Yelp’s Q4 Revenues Likely To Grow, Albeit At A Slower Rate

by Trefis Team
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Yelp (NYSE:YELP) is set to report its Q4 results on February 7. As Yelp’s user base and revenues from mobile continue to improve, we expect local ad revenues to grow once again in Q4. Additionally, Yelp also continues to witness traction at its transaction services business and revenues are expected to stabilize in Q4. We have created an interactive dashboard that illustrates our Q4 expectation for Yelp. You can modify the revenues from each business segment and net income expectations to see how the EPS would be affected in Q4 2017.

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.

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 three quarters of 2017. We expect that this trend continued in Q4 and transactions across its platform grew during the quarter.

At present, our $38 price estimate for Yelp is around 15% below the current market price.

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