Yelp’s 2Q results, outlook disappoint as stock plunges

For the third quarter, revenue is expected to be in the range of $139 million to $142 million, up 37% year-over-year.


Yelp Inc. (NYSE:YELP): 21 Brokerage firm Analysts have agreed with the mean estimate for the short term price target of $51.91 in Yelp Inc.

Yelp’s first quarter earnings were also less than satisfactory.

Yelp lost $1.3 million, or 2 cents per share, in the three months ending in June. That resulted in the company’s stock tanking 13 percent. And as we step back and look at the bigger picture, we believe that Yelp continues to present a unique consumer value proposition and as a property remains undermonetized.

Then, the stock was at $37.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, aims, assumptions, or future events or performance may be forward looking statements.

Earlier this month, Google announced it would be building out business information cards along complete with client reviews. Furthermore, the company said that revenue from worldwide markets is expected to gain traction in the coming quarters as it monetizes these regions.

Yelp’s other revenue category previously included transactions revenue. But investors want to know how Yelp is going to combat Google.

For these folks, all that matters is that Yelp is showing itself unable to retain qualified sales personnel. The social network has seriously extended its dominance on mobile devices, as most of its 1.44 billion users hail the website from smartphones and tablets. Historically, Yelp’s operating expenses have been 85% of its overall revenues. During Q2 FY15, active local advertising business accounts grew by 40% year over year to approximately 97,000, driven by global expansion underway and assimilation of Eat24 and SeatMe business, which enhances Yelp’s appeal to users and advertisers alike.

“We expect local advertising will continue to be our primary driver of growth as we work toward our goal of generating one billion dollars of revenue in 2017”, said Rob Krolik, chief financial officer.

This quote says it all. Of course this can be fixed, but Yelp might have to change strategies, invest heavily in new ad products, and/ or cooperate with a player that already enjoys a large scale. Unfortunately, Yelp’s rate of traffic growth slowed down quite a bit in the second quarter. It it no longer good enough to rely on local advertising as its sole source of revenue, investors want to see Yelp innovate or else sell.


Still, it would’ve been nice to sell YELP stock before Tuesday afternoon’s Q2 earnings release. Yelp provides a platform for customers to share their everyday local business experiences, through its particular Message the Company feature and reviews, and participate directly with companies, through videos, tips, photos and reviews.