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Yelp (NYSE:YELP)

Company Conference Call

September 4, 2013 8:15 am ET

Executives

Rob Krolik – Chief Financial Officer

Analysts

(no identified analysts)

(no formal presentation)

Question and Answer Session

Mark May

--at Citi and I’m pleased to welcome Rob Krolik, the CFO at Yelp for joining us this morning. Thanks.

Rob Krolik

Thank you.

Mark May

So we’re going to jump right in. I’ve got some prepared questions, but there’s a large group here and we’d like to make it interactive, so feel free to raise your hand in the middle and we’ll take questions, if I can see without blinding light.

So I want to focus on something that I’ve been kind of focused on quite a bit for the last few quarters, is on the international business. So you know, I was hoping that you could—how should we think about your strategy as you’ve begun to enter—or you’re been in Europe and other countries for a while, but as you begin to monetize. What’s the strategy? You’ve made an acquisition, there’s some integration work going on there. Help us – I think one thing that we struggle with is just understanding the addressable market and how it may or may not differ from what we’re familiar with here in the U.S.

Rob Krolik

Right. Well, thanks, for having me, Mark. So I guess there’s a couple of ways you could attack the TAM specifically. One would be there’s a BIA/Kelsey report out that says that the localized spending globally is about $150 billion at a local level. The other way you could look at it is of that, there’s about—again, I think the same report or something similar says that Yellow Pages globally is about a $24 billion market, of which there’s about $9 billion or $10 billion being spent in the U.S. alone. So actually the way we’re looking at our market is internationally could be as big or bigger than the U.S. market, so internationally we could actually be bigger at some point. We’re obviously today far away from that point.

In terms of number of businesses, there’s about 20 million to 25 million local businesses in the U.S., and there is about that in Europe, specifically about 20 million local businesses in Europe; and then if you add in Canada and Australia, which are two countries we’re also in, which is about 2 million each for businesses, and then add all the other—like, we went into Singapore, we just went into Brazil, so you add all that in – Brazil has, I think, a couple hundred million people, obviously a lot of local businesses. So a lot of opportunity outside the U.S., even though there is obviously a very large opportunity in the U.S.

As far as how we’re approaching it, what we’ve done kind of over this almost nine year span is we started out in San Francisco, honed what we call the playbook, and we’ve rolled that out across the U.S. About three or four years ago, we decided to go international, so we went into an English-speaking country – London – and what we do is we place the community manager, and I can go into that stuff if you want, but to start developing the content that we are so known for and the high quality of that content. That content is built, the traffic comes with that content, and we’ve played out in the U.S. and now it’s playing out internationally.

Globally we have about 108 million uniques that are coming to us on a monthly average basis. From a review standpoint, we have about 42.5 million reviews globally, and then if you kind of break that down from an international standpoint, as of—and these are all numbers as of 6/30 – as of 6/30, we had about 2.5 million, 2.7 million reviews of that 42.5 million that are international, and then we also had about 17 million of that 108 million uniques internationally, so about 16% of our uniques was international and that’s growing quite rapidly.

One of the things that we did, which you just mentioned, is we bought a company last October called Qype and we have been integrating them, so they were the number one review site. They were based in Hamburg, Germany. They’ve been around for about seven years. They were somewhat of a replicate of Yelp in Europe in some ways, so they had built up a great content base and therefore had built up a great traffic base. So we acquired them in October of last year and have been integrating them into our site. So we integrated Ireland, Italy and Spain between March and July—or June, and what I mean by that is we’ve been taking the content of their site and actually moving it over to the Yelp site and then redirecting their traffic from their site over to our site. So we started with the smallest countries first in terms of content and traffic that they had so as to make sure that we were on the right path, and then we’ve gotten some learnings along the way and honed that process.

So a couple weeks ago, maybe three weeks ago, we did France, and France was one of the bigger countries. They had about—I want to say about 300,000, 350,000 reviews that we ported over. They had a ton of photo content and also to our site, which was great, and so all that’s been ported over; and then we redirected their site. So if you go to Qype.fr today, you actually get redirected over to Yelp. And they had a lot of traffic, so the specific reason we bought Qype was for the content and the traffic, and so far that’s working very well for us.

We also just launched Brazil, our first time in South America, and we also—for an interesting reason, I guess. Qype had a presence in Brazil, and we also moved over their reviews and traffic in the last couple of weeks.

Mark May

In terms of marketing packages that you’re selling or pricing, or the way the sales force is structured and incentivized, anything that sort of stands out that’s different, or maybe not, outside the U.S.?

