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Yelp Earnings Preview: What Wall Street Is Saying

NEW YORK (TheStreet) -- Yelp's (YELP - Get Report) focus on its ability to serve as an advertising platform for small businesses and improve its mobile traffic have optimistic investors waiting on the company's second quarter earnings, as analysts project strong growth in both areas.

Analyst at Thomson Reuters expect Yelp to narrow losses to 3 cents a share on $86.3 million revenue for the second quarter, up from losses of 4 cents a share on $76.4 million revenue reported in its first quarter ended Mar. 31.

This comes following a first-quarter which saw the San Francisco-based Yelp lose 4 cents a share on $76.4 million in revenue, as cumulative reviews grew 46% year over year to approximately 57 million.

The company announced an expansion of its application programming interface (API) in July, increasing the application's call limit to 25,000 per day from 100 per day in attempts to increase mobile traffic.

By expanding its API call limit, the San Francisco, Calif.-based Yelp can allow more third-party applications and users from those appls to access Yelp's local database. The online guide's database includes over 57 million reviews reported by Yelp in its first quarter, photos, ratings, and business listing information.

Analysts project that this move by the company will help the number of Yelp mobile subscribers grow because of increased accessibility. This proves important for the company with Yelp reporting last quarter an average of 61 million unique monthly visitors through a mobile device and 60% of searches on Yelp coming from mobile devices.

The leading online local guide's database has attracted big tech names, being used by Apple (AAPL) Maps, Yahoo! (YHOO) Search and Microsoft (MSFT) Bing Local Search.

As local online advertising opportunities for the company expand, analysts estimate strong ratings for Yelp. Local advertising revenue is estimated to reach almost $73 million up 11.9% from the first quarter and 63% from the prior year, according to Deutsche Bank. 

The company added Argentina to its online guide in May, as CEO Jeremy Stoppelman foreshadowed in the company's first quarter earnings report in April of this year. Adding Argentina makes 27 countries total in Yelp's online guide.

"Looking to the rest of the year, we will continue to support and engage our community of Yelpers, expand geographically and create innovative products that close the loop with business owners," said Stoppelman.

The company also announced the launch of a messaging app to its platform in June to encourage engagement between users and local business owners.

Yelp is expected to generate $366 million in fiscal 2014 according to analysts at Thomson Reuters. The company's guidance for net revenue was in line with analysts estimates for 2014 with Yelp expecting full year net revenue to be in the range of $363 million to $367 million, representing growth of approximately 57% compared to the full year of 2013.


Here's what Wall Street will be watching when Yelp reports earnings after Wednesday's closing bell:

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