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Tag: Online Reviews

  • Was Yelp Misleading About Its Reviews?

    Was Yelp Misleading About Its Reviews?

    Yelp is no stranger to legal battles, nor is it a stranger to complaints about how it handles reviews. Now, the company faces a new class action suit from shareholders, accusing it of selling over $81 million in stock, while misleading shareholders about the legitimacy of reviews.

    Do you believe Yelp would mislead investors about its reviews, or do you think the suit is baseless? Share your thoughts in the comments.

    Named defendants include CEO Jeremy Stoppelman, CFO Robert Krolik, and COO Geoffrey Donaker.

    Joseph Curry, who filed the suit, alleges that Yelp “made false and misleading statements concerning the company’s true business and financial condition, including but not limited to the true nature of the so-called “firsthand” experiences and reviews appearing on the company’s website, the robustness of its processes and algorithms purportedly designed to screen unreliable reviews, and the company’s forecasted financial growth prospects and the extent to which they were reliant upon undisclosed business practices, including but not limited to requiring business customers to pay to suppress negative reviews.”

    The complaint adds, “The class period misrepresentations made by defendants concerning the company’s current financial and business condition, including its forecasted financial and business condition alleged herein, were each materially false and misleading when made and caused the company’s stock to trade at artificially inflated prices of over $98.00 per share on March 4, 2014, because defendants knew, or recklessly disregarded, the following facts:

    (a) Reviews, including anonymous reviews, appearing on the company’s website were not all authentic “firsthand” reviews, but instead included fraudulent reviews by reviewers who did not have first-hand experience with the business being reviewed;

    (b) Algorithms purportedly designed to screen unreliable reviews did not comprehensively do so, and instead the company allowed such unreliable reviews to remain prominent while the company tried to sell services designed to suppress negative reviews or make them go away; and

    (c) In light of the above facts, the representations concerning the company’s current and future financial condition and prospects, and the extent to which they were reliant upon undisclosed business practices, did not have a reasonable basis.”

    It goes on to allege that the defendants sold over a million shares of Yelp stock at prices as high as $98.99 per share for “insider trading proceeds” of over $81.5 million. As a point of reference, shares are $67.78 as of the time of this writing.

    Here’s the actual complaint (via GigaOm):

    Curry v Yelp by jeff_roberts881

    Yelp has suggested that the claims made in the complaint are without merit, as you would expect.

    The company was in the news earlier this week as a hotel called Union Street Guest House was charging people for posting negative reviews. As a result, people who hadn’t actually stayed there flocked to the hotel’s Yelp page to leave bad reviews. Yelp said this was against its policy, and said “reviews that are contributed as a result of media attention and do not reflect first-hand experiences run counter to Yelp’s Terms of Service and will be removed from the site.”

    Still, seemingly illegitimate reviews (including one from Hitler) have continued to appear on the page. Sometimes fictional businesses and reviews appear on the site as well.

    In April, the FTC disclosed that it had seen over 2,000 complaints about Yelp’s business practices between 2008 and March of this year. The company, which is celebrating its ten-year anniversary, released its quarterly earnings report last week, as it became profitable for the first time since going public in 2012.

    Do you think Yelp can actually do a good job of keeping reviews legitimate? Let us know in the comments.

    Image via Yelp (Flickr)

  • What Happens When You Charge People For Negative Yelp Reviews

    Historic hotel Union Street Guest House learned a harsh lesson this week, which should serve as a cautionary tale to those worrying about their Yelp reviews a little too much. Reviews on Yelp and other sites are controversial for a variety of reasons, but businesses going to extreme lengths to keep negative reviews away are bound to only draw more of them.

    How far would you go to maintain a positive Yelp presence? Let us know in the comments.

    In case you missed it, the hotel in question had posted a policy on its website indicating that it would charge guests $500 for not only negative online reviews of its establishment, but for such reviews by other people. I’ll allow the text of said policy to explain:

    Please know that despite the fact that wedding couples love Hudson and our Inn, your friends and families may not. This is due to the fact that your guests may not understand what we offer – therefore we expect you to explain that to them. USGH & Hudson are historic. The buildings here are old (but restored). Our bathrooms and kitchens are designed to look old in an artistic “vintage” way. Our furniture is mostly hip, period furniture that you would see in many design magazines. (although comfortable and functional – obviously all beds are brand new) If your guests are looking for a Marriott type hotel they may not like it here.

    Therefore: If you have booked the Inn for a wedding or other type of event anywhere in the region and given us a deposit of any kind for guests to stay at USGH there will be a $500 fine that will be deducted from your deposit for every negative review of USGH placed on any internet site by anyone in your party and/or attending your wedding or event If you stay here to attend a wedding anywhere in the area and leave us a negative review on any internet site you agree to a $500. fine for each negative review. (Please NOTE we will not charge this fee &/or will refund this fee once the review is taken down). Also, please note that we only request this of wedding parties and for the reasons explained above.

    As you can imagine, once the media (including reddit) caught wind of this, all hell broke loose. The negative reviews came pouring in both from people claiming to have stayed at the hotel, and those admitting they hadn’t. There was a common theme: these people suck because they charge people fees for negative reviews – a worrisome business practice indeed.

    Yelp agreed that the business practice was not a good one, but also said it wouldn’t allow reviews from people who hadn’t actually been to the hotel.

    A spokesperson for the company told us, “For 10 years, Yelp has existed as a platform to alert consumers of bad business behavior such as this. Reviews that are found to be in violation of Yelp’s Terms of Service or Content Guidelines, including those that are not based on a first-hand experience, may be removed from the site.”

    Another Yelp representative told us, “For ten years (this month), Yelp has provided a platform for people to exercise free speech and warn consumers about bad business behavior such as this. Yelp fights to protect free speech for consumers and against efforts to intimidate or stifle it. Trying to prevent your customers from talking about their experiences is bad policy and, in this case, likely unenforceable anyway.”

    “We encourage people to share their first-hand experiences; reviews that are contributed as a result of media attention and do not reflect first-hand experiences run counter to Yelp’s Terms of Service and will be removed from the site,” they added.

    A day later, it would appear that some of those reviews have been removed, and the hotel’s rating has gone up to one and a half stars (it was at one-star on Monday).

    Still, the questionable reviews continue to roll in. The top one right now is five-stars, and comes from Hitler:

    Union Street Guest House appears to have removed the practice from its policy – at least on the website. The part about charging people for negative reviews has disappeared. It’s unclear whether it’s still in the contract. The establishment has not been talking to the media.

    The moral of the story is that no matter how much you may hate Yelp and online reviews in general, the last thing you should do is try to actually charge people who post negative ones. It will absolutely destroy your online reputation.

    The flood of reviews may die down as the story fades from memory, and Union Street Guest House may be able to work its way up to a more positive Yelp presence, but getting rid of all the articles written about this incident may not be so easy – unless, of course, the “right to be forgotten” becomes a thing here in the U.S.

    The hotel is lucky it hasn’t faced any apparent repercussions from Yelp, especially since Yelp is supposed to be alerting consumers about businesses who cheat on reviews. I don’t see a warning on Union Street Guest House’s page.

    Do you think Yelp should have taken down reviews related to this? Should the hotel’s page have a consumer alert? Given the above Hitler example, is Yelp even effective at policing its policies? Let us know what you think in the comments.

  • Union Street Guest House Charges Guests $500 For Negative Yelp Reviews

    Union Street Guest House Charges Guests $500 For Negative Yelp Reviews

    The Union Street Guest House in Hudson, New York has a strange policy. It charges guests who book weddings $500 for any negative reviews left on websites like Yelp by the wedding parties’ guests.

    On the hotel’s Events & Weddings page, there’s a section called “Reviews,” which says:

    Please know that despite the fact that wedding couples love Hudson and our Inn, your friends and families may not. This is due to the fact that your guests may not understand what we offer – therefore we expect you to explain that to them. USGH & Hudson are historic. The buildings here are old (but restored). Our bathrooms and kitchens are designed to look old in an artistic “vintage” way. Our furniture is mostly hip, period furniture that you would see in many design magazines. (although comfortable and functional – obviously all beds are brand new) If your guests are looking for a Marriott type hotel they may not like it here.

    Therefore: If you have booked the Inn for a wedding or other type of event anywhere in the region and given us a deposit of any kind for guests to stay at USGH there will be a $500 fine that will be deducted from your deposit for every negative review of USGH placed on any internet site by anyone in your party and/or attending your wedding or event If you stay here to attend a wedding anywhere in the area and leave us a negative review on any internet site you agree to a $500. fine for each negative review. (Please NOTE we will not charge this fee &/or will refund this fee once the review is taken down). Also, please note that we only request this of wedding parties and for the reasons explained above.

    Yep.

    It’s unclear how long this policy has been in effect, but it was brought to the world’s attention on Monday thanks to a piece from The New York Post’s Page Six, which says:

    For any bad reviews that do make it online, the innkeepers aggressively post “mean spirited nonsense,” and “she made all of this up.”

    In response to a review complaining of rude treatment over a bucket of ice, the proprietors shot back: “I know you guys wanted to hang out and get drunk for 2 days and that is fine. I was really really sorry that you showed up in the summer when it was 105 degrees . . . I was so so so sorry that our ice maker and fridge were not working and not accessible.”

    Union Street Guest House currently has a one-star rating on Yelp. This is likely attributable to a slew o freshf one-star reviews slamming the establishment for its policy. A few samples:

    This Guest House follows despicable practices of charging $500 for a negative review on Yelp. Shameful.

    …Oh, and the proprietors are mentally disabled. They’ll blame you (and even charge YOU $500) for every thing that goes wrong with other guests stays. Seriously, spend your money elsewhere.

    …Think about it this way; forget the bad service, etc. why would you want to stay at a place that has a policy of fining a guest $500 for any bad review about their experience? Do you like having your freedom of speech censored?

    There are many, many more where those came from. Among them, a Jonathan S. of Hudson, provides the following five-star review:

    That’s funny. Yelp doesn’t publish real reviews I’ve gotten that are positive but they’ll publish all these negative reviews from people that have never been to the establishment.

    It looks like it’s gotten quite a few one-star ratings on Facebook too:

    The real question is how could this business expect something like this not to happen with such a ridiculous policy in place?

    Yelp’s policy makes it clear that users can’t always withdraw the content they create, meaning that once those negative reviews are up, they can’t always be eliminated, so anyone fined by Union Street Guest House could have a hard time getting their money back. Something tells me this policy will soon go away after this though. For the hotel, however, it might be too late to recover any semblance of a positive rating, unless Yelp gets rid of all the recent slams.

    The hotel isn’t commenting to any media outlets so far. We’ve reached out to Yelp for clarity on its own policy on this type of business behavior, and will update accordingly. We know they restrict compensating people for reviews. It seems like that should include negative compensation.

    Either way, the policy has done plenty to quickly ruin the business’ online reputation. In addition to all the new negative reviews, they also get the added benefit of all the articles about the policy showing up in search results. I wonder if all the money they’ve collected from negative reviews has been enough to offset the irreparable damage they’ve caused themselves. I’m guessing not.

