Yelp Stock Jumps As Q1 Earnings, Revenue Beat On Local Ads
Yelp ( YELP ) Q1 earnings fell from the year-earlier period but beat expectations, while the Internet firm also raised current-quarter and full-year revenue guidance ahead of analyst views, sending shares up. San Francisco-based Yelp late Thursday said it earned 8 cents per share minus items in the March quarter, down from 10 cents in Q1 2015. But analysts had modeled a 16-cent per-share loss ex items. Revenue rose 34% to $158.6 million, ahead of analyst consensus of $156 million. Yelp stock, which in February hit a nearly four-year low of 14.53, was up 11% in premarket trading Friday, near 24. Yelp stock had been down 26% in 2016 as of Thursday’s close and down 56% from 12 months earlier. Yelp has a weak IBD Composite Rating of 24 out of a possible 99. Yelp connects consumers with a directory of local businesses, such as restaurants, boutiques, and household services, and users can post feedback on the services. “Yelp reported a solid quarter driven by local (ads) where revenue growth accelerated on better-than-expected ad budget fulfillment and above-average salesperson productivity,” said Brian Fitzgerald, an analyst at Jefferies, in a research note. Q2 revenue guidance of $167 million to $171 million edged Wall Street estimates of $168 million at the midpoint, which would be up 26% from Q2 2016. And the midpoint for Q2 EBITDA (earnings before interest, taxes, depreciation and amortization) guidance of $21 million to $25 million also beat the Street’s estimate of $21 million. For 2016, Yelp hiked its revenue guidance to $690 million to $702 million from $685 million-$700 million against the Street’s $691 million expectation. Yelp had sales of $550 million in 2015. “Although Yelp’s Q1 results demonstrated an impressive pivot from brand ads to direct-sold national campaigns, the company will likely need to show a few more quarters of local advertising strength to fully win back the confidence of the Street,” John Egbert, an analyst at Stifel, said in a report. “We are encouraged by the first-quarter results, as it appears Yelp has largely completed the migration of its core business from a CPM (cost per impression) product to a performance-based cost-per-click (CPC) without a material impact on its financial results,” Ralph Schackart, an analyst at William Blair, wrote in a research report.