A Yelp Story That Shines the Spotlight on Facebook
Revenue rises 20%
Yelp (YELP) is waving a sign that Facebook (FB) and Google may not want to read twice. For 2Q17, Yelp reported gains that reflect its growing influence in the digital advertising industry where Facebook and Alphabet’s (GOOGL) Google have long ruled.
Yelp’s progress in the quarter could also be viewed as confirming recent reports of advertisers’ willingness to work with smaller platforms rather than the Facebook-Google duopoly.
Yelp reported that its 2Q17 revenue rose 20.0% year-over-year to $208.9 million, surpassing the consensus estimate of $205.0 million. The company also turned an unexpected profit, as adjusted EPS (earnings per share) came to $0.25 compared to $0.16 a year earlier.
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Advertising accounts rise 18%
The strong 2Q17 results were supported by strong gains in Yelp’s advertising and transaction businesses. Advertising revenue rose 19.0% year-over-year to $186.6 million, while transactions revenue rose 19.0% to $18.4 million. Other services revenue more than tripled to $3.8 million.
The rise in advertising sales came alongside a rise in the number of Yelp’s paying advertising accounts, which rose 18.0% to about 148,000.
Yelp’s progress: Bad news for Facebook?
Facebook and Google boast millions of advertisers, which means that Yelp’s 148,000 advertising accounts pale in comparison. However, the growth in paying advertiser accounts reveals Yelp’s growing influence in the online advertising space, which could be viewed as a threat to Facebook and Google. Yelp has been cited among the smaller advertising platforms that could benefit as marketers revolt against the strong grip of Facebook in the Internet advertising market.