UK markets open in 4 hours 30 minutes
  • NIKKEI 225

    26,293.37
    +185.72 (+0.71%)
     
  • HANG SENG

    21,406.12
    -180.54 (-0.84%)
     
  • CRUDE OIL

    97.57
    -0.96 (-0.97%)
     
  • GOLD FUTURES

    1,738.40
    +1.90 (+0.11%)
     
  • DOW

    31,037.68
    +69.86 (+0.23%)
     
  • BTC-GBP

    17,113.88
    +363.40 (+2.17%)
     
  • CMC Crypto 200

    444.44
    +8.92 (+2.05%)
     
  • ^IXIC

    11,361.85
    +39.61 (+0.35%)
     
  • ^FTAS

    3,910.80
    +46.89 (+1.21%)
     
  • Oops!
    Something went wrong.
    Please try again later.

Yelp CFO: ‘We’re seeing significant business creation’

In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Yelp CFO David Schwarzbach joins Yahoo Finance Live to discuss company earnings, advertising revenue, and the outlook for growth.

Video transcript

BRIAN CHEUNG: --thing that was in focus in that report was just the gains that we saw in leisure and hospitality. And for more on that, let's bring in Yahoo Finance's Brooke DiPalma, who was looking into that a little bit deeper. And Brooke, again, same story as we've seen in previous months. Big gains in that specific sector.

BROOKE DIPALMA: Absolutely, Brian. When you think of the comeback that happened since the pandemic started back in February of 2020, it certainly is a huge moment for the leisure and hospitality sector here. In April, it increased to 78,000 jobs-- they added, that is. And then when you look deeper into that, the food services and drinking places-- of course, you know, that's bars and restaurants-- they added about 44,000. And accommodation-- hotels, lodges, motels-- added about 22,000 jobs.

But Akiko and Brian, it's a long road ahead for this leisure and hospitality sector to just get back to where it was. It's still down 1.4 million jobs-- that's 8.5%-- since that February 2020 onset of the pandemic. But when you think about the pent-up demand that we're seeing from consumers, just really eager to get out, to spend, to travel, of course, as the summer months come closer-- also, too, think about it, we're back in the office. People are going back into their offices. They're looking to stop and grab breakfast.

It really comes down to the fact that can these restaurants fill that demand with the staff that's needed. And that's for so many restaurants to have to cut hours, delay their openings, and really take a second look at their staffing because, you know, just recently, on Wednesday, we got new data out of the US Bureau of Labor Statistics that 889,000 employees quit in the leisure and hospitality sector in March of 2022. So to fill that demand while also seeing so many quit this sector, it's certainly lots to gamble here.

AKIKO FUJITA: Yeah. Well, and I guess the question is, how many of those people who left are actually going to come back to the sector, even if they come back to the labor force? And that's something that we've heard from so many--

BRIAN CHEUNG: They could be changing--

AKIKO FUJITA: --businesses--

BRIAN CHEUNG: Industries, yep.

AKIKO FUJITA: --that, look, after what happened in the pandemic, they're looking to other areas to--

BROOKE DIPALMA: For stability, perhaps, more hours.

AKIKO FUJITA: Yeah.

BROOKE DIPALMA: Absolutely.

AKIKO FUJITA: Something we'll be watching closely. With the leisure and hospitality sector seeing momentum, activity on Yelp is also ticking up, as consumers-- let's just get to our guest here. We've got David Schwarzbach. He is Yelp CFO. He's joining us today. And I wanted to point to the stock, that move that we're seeing today. I mean, obviously, when you look at the quarter, you have record quarterly revenue. But we saw a dip in the stock. I wonder what you think investors are missing from the story.

DAVID SCHWARZBACH: Well, coming off of a great 2021 for us, we continued to deliver in the first quarter. We were up 19%. It did reflect a rebound in our restaurant, retail, and other categories. That grew 27%. Yelp's really known for restaurants, but actually, about 60% of our revenue comes from services. That grew 14%.

