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Yelp’s Q1: Nailed It!

Who says you can’t make money in mobile?

Yelp (NYSE:YELP) seems to have figured things out, if its first-quarter earnings report is any indication, and that had investors bidding up YELP by 24% as of midday Thursday. At roughly $32 per share, YELP is trading at more than double its IPO listing price from roughly a year ago.

The company’s Q1 revenues surged by 68% to $46.1 million, and it thinned its net loss by 75% to $4.8 million, or 8 cents per share. Revenues topped Street expectations for $44.5 million, though profits were 2 cents shy of forecasts.

Yelp also expects good things for the next few months — it projects Q2 revenues in a range of $52.5 million to $53.5 million, which compares favorably to analysts’ consensus of $50.4 million.

When it comes to online reviews for restaurants and service providers, Yelp is establishing itself as a dominant brand in the U.S. It’s also pushing aggressively into foreign markets, including via acquisitions like Qype, which provided a nice footprint in Europe.

Yelp also is seeing a nice payoff from its mobile investments.

While Yelp’s mobile technology is standout — the apps are quick and full of helpful content — the company also has been aggressive with partnerships. Perhaps the most important has been a deal with Apple, which has provided substantial distribution.

In the latest quarter, the company’s apps — which are on both the Apple (NASDAQ:AAPL) iOS and Google (NASDAQ:GOOG) Android platforms — were used across 10 million devices. About 36% of total ad impressions came from mobile, and a variety of top brands made purchases, such as Yum Brands (NYSE:YUM) and InterContinental Hotels (NYSE:IHG).

Now it’s true that Yelp faces competition, such as from Google and Angie’s List (NASDAQ:ANGI), and could even feel some pressure from Facebook (NASDAQ:FB). But so far, none of these are showing any real impact on Yelp’s business — a testament to how solid the company’s offerings are.

Investors might want to hold off amid today’s big jump and nose-bleed valuation (127 times earnings at last count), but there’s plenty of reason to love YELP on a dip.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities, and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


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Mystic Maggie

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