Can Yelp’s Revenue Growth Rate Improve In 2020?

by Trefis Team
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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. Trefis captures trends in Yelp’s Revenues over recent years along with our forecast for full-year 2019 and 2020 in an interactive dashboard. While the company’s growth rate fell from a strong 18.8% in 2017 to just 11.3% in 2018, we expect the top line to expand 14.8% for the current year, and further by 16% in 2020 as we detail below.

A Quick Look At Yelp’s Revenues

Yelp’s 2 divisions (1) Local Advertising Revenues and (2) Deals & Other Services Revenues are expected to contribute $1.05 billion (97.5%) and $28 million (2.5%) respectively to the company’s 2019 revenue of 1.08 billion.

Yelp’s Business Model Has 2 Operating Segments

  • Local Advertising: Segment revenues are derived from the sale of advertising and listing space on the Yelp Platform.
  • Deals and Other Services: Segment revenues are derived from the sale of deals and other related services.

Yelp’s revenue grew 32.2% over 2016 to 2018 to $943 million and is expected to increase 33.3% to nearly $1.3 billion by 2020.

(1) Local Advertising revenue growth of $324 million over the next two years is likely to be driven by partnership with GrubHub and an increase in salesforce productivity.

(2) Deals & Other Services revenues will continue to decline over the next two years as the company is moving away from this business.

Additional details about changes in Yelp’s revenues by segment over the years is available in our interactive dashboard.

Also, we continue to believe that Yelp is a potential acquisition target for several other tech firms, with a combination with Facebook likely to be a much more favorable outcome than the one with Groupon.

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