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Yelp hits all – time high in wake of results

By Rex Crum, MarketWatch

SAN FRANCISCO (MarketWatch) — Yelp Inc. shares closed at a record high Thursday, rising more than 27% on upbeat reaction to the company’s earnings results and forecast that was highlighted by improvements in local ad and mobile use of the online consumer review service.



/quotes/zigman/9021597/quotes/nls/yelp YELP

ended the day up by $6.92, at $32.22 a share. The impetus was Yelp reporting late Wednesday a first-quarter loss of $4.8 million, or 8 cents a share, on revenue of $46.1 million. In the year-ago period, Yelp lost $9.8 million, or 31 cents a share, on $27.4 million in sales.

Analysts surveyed by FactSet had forecast Yelp to lose 6 cents a share on revenue of $44.5 million.

Yelp specializes in consumer reviews and information related to local businesses, and it was local ad sales that were seen as driving the company’s revenue gains in the quarter. Local ads accounted for 85% of the quarter’s sales, and Gene Munster, of Piper Jaffray, said those results “can be attributed to better-than-expected average revenue per user.”

Munster raised his price target on Yelp to $30 a share from $25, but left his neutral rating on the stock unchanged due to current valuation levels.

Yelp was able to point to several examples of improvements in its business strategy. The number of average monthly users of Yelp’s service reached 102 million, up 43% from a year ago, and active business accounts rose by 63%, to 45,000 businesses.

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More of Yelp’s users are also using Yelp via its app on smartphones and mobile devices. The company said its mobile app was used on approximately 10 million unique mobile devices in the quarter, while 36% of its local ads were shown on mobile devices.

“[Yelp’s] mobile evolution continues,” said Tom White, of Macquarie Equities Research, in a research note. “We continue to view these [local ads on mobile devices] as higher-value impressions for certain categories of local merchants.”

For its second quarter, Yelp said it expects to report revenue in a range of $52.5 million to $53.5 million. Analysts had previously forecast $50.4 million in sales.


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