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Yelp! Inc. (NYSE:YELP)

Cantor Fitzgerald 2013 Internet Conference Call

December 11, 2013 8:40 AM ET

Executives

Vince Sollitto – VP, Corporate Communications

Wendy Lim – Head, IR

Analysts

Youssef Squali – Cantor Fitzgerald & Co

Youssef Squali – Cantor Fitzgerald & Co

All right. Well, thank you very much for showing up. It’s been quite an interesting day yesterday with snow and also...

Vince Sollitto

We were a little bit late, but we got here.

Youssef Squali – Cantor Fitzgerald & Co

Good, all right. Okay, so Yelp is the leading provider of reviews on hundreds of thousands of businesses across hundreds of markets in the U.S. and overseas. Users have contributed more than 15 million reviews to-date on everything from restaurants to hotels, dentists, mechanics and what have you. It is a name that we cover. It is a name we have buy on with a $69 price target. With us from the company is, Wendy Lim, she is Head of Investor Relations; and Vince Sollitto is VP of Communications and Public Affairs. Due to last minute issue that came up, unfortunately Rob Krolik, the CFO could not join us. So Wendy and Vince, thank you very much for stepping in. So let's talk, kind of big picture first. Looking at the overall environment and your environment, you’ve had to compete against some pretty big goliaths, Microsoft, Google, Yahoo, Yellow Pages, etcetera, yet you guys seem to have been pretty successful – I should really say very successful in your strategy, in the way you’ve executed it. Can you just talk about, maybe starting with you Vince, what has differentiated your offering that you believe made you guys different?

Vince Sollitto

Sure, thanks. And thanks, Youssef. And we have actually had some great success. We’ve had a really great quarter last quarter, $61 million in revenue just last quarter, 68% revenue growth and just continuing to move up in the right, virtually all categories. About a 117 million monthly unique visitors to the website now coming for our corpus at about 47 million reviews, all which are growing at a great rate. And so we’re very happy with the success we’ve had.

You asked the question that a lot of analysts and investors have asked over the years, since the last year as we IPO-ed. How do you guys compete with Google since it’s such a behemoth than anything who wants to get into? And I think the main way we've competed against virtually all of these entities that you described is through, first and foremost, our focus and our focus on building community.

Yelp is a little bit different than a lot of more technology companies that try to just [indiscernible] by technology. We go into every market in which we operate and we put booths on the ground and we nurture and create a community of passionate contributors that generate this very deep, rich, high-quality content. And that’s not saying that’s easily replicated.

And then we take that content and then we curate it using very aggressing means and filtering out attempts to gain the system bakes and shields and so that content creation and then that content curation results in very high quality content that attracts traffic and then in fact search engines find very desirable

Youssef Squali – Cantor Fitzgerald & Co

So within that, what’s really so difficult to go out and hire community managers and organize some block parties and try to get people…

Vince Sollitto

Well ask yourself, how many people in this room have actually even written a review right, maybe three or four of us.

Youssef Squali – Cantor Fitzgerald & Co

Yes.

Vince Sollitto

It kind of follows the 1-9-90 rule, right. There is 90% of the people are just going to read, 9% might contribute occasionally and 1% are going to dedicate it to community. How do you find those people that are determined to share their experience, it’s online and encourage them to do so in a meaningful way? Frankly this is not something that the search engines, particularly Google and others have found the way to do. I think it takes both people and technology together.

Youssef Squali – Cantor Fitzgerald & Co

Wendy, can you talk about your value proposition to merchants and how it – why do you think it resonates, and when it doesn’t, why doesn’t it?

Wendy Lim

Yes, so we – at the end of Q3, we had about 57,000 advertisers on the platform, out of a huge ocean of roughly 18 to 20 million in the U.S. And so we have seen great traction.

Vince Sollitto

And those advertisers are small businesses basically.

