Yelp finalizes $80 million RepairPal acquisition

SAN FRANCISCO - Yelp Inc. (NYSE:YELP), a platform that connects consumers with local businesses, has finalized the acquisition of auto service platform RepairPal. The deal, which was completed today, involved an $80 million cash transaction, with adjustments to follow standard post-closing procedures.

RepairPal, established in 2007, is known for connecting customers with certified mechanics across the United States and is endorsed by notable companies such as USAA, CarMax (NYSE:KMX), and Endurance Vehicle Services for reliable auto repairs at fair prices.

The financial advisory role for this acquisition was filled by TD Securities exclusively for RepairPal, while legal counsel was provided by Fenwick & West LLP. Yelp received legal advice from Cooley LLP.

Yelp, founded in 2004 and headquartered in San Francisco, serves as a platform where millions of users find and review local businesses, ranging from restaurants to a variety of service providers. This acquisition is expected to enhance Yelp's range of services by integrating a trustworthy auto repair component into its local business platform.

This expansion of Yelp's services is based on a press release statement and further details about the integration of RepairPal's services into Yelp's platform have not been disclosed.

In other recent news, Yelp Inc. reported mixed results for the third quarter of 2024, with record net revenue of $360 million, marking a 4% increase year-over-year, despite declines in restaurant, retail, and other categories. The company has seen notable growth in its Services revenue, which increased by 11%, while the Home services segment revenue grew by 15%, propelled by a 25% rise in requests for quotes. Yelp has also announced the strategic acquisition of RepairPal for approximately $80 million, aiming to expand its presence in the auto services market.

The company's net income margin stood at 11%, with a 28% adjusted EBITDA margin. Yelp continued its share repurchases with $62.5 million worth of shares bought back in the third quarter. For the full year, Yelp projects net revenue between $1.397 billion and $1.402 billion, with adjusted EBITDA expected to be between $341 million to $346 million.

These developments underscore Yelp's ability to navigate a challenging market while pursuing growth through strategic investments and acquisitions. The company maintains a focus on disciplined expense management, optimizing marketing spend, and leveraging AI to enhance customer interaction and ad matching. As Yelp navigates these recent developments, the company remains committed to profitable growth while maintaining a flat headcount.

InvestingPro Insights

Yelp's acquisition of RepairPal for $80 million in cash demonstrates the company's commitment to expanding its service offerings and strengthening its position in the local business platform market. This strategic move aligns with several key financial metrics and insights from InvestingPro.

According to InvestingPro data, Yelp's market capitalization stands at $2.45 billion, with a revenue of $1.39 billion over the last twelve months as of Q3 2023. The company's revenue growth of 6.8% during this period suggests a steady expansion, which could be further bolstered by the RepairPal acquisition.

An InvestingPro Tip highlights that Yelp holds more cash than debt on its balance sheet. This strong financial position likely enabled the company to make the $80 million cash acquisition without straining its resources. Additionally, another InvestingPro Tip notes that Yelp's management has been aggressively buying back shares, indicating confidence in the company's future prospects and potentially signaling that they view the stock as undervalued.

Yelp's impressive gross profit margin of 91.38% for the last twelve months ending Q3 2023 underscores its efficient business model. This high margin could provide the financial flexibility needed to integrate RepairPal and potentially improve the combined entity's profitability.

For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights. Currently, there are 11 additional InvestingPro Tips available for Yelp, providing a deeper understanding of the company's financial health and market position.

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