Yelp’s Product-Led Strategy Drove Strong 2022 Results
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2022 Net Revenue reached a new high of $1.2 billion
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2022 Net Income a positive $36 million
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2022 Adjusted EBITDA increased to a record $270 million
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Expects 2023 Net Revenue in the range of $1.29 billion to $1.31 billion and Adjusted EBITDA1 in the range of $290 million to $310 million
Yelp Inc , the company that connects people with great local businesses, today posted its financial results for the fourth quarter and full year ended Dec. 31, 2022 in the Q4 and Full Year 2022 Shareholder Letter available on its Investor Relations website at yelp-ir.com.
“We delivered a number of record financial results in 2022 thanks to the strong execution of our teams on our product-led strategy,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “Record net revenue, driven by record advertising revenue from services businesses as well as in our most efficient sales channels, reflected strong advertiser demand across categories. We also reached record levels in the number of business locations that advertise on Yelp and the average amount each location spends, signaling that our product investments are paying off. Looking ahead, we’re confident in our plan to drive profitable growth over the long term as we deliver on our mission to connect consumers with local businesses.”
“Yelp’s strong performance in 2022 led to 16% year over year net revenue growth, reaching a record $1.2 billion,” said David Schwarzbach, Yelp’s chief financial officer. “These results demonstrate the strength of our broad-based local advertising platform and the momentum across our strategic initiatives. In 2023, we plan to continue our disciplined investments to drive shareholder value over the long term.”
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Yelp has not reconciled its Adjusted EBITDA outlook to GAAP Net income (loss) because it does not provide an outlook for GAAP Net income (loss) due to the uncertainty and potential variability of Other income, net and Provision for (benefit from) income taxes, which are reconciling items between Adjusted EBITDA and GAAP Net income (loss). Because Yelp cannot reasonably predict such items, a reconciliation of the non-GAAP financial measure outlook to the corresponding GAAP measure is not available without unreasonable effort. We caution, however, that such items could have a significant impact on the calculation of GAAP Net income (loss). For more information regarding the non-GAAP financial measures discussed in this release, please see “Non-GAAP Financial Measures” below.
2022 Key Business Highlights
Yelp’s product-led business model drove a number of record results in 2022, even as macro challenges persisted:
- Net revenue increased by 16% year over year to a record $1.2 billion, near the high end of Yelp’s outlook range provided in November 2022 and $14 million above the high end of the company’s initial outlook range provided in February 2022.
- Net income decreased by approximately $3 million year over year to positive $36 million.
- Adjusted EBITDA grew 10% year over year to a record $270 million, at the midpoint of Yelp’s outlook ranges provided in February and November 2022, representing a 23% adjusted EBITDA margin.
- Strong advertiser demand drove this record revenue performance across categories and channels. Total advertising revenue increased by 15% year over year to a record $1.1 billion, reflecting balanced growth in paying advertising locations and average revenue per location. Paying advertising locations for the year increased by 7% compared to 2021.
- In Services, Yelp demonstrated consistent year-over-year growth throughout 2022, resulting in a record $694 million of advertising revenue from Services businesses for the year. The company reported the 10th consecutive quarter of growth in average revenue per location in these categories. Advertiser demand was particularly robust in the Home Services category, where annual revenue increased by approximately 20% year over year and at a compound annual growth rate of nearly 20% from 2019.
- Advertising revenue from Restaurants, Retail & Other businesses increased by 17% year over year to $441 million, primarily driven by growth in paying advertising locations.
- Advertising revenue from each of Yelp’s most efficient channels, Self-serve and Multi-location, grew by approximately 25% year over year in 2022.
- Ad clicks for the year decreased by 8% from 2021, a year that benefited from reopening tailwinds and elevated consumer spending. Average CPC for the year increased by 27% as advertiser demand for Yelp’s valuable, high-intent clicks was robust, demonstrated by records in both paying advertising locations and average revenue per location for the year.
- On the consumer side of Yelp’s business, demand remained below pre-pandemic levels as consumers visited many types of businesses less frequently. In 2022, app unique devices were flat compared to 2021. The company also reported an increase in average review submission frequency among users, who contributed 21 million new reviews in 2022, up 3% from the prior year. This resulted in more than 265 million cumulative reviews as of December 31, up 9% year over year.
Outlook
The company expects 2023 Net revenue will be in the range of $1.29 billion to $1.31 billion as it continues executing on its strategic initiatives. The company also expects Adjusted EBITDA will be in the range of $290 million to $310 million.
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Quarterly Conference Call
Yelp will host a live Q&A session today at 2:00 p.m. Pacific Time to discuss the fourth quarter and full year 2022 financial results and outlook for the first quarter and full year 2023. The webcast of the Q&A can be accessed on the Yelp Investor Relations website at yelp-ir.com. A replay of the webcast will be available at the same website.
