Yelp to sell Eat24 for $287.5 million, authorizes share repurchase
SAN FRANCISCO (Reuters) – Yelp Inc said on Thursday it would sell its Eat24 business to Grubhub for $287.5 million in cash, news along with better-than-expected quarterly revenue that drove its shares up more than 18 percent.
The consumer review website operator also said its board had authorized a $200 million share repurchase program.
Shares of Grubhub, meanwhile, fell 7 percent in extended trade. The online food delivery platform reported second-quarter revenue up 32 percent to $159 million, slightly above the $158 million expected on average by analysts, according to Thomson Reuters data.
Yelp said it would enter a long-term strategic partnership in which it would integrate online ordering from restaurants on Grubhub’s site.
Yelp’s second-quarter revenue rose 20 percent to $209 million, above the $205 million expected by analysts, on average.
Net income of $7.6 million far exceeded $400,000 a year earlier. Earnings per share were 9 cents per share, versus 1 cent per share, a year ago.
Investors were cheered by the beat in revenue after Yelp missed first-quarter revenue estimates, along with news of the sale and the repurchase program. “It’s a sign that execution is back on track,” analyst Matthew Thornton of Suntrust Robinson Humphrey Capital Markets said.
Looking to the third quarter, Yelp said it expects revenue of $217 to $222 million. Analysts have been expecting $219.67 million. Shares rose to $37.12 in after-hours trade, up 18.3 percent, after closing at $31.37.