    Update: Here’s the statement we got from Yelp: “For 10 years, Yelp has existed as a platform to alert consumers of bad business behavior such as this. Reviews that are found to be in violation of Yelp’s Terms of Service or Content Guidelines, including those that are not based on a first-hand experience, may be removed from the site.”

    Update 2: Yelp sent us a second statement:

    For ten years (this month), Yelp has provided a platform for people to exercise free speech and warn consumers about bad business behavior such as this. Yelp fights to protect free speech for consumers and against efforts to intimidate or stifle it. Trying to prevent your customers from talking about their experiences is bad policy and, in this case, likely unenforceable anyway.

    We encourage people to share their first-hand experiences; reviews that are contributed as a result of media attention and do not reflect first-hand experiences run counter to Yelp’s Terms of Service and will be removed from the site.

    So it sounds like all the fresh reviews knocking the hotel’s policy won’t be sticking around. So far, they’re still up, as is this new, glowing five-star review:

    5/5 stars, came here to enjoy a nice wedding. I came expecting a modern high end hotel. instead it was “historic” which is a synonym for “old and overpriced.” They claim their furniture is “hip and would be found in many design magazines.” I think i spotted a nice chair in the lobby that I had seen at a flea market before. Luckily my stay was paid for so as they say, free is five stars!

    apparently this hotel fines 500 dollars for negative reviews. I’m not quite sure how Union Street Guest House plans to enforce this policy, but it seems fair that 5 star reviews should receive some sort of compensation.

    If you are reading this USGH management, please send 500 dollars as a reward. You can message me for the payment terms. I accept cash or bitcoin

    Thanks!

    Another five-star review says:

    I’ll give you guys 5 dumb stars, for being SO dumb.

    Hope you’ve figured out by now how the internet works.

    Best of luck.

    Please send me $500 for writting a positive review.

    Thanks.

    Images via Yelp, Facebook

  • Yelp Becomes Profitable For First Time Since Going Public

    Yelp just released its Q2 earnings report with revenue of $88.8 million, up 61% year-over-year. Net income was $2.7 million, or $0.04 per share, compared to a net loss of $(0.9) million, or $(0.01) per share in the same quarter last year.

    That last part is the real news.

    CEO Jeremy Stoppelman said, “We delivered great results this quarter. Our consistent focus and strong execution across all areas of our business have driven our growth quarter after quarter. We also became profitable for the first time as a public company. While this is an important milestone, we still have a large local opportunity ahead of us.”

    Yelp went public two years ago.

    Cumulative reviews grew 44% year-over-year to 61 million while average unique monthly visitors grew 27% to 138 million. Average monthly mobile unique visitors grew 51% to 68 million. Active local business accounts grew 55% to 79.9 thousand.

    On the earnings call, Stoppelman said consumer experience is the company’s top priority. Consumers are increasingly engaged with businesses on Yelp, he said. He’s been “delighted” by the high quality videos so far from the new video feature. More than 40% of new reviews have been from mobile.

    Consumers have sent about a hundred thousand messages to businesses since the messaging feature launched. Thousands of restaurants are using Yelp Reservations.

    In June, Japan led all international countries in iOS app downloads.

    Stoppelman is proud of everything Yelp has accomplished in its first ten years (they’re celebrating the company’s tenth birthday).

    80 thousand paying local business accounts – company notes that salesforce has quotas, and they’re happy where they’re at. More salespeople are calling into more markets. SeatMe is a small number of this.

    Asked about Google’s impact on Yelp, Stoppelman noted that Yelp has seen an uptick (in traffic presumably) as a result of a recent Google algorithmic change (presumably the local search update as discussed here). He also noted that changes Google makes day to day don’t have much of an impact.

    A “decent amount” of advertisers are using the call-to-action feature, but they won’t release any specific numbers.

    Here’s the release in its entirety:

    SAN FRANCISCO, July 30, 2014 /PRNewswire/ — Yelp Inc. (NYSE: YELP), the company that connects consumers with great local businesses, today announced financial results for the second quarter ended June 30, 2014.

    • Net revenue was $88.8 million in the second quarter of 2014, reflecting 61% growth from the second quarter of 2013
    • Cumulative reviews grew 44% year over year to approximately 61 million
    • Average monthly unique visitors grew 27% year over year to approximately 138 million* and average monthly mobile unique visitors grew 51% year over year to approximately 68 million**
    • Active local business accounts grew 55% year over year to approximately 79.9 thousand

    Net income in the second quarter of 2014 was $2.7 million, or $0.04 per share, compared to a net loss of $(0.9) million, or$(0.01) per share, in the second quarter of 2013.  Adjusted EBITDA for the second quarter of 2014 was $17.2 million, compared to $7.8 million for the second quarter of 2013.

    “We delivered great results this quarter,” said Jeremy Stoppelman, Yelp’s chief executive officer.  “Our consistent focus and strong execution across all areas of our business have driven our growth quarter after quarter.  We also became profitable for the first time as a public company.  While this is an important milestone, we still have a large local opportunity ahead of us.”

    “We achieved revenue growth of 61% year over year, driven by acceleration across all of our cohorts and strong results in our key operating metrics,” added Rob Krolik, Yelp’s chief financial officer.  “We also saw considerable leverage in the model with more than a 120% increase in adjusted EBITDA compared to last year.  Given our strong performance and large addressable market, we plan to continue to invest in the business.”

    Net revenue for the six months ended June 30, 2014 was $165.2 million, an increase of 63% compared to $101.2 million in the same period last year.  Net income for the six months ended June 30, 2014 was $0.1 million, or $0.00 per share, compared to a net loss of $(5.7) million, or $(0.09) per share, in the comparable period in 2013.  Adjusted EBITDA for the first six months of this year was approximately $25.8 million compared to $11.0 million for the first six months of last year.

    Business Highlights

    • Community engagement:  Yelp continues to engage its community and consumers on mobile.  Yelp extended private messaging for its community from the desktop to its mobile platforms and, in July, rolled out the ability to post video clips to business listings.  In the second quarter, Yelp had approximately 68 million** mobile unique visitors on a monthly average basis and approximately 40% of new reviews were contributed through mobile devices.
    • Closing the loop with businesses:  In June, Yelp launched the Message the Business feature, which enables consumers to directly contact businesses on Yelp with questions.  Yelp also launched Yelp Reservations for restaurants to easily and quickly set up free online reservations, providing another way for businesses to see the valuable leads Yelp delivers.
    • Geographic expansion:  Yelp is now in a total of 27 countries.  In the second quarter, Yelp launched in Japan andArgentina and also opened a new European headquarters in Dublin, Ireland.

    Business Outlook

    As of today, Yelp is providing its outlook for the third quarter of 2014 and raising its outlook for revenue and adjusted EBITDA for full year 2014.

    • For the third quarter of 2014, net revenue is expected to be in the range of $98 million to $99 million, representing growth of approximately 61% compared to the third quarter of 2013.  Adjusted EBITDA is expected to be in the range of $18 million to $19 million.  Stock-based compensation is expected to be in the range of $12 million to $13 million, and depreciation and amortization is expected to be approximately 4-5% of revenue.
    • For the full year of 2014, net revenue is expected to be in the range of $372 million to $375 million, representing growth of approximately 60% compared to the full year of 2013.  Adjusted EBITDA is expected to be in the range of $67 million to $69 million.  Stock-based compensation is expected to be in the range of $45 million to $47 million, and depreciation and amortization is expected to be approximately 4-5% of revenue.

    Quarterly Conference Call

    To access the call, please dial 1 (800) 708-4539, or outside the U.S. 1 (847) 619-6396, with Passcode 37666042, at least five minutes prior to the 1:30 p.m. PT start time.  A live webcast of the call will also be available at http://www.yelp-ir.com under the Events & Presentations menu.  An audio replay will be available between 4:00 p.m. PT July 30, 2014 and 11:59 p.m. PT Aug 13, 2014 by calling 1 (888) 843-7419 or 1 (630) 652-3042, with Passcode 3766 6042.  The replay will also be available on the Company’s website at http://www.yelp-ir.com.

    About Yelp

    Yelp Inc. (http://www.yelp.com) connects people with great local businesses. Yelp was founded in San Francisco in July 2004. Since then, Yelp communities have taken root in major metros across 27 countries. Yelp had a monthly average of approximately 138 million unique visitors in the second quarter of 2014*. By the end of the same quarter, Yelpers had written approximately 61 million rich, local reviews, making Yelp the leading local guide for real word-of-mouth on everything from boutiques and mechanics to restaurants and dentists. Approximately 68 million unique visitors visited Yelp via their mobile device on a monthly average basis during the second quarter of 2014**.

    * Source: “Users” as measured by Google Analytics

    ** Average monthly mobile unique visitors based on the number of unique visitors accessing Yelp via mobile web and unique devices accessing the app on a monthly average basis over a given three-month period.

    Non-GAAP Financial Measures

    This press release includes information relating to Adjusted EBITDA, which the Securities and Exchange Commission has defined as a “non-GAAP financial measures.” Adjusted EBITDA has been included in this press release because it is a key measure used by the Company’s management and board of directors to understand and evaluate core operating performance and trends, to prepare and approve its annual budget and to develop short- and long-term operational plans. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”).

    Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. Some of these limitations are:

    • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
    • adjusted EBITDA does not reflect changes in, or cash requirements for, the Company’s working capital needs;
    • adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;
    • adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;
    • adjusted EBITDA does not take into account restructuring and integration costs associated with our acquisition of Qype; and
    • other companies, including those in the Company’s industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

    Because of these limitations, you should consider adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income (loss) and the Company’s other GAAP results. Additionally, the Company has not reconciled its adjusted EBITDA outlook for the third quarter and full year 2014 to its net income (loss) outlook because it does not provide an outlook for other income (expense) and provision for income taxes, which are reconciling items between net income (loss) and adjusted EBITDA. As items that impact net income (loss) are out of the Company’s control and cannot be reasonably predicted, the Company is unable to provide such an outlook. Accordingly, reconciliation to net income (loss) outlook for the third quarter and full year 2014 is not available without unreasonable effort.  For a reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see “Reconciliation of Net Income (Loss) to Adjusted EBITDA” included in this press release.

    Forward-Looking Statements

    This press release contains forward-looking statements relating to, among other things, the future performance of Yelp and its consolidated subsidiaries that are based on the Company’s current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding expected financial results for the third quarter and full year 2014, the future growth in Company revenue and continued investing by the Company in its future growth, the Company’s ability to expand geographically and build Yelp communities internationally and expand its markets and presence in existing markets, the Company’s ability to capture the large local opportunity and closing the loop with local businesses. The Company’s actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Factors that could cause or contribute to such differences include, but are not limited to: the Company’s short operating history in an evolving industry; the Company’s ability to generate sufficient revenue to maintain profitability, particularly in light of its significant ongoing sales and marketing expenses; the Company’s ability to successfully manage acquisitions of new businesses, solutions or technologies, including Qype and SeatMe, and to integrate those businesses, solutions or technologies; the Company’s reliance on traffic to its website from search engines likeGoogle and Bing; the Company’s ability to generate and maintain sufficient high quality content from its users; maintaining a strong brand and managing negative publicity that may arise; maintaining and expanding the Company’s base of advertisers; changes in political, business and economic conditions, including any European or general economic downturn or crisis and any conditions that affect ecommerce growth; fluctuations in foreign currency exchange rates;  the Company’s ability to deal with the increasingly competitive local search environment; the Company’s need and ability to manage other regulatory, tax and litigation risks as its services are offered in more jurisdictions and applicable laws become more restrictive; the competitive and regulatory environment while the Company continues to expand geographically and introduce new products and as new laws and regulations related to Internet companies come into effect; the Company’s ability to timely upgrade and develop its systems, infrastructure and customer service capabilities. The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof.

