Yelp Inc.'s YELP shares gained 2.3% during Thursday’s extended trading session following the company's better-than-expected fourth-quarter 2024 results. YELP's quarterly earnings jumped 67.6% to 62 cents per share, which beat the Zacks Consensus Estimate by 21.6%. The robust bottom-line performance was mainly driven by higher revenues and lower expenses.

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Earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 149.1%.

Revenues increased 6% year over year to $362 million and surpassed the consensus mark by 3.2%. The year-over-year increase was driven primarily by growth in advertising revenues from Services business.

Yelp’s Q4 Results in Detail

Yelp’s advertising revenues (95.6% of total revenues) increased 6% year over year to $346 million, mainly driven by a rise in ad clicks. Our model estimate for Advertising revenues was pegged at $335 million.

Advertising revenues for the Services business grew 10.7% year over year to $224.8 million, driven mainly by strong demand from advertisers and a rise in paying advertising locations. The RR&O division decreased 2.8% year over year to $120.8 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 9% to $16.3 million.

Our model estimates for Services, RR&O and Other revenues were pegged at $216.7 million, $118.4 million and $15.3 million, respectively. Total Paying Advertising Locations decreased 4.2% year over year to 521,000. Per our model, Paying Advertising Locations were pegged at 527,000.

Total costs and expenses decreased 3% year over year to $309 million. Yelp’s fourth-quarter adjusted EBITDA climbed 5% year over year to $101 million. The adjusted EBITDA margin remained flat year over year at 28%.

Yelp’s 2024 Performance in Brief

YELP’s 2024 revenues increased 6% year over year to $1.41 billion and surpassed the Zacks Consensus Estimate of $1.4 billion. The year-over-year increase was driven primarily by growth in advertising revenues from Services businesses.

The company’s 2024 earnings jumped 39.3% to $1.88 per share, which beat the Zacks Consensus Estimate of $1.80. The robust bottom-line performance was mainly driven by higher revenues and lower expenses.

Yelp’s Balance Sheet & Cash Flow

As of Dec. 31, 2024, Yelp’s cash, cash equivalents and short-term marketable securities totaled $317.9 million without any debt.

The company generated an operating cash flow of $71 million and a free cash flow of $60 million in the fourth quarter. In 2024, it generated operating cash flow and free cash flow of $285.8 million and $248.5 million, respectively.

Yelp Initiates Q1 & FY25 Guidance

For the first quarter of 2025, Yelp anticipates revenues to be between $350 million and $355 million. Adjusted EBITDA is projected to be in the band of $65-$70 million. The Zacks Consensus Estimate for revenues is pegged at $348.4 million.

For 2025, the company anticipates revenues to be between $1.470 billion and $1.485 billion. The adjusted EBITDA is expected to be in the range of $345-$360 million. The consensus mark for full-year 2025 revenues is pinned at $1.48 billion.

Yelp’s Zacks Rank and Stocks to Consider

Currently, Yelp carries a Zacks Rank #3 (Hold).

Atlassian TEAM, Planet Labs PBC PL and Fortinet FTNT are some stocks that investors can consider in the broader Zacks Computer and Technology sector. TEAM, PL and FTNT carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Atlassian's shares have soared 45.9% in the past year. The Zacks Consensus Estimate for TEAM’s fiscal 2025 earnings is pegged at $3.45 per share, indicating a 17.8% year-over-year increase.

Planet Labs PBC's shares have surged 174.7% in the past year. The Zacks Consensus Estimate for PL’s fiscal 2025 bottom line is pinned at a loss of 15 cents per share. In fiscal 2024, the company had reported a loss of 50 cents per share.

Fortinet's shares have gained 55.1% in the past year. The Zacks Consensus Estimate for FTNT’s full-year 2025 earnings is pegged at $2.43 per share, suggesting a year-over-year increase of 2.5%.

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