CEO Says Yelp Is at 'Peak Desktop' — Is It Also Nearing Peak Growth? | Street Fight

CEO Says Yelp Is at ‘Peak Desktop’ — Is It Also Nearing Peak Growth?

CEO Says Yelp Is at ‘Peak Desktop’ — Is It Also Nearing Peak Growth?

yelp-logoYelp posted its first-ever annual profit Thursday, but sluggish user growth sent shares of the reviews company tumbling in after-hours trading. The company finished the year with $337.5 million in revenue on $32.7 million in annual profit, driven by strong growth in its local advertising business.

The company generated $93 million in local advertising revenue during the fourth quarter, contributing to a 65% jump in Yelp’s core business during 2014. Revenues were also bolstered by a partnership with YP inked last spring that helped to grow revenue in its “Other” category by over 140% in the fourth quarter and offset slight declines in its brand advertising segment.

However, the solid earnings were dampened by concerns that the strong user growth, which propelled the company to the public markets, may be waning. The company has seen growth of its unique monthly users, a measure of traffic across both mobile and desktop properties, slow on a year-over-year basis for the past five quarters. During a seasonably slow fourth quarter, total unique visitors actually declined from the previous period.

The slowdown comes as mobile accounts for nearly half of the company’s traffic and makes up almost two-thirds of searches on Yelp. During an earnings call Thursday, Jeremy Stoppelman, chief executive at Yelp, downplayed the decline in traffic, pointing to a 37% jump in traffic to its mobile properties and underscoring the seasonable sluggishness of the fourth quarter.

“We’re at peak desktop, more or less. Users are going to mobile, and with our mobile traffic growing at 37% year over year, we’re feeling pretty good about that,” said Stoppelman. “But the age of [users] going to Google on your desktop and finding [their] way to Yelp — while it’s not over — we’ve sort of hit that peak.”

While the shift to mobile can make determining total users difficult, the decline in traffic growth seems difficult to explain away. During the last two quarters of 2013, Yelp grew total UVs by roughly 40% from a year earlier; during the third and fourth quarters of 2014, those numbers slowed to 19% and 13% respectively. Meanwhile, mobile traffic, which has grown consistently on a year-over-year basis for the past year, actually declined in the last quarter of 2014 — albeit, a typically sluggish part of the year for the company.

The slowing growth may also stem from an international expansion that has developed slower than some watchers expected. International unique visitors have remained essentially flat over the past few quarters after the company posted strong growth in 2013, which was boosted by the acquisition and integration of Qype in 2012. The company responded in October with the acquisition of two international rivals: the German firm Restaurant-Kritik and French reviews site CityVox.

Yelp remains a strong and growing company, but the shift to mobile has undoubtedly hurt the company’s search-driven customer acquisition strategy. As much as the company may want to rid itself of its dependency on Google, the search giant has provided a critical platform on which a small company with unique content could quickly grow its user base.

In an app-driven mobile environment, customer acquisition is substantially far more difficult. Instead, the company may have to invest more in marketing spending, adding to the already massive amount technology companies spend each year to drive application installations.

Steven Jacobs is Street Fight’s deputy editor.

4 thoughts on “CEO Says Yelp Is at ‘Peak Desktop’ — Is It Also Nearing Peak Growth?

  1. YELP WAS GREAT UP FRONT AS A QUALITY INQUIRY SOURCE. BUT ONCE DISCOVERED, BECOME ABUSED ON BOTH ENDS AND REALLY ACCENTUATED THE NEED FOR PERSONAL REFERENCES ABOVE ALL. IT HAS ALSO CONTRIBUTED GREATLY TO THE OVER ESTIMATION OF EATING ESTABLISHMENTS. THIS SOURCE-FED GROUP WILL DISSOLVE OVER TIME AND BRING EATING BACK TO THE SIMPLE ACT OF EATING. I DONT WANT TO WAIT IN LINE IN A SMALL TOWN FOR AN HOUR FOR A GOOD STEAK. IS THAT TOO MUCH TO ASK. WE HAVE BUILT A SYSTEM THAT PUSHES 90%TO THE 10% AND LEFT THE OTHERS TO WILT AND WISH. LET’S FIND A CHEERLEADER FOR THIS…LOL

  2. YELP allows people to make derogatory comment on your site without evidence of proof. Then you are followed by a call asking you to pay $199 per month to investigate and remove the comment. If you said no, you are followed by a call from the same person, calling you bitch and to F you F mouth up. The phone calls never stop. I continue everyday. Shame on you Yelp for hiring those low class telemarketers

  3. yelp is a scam unless you pay . Many of our clients have posted reviews that were 5 star all have been removed and the only none that appear are negative. so let me get this straight cars.com ,google,yp,dealer-rater all post both good and bad ones we mostly have good ones.

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4 thoughts on “CEO Says Yelp Is at ‘Peak Desktop’ — Is It Also Nearing Peak Growth?

  1. YELP WAS GREAT UP FRONT AS A QUALITY INQUIRY SOURCE. BUT ONCE DISCOVERED, BECOME ABUSED ON BOTH ENDS AND REALLY ACCENTUATED THE NEED FOR PERSONAL REFERENCES ABOVE ALL. IT HAS ALSO CONTRIBUTED GREATLY TO THE OVER ESTIMATION OF EATING ESTABLISHMENTS. THIS SOURCE-FED GROUP WILL DISSOLVE OVER TIME AND BRING EATING BACK TO THE SIMPLE ACT OF EATING. I DONT WANT TO WAIT IN LINE IN A SMALL TOWN FOR AN HOUR FOR A GOOD STEAK. IS THAT TOO MUCH TO ASK. WE HAVE BUILT A SYSTEM THAT PUSHES 90%TO THE 10% AND LEFT THE OTHERS TO WILT AND WISH. LET’S FIND A CHEERLEADER FOR THIS…LOL

  2. YELP allows people to make derogatory comment on your site without evidence of proof. Then you are followed by a call asking you to pay $199 per month to investigate and remove the comment. If you said no, you are followed by a call from the same person, calling you bitch and to F you F mouth up. The phone calls never stop. I continue everyday. Shame on you Yelp for hiring those low class telemarketers

  3. yelp is a scam unless you pay . Many of our clients have posted reviews that were 5 star all have been removed and the only none that appear are negative. so let me get this straight cars.com ,google,yp,dealer-rater all post both good and bad ones we mostly have good ones.

Leave a Reply

Your email address will not be published. Required fields are marked *

Name *