Yelp (YELP 2.22%), an online platform for local business reviews and advertising, released its earnings for the fourth quarter of 2024 on Feb. 13, 2025. The company reported impressive results that beat analyst estimates, showcasing strong performance in its Services segment. For the quarter, Yelp reported earnings per share (EPS) of $0.62, significantly higher than the expected $0.53. Revenue was also above expectations, totaling $361.95 million compared to the forecast of $350 million. Overall, the quarter was marked by a record year in terms of growth, despite challenges in specific segments like Restaurants, Retail, and Other (RR&O).
| Metric | Q4 2024 Results | Q4 2024 Estimate | Q4 2023 Results | Y/Y Change |
|---|---|---|---|---|
| Diluted EPS | $0.62 | $0.53 | $0.37 | +67.6% |
| Net Revenue ($M) | 361.95 | 350 | 342.38 | +5.7% |
| Net Income ($M) | $42.22 | N/A | $27.41 | +54.0% |
| Adjusted EBITDA ($M) | $101.06 | N/A | $96.05 | +5.2% |
| Free Cash Flow ($M) | $59.96 | N/A | $73.17 | -18.0% |
Source: Analyst estimates for the quarter provided by FactSet.
Yelp operates as a platform that delivers reliable user-generated reviews and ratings. Its core services cater to the advertising needs of small and medium-sized businesses. In recent years, Yelp has focused on expanding its Services segment and investing in innovative solutions like artificial intelligence (AI) to improve user engagement and product offerings. Key success factors for Yelp include maintaining high-quality content, leveraging its large consumer audience, and focusing on profitable revenue streams like home services.
Yelp's strategic initiatives emphasize strengthening consumer trust and diversifying advertising capabilities. With a sophisticated local advertising platform, Yelp maintains a dual focus on high-margin growth through self-serve channels and strategic investments in high-demand verticals, such as home services. It is also prioritizing technology-driven solutions to enhance advertiser value and user experience.
Yelp's fourth quarter was defined by strong earnings and revenue that exceeded expectations. The Services segment was a key driver, seeing a notable 11% year-over-year growth in advertising revenue, reaching $879 million. This marked the 15th consecutive quarter of double-digit growth in Services, encapsulating the success of Yelp's strategic shift. However, the traditionally strong RR&O categories encountered a tougher landscape, resulting in a 3% decline in advertising revenue to $470 million.
The quarter also saw record achievements in terms of financial metrics. Yelp's adjusted EBITDA, which measures earnings before interest, taxes, depreciation, and amortization, reached a new high of $358 million for the year, up 8% from the previous year. Additionally, diluted EPS surged by 67.6%. Despite these successes, the number of total paying advertising locations fell by 5%, impacted by the decline in RR&O categories.
Throughout 2024, Yelp introduced more than 80 new features aimed at enhancing business-user connections. This product-led approach, underpinned by AI, is part of Yelp's broader strategy to drive sustainable growth. Beyond these operational shifts, Yelp's emphasis on improving consumer engagement is evident. The platform recorded 21 million new reviews, bringing the total to 308 million.
Yelp's cash position changed notably over the year. Cash and equivalents decreased to $217.3 million from $313.9 million. This reduction partly resulted from acquisitions that showed increased goodwill and intangible assets on the balance sheet, hinting at longer-term strategic gains.
For 2025, Yelp projects net revenue between $1.470 billion and $1.485 billion and adjusted EBITDA in the range of $345 million to $360 million. This moderate outlook reflects cautious optimism, factoring in macroeconomic pressures and competitive challenges in its RR&O categories. Management intends to sustain its focus on high-margin opportunities, particularly within services advertising and AI-driven enhancements.
Investors should monitor Yelp's strategic initiatives, especially its efforts to augment high-margin segments and its competitive response to challenges in restaurant and retail advertising. As Yelp continues to leverage its strategic pivots, its trajectory in expanding successful verticals like home services is key for sustainable growth.
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