Yelp (NYSE:YELP) announced second-quarter 2019 results on Thursday after the market closed, delivering slightly better-than-expected profitability on revenue squarely at the center of its target range. For that, management credited the company's execution of several initiatives outlined last quarter -- when those same targets incidentally left investors underwhelmed -- with the aim of accelerating both top- and bottom-line growth.

Perhaps unsurprisingly, Yelp stock is up around 5% in after-hours trading as the market reviews the news. Let's have a closer look at what the local business review leader accomplished to end the first half.

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Yelp results: The raw numbers

Metric Q2 2019 Q2 2018 Change


$247.0 million

$234.9 million


GAAP net income attributable to common stockholders

$12.3 million

$10.7 million


GAAP earnings per diluted share




Data source: Yelp. GAAP = generally accepted accounting principles. 

What happened with Yelp this quarter?

  • Revenue arrived within guidance provided in May for growth in the range of 4% to 6%. And though we don't usually pay close attention to Wall Street's demands, most analysts were modeling lower earnings of $0.12 per share.
  • Adjusted EBITDA grew 16.9% to $54.9 million, while adjusted EBITDA margin expanded by 2 percentage points to 22% -- above guidance for adjusted EBITDA margin to be roughly flat to up 1 percentage point.
  • By segment: 
    • Advertising revenue grew 5% to $238 million, driven by a higher number of paying advertising locations (up 6% year over year to 549,000) and improved ad sales force productivity. Paying advertising accounts increased 5,000 sequentially from last quarter to 197,000.
    • Transactions revenue declined 25% to $3 million, primarily driven by Yelp's sale of Eat24 to Grubhub in 2018.
    • Other services revenue grew 15% to $6 million, driven by growth in the number of restaurant customers using Yelp Reservations and Yelp Waitlist.
  • App unique devices climbed 15% to 37 million.
  • Cumulative reviews increased 18% to 192 million.
  • Yelp repurchased 8.8 million shares for $295 million this quarter -- in addition to the 2.8 million shares it bought back in Q1 for $102 million -- helping reduce its outstanding share count by 12% year to date.
  • In a separate press release, Yelp also announced its CFO, Lanny Baker, is stepping down effective September 2, 2019 to accept an executive position at another company -- reportedly he'll be the new CFO at Eventbrite, according to The Wall Street Journal on Thursday evening. Current Yelp Finance VP will serve as interim CFO while Yelp searches for a permanent replacement.

What management had to say

In his second-quarter letter to shareholders, Yelp co-founder and CEO Jeremy Stoppelman touched on the company's progress on initiatives to drive accelerated growth, including improving its go-to-market strategy, innovating new business-centric products, bolstering monetization, and maximizing its value proposition:

[W]e are making substantial progress on the business transition we designed to propel Yelp far into the future. Building on Yelp's established consumer brand, strong mobile growth, and proven local sales model, we are elevating our focus on advertisers and business owners, and closely integrating product and marketing into our go-to-market strategy. Yelp's considerable assets and the successful execution of our strategic plan have the potential to deliver strong and sustainable long-term growth, increasing profitability, and significant returns for shareholders in the years ahead. In addition to the financial highlights of the second quarter -- which include growing earnings per diluted share by 30% year over year -- we are highly encouraged by our team's strong execution, which has set the stage for accelerating revenue growth in the second half of the year.

Looking forward

More specifically for the third quarter of 2019, Yelp expects revenue to increase 8% to 10% year over year -- roughly in line with analysts' consensus models -- while adjusted EBITDA margin should expand by 1 to 2 percentage points.

So, Yelp reiterated its full-year 2019 guidance for revenue growth of 8% to 10%, and adjusted EBITDA margin expansion of 2 to 3 percentage points.

In the end, with shares of Yelp down nearly 30% over the past year leading up to this report, coupling this guidance with its slight outperformance in Q2 was exactly what skittish investors needed to see. And shares are rightly climbing in response.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.