Yelp, the company that lets people rate local businesses, announced on Wednesday that it suffered another quarterly loss on sharply higher costs due to the company trying to revamp its operations.
But according to the Wall Street Journal, despite Yelp Inc.'s quarterly loss, the company's revenue still jumped 40 percent which toppled their expectations. In addition, it was also bolstered by a 36 percent increase in revenue from local advertising.
Yelp's stock, which lost almost 60 percent of its value this year through Wednesday's closing, rose by 3.3 percent to $22.80 in late trading.
Reports said that the bulk cost in the latest period was tied to a national advertising campaign that was launched during the quarter and higher-than-projected hiring of local sales representatives.
Chief financial officer Robert J. Krolik also told analysts, "We are investing in our future, as we believe our marketing campaign along with the continued growth of our sales team, will benefit our business over the long term."
In a related report by Tech Crunch, Yelp is quickly growing shop and investors are currently valuing it more on a net cash basis than on a full-cost basis. Specifically, when Yelp reports profits, its preferred metrics discount non-cash costs such as share-based compensation.
Also, on a year-over-year basis, the company grew its revenue by roughly 40 percent compared to its year ago quarter. The crowd-source review business also made an adjusted profit of $2.7 million in the quarter, discounting certain non-cast costs. But using normal accounting techniques, it lost $8.1 million in its third quarter or $0.11 per share.
24/7 Wall Street also reported that despite the loss, Yelp's earnings are still good enough compared to the past. It's fourth quarter revenue is expected to be in the range of $149.5 million to $154.million, meaning it would be a 38 percent growth at the midpoint versus a year earlier, but according to a consensus by Reuters, it's already at $152.million.
And according to Yelp CEO Jeremy Stoppelman, "We executed well this quarter. Consumers are increasingly discovering our app, which represents approximately 70% of engagement across our entire ecosystem."
He added, "We believe that our highly engaging app, combined with our native local advertising products that generate high ROI for our customers, strongly positions us to capture the large market opportunity."
Moreover, the company also demonstrated its capability to derive revenue from sources that are not advertising-based. According to its report, "Transactions revenue totaled $12.0 million, compared to $1.3 million in the third quarter of 2014, primarily due to the acquisition of Eat24 in the first quarter of 2015."
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