As Yelp expands into commerce, business stays focused on local
CEO downplays revenue potential from company's latest efforts to close the loop between consumer and merchant.
Business reviews site Yelp will keep local advertising as the linchpin of its business model, despite an ongoing interest in adding transactional elements to the consumer experience, CEO Jeremy Stoppelman said Wednesday on the company's second-quarter earnings call with analysts.
Yelp posted a loss of 1 cent per share and grew revenue by 69 percent year over year to $55 million in the second quarter of 2013. Both results came in notably higher than analysts' estimates of a loss of 4 cents per share and revenue of $53.3 million. As a result, the company's stock has spiked by 7 percent in after-hours trading.
Yelp's local advertising business, the crux of the company's monetization efforts, was especially strong during the second quarter. Yelp made $44.8 million from local revenue, which is an increase of 77 percent from the year-ago quarter. Additionally, the company signed on 6,800 paying customers, representing Yelp's largest quarterly increase, Stoppelman said.
Perhaps it makes sense, then, that when questioned about the revenue opportunities from the network's newest initiatives, which include allowing people to order delivery from Yelp's site or mobile apps, Stoppelman crushed analysts' expectant desires and said that the company would stick to what it knows best: local advertising.
"From our perspective, we still feel like the local ad model is core to what we do, and we're going to keep doing it for a very long time. And I think our focus on Yelp platform is really about consumer convenience. We think it just makes using Yelp that much easier," he said.
Yelp platform is the newly launched program that includes on-site food ordering powered by Eat24 and Delivery.com. The program will eventually allow local businesses to offer other for-purchase services so customers can reserve spa treatments or book and pay for dentist appointments right from Yelp.
The chief executive added that though the company may eventually consider revenue options for Yelp platform, he wants to first make Yelp the Amazon of local, as in a place where people store their payment information so they can buy whatever they want from neighborhood merchants.
"When you think...about the experience on Amazon...anytime I'm trying to buy just about anything, I know that all my information is in Amazon and I can immediately purchase and have it delivered," Stoppelman said. "We want to re-create that type of experience in local, and that's what we're focused on, not necessarily the monetization at this point."
Yelp said it grew unique visitors to 108 million for the quarter. Yelp was used, on average, on 10.4 million unique mobile devices during the second quarter, the company said, and now sees 59 percent of total searches coming from its mobile products.