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YI

YELP INC (YELP)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue was $361.95M (+6% y/y), net income $42.22M (12% margin), diluted EPS $0.62, and adjusted EBITDA $101.06M (28% margin); both revenue and adjusted EBITDA were above the high end of company Q4 outlook, a positive surprise.
  • Services advertising continued to drive results: Services revenue reached $224.84M in Q4 (+10.7% y/y), while RR&O declined to $120.80M (-2.8% y/y). Total paying advertising locations fell to 521k (-4% q/q, -4% y/y).
  • 2025 guidance: net revenue $1.470B–$1.485B and adjusted EBITDA $345M–$360M; Q1 2025 revenue $350M–$355M and adjusted EBITDA $65M–$70M; effective GAAP tax rate range 24%–28%; SBC ~9% of revenue; D&A ~3%.
  • Management emphasized product-led growth and AI (Yelp Assistant), with Request-a-Quote projects up ~30% y/y in Q4 despite reduced paid search; near-term narrative is Services strength vs persistent RR&O headwinds.

What Went Well and What Went Wrong

  • What Went Well

    • “We delivered our 15th consecutive quarter of double-digit year-over-year growth in services revenue,” underscoring durable momentum in Services categories and product-led execution.
    • Q4 revenue and adjusted EBITDA were above the high end of guidance; adjusted EBITDA margin held at 28% and net income margin rose to 12% (vs 8% in Q4’23).
    • AI initiatives (Yelp Assistant, ad matching, smart selection) are driving engagement and advertiser value; project submissions via Assistant rose >50% q/q in Q4.

  • What Went Wrong

    • RR&O remains pressured by macro headwinds (inflation, input/labor costs) and to a lesser extent competition from food delivery platforms; RR&O advertising revenue fell 3% y/y in 2024 and declined 2.8% y/y in Q4.
    • Paying advertising locations fell 5% for 2024 (average) and ended Q4 at 521k (down from 544k in Q4’23), reflecting softer RR&O demand.
    • Paid search for Services projects delivered strong top-of-funnel but insufficient ROI at the bottom-of-funnel; spend was reduced, tempering one growth lever.

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$342.38 $360.34 $361.95
Net Income ($USD Millions)$27.41 $38.44 $42.22
Diluted EPS ($USD)$0.37 $0.56 $0.62
Adjusted EBITDA ($USD Millions)$96.05 $101.36 $101.06
Net Income Margin (%)8% 11% 12%
Adjusted EBITDA Margin (%)28% 28% 28%
Segment Advertising RevenueQ4 2023Q3 2024Q4 2024
Services ($USD Millions)$203.14 $228.01 $224.84
Restaurants, Retail & Other ($USD Millions)$124.23 $116.40 $120.80
Total Advertising ($USD Millions)$327.37 $344.41 $345.64
Other Revenue ($USD Millions)$15.01 $15.94 $16.31
Total Net Revenue ($USD Millions)$342.38 $360.34 $361.95
KPIsQ4 2023Q3 2024Q4 2024
Total Paying Advertising Locations (000s, monthly avg)544 524 521
Services Paying Locations (000s)245 252 250
RR&O Paying Locations (000s)299 272 271
Auction/Traffic Dynamics (y/y)Q2 2024Q3 2024Q4 2024
Ad Clicks (y/y %)+9% +2% +5%
Average CPC (y/y %)-1% +3% 0%

Notes: Adjusted EBITDA and margin are non-GAAP as defined and reconciled in exhibits.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
Net Revenue ($USD Millions)Q4 2024$347–$352 $361.95 Above range
Adjusted EBITDA ($USD Millions)Q4 2024$84–$89 $101.06 Above range
Net Revenue ($USD Billions)FY 2025N/A$1.470–$1.485 New
Adjusted EBITDA ($USD Millions)FY 2025N/A$345–$360 New
Net Revenue ($USD Millions)Q1 2025N/A$350–$355 New
Adjusted EBITDA ($USD Millions)Q1 2025N/A$65–$70 New
Effective GAAP Tax Rate (%)FY 2025N/A24–28 New
Stock-Based Compensation (% of Revenue)FY 2025~10% (Q4) ~9% (FY) Lower
Depreciation & Amortization (% of Revenue)FY 2025~3% (Q4) ~3% (FY) Maintained
Opex/Cost CommentaryQ1/FY 2025N/ASeasonal payroll taxes in Q1; modest expense increase in FY (COR higher with RepairPal) New

