Yelp (YELP) to Acquire Eat24 in $124M Deal; Boosts Q1, FY15 Revenue Outlook

Yelp (NYSE: YELP) announced it has acquired Eat24, a leading web and app-based online food ordering service. With this acquisition, Yelp will drive daily engagement in the key restaurant vertical and plans to expand Eat24's offering to the one million U.S. restaurants listed on its platform.

Based in San Bruno, California, Eat24 was founded in 2008 to expand online food ordering while providing an improved customer experience. Eat24 provides approximately 20,000 restaurants in over 1,500 cities nationwide with the ability to offer online delivery and takeout services. Its intuitive site and app design and unrelenting focus on the consumer experience, including 24/7 live chat, email and phone support, make ordering easy.

"As more food ordering transactions move online, further integrating Eat24 will enhance our user experience with an easy-to-use product and service that allows our large consumer audience to transact directly with businesses," said Jeremy Stoppelman, Yelp co-founder and chief executive officer. "Eat24 has developed a great solution and unique service that has already added great value to the Yelp Platform. With this acquisition, we gain more tools and expertise to help engage our users from discovery through transaction in a key vertical for Yelp."

"We're excited to join the Yelp team to deliver an even better consumer experience inside this top destination for finding local businesses," said Nadav Sharon, Eat24's co-founder and chief executive officer. "Yelp has an impressive ability to connect its users directly with businesses. This is an incredible opportunity to further connect with Yelp's highly engaged users and to expand our reach to even more local businesses on its platform."

Acquisition Details

The transaction is valued at approximately $134 million, consisting of approximately 1.4 million shares of Yelp Class A common stock and $75 million cash, less certain transaction expenses and subject to customary working capital adjustments. The transaction, which was approved by the boards of directors of both companies, closed on February 9, 2015 and the purchase price will be recorded in Yelp's first quarter 2015 financial statements.

Business Outlook

Yelp is making the following adjustments to its previous outlook for the first quarter and full year of 2015:

For the first quarter 2015, Yelp is increasing its revenue outlook and expects net revenue to be in the range of $118.5 million to $120.5 million. Adjusted EBITDA is still expected to be in the range of $19 million to $21 million.

For the full year 2015, Yelp is increasing its revenue outlook and expects net revenue to be in the range of $574 million to $579 million. Yelp is also increasing its Adjusted EBITDA outlook, which is now expected to be in the range of $102 million to $105 million for the full year 2015.

*** The Street sees Q1 revs of $115.7 million and FY15 revs of $542.8 million.

For the first quarter 2015, Yelp expects its weighted average fully diluted share count to be approximately 79 million shares. For the full year 2015, Yelp expects its weighted average fully diluted share count to be approximately 80 million shares.

For the first quarter 2015, Yelp expects to record an increase in amortization of intangibles and an increase in stock based compensation. Yelp will update full year 2015 stock-based compensation and amortization outlook when it reports first quarter 2015 financial results.

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