Despite Yelp Inc.’s (NYSE : YELP) revenue in the fiscal fourth quarter jumped 65 percent, shares fell almost 3 percent in aftermarket trading on Wednesday as online directory services provider’s marketing costs leaped 59 percent leading to higher-than-expected losses.
In the fourth quarter, Yelp reported net loss $5.3 million, or 8 cents a share compared with net loss of $9.1 million, or 56 cents a share, in the year earlier quarter.
Revenue during the period stood at $41.2 million.
Analysts polled by Thomson Reuters, on average, were expecting net loss of 5 cents a share on revenue of $40 million.
One of the key indicators to judge social networking site’s success in today’s competitive landscape is to find out how much traction it has gained in mobile computing business or how much revenue it generates through mobile ads. This is because; worldwide, more and more users now prefer smartphones and tablets over PC’s and laptops. So lower the visibility in mobile computing, lesser will be the number of advertisers willing to advertise.
According to Yelp’s Chief Executive, Jeremy Stoppelman, the Company is on right track when it comes to mobile computing. While speaking to CNBC, Stoppelman said, “Twenty-five percent of our ads are now showing on mobile. It represents the same type of ads you see on the website. What we have is just more inventory. And on the mobile device it can be location-targeted.”
Moreover, Yelp’s monthly unique visitors rose 31 percent in fiscal 2012 to 86 million while users’ reviews climbed 45 percent YOY to 36 million.
However, one cause for concern is the growing expenses. During the quarter, Yelp’s marketing expenses climbed to $25.5 million from $16 million, in the same period of last year. The Company said that marketing costs increased as it tried to aggressively expand its reach in Britain and Germany.
For the fiscal first quarter, Yelp is expecting net revenue to be in the range of $44.0 million to $44.5 million, which would represent a growth of 62% YOY.
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