Yelp’s Q4 Performance and Cautious Outlook for 2025
Yelp’s Stock (NASDAQ: YELP) has dropped 16% over the past month to approximately $34, which is a significant underperformance compared to the S&P 500 index’s 3% decline. In Q4, Yelp’s results exceeded expectations, with net revenue increasing 6% year-over-year (y-o-y) to $362 million. Earnings per share surged to $0.62, representing a 68% y-o-y increase, surpassing the forecasted $0.53. Despite this success, the company provided cautious guidance for 2025 due to macroeconomic uncertainties and ongoing challenges affecting businesses in the restaurants, retail, and other (RR&O) sectors. For additional context, see Tripadvisor’s Stock, which is down 30%, and explore insights on Inflation’s Impact on the S&P 500.
2025 Revenue Projections and Strategic Focus
For fiscal year 2025, Yelp forecasts net revenue between $1.470 billion and $1.485 billion, compared to $1.41 billion in FY 2024. Additionally, adjusted EBITDA is expected to range from $345 million to $360 million, slightly below the $358 million projected for FY 2024. Yelp’s outlook emphasizes focusing on high-margin opportunities in services advertising and AI-driven enhancements, particularly amid macroeconomic and competitive pressures. If you’re looking for more stability compared to individual stocks, consider the High Quality portfolio, which has shown an impressive return of over 91% since its inception.
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Performance Breakdown and Strategic Acquisitions
In 2024, Yelp’s revenue performance improved, driven by a 6% y-o-y increase in advertising revenues. The Services segment contributed significantly, achieving an 11% y-o-y rise in advertising revenue, totaling $879 million. This growth highlights the importance of the services sector within Yelp’s business framework. Additionally, Yelp bolstered its presence in the automotive services advertising market through the strategic acquisition of RepairPal for $80 million in Q4, aiming for incremental revenue growth. Conversely, the RR&O categories faced challenges, leading to a 3% drop in advertising revenue, totaling $470 million. This decline can be attributed to economic strains, changing consumer spending habits, and competitive pressures from delivery platforms.
Yelp experienced key achievements, including a 6% y-o-y growth in ad clicks and a remarkable 39% y-o-y increase in EPS to $1.88 for the full year. Adjusted EBITDA rose by 8% y-o-y, reaching a record $358 million. However, the company noted a 5% decrease in total paying advertising locations, largely influenced by the downturn in the RR&O segments.
Forecast and Valuation
Looking ahead, we project Yelp’s Revenues to reach $1.5 billion for fiscal year 2025, reflecting a 5% y-o-y growth. Adjustments to our revenue and EPS forecasts have led us to revise Yelp’s Valuation to $36 per share, based on an expected EPS of $2.28 and a 15.7x P/E multiple for FY 2025, which is closely aligned with the current market price as of March 3.
Yelp’s Volatile Stock Performance
Over the past four years, Yelp’s stock performance has been notably volatile. The annual returns show an 11% gain in 2021, a -25% decline in 2022, a 73% increase in 2023, and an -18% return in 2024. In contrast, the Trefis High Quality (HQ) Portfolio, consisting of 30 stocks, has been significantly less volatile and has consistently outperformed the S&P 500 during this same period. The HQ Portfolio delivered better returns with lower risk, demonstrating less volatility compared to the benchmark index.
Comparative Insights on Peers
To better understand Yelp’s positioning, it is insightful to compare it with its peers. The YELP Peers section offers relevant metrics for comparison. For additional comparisons across various industries, please refer to Peer Comparisons.
| Returns | Mar 2025 MTD [1] |
2025 YTD [1] |
2017-25 Total [2] |
| YELP Return | -2% | -13% | -12% |
| S&P 500 Return | -2% | -1% | 161% |
| Trefis Reinforced Value Portfolio | -2% | -4% | 658% |
[1] Returns as of 3/4/2025
[2] Cumulative total returns since the end of 2016
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
