YELP Stock Recovers on Impressive Q3 Earnings: What’s Next?

YELP stock

On Friday, YELP stock jumped following the release of the Yelp’s (NYSE:YELP) Q3 earnings. The shares surged 14.50% in today’s trading following a 7.9% dip in yesterday’s session.

Yelp’s Q3 Revenue Beats Analyst Estimates

The company reported revenue of $262.47 million, up from $241.1 million in the third quarter last year, topping analysts’ estimates of $262.25 million. Adjusted earnings per share missed estimates after the company reported earnings of $0.14 per share below Wall Street’s average estimate of $0.19.

This third-quarter report shows a -26.32 earnings surprise compared to the previous quarter. In Q2, the company had expected to report earnings of $0.12 per share but posted $0.16 per share, producing a surprise 33.33% increase. In the past four quarters, Yelp only surpassed average EPS projections twice.

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Jeremy Stoppelman, the CEO and co-founder of Yelp, indicated that they were delighted to have increased adjusted earnings and reaccelerated growth of revenue in the quarter. He added that he expects the company to maintain the growth momentum going into the fourth quarter.

Stoppelman said that the situation is promising compared to a year ago, considering revenue grew double digits, and the margin expanded significantly. The CEO affirmed that the strong business fundamentals exude confidence in the company’s ability to attain its financial targets in the long term.

YELP stock is up 14.55% at $34.67.

Yelp’s Q4 Guidance

Yelp has underperformed this year in the market and has seen its shares drop 6.5% since the beginning of the year.  However, investors may be optimistic that the company will turn things around, especially when looking at its guidance. The current outlook includes the current analyst earnings projections for the upcoming quarter, and the forecast has changed as of late.

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The current consensus estimate is $277.90 million in revenue and EPS of $0.32 for the fourth quarter. Equally, analysts expect whole-year revenue of $1.02 billion and EPS of $0.66. The company indicated that it expects its Q4 revenue to grow between 11% and 13% compared to last year. It expects revenue to be between $270.5 million and $275.4 million.

YELP stock has fallen over 25% over the past year.

Featured image: DepositPhotos © kapustin_igor

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