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Yelp Plunges After Out-Early Report Shows Key Metrics Slowed

Online consumer-review website Yelp ( YELP ) sank on Monday, in a tumultuous market, after posting Q4 earnings that showed a decline in the rate of growth of cumulative review and local ad accounts. Also, its CFO is on his way out. In addition to forecasting full-year 2016 sales growth of about 26% year over year at the midpoint of guidance, Yelp guided adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $90 million to $105 million, up from $69.1 million in 2015. Analysts polled by Thomson Reuters had modeled 2016 adjusted EBITDA of $106.82 million. Yelp stock was down 12% in early afternoon trading in the stock market today , near 16. Yelp stock is down 63% from where it was trading last year and is down nearly 83% from its all-time high of 101.75 brushed in early March 2014. The company’s earnings were released several hours in advance of its scheduled time on Monday due to “a vendor error by PR Newswire.” A conference call with analysts is scheduled for after the close. Growth in three key metrics slowed. Cumulative reviews grew 34% from a year earlier to 95 million, after growing 35% in Q3. Local advertising accounts grew 32% to 111,00 vs. 37% in Q3.  App unique devices, or the number of unique mobile devices accessing Yelp’s apps, grew 38% to 20 million vs. 39% in Q3. Yelp claims that app users “were more than 10 times as engaged as website users based on number of pages viewed.” Diners seated via reservation platform SeatMe rose 120% year over year. Yelp is facing competition in online reviews from multiple fronts — including from Facebook ( FB ), Apple ( AAPL ), Amazon.com ( AMZN ) and Alphabet ( GOOGL )-owned Google — as other websites build or buy their own databases of user-generated reviews to attract viewers. Yelp also competes with online travel agency TripAdvisor ( TRIP ) and Priceline Group ( PCLN ), the world’s largest Web travel-service company. Thomson Reuters noted Yelp’s Q4 EBITDA as coming in light of the consensus analyst estimate: $17.54 million vs. the $21.9 million that analysts had anticipated. Yelp posted Q4 EPS ex items of 11 cents, down 40% year over year. Yelp reported that revenue rose 40% year over year to $153.7 million. That exceeded the $152.35 million that analysts polled by Thomson Reuters had wanted to see. “We are pleased with the progress we made on the key initiatives we set at the beginning of 2015,” said Yelp CEO Jeremy Stoppelman in a statement. “We have evolved to a mobile-centric company and have successfully completed our transition to a performance-based advertising business. In 2016, our priorities are to continue to build our core local advertising business, further increase engagement and awareness and grow transactions. With our rich, relevant review content and highly engaged consumer traffic, we are well-positioned to capture the enormous opportunity ahead of us.” Yelp guided Q1 revenue of $154 million to $157 million, up 31% year over year at the midpoint. Analysts have been expecting $154.4 million. The company announced that its chief financial officer, Rob Krolik, will be stepping down “in the coming months.” The company said it will start looking for a new CFO immediately. Yelp stock opened Monday at 17.08, down 5.6% from Friday’s close. Shares spiked briefly to 18.84 around the time of the midsession earnings release, then quickly dropped to the vicinity of 16. Yelp, LinkedIn ( LNKD ) and others “are trading lower due to Facebook and Google’s competitiveness,” said Chilton Capital Management economist Samuel Rines, in an email to IBD.    

Will Apple Ad-Blocking, China Expansion Worries Curb Criteo?

How ad tech firm Criteo ( CRTO ) fares in Wall Street’s eyes after reporting Q4 earnings on Wednesday morning hinges on the company’s outlook for 2016 after the Paris-based firm transitions to reporting in U.S. dollars, an analyst says. “The key issue into earnings is the 2016 guidance,” wrote Cowen and Co. analyst John Blackledge in a research note on Monday. He said Paris-based Criteo will cease reporting in euros after Q4. The company is transitioning to a U.S. domestic issuer and will be adhering to GAAP reporting in U.S. dollars. Blackledge said he is looking for 2016 revenue guidance ex-TAC at 20-25% year over year, assuming a “5% foreign exchange headwind.” For Q4, he also expects Criteo’s customer additions to rise a “strong” 10% year over year to 10,000. Criteo embeds browser cookies — tiny text files that let websites recognize users and their preferences when they return to a site — for about half of the 100 largest retail and travel websites in the U.S. Criteo gets paid for serving ads only if a user clicks on them and collects a bigger cut if the user goes on to buy a product from or otherwise engage with that advertiser. Wall Street is also keen to get an update on how an  Apple ( AAPL )‘s decision to allow browser ad blocking on iPhones for the first time is impacting Criteo, said Blackledge. Apple began letting users install apps that prevent ads from appearing in its Safari mobile browser last year. Apple’s action is seen as a potential blow to Criteo. which gets paid for serving ads only if a user clicks on them, and it collects a bigger cut if the user goes on to buy a product from or otherwise engage with that advertiser. Analysts have said reducing the ad supply could impact Criteo’s growth. However, Jefferies analyst Brian Pitz wrote in a note on Oct. 2 that he doubted “the enabling of ad blockers for Apple iOS 9 will meaningfully impact” Criteo, which “has stated that a majority of their mobile revenue is driven through Alphabet ( GOOGL )-owned Google Android products rather than Apple.” Criteo is “creating one of the largest cross-device advertising mousetraps, which will complement advertisers’ ability to measure performance outside of Facebook ( FB ) and Google,” said another analyst, RBC Capital Markets’ Rohit Kulkarni, in a November research note. Another major point of interest for investors this week is Criteo’s strategy in China and whether Alibaba Group ( BABA ) emerges as a major client in 2016. Blackledge said he also wants an update on how the company is faring with the mobile Dynamic Product Ad inventory on Facebook as well as what new search products may be ahead. In Q3, Criteo posted revenue minus traffic acquisition costs — what it must pay other websites to carry ads — of 120.3 million euros, about $134 million at current exchange rates, up 55% year over year in local currency. That beat the 117.9 million euros analysts polled by Thomson Reuters had been expecting. For Q4, the company guided revenue minus traffic acquisition costs of between 134 million euros and 139 million euros, up 39% to 44% year over year in local currency, equal to about $153 million at the midpoint at current exchange rates. That Q4 revenue guidance was short of the 141.63 million euros that analysts had wanted to see. Analysts polled by Thomson Reuters are expecting Criteo to report Q4 revenue minus TAC — traffic acquisition costs, or what the company pays other sites to carry its ads — of 138.2 million euros, up 43% year over year in euros. Analysts are modeling Q4 EPS ex items of 0.40 euros, up 8% year over year in euros. Criteo stock was down 8% in midday trading in the stock market today , near 25.50. Criteo stock is 35% below where it was trading this time last year and is off 58% from its all-time high of 60.95 touched in early March 2014.

