Yelp Inc. (YELP): history, ownership, mission, how it works & makes money

A Brief History of Yelp Inc.

Company Overview

Yelp Inc. is a leading online platform for discovering local businesses and services, founded in 2004. As of 2024, Yelp has evolved significantly, expanding its services and enhancing its advertising capabilities.

Financial Performance

For the six months ended June 30, 2024, Yelp reported a net income of $52.2 million, which represents a substantial increase from $13.6 million in the same period the previous year. This growth in profitability is attributed to increased advertising revenue and improved operational efficiencies.

Advertising Revenue Breakdown

Yelp's advertising revenue for the second quarter of 2024 showed a year-over-year increase of 6%, primarily driven by a 9% increase in ad clicks. The average cost-per-click (CPC) slightly decreased by 1% which reflects the enhanced value delivered to advertisers.

Cash Flow Overview

Yelp's cash flow from operating activities for the six months ended June 30, 2024, was $112.5 million, a decrease from $122.3 million in the prior year. The decline is attributed to increased employee-related payments and higher operating expenses.

Debt and Liquidity

As of June 30, 2024, Yelp had cash and cash equivalents amounting to $252.4 million and marketable securities totaling $132.4 million. The company entered a revolving credit facility of $125 million, enhancing its liquidity position.

Stock Repurchase Program

Yelp's board authorized a stock repurchase program totaling $1.95 billion, with $429.7 million remaining as of August 2024. In the first half of 2024, Yelp repurchased approximately 3.2 million shares for $125.9 million.

Future Outlook

Yelp anticipates further growth in advertising revenue and operational efficiencies as it continues to invest in technology and marketing strategies to enhance user engagement and advertiser value.

A Who Owns Yelp Inc. (YELP)

Ownership Structure

As of 2024, Yelp Inc. (YELP) has a diverse ownership structure comprising institutional investors, mutual funds, and individual shareholders. The following table outlines the major shareholders and their respective ownership percentages.

Institutional Ownership

Institutional ownership plays a significant role in Yelp's capital structure. As of the latest reports, the total institutional ownership stands at approximately 36.4%.

Recent Shareholder Changes

In 2024, Yelp has seen some shifts in its shareholder base. Notably, The Vanguard Group increased its stake by 1.2% over the last year, while BlackRock's stake remained stable. This indicates a growing confidence among institutional investors in Yelp's long-term prospects.

Stock Performance

Yelp's stock performance has reflected investor sentiment. As of Q2 2024, Yelp's stock price was approximately $40.25, with a market capitalization of about $2.8 billion. The stock has seen an increase of 12% year-to-date, indicating positive market reception.

Conclusion on Ownership Dynamics

The ownership dynamics of Yelp Inc. illustrate a balanced approach between institutional and individual investors. The continued interest from major institutional players suggests a robust outlook for the company moving forward.

Yelp Inc. (YELP) Mission Statement

Company Overview

Yelp Inc. is a prominent player in the local search and discovery market, connecting consumers with local businesses through its platform. The mission of Yelp is to connect consumers with great local businesses, providing a trusted resource for both consumers and businesses alike.

Mission Statement Details

As of 2024, Yelp's mission emphasizes the importance of community engagement and the provision of quality information for consumers seeking local services. The company strives to enhance user experience through continuous improvements in its platform and advertising solutions.

Financial Performance

For the second quarter of 2024, Yelp reported:

• Net revenue: $357.0 million, an increase of 6% compared to Q2 2023.
• Net income: $38.0 million.
• Adjusted EBITDA: $91.1 million.

For the first half of 2024, Yelp's financial metrics were as follows:

• Net revenue: $689.8 million, up 6% year-over-year.
• Net income: $52.2 million.
• Adjusted EBITDA: $155.6 million.

Advertising Revenue Breakdown

In Q2 2024, advertising revenue from services businesses constituted 65% of total advertising revenue, reflecting a year-over-year growth of 11%. The Home Services category experienced particularly strong growth at approximately 15% year-over-year.

