of is in

does down maybe other opportunity? this approach verticals this to of smaller is in these And of road? more for So up don't vertical-specific a you, help same like some can verticals well kind I expect that the that but apply as maybe something you a services specific feel open the approach really comment, of are

Jeremy Stoppelman

been in at is There's that talk team services, a sheet with growing element an an at -- this a win-win we capital that. balance at number and categories We take has We led have this. someone our all has the your you really can a potential can that's acquisitions. services But do target for to of aligned yin-yang XX%. find a RepairPal. home -- been kind that growing result strategy a and I been same of a we Overall, a when there reserved at there's at grown time, stab -- services. stars And the to do lot which do tuck-in of of you happy about acquisition acquiring and has happen that think large XX%. fits case that within of has on one. all relationship as opportunistic us with great acquisition We've

make rate Yelp is Auto this We Request-A-Quote the potentially has help a see our Yelp very And as to said, on us north excited business, lot their particularly nicely, business expertise We're to the in auto fitting with $XX a bear said, opportunity. that And million. And significant some top to and there, $XX intelligence run Assistant bake business within our with pricing then about the of a auto as we're is consumers. being of better, of in them. a category. categories. already and really one you there million existing significant for able to audience in bringing within do able you bring to of there

We and in have obviously a lot of expertise SEO paid search.

can So we're together excited forward. do to going see what we

Josh Beck

Okay. the little That's super then just a follow-up helpful. And landscape. bit of search a generative maybe on

and You've had create opportunities see generation that how just guidance change results? I early could think to unfold in ways, this the and, some relationship maybe frequency on with of how you guess, Perplexity. learnings potentially traffic for market consumers about which kind or either at Any Yelp

Jeremy Stoppelman

things you bring that players time in be you that first like for we're fundraising early together the haven't with be obviously Perplexity that. well, opportunity. to They've that folks certainly There create I've been way general sense entrants. we I also a in news think growing. I are appear those to decades. antitrust And a about there X in like time, happy excited say in a the real working with and their get round. search big doing are would new to in seen There's And enforcement started the Sure. long some

Our to door we obviously We is open this. APIs as far licensing. for have are that can companies bear as pursuing that bring

for Yelp. really a So it represents I interesting do think opportunity

local to I on at knock If offer, an if what content Yelp the look we have looking North place are back in you does obvious America, door. step for and think you're to

with to that you're is know you issue. an trust LLMs, If working be going

that know they can they things. hours, locations, hallucinate You even hallucinate sorts of can all

reputation And do businesses. also most both So you individual information that importantly, information, content. want be at, to really attributes, Yelp perhaps one be like trustworthy it but about absolutely grounded in excels that's things location thing hours,

So our the we're open, early, It's having but very we door are and is still excited about conversations. opportunity.

Operator

from Markets. with next Our Sergio Capital KeyBanc Segura comes the question of line

Sergio Segura

investment really into results SEM. on I guess hasn't translated first when investment. the started you envisioned the this you The

So way? it your And different walk believe was through could played thesis? us learn than kind why you just that this I just of what did guess, you original you out

Jeremy Stoppelman

is this Yes, Jeremy.

able at when quality hey, in, the we think is project in there wanted I validate, to be to that of Yelp news top significant were good stepped pretty we good bring them. pool we first we is the a volume, need appear can reasonable funnel, big those where there bring leads we And direct that into of on and and projects prices. to to the

Now comes change really have on have our to we a to drive return. behavior advertisers, their for that it challenge when to the side unique is us they

either but a out that still have our to the it bunch retain course, would We they while at only deliver we scale their didn't to to magnitude the to we the a there, we have leads of to they did the this the to opportunity. do focus were did. with is be especially do unlock think into for relatively or to -- real lot way, we see And for. that return change the value as we short have run there see And So better was to us spending in figure work unlock looking there, needed improvements that businesses willing narrowed most, we us. we bump up thought order to

And continue iterate, about so we we it focus opportunity spend informed you we're and to look keeping to the and forward so bringing down can develops. that as

Sergio Segura

short I X, if maybe here. could That's X X it. Jeremy. sneak And Got ones helpful, in

was pointed drivers out SEM that of for investment. guys you ad clicks One the

ad then And we Any decreasing? CPC staying that? stable, slow services to increasing, increasing would clicks moderate looks on comments down also services? of what So Is CPC as because secondly, be Any due helpful. do that that investment, to you you mentioned expect commentary mix. should that within around

Jeremy Stoppelman

So to down grow by project looking while bring your question spend volume XX%. respect the first there. paid we did continue to projects, half, we at With

did a our of through product-led And so lot strategy. that Well, how we do that? is

delivering So Yelp us. really been Assistant for has

on continue deep to have system, matching do work also And yields which a we We ad portfolio improvements. of efficiencies. the

efficiencies plenty we and we that do on there's of drive ad that volume the innovation there still believe we create traffic the room So volume to have. for clicks have,

David Schwarzbach

thoughts to auction and the designed back deploy. stepping is second, add of a more the for give few optimize Sergio, on here who of a to budget behalf just advertisers to us that overall system budget deployment

CPCs, time so or not geography. price in specifically that we're that And we're the letting clicks category find ad the at market auction clearing rather, targeting in that

that's of the the operates. fundamental way system So the just that overall

more feed And the clicks, you Now projects that's typically then that the if net to certainly, be if would for overall into that's have, traffic CPCs impact bringing decline. you're is budget to going delivering and system. the constant

Now all more deliver is all what than it's a under continuing of focused to to complicated it's bit And of value hood, most more we're the on obviously that. advertisers.

