What to expect from Yelp’s inventory?

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Yelp (NYSE: YELP), an online site for discovering local businesses ranging from bars, restaurants and cafes to hairdressers, spas and gas stations, will report its fiscal second quarter results on Thursday, Aug. 4. the stock will see little to no movement after the fiscal Q2 release with earnings and earnings both meeting expectations. While Yelp
YELP
experienced downtime for most of 2020, the company has used this time to streamline its strategy by reducing the workforce in its lower revenue-generating local division and increasing focus on its multi-location sales teams. Yelp has been able to sustain teen revenue growth and the rise in review use and creation in 2021 and Q1 2022 – in terms of business metrics. The main driver for the growth was an increase in ad clicks, as almost all restaurants and shops have reopened during normal hours. We expect this trend to continue in the second quarter. To attract new customers and improve retention, Yelp is investing more in product development, such as improving its Android app.

For fiscal 2022, Yelp expects net sales to come in at the top end of its previously announced outlook of $1.16-$1.18 billion in revenue, representing 12-14% yoy revenue growth, and maintain its $260 – $280 million in adjusted EBITDA (6 to 14% EBITDA growth) projected on an adjusted EBITDA margin of 23%.

Our forecast indicates that Yelp’s valuation is around $32 per share, which is slightly above the current market price. View our interactive dashboard analysis on Yelp’s Earnings Example: What to expect in fiscal Q2? for more details.

(1) Revenue expected to be in line with consensus estimates

Trefis estimates Yelp’s second quarter 2022 revenue to be approximately $287 million, in line with the consensus estimate. Yelp’s Q1 revenue increased 19% yoy to $276.6 million. The company saw a 4% growth yoy in ad clicks, while the average cost per click increased by 17% yoy. The company reported strong adjusted EBITDA of $48 million, although the EBITDA margin declined to 17% as the company re-invests for future growth. Going forward, the company expects second-quarter net sales to be between $280 and $290 million. In addition, it also expects adjusted EBITDA to be relatively flat compared to the first quarter and in the $45 to $55 million range. According to company estimates, second quarter EBITDA margin of 22 (at best) will reach 19%, while YELP’s margins were 24% last year.

(2) EPS Likely Matches Consensus Estimates

Yelp’s second quarter 2022 earnings per share are expected to yield a one-cent gain per Trefis analysis, which is in line with the consensus estimate. In the first quarter, the company’s earnings per share came in at a loss of one cent, compared to a loss of 8 cents in the same quarter a year ago.

(3) The stock price estimate appears to be priced correctly at the current market price

along our Yelp’s Ratingwe estimate revenue per share at $15.28 and a P/S multiple of 2.1x in fiscal 2022, which translates to a price of approximately $32, which is nearly 2% higher than the current market price.

It is helpful to see how his peers are doing. YELP Peers shows how Yelp compares to peers in the metrics that matter. Other useful comparisons for companies in different sectors can be found at Peer Comparisons.

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