Yelp's (YELP) Q1 Earnings and Revenues In Line, Rise Y/Y

Yelp Inc.’s YELP first-quarter earnings of 2 cents per share reversed the loss of 3 cents in the year-ago period. Meanwhile, the bottom line matched the Zacks Consensus Estimate.

While net revenues increased 6% year over year to $236 million, the metric met the Zacks Consensus Estimate.

Healthy growth in the company’s multi-location and national businesses was a tailwind.

Quarterly Details

Advertising revenues (96% of total revenues) rose 6% year over year to $227 million, driven by growth in the number of Paying advertising accounts.

Paying advertiser accounts were 192,000, up 8% year over year, aided by a transition to non-term advertising.

In the first quarter, Paying advertising locations grew 4% year over year to 529,000 sites but decreased by 15,000 locations sequentially.

Yelp is more and more benefiting from its Home & Local services, which contributed 33% to advertising revenues. Home & Local category was mainly boosted by revenues from ‘Request-A-Quote’, which surged 50% year over year.

Management noted that the launch of Verified License last November led to a rapid adoption with more than 5,000 clients adding the feature to their advertising packages. Moreover, a positive early response to the latest offering, Business Highlights, unveiled at April end, is a tailwind.

Transaction revenues declined 25% year over year to $3 million on revenue loss as a result of Eat24’s sale to Grubhub.

Other services revenues improved 8% to $5 million, banking on growth of Yelp Reservations and Yelp Waitlist.

In the first quarter, cumulative reviews rose 18.7% year over year to more than 184 million. App unique devices climbed 16% year over year to 35 million on monthly average basis.

In the first quarter, the company delivered 19% more ad clicks to advertisers while reducing their average cost-per-click (CPC) by 8%.

Yelp reported adjusted EBITDA of $39 million, up 19% year over year. Adjusted EBITDA margin expanded 200 bps to 17%.

Yelp Inc. Price, Consensus and EPS Surprise

Yelp Inc. Price, Consensus and EPS Surprise

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

Balance Sheet & Cash Flow

Yelp exited the first quarter with $626 million in cash, cash equivalents & marketable securities, down from $755.9 million at the end of the prior reported quarter.

Net cash flow from operating activities in the first quarter of 2019 was $41 million.

During the first quarter, the company repurchased nearly 2.8 million shares for $102 million. As a result, the company lowered its outstanding shares by 3.5% from the beginning of this year.


For the second quarter, Yelp expects a revenue rise in the range of 4-6% and adjusted EBITDA margins to be flat or increase 1 percentage point year over year.

The company still expects to achieve 8-10% revenue growth for 2019. Transaction revenues are expected to be nearly $15 million and Other services revenues might be around $29 million.

Adjusted EBITDA margin is anticipated to improve 2 to 3 percentage points for the full year.

Revenues are likely to rise in the mid-teens’ rate on average during the 2019-2023 period.

Yelp also reiterates its adjusted EBITDA margin growth expectation of 30-35% by 2023.

Zacks Rank & Key Picks

Yelp currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader Computer and Technology sector are Cadence Design Systems CDNS, ACI Worldwide, Inc. ACIW and Avid Technology, Inc. AVID, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Cadence, ACI Worldwide and Avid is projected at 12%, 12% and 10%, respectively.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.

See 7 breakthrough stocks now>>

Click to get this free report

Yelp Inc. (YELP): Free Stock Analysis Report

ACI Worldwide, Inc. (ACIW): Free Stock Analysis Report

Avid Technology, Inc. (AVID): Free Stock Analysis Report

Cadence Design Systems, Inc. (CDNS): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics


Latest Markets Videos