Investors Outlook Soured Even after Yelp’s Sales and Profits Rise

Investors Outlook Soured Even after Yelp’s Sales and Profits Rise

Thursday’s report by Yelp had solid results of the fourth quarter, but still there was a nosedive in the shares as there was very light guidance from the ratings and reviews site. There was a huge surge in the shares of Yelp during the last year with about 158% rise, but in the after-hours trading there was a drop of 10% to about $37.41.

This fiscal year, Yelp has forecasted its adjusted earnings in the range of 25 million dollars – 28 million dollars and its revenue is expected to be in the range of 195 million dollars – 199 million dollars. This forecast is way below what the analysts at Wall Street expect. Their expectation is about 30 million dollars in profits and about 204 million dollars in revenue.

However, the review and ratings site beat the expectations in the latest quarter results. Their net income rose to 10 cents per share or about 8.3 million dollars as compared to their earlier year loss of 29 cents per share and 22.2 million dollars. The expectation of analysts was three cents.

The estimates of the analysts were 194.5 million dollars for revenue, but the revenue climbed to 194.8 million dollars i.e. 27% beating analysts’ expectations.

The total number of reviews on yelp are now 121 million as this quarter brought 27% more reviews. This shows that the reviews of local businesses is increasing as the site continues to grow. With the increase in the user base, Yelp is now bringing out new and improved features like the customers can now make reservations, request quotes for services and even put themselves on the waitlists of restaurants.

In this quarter, the amount of unique mobile app devices increased by 20% to about an average of 24 million unique devices monthly. These types of users are more active as compared to the other users, but they still represent a minor part of Yelp user base. These users view ten times more pages than their regular users. They are less than the users that use Yelp on a browser whether mobile browser about 65 million monthly active or desktop browser about 73 million monthly active.

The cofounder and CEO of Yelp, Jeremy Stoppelman said that Yelp is planning to focus more on their mobile app by increasing engagement, expanding their sales strategy and boosting the transactions that people carry out using the app. He also added that they were extremely proud of how deeply Yelp is integrated into their customer’s daily life habits and how essential it is to the local business owners that use Yelp.

Their 2017 projection of adjusted earnings is $150 to $165 million on revenue of $880 to $990 million which matches analysts’ expectations.

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