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Credit Suisse: Yelp Outperformed Expectations

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Shares of Yelp (NYSE: YELP) were trading lower by nearly five percent in Thursday's pre-market session after surging 8.81 percent on Wednesday ahead of the company's earnings results.

After market close on Thursday, Yelp reported that it earned $0.04 per share, beating analysts expectations for a loss of $0.06. Revenue of $88.79 million also exceeded analyst expectations of $86.32 million.

In fact, Wednesday's quarterly results marked the 10th consecutive quarter of 60-plus percent revenue. For the first time as a publicly traded company, Yelp achieved profitability.

While investors and traders sold off shares going into Thursday's trading session, Stephen Ju of Credit Suisse maintained an Outperform rating while boosting the price target from $90 to $93.

In a note to clients, Ju noted that Yelp's quarterly results outperformed expectations due to a growth in average revenue per active local business account (ARPU) at $330. The analyst estimated the company's ARPU would only come in at $312.

Yelp's 6.1 percent year-over-year growth in ARPU was due to a successful shift towards higher value advertising solutions, while mobile engagement continues to trend higher.

Yelp has also seen tremendous growth in its user base. Unique visitors grew 27.8 percent year-over-year to 138 million, while active local business accounts grew 55.4 percent from a year ago to around 80,000.

“The transition of its user base from desktop to mobile is vital for Yelp as it reduces its reliance on external sources for traffic while simultaneously offering a potential higher value ad format for local businesses,” Ju wrote.

Ju also noted that there remains “a large gap between usage and monetization in overseas markets” given the fact that International traffic accounted for approximately 20 percent of total traffic. International only accounted for approximately three percent of total revenue in the quarter.

Looking forward, Ju raised his full year fiscal 2014 revenue guidance to $373.2 million from a previous $365.9 million. The higher expectations are due to increased claimed local business accounts, which translates to higher active local business accounts.

Ju also raised his full year fiscal 2014 earnings per share guidance to $0.71.

Latest Ratings for YELP

Sep 2016MacquarieMaintainsOutperform
Aug 2016Deutsche BankMaintainsBuy
Aug 2016CitigroupMaintainsNeutral

View More Analyst Ratings for YELP
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Posted-In: Credit Suisse Stephen JuAnalyst Color Earnings News Price Target Reiteration Analyst Ratings


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