Categories Analysis, Technology

After a bumpy 2020, Yelp (YELP) could pick up momentum in 2021

Net revenues for the fourth quarter of 2020 are expected to be $220-230 million

Yelp Inc. (NYSE: YELP) saw its stock fall 19% since the beginning of this year. However, shares have gained over 45% over the past three months. The company saw its performance fluctuate through the first three quarters of the year but it appears to be picking up momentum going into 2021.


After seeing a 6% year-over-year growth in the first quarter of 2020, net revenues fell 32% YoY in the second quarter as the COVID-19 pandemic took a toll on operations. Yelp saw some improvement in the third quarter as revenues fell only 16% YoY and at the same time increased 31% sequentially as restrictions eased.

The company reported a net loss for all three quarters of the year, reflecting lower revenue and higher expenses but net loss narrowed to $0.01 per share from $0.33 per share in the second quarter.

Advertising and other metrics

Advertising revenues grew 6% in Q1, helped by a 6% growth in paying advertising locations. This number dropped 32% YoY in Q2 due to the pandemic as customers reduced their advertising budgets. The trend saw a pickup in the third quarter as restrictions eased and customers resumed their campaigns. The decline in ad revenues slowed to 17% YoY while on a sequential basis, ad revenues rose 30% and paying advertising locations increased by 34%.   

While app unique devices totaled 35 million in Q1, this number dropped to 28 million in Q2. In the third quarter, app unique devices totaled 32 million, up by 4 million from Q2. Overall page views and searches increased by approx. 40% from Q2.

While cumulative reviews increased consistently through the first three quarters of the year, there was a slowdown in the growth rate. Cumulative reviews increased 10% to 220 million in Q3.

Yelp saw improvement in the Restaurants category during Q3 as restrictions eased. Page views and searches for restaurants were up by more than 110% from early April to reach 80% of pre-pandemic levels by September-end. This category also saw ad revenues double from Q2 as customers resumed campaigns.


Yelp anticipates some volatility in its fourth quarter results due to seasonal factors. The company believes ad spend might be lower this year due to the current macroeconomic environment. In addition, small and medium business customers typically pause their ad spends during the holidays but due to the pandemic this year, it is difficult to predict how many customers will pause spending this season.  

Net revenues for the fourth quarter of 2020 are expected to be $220-230 million. Operating expenses are expected to see an increase from the third quarter.

Click here to read the full transcript of Yelp Q3 2020 earnings conference call

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