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New Products At Google And Facebook Put The Ball In Yelp’s Court

Posted on Wednesday, Jun 22nd 2011

Till now, the online local listings player,, has successfully managed to avoid Google’s buy-out overtures and other competition while remaining a private player. This may change. After declaring their intentions last year to stay private, Yelp has finally started evaluating the option of going public. According to management, an IPO now will give the company the best valuation. They still have not finalized their intentions and have not yet filed the requisite documents with the SEC. But Yelp has begun to prepare for the IPO by scouting the market for a CFO with public company experience.

Yelp’s Financials
According to recent estimates, Yelp has more than 50 million unique monthly visitors across their website and mobile applications, and these visitors access more than 18 million reviews. Researchers estimate the company’s revenues at $100 million a year. Despite high traffic and revenues, Yelp remains unprofitable. NextUp Research recently valued Yelp at $561 million.

Yelp’s International Growth
As part of their international expansion strategy, Yelp recently launched the European edition of their Android app. The app is available in French, German, or Dutch for users in France, Germany, Austria, and the Netherlands. The app includes Yelp’s check-in feature, along with the basic access to reviews. Earlier this quarter, the company also launched their free multilingual business owner tools, Yelp Business Accounts, in these four countries in the local languages.

Yelp’s Mobile Expansion
To expand their mobile offerings, Yelp also introduced the check-in feature on their other mobile apps. Additionally, they extended their tie-up with OpenTable, the restaurant reservation platform, to enable users accessing a Yelp restaurant review over their mobile device to make reservations directly with the restaurant via the OpenTable feature.

Yelp’s Competition
Meanwhile, competition from bigger players continues to intensify. Facebook added a feature that allows users to recommend a place using Facebook Places. Facebook’s reach of 700 million users may represent a real challenge for Yelp. Google has also upped the ante. Recent articles reveal that Google is working on creating city-specific directories for a national rollout. Google’s city portals are expected to package local initiatives like Google Places along with photos, Maps, Offers, Mobile apps and local Events into a simple directory that will also be strong competition to Yelp. Yelp has managed to retain a loyal following for their local listings and reviews platform. But, as the bigger players continue to enter their market, it will become tougher for Yelp.

It seems that Yelp realizes this, and their investors want to cash out while the iron is hot. After a long closure, the IPO window has opened up with LinkedIn’s successful public offering. I suspect that before competition muddies the water, Yelp will take advantage of the window and ensure that the investors have a payday.

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