Rob Krolik

It’s the same concept, so we have a telesales presence globally, so in the U.S. it’s based in San Francisco, New York, and Phoenix, where we call out to local businesses – we don’t have feet on the street – and we talk to them about the benefits of being on Yelp. Same thing in Europe, so we just started about a year ago selling in London, so we put a sales force on the ground in Q3 of 2012, a pretty small sales force. Then we acquired Qype and gained their sales force, which was also in London, so we combined them; and we also have a Hamburg sales force. The Hamburg sales force is actually still selling Qype, and they will up until the point where we transfer that traffic and content over to our site, which will be later this year. We also have yet to go in the U.K.

But they are selling basically the same thing globally. The pricing may be a little bit tweaked depending on the country it’s in, but for all intents and purposes it’s something similar, and we sell subscription service and enhanced profile, along with the number of impressions that people subscribe to. We also do have a CPC package that’s small but growing very fast, and that’s a marketplace dynamic model that is the same globally, so whatever people are bidding on globally is what you’ll get.

But it’s what I would call early days, especially internationally, so just started selling a year ago. It’s kind of like San Francisco back in 2006 or ’07, so we’re just kind of getting started there.

Mark May

Maybe last or next-to-last question on international, anything that you think will be different in terms of the mix of local businesses in Europe versus what—maybe you can remind us roughly the sort of business mix here in the U.S. and where you see demand will be any different.

Rob Krolik

Yes, so in the U.S., you have reviewed businesses, so about 20% of reviewed businesses are in the restaurant category. About 23% is in shopping, and then home and local makes up about 11% of reviewed businesses. On a revenue basis, we generate about 24% of local ad revenue out of home and local services and about 16% in restaurants, and beauty and fitness is about 12% to 14% of local ad revenue.

Clearly right now, I think I would guess that the revenue that we’re generating in London specifically is probably weighted towards restaurants – just again early days, as in San Francisco. That’s kind of where a lot of the review content is, and it takes a while for that to build out and for them to monetize, so the rest of the tale. So I would say that that’s probably the case, but it’s showing the same curve, at least at this point, that we saw in the U.S., so we’re pretty happy about that. We’re encouraged by it and we expect that to continue.

Mark May

Maybe we could shift to mobile, and in fairly short order mobile, smartphones in particular, have become a really meaningful part of the business in terms of consumption and even revenue contribution or ad impressions, if you will.

Rob Krolik

Ad impressions, yes.

Mark May

How has that consumption changed so quickly affected the business in terms of things that it’s enabled you to do that maybe you aren’t able to do on the desktop, and maybe also if there are any kind of challenges that you want to highlight.

Rob Krolik

Yes, mobile is a great thing for Yelp. It really plays into our sweet spot. Local is all about location and mobile helps us out a great deal, especially when people engage with us on the mobile app. They are giving their location data and then we’re serving them up a very relevant source of information about local businesses in that area for what they are searching for. So I think it plays right into our wheelhouse.

We have about 59% of our searches on mobile between the mobile web and the app. We have about 40% of all impressions now showing up on the mobile devices, so it’s really—we’re very excited about mobile. We have relationships with different players in that space, specifically Apple, and integrated into the Apple maps, and I think from a branding standpoint that really helps us.

So in terms of—and I mean, the mobile growth has been a phenomenal growth rate. I think just in Q2 alone, app usage – now this is now downloaded number. We have about 10.4 million people using us on the app on a monthly average basis, so that’s not downloads, that’s actually usage, and that’s been growing at 40% to 50% year-over-year. So we feel like mobile is great for local. It makes a lot of sense, and there is different use cases. So on desktop, generally if you look at different searches, you’ll see searches for plumbers on the desktop more weighted than you will on the mobile phone. Same thing with restaurants – a lot more searches on the mobile phone than on the desktop. So it plays into our strengths.

In terms of some challenges, I think it’s just about continuing to innovate. For the first time in last December, we rolled out the ad impressions on mobile, which we had never had on the mobile app, and we did a lot of testing to make sure our users weren’t confused or upset by that, and they felt really good about it, so that was good. We now have the ability—all of the things that we’re doing, or most of the things that we’re doing is focused on mobile. One of our themes for 2013 is really to focus on the mobile experience, so we have some new bells and whistles, if you will, where you can order food right on your mobile phone, you can do deals.