And so working matching. the we're continuously improve to

things using right LLM even questions, into the better is get feeds do quickly us right to back system our more Assistant Yelp to an matching. information One customers from of for us important that very the around enables the that's and so ability with

just to up project search improvements exclusively a been for growth the driving that paid that of improvements. overall not And from looking the ways amount has while spend. significantly, from the is we're So and always we're drive considerable

continue to deliver direct projects. to we map those have right projects the that optimistic and of road to advertisers value we to advertisers get generate And course, the and the we in ahead when consumers. So then, to them the to to remain

question -- versus the and in is In terms your of general, on front. demand strength other, the services what restaurant, services see of about we do retail in

shift there's demand so would And And are see more categories consumers obviously, as going that seen the in payout component put mix in typically, from clicks higher see front we've shift we're service are expensive. then there. CPCs expect if that projects you still And then you're stronger that to able to have that Pro, to for of rise. mix a advertisers, a

So to CPCs. add that's to going potential the growth in

the map, operating. to with all So together, more we're you We're road lot against the pleased that is there's and way and going execute the system a to to continue roll come.

Operator

from of our Colantoni the Jefferies. Instructions] John line [Operator comes next question with

Unknown Analyst

John. on to thinking the the be us help upside of is time? Can margin how we RepairPal's their from frame for This you we for RepairPal? P&L drive over investment should business really and As the adjusting the about breakeven across profile after intensity think models about Chris integrating ability our acquisition,

David Schwarzbach

Thanks, Chris. This is David.

to through more $XX yes, provide but $XX what or at to August recap, do, So a just to million call. get we in breakeven the we're XX prior level. the for lot months we when run obviously rate revenue commentary million QX a going And to aim

transaction, We haven't -- today. we the just obviously, announced

have to still close we So and together start directly. working

concept, help we mentioned, with in to do, to But as of is Jeremy what drive them. course, want traffic

We that SEO SEM side. experience both the have and on

investments the in we to perspective. RepairPal. leveraging sense, can a positive that from in revenue bring and a can be that's, perspective over that We a Yelp We potentially margin time. on think that we've a bear, from both So think, made

our they're auto Request-a-Quote expert we that business that, think really as help is estimating can repair, it think a really cost And rate lot And we $XX with the have of really could additive. request-a-quote. run in then and stands. be of a million Obviously, they expertise currently that

get the a to to to they and We're in lot team bring point. we Yelp. to forward call. we great RepairPal, We starting QX think that So net-net, with We to think bring we're think joining look sharing the a we you when lot have us. can more excited we a

Unknown Analyst

consolidated that One the performed disproportionate weak helpful. are that So into other subsegment? there restaurants the are of have us maybe within better more, share within of if dig also RR&O number? may. you or Or pressure the Can buckets a than driving I is, RR&O Very weakness? help advertisers been by Great.

Joseph Nachman

is perspective, weakness -- do the on from Overall, tend from it for that perspective. the makes the certainly, the kind of macro entire and and This they RR&O feeling Jed. Thanks and are a we restaurant question. consumer but in retail other, component, operate a see way in to restaurant same Yes. in we overall, headwinds the

side. we at have And opportunity look kind really see pleased a services of strength. the so continued that it, And opportunity. services broad-based And of obviously the perspective, to from we're when go the on we after to channel is multi-location the things one on have

the had product we've improvements year SEM past made and course and software, from the process being very that kind to customer learned to of year, dialogue the of over business lot those also over We who We've customers. leads healthy able the friction drive our account to management a and particular owner relationship we've out pilots for leads take done folks the API improved to and date. last have of

original -- against RR&O, broad-based but restaurant, So going and back to retail question it's your other. on the

Operator

of line [ ]. Coulbreth with comes the ISI Evercore question from Robert next Our

Unknown Analyst

but just to any ask, the don't the from online? services from changes tailwind it, Just thoughts FCC, sense a wanted in the any changes Or the to consent I environment maybe takes for leads TCPA and talked broad home in and of on your business you supply puts think about the there? under regulations

David Schwarzbach

been general, as advertisers. has other as the this question. is that not relevant for it Robert, Thanks is us for for In David.

So I can't that's a say that, driver. been significant

Operator

that, may participation, for time. you today's you this conference call. will With now disconnect. at conclude and no your have further we Thank We all questions

Yelp (YELP) 7 Nov 242024 Q3 Earnings call transcript