User Engagement and Platform Improvements

Yelp has focused on enhancing user experience by implementing backend improvements and simplifying the user interface. In Q2 2024, Yelp reported a significant increase in page views across mobile and desktop platforms, contributing to an improved search experience.

Future Outlook

Yelp is committed to expanding its market presence through strategic investments in product development and marketing initiatives. The company aims to further enhance its platform's capabilities to better serve both consumers and local businesses.

How Yelp Inc. (YELP) Works

Business Model

Yelp Inc. operates primarily as a platform for user-generated reviews and local business recommendations. The company generates nearly all of its revenue through performance-based advertising products, which utilize a cost-per-click (CPC) auction model to connect consumers with businesses.

Financial Performance

As of the second quarter of 2024, Yelp reported the following financial metrics:

User Engagement

Yelp boasts a significant user base, which includes:

• Over 260 million ratings and reviews available on the platform.
• A year-over-year increase in page views on mobile and desktop platforms, attributed to enhancements in user experience.
• Improvements to the Request-a-Quote flow and paid search marketing, resulting in a project growth increase from approximately 20% to 35% quarter-over-quarter.

Advertising Revenue

Advertising is categorized into several segments, with notable performance in the Home Services category:

Strategic Initiatives

Yelp's strategic initiatives focus on:

• Enhancing user experience to simplify searches and connect consumers with businesses more effectively.
• Expanding advertising reach through partnerships, including integrations with social media platforms.
• Optimizing advertiser value through advanced technology and improved ad formats, leading to a 9% increase in ad clicks year-over-year.

Market Trends

As of mid-2024, Yelp continues to adapt to the evolving local digital advertising landscape, focusing on:

• Strengthening its position in the Home Services market.
• Addressing challenges faced by the Restaurants, Retail & Other segments due to a competitive environment.
• Implementing AI-powered features to enhance accessibility and user engagement.

How Yelp Inc. (YELP) Makes Money

Revenue Model Overview

Yelp Inc. generates the majority of its revenue through the sale of performance-based advertising products. These products are primarily sold to businesses of all sizes, from local shops to national chains. The advertising platform operates on a cost-per-click (CPC) basis, allowing businesses to pay only when users interact with their ads.

Financial Performance in 2024

As of June 30, 2024, Yelp reported a net revenue of $357.0 million, which represents a 6% increase from the same period in 2023. The net income for the same quarter was $38.0 million, and the adjusted EBITDA reached $91.1 million.

Advertising Revenue Breakdown

Yelp’s advertising revenue can be categorized into two main segments: Services and Restaurants, Retail & Other (RR&O). The following table summarizes the advertising revenue by category for the second quarter of 2024 compared to the previous year.

Paying Advertising Locations

The number of paying advertising locations is a critical metric for Yelp. As of June 30, 2024, the total number of paying advertising locations was 531,000, reflecting a 6% decrease from the previous year. This decline was primarily due to a drop in RR&O locations, while Services locations continued to grow.

Other Revenue Streams

In addition to advertising, Yelp generates revenue from various other sources, including:

• Subscription services, such as Yelp Guest Manager.
• Data access programs like Yelp Fusion and Yelp Knowledge.
• Revenue-sharing arrangements for food orders placed through third-party integrations.

For the first half of 2024, Yelp's total net revenue was $689.8 million, an increase from $649.6 million in the same period of 2023.

Costs and Expenses

During the second quarter of 2024, Yelp incurred total costs and expenses of $317.3 million, with significant allocations to sales and marketing, which amounted to $150.3 million, and product development costs of $82.1 million.

Market Position and Trends

Yelp continues to focus on enhancing user experience and advertiser value through technology improvements and strategic marketing initiatives. The company has also expanded its self-serve advertising options, leading to a 20% increase in revenue from this channel year-over-year in the second quarter of 2024.