Yelp explodes 20% out of the gate after crushing Wall Street's expectations

After reporting a big beat on its quarterly earnings, shares of Yelp exploded 20% out of the gate on Friday morning.

Wall Street analysts were expecting the business review site to post a loss of 16 cents per share. Instead, Yelp reported 8 cents of earnings per share, or EPS.

That’s a huge beat, though it’s still less than the $0.10 per share Yelp posted over the same period in 2015.

Yelp also posted a more modest win in revenue, reporting $158.6 million versus analyst expectations of $156 million. The company also raised its guidance targets for the rest of the year beyond Wall Street expectations.

At the time of writing, the stock had settled out to around 19% up from closing last night, around $25.52 per share.

Intriguingly, Barron’s reports that Wall Street is attributing the win to Yelp’s investments in boosting the productivity of its local ad sales units, which was a standout part of the business this quarter.

But Yelp CEO Jeremy Stoppelman downplayed that aspect on the company’s earnings call, saying that “sales team performance in any quarter is actually a relatively small percentage of the overall quarter performance.”

No matter the cause, it’s the source of some much-needed good news for Yelp, which has had a rough 2016: So far this year, Yelp has been at the center of two controversies around terminated employees. And in February 2016, a systems glitch meant that Yelp’s disappointing earnings leaked early, leading to a massive drop in value.

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