Just recently, about three or four weeks ago, much to people’s surprise we rolled out the ability to write reviews on mobile where you could do it before but it was in draft form, so you couldn’t actually post it without going back to your computer to look at it. Now, we felt like the time is right for people to actually just go ahead and post, and there is mechanism there so we get high quality content, because that’s really the bellwether for Yelp. So if your review doesn’t have enough information, we off-road it into a tip; but for the most part, we’ve seen really great information coming from people’s mobile phones and we’re excited about that.

Mark May

Along the lines of closing the loop and helping to prove the ROI or attribution of your advertisers marketing with you, does mobile enable you to further that? Are there data points you can collect and share back to the merchants that help to close that loop and help them understand ROI a little better?

Rob Krolik

Yes, so one of the things that we did a little over a year ago is we started—so each business, you can claim your page for free on Yelp and you get access to a business dashboard, and that dashboard has some information on it. What we did about a little over a year ago is we included some mobile metrics in that, so check-ins, people uploading photos, bookmarking, calls. So on the website, obviously, it’s hard to see if somebody actually made a call, but on the phone it’s pretty easy to, so we started it and check-ins, so we included all that information on the dashboard.

So one of the themes also for 2013 and probably beyond is this concept of closing the loop, so helping businesses understand how much business they’re actually generating from Yelp, and with all that information we now have kind of a view on how many customer leads we’re giving that business, and we can share that back to the business and then we can actually calculate how much revenue we estimate that they are generating from all those leads. So we also about a year and a half ago, two years ago, we rolled out Deals, and so they can also see, and that’s to a specific transaction. They can do all of this on their phone. You can buy a deal on the phone, you can obviously check in, and any time you find a business and click on their phone number, that’s all recorded and shared back with the business, not at an individual level but at an aggregate level that they got 25 phone calls last week or 50 last month.

Mark May

And also on mobile, there’s a conception, maybe a misconception that monetization on mobile is less for the industry as a whole than on desktop. Maybe can you talk a little bit about how you monetize mobile and how advertisers actually buy advertising.

Rob Krolik

Yes, that’s a good question. It’s something that I think as we go forward, it will evolve over time. Today what we’ve decided to do is we added app impressions, ad impressions end of November, beginning of December of last year, and what we decided to do was bundle that with our existing package. So local businesses, so how we sell our product is you get an enhanced profile which includes either a slideshow or a video. It also includes removal of competitor ads on your business profile page. It now includes a call-to-action button that you can have on your page. It also has a certain number of impressions, so let’s say for a restaurant, it may have 2,000 or 3,000 impressions associated with that, versus a plumber maybe 1,000, so that’s how we sell our advertising in this bundled package in general.

What we’ve decided to do is remain pretty platform-agnostic, so those 2,000 impressions for that restaurant can be served up on the desktop, on the mobile web or the app, depending on how Yelp determines what’s best for that customer. So the customer, the local business owner, doesn’t decide today on where those impressions show up, so we’ve chosen to include it. Now as I said, about 40% of our local ad impressions are serving up on mobile, so that’s great; but we just think at this point it’s not something that the business owner wants to decide. They are just happy to have ad impressions on mobile and the mobile app. It would be another hurdle for us to ask them, okay yes, you’d like to buy this package, here’s all the package. Okay, you get 2,000 impressions – where do you want those impressions to show? And they’d be like, what do you mean? I don’t know. So it’s actually a better place for Yelp to decide where those impressions show, so our revenue is not specific to mobile.

Mark May

Could that evolve or change over time?

Rob Krolik

Yes, I think it can. I think—you know, we have a CPC product that today—again, the impressions are agnostic to determination of what platform it shows up on. I can see and envision in the future at some point where people are choosing mobile web, mobile app, or desktop. And what’s interesting when people search on their phones and search on desktop, the click-through rate on search for mobile phones is significantly higher than it is on desktop. So for us, we would view that there’s actually a premium that would be associated with that; but again, we’re pretty far off from that. That’s not something we’re focused. We’re kind of set in our pricing for now and we’re not particularly focused on that. But it is an opportunity, just like a lot of opportunities that we look at in the landscape of things.

Mark May

So mobile ad impressions today are primarily CPM-based as part of the package?

Rob Krolik

Yes, as part of the package.

Mark May

Most of the CPC campaigns are desktop right now?

Rob Krolik

No, they can be—when you bid for CPC, it could show up on either mobile or on the desktop.

Mark May

And these CPMs for the CPC business are higher than the implied CPM—

Rob Krolik

Well, the click-through rates are, because you don’t actually bid on mobile today – you bid on impressions.