    More information about factors that could affect the Company’s operating results is included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recent Quarterly Report on Form 10-Q at http://www.yelp-ir.com or the SEC’s website at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to the Company on the date hereof. Yelp assumes no obligation to update such statements. The results we report in our Quarterly Report on Form 10-Q for the three months ended June 30, 2014 could differ from the preliminary results we have announced in this press release.

    Media Contact Information
    Yelp Press Office
    Vince Sollitto
    (415) 230-6506
    [email protected]

    Investor Relations Contact Information
    Yelp Investor Relations
    Wendy Lim
    (415) 568-3240
    [email protected]

     

    Yelp Inc.
    Condensed Consolidated Balance Sheets
    (In thousands)
    (Unaudited)
    June 30, December 31,
    2014 2013
    Assets
    Current assets:
    Cash and cash equivalents $ 290,386 $        389,764
    Short-term marketable securities 60,429 –
    Accounts receivable, net 25,450 21,317
    Prepaid expenses and other current assets 7,960 5,752
    Total current assets 384,225 416,833
    Long-term marketable securities 61,704 –
    Property, equipment and software, net 37,462 30,666
    Goodwill 59,271 59,690
    Intangibles, net 3,996 5,235
    Restricted cash 3,684 3,247
    Other assets 2,814 306
    Total assets $ 553,156 $        515,977
    Liabilities and stockholders’ equity
    Current liabilities:
    Accounts payable $     1,680 $            3,364
    Accrued liabilities 21,621 19,004
    Deferred revenue 2,186 2,621
    Total current liabilities 25,487 24,989
    Long-term liabilities 6,424 4,505
    Total liabilities 31,911 29,494
    Commitments and contingencies
    Stockholders’ equity
    Common stock – –
    Additional paid-in capital 588,829 553,753
    Accumulated other comprehensive  income 2,764 3,186
    Accumulated deficit (70,348) (70,456)
    Total stockholders’ equity 521,245 486,483
    Total liabilities and stockholders’ equity $  553,156 $         515,977

     

     

    Yelp Inc.
    Condensed Consolidated Statements of Operations
    (In thousands, except per share amounts)
    (Unaudited)
    Three Months Ended Six Months Ended
    June 30, June 30,
    2014 2013 2014 2013
    Net revenue $ 88,787 $ 55,023 $ 165,194 $ 101,156
    Cost and expenses
    Cost of revenue (1) 5,845 4,018 10,922 7,358
    Sales and marketing (1) 47,798 30,803 92,919 58,997
    Product development (1) 14,726 7,997 28,708 15,233
    General and administrative (1) 13,257 10,148 26,427 18,912
    Depreciation and amortization 4,034 2,637 7,695 5,115
    Restructuring and integration (1) – – – 675
    Total cost and expenses 85,660 55,603 166,671 106,290
    Income (Loss) from operations 3,127 (580) (1,477) (5,134)
    Other income (expense), net (15) (66) (17) (267)
    Loss before provision for income taxes 3,112 (646) (1,494) (5,401)
    Benefit (Provision) for income taxes (369) (232) 1,602 (276)
    Net income (loss) attributable to common stockholders $   2,743 $    (878) $        108 $   (5,677)
    Net loss per share attributable to common stockholders:
    Basic $     0.04 $   (0.01) $       0.00 $     (0.09)
    Diluted $     0.04 $   (0.01) $       0.00 $     (0.09)
    Weighted-average shares used to compute net loss per share attributable to common stockholders:
    Basic 77,714 64,576 71,444 64,163
    Diluted 77,056 64,576 76,903 64,163
    (1) Includes stock-based compensation expense as follows:
    Three Months Ended Six Months Ended
    June 30, June 30,
    2014 2013 2014 2013
    Cost of revenue $      119 $      105 $        269 $        177
    Sales and marketing 3,728 2,282 7,125 4,270
    Research and development 3,456 1,040 6,498 1,856
    General and administrative 2,780 2,286 5,647 4,015
    Restructuring and integration – – – 555
    Total stock-based compensation $ 10,083 $   5,713 $   19,539 $   10,873

     

     

    Yelp Inc.
    Condensed Consolidated Statements of Cash Flows
    (In thousands)
    (Unaudited)
    Six Months Ended
    June 30,
    2014 2013
    Operating activities
    Net income (loss) $       108 $ (5,677)
     Adjustments to reconcile net income (loss) to net
     cash provided by operating activities:
    Depreciation and amortization 7,695 5,115
    Provision for doubtful accounts 2,581 1,301
    Stock-based compensation 19,539 10,873
    Loss on disposal of assets and web-site development costs (5) 94
    Excess tax benefit from share-based award activity (460) –
    Premium amortization, net, on securities held to maturity 93 –
    Changes in operating assets and liabilities:
    Accounts receivable (6,716) (4,404)
    Prepaid expenses and other assets (5,980) (2,318)
    Accounts payable and accrued expenses 3,567 215
    Deferred revenue (433) (85)
    Net cash provided by operating activities 19,989 5,114
    Investing activities
    Purchases of property, equipment and software (7,212) (4,966)
    Capitalized website and software development costs (4,327) (2,139)
    Change in restricted cash (397) (1,768)
    Goodwill measurement period adjustment – 1,153
    Proceeds from sale of property and equipment 14 –
    Purchase of investment securities held to maturity (122,226) –
    Cash used in investing activities (134,148) (7,720)
    Financing activities
    Proceeds from issuance of common stock 10,841 4,604
    Proceeds from issuance of common stock for Employee Stock Purchase Plan 4,087 –
    Excess tax benefit from share-based award activity 460 –
    Repurchase of common stock (642) (193)
    Net cash provided by financing activities 14,746 4,411
    Effect of exchange rate changes on cash 35 (134)
    Net increase in cash and cash equivalents (99,378) 1,671
    Cash and cash equivalents at beginning of period 389,764 95,124
    Cash and cash equivalents at end of period 290,386 $ 96,795

     

     

    Yelp Inc.
    Reconciliation of Net Income (Loss) to Adjusted EBITDA
    (In thousands)
    (Unaudited)
    Three Months Ended Six Months Ended
    June 30, June 30,
    2014 2013 2014 2013
    Net income (loss) $   2,743 $  (878) $      108 $ (5,677)
    (Benefit) Provision for income taxes 369 232 (1,602) 276
    Other expense, net 15 66 17 267
    Depreciation and amortization 4,034 2,637 7,695 5,115
    Stock-based compensation 10,083 5,713 19,539 10,318
    Restructuring and integration – – – 675
    Adjusted EBITDA $ 17,244 $ 7,770 $ 25,757 $ 10,974

    Image via Yelp

  • Yelp Gets This Much Favorability In Google And Still Complains?

    Yelp frequently complains about how Google treats it in search results, and recently became an official complainant in the EU’s investigation into the search engine’s business practices.

    Meanwhile, Google appears to be giving Yelp an unprecedented amount of visibility in its search results.

    For one, Google recently began rolling out an algorithm update for local search results, which takes into account more factors like its web search algorithm does. As a result, there has been quite a shake up in local listings for all types of business queries.

    Also as a result, Google seems to be favoring Yelp content even more than it already was. Yelp has asserted that Google gives its own content preference over Yelp, even when users are looking for Yelp content, but Danny Sullivan did an excellent job of dismantling that theory, showing that Google strongly favors Yelp content for the very restaurant Yelp used as an example.

    Now, after this recent algorithm update, Google has been found to have “fixed” the specific example Yelp was complaining about (and presumably many others like it).

    But as if that wasn’t enough, Yelp is pretty much dominating entire search results pages for various local queries. Mike Blumenthal points to a couple examples: “plumber san francisco” and “nail salon san francisco”. Beyond ads from the businesses themselves and the actual local results, which point to the actual businesses, Yelp appears in nearly every page one organic result for these queries.

    “Yelp is obviously very, very good with their SEO. They apparently have the ability to sculpt their internal link values to highlight what appear to be the most popular local businesses in the Google local results,” writes Blumenthal. “Apparently their ability to do that in their strongest markets is even greater than elsewhere.”

    “They reflect on Yelp’s ability to manipulate the search results and reflect poorly on Google’s acceptance of those practices,” he adds. “Yelp, though, needs to be careful of soiling the bed in which they sleep. Although I suppose they could fall back on their all too successful (but BS) cry wolf strategy if Google were to clamp down.”

    I don’t know about Yelp, but most businesses would kill for that type of search visibility. Considering that loyal Yelp users are likely to just go to Yelp to find what they want, it’s kind of insane how much Yelp is appearing in Google searches.

    Images via Google

  • Yelp Launches Video Upload Feature. Is Your Business Ready?

    A couple months ago, we learned that Yelp was preparing to launch a video feature. The company has now officially launched it.

    Do you like the idea of Yelp users taking videos from within your business and posting it to the site? Share your thoughts in the comments.

    The idea behind the feature, according to Yelp, is that users will be able to show off aspects of a location, such as ambiance, lighting, noise level, etc. They’ll be able to do this for their “favorite local businesses”. Something tells me users won’t limit this to their favorites, and may use it for businesses that they have problems with.

    “Photos are a great way to add a visual element to your reviews, and Yelpers upload more than 23,000 of them from their mobile apps alone per day,” says Yelp mobile product manager Madhu Prabaker. “We also know visuals are important to Yelpers since they spend 2.5 times longer on business pages with images than on those without. Now, using your iPhone (and soon Android) Yelp app, you can take short, 3-12 second videos of your favorite local businesses and better capture those details that photos alone can’t.”

    Keep in mind, Yelp is encouraging users to take videos of your business, but doesn’t want your business to ask for a review. I wonder what those restaurants that don’t like people taking pictures of their food will think about this. Same for the businesses worried about people showrooming. All they’ll see is someone pulling out their phone and pointing it at something. Yelp is also going out of their way to tell users that they’re not too worried about the quality of the videos.

    “Worried your video skills are not up to par? We’re not looking for Ken Burns-level documentary filmmaking – it’s actually more helpful to see what a real-life consumer experience looks like without fancy editing or narration,” says Prabaker. “These are not intended to be ‘video reviews,’ but rather an extension of the visual experience. Sound trippy? Here’s what we mean: These short videos are great for conveying the atmosphere of a business, which helps others anticipate their experience before stopping by. For instance, imagine scrolling through pics of delicious dishes at a new bistro but not really being able to tell if the ambiance is more ‘date night’ or ‘family friendly.’ Yelp video is here to help.”

