Friday, November 18, 2011

Some Info on the Yelp (YELP) IPO Filing

I expect Yelp (YELP) to have a successful IPO simply on brand recognition alone.  As we've seen lately, losing hordes of money means little, and Yelp actually loses a lot less money (relative to revenue) than some of the IPO "winners" we've seen the past year.   But as its revenue slows (which the company says is likely in the filing), while expenses still must go up - the long term prospects - short of an international roll up, are probably not quite so awesome.  Still a fun service to use, however.

Here are some details on the company per Dealbook:

  • The reviews site is on track for a $100 million initial public offering, based on a figure used to calculate the registration fee. Yelp, which plans to trade under the appropriate ticker “YELP,” has hired Goldman Sachs to be its lead underwriter and Citigroup and Jefferies & Company to be joint bookrunners. 
  • Founded in 2004, the company has a large database of user-generated reviews for local businesses like restaurants and hair salons. It is part of a rising class of Internet start-ups, like Groupon and Angie’s List, that helps customers discover local vendors through the Web and mobile applications. 
  • So far, investors have embraced such start-ups. Earlier this month, shares of Groupon rose 31 percent on their first day of trading. Angie’s List, which went public on Thursday, soared 39 percent at the start of trading.
  • Like its peers, Yelp has increased its user base sharply over the last year. According to the filing, Yelp now has 22 million reviews on its site, a 66 percent jump from the previous year. It also recorded a monthly average of 61 million unique visitors for the third quarter, a 63 percent surge from the year-ago period.
  • Yelp, which makes the bulk of its revenue from advertising contracts with local businesses, is not yet profitable. Though revenue rose 79.9 percent, to $58.4 million for the first nine months of this year, the company recorded a loss of $7.4 million.
  • Yelp also warned investors that it expected revenue growth rate to slow, as the business matures and the company spends more money on corporate expenses, like marketing and international expansion.
  • According to the filing, Yelp’s venture capital investors own the largest slices of the company. While Jeremy Stoppelman, Yelp’s co-founder and chief executive, owns 11 percent of the company, Bessemer Venture Partner and Elevation Partners own about 22 percent each.

Here is the full SEC filing.

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