Mark May

Right, but if you were to look across all platforms and compare the ECPM to the CPC, it’s higher than what you’re charging as part of the bundled package for—

Rob Krolik

I believe that’s correct. I’d have to go back. It’s a function of the click-through rate versus the cost, right.

Mark May

Okay, so to the extent that you can grow the mix of business to CPC, it’s going to have a benefit—

Rob Krolik

I think so. I think we have a long way to go before we get there. It’s a pretty small piece of our business today, but it’s something that—you know, we believe that performance-based advertising is actually better for everyone, and then a market-based system on a CPC basis is better for everyone because we don’t then set the price. It’s the marketplace that will set the price.

Mark May

So this is a CPM served as—or part of your local ad package. The CPC, is that a different advertiser?

Rob Krolik

It can be. So there are local businesses that do sign up for CPC and put in bids. There is a lot of advertising in the CPC world that’s done by what we call regional and national chains, so they’re much more—

Mark May

So that opens you up to a new—

Rob Krolik

Yes, so they’re much more sophisticated. They’re used to bidding platforms and we think that there’s a huge opportunity there.

Mark May

But that’s fairly new. When did you launch the CPC?

Rob Krolik

Well, CPC has been around for a couple of years. The market-based platform, the bidding system has been around for about a year.

Mark May

About a year, so it’s still—

Rob Krolik

It’s still in its infancy, yes.

Mark May

Google – how has Yelp managed to continue to grow its traffic despite what appears to be some pretty meaningful changes that Google has made to its serve? It feels like kind of a year and a half ago to me when a lot of the major changes happened. How in the world has the company been able to grow through that? Is it because of the mobile and that’s lessened the dependency, and that’s helped to offset that headwind?

Rob Krolik

Yes, I don’t know that it’s helped offset. I mean, it’s definitely incremental in our view – it adds to. I think that our traffic is growing year-on-year in Q2 about 40%-plus, and we feel like it’s growing because of the excellent content that we have, very high quality content that the community is generating for us. So you know—

Mark May

So direct-type on desktop, or—

Rob Krolik

Yes, in other words, people are contributing content through reviews, right, and photos and tips and all sorts of things to our site via mobile or desktop. All of that gets indexed into the search engines, and it continues to be the case – over 50% of our traffic both on mobile and desktop are coming from Google. We don’t pay for traffic, so we don’t—it’s all organic, so we’re happy to get it. I think there has been a lot of movement on the Google side and a lot of other companies understanding that local is a big market, and I’m sure there’s going to be other players that come in. But we’re at a point where we feel really good about what Yelp has to offer.

The reason you go to Yelp is to make a purchase decision because you decided to look for a business to actually make a decision, so you’re much further down the funnel than you would otherwise be, and we play really well in the long tale. So when you go to Google, they put a lot of different, what I’d call roadblocks for the consumer. Consumers are still finding—I mean, we couldn’t be growing at 40% if we weren’t growing pretty significantly with Google.

Mark May

Maybe I’ll pause and see if there are any questions. So a question is, what metrics do you use to measure the health of the business? Can you talk specifically about ARPU, which saw a nice jump last quarter? Is this something, a metric that investors should be focused on? Will you help us think through the variables there?

Rob Krolik

Yes, ARPU obviously is a function of our paying accounts and our revenue. Our sales folks are incented to bring in dollars, not specifically individual accounts, so I don’t know that ARPU is the best way to measure our business. We internally do not measure our business via ARPU, so I don’t think it’s that worthwhile for investors. Obviously you can calculate it all you want, but I just don’t think it’s helpful. I think the number of customers we have, as long as that’s growing at a pretty healthy clip, which it is, and then obviously we’re bringing in revenue.

To your earlier question, thinking about it on the national and regional chains, that’s something that I think is really interesting for us. We have a small team, look a few years back, that started kind of reaching out to those businesses, and I think what has been very interesting is to see how that’s grown and that’s become—you know, again, a small part of the business overall but very fast growing. It’s these national and regional chains that are realizing they obviously have local stores in the community and want to find out what’s going on with those local stores via review, and also to pay for enhanced profiles.

So just to give you a picture of that, the regional and national chains, what they buy is generally they don’t buy our typical subscription package. What they’ll do is they’ll buy something called the enhanced profile, which is to make their page look better, basically; and then they’ll also buy into the CPC program, so they kind of do a hybrid. I can share with you there’s a very large chain, a retail store that’s out there that has signed up with Yelp in the last, I’d say nine to 12 months, and they’ve seen an increase of about 70% to 75% in mobile calls and directions, and about a 50% increase in leads. There’s also a very large hotel chain, kind of higher end hotel chain that signed up for a similar package – enhanced profile along with CPC – and they’ve seen a three times increase in the number of phone calls that they get to their business and a four times increase in the number of directions that they get, and a 500% increase in the number of customer leads in all that they’re getting.

