) reported loss per share of 8 cents in the fourth quarter of
2012, significantly narrower than the year-ago quarter loss of 56
cents per share. Including stock-based compensation but excluding
one-time items, loss per share came in at 6 cents, wider than the
Zacks Consensus Estimate of 4 cents loss per share.
Revenues for the quarter surged 65.2% from the year-ago
quarter to $41.2 million. Reported revenues not only surpassed
management's guided range of $40 million-$40.5 million, it was
also ahead of the Zacks Consensus Estimate of $40 million.
In the fourth quarter, Yelp's local revenues shot up 87% on a
year-over-year basis to $33.9 million while other revenues
increased 29% from the year ago quarter to $2.2 million. Brand
revenues remained flat on a year-over-year basis at $5
During the quarter, Yelp expanded its base in Poland and
Turkey, thereby extending its services in 20 countries. Yelp
continued to strengthen its mobile apps services with its
Yelp reported adjusted earnings before interest, taxes,
depreciation, and amortization ("EBITDA") of $1.8 million
compared to a loss of $0.02 million in the year-ago quarter.
Sales and marketing expenses escalated 59.3% year over year to
$25.5 million. The majority was spent on enhancing sales and
marketing headcount in order to drive business in the new
Product development costs soared 97.5% year over year to $6.2
million, while general & administrative expense surged 49.1%
from the year-ago quarter to $7.8 million.
Higher level of investments hurt profitability as Yelp
reported an operating loss of $3.9 million in the quarter
(including stock-based compensation but excluding one-time
items). However, operating loss widened from the year-ago quarter
loss of $2.8 million.
Net loss (including stock-based compensation but excluding
one-time items) came in at $4.2 million, wider than $2.9 million
incurred in the year-ago quarter.
Yelp exited the quarter with $95.1 million in cash & cash
equivalents. Cash used in operations was $2.8 million in fiscal
Yelp expects revenues in the range of $44 million to $44.5
million for the first quarter of 2013. Adjusted EBITDA is
expected to be in the range of $1.25 million to $1.5 million for
the same period.
For the fiscal 2013, the company expects revenues to be in the
range of $210 million to $212 million, with adjusted EBITDA
estimated between $20 million and $22 million.
Yelp's positive guidance reflects strong growth in user base
(particularly mobile), expansions into new markets (both domestic
& international) and partnerships with Apple and
) Bing. We believe that mobile presents a significant
monetization opportunity for Yelp and the partnerships with Apple
and Microsoft will boost top-line growth from this segment over
the long term.
However, increasing investments and competition from
) are expected to drag profitability in the near term. As Yelp
continues to explore and expand into new markets, sales &
marketing expenditure is expected to increase significantly,
thereby hurting margins going forward.
Currently, Yelp has a Zacks Rank #3 (Hold).
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