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Yelp's (YELP) Q3 Earnings and Revenues Surpass Estimates

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Yelp Inc. (YELP - Free Report) reported third-quarter 2020 loss of 1 cent per share, beating the Zacks Consensus Estimate by 96.7%. In the year-ago quarter, Yelp had reported earnings of 14 cents per share.

Revenues declined 15.9% year over year to $220.8 million but surpassed the Zacks Consensus Estimate by 9.5%.

The year-over-year decline was primarily due to coronavirus-led lockdowns and resultant shelter-in-home guidelines. However, as these restrictions began to ease gradually in the reported quarter, revenues jumped 31% sequentially.

Yelp shares were up almost 10% in pre-market trading. Notably, Yelp shares are down 36.8% against the Zacks Internet Content industry’s rally of 6.4%, year to date.

Yelp Inc. Price, Consensus and EPS Surprise Yelp Inc. Price, Consensus and EPS Surprise

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


Quarter Details

Advertising revenues (78.5% of total revenues) decreased 16.6% year over year to $211.2 million. This decrease was due to coronavirus-led reduction in advertising budgets by customers, particularly those in the restaurants and nightlife categories. Paying advertising locations declined 10% year over year to 507K sites in the third quarter.

Transaction revenues were $4.4 million in the third quarter of 2020, up 43.5% year over year due to increases in food take-out and delivery orders as a result of the coronavirus pandemic, which forced many restaurants to close for dine-in services and provide take-out and delivery services only.

Other service revenues decreased 17% to $5.2 million, primarily as a result of approximately $3 million in relief provided to customers in the third quarter of 2020, mainly in the form of waived fees.

Cumulative reviews climbed 10% year over year to 220 million. However, app-unique devices declined 15% year over year to 32 million on a monthly-average basis.

Total costs and expenses declined 16% year over year to $211 million.

Yelp’s third-quarter adjusted EBITDA declined 9.7% year over year to $52.7 million. However, adjusted EBITDA margin expanded 160 bps year over year to 23.8%.

Balance Sheet & Cash Flow

As of Sep 30, 2020, Yelp’s cash, cash equivalents & marketable securities were $591 million, up from $526 million as of Jun 30, 2020.

Net cash flow from operating activities was $71 million compared with the previous quarter’s $57.2 million.


For the fourth quarter of 2020, Yelp expects revenues between $220 million and $230 million.

The Zacks Consensus Estimate for revenues is pegged at $228.5 million, suggesting 15% decline from the figure reported in the year-ago quarter.

Moreover, operating expenses are expected to increase sequentially as the company restored reduced salaries in August. It has also completed the return process of furloughed employees in October.

Adjusted EBITDA margin is expected between 16% and 20%.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the broader technology sector are CMC Materials (CCMP - Free Report) , Covetrus (CVET - Free Report) and NVIDIA (NVDA - Free Report) . All three stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Covetrus and CMC Materials are set to report their quarterly earnings on Nov 10 and 11, respectively. NVIDIA is set scheduled to report the same on Nov 18.

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