So these businesses are realizing that Yelp is a powerful way to attract customers once they advertise, so for those national advertisers out there, if you’re listening, this is something that you should contact us, because it is proving—the businesses that we’re talking to are almost in jaw-drop mode from this.

Mark May

Citibank, maybe?

Rob Krolik

Maybe Citi should do it – yes! We should talk to you guys.

Mark May

Maybe I’ll pause there. Peter?

Peter

Two questions. You mentioned national chains. Can you quantify how many national chains you guys currently have, and what you think the addressable universe is in terms of national chains? And then I have a follow-up.

Rob Krolik

Yes, the national chains – I mean, I wouldn’t give you a number. It’s a small number. We have a pretty small sales force that is contacting these guys, and that is more of a one-off basis, contacting them, so it’s a small number. The universe is actually pretty large.

Actually, I think the universe is even larger for what I’d call regional chains, businesses that you know in your local community that have probably 25, 50, 100 stores, and so not obviously qualify them as national but definitely regional, so that’s a huge opportunity. There’s a lot of business names I’ve never heard of before, but they are all throughout our communities.

Peter

And then Foursquare seems to have finally figured out a revenue model. I think one of the things that’s working for them is when people check in, they are being presented with deals. Can you comment, one, on how many check-ins you guys have; and two, whether that’s a revenue model down the line, kind of along the lines of a call-to-action that would make sense for you guys?

Rob Krolik

Yes, I don’t have the number of check-ins that we have. It’s a data point for us and it’s fed back to our system, but it’s not something I have off the top of my head. It’s an interesting data point. I don’t know that it makes a business.

I think the thing that I look at is—you know, we look at consumer experience. That’s the one thing that we’re always going to focus on, and so we want to make sure that the consumer who uses either the website or the mobile app has a great experience, so we want to make sure that there’s no interruption in that flow. So we’ll be very careful about how we will allow any changes to that consumer experience.

One thing that’s been—you know, I think people have let us know over the last three or four years is that they weren’t able to write reviews on the mobile phone and post it, so that’s something we heard loud and clear and we finally did that. But I think there’s a ton of monetization opportunities. We’ll just to see how that plays out over time. Again, we want to make sure that the consumer experience is a great one, and a lot of the feedback that we get back right now is that Yelp is a great product, and we want to continue to have that happen.

Mark May

I think—we’re webcasting. You might want to—if you could wait just a minute.

Unidentified Speaker

So I think you have closed the SeatMe acquisition at this point.

Rob Krolik

Yes.

Unidentified Speaker

Now that that’s under your belt, how are you guys going to communicate that product offering to the restaurants in your install base, and will you roll that sales force, to the extent they had a large sales force, into your own and will you have your own sales reps selling SeatMe, or will it remain separate?

Rob Krolik

Okay, yes. Great question. And just for background for folks here, we purchased a company called SeatMe. It was a two-year-old company based in San Francisco. They have a reservation technology that restaurants and nightlife establishments could use as a back-in. It’s a cloud base; there’s no hardware to install. It’s app and cloud-based technology. We closed that transaction at the end of July for about $12 million.

They had—again, it was a two-year-old company. They started selling their product at the beginning of this year, 2012. They had about 200 clients, and they had—in total in the company, I think there was 15 people, most of which were engineers, but I think they had three sales folks, something right around there.

So in terms of integration, we’re still experimenting. We just closed it about a month ago or so. We’ll see how that rolls out, but the idea is at least to experiment with having our sales folks talk to customers about this product and then maybe handing that over to their team, or obviously people who are interested and do a web search can come and find that product and then they have a team that can handle that.

It’s a small company. We’re excited about the opportunity because it’s around the theme of closing the loop. So if we can tell a restaurant or nightlife place that they have 10 reservations coming from the SeatMe product that was built into Yelp at some point, why don’t you advertise on Yelp and increase that by two, three, five-fold over the course of a month or two. So we’re excited about it, and we have about a million businesses in the U.S. that are kind of in the sweet spot of restaurants and nightlife that can possibly use this service. A lot of these businesses use pen and paper today, and the way SeatMe was selling it, it was a $99 a month product. There was no charge for seated diner, and a lot of these businesses—to give you an example, there’s a winery up in Napa that uses them for their wine tasting room, and so they don’t have the concept of a seated diner. They just—as you’re going up to Napa, on your phone – hopefully if you’re not driving – you can put yourself on the wait list and get up there and go right in, and be in their tasting room.

