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Yelp Revenue Tops Estimates Amid Growth in Local Advertising

Yelp Inc. (YELP) reported second-quarter revenue that topped analysts’ estimates as more local businesses opted to pay for advertising on its consumer-review website. The shares jumped as much as 12 percent in late trading.

Sales climbed 69 percent to $55 million, the San Francisco-based company said today in a statement, exceeding the $53.3 million average analyst prediction compiled by Bloomberg. The net loss narrowed to $878,000, or 1 cent a share, from a loss of $2 million, or 3 cents, a year earlier. Analysts on average had projected a loss of 4 cents in the recent quarter.

Chief Executive Officer Jeremy Stoppelman is banking on partnerships with companies such as reservation site OpenTable Inc. (OPEN), food-delivery site Eat24 Hours LLC and iPhone maker Apple Inc. (AAPL) to get consumers spending more time on Yelp. Increasing user engagement can help the company attract more advertising from local businesses, which jumped 77 percent to $44.8 million -- or 81 percent of total revenue -- in the second quarter.

“We’re increasingly positive on Yelp’s efforts to close the loop and drive transactions on the site,” Kaizad Gotla, an analyst at JPMorgan Chase & Co. in New York, wrote in a report yesterday. He has a neutral rating on Yelp.

Yelp shares climbed as high as $46.87 in extended trading after the report. They had gained less than 1 percent to $41.80 at the close in New York and have more than doubled so far this year.

Higher Forecast

Third-quarter revenue will be $58 million to $59 million, the company said. That compares with the average analyst projection of $57.4 million, according to data compiled by Bloomberg. Annual sales will be $222 million to $224 million, compared with an average estimate of $219.8 million.

Total reviews on Yelp’s sites, where consumers rate and comment on local businesses such as coffee shops, hair salons, pet shops and plumbers, increased 41 percent in the second quarter to more than 42.5 million, while average monthly unique visitors grew 38 percent from a year earlier to about 108 million, Yelp said.

The company expanded search ads to its mobile application in the fourth quarter and added display ads in the first three months of 2013. About 59 percent of Yelp searches originated on mobile, including its app and through the Web on wireless devices, in the second quarter, the company said.

To contact the reporter on this story: Danielle Kucera in San Francisco at dkucera6@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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