Yelp (YELP)

New Scenario
Request Scenario
Sankey Grid
Subscribe to Updates
Select a component to explore
Top Drivers for Period
Key Drivers



  1. Yelp tops expectations in Q2, but continues to feel the impact of the Covid-19

Revenue in the second quarter fell by nearly one-third to $169 million, which was still better than the $153 million in sales that analysts were expecting. That translated into a net loss of $0.33 per share, also better than the $0.51 per share in losses that Wall Street was modeling for. Adjusted EBITDA dropped 80% to $11 million. The company relies primarily on advertising revenue from small local businesses.

Due to ongoing uncertainty stemming from the pandemic, Yelp did not give much specific financial guidance for Q3 beyond noting that operating expenses are expected to rise by $30 million. The company's management pointed out that consumer spending and advertising revenue started to recover near the end of the quarter in June. However, traffic started to plateau in July due to a resurgence in Covid-19 cases around the U.S.


Local Advertising

  • Yelp's Active Local Business Accounts: Yelp had over 210,000 active local business accounts in 2019. We currently forecast the number of active local business accounts to steadily increase, as it continues to expand aggressively, reaching around 386,000 by the end of our forecast period.

Yelp deals revenue

  • Yelp's revenue from Yelp deals, partnership and other services: Over the past few years, Yelp has sold Eat24 etc to GrubHub. As a result, its deals and partnership revenue declined from $75 million in 2017 to $37 million in 2019. We expect the division's revenues to remain at similar levels by the end of our forecast period.

Brand Advertising

  • Yelp has moved away from brand advertising in 2016 and is focusing on building its Local ads business. As a result, we expect the revenue from this division to wind down to zero by the end of our forecast period.

Sales And Marketing Expenses

  • S&M as a percentage of Revenue: We currently expect Yelp's selling and advertising expenses (S&M) to increase from around 46% in 2019 to 50% by the end of the forecast period. Given the increasing competition in the online business review and recommendations space, Yelp may have to incur increasing amounts of marketing expenses going forward.


Yelp is a local business search, review and recommendation service that allows consumers to access ratings and read reviews on local hotels, restaurants, salons, dentists, and mechanics on their website These businesses are reviewed and rated by contributors.

Yelp currently has more than 205 million reviews of local businesses in the North American markets. The company currently offers information on more than 4 million businesses in the markets it operates in. It had more than 210 million monthly unique visitors at the end of 2019.

Yelp generates revenue mainly from local business advertising, display advertising, and from additional services like Yelp deals, and deals with reservation services like OpenTable. It competes primarily with other online business review services like Google Places, Yahoo Local, Angie's List, CityLocal and Gumtree; display advertising players like Google, Yahoo, Facebook and AOL; and daily deal sites like Groupon and LivingSocial.


Local Advertising is Yelp's most valuable business

Yelp generates a major portion of its revenue from local advertising. In 2019, Yelp generated more than 95% of its overall revenue through local advertising. Its local advertising platform leverages the power of inbound marketing, which leads to a higher customer conversion rate than traditional display advertising. We expect its local advertising revenue to grow in the coming years, as it expands in multiple international markets.

Huge repository of local business reviews and large user base

Yelp has the largest database of local businesses in the markets that it operates in, especially in the United States. It has more than 205 million user reviews of around 4 million local businesses. Due to its large repository of user-generated information, it attracts more than 160 million monthly unique visitors every month, which makes it a very attractive advertising and marketing platform for local businesses, who are trying to attract new customers.

Proven expansion and market development strategy

Yelp has a proven market development strategy that it uses to expand into new markets in the United States. While it has exited the international markets, it plans to expand its services aggressively in the untapped U.S markets.

Large community and network effects

Yelp has one of the largest communities of active contributors, who write detailed reviews about local businesses. Its community has contributed more than 95 million reviews to date, and continues to generate more than 60,000 local business reviews every day. Its large repository of reviews attracts more than 140 million unique visitors every month, which makes it the perfect advertising platform for local businesses looking to gain new customers. This in turn, helps Yelp generate increasing amounts of revenue from local and display advertising, as well as offerings like Yelp Deals and hotel reservations.

Recent Trefis Articles

Yelp Stock’s Down 45%, But Sales up 20%, Why?

Yelp's stock (NYSE: YELP), an online directory for discovering local businesses, has declined around 45% since the end of 2017. But what went wrong for the company to see such a drop in stock price, despite revenue growth of close to 20% over the same period? As it turns out, the company saw a 78% decline in its net income margin over recent years. ...More

Yelp: Can It Recover?

After almost a 51% decline in the online review platform Yelp’s (NYSE: YELP) stock since the beginning of this year, at the current price of $17 per share, we believe that Yelp's stock is likely oversold and it has potential upside. ...More

How Will Yelp Look In the Next 2 Years?

Yelp (NYSE:YELP)  is a online directory for discovering local businesses ranging from restaurants, and cafes to hairdressers, spas, and gas stations. Users can also search for and review businesses around them. The company's Local Advertising business, which makes revenue from the sale of advertising and listing space on the Yelp Platform, is expected to contribute $1. ...More

Can Yelp’s Revenue Growth Rate Improve In 2020?

