Good day, welcome to the Yelp Q1 2021 earnings call. I would now like to turn the conference over to James Miln, Senior Vice President of Finance and Investor Relations. Please go ahead. Good afternoon, everyone, and thanks for joining us on Yelp's Q1 2021 earnings conference call. Joining me today are Yelp's Chief Executive Officer, Jeremy Stoppelman, Chief Financial Officer, David Schwarzbach, and Chief Operating Officer, Jed Nachman. We published a shareholder letter on our investor relations website and with the SEC and hope everyone had a chance to read it. We'll provide some brief opening comments and then turn to your questions. I'll read our safe harbor statement. We'll make certain statements today that are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. In addition, we are subject to a number of risks that may significantly impact our business and financial results. Please refer to our SEC filings as well as our shareholder letter for a more detailed description of the risk factors that may affect our results. During our call today, we'll discuss adjusted EBITDA and adjusted EBITDA margin, which are non-GAAP financial measures. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with Generally Accepted Accounting Principles. In our shareholder letter released this afternoon and our filings with the SEC, each of which is posted on our website, you will find additional disclosures regarding these non-GAAP financial measures, as well as historical reconciliations of GAAP net income to both adjusted EBITDA and adjusted EBITDA margin. With that, I will turn the call over to Jeremy. Thanks, James, and welcome everyone. Our Q1 results represent a strong start to the year, driven by the success of our go-to-market shift and an increased focus on product innovation, which together comprise the foundation of our next stage of growth. We saw record performance from our services categories, self-serve channel, and non-term advertiser budget retention. Revenue growth in the self-serve channel accelerated once again to approximately 30% year-over-year in the Q1. Services revenue performance was driven by ongoing strength in home services, which increased by nearly 15% year-over-year. At the same time, we are seeing consumer traffic return with the recovery in local economies, benefiting businesses in our more COVID-impacted categories. Demand from these businesses increased over the course of the Q1. More recently, the encouraging traffic recovery trends we saw in the first quarter continued in April. Page views and searches for home services businesses continue to exceed pre-pandemic levels, while page views and searches for restaurants have rebounded 40% from December 2020. Building on the strong momentum of our Q1 performance, we're investing in product development, marketing, and multi-location sales to support our initiatives and deliver more value to advertisers. We believe this will enable us to drive growth and scale our business in a more profitable way over the long term through increased revenue retention and a more efficient go-to-market approach. In the Q1, lower CPCs contributed to record non-term advertiser budget retention. We were able to achieve these results with local sales headcount remaining at approximately 50% of pre-pandemic levels, which also enabled us to improve net loss by $10 million year-over-year to $6 million and deliver a 19% adjusted EBITDA margin while heavily investing in our growth initiatives. We are pleased with this start to the year and expect our investments to continue benefiting both revenue and adjusted EBITDA over the long term. Together with the structural changes we've made to our business over the past year, we believe we are well-positioned to fully participate in the economic recovery and to deliver long-term sustainable growth in the years to come. With that, I'd like to turn it over to David. Thanks, Jeremy. We saw improving trends across the business over the course of the Q1 as COVID-19 cases declined and restrictions eased. As Jeremy noted, our product initiatives continue to drive strength in self-serve and our services categories. As a result of these efforts, advertiser demand increased steadily over the Q1, which together with a record retention rate for non-term advertisers budgets, enabled us to deliver $232 million of net revenue. In addition to our strong revenue performance, we were very pleased to see another quarter of disciplined expense management while investing in our initiatives. Net loss improved by $10 million year-over-year to $6 million, while adjusted EBITDA increased by 159% - $44 million. The healthier-than-expected macro environment and a slower headcount ramp did provide some short-term benefit to expenses versus our expectations for the quarter. However, the lower headcount did not have a significant impact on revenue or our strategic initiatives, and we expect to continue investing behind our initiatives to drive our revenue momentum over the remainder of the year. Returning capital to shareholders through share repurchases remains an important element of our capital allocation strategy. Since we resumed repurchasing shares in the Q4 of 2020, we have repurchased approximately $99 million worth of shares as of today, at an average price of $34.98 per share. We currently have approximately $170 million remaining under our current share repurchase authorization. We plan to continue repurchasing shares throughout the year, subject to market and economic conditions. Turning to our outlook. In the