After A Strong Start To 2018, What To Expect From Yelp Through The Year?

Yelp (NYSE:YELP) announced its first quarter results on May 10, reporting a 13% increase in net revenues to $223 million. Advertising revenues increased 20% on a y-o-y basis to $214 million while other revenues combined fell over 50% to $9.2 million. In recent quarters, Yelp has reported steady growth in advertising revenues driven by a corresponding increase in paying advertising accounts. This trend continued through the March quarter with a 27% annual increase in paying accounts to 177,000, up from 139,000 in the prior year period. Additionally, claimed business locations – or businesses that are listed for free on Yelp – were also up to 4,439 from 3,559 in the March quarter of last year.

We expect this trend to continue through the year. As Yelp’s advertiser base increases and mobile engagement continues to improve, we expect it to translate to ad revenue growth. We forecast ad revenues to increase 13-14% to around $870 million for the year. On the other hand, transaction services and other revenues business are expected to continue to decline on a y-o-y basis. In addition to net revenue growth, we expect Yelp’s adjusted EBITDA margin to expand by around 150 basis points to 20% for the year. We have created an interactive dashboard analysis that summarizes our expectation for Yelp’s full year results. You can modify the revenues from each business segment and margin expectations to see how the EPS would be affected for the year.

See our complete analysis for Yelp

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