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Thu, Apr. 30, 11:28 AM
- BofA/Merrill, RBC, Sterne Agee, and Northland have downgraded YELP after the company missed Q1 sales estimates (while beating on EPS) and offered soft Q2/full-year revenue guidance, and several other firms have cut their targets. Shares have tumbled to their lowest levels since mid-2013.
- "[W]e implemented a territory change within our [ad] sales organization at the beginning of January in an effort to increase our reach to more local businesses. But the change had a negative impact on sales productivity," said CFO Rob Krolik on Yelp's Q1 CC (transcript), discussing the company's local ad performance (sales +51% Y/Y to $98.6M). He insists sales productivity has rebounded since the territory change was reversed in early March.
- Krolik adds brand ad revenue (-11% Y/Y to $6.6M) was affected by "industry headwinds related to the shift to programmatic advertising and the industry's desire to have advertising products that are disruptive to the consumer experience," and the Yelp has refused to support "disruptive" ad formats. Other revenue rose 254% to $13.3M, with the Eat24 acquisition contributing $5M.
- Also drawing concern: Yelp's average monthly unique visitors rose only 8% Y/Y to 142M, with a 29% increase in mobile uniques (to 79M) partly offset by a 3% drop in PC uniques (to 80M). International uniques were flat at 31M; Yelp notes Google algorithm changes are still taking a toll.
- Some bright spots: Local ad accounts rose 43% Y/Y to 90.2K, and cumulative reviews rose 36% to 77M. 40% of local ad sales came from ads sold on a cost-per-click (NYSE:CPC) basis, up from 32% in Q4.
- During the Q&A, RBC and MKM both pressed Yelp on its full-year sales guidance, which (though below consensus) implies a pickup in revenue growth from expected Q2 levels. Krolik argued improved sales productivity and a shift towards CPC ads will provide a lift. Cowen asked why Q1 adjusted EBITDA ($16.3M) missed guidance of $19M-$21M; Krolik says lower (high-margin) brand ad sales were to blame.
Feb. 12, 2014, 12:03 PM
- TripAdvisor (TRIP +8.3%) is making new highs after beating Q4 revenue estimates and providing strong guidance on its CC (transcript). The travel reviews leader said it expects 2014 revenue growth to be in the mid-20s range (consensus is at 21.9%), and for EBITDA to grow at a similar clip.
- TripAdvisor expects click-based (CPC) ad sales to show accelerating growth in 2014, with full-year growth in the low-20s range. Display ad sales (CPM-based) are expected to grow at a high-teens rate, and all other businesses (subscriptions, transactions, etc.) are expected to collectively grow in the low-50s range.
- CPC ad sales made up 68% of Q4 revenue, display ads 15%, and all other businesses 17%. North American sales (51% of revenue) rose 22%, EMEA 30%, and Asia-Pac 40%. Latin America was flat.
- Mobile's share of TripAdvisor traffic doubled to 40% in 2013, and app downloads rose nearly 150% to 82M. Travel listings rose 80% to 550K, and business listing subs 38% to 69K.
- Priceline (PCLN +2.5%) and Expedia (EXPE +1.1%), both major TripAdvisor clients, are also trading higher. Expedia took off last week following a Q4 beat. Priceline, which launched an updated Android app this morning, reports on Feb. 20.
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