second quarter, we expect to move from recovery to year-over-year growth and anticipate net revenue will increase from the Q1 to fall within the range of $240 million-$250 million. In addition, as a result of our strong execution in the first quarter, we are raising our 2021 outlook for net revenue, which we now expect to be between $1 billion and $1.02 billion. To drive continued growth, we plan to invest further behind our initiatives as we catch up on hiring in the Q2. As a result, we anticipate Q2 adjusted EBITDA will fall within the range of $35 million-$45 million. We are raising our full year 2021 outlook for adjusted EBITDA, which we now expect to be between $175 million and $195 million, with increased leverage expected toward the end of the year. In closing, our Q1 results reflect strong progress towards delivering our plans for the year. As Jeremy mentioned, these results reflect the success of our go-to-market mix shift and our increased focus on product innovation, which together lay the foundation for our next stage of growth. With that, operator, please open up the line for questions. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. Our first question today comes from Colin Sebastian with Baird. Great. Thanks. Good afternoon, guys. Nice to see the progress here. I guess first off, interested in Yelp Connect and the penetration you're seeing across services and multi-location accounts, and if there's a way to quantify how this is benefiting engagement with ads, with advertisers, retention, or any other relevant metrics. Hi, Colin, this is Jeremy. I'll hop in and take that one. We're very pleased with our progress, with Yelp Connect. In fact, we talked on the letter that we've released a new audience model, which boosted the performance, particularly for services. Largely, it's being bundled in as part of an upgrade package that's essentially our new model, that we've been working with. As we sell advertisers, we give them a whole host of different profile upgrades and include things like Connect. On the multi-loc side, we also saw some encouraging early results, with some clients that we piloted with. They're essentially seeing better economics on their investment with Yelp, based on those studies. Overall, we're feeling really good about our progress with Connect. Seems to be adding value, lifting performance for business advertisers that take advantage of it. We'll keep you posted on our progress there. Okay, great. Secondly, just on CPCs, maybe you could just walk through the moving parts, why that shifted to a decline from growth? On CPCs, a decline we see as a good thing, because ultimately that's more value flowing to our advertisers, we like to see that. What's driving that? Partially, it's as more traffic comes into the system, obviously that's going to lower prices, which again, is a good thing. Also, we're continually refining the ad system and improving the efficiency of that system. When somebody's taking a look for a business, we want to show them the best possible ad that we can. We invest a lot of our engineering and product bandwidth in making sure that those connections happen as efficiently as possible, and we're using our inventory as efficiently as possible. As we make progress with that, it should drive more value to businesses and ultimately lower prices, all things equal. All right, great. Thanks, Jeremy. Thank you. Our next question comes from Shweta Khajuria with Evercore ISI. Great. Thank you. This is Jan, lead for Shweta. Maybe just a quick follow-up on that, the trends you're seeing in ad clicks progress as a CPC decline. If you can put any color around the linearity of that, the traffic gets ad click recovery interquarter and maybe into Q2. The second question is just, on the restaurant part, the restaurant recovery cadence. What are you hearing from the sales team regarding the multi-location business recovery, especially as we're getting into better progress with the vaccine penetration? Thank you. Hi, it's David. I'll start off and talk about clicks, and then Jed will pick up around restaurants and multi-location recovery. We are seeing good progress in the recovery of clicks, and that has continued over the course of the quarter. It's also important to appreciate that when we look at clicks, we're looking obviously across both our services business as well as our restaurant business, and we were very pleased to see that on the restaurant side, as traffic has increased, we're also seeing a commensurate increase in clicks there. Overall, making good progress as we move through the quarter. I do think it's important to underscore that while we know that the vaccine rollout has gone well today, as we entered the quarter, that was less clear with cases being very high and the rollout just at its initial stages. What we are seeing is that progress as people feel more confident to go out. Hi, Jan, this is Jed. I can take the restaurants question. Obviously, compared to services, our restaurant retail and other category is down more year-over-year. Although we are seeing nice signs of recovery there. We're down about 15% year-over-year from a PAL perspective and doing about $81 million. Those categories were hit hard, but we did look to preserve those relationships throughout COVID and often gave relief and free services and just worked to support kind of retention in that segment. We are seeing page views and searches in restaurants rebound. They're up about 40% from December of 2020, and are at about 90% of those pre-COVID levels