What happened

Yelp (YELP 0.29%) investors gained ground on the market on Friday. The stock was up 9% as of 11:45 a.m. EDT even as the S&P 500 ticked slightly higher, according to data provided by S&P Global Market Intelligence.

The rally put the local business shopping platform's stock up sharply for the year, with gains over 20% compared to the market's 18% increase. The boost was powered by a surprisingly strong earnings report.

A woman checking her phone while shopping at a mall.

Image source: Getty Images.

So what

Yelp's revenue rose 52% in the quarter that ended in late June as a fast reopening around the U.S. drove higher demand for its advertising services. Restaurants in particular saw a sharp spike compared to a year earlier, when many in-person locations were closed due to COVID-19 social distancing efforts.

Management had been predicting a slightly lower Q2 result, but it was pleasantly surprised. "Our strong second quarter results give us the confidence to raise our full-year outlook," CFO David Schwarzbach said in a press release.

Now what

Yelp is now targeting just over $1 billion of revenue in 2021, along with between $200 million and $220 million of adjusted earnings (EBITDA). That sales forecast is just slightly higher than management's early May prediction, while the profit goal is significantly higher. "Yelp is a stronger and more efficient business than it has ever been," executives said in a letter to shareholders.

That improving efficiency, plus the lack of any hint of an impending growth slowdown, has investors feeling more optimistic about Yelp's stock today.