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Yelp (YELP - Free Report) reported third-quarter 2022 earnings of 13 cents per share, beating the Zacks Consensus Estimate of 12 cents. The bottom line dropped 43.5% from the year-ago quarter’s earnings of 23 cents per share.
Revenues increased 15% year over year to $309 million and surpassed the Zacks Consensus Estimate of $306.1 million. The top line primarily reflected growth in advertising revenues.
Quarter in Detail
Advertising revenues (95.1% of total revenues) climbed 14% year over year to $293.7 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 572,000, up 6.9% from the year-ago quarter and 0.5% from the previous quarter. Within key categories, Paying Advertising Locations for Services business increased 6,000 from the second quarter of 2022 while that of Restaurants, Retail & Other categories were down 3,000 from the second quarter.
Within Advertising, Services revenues grew 15% year over year to $181 million on growth in the Home Services category, which jumped from approximately 20% year over year in the previous quarter to approximately 25% year over year in the reported quarter. Restaurants, Retail & Other revenues climbed 13% to $113 million.
Transaction revenues were $4 million in the third quarter, up 22% year over year, due to an increase in the per-order transaction fee from Grubhub post renewal of partnership in March this year. 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 24% to $12 million, driven by the strong adoption of its Yelp Fusion program introduced in 2020.
Total costs and expenses flared up 19% year over year to $295 million, reflecting the company’s continued investments in its long-term growth initiatives.
Yelp’s third-quarter adjusted EBITDA increased 4.5% year over year to $73.9 million. However, the adjusted EBITDA margin contracted 200 bps from the year-ago quarter’s 26% to 24%.
Balance Sheet & Cash Flow
As of Sep 30, 2022, Yelp’s cash & cash equivalents were $421.8 million, without any debt.
During the third quarter and the first nine months of 2022, the company generated an operating cash flow of $69.6 million and $147.8 million, respectively.
During the third quarter and the first nine months of 2022, the company repurchased shares worth $50 million and $150 million, respectively. As of Sep 30, 2022, the company had $82 million left under its existing authorization. In November 2022, the company increased its share-repurchase authorization by $250 million.
Guidance
For the fourth 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 $75-$85 million.
For full-year 2022, the company estimates revenues between $1.185 billion and $1.195 billion. Adjusted EBITDA is anticipated in the range of $265-$275 million.
Zacks Rank & Key Picks
Yelp currently carries a Zacks Rank #3 (Hold). Shares of YELP have declined 8.9% in the past year.
The Zacks Consensus Estimate for Zscaler's first-quarter fiscal 2023 earnings has been revised 7 cents north to 26 cents per share over the past 60 days. For fiscal 2023, earnings estimates have moved north by 15 cents to $1.18 per share in the past 60 days.
ZS' earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 28.6%. Shares of the company have declined 60% in the past year.
The Zacks Consensus Estimate for Celestica’s fourth-quarter 2022 earnings has increased by 9 cents to 53 cents per share over the past 30 days. For 2022, earnings estimates have moved 16 cents up to $1.86 per share in the past 30 days.
Celestica's earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 11.8%. Shares of the company have dropped 1.1% in the past year.
The Zacks Consensus Estimate for Okta's third-quarter fiscal 2023 loss has been revised 3 cents northward to 24 cents per share over the past 90 days. For fiscal 2023, loss estimates have improved by 3 cents to 72 cents per share in the past 60 days.
OKTA’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 45.5%. Shares of the company have declined 80.4% in the past year.
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YELP's Q3 Earnings Surpass Estimates, Revenues Increase Y/Y
Yelp (YELP - Free Report) reported third-quarter 2022 earnings of 13 cents per share, beating the Zacks Consensus Estimate of 12 cents. The bottom line dropped 43.5% from the year-ago quarter’s earnings of 23 cents per share.
Revenues increased 15% year over year to $309 million and surpassed the Zacks Consensus Estimate of $306.1 million. The top line primarily reflected growth in advertising revenues.
Quarter in Detail
Advertising revenues (95.1% of total revenues) climbed 14% year over year to $293.7 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 572,000, up 6.9% from the year-ago quarter and 0.5% from the previous quarter. Within key categories, Paying Advertising Locations for Services business increased 6,000 from the second quarter of 2022 while that of Restaurants, Retail & Other categories were down 3,000 from the second quarter.
Yelp Inc. Price, Consensus and EPS Surprise
Yelp Inc. price-consensus-eps-surprise-chart | Yelp Inc. Quote
Within Advertising, Services revenues grew 15% year over year to $181 million on growth in the Home Services category, which jumped from approximately 20% year over year in the previous quarter to approximately 25% year over year in the reported quarter. Restaurants, Retail & Other revenues climbed 13% to $113 million.
Transaction revenues were $4 million in the third quarter, up 22% year over year, due to an increase in the per-order transaction fee from Grubhub post renewal of partnership in March this year. 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 24% to $12 million, driven by the strong adoption of its Yelp Fusion program introduced in 2020.
Total costs and expenses flared up 19% year over year to $295 million, reflecting the company’s continued investments in its long-term growth initiatives.
Yelp’s third-quarter adjusted EBITDA increased 4.5% year over year to $73.9 million. However, the adjusted EBITDA margin contracted 200 bps from the year-ago quarter’s 26% to 24%.
Balance Sheet & Cash Flow
As of Sep 30, 2022, Yelp’s cash & cash equivalents were $421.8 million, without any debt.
During the third quarter and the first nine months of 2022, the company generated an operating cash flow of $69.6 million and $147.8 million, respectively.
During the third quarter and the first nine months of 2022, the company repurchased shares worth $50 million and $150 million, respectively. As of Sep 30, 2022, the company had $82 million left under its existing authorization. In November 2022, the company increased its share-repurchase authorization by $250 million.
Guidance
For the fourth 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 $75-$85 million.
For full-year 2022, the company estimates revenues between $1.185 billion and $1.195 billion. Adjusted EBITDA is anticipated in the range of $265-$275 million.
Zacks Rank & Key Picks
Yelp currently carries a Zacks Rank #3 (Hold). Shares of YELP have declined 8.9% in the past year.
Some better-ranked stocks from the broader Computer and Technology sector are Zscaler (ZS - Free Report) , Celestica (CLS - Free Report) and Okta (OKTA - Free Report) . While Zscaler and Celestica flaunt a Zacks Rank #1 (Strong Buy), Okta carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Zscaler's first-quarter fiscal 2023 earnings has been revised 7 cents north to 26 cents per share over the past 60 days. For fiscal 2023, earnings estimates have moved north by 15 cents to $1.18 per share in the past 60 days.
ZS' earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 28.6%. Shares of the company have declined 60% in the past year.
The Zacks Consensus Estimate for Celestica’s fourth-quarter 2022 earnings has increased by 9 cents to 53 cents per share over the past 30 days. For 2022, earnings estimates have moved 16 cents up to $1.86 per share in the past 30 days.
Celestica's earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 11.8%. Shares of the company have dropped 1.1% in the past year.
The Zacks Consensus Estimate for Okta's third-quarter fiscal 2023 loss has been revised 3 cents northward to 24 cents per share over the past 90 days. For fiscal 2023, loss estimates have improved by 3 cents to 72 cents per share in the past 60 days.
OKTA’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 45.5%. Shares of the company have declined 80.4% in the past year.