Yelp's (YELP) Earnings and Revenues Beat Estimates in Q2

Yelp YELP reported second-quarter 2022 earnings of 11 cents per share, which compared favorably with the Zacks Consensus Estimate of a loss of 2 cents per share. The bottom line improved 120% from the year-ago quarter’s 5 cents per share.

Revenues jumped 16% year over year to $299 million and surpassed the Zacks Consensus Estimate of $284 million. The top line primarily reflected growth in advertising revenues.

Quarter in Detail

Advertising revenues (95% of total revenues) climbed 16% year over year to $284 million. This upside can primarily be attributed to higher customer spend, an increase in Paying Advertising Locations and an improved non-term customer (“NTC”) retention rate. Paying Advertising Locations reached 569,000, up 8% from the year-ago quarter and 4% from the previous quarter.

Yelp Inc. Price, Consensus and EPS Surprise

Yelp Inc. Price, Consensus and EPS Surprise

Yelp Inc. price-consensus-eps-surprise-chart | Yelp Inc. Quote

Within key categories, Paying Advertising Locations for Services business increased 9,000 from the first quarter of 2022. Paying Advertising Locations for Restaurants, Retail & Other categories were up 14,000 from the first quarter, primarily driven by the relaxed pandemic-related restrictions.

Within Advertising, Services revenues grew 14.3% year over year to $174.3 million. Restaurants, Retail & Other revenues climbed 18.2% to $109.2 million.

Transaction revenues were $4 million in the second quarter, up 12% year over year due to an increase in the per-order transaction fee from Grubhub, partially offset by lower food take-out and delivery order volumes, as several restaurants resumed and increased their dine-in operations.

Other revenues jumped 31% to $11 million as the company reduced relief incentives to the pandemic’s most affected customers in the form of waived fees. The surge in this segment’s revenues reflects benefits from the strong adoption of its Yelp Fusion program, which was introduced in May 2020.

Total costs and expenses flared up 10% year over year to $283 million, reflecting the company’s continued investments in its long-term growth initiatives.

Yelp’s first-quarter adjusted EBITDA increased 5% year over year to $67 million. However, the adjusted EBITDA margin contracted 200 bps from the year-ago quarter’s 25% to 23%.

Balance Sheet & Cash Flow

As of Jun 30, 2022, Yelp’s cash & cash equivalents were $421.2 million without any debt.

During the second quarter and first six months of 2022, the company generated operating cash flow of $18 million and $78.2 million, respectively.

During the second quarter and first six months of 2022, the company repurchased shares worth $50 million and $100 million, respectively.

Guidance

For the third quarter of 2022, Yelp projects revenues between $300 million and $310 million.

Management plans to increase strategic investments in the third quarter, as a result of which, adjusted EBITDA is expected to be $65-$75 million.

The company estimates revenues between $1.18 billion and $1.20 billion.

The adjusted EBITDA is anticipated in the range of $265 million to $285 million.

Zacks Rank & Key Picks

Yelp currently carries a Zacks Rank #3 (Hold). Shares of YELP have fallen 13.1% in the past year.

Some better-ranked stocks from the broader Computer and Technology sector are Taiwan Semiconductor TSM, Clearfield CLFD and Silicon Laboratories SLAB, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Taiwan Semiconductor's third-quarter 2022 earnings has been revised 10 cents northward to $1.70 per share over the past 30 days. For 2022, earnings estimates have moved 37 cents north to $6.30 per share in the past 30 days.

TSM's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 3.9%. Shares of the company have decreased 25.2% in the past year.

The Zacks Consensus Estimate for Clearfield's fourth-quarter fiscal 2022 earnings has been revised upward by 10 cents to 80 cents per share over the past seven days. For fiscal 2022, earnings estimates have moved 36 cents north to $3.13 per share in the past seven days.

Clearfield’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 33.9%. Shares of CLFD have soared 143% in the past year.

The Zacks Consensus Estimate for Silicon Laboratories’ third-quarter 2022 earnings has increased 22.9% to $1.02 per share over the past seven days. For 2022, earnings estimates have moved 14.2% up to $4.18 per share in the past seven days.

Silicon Laboratories’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 63.6%. Shares of SLAB have decreased 2.2% in the past year.

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