Yelp (YELP) Q2 2024 earnings summary

Executive summary

• Net revenue reached a record $357 million in Q2 2024, up 6% year-over-year, with net income of $38 million and adjusted EBITDA of $91.1 million, reflecting strong profitability and margin expansion from a product-led strategy and disciplined expense management.

• Services revenue grew 11% year-over-year, marking the 13th consecutive quarter of double-digit growth, while RR&O revenue declined 3% due to a challenging operating environment for restaurants and retailers.

• Home services category outperformed with approximately 15% year-over-year growth; self-serve channel revenue rose about 20% year-over-year for the 15th consecutive quarter.

• Strategic investments in AI, product enhancements, and marketing, including new accessibility features and advertiser tools, contributed to improved user and advertiser engagement.

• Ad clicks increased 9% year-over-year, while average cost-per-click decreased 1%, reflecting improved advertiser value.

Financial highlights

• Q2 2024 net income was $38 million (11% margin), or $0.54 per diluted share, up 158% year-over-year.

• Adjusted EBITDA reached $91.1 million (26% margin), up 9% year-over-year and $16 million above the high end of the outlook.

• Advertising revenue in services hit a record $223 million, up 11% year-over-year, while total advertising revenue grew 6% year-over-year.

• Operating cash flow for the first half of 2024 was $112.5 million; free cash flow was $96 million.

• Paying advertising locations declined 6% year-over-year to 531,000, mainly due to RR&O softness.

Outlook and guidance

• Q3 2024 net revenue expected between $357 million and $362 million.

• Full-year 2024 net revenue guidance lowered to $1.410–$1.425 billion, down $12.5 million at the midpoint.

• Full-year Adjusted EBITDA guidance raised to $325–$335 million, up $10 million at the midpoint.

• Q3 Adjusted EBITDA expected between $82 million and $87 million.

• Expect to spend $35 million on paid search for the year, with $19 million spent in the first half.

• Anticipate a $4 million to $4.2 million impairment charge in Q3 due to subleasing Toronto office space.