Back in 2004, Yelp’s crowd-sourced business review platform helped create an era of commerce defined by at-your-fingertips convenience.
That was then. But two decades later, and Yelp is still contributing to, if not necessarily as strongly defining, the digital category it helped spearhead. After all, convenience and real-time insights are far from going out of style in today’s commerce landscape.
Just look at the Thursday (Aug. 8) results from Yelp’s second quarter 2024 earnings report — which show that the company’s net revenue increased by 6% year over year, to $357 million. Net income for the quarter increased by 158% year over year to $38 million, reflecting an 11% margin.
“Yelp delivered strong profitability and record net revenue in the second quarter,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer.
“The execution of our product-led strategy continued to drive results, particularly in home services, which grew approximately 15% year over year in the second quarter, as well as in our self-serve channel, which saw revenue increase about 20% year over year to a record level.
“Looking ahead, we plan to build upon our strong momentum in services as we remain focused on executing against our robust product roadmap to deliver the best experience for consumers and service pros.”
Still, Yelp ultimately lowered its full year 2024 guidance for the rest of the fiscal season down to $1.410 billion to $1.425 billion of net revenue.
The restaurant industry is particularly susceptible to recession fears, which have been mounting, as PYMNTS reported Monday (Aug. 5), and Yelp executives cited the operating and macro environment to investors on Thursday’s call when sharing their quarterly results.
Read more: 3 Big Ideas From PYMNTS Intelligence’s Restaurants’ Digital Transformation Report
“Yelp delivered a solid second quarter with net revenue increasing by 6% year over year to a record $357 million even as challenges persisted in the operating environment for restaurants, retail and other businesses,” said David Schwarzbach, Yelp’s chief financial officer.
“Net income margin increased six percentage points and adjusted EBITDA margin increased one percentage point from the previous year, reflecting our disciplined approach. We’re particularly focused on the opportunity ahead in services to deliver shareholder value over the long term.”
Shifts in consumer behavior and advancements in technology are transforming the restaurant industry, and Yelp executives stressed to investors that their company is leaning into those changes.
As PYMNTS reported, Yelp at the start of the year (Jan. 30) added more artificial intelligence (AI)-powered search tools, including AI business summaries that quickly bring potential visitors up to speed on what a particular business is best known for based on first-hand reviews from users, “such as the atmosphere, service, amenities, value, or a popular dish.”
“While challenges in the operating environment for Restaurants, Retail & Other (“RR&O”) businesses persisted, our Services categories maintained their momentum, with double-digit revenue growth for the 13th consecutive quarter. At the same time, our product and engineering teams continued to innovate, introducing more than 20 new features and updates in the quarter,” executives told investors in the company’s shareholder letter.
And Yelp’s materials noted that while overall paying advertising locations decreased by 6% year over year to 531,000, ad clicks themselves increased by 9% year over year, “driven by improvements to advertising technology as well as our efforts to acquire Services projects through paid search, which drove more leads to service pros compared to the prior-year period.”
Read more: How Technology With a Side of Service Is Shaping Restaurant Loyalty
PYMNTS Intelligence’s new study, “Why More Restaurants Need to Bite Into Digital Transformation,” delves into consumers embracing technologies like digital wallets, mobile apps and QR codes because they not only meet the preferences of tech-savvy diners, but also enhance operational efficiency and empower staff to elevate the overall dining experience.
More contemporary channels, such as social media platforms like TikTok, have also become crucial for restaurants looking to engage with a younger, more digital-savvy audience, Steve Fusco, president and head of all distribution for Rewards Network, told PYMNTS. He mentioned that successful restaurants often employ dedicated staff to produce engaging content, such as videos showcasing unique dishes or special events. This content can go viral, boosting a restaurant’s visibility and customer traffic.
Yelp’s own AI goals come on the heels of the news that Yum Brands is aiming to be a “leading global digital restaurant company,” by tapping its tech acquisitions to create a unified eCommerce ecosystem on which to layer AI to drive sales and productivity.
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