Yelp’s CFO said the first-quarter results don’t reflect more people dining out, things are improving now.
Dreamstime
Yelp posted better-than-expected first quarter financial results and raised its guidance for the full year, as it starts to see early benefits from the post-pandemic reopening of the economy.
An advertising-supported provider of local service and restaurants recommendations, Yelp (ticker:YELP) posted March quarter revenue of $232 million, down 7% from a year ago, but ahead of the guidance range of $220 million to $230 million. Street consensus was $228 million.
Adjusted Ebitda (earnings before interest, taxes, depreciation and amortization) was $44 million, up 159% from a year ago, and ahead of the guidance range of $20 million to $30 million. Yelp reported a net loss in the quarter of 6 cents a share, well ahead of the Street consensus forecast for a loss of 26 cents.
In letter to shareholders, Yelp said that the first quarter results “demonstrate a strong start to our plan for the year…they also reflect the success of our go-to-market mix shift and increased focus on product innovation, which are the foundation for our next stage of growth.” The company noted that it saw sequential and year-over-year increases in both the Services category and in self-service advertising sales
“Recovery in local economies and the increased vaccination rate benefited businesses in our more impacted Restaurants, Retail & Other categories,” the company said. “As a result, we saw demand from these businesses increase over the course of the first quarter. These trends, together with the structural changes we’ve made to our business over the past year, position us well to benefit from economic recovery and return to sustainable growth.”
Yelp also provided upbeat guidance. For the second quarter, the company sees revenue of $240 million to $250 million, above the Street consensus at $239 million, with adjusted Ebitda of $35 million to $45 million.
For the full year, the company now sees revenue of between $1 billion and $1.02 billion, compared with a previous forecast of $895 million to $1.005 billion, and $873 million in 2020. Yelp now sees full-year adjusted Ebitda of between $175 million and $195 million, up from a previous forecast of $150 million to $170 million.
“We were really pleased with the quarter,” CFO David Schwarzbach said in an interview with Barron’s. “Last year was a year of transformation for Yelp. We’re in a new chapter of our story, and our new strategy is working.” That strategy is focused on driving advertisers to adopt a self-service model, increasing the number of national advertisers and improving monetization in the services category. He notes that the company had record revenue from services in the quarter, but that the company still sees “room to run” in the category.
He adds that while the first-quarter results do not reflect a pick-up in consumer willingness to return to restaurant dining, that is changing in the second quarter, as case loads fall and more people get vaccinated. “It’s still early, but there’s been a pick-up in people going out to ear,” he says.
Schwarzbach notes that in Texas and Florida, diners seated through the Yelp app have now exceeded prepandemic levels, while overall diners seated through the company’s reservation system was up close to 20% in the March quarter from the December quarter.
Yelp notes that for the year to date it has repurchased $99 million of its common stock. Late in Thursday’s regular session, Yelp was off 3.4%, to $37.40.
Write to eric,[email protected]
