Yelp Inc. YELPis set to report first-quarter 2018 results on May 10. The company beat the Zack Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 576.3%.
In the last reported quarter, the company reported non-GAAP earnings of 19 cents per share, which declined 29.
Revenues increased 12% year over year to $218.2 million, which surpassed the Zacks Consensus Estimate of $215 million.
For the first quarter of 2018, Yelp expects revenues between $218 million and $221 million.
Let's see how things are shaping up for this announcement.
Factors at Play
Advertising is the primary source of revenues for Yelp. In the last reported quarter, ad revenues, which accounted for 95.5% of total revenues, increased 18.1% from the year-ago quarter to $208.4 million. This was driven by the fastest growing self-serve channel, followed by national and local. Paying advertiser accounts grew 7600 sequentially to reach 163K and increased 21% year over year.
Moreover, Yelp is benefiting from its partnership with GrubHub Inc. GRUB. Higher-than-expected revenue per order from Eat24, which was divested to Grubhub in October 2017, drove results in the last reported quarter.
The collaboration provides users with access to a significant number of restaurants available for food ordering on the platform, which is expected to boost transaction revenues.
Further, expansion in customer base of Yelp Reservations, Nowait and Yelp Wi-Fi marketing is a positive. Increasing adoption of Request to Quote is expected to improve advertising revenues in the home and local category.
Moreover, accelerating consumer traffic across app and mobile is a positive for the company. App unique devices grew 20% year over year to approximately 29 million on a monthly average basis in the December quarter. Significant improvement in cumulative reviews is also encouraging.
However, increase in operating expenses driven by an expected increase in headcount, product development and sales & marketing expenses will remain an overhang on the bottom line.