If yelping doesn't sound like fun, you may not be as hip as you think. Yelp offers user-generated reviews and information on local businesses and service providers through its website at Yelp.com, and via its mobile app. Its content targets younger, urban consumers and covers restaurants, bars, salons, retailers, doctors, and museums. The site has a social media-friendly interface -- users can create and maintain profiles (complete with friend networks and photos), where they can blog on experiences with businesses. Yelp has established a foothold in cities across the US, Canada, and Europe. The firm was founded in 2004 by former PayPal engineers Jeremy Stoppelman and Russel Simmons. It went public in 2012.
Yelp has more than 70 million cumulative reviews of almost every type of local business available in about 30 countries. The company has been expanding globally. It now has sites in Austria, Canada, France, Germany, Ireland, the Netherlands, Spain, and the UK.
The firm continues to strengthen its presence in markets throughout the US, and has plans for expansion in Canada and Western Europe.
Yelp’s sales force works from five primary locations: San Francisco, California; Scottsdale, Arizona; New York City: London, UK; and Hamburg, Germany. The company has an office in Dublin, Ireland as well.
Yelp divides itself into three segments for reporting purposes: local advertising, brand advertising, and other services. Local advertising, which contributed 85% of revenue in fiscal 2014, includes free and paid business listings for businesses of all sizes. Brand advertising, which accounted for about 9% of total revenue during fiscal 2014, offers advertising for national brands in the automobile, financial services, logistics, consumer goods, and health and fitness industries. Other services contributed the remaining 6% of annual revenue in fiscal 2014.
Yelp has seen sizable growth in its revenue since fiscal 2010. During fiscal 2014 its revenue increased by 62% to $377.54 million, compared to $232.99 million in fiscal 2013. The increase was primarily due to revenue growth related to the company's local advertiser customer base, as well as the development of relationships with brand advertising agencies.
Local advertising segment revenue increased by 65% in fiscal 2014 compared to the prior year. The spike was due to a significant increase in the number of customers purchasing local advertising plans as they expanded their sales force to reach more local businesses. Brand advertising segment revenue increased by 23% in fiscal 2014 compared to fiscal 2013. The increase was largely due to an increase in the average spend per brand advertiser.
After suffering a net loss for three straight fiscal years, in fiscal 2014 Yelp posted net income of $36 million (compared to a net loss of $10 million in fiscal 2013).
In fiscal 2014 Yelp’s operating cash inflow increased to $57.93 million compared to $21.43 million in fiscal 2013. The influx of cash came from profit for the current year and higher account payable and deferred revenue.
The company is counting on a strategy of reaching more people for growth: As it adds users, its content expands to cover more local businesses, which in turn attracts more consumers and more advertisers. Yelp sees its local business accounts as an opportunity for growth, as it generates revenue from only a small fraction of those businesses.
During 2014 Yelp formed a partnership with Yahoo! to use Yelp content to power Yahoo Search in the US.
Mergers and Acquisitions
As a part of its content expansion, in 2014 Yelp acquired Restaurant Kritik, a German review website, and Cityvox, a French review website. Yelp expects to migrate the content from those sites to the Yelp platform in 2015.
During fiscal 2013 Yelp acquired SeatMe for a price of about $12.7 million ($2.2 in cash and the rest in stock).