Yelp (YELP) Second Quarter of Local Ad Acceleration - RBC

August 10, 2016 6:39 AM EDT
Get Alerts YELP Hot Sheet
Price: $40.65 -0.66%

Rating Summary:
    20 Buy, 22 Hold, 5 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 29 | Down: 29 | New: 23
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RBC Capital analyst, Mark Mahaney reiterated his Outperform rating on shares of Yelp (NYSE: YELP) and raised his price target to $48.00 from $36.00 after YELP posted another beat and raise quarter. The most important Local Ad segment accelerated to 41% Y/Y growth. The company continues to execute following a rocky 2015.

Revenue of $173.4MM came in above the Street @ $170MM. More importantly, Yelp’s $152MM Local Ad Revenue came in above the Street at $148MM and accelerated to 41% Y/Y growth from improving internal execution. EBITDA of $28MM came in above the Street @ $23MM. YELP raised 2016 Revenue & EBITDA guidance while the Q3 Revenue guide of $180-184MM beat the Street at $180MM. Q3 EBITDA guidance of $24-28MM was just below the Street’s $28.1MM expectation.

Six keys to the quarter:

1) Local Ad Revenue Growth – Second. Consecutive. Acceleration. Growth to 41% Y/Y from 40% Y/Y in Q2.

2) Very Robust Organic Rev Growth – of 38% Y/Y, which excludes the loss of the brand advertising biz.

3) Local Advertising Account Adds – Up Y/ Y with 7.4K adds vs. 6.9K in Q215, tho down from Q1’s record high adds of 10K.

4) Nowait Partnership – Yelp partnered with and invested $8MM in Nowait, a mobile platform for restaurants to manage their waitlists.

5) Visitor Growth – Stable and robust App Unique Devices growth of 27% Y/ Y and Mobile App growth is the Moatiest growth Yelp can have.

6) COO Transition – Jed Nachman has been promoted to COO, with Geoff Donaker retiring but continuing to serve as a strategic advisor to the company with a board seat.

For an analyst ratings summary and ratings history on Yelp click here. For more ratings news on Yelp click here.

Shares of Yelp closed at $32.64 yesterday.

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