Yelp, the local online business and restaurant guide that has become the Web's go-to resource for reviews of local businesses since launching in 2004, announced its 2013 third quarter earnings after the market closed this afternoon. For the second straight quarter, the company beat expectations, with revenue coming in at $61.2 million in the third quarter and a per-share loss of $0.04.
Considering Yelp posted a greater-than-expected loss of $2.3 million, it wasn't a categorical victory, but it was a win nonetheless, with revenue increasing 80 percent from the same period in 2012, while cumulative reviews grew 42 percent year-over-year to over 47.3 million, average unique visitors grew 41 percent year-over-year and local business accounts grew 61 percent to 57,000.
Wall Street expected Yelp to announce a loss of $0.01 per share on revenue of $59.40 million for the quarter. Yelp passed muster in revenues, but saw an uptick in its net losses in the third quarter of $2.3 million, or $0.04 per share, compared to a net loss of $2.0 million in the third quarter of 2012.
Thanks to a fairly consistent performance in recent quarters and solid progress from its local ads business, Yelp's stock price has increased 180 percent over the last six months. This is a strong signal that investor confidence has indeed returned for Yelp, even if many believe that the market is a little too bullish on the company at the moment.
The company's stock price had been hovering around $68 per share on Tuesday, but is down slightly in after hours trading.
Reflecting on his company's third quarter performance, Yelp CEO Jeremy Stoppelman highlighted the company's renewed focus on its mobile experience as a driving source of growth, along with the launch of the Yelp Platform in July, which allows local businesses to interact directly with customers via its portal. The company also saw continuing growth in its unique user base over the last quarter, which now stands at 117 million.
Stoppelman said in the company's statement today that Yelp …
Saw another quarter of strong momentum thanks to the high-quality, authentic content contributed by Yelpers around the world … Our focus on connecting consumers with great local businesses continues to drive our success. In the third quarter, we improved the user experience by adding the ability to write and post reviews from mobile and launched new features such as the customer activity feed for business owners. Looking to the rest of the year and beyond, we are well positioned to capture the large local opportunity ahead of us through our innovation around mobile, geographic expansion and closing the loop with local businesses.
Other than that, after adjustments, Yelp's EBTIDA came in at $8.1 million for the third quarter, compared to $2.2 million for same quarter in 2012. The company showed 46 percent of its advertisements on mobile devices in Q3, which was an increase from the prior quarter, but will need to be stronger going forward, considering companies in its class, like Facebook, have seen significant spikes in mobile revenue.
Comparatively, Yelp's 46 percent is only a 6 percent improvement on its second-quarter figure, which is important considering the company doesn't break out mobile revenue as many other companies do, instead limiting its report to mobile advertising share. Nonetheless, it's mobile ad business has seen consistent growth of late, and the company has been taking steps to improve its mobile experience, like finally giving users the ability to post reviews from its apps, for example.
Yelp's cash position grew slightly over the last three months, increasing by about $5 million to $101 million in cash and equivalents in Q3. Its acquisition of SeatMe in early July for $12.7 million was announced at the time, but recorded as part of this quarter's financial statements.
All in all, Yelp booked a fairly solid performance in the third quarter, just beating expectations, keeping firm hold of its cash, while growing traffic and moving up and to the left in key performance metrics. The company has been expanding aggressively overseas, which from the reports today, appears to be proceeding as expected, without putting too much of a squeeze on capital.
During the third quarter, Yelp took its first steps into Latin America, for example, beginning with Brazil. Yelp will likely look to Brazil to act as a gateway to the region, helping it to secure a foothold in Latin America. Looking forward, the company will likely begin accelerating its international expansion over the next six months. While this could be a drain on profits in the short-term, Yelp could see significant gains in local ad revenues in the long run as it launches in new markets.
Yelp has been turning in solid quarters of late, but it must be said that, when compared to its generation of tech companies (Facebook, Twitter and LinkedIn among them), Yelp still has some catching up to do.
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