) reported earnings 4 cents per share in the second quarter of
2014, which compared favorably with the Zacks Consensus Estimate of
a loss of 3 cents per share. It also reversed the year-ago loss of
a penny. This improvement was primarily attributable to robust
Shares of Yelp were up 8.81% ($6.12) following the earnings
Revenues for the quarter surged 61.4% from the year-ago quarter to
$88.8 million. Reported revenues were ahead of management's guided
range of $85.0 million to $86.0 million as well as the Zacks
Consensus Estimate of $86.0 million.
Local revenue was $75.7 million, up 69% on a year-over-year basis
while brand advertising revenues increased 28% year over year to
$9.1 million. International revenue contributed about 3% of total
revenue in the second quarter.
In the reported quarter, total international traffic grew 80%
year-over-year to approximately 31 million unique visitors on a
monthly average basis. The company expanded its presence in Japan
and Argentina in the reported quarter. During the quarter, the
company also opened a new European headquarter in Dublin, Ireland.
In the second quarter, Yelp recorded a 55% increase in active local
business accounts from the year-ago quarter to reach a level of
80K. Cumulative reviews increased 44% from the year-ago quarter to
$61 million. Nearabout 40% of the new reviews were contributed
through mobile devices.
Average monthly unique visitors grew 27% on a year-over-year basis
to $138 million in the reported quarter. Average monthly mobile
unique visitors on the other hand grew 51% year over year to $68
Yelp has been continuously endeavoring to improve the mobile web
experience for its users and in the reported quarter it rolled out
the ability to post video clips to business listings.
During the quarter, the company launched Message the Business
feature, which in turn enables consumers to directly contact
businesses on Yelp with questions. The company also introduced Yelp
Reservations for restaurants to easily and quickly set up free
Yelp also teamed up with EatStreet to bring online ordering to
thousands of restaurants listed on its site and their customers.
Yelp reported adjusted earnings before interest, taxes,
depreciation, and amortization (EBITDA) of $17.2 million compared
with $7.8 million in the year-ago quarter.
Sales and marketing expenses escalated 55.2% year over year to
$47.8 million while product development costs surged 84.1% year
over year to $14.7 million. General & administrative expenses
increased 30.6% from the year-ago quarter to $13.3 million.
Sales headcount grew 62% in the quarter on a year-over-year basis.
The company intends to continue investing in sales and marketing
going forward with an eye to explore the large market opportunity.
In the second quarter, the company reported an operating profit of
$3.13 million versus a loss of $0.64 million in the year-ago
quarter. Net income was $2.7 million or earnings of 4 cents per
share compared to $0.88 million or loss of a penny reported in the
Yelp Inc - Earnings Surprise | FindTheBest
Balance Sheet & Cash Flow
Yelp exited the quarter with $290.4 million in cash & cash
equivalents versus $400.0 million in the previous quarter. The
company generated $19.9 million in cash from operations in the
reported quarter compared with $5.1 million in the prior-year
Yelp expects revenues in the range of $98 million to $99 million
for the third quarter of 2014, representing 61% year-over-year
growth. The Zacks Consensus Estimate of $95 million is lower than
management's guidance range. Adjusted EBITDA is expected in the
range of $18 million to $19 million for the same period.
For full year 2014, net revenue is expected to be in the range of
$372 million to $375 million, representing year-over-year growth of
approximately 60%. The Zacks Consensus Estimate for the same is
pegged at $365 million. The company also projected adjusted full
year 2014 EBITDA to be between $67 million and $69 million.
For the first time in its history, Yelp reported a profit in the
second quarter. Management provided optimistic guidance for the
third quarter and full year. The positive guidance reflects strong
growth in user base (particularly mobile), its entry into new
markets (both domestic & international) and also new
Moreover, we remain encouraged by the company's international
expansion (Japan Mexico, Portugal and Argentina in 2014), which
will beef up ad revenues. Additionally, partnerships with Yahoo! (
) and YP.com are positives for the company.
Also, the company's collaboration with cloud-based platform, Booker
is expected to boost its top line going forward. The acquisition
and integration of its European competitor, Qype, has led to a
contribution of 1.8 million reviews and 1.4 million photographs.
Although fierce competition from the likes of Facebook (
) and Twitter (
) in the brand related revenue market and rising product
development cost remain headwinds going forward, we believe that
Yelp will benefit from robust growth in active local business
accounts and improving mobile customer engagement.
Currently, Yelp has a Zacks Rank #1 (Strong Buy).
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