Ticker Bullets | YELP | Eat24 Financials

KEY POINTS

1. Transaction Revenue to Decline: Eat24 represented ~95% of YELP's Transaction revenue over the last 6 months, so the Eat24 sale is basically a segment divestiture.  Even with the Grubhub deal, all YELP would be getting is a take of its prior take, and only on the food orders that are processed on the Yelp Platform, which we estimate is <25% of Eat24's business.
2. But Related EBITDA to Increase: Eat24 was also EBITDA negative over the last 6 months (-$5.6M vs. $34.5M in revenue), with S&M as its largest expense ($22.5M).  So unless there is material stock-based comp in those reported figures, the Eat24 sale will be EBITDA accretive to YELP next year, regardless of any orders that YELP processes for GRUB.  

Let us know if you have any questions or would like to discuss further.

Hesham Shaaban, CFA
Managing Director


@HedgeyeInternet