RBC Capital Markets analysts Mark S. Mahaney and Andre Sequin rate Yelp Inc (NYSE:YELP) as Sector Perform based on intra-quarter datapoints and model sensitivity work, and they believe there could be modest upside to Street estimates.

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We are forecasting Q4:13 revenue of $66.6MM, roughly in line with consensus of $67.2MM and in the upper half of the guidance range of $66-$67MM. Our projections for EBITDA/GAAP EPS of $9.8MM/($0.03) are also in line with Street @ $9.8MM/($0.02). Note that our and Street EBITDA estimates are in the upper half of the company’s guidance range of $9.0-10.0MM. Intra-quarter Datapoints: comScore Traffic Trends – We saw neutral Desktop traffic trends at Yelp in Q4:13. Desktop Unique Visitors, Total Minutes, and Pages Viewed all decelerated vs. much tougher comps. These trends don’t take into account Yelp Inc (NYSE:YELP)’s fast-growing Mobile traffic.

Yelp earnings: Key items to focus on

Active Local Business Accounts – The number of local businesses paying to advertise on Yelp Inc (NYSE:YELP) is a key driver of the company’s largest revenue segment. Active Local Business Accounts grew 61% Y/Y in Q3:13, and we are forecasting continued robust 57% Y/Y growth in Q4.

Local Advertising Revenue – Yelp Inc (NYSE:YELP)’s largest revenue line accelerated in Q3, growing 80% Y/Y. We are forecasting some natural deceleration vs. a tougher comp, with 70% growth in Q4:13.

Unique Visitors – The number of monthly Unique Visitors on Yelp Inc (NYSE:YELP)’s site is a significant top-line driver of advertising revenue. Unique Visitors accelerated in Q3:13, growing 41%. We continue to forecast only modest deceleration – 38% growth in Q4:13.

Adjusted EBITDA – Yelp turned EBITDA positive in Q2:12 and has gradually been expanding EBITDA margin since. Our estimates call for over 100bps in Q/Q margin leverage in Q4, consistent with company guidance.

Mobile Datapoints – During Q3, 43% of total ad impressions were served on Mobile devices – up from 40% of total impressions in Q2. A full 62% of Q3 searches came via Mobile devices compared to 59% in Q2. Finally, 33% of Unique Visitors during the quarter came via the Mobile Web, compared to 32% in Q2, and this is not inclusive of +11.5MM app users (up from 10.4MM in Q2). We think Mobile will continue to be an important monetization opportunity for Yelp.

Yelp valuation

Yelp Inc (NYSE:YELP) continues to perform very well from a fundamental perspective, either maintaining very high growth or even accelerating growth in its most important metrics. Yelp is arguably one of the best plays off two of our most important 2014 Internet Growth Factors: Mobile Materiality and Local Internet Adoption. But, at current valuation, we continue to think that the positive operating results are reflected in the share price. We arrive at our $60 PT using a 10x P/S multiple and a 42x EV/EBITDA multiple on our 2015 estimates.