    I’m sure it will be nothing but helpful, positive content, right?

    As we reminisced in a previous article, think about all the PR disasters that have occurred from in-restaurant photos being shared to various social media sites (and Yelp does consider itself a social media site).

    We’ve seen people putting their private parts on bread and freezing bottles of urine at Subway, and posting it to Instagram. We’ve seen Taco bell workers licking taco shells and posting it to Facebook – to the restaurant’s official page no less. We’ve seen a Golden Corral employee expose all kinds of gross stuff from the restaurant on reddit, complete with photos.

    And that’s just the employees. What kind of video content might we see from upset customers?

    While we haven’t seen many complaints about photos that appear on Yelp pages, video takes things up a notch. It gives people a chance to talk and capture more content. It could give an unhappy customer a chance to visually focus on a single aspect of a business, which may or may not provide a complete picture of the whole experience or even the full context.

    Yelp has guidelines in place to help ease your concerns, assuming you trust Yelp’s ability to enforce its policies. Here’s what they say:

    Business photos and videos should be broadly relevant to the business and reflect the typical consumer experience (e.g., what the business looks like, what the business offers, etc.).

    We may remove photos and videos that showcase a more unique personal experience (e.g., your smiling group of friends at the bar, the fly in your soup) as well as lower quality photos and videos (e.g., too blurry or dark).

    Unfortunately, Yelp doesn’t have the greatest reputation among businesses when it comes to ensuring the best content about them appears on their pages.

    Either way, it’s likely that these videos will not only appear on Yelp itself, but in countless other apps and websites too, as Yelp recently opened up its API to spread its data around to whoever wants to use it. Yelp is also getting an incredible amount of visibility in Google search results, and people also seem to be trusting what they see on Yelp more than ever.

    It looks like Yelp’s video offerings take advantage of Brightcove, though the company doesn’t mention it in its announcement.

    Do you think video on Yelp is a good idea? Let us know in the comments.

    Image via Yelp

  • Yelp Lets You Look At Trends From The Past 10 Years (For Some Cities At Least)

    Yelp is showing off a new tool called Yelp Trends, which gives you access to its ten years’ worth of data to get a look at trends on a city by city basis.

    Yelp was founded in October of 2004, so it’s releasing this tool as it prepares to celebrate its tenth birthday. Product manager Travis Brooks writes on the Yelp blog:

    From food trends to popular slang to short-lived beauty fads (Brazilian blowout anyone?), Yelp Trends searches through words used in Yelp reviews to show you what’s hot and reveals the trend-setting cities that kicked it all off. Our massive wealth of data and the high quality reviews contributed by the Yelp community are what allow us to surface consumer trends and behavior based on ten years of experiences shared by locals around the world. For example, are San Franciscans still sipping PBR or craving craft beer? Is the CrossFit fad still going strong or losing steam? Are Londoners loving bob hairstyles or feeling more fringe (that’s bangs, for you Americans) these days? And every city has its favorite food trucks now, but where did this meals-on-wheels phenomenon first take off?

    Compare searches by city to end the “who did it first” debate once and for all. Canada gets credit for creating the poutine craze, but which cities did it spread to first? It may not come as a shock that these gravy-soaked French fries peaked with New Yorkers in 2010, but Angelenos have just begun embracing the trendy menu item in the past couple years.

    The tool enables users to search through 98 cities in 20 countries. It would be a lot cooler if it included every city listed in Yelp, but unfortunately that’s not the case. It would also be nice if the graphs were embeddable, but that’s not an option, though it does provide buttons to share on Facebook and Tweet.

    Yelp recommends students tap into the data for various projects, and is even enabling them to win $5,000 for creating unique and compelling ones using the data. More on the Yelp Dataset Challenge here.

    Yelp recently expanded availability of its data to developers by making its API widely available.

    Image via Yelp

  • Yelp Reviews Are About To Appear In A Lot More Places

    Yelp announced some big news late on Tuesday. They’ve increased the call limit on their API to 25,000 per day, and made it easier for developers to use, in addition to opening it up to all developers for free. In other words, anyone who wants to use Yelp data in their apps or website can now do so easily, without cost, and pull enough data to make actual useful Yelp-related features.

    For Yelp, this means that it’s likely to see a big increase in the visibility of its content and its ads. For businesses, it means more people than ever are going to be exposed to reviews – positive and negative. Let the fun begin.

    Is increased exposure of Yelp reviews good or bad for businesses? Tell us what you think.

    Yelp has been pretty protective of its data, and today it has more competitors than ever. This, of course, includes Google, which has pretty much become its sworn enemy. Google used to use Yelp’s (and other sources’) reviews in its product in a way that essentially passed them off as Google’s own. Things have changed on that front, but Yelp still doesn’t think Google plays fair, and recently became an official complainant in a lengthy antitrust probe into the search giant’s business practices.

    “I truly fear the landscape for innovation in Europe is infertile, and this is a direct result of the abuses Google has undertaken with its dominant position,” Yep CEO Jeremy Stoppelman told European Commission chief José Manuel Barroso in a letter. “While I laud the important work of your office and Vice-President Kroes in ensuring Europe is able to tap into the economic opportunity that the Internet industry is unleashing, it is my strong belief that such potential cannot be realized unless every possible step is taken to prevent abuse by dominant firms.”

    Either way, opening up its API like it is should help Yelp better compete with everyone. It already has a significant brand, and when that and its content are plastered all over the place, that brand is bound to gain significance in consumers’ eyes. Yelp has already been integrated into some key places, including iOS, Mac OS X, Yahoo’s local search results, and the Pebble smartwatch.

    “Thousands of companies have used Yelp’s API to build local information into their products and services, giving consumers even more access to great Yelp content, like Yelp review snippets, photos, ratings and business listing information,” says Yelp VP Business & Corporate Development Mike Ghaffary. “Developers have turned to Yelp because of our trusted, high-quality local data, which, through an empirical study, is shown to be more reliable and consistent than other sources of local data.”

    Not everybody’s convinced that Yelp’s data is so reliable, but the study Ghaffary refers to is discussed in more detail by the company here. The study was done by Yelp itself, with findings presented back in November. It looked at how Yelp data “stacks up against the competition,” but looked at photos, and not reviews. The company said the reason for this was that not all the sites it looked at have the same concept of reviews, and it needed a measure of content that is comparable across sites. It also looked at business names, addresses, phone numbers, websites, dupes, and locations. Here are the stats:

    Yelp director of search Jason Fennell said at the time:

    There are a few things of note. First, TripAdvisor and Yellowbook do not have listings in some categories/geographies so they have a smaller set of samples. Second, fewer listings had websites than other types of data. This is at least partly because not all businesses have websites, so the maximum is less than 100%. Finally, one downside of our approach to scoring is that a missing listing gives you credit for not having a duplicate. This flaw in scoring combined with a fairly large number of listings outside of TripAdvisor’s main area of focus—79 Shopping businesses in Dublin, Ireland for example—likely inflate TripAdvisor’s “No Dupes” score.

    The high-level story is that in terms of listing data Yelp and Google are closely matched and ahead of the other competition. Google wins out on finding business websites, which isn’t surprising given that crawling the web is part of its core business. On the other hand, Yelp is well ahead of Google in terms of photo content.

    Clearly Yelp has some helpful data to offer developers beyond the reviews themselves, which will give them all the more reason to utilize the API, but it’s also going to mean greater access to those controversial reviews, and this is what businesses already critical of Yelp (and there are a lot of them) may be concerned with.

    You probably know the story by now. Some businesses think Yelp is sabotaging their listings by burying positive reviews, sometimes accusing them of holding said reviews hostage if they don’t spend advertising dollars. We’ve seen such accusations come up time and time again for years, though nobody’s ever been able to offer any real evidence of this happening.

    There is also always the concern about fake reviews. Yelp appears to do its best to weed these out, but just how successful they’ve been is anybody’s guess. Every so often they provide updates about adding consumer alerts for businesses they catch “red-handed,” but there’s no real confirmation that they’re catching all the fake stuff.

    There is almost certainly a number of reviews that while not completely fake are misleading at best, or exaggerated by angry customers or people that frankly don’t really know what they’re talking about. That’s why celebrity Andrew Zimmern called Yelp reviews “worthless”.

    Regardless, they’re about to be much more prevalent throughout the web and mobile app ecosystems, which will probably also lead to more of them being written in the first place – especially now that people can leave reviews from the phones.

    Oh, and just so you know, people are trusting the reviews they read online more than ever. A recent study from BrightLocal found not only that people are turing to online reviews for local businesses more and more, but 88% say they trust online reviews as much as personal recommendations. That’s actually up from 79% last year. Only 13% said they don’t trust reviews as much.

    Are you glad to see Yelp’s API open and expanded to any app that wants to take advantage? Let us know in the comments.

  • People Are Trusting Online Reviews More Than Ever

    It appears that people are not only turning to online reviews for local businesses more and more, but they are actually trusting them more than ever despite all the media coverage questioning their legitimacy.

    If people are trusting what they read about businesses online more, do you view this as a good thing or bad thing? Let us know in the comments.

    BrightLocal recently put out the results of its 4th annual Local Consumer Review Survey, finding that for better or worse, online reviews are only gaining momentum with consumers.

    Most (57%) of consumers have searched online for a local business over 6 times in the past year, while 39% have searched online for local businesses at least one time per month, and 15% searching almost every day.

    “Consumers are becoming more comfortable using the internet to find businesses on both PC & mobile,” says Myles Anderson, BrightLocal’s CEO. There are more & better services for locating businesses which make it faster, easier & better for consumers. It’s habit forming and they start to use it with increasing regularity.”

    “Part of this growth can be attributed to more local businesses building & improving their online presence,” he adds. “Local data is more abundant & increasingly accurate which delivers better experience for consumers – i.e. they have a great selection of businesses to consider with lots of information to make in informed decision.”

    The survey found that more people are searching for more types of businesses this year than last year. Restaurants and cafes are still the biggest category, but as people seek out more types of businesses, the percentage is down.

    88% of those surveyed said they have read reviews to determine the quality of a local business (up from 85% in 2013). 39% read reviews on a regular basis. Only 12% don’t read reviews, down from 15% last year.

    One of the more interesting takeaways from the findings are that consumers appear to be doing their homework on businesses, and reading a significant number of reviews before deciding whether or not to trust them. 67% say they read up to 6 reviews. 85% say they read up to 10. 7% say they read over 20. That last percentage may be small, but it’s up from 2% last year.

    “The significance of these stats is that it sets a benchmark for the number of positive reviews that they need,” says Anderson. “With 85% of consumers reading 10 or less reviews then we need to ensure that we have at least 10 reviews to satisfy them, but more importantly that the most recent 10 reviews are all positive. If your most recent reviews are negative in sentiment & rating then most consumers won’t look beyond these to the better ones that may lie further down the page. It’s important to ‘manage’ out bad reviews and focus on generating regular, fresh, positive reviews.”

