Yelp's (YELP) Q1 Earnings and Revenues Surpass Estimates

·4 min read

Yelp Inc. YELP reported first-quarter 2021 net loss of 8 cents per share, beating the Zacks Consensus Estimate of a loss of 26 cents. Moreover, loss per share was narrower from the net loss per share of 22 cents reported in the year-ago quarter.

Revenues declined 7% year over year to $232 million but surpassed the Zacks Consensus Estimate of $228 million.

The year-over-year decline was primarily due to lower revenues from Restaurants, Retail and Other categories as a result of the COVID-19 pandemic-related shelter-in-place orders.

Nonetheless, strength in the Services categories, especially the Home Services business, led to an improved retention rate

Yelp Inc. Price, Consensus and EPS Surprise

Yelp Inc. Price, Consensus and EPS Surprise
Yelp Inc. Price, Consensus and EPS Surprise

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

Quarter Detail

Advertising revenues (95.7% of total revenues) declined 7.5% year over year to $222 million. The downside was caused by coronavirus-led reduction in advertising budgets by customers in the restaurants, retail and other categories. However, paying advertising locations showed recovery trends during the quarter.

Within Advertising, Services revenues grew 6% year over year while Restaurants, Retail & Other revenues fell 24.3%.

Transaction revenues were $3.8 million in the first quarter of 2021, up 44% year over year due to increases in food take-out and delivery orders, particularly through Yelp’s partnership with Grubhub GRUB. This was a result of the coronavirus outbreak, which forced many restaurants to close for dine-in services and provide take-out and delivery services only.

Other service revenues fell 12% year over year to $6 million, primarily as a result of relief provided to customers in the form of waived fees.

App-unique devices improved 10.3% year over year to 32 million on a monthly average basis, as pandemic-related restrictions ease during the quarter.

Diners seated via Yelp rose 20% sequentially, while it declined 24% year over year.

Total costs and expenses declined 13% year over year to $240.7 million.

Yelp’s first-quarter adjusted EBITDA surged 159% year over year to $44 million. However, the adjusted EBITDA margin expanded from 7% in the year-ago quarter to 19% in the first quarter of 2021.

Balance Sheet & Cash Flow

As of Mar 31, 2021, Yelp’s cash, cash equivalents & restricted cash were $589.3 million, down from $596.5 million as of Dec 31, 2020.

Net cash flow from operating activities was $58.9 million compared with the previous quarter’s $48 million.

Guidance

In the second quarter, the company expects to move from recovery to year-over-year growth. Yelp expects revenues between $240 million and $250 million.

Management plans to increase hiring in the second quarter, as a result of which, the second-quarter adjusted EBITDA is expected to be in the range of $35-$45 million.

The company raised its guidance for 2021. It now expects revenues between $1 billion and $1.02 billion, up from the previous range of $985 million-$1 billion. Adjusted EBITDA is now anticipated in the range of $175-$195 million, up from $150-$170 million

Zacks Rank and Other Stocks to Consider

Yelp currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector include Lam Research Corporation LRCX and LG Display Co., Ltd. LPL, each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Lam Research and LG Display is currently projected at 32.8% and 29.8%, respectively.

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