Analysts Have Mixed Ratings After Yelp Misses Revenue Estimates And Posts Unimpressive Outlook

By Sarah Roden

Yelp Inc (NYSE: YELP) posted disappointing first quarter earnings on April 29, falling short on revenue estimates and posting slowed user growth for the second consecutive quarter. The report sent shares down about 16% after it was released.

Yelp posted quarterly revenue of $118.5 million, marking a 55% year-over-year increase though missing analysts’ estimates of $120 million. Revenue derived from advertising increased 51% year-over-year to $98.6 million, making up the majority of Yelp’s total revenue. Yelp posted a net loss of ($0.02) per share, slightly wider than the analyst consensus of ($0.01) per share. However, this was a narrower loss compared to ($0.04) posted in the same quarter last year.

Investors are wary of slowed growth rates on the website. Yelp posted an 8% year-over-year increase in average monthly unique visitors, though this marks slowed growth as this metric increased 30% a year prior and increased 13% in the previous quarter.

Yelp acquired Eat24, a food delivery platform, as a way to increase daily consumer engagement on Yelp.

Looking forward, Yelp expects to post second quarter revenue between $131 million and $134 million, which would be an approximate 49% year-over-year increase. For the full-year 2015, Yelp expects to post net revenue between $574 million and $579 million, which would be an approximate 53% year-over-year increase. This outlook falls on the low side of analysts’ expectations.

Analysts issued varying ratings following Yelp’s report.

Robert Peck of SunTrust maintained a Buy rating on Yelp though reduced his price target from $70 to $52. Peck attributed the revenue miss to currency headwinds. He added that Yelp’s full-year guidance implies “growth reacceleration” in the second half of the year driven by “continued bolstering of the sales force and CPC offerings (Local), launch of mobile programmatic (Brand), Eat24 (Other), and ramp of marketing spend.”  Peck believes Yelp has a “strong core” and opportunities in the international market, Eat24, and SeatMe.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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