as of April 2021. Multi-location, we typically see a dip early in Q1, and that was exacerbated this year with some of the COVID case counts moving up. We did see progress across that segment throughout Q1, with Paying Advertising Locations kind of in the range of where we were during Q4. Good momentum during the quarter coming out into March. We do see an opportunity to help these national brands with their reopening campaigns, and certainly when you look at national in the restaurant segment, there has been some structural movement towards pickup and delivery. There is certainly demand building both on the consumer side as well as on the business side for kind of in-store dining. We're seeing those trends and the strength in the pipeline kind of coming out of March. Attribution continues to be a very big part of that story, making sure we can tie both those store visits online as well as any offline conversions. We're just working hard to get back to our original run rate within that restaurant retail and other segment. Thank you, Jed. Our next question comes from Dan Salmon with BMO Capital Markets. Hey, good afternoon, everyone. Jeremy, in the letter you have a line teasing some new self-service investment opportunities you foresee as businesses reopen. Any color you care to add to that about what's on the self-service roadmap ahead in 2021? Maybe just a quick one for David. The letter also highlights lower healthcare costs than anticipated. I assume that's more than just on an absolute basis due to lower headcount. Is that on a per employee basis? If so, just if you could add some color on that as well, it'd be great. Thank you. All right. Yeah, happy to talk more about self-service. Going back to our long-term strategy, a big part of that is our shift in go-to market, leaning into really profitable channels like Self-serve. We made really healthy progress in that channel. Self-serve revenue, again, was up 30% year-over-year. That's driven by retention as well as acquisition. Some of our investment, of course, is happening on the pure product side, just enhancing the flows, making advertisers have an easier time to get started, streamlining that. Also, some of the engineering and then marketing heft is happening on the performance marketing side. We're rapidly building muscle in that area as well. Those are some of the things that are driving the performance there. Dan, this is David. Thanks for the question. On the healthcare expense, it is adjusted for headcount. Obviously, we were modestly behind on headcount in the quarter, and so that has an effect. We did see on a per employee basis that we had lower expense per employee. Again, I think overall, as we've gone through the pandemic, we have seen that employees have availed themselves less of healthcare than is probably the historical norm, and so that has seemingly continued, at least in the Q1. Okay, great. Maybe just a follow-up. Is that just people needing to get back out and going to the doctor again? That's what I'm assuming. Yeah. It's this fundamental, people are pretty apprehensive about heading out, and I think in particular to doctors' offices and maybe doing everything they should be doing. I would expect as people have gotten vaccinated and are more comfortable, that we'd see things similar to what they have been on a historical basis. Okay, great. Thank you. Our next question comes from Ygal Arounian with Wedbush Securities. Hey, good afternoon, guys. I want to maybe spend a little bit of time on the non-term contract retention rate. Obviously, doing a lot of things there to improve that. You wrote in the letter, lower CPCs contributed to a record retention rate there. Can you maybe spend a little bit of time on where you think you are there, you can continue to improve that retention rate, and exactly what you're trying to imply there with the lower CPCs? Yeah. Ultimately, we want to hang on to every customer that we possibly can deliver performance for. That's been a big area of focus for us, and actually ties back to our long-term strategy of creating more value for our advertisers. We talked about in previous quarters, just the percentage of monetized leads. I was thinking Q4, we were talking about something like 20%. We've made progress on that, there's just an enormous amount of leads flowing through our system, many of which aren't flowing to our advertisers. We've poured a lot of product and engineering bandwidth towards bringing that number up and making sure that our ads work for our advertisers and are increasingly performant. If you are one of our advertisers, you should feel that impact. You should be getting more customers and therefore stick with us longer. It does seem like we are seeing that, the impact of all of that work. Some of that shows up in lower pricing, but it also shows up in retention. There's another piece, too, which is as we've shifted our go-to market more towards self-serve, if you sell yourself the product, you tend to stick longer. That's playing out as well. We see better retention rates in our self-serve channel, and that's been growing rapidly and represents about 40% of our SMB starts at this point. Thanks. On that point, just to follow up on self-serve versus sales. Obviously, self-serve is contributing and growing faster. Are you where you want to be with the balance between self-serve and, I know there's been a lot of focus on the local side, but maybe you could just touch on both local and multi-location? Thanks. Sure. This is Jed. I think from a channel