In the fourth quarter, Yelp began repurchasing stock for the first time since 2019.
Andrew Harrer/Bloomberg
Yelp stock gained ground in late trading Tuesday after the company posted better-than-expected results for the fourth quarter, and projected a return to year-over-year revenue growth in 2021.
The advertising-supported provider of local service and restaurants recommendations posted December quarter revenue of $233 million, down 13% from a year ago, but up 6% from the September quarter—and above the Street consensus forecast of $228.3 million.
Yelp posted fourth-quarter earnings of 27 cents a share, up from 24 cents a year ago, and well ahead of the Street consensus, which called for a break-even quarter. The high estimate on the Street called for a profit of 6 cents. Adjusted Ebitda (earnings before interest, taxes, depreciation, and amortization) was $60 million, ahead of the Street consensus at $41.8 million.
For the March quarter, Yelp sees revenue of between $220 million and $230 million; Street consensus has been for revenue of $229.8 million. The company expects adjusted Ebitda of between $20 million and $30 million.
For the full year, Yelp projects revenue between $895 million and $1.005 billion, with adjusted Ebitda of between $150 million and $170 million.
CFO David Schwarzbach said in an interview with Barron’s that the quarter demonstrated the resilience of Yelp’s business, as the company executed on a revamped strategy that emphasized more self-service ad sales and a focus on national accounts versus local sales. He notes that the decision early in the pandemic to sharply reduce head count resulted in lower expenses, setting the stage for what was the company’s most profitable quarter ever as measured by adjusted Ebitda.
Yelp also noted that the company in the fourth quarter began repurchasing stock for the first time since 2019. Through February 9, the company has bought back $49 million worth of stock, and Schwarzbach said the company expects to continue repurchasing shares.
The company ended the quarter with $596 million in net cash, up from $466 million a year ago.
Yelp shares in late trading jumped 5.2%, to $40.50. The stock has been rallying steadily in recent weeks as investors increasingly view Yelp as a “reopening play” that should thrive later in the year as the world begins to recover from the Covid-19 pandemic. The stock has rallied since a bullish feature in the December 28 issue of Barron’s.
Write to Eric J. Savitz at [email protected]