Wendy Lim

Right, they are local small pop businesses and we’ve seen great traction with those advertisers that we have lot of opportunity to grow. In terms of the value proposition that they see with Yelp, I think that they are seeing a lot of their own customers coming from Yelp, and so they are starting to understand and see the value that we deliver. We have created a bunch of different tools and one of our big themes we’re posing the loop to help communicate the value that Yelp delivers to these businesses.

We created a dashboard that includes mobile calls, directions and a lot of activity that these customers generate on behalf of these businesses. And so that’s been a really great way for us to show the value to these business owners in terms of the revenue that Yelp is delivering every day.

Youssef Squali – Cantor Fitzgerald & Co

Are you able to actually get to an ROI level with these guys?

Wendy Lim

Yes, earlier this year we developed this new tool, our dashboard called the Revenue Estimator tool. And on that, we’re able to take all of these customer leads from check-ins, mobile calls, quick for direction, aggregate those customer leads and then find a dollar value to those leads. And so they are able to see how much revenue Yelp is helping to deliver.

For advertisers, they roughly pay $3,600 to $4,000 a year to advertise. And so they are very quickly able to see how much ROI they are getting from their dollars spend on Yelp.

Youssef Squali – Cantor Fitzgerald & Co

Vince, do you want to add anything?

Vince Sollitto

I was thinking about big picture you pull back for a second. People come to Yelp because they need something. They are not coming to Yelp because they are trying to look for social network or look at figures. They come to Yelp, because I need a plumber, I am going to spend money on a plumber. I just need to figure out which one.

And so when you’re dealing with customers that are already at the very bottom of the purchasing funnel, that’s a very attractive opportunity for small businesses, because they know that if they can just get in front of those eyeballs and with the value proposition, they have a good chance of making conversion, and then that’s really been our main forte is connecting consumers with these great local businesses and many businesses believe that this type of search advertising is really the most valuable.

Youssef Squali – Cantor Fitzgerald & Co

So if I’m a small business, how do I look at Yelp? Do I look at Yelp versus Adwords, do I look at Yelp versus Yellow Pages, do I look at Yelp versus, I don’t know, the local paper or all of the above, and if so, why do I – if Yelp is performing so much better than the other platforms, I don’t know, that’s actually a question, why am I not spending more money on it?

Vince Sollitto

Well, I think that you raised a great point. We just recently get to study through BCG had found that – actually it was Nielsen, I’m sorry, founded businesses are still spending about 97% of their advertising budget offline. And that’s Yellow Pages, coupon pack mailers, radio, print, TV. And yet we know from surveys such as brand local [ph] that 85% of consumers that they find all things including local businesses online. So all this advertising dollars; A, are being wasted and B, are eventually going to have transitioned online in order to be worth anything.

And so I think there is a number of reasons for that. One, Yellow Pages have been around for a long time. There is a strong lock there. It is a pay-to-play model. You had the Yellow Pages ad for years. Your sales guy calls up every year and says, time for that $5,000 renewal. And if you don’t pay, you won't be in the book this year. You had no way of knowing how many customers are coming to you from that. And so I think a lot of businesses just get used to that.

But it’s pretty obvious that consumers are using the internet to find businesses. And when they do, they find them through Yelp, and I think it’s only a matter of time. The good news for us is that there is a huge ocean of opportunity. If you look at Yellow Pages industry alone, I think it’s about $7 billion last year. We easily think that the vast majority of that could shift to us.

Youssef Squali – Cantor Fitzgerald & Co

Yes, it’s actually I think it's $9 billion in the U.S. and probably double that overseas.

Vince Sollitto

Great.

Youssef Squali – Cantor Fitzgerald & Co

So how do you convince? How do you break into that 97% that’s still being spend up on...

Vince Sollitto

Sure. And a bit part of what our sales team does, and our sales team – we have a large in-house telesales presence and they are calling into small businesses across about six, seven countries now, and the first call is primarily adjective. Are you aware that you’re online? You have a profile. You have great word of mouth online. And wouldn’t you like to amplify that, and that’s what you’re customers are finding you. And so that’s part of a sales process is educating and then closing the deal.