Earnings Call Themes & Trends

TopicQ2 2024 (Aug 8)Q3 2024 (Nov 7)Q4 2024 (Feb 13)Trend
AI/Technology (Yelp Assistant, ad tech)Launched Assistant; ad clicks +9% y/y; CPC -1% Narrowed paid project acquisition; ad clicks +2% y/y; CPC +3% Assistant projects >50% q/q; AI matching and smart selection; continued advertiser value Improving
Request-a-Quote projectsAccelerated to ~35% y/y (Q2) ~25% y/y; narrowed spend, strong top-of-funnel ~30% y/y despite minimal paid search spend Improving (organic)
RR&O macro headwindsAdditional pressure in late Q2; macro-driven Persisting headwinds; seasonality not materializing Ongoing macro pressures (inflation, input costs) Pressured
Paid search projectsSpend $12M in Q2 (top-of-funnel strong) Reduced by half; FY spend ~$30M Reduced; continuing modest, ROI-focused experiments Rationalized
Multi-location Services & Leads APILaunches; target enterprise adoption Request-a-Quote for Brands; new leads & conversion APIs Early adoption; longer sales cycles but promising Building
RepairPal (Auto Services)N/AAnnounced ($80M), ~$30M revenue run-rate, breakeven Closed; integration underway; Auto now #2 Services category Expanding
Data licensing/AI search (Perplexity)Highlighted opportunity; Apple Maps R-a-Q button Perplexity partnership; broader AI agent/API vision Early traffic/licensing conversations continue; no unusual Google volatility Emerging

Management Commentary

  • CEO: “We delivered our 15th consecutive quarter of double-digit year-over-year growth in services revenue… We introduced more than 80 new features and updates as we leveraged AI to drive more connections between consumers and service pros.”
  • CFO: “Top line growth was driven by continued strength in services… Adjusted EBITDA increased by 5% y/y to $101M… we decreased our shares outstanding and increased diluted EPS by 40% y/y to $1.88.”
  • CEO on Assistant: “A conversational AI… walks you through the process… then goes on to connect you with pros… We have seen a lift in terms of projects submitted.”
  • CFO on capital allocation: “We repurchased $251M worth of shares in 2024… and plan to continue repurchasing shares in 2025, subject to market and economic conditions.”

Q&A Highlights

  • RR&O outlook: Management views RR&O weakness as largely macro (inflation, input costs, lower consumer frequency) with some marginal competitive pressure; expect to be positioned to capture recovery when it turns.
  • Multi-location Services: Leads API and revamped owner tools enable better lead management; early adoption is promising but requires change management and has longer cycles.
  • Paid search dial-back: Strong top-of-funnel validated lead pools, but retention and advertiser budget increases were insufficient; spending reduced to focus on ROI while continuing to iterate.
  • RepairPal integration: Auto category elevated to #2; synergy expected via SEO/SEM and embedding repair pricing into R-a-Q and Assistant flows; RepairPal was ~breakeven on cash and net income.
  • Generative AI search platforms: Early conversations/licensing; Perplexity features Yelp content; no unusual Google traffic volatility observed.

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS, revenue, and EBITDA was unavailable at time of analysis due to data access limits. As a proxy, the company’s actual Q4 results exceeded its own Q4 guidance ranges for both revenue and adjusted EBITDA.
  • Implication: Near-term estimate revisions likely to reflect stronger-than-guided Q4 performance and 2025 guidance framing (Services strength, modest expense increases, SBC headwind to adjusted EBITDA but not net income).

Key Takeaways for Investors

  • Services-led model remains the growth and margin engine; 15 consecutive quarters of double-digit Services growth and sustained 28% adjusted EBITDA margin support durability.
  • Q4 beat vs company guidance (revenue and adjusted EBITDA) is a positive catalyst; execution offsets RR&O weakness.
  • AI deployment (Assistant, ad matching, smart selection) is translating into measurable KPIs (project submissions, ad clicks) even as paid search is dialed back.
  • RepairPal integration expands Auto Services and should enhance consumer experience and monetization; watch for Auto category ramp in 2025.
  • RR&O headwinds persist; total paying locations down to 521k; near-term growth relies more on Services and product-driven efficiency.
  • 2025 guide implies steady revenue growth with disciplined expense posture (SBC ~9%, D&A ~3%, effective tax 24–28%); adjusted EBITDA $345M–$360M reflects SBC headwinds to non-GAAP but no impact to net income.
  • Capital returns remain active (2024 repurchases $251M); continued buybacks in 2025 subject to conditions provide EPS support.