By Kim-Mai Cutler
In its first ever earnings report as a publicly-traded company, Yelp (NYSE:YELP) said it earned $27.4 million in revenue in the first quarter, up 66 percent from the $16.5 million it made in the same time a year ago.
However, the company more than tripled its net losses, mostly on rising costs associated with supporting a larger sales staff. It lost $9.8 million, up from the $2.7 million it lost in the same time a year earlier. That loss of 31 cents per share was about double what analysts had estimated. Analysts had predicted a loss of 15 cents per share, according to a Bloomberg survey.
Looking at the sheet, Yelp's loss expanded mostly on sales, marketing and administrative costs. Sales and marketing costs rose to $18.8 million, up from $11.3 million the year before. On the earnings call, the company said much of this headcount growth came from international expansion, which it has yet to fully monetize. In the first quarter, Yelp launched in 11 new markets, eight of which were international.
General and administrative costs also more than doubled to $10.7 million, up from $3.6 million. But this was mostly from a stock-based compensation charge of $5.5 million related to the IPO.
All this considered, Yelp is still very much in growth mode, with an expanding footprint on both the desktop web and on mobile. Yelp's average numbers of monthly unique visitors grew 53 percent to 71.4 million. Mobile usage is also up to 6.3 million unique devices per month.
"From a monetization standpoint, we think mobile is better than what we have on the web," said Yelp chief executive Jeremy Stoppelman on the earnings call. He said the advertising the company has been running in the app is more lucrative than it is on the desktop web.
Like in its initial IPO filing, Yelp broke down how its revenues are split between local and brand advertising. The company said it brought in $21.4 million in local advertising, $4 million in brand advertising revenue and $1.9 million in other services. On the call, Stoppelman pointed to new partnerships with brands like Mercedes Benz.
Last year, Yelp earned more than 70 percent of its revenues from local advertising (like the improved profile pages that small businesses can pay for). It earned another 21.2 percent from brand advertising. For all of 2012, Yelp says it will bring in between $128 and $132 million. That would be up 54 percent from the $83.3 million it brought in last year.
Although they spiked a little bit after earnings went out, markets are now ho-hum on Yelp's news. The company's shares are down 0.7 percent in after-hours trading to $23, giving Yelp a market capitalization of $1.39 billion.
Here's the release.
Revenue was $27.4 million in the first quarter of 2012, reflecting 66% growth in revenue from the first quarter 2011
Cumulative reviews grew 59% to 27.6 million
Average monthly unique visitors grew 53% to 71.4 million*
Active local business accounts grew 117% to 27,300
Net loss in the first quarter of 2012 was $(9.8) million or $(0.31) per share, compared to a net loss of $(2.8) million, or $(0.19) per share, in the first quarter of 2011. Adjusted EBITDA for the first quarter of 2012 was a loss of approximately $1 million, compared to a loss of $880,000 for the first quarter of 2011.
"We are very pleased to report our first quarter as a public company," said Jeremy Stoppelman, Yelp's chief executive officer. "We were particularly excited to launch 11 new Yelp markets in the first quarter, including Sydney and Stockholm. With more than 80 Yelp cities around the world today, consumers are yelping about their favorite local businesses in record numbers and we look forward to continue expanding our platform around the globe."
"Our initial public offering added $114 million to our balance sheet, adding strength to our financial foundation as we look to continue investing in our rapid growth and increase the value we deliver to our communities and local businesses," added Rob Krolik, Yelp's chief financial officer. "The number of active business accounts has more than doubled year over year, and we have seen engagement from local business owners increase proportionally as they realize the positive economic impact that results when business owners have a constructive dialogue with their customers."
New market expansion: Yelp launched 11 new markets in the first quarter, including Antwerp, Brussels, Oklahoma City, Perth and Hampton Beach, increasing the total active markets worldwide to 82.
Yelp Mobile: Our mobile apps were used on approximately 6.3 million unique mobile devices on a monthly average basis for the quarter. Our development team released a total of nine updates for Yelp's iPhone and Android apps in the first quarter. Enhancements to the user experience included new features such as the release of photo feedback, new search filters (filter by what's hot/new and by businesses with deals) and the ability to view business owner replies.
Distribution partnerships: Mercedes and Lexus integrated Yelp into their in-vehicle infotainment systems. Combined with Yelp's BMW partnership announced in December, these relationships underscore the value that Yelp content provides to consumers on the go. OEMs are now working quickly to ensure that Yelp reviews are within reach from the dashboard.
Yelp for Business Owners: Yelp introduced a new set of dashboard metrics to make Yelp's business owner accounts even more insightful. The most notable improvement is the integration of mobile metrics which enables a business owner to track how many people placed a call to a business, mapped directions, purchased a Yelp Deal and/or uploaded photos.
Yelp Deals: Yelp Deals continues to grow. More than 25,000 businesses offered deals to their local community in the first quarter.
As of today, Yelp is initiating guidance for its second quarter of 2012 and full year 2012 revenue and adjusted EBITDA guidance.
For the second quarter of 2012, revenue is expected to be in the range of $29 million to $31 million. Adjusted EBITDA is expected to be a loss in the range of $(500,000) to $(800,000).
For the full year of 2012, revenue is expected to be in the range of $128 to $132 million, representing growth of 54% to 58% compared to the full year of 2011. Adjusted EBITDA is expected to be breakeven to slightly positive.