Yelp Inc (YELP) To Report Sequential Growth In 4Q On User Growth And Improved Churn Rate


Yelp Inc (NYSE:YELP) is expected to deliver profit in the fourth quarter compared to a loss suffered in the 2013-fourth quarter. On a sequential basis, the company is predicted to record growth in the December quarter. The optimism was mainly because of two counts. One was the likely improved churn rate, and the other was growth in the unique users. The company is involved in the crowdsourced online reviews segment.

As Yelp Inc (NYSE:YELP) was slated to disclose its financial results for the December quarter on Thursday after the bell, Raymond James upgraded the shares of the company to Outperform rating from Market perform. However, the brokerage retained the price objective of $72 on the company’s stock.

Advertisers To Stay

A recent survey of 75 advertisers of Yelp indicated that 60% of them planned to retain their existing spending rates. However, 27% of them were predicted to cancel, according to the brokerage analyst, Aaron Kessler. This meant a churn rate of 27%, which was lower than the 45% predicted churn rate in the second quarter of 2013.

Another key point was that 64% of the respondents felt satisfied with their experience with Yelp Inc (NYSE:YELP). Similarly, 44% of the respondents approved the incremental traffic level that they received.

At the end of the third quarter, the company’s average monthly unique visitors stood at 139 million while average monthly mobile unique visitors totaled 73 million. This data and the strong brand which users seek for reviews place the company as an attractive platform for advertisers.

Guidance Vs. Expectations

While releasing third quarter results, the company estimated fourth quarter revenues to be $107 – $108 million indicating about 52% YOY growth. Adjusted EBITDA was predicted to be $24 – $25 million.

Street analysts expect Yelp Inc (NYSE:YELP) to report earnings of seven cents a share and revenue of $108.36 million for the December quarter. In the last four quarters, the company’s earnings never failed to meet analysts’ predictions.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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