Yelp Soars on Qype Purchase as Sales Exceed Estimates

Yelp Inc., a U.S. website that lets users review businesses ranging from plumbers to pet shops, surged the most in two months after announcing an acquisition to expand in Europe and reporting sales that topped estimates.

The shares advanced 7.4 percent to $25.77 at the close in New York. Yelp, based in San Francisco-based, has increased 72 percent since its initial public offering in March.

Yelp said third-quarter sales will be about $36.4 million, exceeding its prior forecast and more than analysts’ average $35.7 million estimate, according to data compiled by Bloomberg. The company also said it acquired Qype GmbH, Europe’s biggest local review website, for about $50 million to expand beyond its U.S. base and step up competition with Google Inc. and Facebook Inc. for users and advertisers.

“The Qype deal should help Yelp accelerate its expansion into Europe,” Tom White, an analyst at Macquarie Capital USA Inc., wrote in a research report today.

Third-quarter adjusted earnings before interest, taxes, depreciation and amortization will be about $2.2 million, more than double White’s estimate of $1 million.

Started by Chief Executive Officer Jeremy Stoppelman in 2004, Yelp is working to add mobile features and using a partnership with Apple Inc. to integrate local content into software for the iPhone and iPad devices. Qype, like Yelp, makes money from ads local businesses buy that appear within search results.

“We have built a solid foundation in Europe, and this acquisition should significantly increase our international presence,” Stoppelman said in the statement. “Qype will help Yelp become the de facto choice” for local information searches in Britain and Germany.

Closely held Qype, founded in Hamburg in 2006 and with operations in Germany and the U.K., has about 15 million unique visitors every month in 13 countries, according to the statement. That adds to the 78 million unique visitors Yelp reported in the three months through June.

Yelp will report complete third-quarter financial results and provide a forecast for the current period on Nov. 1.

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