Yelp said revenue grew 12% year over year in the third quarter.
Andrew Harrer/Bloomberg
Yelp
posted better-than-expected financial results and lifted its full-year guidance Thursday, driven by strong demand for advertising from service pros.
The company’s 2023 outlook, however, implies a mixed fourth-quarter forecast.
For the third quarter, Yelp (ticker: YELP) reported revenue of $345 million, up 12% from the year-ago period. That was above both the Wall Street consensus of $341 million, as measured by FactSet, and at the high end of the company’s guidance range of $337 million to $342 million.
The company said it posted record ad revenue from services firms in the quarter. In an interview with Barron’s, CFO David Schwarzbach specifically noted Yelp’s 20% growth in home services revenue during the period.
“We believe we are taking market share with that growth rate,” he says. “We’re delivering value for service pros.”
Adjusted Ebitda, or earnings before interest, taxes, depreciation, and amortization, was $96 million in the quarter, also above Yelp’s forecast range of $84 million to $89 million. Its adjusted Ebitda margin jumped to 28%, from 24% in the year-earlier quarter.
“The way we see it, this was easily the best quarter in Yelp’s history,” Schwarzbach said. The improved profitability in the quarter reflects not only the better-than-expected top-line growth, but also “continued financial discipline,” he added.
The CFO also noted that overall advertising clicks were up 9% in the quarter, while cost per click was up 4%.
Earnings came in at 79 cents a share, more than double the consensus at 34 cents. Net income of $58 million was above the Street estimate at $23 million. Yelp said earnings included $15 million, or about 20 cents a share, from a one-time tax adjustment.
For the full year, Yelp now sees revenue ranging from $1.332 billion to $1.337 billion, above the prior forecast range of $1.32 billion to $1.33 billion. It predicts full-year adjusted Ebitda between $319 million and $324 million, up from a previous range of $310 million to $320 million.
The guidance implies fourth-quarter revenue between $337.3 million and $342.3 million, which, at the midpoint, is about in line with the Street consensus of $339 million. But it also suggests adjusted Ebitda between $84.6 million and $89.6 million for the fourth quarter, which falls short of expectations for $95 million. Yelp said fourth quarter expenses “will increase modestly” from the third quarter.
Schwarzbach, when asked about the adjusted Ebitda guidance, said the fourth quarter tends to be seasonally slower for Yelp, with some services providers taking time off heading into the holidays. The forecast also reflects some “timing elements” on expenses, he added.
Write to Eric J. Savitz at [email protected]
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