YELP: We’re NOT Facebook!
After one social media disappointment after another, investors finally have a friend that is cool enough to hang out with in public. Late Wednesday, Yelp (NYSE:YELP) delivered quarterly financial results that impressed the market and gave a huge boost to shares.
The company, which aims to connect people with great local businesses by providing more than 30 million written local reviews, announced that revenue for the second quarter jumped 67 percent to $32.7 million, beating estimates of $30.5 million. Yelp reported a net loss of 3 cents per share, but analysts expected a loss of 6 cents per share.The results are a sharp contrast from other social names such as Facebook (NASDAQ:FB) and Zynga (NASDAQ:ZNGA), which both disappointed Wall Street with recent earnings and caused a dramatic sell-off in shares.
Yelp eased mobile worries that plague other social media companies by explaining that mobile devices help users generate more content, rather than less. “Mobile changes the consumer engagement model dramatically and we have by far the best app in the market for finding local businesses,” explained Jeremy Stoppelman, chief executive officer. “With the phone in hand our users can contribute more content faster. We’ve released new features that make it easier for users to contribute content to Yelp from a mobile device. These appear to have had the desired effect as we have seen a significant increase across the number of mobile contribution categories including photos, tips, and business listing updates.” On average, Yelp’s monthly mobile app usage in the second quarter increased 70 percent from last year.
Unlike Facebook, which offered little guidance, Yelp was not shy about its expected future success. The company expects revenue for the current quarter to total $34.5 million to $35.5 million, ahead of the $34.4 million consensus estimate. For the full year, it expects revenue to equal $135 million to $136 million, better than the $128 million to $132 million estimate. Stoppelman also declared, “We’ve created a site that is rapidly becoming the de facto local search engine for connecting consumers to create local businesses.”
Although Yelp does face competition from Facebook, Google (NASDAQ:GOOG) and Yahoo (NASDAQ:YHOO), it expects to fuel more growth through partnerships with Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT). Yelp’s services are expected to be utilized with the new maps feature on Apple’s upcoming mobile operating system, while users on Bing can currently find Yelp business reviews integrated in the search results.
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