The pioneering online platform that allows users to share their experiences with local businesses is once again experiencing growth with new features. The significant expansion of services and reviews, and the introduction of an intelligent assistant that makes it easier to find experts, are testament to the constant innovation and adaptation to the current needs of consumers.

Constant innovation and feedback from millions of users is changing the game for local businesses. New features such as Smart Assistant and a focus on home services are bringing a better and easier way for users around the world to find the best service providers in their area.

Introducing the company

Yelp$YELP is an American company founded in 2004 that specializes in online reviews and recommendations of local businesses. Yelp's main goal is to provide a platform where users can share their experiences with different services and products, helping other users find the best businesses in their area. Yelp covers a wide range of industries, including restaurants, cafes, bars, shops, medical facilities, and other local services.

Yelp operates globally, offering its services primarily in the United States, Canada, the United Kingdom, Ireland, and other countries. The company is headquartered in San Francisco, California, and its platform is accessible through both a website and a mobile app, allowing users to easily access reviews and recommendations anywhere, anytime.

Yelp's main products include:

1. Yelp Reviews: Users can write and read reviews on local businesses, which is a major feature of the platform.
2. Yelp Reservations: The service allows users to make restaurant reservations directly through the platform.
3. Yelp Waitlist: This tool helps users find out wait times at restaurants and add themselves to the waitlist.
4. Yelp Ads: Yelp offers businesses the ability to advertise on its platform, which helps them gain more visibility among users.

What makes Yelp interesting is its huge database of user reviews, which is constantly growing. Users add millions of new reviews every month, providing invaluable information for other consumers. Yelp is also known for its community page, where users can participate in local events and activities, which encourages community interaction and engagement.

Interesting facts about Yelp include its origins, when it was founded by two former PayPal employees, Jeremy Stoppelman and Russell Simmons. The original idea was to create a platform where people could recommend doctors to each other. However, the project quickly grew and expanded to a wide range of local businesses. Yelp went public in 2012 and has since become one of the most recognizable names in online reviews.

The company's leadership has changed over the years, but Jeremy Stoppelman remains a prominent figure, serving as CEO since the company's inception. Under his leadership, Yelp has become one of the biggest players in the online review market, thanks to constant innovation and expansion of its service offerings.

Yelp is thus a fascinating example of how the combination of user-generated content and modern technology can create a valuable service that improves the lives of consumers around the world.

Quarterly Results

On May 9, 2024, Yelp released its financial results for the first quarter ended March 31, 2024. The results show growth in several key areas, reflecting successful service investments and new product initiatives.

The financial overview for the first quarter of 2024:

• Net sales increased 7% year-over-year to $333 million.
• Net income increased from the prior year to $14 million, representing a 4% margin.
• Adjusted EBITDA increased 19% year-over-year to $64 million.

Jeremy Stoppelman

Jeremy Stoppelman, co-founder and CEO of Yelp, said: "In the first quarter, the strength and momentum of our services, particularly home services, offset a challenging environment for our restaurant, retail and other service categories. Project solicitations increased approximately 20% year-over-year, reflecting the positive results of our efforts to acquire service projects through paid search. We continued to execute on our robust product roadmap with the launch of Yelp Assistant, a conversational AI feature that intelligently guides consumers through the process of finding the right service provider for their project. I am excited about the opportunities that lie ahead to drive profitable growth and shareholder value over the long term."

Other key points:

• Yelp launched Yelp Assistant, a new conversational AI feature that helps consumers find the right service provider.
• Request for Proposal projects increased 20% year-over-year.
• The company remains optimistic about growth and long-term shareholder value.

What the market is telling us

Yelp stock is not much more volatile than the market average, and has seen only 4 moves greater than 5% over the past year. Yelp is down 20.5% year-to-date and, at $36.84 per share, trades 22% below its 52-week high from December 2023.

Why is the stock price down this year?

Yelp, a platform for local business reviews, is experiencing a nearly 21% decline in market value this year as a result of investor preferences toward riskier stocks. Still, it doesn't fall into the value trap category thanks to its home services initiatives, which are seeing growth. While the restaurant industry is facing challenges, Yelp is thriving in the services space, which is especially evident with the recent launch of Yelp Assistant, a feature that allows users to find suitable professionals using artificial intelligence.

Despite the slowdown in restaurant advertising, Yelp's management has confidence in the strategy and expects annual net sales to be within the projected range.

Analyst expectations

Given the current uncertain macroeconomic outlook with high oil prices and elevated interest rates, Yelp could face the same situation it faced in 2021 and 2022 and could experience weaker performance than the S&P over the past 12 months - or, conversely, see a strong jump, analysts say.

What to expect in fiscal Q4?

For example, Trefis estimatesthat Yelp's revenue for Q4 2023 will be around $342 million, which is in line with consensus estimates. In the third quarter, Yelp generated net revenue of $345 million, up 12% year-over-year, fueled by an increase in average revenue per site. Clicks on the company's ads increased 9% year-over-year, and ad monetization saw improvement - meaning the company earned more per click. Average cost per click increased 4% year-over-year. Yelp has significant exposure to the restaurant industry, which explains the 12% increase in ad revenue in the third quarter despite inflationary pressures. We project Yelp's revenue for fiscal 2023 to be $1.3 billion, up 12% year-over-year.

Key metrics

Yelp currently has a market capitalization of approximately $2.43 billion and has 67.46 million shares outstanding. In terms of revenue, the company was worth USD 1.36 billion.

In terms of debt, Yelp has a low D/E ratio of 0.11 and a D/C (debt-to-equity) ratio of 0.10, indicating relative stability in the company's financing.

In terms of performance, Yelp shows ROA (return on total assets) of 11.53%, ROE (return on equity) of 15.69% and ROIC (return on invested capital) of 13.48%. The company generates gross profit margin of 8.44%, operating margin of 8.70% and net profit margin of 8.44%. The company generates free cash flow (FCF) with a margin of 11.16%.

Analysts expect further growth

Profit in the current fiscal year is expected to grow 13.3% year-on-year and sales are expected to grow 7.1%.

One analyst in the last 60 days has revised their fiscal 2024 earnings estimate higher, while the Zacks Consensus Estimate has increased by $0.13 to $1.53 per share. YELP also boasts an average surprise of 72.7%.

Yelp is also cash rich. The company generated 18.8% cash flow growth and is expected to report 47.8% cash flow growth in 2024.

Investors should take time to consider YELP for their portfolios due to its solid Zacks Rank, remarkable growth metrics, and impressive growth scores.

Based on 5 Wall Street analysts who have offered 12-month price targets for Yelp over the past 3 months. The average target price is $45.60 with a high forecast of $50.00 and a low forecast of $39.00. The average target price represents a 23.78% change from the last price of $36.84.

⚠ You will find a lot of inspiration on Bulios, but the final stock selection and portfolio construction is of course up to you, so always do a thorough analysis of your own. Practical tools within the membership Bulios Black are always at your disposal.