Yelp Inc Q2 Earnings Preview: Mobile Monetization Is Key

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Yelp Inc (NYSE:YELP) is expected to deliver solid financial results for the second-quarter when it reports on Wednesday July 30th, according to Cantor Fitzgerald Equity Research.

According to analysts Youssef Squali, Naved Khan and Kip Paulson, the local advertising revenue growth rate of Yelp Inc (NYSE:YELP) will be around 63% year-over-year, which is above expectations. It is slightly lower than its 67% local ad revenue growth rate in the first-quarter.

When it comes to local online advertising, the analysts believed that Yelp Inc (NYSE:YELP) has a massive opportunity. They also noted that Yelp is in a good position as an operator or as an acquisition target due to the limited number of players with scale brand, network effect and solid execution.

Squali and his fellow analysts have a Buy rating for the shares of the company with a price target of $80 per share. The company is trading $69.03 per share at the time of this writing around.

Yelp Inc (NYSE:YELP) Second-quarter estimates

Squali and his fellow analysts estimated that the company will be able to deliver $85.4 million in revenue and $12 million in EBITDA, an increase of 55.3% and 14% respectively year-over-year.

According to them, the company will meet the consensus estimate of Wall Street analysts at $86.3 million in revenue and $12.3 million in EBITDA based on data compiled by FactSet.

Yelp Inc (NYSE:YELP) has guidance in the range of $85 million to $86 million in revenue and around $11.5 million to $12.5 million in EBITDA for the second quarter.

The analysts expected that the company’s local ad revenue will increase to $73 million, which accounts 85.4% of its total revenue. The figure also reflects 81,000 active local businesses by the end of the quarter. According to them, Yelp’s average revenue per local business climbed 2% sequentially to ~ $942. Squali and his colleagues estimated a 7.7% increase for branded ad revenues to $7.5 million year-over-year.

Yelp Inc (NYSE:YELP) Mobile monetization

The analysts believe that mobile impressions will continue to increase, and it remains a key for growth. Squali and his colleagues noted that mobile was strong with 52% growth to 61 million unique visitors in the previous quarter. The company noted that 60% of all searches and 49% of ad impressions came from mobile devices last quarter.

Yelp Inc (NYSE:YELP) Potential guidance for the third-quarter

Squali and his fellow analysts predicted that Yelp Inc (NYSE:YELP) will likely provide a revenue and EBITDA guidance in line with the consensus estimate at $94.5 million and $16.5 million, respectively for the third-quarter.

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