    92% of users will use a local business if it has a 4 star (out of 5) rating. 72% will us one that has a 3 star rating. 27% will use one that has a 2 star rating, and only 13% will use one that has a 1 star rating.

    72% say that positive reviews make them trust a local business more, which is one percentage point lower than last year. 10% say they don’t take any notice of online reviews.

    Here’s perhaps the most interesting finding of all: 88% say they trust online reviews as much as personal recommendations. That’s actually up from 79% last year. Think about that for a minute. Most people trust random online reviews from people they don’t know or have any real evidence of the legitimacy of the review just as much as a recommendation from someone they know. Only 13% said they don’t trust reviews as much as personal recommendations.

    That’s good news for Yelp, who’s been constantly battling fake reviews.

    Anderson says local consumers are trusting online review more than ever before.

    57% said they will visit a local business’ website after reading a positive review, and 72% said they will take some sort of action.

    Reliability was found to be the most important “reputation trait” that consumers look for in online reviews – more so than expertise, professionalism, good value, accreditations, friendliness, courtesy, or localness.

    Based on the survey’s findings, people are far more likely to recommend a local business via Facebook than via Yelp, though good old fashioned word of mouth is still on top.

    One more interesting finding that highlights another problem of Yelp’s is that 9% of people will recommend a business if asked to by the business. By asking for a review, Anderson notes, one in ten people will be more inclined to give you one. Yelp forbids this practice, though it might not be so easy for the company to police when the reviews aren’t coming from the same IP address (which seems to be its main way of detecting this).

    Is a review left by a consumer who was asked to do so by a business less legitimate than any other review? Share your thoughts in the comments.

    [Via MarketingCharts]

    Images via BrightLocal

  • Did Yelp Just Become Better For Businesses?

    Did Yelp Just Become Better For Businesses?

    Yelp may have a tough time overcoming negative perception from some businesses thanks to a seemingly never-ending barrage of unproven accusations, but the company continues to add features that can potentially help merchants.

    Do you think Yelp is getting better for businesses? Share your thoughts in the comments.

    Yelp announced that it is now letting users send messages to business owners through their listings on the site. The idea is to have a way for people to send questions to businesses if they can’t find all the info they need on the Yelp listing itself. Yelp doesn’t want to have to send users elsewhere to find out what they need to know.

    On listings, a link that says “Message the business” will appear under the phone number.

    “We realize there are times when a very specific question might not be easily answered with a quick look at a business listing (and you don’t always feel like picking up the phone to inquire about),” writes Yelp product manager Ely L. on the company’s blog. “For instance, whether a restaurant will be serving a special pre-fixe menu for Mother’s Day or what a spa charges for a manzilian very specific treatment for males.”

    “While some customers prefer to pick up the phone, others would much rather communicate via a keyboard, so this feature adds one more way to reach out to businesses, while giving business owners another opportunity to close the loop and receive even more leads,” adds Ely. “Biz owners will receive an email when they get a message from a consumer and can reply directly from that email without even having to log into their business owner’s account. When people click on the “message the business owner” button for a particular business, they’ll be shown the average response time to help them understand when, on average, they might get a response.”

    The feature is rolling out to all businesses who have claimed their accounts. The feature can be disabled if you don’t want to get messages.

    Yelp recently announced the addition of video reviews, which could go either way for businesses. If the company lives up to its filtering promises on those, it should be a mostly positive thing.

    Last month, Yelp launched a new reservations tool to enable businesses to let customers book reservations online.

    They also recently let businesses highlight Bitcoin acceptance.

    Yelp is also expanding its Small Business Advisory Council, looking for input on products and new ideas for businesses right from business owners themselves. Presumably, we’ll be seeing more business-oriented features come from that.

    Yelp says it has over 57 million local reviews across 27 countries.

    Do you think Yelp is making moves that will actually help businesses? Share your thoughts in the comments.

    Images via Yelp

  • Should Yelp Be Worried About Amazon?

    This week, Reuters reported that Amazon is readying the launch of a new local services marketplace, which would not only compete with large chain stores, but also with local review sites like Yelp. Many businesses in a variety of spaces have had to contend with tremendous competition from the ecommerce giant. It appears that Yelp is next.

    Should Yelp be worried about what Amazon’s building? Share your thoughts in the comments.

    Here’s a snippet from the report:

    A local services marketplace would extend Amazon’s role as a middleman for third-party vendors, which account for about 40 percent of Amazon’s sales.

    The quality of the local services would be backed by Amazon’s “A-to-z Guarantee” which the company uses to vouch for items sold by third-party sellers on its website, the sources said.

    That A-to-z Guarantee could be an important part of Amazon’s strategy in helping it compete with sites like Yelp. With Yelp, people are left to trust the opinions of random reviewers (including potentially fake ones) when they decide to obtain a business’ services. With Amazon’s, that guarantee could be a little more encouraging.

    “We want you to buy with confidence anytime you make a purchase on the Amazon.com website or use Amazon Payments; that’s why we guarantee purchases from third-party sellers when payment is made via the Amazon.com website or when you use Amazon Payments for qualified purchases on third-party websites,” the company says of the guarantee as it stands. “The condition of the item you buy and its timely delivery are guaranteed under the Amazon A-to-z Guarantee.”

    Presumably that also applies to the services you obtain from businesses going through Amazon’s forthcoming local marketplace.

    It’s been well documented that a lot of businesses don’t care for Yelp, even if they feel it is a necessary evil. We’ve covered this numerous times in the past, and won’t get into it too much here. Will they like Amazon’s offering better? Keep in mind that some of these businesses will have probably already been on Amazon.

    Do consumers trust Amazon more than they do Yelp? Perhaps that’s the better question.

    Yelp has also been criticized plenty on the consumer side of things. Celebrity chef/TV personality Andre Zimmern recently blasted Yelp, saying he finds it to be “increasingly worthless” as a consumer. He was critical of its ability to maintain legitimate content.

    He told Eater, “The last thing I want to do is utilize a service where millions of people are chiming in, and the results are tainted. Either it’s people who don’t know what they’re talking about shouting over the people who do … Look. There’s lots of people on Yelp whose opinions I would love to have, but you know what, I can’t use on Yelp, because Yelp to me is worthless.”

    Another chef, David Chang, was in the news criticizing Yelp just this week. From FiveThirtyEight:

    I’m just going to come out and say: Most of the Yelp reviews are wrong. They just are. Yelp is great for finding information if you forgot the address of a place. You Google it, you say, “Yes, that’s where it is,” and then maybe you spend some time reading reviews when you’re already on your way to the restaurant. And that’s useful. But for the most part, no chef is going to take a Yelper’s review seriously, even though they might read them.

    …

    [Yelpers] are just not professional critics. The best analogy I can give is fantasy sports or lawn-chair stockbrokers. For the most part, unless you’re really studying the stats and you’re a former football player or baseball player and know the industry inside and out, it’s most likely that your insights aren’t that great.

    …

    The problem with Yelp is it’s so personal; reviewers only think about themselves: “I don’t think anyone should go to this restaurant. It’s the worst.” There’s just not enough empathy to think about how other people might experience it. It’s only from their lens. Also, Yelpers don’t have any professional protocol. They sit down and say, “If you don’t do this, we’re going to give you a bad Yelp score.”

    Regardless of any criticism of Yelp, the company continues to weather the storm with solid financial quarters.

    The Street’s Kathryn Mykleseth writes, “Despite a potential market war with the online service juggernaut, analysts say Yelp does have some leverage against the scale and reach of Amazon – its content. Yelp’s seniority in the local services marketplace helps its case, as seen with other companies like Grub Hub and Open Table that have attempted to challenge Yelp in the past.”

    Yelp and OpenTable are actually partners now. Priceline just agreed to buy OpenTable, and Yelp’s stock is on the rise as a result.

    Yelp also has some significant search advantages. As The Motley Fool notes, Google’s Panda algorithm hasn’t affected Yelp, while it has one of its competitors – YellowPages.com. Yelp is also integrated into local search results from Yahoo and Apple’s Siri.

    It’s not only reviews that Yelp and Amazon may find themselves competing in. Yelp has increasingly been interested in expanding its ecommerce offerings and “closing the loop” in business transactions.

    Do you think Amazon’s forthcoming offering will pose a significant threat to Yelp? Let us know in the comments.

  • Yelp On The Defensive Once Again

    Yelp On The Defensive Once Again

    Once again, Yelp is drawing the kind of media attention that it would like to avoid, but which has been following it around for years. You know the deal. A business claims Yelp is holding positive reviews hostage in its review filter because they refused to pay for ads. We hear this claim time and time again from business after business, and it can’t be good for Yelp’s reputation.

    Do you really believe Yelp does this? Share your thoughts in the comments.

    This time, a reddit post to the Toronto subreddit is the starting point. It has roughly 250 comments at the time of this writing, mostly from others bashing the company. A few other media outlets, including the Daily Dot and Consumerist have reported on it. The reddit post, titled “I want Reddit Toronto to see how bogus Yelp is” goes like this:

    My family opened a Mediterranean Restaurant approximately 2 years ago called Ba-Li Laffa. During the first number of weeks, we were approached by a marketing member of Yelp who asked us to pay a fee for preferential display on the Yelp website. Due to the fact that were we a new establishment and bills were through the roof at that point, we politely declined their offer. This is where the issues with Yelp begin to arise.

    Yelp claims to have an “advanced review engine” that apparently is knowledgable to sift out all the “fake” reviews and only put the “legitimate” reviews visible to those who are searching the restaurant. In theory this makes sense that those account with the sole review being that of your restaurant are probably fake accounts (or possibly someone that you asked to review it for you). Although this is not how it works, and according to numerous accounts from other restauranteurs that I have met through reddit, it is essentially a blackmail money grab by Yelp.

    If you go to the site of our restaurant, http://www.yelp.com/biz/ba-li-laffa-kosher-mediterranean-grill-vaughan, you will see that 5 reviews have been selected, all 2/5 stars. If you look below the 5th review, in a light grey text it says “23 other reviews that are not currently recommended”. The majority of those “not recommended” reviews are by users with multiple reviews who have given the restaurant between 4-5/5 stars. In essence, they have taken every good review and made it categorized as a “bad review”.

    Fortunately, our restaurant is not suffering from a lack of customers because our food and service is great (obviously my opinion), but the number of customers we are losing from internet traffic to Yelp is unfortunate. The problem is that the majority of people making review based decisions either visit Yelp or Urban Spoon (which our restaurant is not on). Maybe I’m giving a little too much credit to Yelp for their popularity, but even if I am losing a minor percentage of my business due to their unfavourable reviews they are giving to our restaurant, it is very frustrating because there is nothing I can do about it.

    I have message the Yelp Business support center numerous times with no helpful directions or answers. I think word of mouth from these types of things are really important especially because of how many people use and trust Yelp.

    As usual, there is no actual evidence revealed. The Daily Dot shares a response from Yelp (along with a screenshot showing positive reviews it says were “likely fraudulent”):

    Yelp told the Daily Dot the team had hidden the positive reviews because they’d found them all to be sent from the same IP address within a short period of time, indicating fraud. “In cases where businesses have a large number of reviews that aren’t recommended, it’s often because they’ve solicited positive reviews from friends, family, or favorite customers or tried to game the system by writing fake reviews for themselves. Yelp does not support these practices as they result in biased reviews which aren’t useful to consumers,” a Yelp spokesperson said.