Yelp (NYSE:YELP) helps merchants list their offerings on its platform. The company makes money through merchants who use Yelp's platform for advertising. Its competitors include Groupon, GrubHub and Twitter. ...More

Why A Groupon-Yelp Deal Is A Bad Idea

Groupon's (NASDAQ:GRPN) stock nudged lower over trading yesterday following reports of the company potentially acquiring Yelp (NASDAQ:YELP). Trefis takes a detailed look at whether Groupon should acquire Yelp... ...More

Facebook Could Pay Roughly $6 Billion To Acquire Yelp

Per Trefis estimates, Facebook (NASDAQ:FB) could potentially pay around $5.8 billion to acquire Yelp (NYSE:YELP) (a figure more than double its current market cap), and still be able to accrue billions of dollars in value for its own shareholders. ...More

Price Reductions Powered Yelp’s Q1 Revenues, But The Company Needs To Do More To Achieve Its Full-Year Growth Target

Yelp (NYSE:YELP) reported its first quarter earnings on Thursday, May 9. The company beat consensus revenue expectations, while delivering an in-line EPS number. One of the highlights of the quarter was that the company entered into lower price-point products like Verified License and Business Highlights to widen its user base. ...More

Strong Growth In Advertiser Accounts Should Have Driven Yelp’s Q1 Results

Yelp (NYSE:YELP) reports its Q1 earnings on Thursday, May 9. We will primarily be looking at how well the management fared in  achieving the long-term goals it laid out at the end of 2018. ...More

What’s The Downside To Yelp’s Valuation If Its Active Local Account Base Doesn’t Bounce Back?

Yelp’s business has two primary components – the demand side, which the company has been trying to spruce up with the partnership with GrubHub, and the supply side, which has been volatile due to a change in the company’s selling policies. We expect the dependence of Yelp’s business on paying accounts to largely dictate the stock price over the coming years. ...More

Can Growth In Demand Help Yelp Tide Over Supply-Side Issues?

Yelp (NYSE:YELP) reported its fourth quarter and full year earnings on Wednesday, February 13. The company’s revenue and EPS beat market expectations. While end-user demand continues to be strong, the company's management continues to be cautious on its sales transition in its local advertising business. ...More

Yelp Q4 Earnings: Key Trends To Watch

Yelp (NYSE:YELP) is scheduled to report its fourth quarter and full year earnings on Wednesday, February 13. We believe the company could surprise the markets on the upside with account additions, primarily due to the weakness in Q3 stemming from apparently solvable operational issues. ...More

Was The Fall In Yelp’s Stock Post-Q3 Justified?

Yelp's (NYSE:YELP) stock fell by over 25% late last week after the company reported its third quarter earnings, with revenue coming in lower than the expected range. While the revenue miss was disappointing, we believe that the sell-off was overdone, as Yelp's operational metrics were decent and its longer-term prognosis remains positive. Below we explain further. ...More

What To Watch For In Yelp’s Q3 Earnings

Yelp (NYSE:YELP) is scheduled to report its Q3 numbers after market close on Thursday, November 8. The highlight of Q2 was the company’s decision to transition to non-term advertising from its historical practice of selling ads on term contracts. ...More

Will Advertising Revenues Continue To Drive Earnings For Yelp Through 2018?

Yelp (NYSE:YELP) announced its second quarter results on August 8, reporting a 12% increase in net revenues to $234 million. Advertising revenues increased over 20% on a y-o-y basis to $226 million, while other revenues combined fell over 60% to $8.7 million. ...More

What To Expect From Yelp’s Q2 Earnings

Yelp (NYSE:YELP) is scheduled to announced its second quarter results on Wednesday, August 8 after the market closes. In recent quarters, Yelp has reported steady growth in advertising revenues driven by a corresponding increase in paying advertising accounts. ...More

After A Strong Start To 2018, What To Expect From Yelp Through The Year?

Yelp (NYSE:YELP) announced its first quarter results on May 10, reporting a 13% increase in net revenues to $223 million. Advertising revenues increased 20% on a y-o-y basis to $214 million while other revenues combined fell over 50% to $9.2 million. In recent quarters, Yelp has reported steady growth in advertising revenues driven by a corresponding increase in paying advertising accounts. ...More

What To Expect From Yelp’s First Quarter Earnings

Yelp (NYSE:YELP) is scheduled to announced its first quarter results on May 10. In recent quarters, Yelp has reported steady growth in advertising revenues driven by a corresponding increase in paying advertising accounts. ...More

Yelp Earnings: Local Ads Continue To Boost Revenues In Q4

Yelp (NYSE:YELP) announced its earnings for Q4 on February 7th, and the company once again reported growth as revenues grew by 12% year over year $218 million. Additionally, Adjusted EBITDA for Q4’17 was $42 million compared to $45 million in the previous year. ...More

Yelp’s Q4 Revenues Likely To Grow, Albeit At A Slower Rate

Yelp (NYSE:YELP) is set to report its Q4 results on February 7. As Yelp’s user base and revenues from mobile continue to improve, we expect local ad revenues to grow once again in Q4. Additionally, Yelp also continues to witness traction at its transaction services business and revenues are expected to stabilize in Q4. ...More

Yelp Sensitivity Analysis: How Changes In Market Share Impact Yelp’s Value

Yelp (NYSE:YELP) is the largest local ads business in the U.S. According to the company, local ad spending in the U.S. is estimated at around around $150 billion, and the company estimates that there are over 20 million local business locations in the U.S. ...More

My Notes

Name (Required)
Email (Required, but never displayed)