Yelp is set to report its fiscal first-quarter results, with revenues and earnings expected to meet expectations. In 2023, the company saw a 12% increase in net revenue, reaching a record $1.34 billion, with net income nearly tripling year-over-year to $99 million. Despite solid results, Yelp’s stock has dropped by 13% since the beginning of the year, as the company predicts a slowdown in revenue and profit growth for 2024. Yelp expects full-year revenue to be in the range of $1.42 billion to $1.44 billion, up 7% from 2023, but below consensus estimates. The company also anticipates adjusted EBITDA to be slightly lower than the previous year, as it invests in service initiatives.
The performance of Yelp’s stock has been inconsistent, with returns of 11% in 2021, -25% in 2022, and 73% in 2023. When compared to the S&P 500, Yelp underperformed in 2021 and 2022. Beating the S&P 500 has been a challenge for individual stocks in recent years, even for heavyweights in the Consumer Discretionary sector and megacap stars. In contrast, the Trefis High Quality Portfolio has consistently outperformed the S&P 500. The uncertain macroeconomic environment raises questions about Yelp’s future performance, as it faces potential challenges in the coming months.
Trefis estimates Yelp’s Q1 2024 revenues to be around $334 million, on par with consensus estimates. The company saw an 11% year-over-year increase in net revenue in Q4, driven by growth in average revenue per location. Yelp’s growth in 2023 was supported by categories like home services and self-serve ads, with full-year ad clicks growing 5% year-over-year. The company’s exposure to the restaurant industry contributed to a 10% growth in advertising revenue in 2023. Trefis forecasts Yelp’s revenues to reach $1.5 billion for fiscal year 2024, up 11% year-over-year.
Yelp’s earnings per share for Q1 2024 are expected to match consensus estimates at 6 cents per Trefis analysis. The company reported a strong growth on the bottom line in Q4, with adjusted EBITDA increasing by 20% year-over-year to $96.1 million. In the fourth quarter of 2023, Yelp repurchased approximately 1.1 million shares, returning a total of $200 million to shareholders during the year. Trefis estimates a price of around $40 for Yelp’s stock in fiscal 2024, aligning with the current market price.
Yelp’s valuation, earnings per share, and P/E multiple for fiscal 2024 indicate a price of around $40, in line with the current market price. The company’s peers are also analyzed to provide a comparison on important metrics. Overall, Yelp’s future performance will depend on its ability to navigate challenges in the macroeconomic environment and sustain its growth momentum.
