Yelp Inc (NYSE: YELP) stock fell 8.5 percent Friday after the company reported first-quarter earnings and revenue beats on Thursday afternoon. The market may not have been impressed by Yelp’s quarter, but analysts say the company’s net account additions, user engagement and monetization are trending in the right direction.
Yelp reported a first-quarter earnings per share loss of 3 cents, slightly better than the 5-cent loss analysts had expected. The company reported first-quarter revenue of $223 million, beating consensus estimates of $220 million. Revenue was up 13 percent from a year ago.
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Yelp reported 177,000 paying advertiser accounts, up 27 percent.
“We had a great start to 2018, accelerating advertising revenue growth and attracting a record number of new advertisers in the first quarter,” CEO Jeremy Stoppelman says in a statement. “The expansion of our non-term advertising product is showing promising results, and we are raising our full-year revenue and adjusted [earnings before interest, taxes depreciation and amortization] outlook.”
Looking ahead, Yelp guided for second-quarter revenue of between $230 million and $233 million, above consensus estimates of $220 million. Yelp also raised its full-year revenue guidance from a previous range of between $935 million and $965 million to a new range between $943 million and $967 million. The company also lifted its full-year 2018 EBITDA guidance from a previous range of between $175 million and $187 million to a new range of between $179 million and $188 million.
Bank of America analyst Ryan Goodman says Yelp’s quarter was solid and expects the company to deliver full-year earnings and revenue numbers on the high end of its updated guidance ranges.
“The 2Q revenue outlook was better, and while the 2Q EBITDA outlook was below Street, management’s investments in the business appear to be driving both engagement and user monetization,” Goodman says.
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Goodman says Yelp’s efforts to retain customers over the past year should help keep churn in check throughout the year. “Overall, we are encouraged to see another strong quarter with upside to net account adds, and continue to see multiple points of optionality in the model for 2018-plus,” he says
Bank of America has a “buy” rating and $53 price target for YELP stock.
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Yelp Inc Stock Dives Despite a Solid Quarter originally appeared on usnews.com
