Yelp Inc (NYSE:YELP), the company that connects consumers with great local businesses, today announced financial results for the second quarter ended June 30, 2015.
Net revenue was $133.9 million in the second quarter of 2015 reflecting 51% growth over the second quarter of 2014.
- Adjusted EBITDA for the second quarter of 2015 was $22.7 million, reflecting a 32% increase over the second quarter of 2014.
- Cumulative reviews grew 35% year over year to approximately 83 million.
- Mobile Unique Visitors1 surpassed the number of Desktop Unique Visitors2 for the first time, growing 22% year over year to approximately 83 million on a monthly average basis. App Unique Devices grew 51% year over year to approximately 18 million on a monthly average basis3.
- Local advertising accounts grew 40% year over year to approximately 97,1004.
Net loss in the second quarter of 2015 was $(1.3) million, or $(0.02) per share, compared to a net income of$2.7 million, or $0.04 per share, in the second quarter of 2014.
Non-GAAP net income, which consists of net income excluding stock-based compensation and amortization was$9.4 million, or $0.12 per share, for the second quarter of 2015.
Net revenue for the six months ended June 30, 2015 was $252.4 million, an increase of 53% compared to$165.2 million in the same period last year. Adjusted EBITDA for the six months ended June 30, 2015 was $39.1 million compared to $25.8 million in the first six months of 2014. Net loss for the six months ended June 30, 2015 was $(2.6) million, or $(0.03) per share, compared to net income of $0.1 million, or $0.00 per share, in the comparable period in 2014. Non-GAAP net income for the six months ended June 30, 2015 was $17.3 million, or$0.22 per share, compared to non-GAAP net income of $15.0 million, or $0.19 per share, in the comparable period in 2014.
“We continue to demonstrate solid topline growth, with total net revenue increasing 51% year over year to approximately $134 million,” said Jeremy Stoppelman, Yelp’s chief executive officer. “Consumers are increasingly turning to apps when using their mobile phones, and we are excited about the growth we’ve seen in app usage which accelerated to 51% year over year. We believe our rich content married with our highly-differentiated local advertising product will position us well to capture a meaningful share of the large local market.”
“Our core local advertising business remains strong, and we are investing in Yelp’s future,” added Rob Krolik, Yelp’s chief financial officer. “We expect local advertising will continue to be our primary driver of growth as we work towards our goal of generating one billion dollars of revenue in 2017.”
Second Quarter Operating Summary
- Local advertising revenue totaled $107.9 million, representing 43% growth over the second quarter of 2014.
- Transactions revenue, which was previously included in Other revenue and will be broken out separately going forward, totaled $11.3 million, compared to $1.2 million in the second quarter of 2014, primarily due to the acquisition of Eat24 in the first quarter of 2015. Transactions revenue is comprised of Eat24, Platform transactions, Yelp Deals and Gift Certificates.
- Brand advertising revenue totaled $8.3 million, representing an 8% decrease compared to the second quarter of 2014. As of today, Yelp is announcing that it plans to phase out its brand advertising product by the end of 2015 to continue its focus on the consumer experience and its native, local advertising products.
- Other revenue totaled $6.4 million, representing 128% growth over the second quarter of 2014. Other revenue is primarily comprised of revenue from partnership arrangements.
- Mobile Traffic: Mobile Unique Visitors surpassed Desktop Unique Visitors for the first time in company history in the second quarter of 2015, growing to approximately 83 million compared to approximately 79 million Desktop Unique Visitors. Growth in unique devices accessing the Yelp app accelerated to 51% over the second quarter of 2014. The majority of Yelp consumer engagement now occurs on the app with approximately 70% of new reviews and photos and approximately 70% of calls, clicks for directions and map views coming via the Yelp app.
- Local Advertising: With the full rollout of its packaged cost-per-click (CPC) advertising package inSeptember 2014, Yelp increased the percent of local revenue generated by CPC advertisers to 46% in the second quarter of 2015, an increase from 40% in the first quarter of 2015. Based on Yelp’s internal analysis, local advertisers on Yelp receive on average approximately 270% ROI on their advertising spend, demonstrating the compelling nature of its highly relevant, native advertising products.
Yelp is providing its outlook for the third quarter and lowering its outlook for the full year of 2015 based on slower sales headcount growth and the elimination of its brand advertising product.
- For the third quarter of 2015, net revenue is expected to be in the range of $139 million to $142 million, representing growth of approximately 37% compared to the third quarter of 2014. Adjusted EBITDA is expected to be in the range of $12 million to $15 million. Stock-based compensation is expected to be in the range of $16 million to $17 million, and depreciation and amortization is expected to be 5%-6% of revenue.
- For the full year of 2015, net revenue is expected to be in the range of $544 million to $550 million, representing growth of approximately 45% compared to full year 2014. Adjusted EBITDA is expected to be in the range of $72 million to $78 million. Stock-based compensation is expected to be in the range of $62 million to $64 million, and depreciation and amortization is expected to be 5%-6% of revenue. (Original Source)
Following earnings, shares of Yelp are dropping 13.9% to $29.04. YELP has a 1-year high of $86.88 and a 1-year low of $32.36. The stock’s 50-day moving average is $40.06 and its 200-day moving average is $46.13.
On the ratings front, Yelp has been the subject of a number of recent research reports. In a report released today, Deutsche Bank analyst Lloyd Walmsley downgraded YELP to Hold, with a price target of $31, which reflects a potential downside of -6.2% from last closing price. Separately, on the same day, Brean Murray Carret’s Tom Forte maintained a Buy rating on the stock and has a price target of $58.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Lloyd Walmsley and Tom Forte have a total average return of 12.4% and -22.8% respectively. Walmsley has a success rate of 56.4% and is ranked #417 out of 3717 analysts, while Forte has a success rate of 23.5% and is ranked #3695.
The street is mostly Bullish on YELP stock. Out of 21 analysts who cover the stock, 12 suggest a Buy rating , 8 suggest a Hold and one recommends to Sell the stock. The 12-month average price target assigned to the stock is $55.69, which implies an upside of 68.5% from current levels.
Yelp Inc operates local search website that connects people with local businesses. The Company provides local advertising, brand advertising, and other services.