Youssef Squali – Cantor Fitzgerald & Co

Wendy, so when people hang-up the phone on you, why is it?

Wendy Lim

I mean I think that we’re obviously facing headwinds in the local business marketplace. 15% to 20% of local businesses close on an annual basis. And so that’s one of the reasons why we do see some advertisers who might be in dire financial straits or who may not be willing to advertise. There are bunch of different reasons. There might be seasonality. They may be stuck advertising whether offline mediums where they are not able to kind of – I guess kind of break their old habits.

On occasions there are some advertisers who do feel as though if they had a pain relationship with us. They do want a review removed and we won't do that, in terms of how we view content. The trust of the consumer is of the at most important to us and the content and the kind of credibility of that content is incredibly important, so we’re not willing to compromise that for any advertiser.

Youssef Squali – Cantor Fitzgerald & Co

One question and I remember I was part of the IPO back a year and a half ago or so. One question that I remember getting quite a bit is just how big is this market? How do you size this market? Do you just look at the Yellow Pages, do you look at maybe some of the Google search spend, etcetera locally, and how do you guys look at the market. How big is it?

Vince Sollitto

Well, there is a number of different ways to look at it, right. You can look at it from a revenue standpoint, what’s available out there. I think BIA/Kelsey estimates that the total local ad market is about $133 billion and about 15% of that is online. The Yellow Pages alone just in the U.S., I think we said $7 billion to $9 billion in the U.S. maybe double that worldwide.

We’re projecting – we’ve guided to annual revenues of $228 million, $229 million for this year. So clearly we’re just scratching the surface of what’s easily a $10 billion to multibillion dollar market just in the short-term. That’s on a revenue side. If you look at on the paying accounts and the businesses side, maybe a 15 million to 20 million small businesses in America alone, another 25 million globally. So you’re looking at maybe 15 million small businesses worldwide. We have 57,000 paying customers. So clearly there is just a huge TAM in front of us.

Youssef Squali – Cantor Fitzgerald & Co

So as you guys looked at the growth factors, what are the top three would – so just from top of my mind, my head I would say, okay, well there’s growth in advertisers, there’s growth in average revenue per advertiser and there is an international component to that, right?

Vince Sollitto

Sure. For us right now because we are so nascent in our efforts and because we’re still at the very beginning of the runway as far as the TAM, for us it’s advertiser number growth. That’s really what we’re focused. We’re not as focused on price leverage. We’re not as focused on increasing ARPU. For us, it’s more customer acquisition, how can we get more customers on to the network and into the system and more about the latter later.

So that’s our biggest focus I think is in acquiring new businesses and new customers and obviously we also are continuing to grow in terms of content generation by expanding internationally bringing more content in from other countries and then that content drives traffic and then that traffic drives inventory.

Youssef Squali – Cantor Fitzgerald & Co

Wendy, is pricing a big component of maybe why you look at the penetration of claimed businesses being still in that 4% range? If you were to lower prices as opposed to maybe raising prices and having that as growth vector, was that – have you run any sensitivity analysis to see if that will dramatically increase penetration or not really?

Wendy Lim

So in terms of looking at that claim business penetration, it’s not something that we closely monitor or track. Claim businesses are certainly a good lead for us. We have about 1.3 million claim businesses on Yelp, but we also have a lot of review businesses which are also great leads for us. And so the opportunity I guess is even more bigger [ph] than the claim business number.

In terms of pricing leverage and whether or not we should actually decrease prices, we have done a number of different kind of pilots and kind of dug into that and we have experiment with different pricings. So recently we launched a new kind of packaged CPC advertising bundle, which is little bit of hybrid between our CPC product offering and our subscription package.

