Yelp, the popular online review platform, has announced better-than-expected financial results for the third quarter of 2023. The company’s revenue reached $345 million, representing a 12% increase compared to the same period last year. This result not only surpassed Wall Street’s consensus of $341 million but also exceeded Yelp’s own guidance range of $337 million to $342 million.
One of the key drivers behind Yelp’s success in Q3 was the strong demand for advertising from service professionals. The company reported record ad revenue from services firms, with home services revenue alone experiencing an impressive 20% growth during the quarter. CFO David Schwarzbach expressed his confidence that Yelp is gaining market share by delivering value to service pros.
In addition to strong top-line growth, Yelp also displayed improved profitability in Q3. Adjusted EBITDA came in at $96 million, surpassing Yelp’s forecast range of $84 million to $89 million. The company’s adjusted EBITDA margin saw a significant jump to 28% from 24% in the previous year.
Schwarzbach attributed this achievement not only to robust revenue growth but also to “continued financial discipline.” He also highlighted that overall advertising clicks increased by 9% in the quarter, while cost per click rose by 4%.
With these impressive results, Yelp remains optimistic about its future performance. However, the company’s 2023 outlook suggests a mixed fourth-quarter forecast, indicating potential challenges ahead. Nevertheless, Yelp’s strong position in the online review market and its ability to drive value for service professionals sets a solid foundation for its continued success.
Strong Earnings and Increased Revenue Forecast for Yelp
Yelp has reported impressive earnings, with a per-share value of 79 cents, surpassing the consensus estimate of 34 cents by a wide margin. Furthermore, their net income of $58 million has exceeded the Street estimate of $23 million. It is worth noting that these earnings include a one-time tax adjustment, contributing $15 million (or around 20 cents per share) to the overall figure.
Looking ahead, Yelp has revised its full-year revenue forecast to a range between $1.332 billion and $1.337 billion. This new forecast outperforms the previous range of $1.32 billion to $1.33 billion. Additionally, the company predicts adjusted Ebitda for the full year to be between $319 million and $324 million, which is an increase from the prior range of $310 million to $320 million.
Based on their guidance, Yelp anticipates fourth-quarter revenue to be between $337.3 million and $342.3 million, aligning with the Street consensus of approximately $339 million. However, their projected adjusted Ebitda for the same period falls below expectations at $84.6 million to $89.6 million, compared to the anticipated $95 million. Yelp acknowledges that expenses in the fourth quarter will see a modest increase compared to the third quarter.
Speaking on the adjusted Ebitda guidance, Schwarzbach, a representative from Yelp, mentioned that historically, the fourth quarter tends to be slower due to service providers taking time off during the holiday season. The forecast also factors in timing elements when it comes to expenses.
Overall, Yelp’s strong earnings and revised revenue forecast demonstrate their continued growth and position within the market.