Yelp, the popular online review platform, recently announced its financial results for the second quarter. The company’s revenue reached $337 million, marking a 13% increase from the previous year and surpassing analysts’ expectations of $325 million. Adjusted Ebitda also performed exceptionally well, reaching $84 million, a 25% growth from last year and surpassing the forecasted range of $60 million to $70 million. Profits per share were reported at 21 cents, outperforming the expected 15 cents.
Robust Growth Driven by Home Service Providers
Yelp’s CFO, David Schwarzbach, attributes the strong quarter to significant growth in service advertising, with a 15% increase compared to last year. Specifically, the home service providers category experienced a remarkable growth of 25% for the second consecutive quarter. Schwarzbach emphasized that Yelp continues to generate substantial advertiser demand, focusing on delivering value to advertisers, particularly service professionals. Services advertising now accounts for approximately 60% of Yelp’s total revenue.
Other Advertising Sectors Show Promising Performance
Apart from the strong growth in service advertising, Yelp observed an 11% revenue increase in the restaurant, retail, and other advertising sectors. Although large national advertisers have not fully recovered their marketing budgets from previous years, there is significant demand from small and medium-sized businesses. Schwarzbach notes that Yelp’s users typically demonstrate high intent and know precisely what they are searching for. Advertisers are consequently shifting their focus toward performance marketing with measurable return on investment (ROI).
Upbeat Outlook for Q3 and Full Year
Yelp projects revenue of $337 million to $342 million for the third quarter, exceeding the Street consensus of $334 million. Additionally, the company anticipates adjusted Ebitda between $84 million and $89 million. For the full year, Yelp has increased its revenue forecast to $1.32 billion to $1.33 billion, up from the previous estimate of $1.295 billion to $1.315 billion. The full-year Ebitda forecast has also been raised to a range of $310 million to $320 million, compared to the prior range of $290 million to $310 million.
Positive Market Response
Yelp’s impressive performance has been well-received by investors, as evidenced by a 58% increase in the company’s shares since the beginning of the year.
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