10 Years in, Yelp Turns a Profit | Street Fight

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10 Years in, Yelp Turns a Profit

0 Comments 30 July 2014 by

6ff22b47-99f2-4199-a098-cc47b4e213e0People Love Us on YELP! LOGOYelp is now in the black. The company beat analysts’ expectations, reporting better-than-expected revenues Wednesday with strong top-line growth and a million dollars in profit for the first time since its IPO.

The company appears to see some leverage in its early markets. The local reviews company grew top line revenues by 61% from a year earlier, posting $88.8 million in revenue in the spring quarter. A jump in revenues outpaced sales and marketing costs in its earliest markets, helping driving the company to a small, but inaugural profit.

From a consumer perspective, the company continues to explode. Yelp said that it now has over 68 mobile users, and 138 million unique visitors to its site each month (roughly ten times the size of the New York Times‘ traffic.)

“For the first time as a public company we achieved profitability, and we believe that Yelp has now become the preeminent destination for local search,” Jeremy Stoppelman, the company’s chief executive told analysts during a call on Wednesday.

Driving the revenue growth was Yelp’s steadily increasing advertiser base — albeit, at a small rate in some areas. The number of active local businesses grew 8% in the second quarter to 79,000 from the quarter earlier, marking the second quarter in a row where it saw the number of new advertisers slow.

Here are a few other interesting bits from the earnings call:

Google and the ‘Panda’ update: The local search community has been up in arms recently over a change in Google’s algorithm, which reportedly has shut out some lower tier content. Yelp said that its international traffic decreased from a quarter earlier, largely due to the changes — but that domestic traffic actually grew. Stoppelman attributed the varied response to the lower quality content in its younger international cohorts.

We’ll can do it on our own, thank you: Stoppelman told analysts that while the company has “dabbled” with reselling partnerships in the past, it’s “not something the [company] is particularly focused on right now.” The company has announced a number of content partnerships recently (one with YP,) but little in terms of more traditional reselling. (In an interesting note, Rob Krolik, CFO at Yelp, said that the company was generating some meaningful revenue from its syndication deal with GoDaddy-owned Locu and others.

Continuing on commerce: A year ago, the company launched Yelp Platform, a business development initiative to integrate with delivery, booking and other commerce-related service. The company declined to disclosed numbers on the project but said it was seeing the most leverage in the food delivery business where it has partnered with firms like Eat24 and Delivery.com. “We feel good about that investment, and there’s no shortage of partners waiting to get on board,” Stoppelman added.

Moving up-market: Today, spending from brands accounts for small sliver of Yelp’s revenue. However, the company appears to be set to move up the stream in the coming years. Geoff Donaker, COO, said that the company has created a new team to focus exclusively what he called a “huge franchise opportunity.”

Steven Jacobs is Street Fight’s deputy editor.

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