strategy perspective, our long-term strategy, and we've talked about this for 18 months or so now, is to shift a lot of that focus from local sales onto the self-serve and multi-location strategy. That was certainly accelerated by COVID. Right now, I think we have about 50% of the local sales force that we did prior to the pandemic. We're seeing, number one, really nice production out of the existing salespeople. A lot of veteran, experienced reps contributing from a production perspective. You are certainly seeing some of that acquisition come into self-serve. We feel really comfortable with the mix at this stage. We're going to continue to improve that business owner platform on the self-serve side, but it also benefits everybody we bring in on the sales side as well. On the multi-location side, we've been really focused on building out that team and specifically the attribution capabilities and products. We have to be able to prove that the dollars that are spent on the Yelp platform are actually yielding either online conversions and/or in-store or in-restaurant consumers. That has been moving along nicely and we've seen a solid recovery in terms of those Paying Advertising Locations in that particular segment. Great. Thank you. Our next question comes from Chris Kuntarich with Deutsche Bank. Hi. Thanks for taking the question. Maybe first one's for David. I think, when you started, it was effectively around the time of COVID-19. I guess it's been kind of noisy for you guiding. It's been Q2 now in a row where you've been above the high end of your guide, and I don't think we've had a chance to ask you how your philosophy is around guiding and whether or not the guide is a guide, or are you looking to do more of a beat and raise sort of strategy or approach to it? Could you help us think about taking up the full year revenue guidance by $15 million at the high end and then similarly taking EBITDA guidance up by $25? Thanks. Thanks for the question, Chris. A couple of pretty important components. The first, of course, is that as we think about our business performance, we want to ensure is that we're continuing to execute on our strategy. What we saw in the first quarter is that our strategy is working. When you think about record services revenue, we can see that we are continuing to improve monetization, as Jeremy mentioned. We're also in the process of enabling our self-serve customers to really do more, and so retain better. When we look at self-serve starts, that's also doing incredibly well in retention. As we think about the way that we want to approach forecasting, we want to continue to reflect in our forecast the momentum that we have in the business. I guess I would remind you that as much as we are all looking forward to continued performance across the economy, there continue to be uncertainties. The way that I think about the guidance that we provide is that it's a balance between the visibility that we have, the uncertainties of our business, and ensuring that we are making strong progress against the goals that we've set for ourselves from a capital allocation perspective. All three of those elements come together in the way that we present guidance. In terms of the full-year numbers, clearly, we were somewhat behind on hiring in the Q1. We wanted to share where we actually have added into the guide for the year, those numbers. We expect to be back on track. One thing I would say about hiring in the Q1, just to differentiate, because product and engineering has become such an important part of our strategy, we are very pleased with our hiring there. That is very much on track. Where the hiring was a bit behind was in our local sales force. For that local sales force, we are beginning to make up ground here in the Q2 and continue to focus on it. The other thing is, clearly, we want to be able to invest in marketing given the improvement in conversion that we've been driving when people land to the site and go through those self-service flows. Looking at the full-year guide, we definitely see that we are doing well against the plan that we've set for ourselves. We're able and pleased to be able to raise the guide for the year. There was a bit more, from a cost perspective in the Q1, that had to do with performance against some of the hiring that we wanted to do, and that's why you'll see that adjusted EBITDA comes up a bit more than revenue. Got it. Very helpful. Maybe if I could just have one follow-up for either Jeremy or Jed. There's been a lot of news lately around the $29 billion Restaurant Revitalization Funds. It seems like the spending should be pretty open-ended as far as how the restaurants could be able to spend these dollars that they'll be receiving. I was just curious. Yeah, is there anything specific that you have lined up at this point to go and try to capture the advertising dollars that are going to be spinning off from this Restaurant Revitalization Fund as these restaurants get back up and running? This is Jeremy. Our perspective is businesses are getting back to it, and we want to participate in that. We have definitely put together reopening plans, and making sure that our marketing team is reaching out and getting the message out and driving as much Self-serve as possible, as well as activating our local sales team as well as our multi-location team. From a general account of like, "Hey, are we tackling the reopening, and are we excited about it, and are we getting our teams oriented around it?" Absolutely. Do we have specific initiatives