Now, we think that there was real demand for advertising in the first quarter. That's what we saw, as advertisers wanted to reach consumers. We think that we're very well positioned to deliver against that. And what you asked, what are investors missing, we've really gone through a strategic transformation over the course of the past three years. And we think the first quarter really reflects the progress that we've made.

BROOKE DIPALMA: And David, I want to dive a bit more into that. Ad revenue, of course, you said that really drove growth this past quarter. But businesses can opt for either a free page on Yelp or they can use ads to help promote their business. What do you think-- we were just talking about the jobs report out today. What do you think this says about the overall state of small businesses that are on Yelp's platform?

DAVID SCHWARZBACH: Well, what we are seeing is that small businesses are seeing folks coming back out. People do want to get back out, notwithstanding the fact that we're not past COVID yet. And so they want to reach those consumers. That being said, if they can't hire enough people to staff, then they don't want to spend too much on advertising and drive even more people in.

All that being said, what we see on the services side is significant demand, because people are still at home and they're still doing those projects that they've put off for a little bit of time. Overall, we think that our consumers are looking for ways to address inflation. As you know, Yelp is very well known for the reviews. And people want to make great decisions, especially when things are more expensive. And we think we really help them to do that.

BRIAN CHEUNG: Hey, David, it's Brian Cheung here. And you know, what's interesting about Yelp within the context of this inflationary story is the ability of users to filter by one or two or three or four dollar signs. And you know, what was interesting was that your data team actually had a report that noted that people who are going out are indeed looking for perhaps more expensive restaurants. Is that because restaurants are getting more expensive and they're actually changing their rating online, or is it because just the types of occasions that people are looking to go out to eat or go out to services is changing in this environment?

DAVID SCHWARZBACH: We do think it's a combination of both of those things. So restaurants are more expensive today. And so you really are being more selective about when you're going out. We think people still want to get out again after COVID and they want to make that a special moment for themselves. And then maybe most importantly, as people go out, they're really maybe, because things are more expensive, not able to go out as frequently. So they want to make a great decision there, as well.

BROOKE DIPALMA: And David, also, too, on the site, there's also options for customers to be able to see what exactly amenities that they offer, in that report that Brian was referencing. You're also seeing consumers look for EV or perhaps sustainable options. What sort of demand are you seeing in that regard of these type of amenities?

DAVID SCHWARZBACH: So we do have many different badges, including those. And our purpose is really to provide folks with the information they're seeking in order to make that decision. And so people do want to go out, and they want to go to restaurants that are green, or they may be vegan, or they may be a Black-owned business. And they want to support those businesses. So we think we play a critical role in enabling businesses to really tell their story. And when consumers are looking for them, they find them on Yelp.

AKIKO FUJITA: And finally, David, I wonder if you can speak to the health of the businesses that are on your platform. You were talking about consumer behavior not necessarily pulling back just yet. There's occasions where people still want to go out and eat at a nice restaurant.

But so many of these businesses have really been struggling over the last few years. And I know you saw a dropoff after the pandemic to those businesses that decided to shut down. What's your sense, based on what you're seeing right now, about how much of those businesses have returned?

DAVID SCHWARZBACH: Yeah, so we're seeing actually significant job-- excuse me, we're seeing significant business creation over the course of the pandemic. I think we're all a bit surprised by that. And really, the businesses that have been able to make it through COVID are stronger. What we saw in the first quarter was significant advertiser demand. We saw that across categories. We saw that in our restaurant, retail, and other categories. We saw that in our services business.

And we were really pleased with our ability to deliver the quarter against this complex macro environment. And we're very, very happy with the progress that we've made. And certainly, we want to continue to deliver value to advertisers and consumers alike.

AKIKO FUJITA: Yelp CFO David Schwarzbach, it's good to talk to you today. Really, a perfect conversation on this jobs day. Appreciate the time. And our thanks to Brooke DiPalma, as well, for joining in on the conversation.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting