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Yelp's (YELP) Q2 Earnings & Revenues Top Estimates, Up Y/Y

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Yelp Inc. YELP came up with second-quarter 2021 earnings of 5 cents per share, while the Zacks Consensus Estimate was pegged at a loss of 8 cents. The bottom-line result reflects a commendable reversal from the year-ago quarter’s loss of 33 cents.

Revenues jumped 52% year over year to $257 million and surpassed the Zacks Consensus Estimate of $246.4 million. The top line benefited from the reopening of the U.S. consumer economy and an easy comparison with the year-ago quarter, wherein revenues had plunged 32% on lockdowns and social-distancing measures amid the COVID-19 pandemic.

Quarter Detail

Advertising revenues (95% of total revenues) climbed 51% year over year to $245 million. This upside mainly resulted from the increased spending by multi-location advertisers. Paying Advertising Locations reached 528,000, up 150,000 from the year-ago quarter and 25,000 from the previous quarter.

Yelp Inc. Price, Consensus and EPS Surprise

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 10,000 from the first quarter. Paying Advertising Locations for Restaurants, Retail & Other categories were up 15,000 from the first quarter and 69% year over year, primarily driven by the eased pandemic-related restrictions.

Within Advertising, Services revenues grew 39% year over year to $152.5 million. Restaurants, Retail & Other revenues surged 75.6% to $92.4 million.

Transaction revenues came in at $3.5 million in the second quarter of 2021, down11.2% year over year on lower food take-out and delivery order volumes, as several restaurants resumed and increased their dine-in operations.

Other service revenues jumped more than three-fold to $8.7 million from the year-ago quarter’s $2.8 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 also reflects benefits from strong adoption of its Yelp Fusion program which was introduced in May 2020.

Diners seated via Yelp surged 70% sequentially and 45% from the second-quarter 2019 level, aided by the relaxation of the pandemic-related restrictions during the reported quarter.

Total costs and expenses flared up 26% year over year and 7% sequentially to $258 million on the company’s continued investments in its long-term growth initiatives.

Yelp’s second-quarter adjusted EBITDA skyrocketed 473% year over year to $64 million. Adjusted EBITDA margin also expanded from the year-ago quarter’s 7% to 25% in the second quarter of 2021.

Balance Sheet & Cash Flow

As of Jun 30, 2021, Yelp’s cash, cash equivalents & restricted cash were $558.2 million, down from $589.3 million as of Mar 31, 2021.

During the first half of 2021, the company generated operating cash flow of $109.1 million.

Guidance

For the third quarter, Yelp projects revenues between $255 million and $265 million.

Management plans to increase hiring in the second quarter, as a result of which, the third-quarter adjusted EBITDA is expected to be in the range of $45-$55 million.

The company raised its guidance for 2021. It now estimates revenues between $1.01 billion and $1.03 billion, up from the previous forecast of $1-$1.02 billion. Adjusted EBITDA is now anticipated in the range of $200-$220 million, up from the $175-$195 million guided earlier.

Zacks Rank & Stocks to Consider

Yelp currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Microsoft MSFT, Cadence Design Systems CDNS and Texas Instruments TXN, all carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for Microsoft, Cadence Design and Texas Instruments is currently pegged at 11.5%, 11.7% and 9.3%, respectively.


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