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Yelp stock price surges on GrubHub deal, strong earnings

Yelp fights back against fake reviews 04:54

By Steve Symington

Shares of Yelp, Inc. (YELP) were up 26 percent Friday afternoon, after the local business review specialist announced strong second-quarter 2017 results and the sale of its Eat24 business to GrubHub (GRUB).

Quarterly revenue climbed 20 percent year over year to $208.9 million -- well above Yelp's guidance provided last quarter for $202 million to $206 million -- helped by strong growth in both app usage and advertiser accounts. On the bottom line, that translated to adjusted net income of $21.6 million, or $0.25 per diluted share, which was also above investors' expectations for a loss of $0.03 per share and up from earnings of $12.5 million, or $0.16 per share in the same year-ago period.

Yelp bathroom feature 00:20

Yelp also announced that its board of directors has approved the repurchase of up to $200 million in common stock.

In addition, Yelp announced a long-term partnership with online food ordering company GrubHub. Through their agreement, Grubhub will acquire Yelp's Eat24 subsidiary for $287.5 million, and Yelp will integrate online ordering from all Grubhub restaurants on its own local goods and services platform.

That's certainly not a bad deal, considering Yelp acquired Eat24 for just $134 million in early 2015. And the partnership should help bolster the results of both companies over the long term.

In the meantime, Yelp expects third-quarter 2017 revenue in the range of $217 million to $222 million -- roughly in line with expectations -- and increased the bottom end of its full-year revenue guidance range by $5 million, resulting in a new range of $855 million to $865 million.

All things considered, this was a great quarter from Yelp made better by its exciting deal with GrubHub. And it's no surprise to see shares popping on Friday in response.

This article originally appeared on Motley Fool.

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