NEW YORK (
(YELP - Get Report)
shrugged off the looming challenge of
Graph Search in its first-quarter results, sending shares soaring on Thursday.
The social networking and recommendations site posted robust revenue growth and better-than-expected guidance before market open, much to the delight of Wall Street. Yelp''s shares were up 23.75% to $31.31 in mid-morning trading
For the three months ended in March, Yelp's revenue rose 68% year over year to $46.1 million, ahead of the $44.5 million expected by Wall Street. In the press release, CEO Jeremy Stoppelman said, "We saw record quarterly increases in absolute numbers in both the number of businesses that claimed their Yelp page and the increase in the number of paying local advertisers."
Yelp's active local business accounts climbed 63% compared to the prior year's quarter, reaching approximately 45,000.
The numbers prompted a flurry of price target raises from analysts. "We continue to like the story, and believe Yelp will be a leading player in a large local opp.," Jefferies noted in a research report. The investment bank maintains a "buy" on shares, and raised its price target to $34.
"Yelp was able to generate strong underlying operating metrics for both price and volume to produce the Local Advertising revenue outperformance," wrote Stephen Ju, an analyst at Credit Suisse, in a note released on Thursday. Ju noted that Yelp's local ad revenue grew 115% year over year in the first quarter, compared to an 87% year-over-year hike in the prior quarter.
The San Francisco-based firm lost 8 cents a share, deeper than the 6 cents analysts were looking for.
There's been some concern in the market place that Yelp was going to be hurt by Facebook's
, but so far that's not the case. The company guided second-quarter and full-year higher than what Wall Street was expecting.
Facebook, which missed analysts'
estimate on Thursday, launched Graph Search earlier this in an attempt to deliver more effective local data to its 1.1 billion users.
For the second-quarter, Yelp expects revenue to be between $52.5 million and $53.5 million. Analysts were expecting $50 million in sales for the quarter. For the fiscal year 2013, the company believes revenue will be between $216 million and $216 million, above the $211.8 million analysts are looking for.
Yelp's guidance could be the result of mobile ads, which were launched late last year, says
analyst Jason Helfstein. The analyst also noted that Yelp's mobile app was used on 10M devices a month during the first quarter, up from 9 million in the prior quarter.
Some 36% of local ads were shown on mobile devices during the first quarter.
Written by Chris Ciaccia in New York