And that was actually at a lower price point, so it appeals to businesses that either are really interested in performance ad products or who are budget constrained. So we have experimented a little bit with that. Our main focus is still on the kind of $300 a month subscription ad bundle, but we do have different options. We also have our self-serve CPC option that people can kind of buy into at a much lower price point.

Youssef Squali – Cantor Fitzgerald & Co

And what kind of feedbacks did you get from those?

Wendy Lim

It’s still really early days for the packaged CPC product, but so far the feedback has been good. Our self-serve CPC product has been working well, but the level sophistication that we see with local business owners is relatively low as it relates to online marketing. So we don’t see a ton of kind of local businesses lining up for that.

Youssef Squali – Cantor Fitzgerald & Co

Okay. The question that I actually got last night and I, – who actually owns the reviews? Do you own them or do the clients – I mean I contributed maybe half a dozen reviews over time.

Vince Sollitto

Thank you. The consumers…

Youssef Squali – Cantor Fitzgerald & Co

Can I delete them?

Vince Sollitto

You can delete them. Sure. You can. Consumers retain ownership of their content. They simply grant us a perpetual, an irrevocable right to use them. And so the individuals that contribute their content own them. They have the ability to update them, to delete them if they choose, and they simply give us the ability to display them.

Youssef Squali – Cantor Fitzgerald & Co

So my personal experience has been in contributing reviews to you guys and to Google and to a couple of other places, what I’ve noticed is after this three, you guys were the only ones that actually authenticated me as user, meaning requesting that I give you an email address that worked. You sent me something, you authenticated me and then you accepted my review. The others did not and to me that was kind of a clear element that showed the quality of the review.

Vince Sollitto

I think it goes back to what Wendy was talking earlier about maintaining trust and protecting the integrity of our content. For us really that is job one. We have to not just generate quality content, but maintain the integrity of that content, because consumers rely on the content and they trust it, and the minute they don’t, the entire value proposition breaks down. And so frankly other services have perhaps not been as aggressive or as thorough in doing that authentication and that type of software filtering, and as a result,. I think some of them became less useful and maybe went on the way side, and others have taken a more let's be more pro-business, more business-centric approach, but for us, if we can get consumers to rely on the content, then that creates this wheel where the business is realized that this is where the consumers are. And that’s what we knew these well.

Youssef Squali – Cantor Fitzgerald & Co

Talk a little bit about the cohorts and the growth rate that you’ve seen among your oldest cohorts? One of the things that was really surprising to me is, you go back to literally 10 years ago and some of these cohorts are still growing really, really fast. Maybe can you contrast for us the growth rates in cohorts between maybe different markets or international, domestic and just give us a sense of somebody that joined maybe – an advertiser that may have joined 10 years ago or eight years ago or seven years ago. How much are they still spending?

Wendy Lim

Yes, so in terms of our cohorts and we have three cohorts that we publish data for. Revenue growth did accelerate in Q3, which we were pretty excited about. Vince mentioned we had 80% year-over-year growth in local revenue. And so we’re seeing growth even in our oldest cohorts. We’re not necessarily sure if there is any one factor that’s really driving that growth. We think there is a combination of different things that’s helping to continue to have even our oldest markets grow. I think the tools that, I mentioned earlier that we’ve launched to business owners, certainly like brand name equity and some slight increases in sales force productivity have helped to really kind of continue that growth across those cohorts.

In terms of international, we haven't provided any data on international cohorts since we just started selling internationally about a year ago. What we have seen is we’ve seen great revenue growth over 600% year-over-year in Q3 which is now about 5% of total revenue. We’ve also seen great review and traffic growth of about 100% for each.

Youssef Squali – Cantor Fitzgerald & Co

Actually on that, can you maybe just tell us, I think at last count I think you guys were in some 110 cities or something. How many cities are you in right now? How many cities are actually monetizing, meaning how many cities you have a community manager and maybe even a sales force, either selling locally or selling from London into Paris or wherever?

