Yelp Inc. (YELP) 4Q Earnings Preview: Expect Solid Results

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Yelp Inc. (NYSE:YELP) is expected to announce December quarter earnings result Wednesday, February 6 with the conference call expected at 4.30 pm ET. The company is largely expected to post a loss in-line with analyst expectations as competitive pressure intensifies.

The online reviews and information service company is valued at $1.34 billion. According to reports, Analysts surveyed by FactSet Research Systems Inc. (NYSE:FDS) estimate Yelp to report $40.2 million worth of revenues with EPS of just 4 cents.

Yelp Inc. (YELP) 4Q Earnings Preview: Expect Solid Results

Raymond James & Associates Research Analysts, Aaron Kessler, CFA and Kurt Batinich estimate that Yelp Inc. (NYSE:YELP) will beat the consensus estimate of $40.2 million in revenues. The analysts expect the company to report $40.4 million for the December quarter, which also ranks as the upper limit of the company’s guidance of $40.0-$40.5 million worth of revenues.

The analysts are very bullish on local advertising revenues, which they expect the company to register a 82 percent year-over-year growth rate, or $33 million for the quarter. This would be one percentage point better compared to the growth rate reported in Q3. However, brand advertising is expected to slowdown for the December quarter compared to the growth rate reported in Q3. The analysts estimate brand advertising revenues to grow by 4 percent year-over-year compared to 28 percent in Q3.

Nonetheless, other services revenue is expected to improve with a year-over-year growth rate of about 25 percent compared to 2 percent reported in Q3. On the other hand, adjusted EBITDA is expected at $1.3 million, or 3.2 percent margin, which is modestly below the consensus estimate of $1.4 million, but in line with the guidance of $1.25-$1.5 million. The analysts expect the company to report a non-GAAP EPS of $(0.01), in-line with the consensus estimate.

In the report, the analysts wrote, “We estimate active (paid) local business account additions of 6,800, above 3,800 net adds in 3Q (though we note that our 4Q estimate incorporates two months of additions from the Qype acquisition). Additionally, we estimate annual ad revenue per account of $3,391 (1.6% y/y).”

Additional statistics, as obtained from COMSCORE, Inc. (NASDAQ:SCOR), indicate that 4Q unique visitors increased by 16 percent year-over-year compared to  the 2 percent growth rate reported in Q3 while total visits increased  by 22 percent year-over-year compared to 10 percent in Q3. However, the analysts noted, “comScore data does not include mobile traffic (mobile represented 45% of Yelp searches in 3Q). We are modeling for total unique visitors (including mobile) of 87.5 million in 4Q (33% y/y vs. 37% y/y in 3Q)”.

In their recommendation to investors, the analysts wrote, “We expect Yelp to report 4Q results modestly above Street estimates given what we believe is conservative guidance. That said, Yelp’s premium valuation (~60x 2013E EBITDA) keeps us on the sidelines. We maintain our Market Perform rating”.

Yelp Inc. (NYSE:YELP) closed at $21.18 on Tuesday, February 5.

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