Yelp (YELP) Q1 Loss Narrower Than Expected, Sales Up Y/Y

Yelp YELP reported a narrower-than-expected loss for first-quarter 2022. The company posted a loss per share of a penny compared with the Zacks Consensus Estimate of a loss of 31 cents. The reported figure was also narrower than the year-ago quarter’s loss of 8 cents per share.

Revenues jumped 19% year over year to $276.6 million and surpassed the Zacks Consensus Estimate of $266.7 million. Yelp’s top line primarily reflected growth in advertising revenues.

Quarter in Detail

Advertising revenues (95.2% of total revenues) climbed 18.6% year over year to $263.2 million. This upside can primarily be attributed to higher customer spend, an increase in Paying Advertising Locations and an improved non-term customer (“NTC”) retention rate. Paying Advertising Locations reached 546,000, up 43,000 from the year-ago quarter and 18,000 from the previous quarter.

Within key categories, Paying Advertising Locations for Services business decreased by 1,000 from the first quarter of 2021. Paying Advertising Locations for Restaurants, Retail & Other categories were up 44,000 from first-quarter 2021, primarily driven by the relaxed pandemic-related restrictions.

Yelp Inc. Price, Consensus and EPS Surprise

Yelp Inc. Price, Consensus and EPS Surprise

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

Within Advertising, Services revenues grew 13.9% year over year to $160.3 million. Restaurants, Retail & Other revenues climbed 26.7% to $103 million.

Transaction revenues were $3.2 million in the first quarter of 2022, down 16.4% year over year on lower food take-out and delivery order volumes, as several restaurants resumed and increased their dine-in operations.

Other revenues surged 62% to $10.2 million as the company reduced relief incentives to the pandemic’s most affected customers in the form of waived fees. The surge in this segment’s revenues reflects benefits from the strong adoption of its Yelp Fusion program, which was introduced in 2020.

Total costs and expenses flared up 17% year over year to $281 million, reflecting the company’s continued investments in its long-term growth initiatives.

Yelp’s first-quarter adjusted EBITDA increased 10% year over year to $48.1 million. However, the adjusted EBITDA margin contracted 200 basis points (bps) from the year-ago quarter’s 19% to 17%.

Balance Sheet & Cash Flow

As of Mar 31, 2022, Yelp’s cash & cash equivalents were $465.1 million without any debt.

During the first quarter of 2022, the company generated operating cash flow of $59.9 million. The company repurchased shares worth $50 million during the same time frame.

Guidance

For the second quarter of 2022, Yelp projects revenues between $280 million and $290 million.

Management anticipates adjusted EBITDA in the band of $45-$55 million, relatively flat compared sequentially.

The company estimates revenues between $1.16 billion and $1.18 billion. The adjusted EBITDA is anticipated in the range of $260 million to $280 million.

Zacks Rank & Key Picks

Yelp currently carries a Zacks Rank #3 (Hold). Shares of YELP have declined 15.7% in the past year.

Some better-ranked stocks from the broader Computer and Technology sector include Avnet AVT, Gogo GOGO and Analog Devices ADI. While Avnet sports a Zacks Rank #1 (Strong Buy), Gogo and Analog Devices carry a Zacks Rank of 2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Avnet's fourth-quarter fiscal 2022 earnings has been revised 55 cents northward to $1.96 per share over the past seven days. For 2022, earnings estimates have moved north by 20.5% to $6.83 per share in the past seven days.

Avnet's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 21.2%. Shares of AVT have increased 8.2% in the past year.

The Zacks Consensus Estimate for Gogo's first-quarter 2022 earnings has been revised downward by a penny to 13 cents per share over the past 30 days. For 2022, Gogo's earnings estimates have moved a couple of cents south to 63 cents per share in the past seven days.

Gogo's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 65%. Shares of GOGO have soared 69.4% in the past year.

The Zacks Consensus Estimate for Analog Devices' second-quarter fiscal 2022 earnings has been revised upward by 4 cents to $2.12 per share over the past 30 days. For fiscal 2022, earnings estimates have moved north by 11 cents to $8.43 per share in the past 30 days.

Analog Devices' earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6%. Shares of ADI have increased 1.8% in the past year.

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