In addition, the y/y change in commissions expense disclosed in company filings continued a downward trend to negative territory. Over the course of 2016, the number has gone from +$5.7mn in 1Q16, to +$2.4mn in 2Q16, to +$1.4mn in 3Q16, to down $1.7mn in 4Q16.
We also consider comScore mobile data, which indicated that US monthly active users were up 2% y/y (2-months data) while desktop monthly active users were down 14% y/y. This reflects a moderate deceleration in mobile from 4Q (+4%) and slightly lower declines in desktop (4Q at -16%). Total QTD US minutes are down 6% y/y for mobile (vs +4% in 4Q), though App minutes were flat, and desktop was up 6% y/y (vs +1% in 4Q). The somewhat weaker mobile minutes trend is notable, particularly the lack of growth in
Estimates vs Consensus
Our revenue and EBITDA estimates are slightly above consensus for both 1Q17 and 2Q17, as well as for 2017 and 2018. We expect local ad revenue to grow 28% y/y in 1Q (vs 36% in 4Q) and transaction revenue to grow 17.5% (vs 19% in 4Q). Our 2017 estimates are near the high end of management’s 2017 outlook, and we would expect any upside potential to likely surface in the latter half of the year.
Table 31: Yelp Estimate Summary
1Q17 2017 2017 2018 Revenue BofAML est. $201 $218 $895 $1,082 Growth Y/Y% 26% 26% 26% 21% Street $198 $215 $889 $1,068 BofAML vs. Street Above Above Above Above EBITDA BofAML est. $31 $40 $166 $221 Street $27 $37 $161 $217 BofAML vs. Street Above Above Above Above EPS BofAML est. $0.18 $0.24 $0.99 $1.28 Street $0.16 $0.25 $1.04 $1.45 BofAML vs. Street Above Below Below Below
Source: BofA Merrill Lynch Global Research, Bloomberg, as of 4/4/2017
We are more constructive on the stock given more negative sentiment and recent sell- off, but maintain our Neutral rating given the decelerating sales leading indicator metrics and tougher revenue comps. Our $43 price objective is based on 14x 2018E EV/EBITDA, slightly above online media comps, which we believe is warranted given the higher margin potential in the model. We believe our multiple balances premium growth vs peers with medium-term concerns on competition and limited GAAP profitability. We believe the slight premium valuation is sustainable if the company can continue to deliver 20%+ y/y topline growth, which would be above the advertising industry.
Bankof America
Merrill Lynch Internet/e-Commerce | 06 April2017 47
HOUSE_OVERSIGHT_014933