Yelp Raises Guidance, Gets a Scare

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Yelp Inc. (NYSE: YELP) reported first quarter 2014 results after the markets closed Wednesday. The local business guide company posted a diluted earnings per share (EPS) loss of $0.04 on revenues of $76.4 million. In the first quarter of 2013, Yelp reported an EPS loss of $0.08 on revenues of $46.1 million. The Thomson Reuters estimates for the first quarter called for an EPS loss of $0.06 and $75.06 million in revenue.

The company provided raised second-quarter and full-year guidance with its results. For the second quarter Yelp expects revenue of $85 to $86 million and adjusted EBITDA of $11.5 to $12.5 million. Adjusted EBITDA in the first quarter totaled $8.51 million which included a charge of $9.5 million for stock-based compensation. In the current quarter Yelp expects stock-based compensation to total $10 to $11 million.

For the full-year the company estimates revenue to total $363 to $367 million and adjusted EBITDA of $56 to $60 million, including $43 to $45 million in stock-based compensation.

Consensus estimates for the second quarter call for an EPS loss of $0.02 on revenues of $85.44 million and for the full year the EPS loss is estimated at $0.04 on revenues of $358.9 million. Given the company’s revenue and stock-based compensation estimates, Yelp could post a profit this year.

Yelp’s CEO said:

Yelp is becoming the gold standard in local search. In the first quarter, we announced our integration into Yahoo local search, building on our existing partnerships with Apple Maps and Bing. We also entered into an advertising partnership with which will enable us to introduce Yelp to an even broader pool of business owners.

Shares closed at $58.32 today and fell more than 8% before investors finished reading the press release. Just before the conference call kicks off shares are up 1.1% at $59.03 in a 52-week range of $25.17 to $101.75. Shares should keep rising unless the call reveals some hidden disaster.

Thomson Reuters had a consensus analyst price target of around $90.40 before today’s report.

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