    The screenshot shows five accounts created within 45 minutes of each other, all writing five-star reviews of the same business, and with email addresses: [email protected], [email protected], [email protected], [email protected], and [email protected]. It shows that they all joined on 6/1/2013. Only one is listed as having logged in since then.

    No, that’s not very legitimate-looking.

    Some have argued in the past that IP address isn’t a great signal, because there could be other reasons people leave reviews from the same address, like if they’re leaving it from the business’ actual venue. That, however, would also be taken as a negative signal by Yelp, because it might suggest to the company that you’re asking people for reviews, and for better or worse, it basically considers this spam.

    Strangely enough, they advise you against asking customers for a Yelp review, but instead suggest you tell them to “check you out on Yelp”.

    If Yelp is not engaging in the practice described by the reddit poster, it’s quite phenomenal that SO many businesses have made essentially the exact same claims, and are showing no signs of stopping. That is some real dedication to a conspiracy theory by a slew of businesses seemingly unrelated to each other. It’s even been brought up on the People’s Court.

    But still, nobody is able to show any proof, and Yelp’s screenshot seems to blatantly illustrate abuse. There’s no Consumer Alert on the business’ page, however.

    Unfortunately for Yelp, the loudest voice in this argument is the one of distrust and anger. Just peruse the reddit thread for a few minutes, and you’ll find slam after slam. Typically, it’s a similar situation in other comment threads on the subject.

    The Better Business Bureau has defended Yelp, and given it an A+ rating. That’s actually down to a C+ now, interestingly enough.

    As one redditor pointed out, the BBB isn’t exactly held in the highest regard by some either. They point to a Google search for “better business bureau extortion,” saying, the BBB is “cut from the same extortionist cloth” as Yelp.

    The search brings up articles with titles like “Why the Better Business Bureau Should Give Itself a Bad Grade” from Time, “BBB Better Business Bureau LEGAL EXTORTION? LEGAL BLACKMAIL??” from Ripoff Report, and “Better Business Bureau Gives Itself an ‘F’ in Los Angeles” from ABC News.

    “I gotta agree here, the BBB isn’t doing their job,” another redditor responded. “I had a valid complaint against a local company that delivered me the wrong piece of furniture, took it back, but then refused to refund the $100 delivery charge. I complained to BBB, the business essentially said again that they wouldn’t refund me, and BBB marked the complaint as resolved (leaving them with a B rating).”

    Yelp may very well be innocent in all of this, but its real battle seems to be defending itself from hordes of angry Internet users, which it does time and time again. Until someone is able to offer up some real proof that Yelp is engaging in the behavior that it’s so frequently accused of, I don’t imagine much will change for the foreseeable future.

    Consumerist suggests “someone start a fake restaurant called ‘The Honey Pot’ and wait for Yelp to call with a tape recorder hooked to the phone 24/7.”

    Luckily for Yelp, all of the negativity on the Internet (and in actual news reports, not just reddit and blog comments) has done seemingly very little to hurt its business. Its quarterly revenue was up 65% year over year.

    Do you believe Yelp is really engaged in the kinds of things its accused of? If so, how can it be proven? If not, why are there so many businesses making the same allegations? Discuss in the comments.

    Images via Yelp, Better Business Bureau

  • Are Video Reviews On Yelp A Good Idea?

    Are Video Reviews On Yelp A Good Idea?

    Yelp is reportedly getting video reviews. As of the time of this writing, the company hasn’t formally announced the feature yet, but Business Insider spoke with mobile product manager Madhu Prabaker, who told the publication about the feature, and gave it a sneak peek at the functionality on the app.

    As a business, do you like the idea of user-generated video reviews appearing on your business page? Let us know what you think in the comments.

    The feature, according to the report, will let users record videos up to twelve seconds in length, and will roll out to Yelp’s “elite” users in June, then to everyone else later. EVERYONE.

    Should businesses be concerned about this? For one, we already see complaints from businesses about Yelp very frequently, including those about reviews damaging their reputations. Will letting anybody post videos about businesses only fuel this?

    Think about all the PR disasters that have occurred from in-restaurant photos being shared to various social media sites (and Yelp does consider itself a social media site).

    We’ve seen people putting their private parts on bread and freezing bottles of urine at Subway, and posting it to Instagram. We’ve seen Taco bell workers licking taco shells and posting it to Facebook – to the restaurant’s official page no less. We’ve seen a Golden Corral employee expose all kinds of gross stuff from the restaurant on reddit, complete with photos.

    Of course those are mostly from dumb, and/or disgruntled employees, and Yelp has had a photo feature for some time now. We really don’t hear many complaints about that.

    Video adds another dynamic though. It gives people a chance to talk over visuals. It gives unhappy customers a chance to visually focus on one aspect of a location that may not provide a complete picture of the whole experience. What if, for example, one person lays waste to a business’ restroom, and someone goes in right afterwards with their finger on the Yelp trigger before the business’ staff is even aware of the problem?

    What if an unhappy restaurant customer goes to a completely different location (like their home), and records a bug crawling on the floor, and uploads it to Yelp for that restaurant, as if the bug was actually there? How well will businesses be able to defend themselves from things like this? How well will Yelp be able to protect them?

    Of course, sometimes bugs really do make it into the food. Here’s a bug found in a McDonald’s burger, which made headlines.

    Yelp does discourage this kind of thing in its guidelines, which say:

    Business photos and videos should be broadly relevant to the business and reflect the typical consumer experience (e.g., what the business looks like, what the business offers, etc.).

    We may remove photos and videos that showcase a more unique personal experience (e.g., your smiling group of friends at the bar, the fly in your soup) as well as lower quality photos and videos (e.g., too blurry or dark).

    I guess it just comes down to how well Yelp is able to enforce its guidelines.

    On the other hand, wouldn’t people wanting to go to a restaurant want to know if people have found flies in their soup there?

    According to Business Insider, Yelp will filter videos that are “inappropriate” using the same technology it uses for its photo feature. It’s unclear what this technology consists of, and what exactly is considered “inappropriate”. Is the technology able to catch the fly in the soup scenario before it hits the site?

    Again, we haven’t really seen complaints about the photo feature, so maybe this won’t be an issue at all, but we have seen many, many complaints about another Yelp filtering feature.

    Engadget makes an interesting point about the feature: “It’ll also give intrepid food shooters another creative outlet that won’t clog up their friends’ and family’s Instagram feeds.”

    If people are already expressing their opinions about businesses in videos on Instagram or other social channels, this could sway some of these users into posting them more on Yelp. In the past, any negative video reviews could have been limited to a person’s group of friends, but now could be attached right to your business on Yelp.

    Are video reviews on Yelp a good idea? Do you trust Yelp to handle the filtering process adequately? Let us know in the comments.

    Image via Yelp

  • Yelp Equates Asking For Reviews To Spam

    Yelp announced on Wednesday that it has issued a new round of Consumer Alerts, the warnings that appear on businesses’ Yelp pages informing users that they’re not to be trusted. The company didn’t say how many it issued this time around, but it did call out a few businesses by name.

    The company is also discouraging businesses from asking customers for reviews in-store, which many would no doubt argue is when the experience is freshest in their minds. As far as Yelp is concerned, asking for reviews is pretty much like spam.

    Do you think reviews businesses ask for are illegitimate? Let us know what you think.

    “Unfortunately some businesses are trying to sneak through fake reviews in an effort to boost their reputations on Yelp and other review sites,” says Yelp’s Kristen Whisenand. “Others may be encouraging their customers to write reviews from the store, which may not sound all that bad until you ask yourself just how objective you’d be if you were at the dentist’s office and she dropped an iPad on your lap and asked you to write her a quick Yelp review. Solicited reviews are often biased and don’t result in the most accurate overall portrayal of that business. You can also be assured that businesses are almost never asking their unhappy customers for reviews.” Emphasis added.

    Part of the problem (on Yelp’s end) with people leaving reviews from in stores is that they come from the same IP address. It would seem that reviews coming from a single IP address has been one of the biggest factors in the company determining when reviews are spammy. In fact, the company said right in its new post on the subject, that it “looks for businesses that have received a disproportionate number of spammy reviews, like those that originate from the same IP address.”

    This was actually brought up on Bloomberg recently, when a business owner and a representative from Yelp each presented their side of the story. In that, Yelp’s Vincent Sollitto, VP of corporate communications, said: “Yelp has to recommend reviews that they find reliable. The reason that there are a number of positive reviews for Beverly’s [the aforementioned business owner] business that are not being recommended is because in fact ten of them came from the very IP address that was used to claim her business owner’s account, and one of them actually was for a one-star review of a competing business to hers. And so the problem is business owners try to game the system, and websites that don’t try to filter out or verify reliable reviews can get gamed. That’s probably why Yahoo decided to go ahead and use Yelp as the de facto standard for local search.”

    Beverly, who runs a dog training service, responded, “First of all, in some cases, clients are at your house, and can be using your IP address to write something. That is possible. IP address isn’t the best judgment. People can be at a cafe and use IP address, you know. I don’t think the location of a person writing the review is relevant. I had one guy, for instance, that is in my five-star-deleted – i’ve had like 34 deleted five-star reviews now – I mean not recommended – and another fourteen that have been deleted. And meanwhile I only have seven five-star reviews up. So that’s a big ratio. We’re talking a fifty to seven ratio here. I had one guy that had to go to the library and open an account in order to be able to write a review for me because he didn’t have a computer service, and he wanted to be able to review me because I did good work with him, and he was very pleased, and Yelp removed his review because it seemed suspicious or whatever, but he’s a real person.”

    Unless Bloomberg cut it out, Sollitto didn’t really acknowledge her comments about people legitimately using the same IP address.

    “Don’t Ask for Reviews” is one of Yelp’s guidelines. They have a whole page on it in their support center.

    Under the “Why does Yelp discourage businesses from asking for reviews?” section, it says:

    1. Would-be customers might not trust you. Let’s face it, most business owners are only going to ask for reviews from their happy customers, not the unhappy ones. Over time, these self-selected reviews create bias in the business listing — a bias that savvy consumers can smell from a mile away. No business is perfect, and it’s impossible to please 100% of your customers 100% of the time.

    2. Solicited reviews are less likely to be recommended by our automated software, and that will drive you crazy. Why aren’t these reviews recommended? Well, we have the unfortunate task of trying to help our users distinguish between real and fake reviews, and while we think we do a pretty good job at it with our fancy computer algorithms, the harsh reality is that solicited reviews often fall somewhere in between. Imagine, for example, the business owner who “asks” for a review by sticking a laptop in front of a customer and smilingly invites her to write a review while he looks over her shoulder. We don’t need these kinds of reviews, so it shouldn’t be a surprise when they aren’t recommended.

    It later goes on to say, “There is an important distinction between ‘Hey, write a review about me on Yelp,’ [BAD] and ‘Hey, check us out on Yelp!’ [GOOD]. It’s the difference between actively pursuing testimonials and simply creating awareness of your business through social media outlets.”

