SAN FRANCISCO - Yelp Inc. (NYSE: NYSE:YELP) experienced a 5.8% decline in its stock following the release of its first-quarter financial results, which revealed a revenue shortfall despite surpassing earnings expectations.
The company reported an adjusted earnings per share (EPS) of $0.20, which was $0.14 higher than the analyst consensus of $0.06. However, revenue for the quarter was slightly below expectations at $332.75 million, compared to the consensus estimate of $333.3 million.
The first quarter saw Yelp's net revenue increase by 7% year-over-year (YoY) to $333 million, with net income rising to $14 million, reflecting a 4% margin. Adjusted EBITDA also grew by 19% YoY to $64 million. Despite these gains, the slight revenue miss appears to have driven the negative market response, overshadowing the EPS beat.
Yelp's CEO, Jeremy Stoppelman, attributed the quarter's strength to the momentum in their services categories, particularly home services, which helped offset challenges in the restaurant, retail, and other categories.
The company's Request-a-Quote projects saw a significant increase of approximately 20% YoY, buoyed by successful paid search strategies. Yelp also launched a new feature, Yelp Assistant, which utilizes conversational AI to connect consumers with service professionals.
CFO David Schwarzbach expressed confidence in the company's strategic investments and disciplined approach to growth, which set a solid foundation for the year. He highlighted the 7% YoY revenue increase and the 19% growth in adjusted EBITDA, which surpassed the high end of their outlook range.
Investors may be weighing the mixed financial results against the backdrop of broader market conditions and Yelp's strategic initiatives. As the company continues to navigate a dynamic economic environment, management's focus on driving profitable growth and shareholder value remains central to their long-term outlook.
The stock's downward movement post-earnings release reflects investor sentiment that may be more attuned to the revenue miss than the earnings outperformance. Yelp's management remains optimistic about their ability to capitalize on opportunities and drive growth throughout the year.
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