initial public offerings (IPOs) trading on American exchanges

Thursday, November 17, 2011

Yelp Files for IPO

Google has become a fierce competitor since Yelp rejected its $500 million buyout offer in 2009. Yelp claims Google has "removed links" to its pages in search results and promoted its own local search results. And Google's recent acquisition of Zagat provides a large database of curated reviews, which some users may find more valuable than Yelp's user-generated ones. Worryingly, Yelp says Google remains the source of "more than half" of the traffic to its website.

Yelp, the popular local reviews service, has filed for a 2012 IPO that could raise approximately $100 million for the company.

Yelp has been preparing for its IPO for a while now, ever since it rejected a $500 million acquisition offer from Google in early 2010. The IPO could value the company north of $2 billion.

According to the company’s SEC filing, Yelp has more than 22 million reviews, 61 million monthly unique visitors and 529,000 business pages claimed.

Yelp earned approximately $12.1 million in revenue in 2008 and doubled to $25.8 million in 2009. In the first nine months of 2011, the company generated $58.4 million in revenue. However, the company is still not profitable. It lost $7.6 million in the first nine months of 2011, a bit less than the $8.5 million it lost during the first nine months of 2010.

Most of Yelp’s income comes from local advertising, followed by brand advertsiing and “other services” such as Yelp Deals, partnerships and remnant advertising inventory. In the first nine months of 2011, Yelp generated $40.3 million in local advertising revenues, $12.7 million in brand advertising and $5.4 million from other services.

Yelp’s largest owners are Bessemer Venture Partners, which owns 22.5% of the company, and Elevant Partners, which owns 22.4%. Benchmark Capital owns 16.2% of the company. Max Levchin, the first investor in Yelp, a board member of the company and co-founder of PayPal and Slide, owns 13.8%. Co-founder and CEO Jeremy Stoppelman owns 11.1% of Yelp’s outstanding shares.

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