Wendy Lim

So we have a 111 Yelp markets, and a Yelp market is defined as a city or a market where we have a community manager. And we have – of that 111, 51 are international and 60 are domestic. And so in terms of how we look at communities and markets, it’s a little bit different in terms of how we sell. So for example, we sell into a number of cities where we don’t have community managers.

So for example, in a city like Fresno, California where we don’t have a community manager, we are generating revenue from a city like that. So we do monetize outside of some of those cities where we have community managers. We’re currently selling into the U.S., Canada, U.K. Ireland, France and Spain and Germany. And so we’re selling into those countries. In the United States and Canada, we are selling out of our telesales centers. In San Francisco, Phoenix and New York and in Europe, we are selling out of our Hamburg and London offices.

Youssef Squali – Cantor Fitzgerald & Co

And so out of that 111, I’ve missed this, but how many are actually generating any types of revenues to?

Wendy Lim

Yes, I would have to look to see where those cities are. I think that you could probably go back into some of our public filings to see which cities we are in, in terms of France and Germany and all those different countries. We are selling into those countries. I don’t know exactly how many of those markets are in the countries that we’re monetizing.

Youssef Squali – Cantor Fitzgerald & Co

Okay, all right. This is meant to be interactive, so please if there are any questions let us know, we’ll circulate a mike to you. But I guess, talk a little bit about the amount of time it takes you to launch a market and then start making some money at it?

Vince Sollitto

Sure. One of the things about local is that it is not an immediate – it’s not a very short-term thing. Locals are very long-term project. And so for us, it takes about two to three years from the time that we actually have community manager in a community to generate enough content, broad enough range of businesses to make the product really useful for consumers. And at that point we came into monetize and so that’s about right two to three years.

Youssef Squali – Cantor Fitzgerald & Co

And has that changed?

Vince Sollitto

No, to be honest, that’s pretty much – it’s pretty standard. There is a very, kind of regular cycle that works. We put the community managers in the market. They grow content. That content grows, traffic seems to grow and then we’re going to monetize. It can vary a little bit depending on whether there is any halo effect from nearby markets or travelers and visitors. Our international markets are very new to us only in the last couple of years and so we’re only beginning to monetize them now, but everything seems to follow the same general trend.

Youssef Squali – Cantor Fitzgerald & Co

Have you ever broken out the cost per market?

Vince Sollitto

The cost per market is also pretty uniform. We generally only have one community manager in each of the 111 Yelp markets. That person’s salary is certainly well less than the $100,000 and that’s really the only marketing cost in that market and then we actually have maybe a handful of sales reps assigned to each particular city. And between those sales reps and that one marketing person, once the revenues begin to kick in, then it pretty much takes care of itself.

Youssef Squali – Cantor Fitzgerald & Co

Okay. Are there any questions? Yes, Julie [ph].

Question-and-Answer Session

Unidentified Analyst

[Inaudible - Microphone Inaccessible].

Vince Sollitto

Sure. Wendy, jump in if I miss anything here, but that’s really been a big focus for us last year, obviously you can just – mobile is important to international growth, but really we’ve also been focused very much on closing the loop with small businesses, helping them understand that the traffic they are getting online is resulting in offline customers, obviously the dashboard was a big part of that.

If you look at the dashboard, you’ll see that we’re also providing them with information about how consumers are viewing and engaging with their account online. We recently launched a consumer or a customer activity feed feature that’s also enabled in the dashboard, where we can send the business owner in real-time information.

So for instance on the dashboard, we provide business owners with not just how many folks have looked at your page on Yelp, we can tell you how many people have checked in at your business from Yelp. How many people have called your business through our application, how many people have generated directions to your business through our applications. If you add those things, now we have the Revenue Estimator, where we know the average spend is for your businesses’ category, you can take those leads and times the average revenue and try to show you a little bit of an idea of how much revenue we’re driving you.

We’ve also now begun the activity feed, we’re actually sending information to business owners in real time, hey, a man and he is 20 from Berkeley just checked in your business or a woman from San Francisco just generated directions to your business. And so these are ways for us to help businesses understand that online activity is generating offline comment and then we’re going to continue ours like that.

