YELP's Q4 Earnings Fall Short of Expectations, Revenues Beat
Yelp YELP reported mixed results in its fourth-quarter 2022 results, wherein the top line increased year over year, outpacing Zacks Consensus Estimate, but the bottom line decreased year over year missing the consensus mark.
The company reported earnings of 28 cents per share, missing the Zacks Consensus Estimate of 31 cents. The bottom line dropped 6.7% from the year-ago quarter’s earnings of 30 cents per share.
Meanwhile, Yelp’s revenues increased 13.1% year over year to $309.1 million and surpassed the Zacks Consensus Estimate of $306.5 million. The top line primarily reflected growth in advertising revenues.
Yelp Inc. price-consensus-eps-surprise-chart | Yelp Inc. Quote
Quarter in Detail
Advertising revenues (95.1% of total revenues) climbed 12% year over year to $294 million. This upside can primarily be attributed to higher customer spending and an increase in Paying Advertising Locations in both Services and Restaurants, Retail & Other categories.
Paying Advertising Locations reached 545,000, up 3.2% from the year-ago quarter but down 4.7% from the previous quarter. Within key categories, Paying Advertising Locations for Services business as well as Restaurants, Retail & Other categories decreased 7,000 and 20,000, respectively, from third-quarter 2022 figures.
Within Advertising, Services revenues grew 13.4% year over year to $178.3 million on growth in the Home, Local, Auto, Professional, Pets, Real Estate, Financial and Event Services categories.
Transaction revenues were $3.3 million in the fourth quarter, up 15% year over year, driven by an increase in the per-order transaction fee from Grubhub post renewal of partnership in March 2022. This was partially offset by lower food take-out and delivery order volumes, as several restaurants resumed and increased their dine-in operations.
Other revenues jumped 30% to $11.8 million, driven by the strong adoption of its Yelp Fusion program introduced in 2020 and lower COVID-19 relief incentives in the form of waived subscription fees.
Total costs and expenses flared up 9% year over year to $276 million, reflecting the company’s continued investments in its long-term growth initiatives.
Yelp’s fourth-quarter adjusted EBITDA increased 18.1% year over year to $80.4 million. Eventually, the adjusted EBITDA margin expanded 100 basis points (bps) from the year-ago quarter’s 25% to 26%.
Balance Sheet & Cash Flow
As of Dec 31, 2022, Yelp’s cash, cash equivalents and short-term marketable securities were $400.6 million without any debt.
During the fourth quarter and full-year 2022, the company generated operating cash flows of $44 million and $192.3 million, respectively.
During the fourth quarter and full-year 2022, Yelp repurchased shares worth $50 million and $200 million, respectively.
Full-Year Highlights
For full-year 2022, Yelp reported revenues of $1.19 billion, up 16% year over year.
The company reported non-GAAP earnings of 50 cents per share, flat with 2021’s figure.
Adjusted EBITDA surged 10% year over year to $270 million. Adjusted EBITDA margin contracted 100 bps to 23% from year-ago quarter’s 24%.
Guidance
For the first quarter of 2023, Yelp projects revenues between $300 million and $310 million.
Management expects adjusted EBITDA in the $40-$50 million band for first-quarter.
For full-year 2023, the company estimates revenues between $1.29 billion and $1.31 billion. Adjusted EBITDA is anticipated in the range of $290-$310 million.
Zacks Rank & Key Picks
Yelp currently has a Zacks Rank #5 (Strong Sell). Shares of YELP have declined 10.6% in the past year.
Some top-ranked stocks from the broader Computer and Technology sector are Axcelis Technologies ACLS, Bandwidth BAND and Nutanix NTNX. While Axcelis sports a Zacks Rank #1 (Strong Buy), Bandwidth and Nutanix carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Axcelis’ fourth-quarter 2022 earnings has been revised 41 cents northward to $1.46 per share over the past 30 days. For 2022, earnings estimates have improved by 8.5% to $5.21 per share over the past 30 days.
ACLS’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 23.2%. Shares of the company have risen 74.6% in the past year.
The Zacks Consensus Estimate for Bandwidth’s fourth-quarter 2022 earnings has been revised by a penny to 4 cents per share over the past 90 days. For 2022, earnings estimates have moved north by 25 cents to 37 cents per share in the past 90 days.
BAND's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 301.8%. Shares of the company have declined 58.1% in the past year.
The Zacks Consensus Estimate for Nutanix's second-quarter fiscal 2023 loss has been revised a penny north to 13 cents per share over the past 30 days. For fiscal 2023, earnings estimates have moved north by 3 cents to 17 cents per share in the past 90 days.
NTNX’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 86.1%. Shares of the company have jumped 6.4% in the past year.
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