    Because, you know, you’re going to recommend unhappy users “check you out” on Yelp. What else is a customer going to do when they “check you out” on Yelp besides write a review? If you’re trying to create awareness about your business on social media, you’re not going to say, “Check us out on Yelp.” You’re going to say, “Check us out on Facebook” or “…on Twitter,” etc.

    According to Yelp, recommending that your customers “check you out on Yelp” allows them to “review your online reputation without feeling like they’re being forced to write a review.”

    So, go ahead and suggest that they review your reputation on Yelp after they’ve done business with you, because that will help them somehow?

    “To an established Yelp community member, a reminder of your Yelp presence can act like a dog-whistle prompting them to share their feedback about your business with fellow Yelpers,” adds Yelp.

    Oh. Just don’t suggest that they write a review!

    If you’ve been encouraging people to leave reviews for your business while they’re actually at your business, don’t offer them up your own device to do it. Luckily, last year, Yelp added the ability for users to leave reviews from the Yelp app.

    “Yelpers won’t have to wait until they get home to tell the world why their neighborhood barber is deserving of five shiny stars – they can do it directly from their phones, while they’re on-the-go,” a Yelp product manager wrote in a blog post at the time.

    “We have zero tolerance for those who are trying to manipulate their online reputations in an effort to get ahead of hard-working business owners who are playing by the rules,” says Whisenand. “We encourage businesses to take a hands off approach when it comes to receiving reviews and take advantage of the free suite of tools Yelp provides business owners who are interested in joining the conversations that are happening about them online.”

    What do you think of Yelp’s policy on asking for reviews? Have you suggested that customers “check you out” on Yelp? Did reviews resulting from that escape the review filter? Share your thoughts in the comments.

  • Better Business Bureau Defends Yelp

    Rarely does a week go by these days in which there isn’t at least one report of business owners complaining about Yelp’s business practices. The latest one comes from an ABC affiliate out of Philadelphia, which conducted an investigation of its own.

    Has your business had a legitimate gripe with Yelp? Let us know in the comments.

    It says it was contacted by small business owners saying their favorable reviews were reduced because they wouldn’t pay Yelp to advertise. You know the story by now, I’m sure. This particular version comes from a Pizza place accusing Yelp of filtering positive reviews and lowering its rating after it refused to pay for ads. You can get the specific complaints here, but it’s essentially the same same story we hear time and time again.

    Yelp always dismisses these accusations as conspiracy theories, and maintains that they’re simply not true, yet they just keep coming.

    This particular report includes some words from the Better Business Bureau on the situation. Here’s the relevant snippet:

    Better Business Bureau records show in the past 6 months over 50 complaints have been filed about what business owners call aggressive advertising practices.In the same time, over 100 businesses have complained about Yelp filtering out positive reviews.

    “There are probably a lot more. There are probably 500, 1000 businesses out there that feel this has happened to them,” Gene O’Neill of the BBB said.

    However, the Better Business Bureau tells Action News after investigating it doesn’t feel aggressive advertising is a part of Yelp’s business model and currently gives the review site an A+ rating.

    You can see that A+ rating right here. Factors listed as the reason for the rating include:

    • Length of time business has been operating.
    • Complaint volume filed with BBB for business of this size.
    • Response to 1404 complaint(s) filed against business.
    • Resolution of complaint(s) filed against business.
    • BBB has sufficient background information on this business.

    It does list 1,404 closed complaints for Yelp from over the last three years with over 500 of them listed as advertising/sales issues. 882 are listed as problems with the product/service. 570 of the total complaints were closed in the last twelve months.

    The most recent review of Yelp’s complaints was done in April 2014, according to the site.

    “Complaints concern, among other things, business owners who are concerned that their positive reviews are being filtered and negative reviews are remaining, potentially giving consumers a skewed view of their business,” it says. “Some complaints also concern business owners alleging that there are false or inaccurate reviews on their Yelp listing that Yelp will not remove, though the business owner has provided proof or substantiation that the review is false or inaccurate.”

    Last month, the FTC disclosed that there had been 2,046 complaints filed against Yelp dating from 2008 to March 4th, 2014.

    Yelp released its first quarter numbers last week, with an impressive 66% year-over-year increase in revenue, though the company still struggles in the profit department.

    During Yelp’s earnings call, CEO Jeremy Stoppelman said that as the company grows internationally, it sees complaints in other markets as well, with a specific “uptick in noise” in Germany.

    Do you agree with the BBB’s rating for Yelp? Let us know in the comments.

    Image via Yelp

  • Yelp Earnings Released, Revenue Up 65% YoY

    Yelp just released its earnings report for the first quarter with revenue at $76.4 billion, up 66% from the same period last year.

    Cumulative reviews grew by 46% year-over-year, reaching about 57 million, with active business accounts growing 65% to 74,000. Average unique monthly visitors were 132 million, up 30% year-over-year. Average monthly mobile unique visitors grew 52% to 61 million.

    Yelp CEO Jeremy Stoppelman said, “We had a great start to the year and are excited about the large opportunity ahead of us. Yelp is becoming the gold standard in local search. In the first quarter, we announced our integration into Yahoo local search, building on our existing partnerships with Apple Maps and Bing. We also entered into an advertising partnership with YP.com which will enable us to introduce Yelp to an even broader pool of business owners. Looking to the rest of the year, we will continue to support and engage our community of Yelpers, expand geographically and create innovative products that close the loop with business owners.”

    He said in the earnings call that they’re very happy with how things are going internationally, as an analyst pointed out how little it is contributing to revenue so far.

    He also said there’s a lot of leverage to be gained from adding additional partners to the Yelp Platform.

    According to Stoppelman all their traffic comes organically, and they don’t do any SEM.

    Yelp’s call-to-action drove over 100,000 leads to customers in the last period, according to the company.

    Stoppelman was asked if Yelp sees the same kind of controversies with reviews in international markets as it sees in the U.S. His response was that there are bound to be some controversies because reviews are opinions. About 20% are negative, and the majority are neutral to positive, he said, adding that negative reviews are “far less frequent than you might imagine”. Internationally, he acknowledges, they do see compaints, with an “uptick in noise” in Germany in particular. They hear complaints in about every market they’re in he said, noting that it’s “the nature of the beast”.

    He also said he thinks Yelp has gotten better about communicating how it polices the site.

    Here’s the release in its entirety:

    SAN FRANCISCO, April 30, 2014 /PRNewswire/ — Yelp Inc. (NYSE: YELP), the company that connects consumers with great local businesses, today announced financial results for the first quarter ended March 31, 2014.

    • Net revenue was $76.4 million in the first quarter of 2014, reflecting 66% growth from the first quarter of 2013
    • Cumulative reviews grew 46% year over year to approximately 57 million
    • Average monthly unique visitors grew 30% year over year to approximately 132 million* and average monthly mobile unique visitors grew 52% year over year to approximately 61 million**
    • Active local business accounts grew 65% year over year to approximately 74 thousand

    Net loss in the first quarter of 2014 was $(2.6) million, or $(0.04) per share, compared to a net loss of $(4.8) million, or $(0.08)per share, in the first quarter of 2013.  Adjusted EBITDA for the first quarter of 2014 was approximately $8.5 million, compared to $3.2 million for the first quarter of 2013.

    “We had a great start to the year and are excited about the large opportunity ahead of us,” said Jeremy Stoppelman, Yelp’s chief executive officer.  “Yelp is becoming the gold standard in local search.  In the first quarter, we announced our integration into Yahoo local search, building on our existing partnerships with Apple Maps and Bing.  We also entered into an advertising partnership with YP.com which will enable us to introduce Yelp to an even broader pool of business owners.  Looking to the rest of the year, we will continue to support and engage our community of Yelpers, expand geographically and create innovative products that close the loop with business owners.”

    “We continue to deliver outstanding results with year over year revenue growth of 66%,” added Rob Krolik, Yelp’s chief financial officer.  “We are pleased to announce that we are raising guidance for the full year due to the momentum we’re seeing in the business.  We will also continue to invest in hiring, geographic expansion and product innovation to capture the large local opportunity in front of us.”

    Business Highlights

    • Community engagement:  Yelp continues to support and engage its community.  In the first quarter, Yelp upgraded the business listing page with larger photos and more relevant review highlights to emphasize what consumers find most useful and also rolled out the ability to add photos through the mobile web.  In the first quarter, Yelp had approximately 61 million mobile unique visitors on a monthly average basis and approximately 35% of new reviews were contributed through mobile devices.
    • Geographic expansion:  Yelp continues to expand globally.  In the first quarter, international reviews grew 210% and international traffic grew 95% year over year.  Yelp expanded its presence in Latin America and Asia with the launch ofMexico and Japan, its 25th and 26th countries.  Yelp also launched new markets in Quebec City, Canada and Lisbon, Portugal and is now in a total of 120 Yelp markets worldwide.
    • Brand ubiquity:  Yelp is becoming the de facto standard in local search and consumers and other companies recognize its leadership in the local space.  In the first quarter, Yelp announced its integration into Yahoo local search as well as an advertising partnership with YP.com.

    Business Outlook

    As of today, Yelp is providing its outlook for the second quarter of 2014 and full year 2014.

    • For the second quarter of 2014, net revenue is expected to be in the range of $85 million to $86 million, representing growth of approximately 55% compared to the second quarter of 2013.  Adjusted EBITDA is expected to be in the range of$11.5 million to $12.5 million.  Stock-based compensation is expected to be in the range of $10 million to $11 million, and depreciation and amortization is expected to be approximately 5% of revenue.
    • For the full year of 2014, net revenue is expected to be in the range of $363 million to $367 million, representing growth of approximately 57% compared to the full year of 2013.  Adjusted EBITDA is expected to be in the range of $56 million to $60 million.  Stock-based compensation is expected to be in the range of $43 million to $45 million, and depreciation and amortization is expected to be approximately 5% of revenue.

    Quarterly Conference Call

    To access the call, please dial 1 (800) 708-4539, or outside the U.S. 1 (847) 619-6396, with Passcode 37094125, at least five minutes prior to the 1:30 p.m. PT start time.  A live webcast of the call will also be available at http://www.yelp-ir.com under the Events & Presentations menu.  An audio replay will be available between 4:00 p.m. PT April 30, 2014 and 11:59 p.m. PT May 14, 2014 by calling 1 (888) 843-7419 or 1 (630) 652-3042, with Passcode 37094125.  The replay will also be available on the Company’s website at http://www.yelp-ir.com.

    About Yelp

    Yelp Inc. (http://www.yelp.com) connects people with great local businesses. Yelp was founded in San Francisco in July 2004. Since then, Yelp communities have taken root in major metros across 26 countries. Yelp had a monthly average of approximately 132 million unique visitors in the first quarter 2014*. By the end of the same quarter, Yelpers had written approximately 57 million rich, local reviews, making Yelp the leading local guide for real word-of-mouth on everything from boutiques and mechanics to restaurants and dentists. Approximately 61 million** unique visitors visited Yelp via their mobile device on a monthly average basis during Q1 2014.

