Yelp Inc. YELP reported third-quarter 2024 earnings of 56 cents per share, beating the Zacks Consensus Estimate by 40%. The figure declined 29.1% year over year.

YELP’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 165.12%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

YELP’s revenues increased 4.4% year over year to $360.3 million but marginally missed the Zacks Consensus Estimate by 0.11%.

Following its lower-than-expected third-quarter revenue estimates, YELP lowered guidance for 2024. This raises concerns about the company’s near-term prospects, which might weigh on its share price performance. YELP shares lost nearly 3% in the pre-market trading. Shares of YELP have plunged 19.7% year to date, underperforming the Zacks Computer & Technology sector’s return of 28.5%.

Quarter in Detail

Yelp’s advertising revenues (95.6% of total revenues) increased 4% year over year to $344 million, mainly driven by a rise in ad clicks and increasing cost per click. Our model estimate for Advertising revenues was pegged at $346.5 million.

Advertising revenues for the Services business grew 11% year over year to $228 million, driven mainly by strong demand from advertisers and a rise in paying advertising locations. The RR&O division decreased 6% year over year to $116.4 million. This decline in the segment was due to persistent macroeconomic headwinds that have further challenged restaurant and retail businesses, reducing demand for Yelp’s services in the RR&O category. Other revenues increased 5.6% to $16 million. Our model estimates for Services, RR&O and Other revenues were pegged at $232.2 million, $114.3 million and $15 million, respectively.

Paying Advertising Locations decreased 7% year over year to 524,000. Per our model, Paying Advertising Locations were pegged at 534,000.

Total costs and expenses increased 3.4% year over year to $313.7 million.

Yelp’s third-quarter adjusted EBITDA climbed 5% year over year to $101 million. The adjusted EBITDA margin remained flat year over year at 28%.

Balance Sheet & Cash Flow

As of Sept. 30, 2024, Yelp’s cash, cash equivalents and short-term marketable securities were $397 million without any debt.

The company generated an operating cash flow of $102.3 million and a free cash flow of $92.5 million in the third quarter.

Q4 and FY24 Guidance

For fourth-quarter 2024, Yelp anticipates revenues between $347 million and $352 million. Adjusted EBITDA is projected in the band of $84-$89 million.

For 2024, the company now anticipates revenues between $1.397 billion and $1.402 billion, down from the previous guidance of $1.410-$1.425 billion. The adjusted EBITDA is now expected in the range of $341-$346 million compared with the previous guidance of $325-$335 million.

Yelp’s Zacks Rank & Other Stocks to Consider

Yelp currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the broader technology sector are Shopify SHOP, Arista Network ANET and CyberArk CYBR, each sporting a Zacks Rank #1 at present. You can see the complete list of today's Zacks #1 Rank stocks here.

The consensus mark for Shopify’s 2024 earnings has been revised upward by 13 cents to $1.12 per share over the past 90 days, indicating a 51.31% year-over-year increase. The long-term expected earnings growth rate for the stock stands at 39.2%. Shares of SHOP have gained 2.7% in the year-to-date period.

The Zacks Consensus Estimate for ANET’s 2024 earnings has been revised upward by 4 cents to $8.28 per share in the past 30 days, indicating an increase of 16.28% on a year-over-year basis. It has a long-term earnings growth expectation of 15.3%. Shares of FTNT have jumped 40.8% in the year-to-date period.

The Zacks Consensus Estimate for CyberArk’s fiscal 2024 earnings has been revised upward by a penny to $2.30 per share in the past seven days, suggesting a year-over-year increase of 105.4%. It has a long-term earnings growth expectation of 33.4%. Shares of CYBR have plunged 21.3% in the year-to-date period.

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