One other way to think about it too is, we recently launched something called a Yelp Platform and that is really a way for local businesses to plug into Yelp. Yelp is obviously a discovery engine. Consumers come to Yelp when they’re trying to find a business to spend money at. And so with our Yelp Platform, we’ve now plugged in partners such as, at the moment food delivery services, the Eat24 and Delivery.com are now partnering with us.

So we’re now moving Yelp from being just discovery engine to also being a transaction engine. So people can come to Yelp, find a business, and then transact with it directly. And there is no better way to tell a business that, we send you a customer when we send them a check. And so they know and so that’s – we can hopefully expand that to other partners that we’ve signed up like spas and dentists and other things. Anything you can think of where someone can come find a business, then right then and there make a reservation, make an appointment, purchase food, purchase something. Again, this is a big focus for us.

Youssef Squali – Cantor Fitzgerald & Co

Are there questions? I was actually going to ask a question about potential scale of benefit of marketing, because if you look at your marketing spend, it’s about 50% of revenues, but I think and let me ask the other side of it, if you were to spent more on marketing to just improve or to increase awareness of the value proposition, who do you guys justify or would that lead to an accelerating growth or have we gotten to a point where you spend an additional 500 basis points and good pickup in top line growth just wasn’t justified, because clearly there is a disconnect in the market, between what you guys do for the small business versus what Huh [ph] was talking about the Yellow Pages ability to do all the stuff that you’re doing.

Vince Sollitto

Sure. I think for us, sometimes we get to ask that question and we kind of look at our growth rates and say, gosh 80% growth in local, all cohorts accelerating, I mean what do you want, right?

Youssef Squali – Cantor Fitzgerald & Co

But when you see the Yellow Pages still doing $7 to $9 billion, like there is something wrong here?

Vince Sollitto

And I agree with that and I think that’s probably just a combination of sophistication in the marketplace, long-term habits and trends, but obviously that money is got to come online. I mean no one is using it. So it’s clearly going to come online. You’re asking me a question of whether we can spend some more money on marketing, whether it’s an advertising to do more to bring the brand up. It’s a difficult question. We’re already 117 million monthly unique worldwide, how many millions would you have spent to move that needle through advertising? Don’t know the answer to that question. So I think we’re certainly happy to look at and we in fact have looked at.

I am not going to say we wouldn’t consider spending additional marketing dollars and try that, but the moment right now we’ve got a playbook that we think works. We’re focused on absorbing our international expansion, making sure that that’s running smoothly. It has been transitioning to mobile and closing the loop. Again with that 57,000 small businesses, we feel that there is such a huge ocean of opportunity in front of us, we’re going pretty quick into this.

Youssef Squali – Cantor Fitzgerald & Co

Yes, staying with the international for a second. So first, how is the acquisition been for you, right, you acquired pretty big for you, a German player and as you look at other markets is buy versus build this through preferred route or not?

Vince Sollitto

Sure. So we acquired really our biggest competitor in Europe, Qype, a little over a year ago. I guess it was in Q3 of last year. And this year our international expansion efforts have really been focused on integrating that acquisition into our company. And so really country-by-country what we’ve done is we’ve taken the content generated by Qype users, migrated that over to the Yelp site, and then slowly redirected the traffic in each country from the original Qype URL over to Yelp. And we’ve done that probably in virtually all the Qype countries now, with the largest being Germany and Switzerland and the German language just in the last month or so.

That transition has gone very smoothly. We are delighted with that. It’s no small engineering feet to begin with, migrating all that data and then also making sure we get the SEO right, so that we get the credit for that content, there is no duplication and it’s all being discovered. And so that’s gone very smoothly. The content has been migrated, the traffic has been redirected. We are seeing that traffic. It’s still early obviously, but we’re very hopeful.

