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Bull of the Day: Yelp Inc. (YELP)

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Yelp Inc. (YELP - Free Report) , a Zacks Ranked #1 (Strong Buy) is a website engaged in providing information through online community offering social networking. It covers restaurants, shopping, nightlife, financial services, health and a variety of services. The company serves customers in the United States, Canada, the United Kingdom, Ireland, France, Germany, Austria, the Netherlands, Spain, Italy, Switzerland and Belgium. Yelp, Inc. is headquartered in San Francisco, California.

Recent Earnings Report

The company reported Q2 earnings in early August where they handily beat both the Zack consensus earnings (-$0.03 estimate vs. $0.09 actual) and revenue ($205 million estimate vs. $209 million actual) estimates.  The company saw year over year (YoY) growth in revenues +20%, GAAP net income +900%, adjusted EBITDA +52.7%, and non-GAAP net income +72.8%.  On a segment basis, advertising revenues grew +19% YoY, Transactions revenues improved by +19% YoY, and Other services revenues were up +317% YoY.  

Management also announced a stock repurchase program of up to $200 million

Management’s Take

According to Jeremy Stoppelman, co-founder and CEO, “We performed well in the second quarter, growing revenue by 20% and driving strong growth in app usage and advertiser accounts. We generated strong profitability in the second quarter, even while investing for future growth. We are announcing the pending sale of Eat24 to Grubhub today as part of an important strategic partnership to expand online ordering capabilities on Yelp. The Eat24 team has been instrumental in Yelp’s success over the past two years and we are excited to continue to work with them as part of Grubhub.”

Also, Lanny Baker, CFO, commented, “Our second quarter financial performance reflects the overall health of our business. We are pleased to sell Eat24 at a price that we believe demonstrates the value we’ve created over the past two years. We are also announcing a share repurchase that reflects confidence in the business and commitment to efficient management of shareholder capital.”

Price and Earnings Surprise Graph

As you can see the company has posted a postive earnings surprise for the past 5 quarters.

Increasing Earnings Estimates

Due to the strong Q2 data, and the stock repurchase program, earnings estimates for Q4 17, FY 17 and FY 18 have all seen upwards revisions over the past 30 days; Q4 17 improved from $0.03 to $0.05, FY 17 rose from $0.01 to $0.12, and FY 18 was lifted from $0.27 to $0.35.

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