Yahoo Finance Yelp's (YELP) Q4 Earnings and Revenues Surpass Estimates
Yelp Inc. YELP reported fourth-quarter 2020 earnings of 27 cents per share, beating the Zacks Consensus Estimate of a loss of a penny per share. Moreover, earnings per share increased 12.5% year over year.
Revenues declined 13.2% year over year to $233.2 million but surpassed the Zacks Consensus Estimate by 2.4%.
The year-over-year decline was primarily due to coronavirus-led lockdowns and shelter-in-home guidelines.
Yelp Inc. Price, Consensus and EPS Surprise
Yelp Inc. price-consensus-eps-surprise-chart | Yelp Inc. Quote
Quarter Details
Advertising revenues (95.7% of total revenues) declined 14% year over year to $223 million. The downside was caused by coronavirus-led reduction in advertising budgets by customers in the restaurants, retail and other categories. The decline was also the result of waived
advertising fees and paused advertising programs provided to affected customers. Paying advertising locations declined 8% year over year to 520K sites in the fourth quarter.
Transaction revenues were $4 million in the fourth quarter of 2020, up 37% year over year due to increases in food take-out and delivery orders, particularly through Yelp’s partnership with Grubhub GRUB. This was a result of the coronavirus outbreak, which forced many restaurants to close for dine-in services as well as provide take-out and delivery services only.
Other service revenues fell 6% to $7 million, primarily as a result of relief provided to customers in the fourth quarter in the form of waived fees.
Cumulative reviews increased 9% year over year to 224 million. However, app-unique devices declined 17% year over year to 30 million on a monthly-average basis.
Total costs and expenses declined 16% year over year to $211 million.
Yelp’s fourth-quarter adjusted EBITDA declined 2.3% year over year to $59.6 million. However, adjusted EBITDA margin expanded 300 basis points (bps) year over year to 26%.
Balance Sheet & Cash Flow
As of Dec 31, 2020, Yelp’s cash, cash equivalents & marketable securities were $595.9 million, up from $591 million as of Sep 30, 2020.
Net cash flow from operating activities was $48 million compared with the previous quarter’s $71 million.
Guidance
For the first quarter of 2021, Yelp expects revenues between $220 million and $230 million.
The Zacks Consensus Estimate for revenues is pegged at $228.64 million, suggesting 15.3% decline from the figure reported in the year-ago quarter.
Moreover, operating expenses are expected to increase sequentially as the company plans to invest in various growth initiatives that include product investments in Self-serve and Services category.
Adjusted EBITDA margin expected to exceed 20%. Adjusted EBITDA is projected in the band of $20-$30 million.
For 2021, the company expects revenues between $985 million and $1 billion. Adjusted EBITDA is anticipated in the range of $150-$170 million.
Zacks Rank and Stocks to Consider
Yelp currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector include Apple Inc. AAPL and Shopify SHOP, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Apple and Shopify is currently pegged at 11.5% and 32.5%, respectively.
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