Twitter Advertising Growth, User Numbers, Under Pressure In Q4?

When Twitter ( TWTR ) reports earnings on Wednesday, analysts will be looking to see if the social media firm known for its global reach has managed to boost its user numbers. During the past year, Twitter has brought in a new CEO, made numerous other executive suite changes, acquired new companies and added new services. Still, its user numbers are expected to remain stagnant in Q4, and Twitter remains under fire from Wall Street. Twitter stock has remained below its 2013  IPO price of 26 since November as analysts worry about the impact that sluggish user growth will have on Twitter’s profitability, as the microblog’s user base could affect its ultimate ability to charge for ads. “We believe positive ad pricing trends drove Q4 revenue towards the high end of guidance, but user growth likely was stagnant,” wrote Wedbush analyst Michael Pachter on Friday in an industry research note. On Friday, Twitter stock tumbled to close at near a record low after getting a price target cut from Wedbush. The investment bank predicts that Twitter won’t show meaningful user growth when it reports Q4 earnings, because the service remains too hard for the average user to figure out, compared to other social media. Monthly active users of the service — excluding SMS Fast Followers who can get tweets on their phones without being registered users — rose by just 5 million to 307 million from Q1 to Q3, Pachter wrote. He doesn’t appear to have high hopes for Moments, the service that Twitter launched last fall to showcase hot news topics and draw more non-registered users to the site. “We do not think that Moments drove a meaningful increase in users, as much of the content remains outdated or irrelevant,” said Pachter. Attrition of high-level staff is also a concern. In late January, Pachter said, Twitter CEO Jack Dorsey announced that the SVP of Engineering, SVP of Product, VP of Global Media and VP of Human Resources had all “chosen to leave,” with the GM of video service Vine also departing. “We believe that had Moments been an early success, the executives would not have left so soon, voluntarily or otherwise,” Pachter said. He said that since Facebook ( FB ) reported that its average price per ad was up 21% year over year in Q4 — with the increase driven in part by the shift to mobile — “positive ad pricing trends drove Q4 revenue towards the high-end of guidance” for Twitter, too. Wedbush cut its price target on Twitter stock to 20 from 30, and Pachter maintains a neutral rating on Twitter stock. Advertising, which makes up 90% of Twitter’s total revenues, will “see continued deceleration over time,” wrote RBC Capital Markets analyst Mark Mahaney in a report on Friday. “Our concern for some time has been that Twitter’s lack of real-time commercial intent (a la Alphabet ( GOOGL )-owned Google) or detailed, authentic profiles (a la Facebook) will eventually limit Twitter’s growth potential.” Mahaney said that he expects Twitter to generate $2.02 for every monthly active user in Q4 vs. Facebook’s $3.59, compared with $1.60 and $2.83 in Q3. Analysts polled by Thomson Reuters are modeling Twitter to post revenue of $709.9 million, up 48% year over year. The consensus opinion is that Twitter’s EPS ex items will remain flat year over year at 12 cents. For Q1, analysts polled by Thomson Reuters expect Twitter to see revenue rise 44% to $629.3 million and post EPS ex items of 8 cents, up 14% year over year. In late January, Cantor Fitzgerald analyst Youssef Squali said that Twitter’s muted stock price might prompt a buyout of the social media company. “Twitter’s current valuation, unique offering and sizable user base makes it a strategic asset for a number of potential buyers, be they technology or media companies,” wrote Squali, who maintained a buy rating on Twitter stock. He said a buyout of Twitter is a little easier than for some other companies because “there is no concentration of share ownership and no super-voting structure, with the top three shareholders owning 6.4%, 5.1%, and 5.0%, respectively.” Besides Facebook, Squali says potential suitors for Twitter, which has a market value near $11 billion, include tech companies Alphabet and Microsoft ( MSFT ), as well as media companies Twenty-First Century Fox ( FOXA ), Walt Disney ( DIS ), Comcast ( CMCSA ) and Time Warner ( TWX ). Late Friday, Buzzfeed reported that Twitter might abandon its reverse chronological timeline display and switch to an algorithimic system.