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.
According to Google Analytics, roughly 120 million unique visitors used Yelp.com and its mobile application was used on some 11 million unique mobile devices on a monthly average basis during 2013.
Yelp 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 83% of revenue in fiscal 2013, includes free and paid business listings for businesses of all sizes. Brand advertising, which accounted for about 12% of total revenue during fiscal 2013, offers advertising for national brands in the automobile, financial services, logistics, consumer goods, and health and fitness industries. Other services contributed the remaining 5% of annual revenue in fiscal 2013.
Yelp’s total revenue increased by 69%, to $233 million in fiscal 2013 compared to $137 million in fiscal 2012. The spike was largely due to a 77% increase in local advertising revenue. Brand advertising revenue increased 36%, primarily due to an increase in the average spend per brand advertiser. Other services revenue increased by 54% during fiscal 2013 compared to the previous period, primarily due to an increase in revenue from the sale of Yelp Deals and remnant advertising inventory.
Yelp reported a decrease in net loss (only $10 million in fiscal 2013 compared to $19 million in fiscal 2012) mainly due to the large revenue growth offsetting increased expenses.
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.
Mergers and Acquisitions
During fiscal 2013 Yelp acquired SeatMe for a price of about $12.7 million ($2.2 in cash and the rest in stock).