So there’s a lot of businesses that have that same kind of opportunity that doesn’t need a full-scale implementation of either hardware or software for some bigger product.

Mark May

Is there application outside of restaurants and nightlife, or is that sort of the main focus?

Rob Krolik

I think for the SeatMe acquisition, I think it is the main focus. I think that’s something that there’s a lot of bells and whistles, a lot more than I ever knew about with regard to a restaurant or a nightlife place that is pretty specific. I think to augment that, what we’ve done is we’ve partnered with a number of companies in the industry, such as—well, we did ReachLocal for the home and local services, Demandforce for dentists, Mindbody, which some of you probably know if you work out in gyms – they do gyms and fitness centers and Pilates and yoga studios. All these companies have reservation or booking engines, and so what we’re doing inside the industry is we’re integrating all that into Yelp so that if you’re in a place and you’re searching for a local yoga studio, you can just make the reservation right there once you find a great one, as long as they’re hooked up into some of these services. So we’re trying to augment it, because we can’t go into, I don’t think, each individual niche or vertical.

Mark May

Do you happen to have a sense of what kind of coverage—when all these partnerships are implemented, what kind of coverage you’d have in terms of booking capability?

Rob Krolik

Yes, that’s a great question. I don’t necessarily. I think what we’re going to do is we’re going to continue to partner with a bunch of different players, so in the food delivery space, we’ve partnered with Delivery.com and Eat24, and so they are two competing players. I know there is Seamless and GrubHub out there – we’re happy to partner with them as well. The idea is, for us anyway, to get as many on our platform as we can so that we can track all of the activity that’s happening, so these are effectively transactions that are happening, and feed that back to the business owners and then reach out to them and talk about local advertising.

Unidentified Speaker

Is there a channel sales opportunity on that front, to the degree of which your sales people call a doctor’s office and they don’t have a reservation data system, to then pack them off to ZocDoc or somebody like that? I mean, it makes sense for you guys to do that, right, because you bring measurability, but it also seems like it’s something you could get paid for, to the degree to which you’re not building those platforms or selling those platforms internally.

Rob Krolik

Yes, I think there’s a channel opportunity that we have, and kind of vice versa where these other places can sell their wares, these booking reservation site capabilities, and then look at Yelp as a source of traffic. So I think there are two ways, so there’s plenty of opportunity in both cases.

Unidentified Speaker

Thanks Rob. Just when you tell us not to focus on ARPU, especially in a room full of analysts and PMs, why are you being that specific, because ARPU has got to be a way to measure size of customer, the amount of engagement that they have. So be a little bit more specific about why ARPU is not the driving metric in your mind that we should be focused on.

Rob Krolik

What I can tell you is it’s not something we look at internally, so we’re really focused on the dollars. So let me give you an example – if a customer came to us or a sales person reached out and sold them on a package, and they spent some time on the phone with them and maybe with a higher end package, and it was a $10,000 package, and that was one customer. They could get three different customers at our standard package, and they could get them up to $10,000 for three packages. So we focus more on the dollars than we do on the number of customers that we’re bringing in the door.

That said, ARPU really hasn’t changed much. I think if you take out the international revenue, because we’re not including the Qype customers into our metrics as of yet, I think it’s been fairly flat over a period of time.

Unidentified Speaker

Just a follow-up – maybe you’ve discussed this, but a cohort analysis of customers, those that signed up in 2008 or 2009, what they were spending then versus what they’re spending now, and is that expanding?

Rob Krolik

Right. I don’t think that they are spending any more or less on average. I think some of the savvy business owners out there that are realizing the benefit of Yelp, they are spending maybe a little bit more. There are numerous examples where businesses are spending more on Yelp, but I think on average it’s about the same. So even if you advertised in 2008, 2009, I think you—it’s kind of like a lot of these local businesses pay for the amount. They believe they are getting value but they don’t necessarily revisit it on an annual or biannual basis. It’s kind of like the Yellow Pages to them – it’s something they do, it’s an advertising vehicle, and now we’re feeding them back a lot of transparent data that we’re giving them.

Mark May

Okay, we’re over our allotted time. Thank you, Rob.

Rob Krolik

Okay, thank you. Happy to talk to you later. Thanks.

Question and Answer Session

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