Yelp Q4 Earnings To Gain On Local Content Strength

Yelp Inc. YELP is set to report fourth-quarter 2017 results on Feb 7. The company's earnings have beaten the Zack Consensus Estimate in three of the trailing four quarters, delivering an average positive surprise of 675%.

In the last quarter, the company reported earnings of 9 cents per share against the Zacks Consensus Estimate of a loss of a penny. Revenues increased 19% year over year to $222.4 million and beat the Zacks Consensus Estimate of $221 million.

For fourth-quarter 2017, total revenues are expected between $211 million and $216 million. Moreover, adjusted EBITDA is projected between $39 million and $42 million.

Let's see how things are shaping up for this announcement.
 

Key Factors

Yelp is benefiting from the growing total addressable market TAM, expanding mobile reach, high quality content and improving user engagement. We believe that growth in cumulative reviews — up 23% year over year to 142 million in the third quarter — reflects expanding local content, which is a significant driver.

Additionally, accelerating consumer traffic across app and mobile is a positive.  Last quarter, app unique devices rose 21% year over year to almost 30 million.

Moreover, the partnership with GrubHub GRUB is a key catalyst. The collaboration increases the number of delivery and takeout restaurants available for food ordering on the platform.

This is likely to boost user base, which will drive advertising and transaction revenues for the platform. Moreover, management expects the partnership to improve Yelp's per-order profitability. In the last quarter, paying advertising accounts improved 18% year over year to almost 155,000.

Further, acquisitions of Nowait and Turnstyle present significant growth opportunity. The takeovers boost Yelp's connection with business owners. Notably, consumer-friendly services like reservations, waitlist and Wi-Fi marketing along with Yelp transaction platform, cash back and Request a Quote is likely to drive subscriptions in the soon-to-be-reported quarter.

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