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What’s Driving Yelp’s Upbeat Guidance?

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Aug. 19 2016, Published 12:36 p.m. ET

Yelp had a phenomenal 2Q16

As discussed in the previous part of this series, Yelp (YELP) reported strong 2Q16 results, easily exceeding analysts’ expectations, driven by accelerated local ad revenues. The company reported a profit of $0.01 per share, compared with a loss of $0.02 in the prior year’s corresponding quarter. Analysts expected Yelp to report a loss of $0.07 per share.

On a non-GAAP (generally accepted accounting principles) basis, net income jumped 33.8% YoY (year-over-year) to $12.5 million, or $0.16 per share. Total revenue for the quarter came in at $173 million, reflecting an increase of 30% YoY. Local advertising revenue grew 41% YoY to $151.9 million, driven by a rise in new accounts.

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To expand its offerings, Yelp has entered into a partnership and made a small investment in Nowait, a mobile platform that enables restaurant owners to manage their waiting list. The company plans to integrate Nowait to its platform, thereby enabling consumers to see the current wait times at thousands of restaurants.

Yelp raised its guidance

Strong quarterly results, a huge growth market, and accelerating local ad revenues led the company to raise its 2016 guidance. Yelp now expects 2016 revenues to be in the range of $700 million–$708 million, up from its earlier guidance range of $690 million–$702 million.

Moreover, the company now expects adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) to be in the range of $100 million–$108 million for 2016, up from its earlier guidance range of $93 million–$105 million.

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