Yelp Earnings Preview: Locals Ad Revenues Set To Grow

by Trefis Team
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Yelp (NYSE:YELP) is set to report its Q3 results on November 1. The company’s revenue has seen improvement on the back of improved monetization rates in its local ad business. Furthermore, the user base for its mobile app continues to grow, which likely helped the company’s revenues and reviews in Q2. Yelp also continues to witness traction at its transaction services business. In this earnings announcement, we will continue to monitor the monetization rate of its markets in the U.S. Additionally, we expect that revenues for its deals and partnership business will improve due to a growing number of transactions on Yelp’s platform. Below we outline our expectations for the results.

Our $38 price estimate for Yelp is around 15% below the current market price. 

Revenues from Yelp’s local ad businesses are expected to grow as more businesses transition from claimed businesses, which have a listing with Yelp but do not pay for any premium services, to active businesses. Meanwhile, the company’s average revenue per active local business is likely to increase as most of the current active businesses are in mature markets, which monetize at a higher rate compared businesses in newer regions.

The company has stated that growing transaction activity remains a top strategic objective for 2017. Since the start of 2017, Yelp extended Request-A-Quote service to its users, thus connecting millions of users with merchants and service providers. This led to an increase in transactions and reservations across Yelp’s platform in the first half of 2017. We expect that this trend continued in Q3 and transactions across its platform grew during the quarter.

Check out our complete analysis of Yelp

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