Yelp Reports Record $322M In Q2 Ad Revenue
Yelp Reports Record $322M In Q2 Ad Revenue
Yelp reported better-than-expected second-quarter financial results on Thursday on strong advertising demand from local home-service providers.
The company reported $337 million in revenue, up 13% from a year ago. The sparkle in the earnings report came from advertising.
Advertising revenue reached nearly $322 million in the second quarter of 2023 — up 14% from the second quarter of 2022. This was driven by several factors including higher average cost per click (CPC), up 14%, as well as higher average revenue per location in both its services and RR&O categories.
Self-serve and multi-location advertising revenue rose to 51% of total advertising revenue in the quarter, growing approximately 25% and 15% year-over-year, respectively. The off-platform advertising product, Yelp Audiences, reached an annual run rate of $45 million — up from $30 million in Q2 2022.
Bard Equity Analyst Colin Sebastian called the quarter’s earnings “solid” in a research note published Friday.
“We remain somewhat more positive given Yelp’s strong product execution, healthy margins, and market share gains,” Sebastian wrote. “While the local ad market is challenging, Yelp is growing at above-market double-digits, continuing to benefit from merchant-oriented product and service improvements along with greater operating efficiency.
He explained in the research note how consumer-oriented areas, such as reviews and Yelp Guaranteed are helping to create more engagement with the platform.
“Looking ahead, we anticipate continued balancing of price and impression growth, and quite possibly, some interesting developments related to AI,” Sebastian wrote.
Yelp’s letter to shareholders for the quarter explains how “advertising revenue from RR&O businesses surpassed 2019 levels, increasing by 11% year over year to a record $122 million. This increase was driven by growth in average revenue per location, partially offset by a decrease in paying advertising locations.”
Yelp also saw 11% revenue growth in the quarter from restaurants, retailers and other advertisers.
Queries on Yelp tend to be “high intent,” with consumers searching for and knowing exactly what they want.
Advertisers are shifting away from brand advertising and to performance marketing because they have a better way to measure return on investment, according to Yelp.
Yelp continues to see an increase in ad sales. About 15% from a year ago to $200 million — and home service providers — up 25% for the second quarter in a row, Yelp CFO David Schwarzbach told Barrons.
The company’s letter to shareholders for the quarter explains how “advertising revenue from RR&O businesses surpassed 2019 levels, increasing by 11% year over year to a record $122 million. This increase was driven by growth in average revenue per location, partially offset by a decrease in paying advertising locations.”
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