What happened
Shares of Yelp Inc. (YELP -1.81%) were up 28.7% as of 1:30 p.m. EDT Thursday after the local business review specialist announced stronger-than-expected second-quarter results and increased its full-year guidance.
More specifically on the former, Yelp's revenue grew 11.9% year over year to $234.9 million, while net income increased by a third to $10.7 million, or $0.12 per share. By comparison, Yelp's own guidance called for lower revenue in the range of $230 million to $233 million, and most investors were only expecting earnings of a penny per share.
IMAGE SOURCE: YELP, INC.
So what
Yelp CEO Jeremy Stoppelman credited business owners' positive reception to the now-complete rollout of Yelp's more flexible non-term ad contracts -- a shift that previously left many investors doubting whether last quarter's strength would be sustainable, particularly if newer advertisers testing the platform chose not to stick around.
To that end, Stoppelman insisted that trial conversion and client retention were in line with expectations, noting that Yelp added a company-record 17,000 paying advertising accounts sequentially from last quarter. That left its total paying ad accounts up 31% year over year to 194,000. App unique devices on its platform also grew 15% year over year to 32 million, and advertising revenue growth accelerated to 21%.
Now what
Better yet, Yelp increased the bottom end of its full-year revenue outlook by $9 million, resulting in a new guidance range of $952 million to $967 million. It also boosted its full-year outlook for adjusted EBITDA to be in the range of $186 million to $192 million, up from $179 million to $188 million before.
All things considered, this was exactly what Yelp's skeptics needed to hear, and gives bullish investors every reason to celebrate today.