Youssef Squali – Cantor Fitzgerald & Co

Are you keeping the brand?

Vince Sollitto

No. The brand has gone.

Youssef Squali – Cantor Fitzgerald & Co

Okay. Go ahead.

Unidentified Analyst

[Inaudible - Microphone Inaccessible].

Vince Sollitto

Well, we do offer our business clients an opportunity to provide a video and we can actually go and shoot that for them based on the level of spend, and so rather than just having a photo slide show. They are able to post video on their Yelp business profile page. We’re also examining the idea of consumer contributed video content. Obviously, however our consumers wish to contribute content to enrichment their experiences.

Right now, it’s review context as photos, it’s sending reviews by mobile. We’ve recently rolled out the ability to write reviews from mobile. And in fact just, maybe we launched it in August and we’re already seeing 25% of our reviewed content being contributed by mobile. So we’re always examining how consumers can contribute and we offer business [indiscernible].

Youssef Squali – Cantor Fitzgerald & Co

On mobile, clearly the big story in 2013 will continue to be 2014 and beyond. So, and among all the services that I personally use, I think Yelp is probably one of the learners that learned itself the most to the mobile platform. Talk about maybe user engagement on mobile versus desktop and maybe even advertisers will honestly spend on the mobile platform versus the desktop?

Vince Sollitto

Wendy, you want to take that?

Wendy Lim

Sure, so in terms of our user engagement on mobile. I mean we’re getting great user engagement on mobile. We had over 11 million unique devices accessing our mobile app at the end of the Q3. And as Vince said, we recently launched writing reviews on mobile and so we’ve seen really great traction with that review writing with almost active contributors, the most active people who are using the app are very engaged writing reviews, checking in, making phone calls, getting directions to businesses via the app.

In terms of advertising, we’re pretty much platform agnostic. So as part of the advertising packet or bundle and the set number of impressions that advertisers buy, they get a kind of an allocation of mobile versus desktop impressions. And we kind of determined that for them, given that there is some complexity and we have a lot of data around where those ads are best served. So we go ahead and make that decision for advertisers. And so we are able to monetize mobile just as effectively as we do desktop.

Youssef Squali – Cantor Fitzgerald & Co

Is mobile changing at all, the economics to you guys?

Wendy Lim

Well, given that we monetize it the same, across the advertising bundle, so it kind of comes included with their package. We monetize it the same, but we do see higher click-through rates on mobile search compared to desktops. So we do see – obviously mobile is a perfect medium for local search, so we do see great engagement on our mobile phone, mobile apps.

Youssef Squali – Cantor Fitzgerald & Co

All right, well then, so what could go wrong with this picture? Google is clearly still a big driver of your traffic, right? Maybe speak to your reliance on Google for traffic versus your reliance – your growing reliance on your app particularly when it comes to mobile?

Vince Sollitto

Sure. Well, let's say that I think virtually internet based business that relies on search for discovery. Google is clearly the biggest player in that market domestically and in Europe even more so. That said, we’ve managed to create such rich compelling content that it’s well regarded and surfaced by the search engines, but the point you make is a good one which is that on mobile when consumers are using our mobile application, they are bypassing those search engines and going directly to Yelp for content.

And so we’ve seen good strong growth in use of our mobile app. That app use disintermediates Google. We’ve seen very strong engagement from consumers in that app. And in fact almost half of the searches conducted on Yelp are conducted through our mobile app. So yes, certainly like most businesses we rely on search engines for discovery, but we also have a strong and growing disintermediated mobile app usage.

Youssef Squali – Cantor Fitzgerald & Co

So put some numbers around that again? So you’re saying half of your mobile traffic is coming through the app?

Vince Sollitto

No, not entirely. So we have a 117 million monthly unique visitors to the website. Of that 117 million, almost a third, 30% or so are coming to our mobile website.

Youssef Squali – Cantor Fitzgerald & Co

Bypassing everybody else, coming straight to you?

