Why Yelp Inc. Stock Popped Today

By Markets Fool.com

Image source: Yelp, Inc.

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What:Shares ofYelp Inc. (NYSE: YELP) were up 13.9% as of 11 a.m. Wednesday after thelocal-business review specialist released stronger-than-expected second-quarter 2016 results.

So what:Quarterly revenue jumped 30% year over year, to $173.4 million, including an accelerated 41% increase in local revenue, to $151.9 million; 37% growth in transactions revenue, to $15.5 million; and a 6% decline in other-segment revenue, to $6 million. Based on generally accepted accounting principles (GAAP), that translated to net income of $449,000, or a penny per share, up from a GAAP net loss of $0.02 per share in last year's second quarter.

On an adjusted (non-GAAP) basis, which adds perspective by excluding items like stock-based compensation, Yelp's net income grew 33.8% year over year, to $12.5 million, or $0.16 per share. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) also grew 23.8% year over year, to $28.1 million.

For perspective, Yelp's guidance provided in May called for lower revenue of $167 million to $171 million, and lower adjusted EBITDA in the range of $21 million to $25 million.

Now what:Looking forward to the second half, Yelp CEO Jeremy Stoppelman noted the company will work hard to execute against its three strategic priorities of continuing to grow its core local ad business, boosting awareness of Yelp's platform, and continuing to drive transactions revenue higher.

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Specifically, Yelp anticipates revenue in the third quarter of $180 million to $184 million, good for year-over-year growth of 27% at the midpoint, and adjusted EBITDA of $24 million to $28 million. Analysts, for their part, were looking for Q3 revenue slightly below the bottom end of Yelp's guidance range.

Finally, for the full year 2016, Yelp now expects revenue in the range of $700 million to $708 million, or growth of 28% over 2015 at the midpoint, with adjusted EBITDA for the year in the range of $100 million to $108 million. Both ranges represent increases from Yelp's previous guidance, which called for 2016 revenue of $690 million to $702 million, and adjusted EBTIDA of $93 million to $105 million.

In the end, this was a cut-and-dried beat and raise from Yelp as it continues to scale its business and chase sustained profitability. So it's no surprise to see Yelp stock trading at a fresh 52-week high as I write.

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Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Yelp. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.