Yelp ( YELP Quick Quote YELP - Free Report) reported second-quarter 2023 results, wherein the top and bottom lines outpaced the Zacks Consensus Estimate and improved year over year.
The company reported second-quarter earnings of 21 cents per share, which surpassed the Zacks Consensus Estimate of 14 cents. The bottom line increased 90.9% from the year-ago quarter’s earnings of 11 cents per share.
Yelp’s revenues increased 13% year over year to $337 million and surpassed the Zacks Consensus Estimate of $325.6 million. The top line primarily reflected growth in advertising revenues.
Quarter in Details
Advertising revenues (95.5% of total revenues) climbed 13.6% year over year to $322 million. Our model estimates for Advertising revenues were pegged at $304.4 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 563,000, down 1.1% from the year-ago quarter but up 1.6% from the previous quarter. Per our model, Paying Advertising Locations were estimated to be 597,000 in the second quarter.
Within key categories, Paying Advertising Locations for Services business remained flat but Restaurants, Retail & Other category increased 9,000 from the first quarter of 2023 figures.
Within Advertising, Services revenues grew 14.9% year over year to $200.3 million on approximately 25% growth in the Home Services category and an increase in Paying Advertising Locations.
Transaction revenues were $3.4 million in the second quarter, down 14.2% year over year due to a decrease in food take-out and delivery order volumes. Our model estimates for Transaction revenues were pegged at $4.5 million.
Other revenues jumped 3% to $11.8 million, driven by the strong adoption of its Yelp Fusion program introduced in 2020. Our model estimates for Other revenues were $13.6 million.
Total costs and expenses flared up 13% year over year to $318 million, reflecting the company’s continued investments in its long-term growth initiatives.
Yelp’s second-quarter adjusted EBITDA increased 25% year over year to $83.9 million. The adjusted EBITDA margin expanded 200 basis points year over year to 25%.
Balance Sheet & Cash Flow
As of Jun 30, 2023, Yelp’s cash, cash equivalents and short-term marketable securities were $397.2 million without any debt.
The company generated operating cash flow of $48 million and $122.3 million during second-quarter and first half of 2023, respectively. Yelp repurchased shares worth $50 million during the reported quarter.
For the third quarter of 2023, Yelp projects revenues between $337 million and $342 million.
Management expects adjusted EBITDA in the $84-$89 million band for the third quarter.
For full-year 2023, the company estimates revenues between $1.32 billion and $1.33 billion. Adjusted EBITDA is anticipated in the range of $310-$320 million.
Zacks Rank & Stocks to Consider
Currently, Yelp carries a Zacks Rank #3 (Hold). Shares of YELP have gained 33.4% over the past year.
Some better-ranked stocks from the broader
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