Vince Sollitto

Well, they are coming to our mobile website.

Youssef Squali – Cantor Fitzgerald & Co

Right.

Vince Sollitto

Right. And so that’s, I don’t know, maybe 40 million people, 40 million unique. And then another 11.2 million folks are using our app. They’ve gone ahead and downloaded the app to their smartphones and they are launching that immediately. So to put it another way, we have about 50 million mobile users on a monthly basis, a combination of mobile web and the app. And so we’re very happy with that.

Youssef Squali – Cantor Fitzgerald & Co

Okay. Any last questions? All right, then let me ask the last one – well, maybe two. So and probably here I’d be push your name on capital allocation [indiscernible] what’s – I am sure he briefed you on it before I think you guys left. 400 million bucks in the bank is a lot of money, it’s more than you guys have ever had.

Vince Sollitto

That’s true.

Youssef Squali – Cantor Fitzgerald & Co

Maiden acquisition, the business is generating quite nice pile of cash. What’s the future there?

Vince Sollitto

Well, it’s funny you asked that question because as he briefed us the answer to that question, what is the right amount of money for a company of our size to have in the bank, if he gives that the answer, you should ask Rob. We’re very happy to have conducted a very successful follow-on that that money is there. We already had money left in the bank from the IPO. We do have almost $400 million in the bank as you said.

We like having that for a company of our size. It gives us flexibility in what we want to do. If we see opportunities for acquisitions that could help us to accelerate our growth or take us in an additional direction, certainly time to consider, but to be honest it’s not a focus. There is nothing like that on the table. It just gives us flexibility to figure out how to invest in our business.

That’s really our number one priority and focus right now is we believe we have a playbook that’s working. It’s working very well. Wherever we go, it generates traffic, it generates content and it generates revenue. And so for us, we’re getting just great returns as you can see from this side of our revenue growth. Let's go ahead and reinvest in that business and that’s really our focus right now.

Youssef Squali – Cantor Fitzgerald & Co

Lastly for me. As you look at the consumer, as you look at the – this is we’re through towards the tail-end of the year looking into 2014, what kind of environment are you baking in for next year?

Wendy Lim

I think that in terms of 2014, I think that we’re going to continue to focus on our three themes from 2013. I don’t think those were necessarily change too much in terms of our focus on mobile and making sure that we have a great mobile experience for consumers, closing the loop that we continued to deliver value and show the value that we’re delivering to local businesses and then also international. So we’ve finished, or for the most part, finished our Qype integration. And so we’ll continue to focus on international and international growth.

Youssef Squali – Cantor Fitzgerald & Co

Okay, but from a consumer standpoint, we are hearing different versions of how the consumer is feeling these days, so here in Europe has there been any change from your perspective, so consumers interacting with your sizing [ph]?

Vince Sollitto

Consumer usage, no. I mean obviously the trends continue to grow strongly. Obviously if you’ve seen if anything accelerating growth in traffic year-over-year in the last few quarters as well as content and some of that content was not organic, we have acquired it. So no, consumer engagement as far as content generation and traffic has been very strong. We’ve really been focused primarily on the product side with helping our transition, as our user base transitions to mobile making sure that that experience is as rich in detail that it is on the webtop, sorry desktop.

We’ve also launched couple of new features including like a Nearby feature, where you can watch in your phone, where you can – it helps suggest things for you based on time of day, location, weather and previous habits. So for us, we’re always focused on a consumer experience and that’s where the nice thing about having the founder and the product guy as the CEO really helps.

I mean, Jeremy, is not just our CEO, he is also our Chief Product Officer. And for him, he is always focused on how does our product works for the consumer. And that’s his real focus and passion. So that’s really I think why we’ve had this continued success.

Youssef Squali – Cantor Fitzgerald & Co

Excellent. That’s all we have in terms of time. So Wendy and Vince, thank you so much.

Vince Sollitto

You bet. Thanks.

Wendy Lim

Thank you.

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