What to expect from Yelp's (YELP) Q3 earnings

What happened

Yelp is scheduled to report third-quarter earnings this Thursday after the market closes. Analysts expect revenue to fall 2% year over year, compared with 4.4% growth in the same quarter last year. Last quarter, Yelp reported revenue of $375.5 million, up 1.4% year over year, and beat revenue expectations.

Confirmed

Global impact / market context

The expected revenue decline points to weaker sales growth at Yelp, which could affect its ability to fund operations and future spending from incoming cash. If results fall short of forecasts, investors may reassess expected revenue and profit per sale; stronger results could ease that concern.

Analyst inference

Analysts have generally reconfirmed their estimates during the past 30 days, suggesting expectations for Yelp have changed little. For Yelp, a forecast revenue decline would contrast with last year’s growth, making reported revenue and the company’s outlook important inputs to investors’ assessments.

Analyst inference

What to watch

1. Compare reported third-quarter revenue with the expected 2% year-over-year decline; a smaller fall or renewed growth would indicate sales held up better than forecast. Analyst inference
2. Check whether Yelp updates its full-year EBITDA guidance, a forecast of earnings before interest, taxes, depreciation, and amortization, and whether it meets analysts’ expectations. Analyst inference
3. Watch management’s explanation of demand and spending trends for signs that could clarify whether weaker expected revenue reflects a temporary slowdown or a longer-lasting pressure. Analyst inference

Evidence

• stockstory.org