against a revitalization fund? No. Obviously, if businesses have more money in hand, that should be a good thing. We're happy to see any additional funds that flow into restaurant and retail. Got it. Thanks. Our next question comes from Trevor Young with Barclays. Hi. Thanks for taking the questions. Just two from me. Dovetailing on one of the earlier questions, can you provide an update on the results you're seeing with bundling? It seems like you're leaning in there. Just be curious, some early learnings from the upgrade package as well as the combination on reservations and wait list. Then separately, what contributed to the acceleration in Request-to-Quote growth this quarter? Thanks. Sure, Trevor. I can take the first one. It's Jed. On the bundling. We've been really pleased with the results thus far on the bundling. I think it goes back to what Jeremy was talking about prior, which is just providing more value for our customers. We have different forms of bundles depending on what vertical you're in. On the restaurant side, we can do things like bundle wait list plus ads plus Connect. It turns out that those three things, as an example, work in tandem to create a lot of value for our customers and create some stickiness there, and we're seeing that. On the services side, you look at the introduction of things like logo and portfolio. If I'm in the services business, this gives me just another reason to kind of distinguish myself from the crowd and, in circumstances as an example, or verified license as an example. In situations where someone may not have as much of a reputation on Yelp, it gives a PAL for those service customers to actually go out and tell their story and tell why they're trustworthy. We feel like the bundling strategy, it's in its early days, and we're going to have a variety of those kind of going forward as we add product into the mix. We're happy with the bundling thus far and are looking towards kind of continuing on that path. For the second part of the question, Request a Quote growth. We're very pleased to see requests grow 30% year-over-year, as you mentioned. What's happening in the macro is obviously, COVID-19 has ended up with a lot of people moving house. When you're doing that, there's all sorts of home services that can go along with that, whether you're getting ready to sell or whether you're moving into a new place or whether you're sprucing it up for work from home. All of that has created robust consumer demand. I think that's also reflected, pulling back a second, if you look at our home services revenue performance up 15% year-over-year. That's really great to see as well. What are we specifically doing to drive some of that performance? Well, we have tons of leads flowing through our system. We talked about how approximately 20% in Q4 were monetized. We're continuing to make improvements to drive more of those leads into our advertisers, raising performance. We're also trying to improve our matching. Every time that we're pulling up different potential advertisers to match with a consumer's request, we want to get those as accurate as possible so we're not wasting any of our inventory. We're also making flow improvements. Just making it easier for consumers to make that request, making it more accurate, collecting the right information based on the category, things like that. I think all of those elements are combining to deliver the performance that you saw, and we're pleased with it. It's been a real area of focus, and local services is a core part of our long-term strategy. That's really helpful. Just a follow-up on that. Can you provide an update on the percentage of monetized leads there versus the 4Q stat? It has improved since Q4. Great. I don't know, David, if we have any more color than that. We're not providing additional detail on the progress that we made here in the Q1. We remain focused on it, and as Jeremy said, it has improved. Great. Thanks. If you have further questions, please press star and then one at this time. Seeing no further questions. Oh, we actually have a follow-up from Chris Kuntarich with Deutsche Bank. Yep. Just quick follow-up on thinking through PAL versus revenue per PAL. Could you help us think about it on a sequential basis and from Q1, and I saw you had made the comment in the letter that PALs in aggregate were back to 4Q or roughly around 4Q levels in March. I was just curious if this implies that service PALs grew throughout the quarter, or if this was just restaurants. Thanks. Sure. This is Jed, Chris, I can take that. Our PALs from a services perspective we were down four percent year-over-year, whereas restaurant, retail, and other, down 15%. That makes a lot of sense if you think about how the recovery has happened thus far. Although we did see acceleration in PALs throughout the quarter. Particularly in multi-location, we're back to Q4 levels in terms of where we are. We expect that services will continue to be resilient for us. Restaurant, retail, and other to make some progress as the recovery continues. Ultimately, we're focused on both the revenue per PAL as well as the number of PALs, and have a bunch of initiatives on both fronts. You should expect that some of those metrics can fluctuate, especially within the retail, restaurant, and other segment over time, depending on seasonality and other factors like that. Got it. Thanks. This will conclude our question and answer session, as well as today's conference call. Thank you for attending today's presentation. You may now disconnect.