Tags: Yelp | Website | Local | Ads

Yelp Sales Rise 65% as Website Draws Local Ads

Wednesday, 06 Feb 2013 04:55 PM

Yelp Inc., owner of a website that lets consumers review local businesses, said fourth-quarter sales rose 65 percent as more merchants paid to advertise goods and services to its growing user base.

Revenue climbed to $41.2 million, the San Francisco-based company said Wednesday in a statement, topping the $40.3 million average analyst prediction compiled by Bloomberg. The net loss narrowed to $5.32 million, or 8 cents a share. Analysts on average were projecting a loss of 5 cents.

Chief Executive Officer Jeremy Stoppelman has carved out a niche for Yelp in local advertising, the company’s largest revenue source -- and a business that Google Inc. and other large websites are trying to target. At stake is an online ad market that may rise to $38.1 billion in 2016 from $21.2 billion in 2011, according to researcher BIA/Kelsey.

“Yelp’s breadth and depth of review content, trusted brand, and large potential local advertising opportunity make it well positioned to continue driving strong revenue growth and margin expansion,” Kaizad Gotla, an analyst at JPMorgan Chase & Co. in New York, wrote in a note on Feb. 4.

Spending on sales and marketing, the company’s largest expense, increased 59 percent to $25.5 million. Yelp expanded into Poland and Turkey in the quarter, for a total of 20 countries worldwide.

First-quarter revenue will be $44 million to $44.5 million, the company said. That compares with the average analyst projection of $44.3 million, according to data compiled by Bloomberg.

Yelp shares rose 5.7 percent to $22.38 in New York Wednesday, but fell back 3.5 percent in aftermarket trading. They have gained 49 percent since the company’s initial public offering in March 2012.

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