Yelp Earnings: Local Ads Continue To Boost Revenues In Q4

by Trefis Team
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Yelp (NYSE:YELP) announced its earnings for Q4 on February 7th, and the company once again reported growth as revenues grew by 12% year over year $218 million. Additionally, Adjusted EBITDA for Q4’17 was $42 million compared to $45 million in the previous year. For the year, Yelp’s net income grew to $142 million, primarily due to the sale of Eat24 which added $165 million to profit before tax.

For the full year 2018, the company expects its revenues to be in the $935 million to $965 million range. Adjusted EBITDA guidance for 2018 stands at $175-187 million. We have created an interactive dashboard that illustrates the results for Q4’17 and expectations for Q1’18 and FY2018. You can modify drivers such as revenues from each business segment, net income margin and share count to see how EPS will be affected in the future.

Key Takeaways

During 2017, paying advertising accounts grew 21% year-on-year and 5.2% quarter-on-quarter to 163,000. Additionally, claimed business locations, businesses that are listed for free on Yelp, witnessed a growth of 25% year over year and 5.4% sequentially to approximately 4.189 million. As a result, local ad revenues grew by 18% year over year to $208 million. Going forward, we expect that the company will add close to 30,000 new paying accounts in 2018 and local ad revenues to grow to $218 million in Q1’18 and $910 million in 2018.

Yelp continued to witness strong adoption among mobile users, as the company stated that its mobile reach now stands at 38% of smartphone users in the U.S. Nearly 70% of the company’s page views were from its mobile application, which grew by 20% to 29 million in Q4. Meanwhile, Yelp’s ad revenues across all three primary channels – local, national, and self-serve – grew during the quarter.

Overall, Yelp’s business has maintained its momentum as the company looks to monetize its transaction services business amid improving metrics for its local ad business. We expect both the claimed business accounts and Average revenue per active local business to grow in the coming quarters. We have a $38 stock price estimate for Yelp, which is marginally below the current market price.

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