    * Source: Google Analytics

    ** Average monthly mobile unique visitors based on the number of unique visitors accessing Yelp via mobile web and unique devices accessing the app on a monthly average basis over a given three-month period.

    Non-GAAP Financial Measures

    This press release includes information relating to Adjusted EBITDA, which the Securities and Exchange Commission has defined as a “non-GAAP financial measures.” Adjusted EBITDA has been included in this press release because it is a key measure used by the Company’s management and board of directors to understand and evaluate core operating performance and trends, to prepare and approve its annual budget and to develop short- and long-term operational plans. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”).

    Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. Some of these limitations are:

    • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
    • adjusted EBITDA does not reflect changes in, or cash requirements for, the Company’s working capital needs;
    • adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;
    • adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;
    • adjusted EBITDA does not take into account restructuring and integration costs associated with our acquisition of Qype; and
    • other companies, including those in the Company’s industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

    Because of these limitations, you should consider adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income (loss) and the Company’s other GAAP results. Additionally, the Company has not reconciled its adjusted EBITDA outlook for the second quarter and full year 2014 to its net income (loss) outlook because it does not provide an outlook for other income (expense) and provision for income taxes, which are reconciling items between net income (loss) and adjusted EBITDA. As items that impact net income (loss) are out of the Company’s control and/or cannot be reasonably predicted, the Company is unable to provide such an outlook. Accordingly, reconciliation to net income (loss) outlook for the second quarter and full year 2014 is not available without unreasonable effort.  For a reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see “Reconciliation of Net Loss to Adjusted EBITDA” included in this press release.

    Forward-Looking Statements

    This press release contains forward-looking statements relating to, among other things, the future performance of Yelp and its consolidated subsidiaries that are based on the Company’s current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding expected financial results for the second quarter and full year 2014, the future growth in Company revenue and continued investing by the Company in its future growth, the Company’s ability to expand geographically and build Yelp communities internationally and expand its markets and presence in existing markets, the Company’s ability to capture the large local opportunity and its plans regarding product innovation around mobile and new features, geographic expansion, and closing the loop with local businesses. The Company’s actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Factors that could cause or contribute to such differences include, but are not limited to: the Company’s short operating history in an evolving industry; the Company’s ability to generate sufficient revenue to achieve or maintain profitability, particularly in light of its significant ongoing sales and marketing expenses; the Company’s ability to successfully manage acquisitions of new businesses, solutions or technologies, including Qype and SeatMe, and to integrate those businesses, solutions or technologies; the Company’s reliance on traffic to its website from search engines like Googleand Bing; the Company’s ability to generate and maintain sufficient high quality content from its users; maintaining a strong brand and managing negative publicity that may arise; maintaining and expanding the Company’s base of advertisers; changes in political, business and economic conditions, including any European or general economic downturn or crisis and any conditions that affect ecommerce growth; fluctuations in foreign currency exchange rates;  the Company’s ability to deal with the increasingly competitive local search environment; the Company’s need and ability to manage other regulatory, tax and litigation risks as its services are offered in more jurisdictions and applicable laws become more restrictive; the competitive and regulatory environment while the Company continues to expand geographically and introduce new products and as new laws and regulations related to Internet companies come into effect; the Company’s ability to timely upgrade and develop its systems, infrastructure and customer service capabilities. The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof.

    More information about factors that could affect the Company’s operating results is included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recent Quarterly Report on Form 10-Q at http://www.yelp-ir.com or the SEC’s website at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to the Company on the date hereof. Yelp assumes no obligation to update such statements. The results we report in our Quarterly Report on Form 10-Q for the three months ended March 31, 2014 could differ from the preliminary results we have announced in this press release.

    Media Contact Information
    Yelp Press Office
    Vince Sollitto
    (415) 230-6506
    [email protected]

    Investor Relations Contact Information
    Yelp Investor Relations
    Wendy Lim
    (415) 568-3240
    [email protected]

     

    Yelp Inc
    Condensed Consolidated Balance Sheets
    (In thousands)
    (Unaudited)
    March 31, December 31,
    2014 2013
    Assets
    Current assets:
    Cash and cash equivalents $  399,320 $        389,764
    Accounts receivable, net 21,376 21,317
    Prepaid expenses and other current assets 9,087 5,752
    Total current assets 429,783 416,833
    Property, equipment and software, net 33,298 30,666
    Goodwill 59,635 59,690
    Intangibles, net 4,615 5,235
    Restricted cash 3,655 3,247
    Other assets 2,488 306
    Total assets $  533,474 $        515,977
    Liabilities and stockholders’ equity
    Current liabilities:
    Accounts payable $      1,578 $            3,364
    Accrued liabilities 23,992 19,004
    Deferred revenue 2,184 2,621
    Total current liabilities 27,754 24,989
    Long-term liabilities 5,784 4,505
    Total liabilities 33,538 29,494
    Commitments and contingencies
    Stockholders’ equity
    Common stock – –
    Additional paid-in capital 569,925 553,753
    Accumulated other comprehensive  income 3,102 3,186
    Accumulated deficit (73,091) (70,456)
    Total stockholders’ equity 499,936 486,483
    Total liabilities and stockholders’ equity $   533,474 $         515,977

     

     

    Yelp Inc
    Condensed Consolidated Statements of Operations
    (In thousands, except per share amounts)
    (Unaudited)
    Three Months Ended
    March 31,
    2014 2013
    Net revenue $ 76,407 $ 46,133
    Cost and expenses
    Cost of revenue (1) 5,077 3,340
    Sales and marketing (1) 45,121 28,194
    Product development (1) 13,982 7,236
    General and administrative (1) 13,170 8,764
    Depreciation and amortization 3,661 2,478
    Restructuring and integration (1) – 675
    Total cost and expenses 81,011 50,687
    Loss from operations (4,604) (4,554)
    Other income (expense), net (2) (201)
    Loss before provision for income taxes (4,606) (4,755)
    Benefit/(Provision) for income taxes 1,971 (44)
    Net loss attributable to common stockholders $ (2,635) $ (4,799)
    Net loss per share attributable to common stockholders:
    Basic $   (0.04) $   (0.08)
    Diluted $   (0.04) $   (0.08)
    Weighted-average shares used to compute net loss per share attributable to common stockholders:
    Basic 71,171 63,733
    Diluted 71,171 63,733
    (1) Includes stock-based compensation expense as follows:
    Three Months Ended
    March 31,
    2014 2013
    Cost of revenue $      150 $        72
    Sales and marketing 3,397 1,988
    Product development 3,042 816
    General and administrative 2,867 1,729
    Restructuring and integration – 555
    Total stock-based compensation $   9,456 $   5,160

     

     

    Yelp Inc
    Reconciliation of Net Loss to Adjusted EBITDA
    (In thousands)
    (Unaudited)
    Three Months Ended
    March 31,
    2014 2013
    Net loss $   (2,635) $   (4,799)
    Provision for income taxes (1,971) 44
    Other income (expense), net 2 201
    Depreciation and amortization 3,661 2,478
    Stock-based compensation* 9,456 4,605
    Restructuring and integration – 675
    Adjusted EBITDA $     8,513 $     3,204

     

    * Stock-based compensation for the three months ended March 31, 2013 excludes approximately $0.6 million of stock-based compensation already included in restructuring and integration costs.

     

     

    Yelp Inc
    Condensed Consolidated Statements of Cash Flows
    (In thousands)
    (Unaudited)
    Three Months Ended
    March 31,
    2014 2013
    Operating activities
    Net loss $ (2,635) $ (4,799)
     Adjustments to reconcile net loss to net
     cash provided by (used in) operating activities:
    Depreciation and amortization 3,661 2,478
    Provision for doubtful accounts 1,186 551
    Stock-based compensation 9,456 5,160
    Excess tax benefit from share-based award activity (39) –
    Loss on disposal of assets and web-site development costs – 50
    Changes in operating assets and liabilities:
    Accounts receivable (1,249) (1,204)
    Prepaid expenses and other assets (5,928) (1,515)
    Accounts payable and accrued expenses 5,309 (1,176)
    Deferred revenue (438) 281
    Net cash provided by (used in) operating activities 9,323 (174)
    Investing activities
    Purchases of property, equipment and software (4,246) (943)
    Capitalized website and software development costs (1,592) (969)
    Change in restricted cash (397) –
    Cash used in investing activities (6,235) (1,912)
    Financing activities
    Proceeds from exercise of employee stock options 6,735 1,657
    Excess tax benefit from share-based award activity 39 –
    Repurchase of common stock (361) (81)
    Net cash provided by financing activities 6,413 1,576
    Effect of exchange rate changes on cash 55 (116)
    Net increase in cash and cash equivalents 9,556 (626)
    Cash and cash equivalents at beginning of period 389,764 95,124
    Cash and cash equivalents at end of period $399,320 $94,498

     

    Logo – http://photos.prnewswire.com/prnh/20050511/SFW134LOGO

    SOURCE Yelp Inc.

    Image via Yelp

  • Talk Examines How Consumers Assess ‘Absolute Value’ With Today’s Buying Tools

    Talk Examines How Consumers Assess ‘Absolute Value’ With Today’s Buying Tools

    Google is sharing a recent talk from Itamar Simonsen and Emanual Rosen on “absolute value”. It examines how consumers asses the value of things they buy using tools of the modern era, such as review sites, price comparison apps, and online experts.

    Included is some discussion about the impact of Yelp on the revenues of restaurants, retailers, and other businesses.

    Google uploaded a bunch of new talks. Also included in the batch is one from RetailMeNot founder and CEO Cotter Cunningham, who tells the story about the company’s success.

    More recent Talks At Google here.

    Image via YouTube

  • Yelp Lets Businesses Highlight Bitcoin Acceptance

    Yelp Lets Businesses Highlight Bitcoin Acceptance

    Yelp announced that it is now showing when businesses accept Bitcoin on business pages. This comes as a new attribute in the “More Business Info” section.

    “We’re constantly thinking about how to make our business attributes more useful for consumers and businesses,” says Justin Overdorrf, business development lead at Yelp.

    Business owners accepting Bitcoin as a payment option can update their payment attributes using the tools at biz.yelp.com.

    Overdorrf adds, “Why does this matter? For those who haven’t heard the buzz about Bitcoin, it’s a new payment technology that allows consumers and businesses to make fast, secure and low-cost digital payments from any Internet-enabled device. Bitcoin also allows for consumers and businesses to transact without having to store sensitive data like a credit card number. Finally, like cash, Bitcoin’s transactions are one-way, so businesses don’t have to worry about chargebacks.”

    Yelp’s current review count is 53 million. The company will release its earnings report on Wednesday, and provide more usage stats.

    Image via Yelp

  • Google Removes Some Zagat Reviews, Says Overall Ratings For Businesses May Be Affected

    Some businesses may soon find that their ratings on Google have changed for better or for worse. They’re doing away with old anonymous Zagat reviews – the ones where the person’s name is “A Zagat User.”

    Google’s Jade Wang wrote in the Google and Your Business forum (via Barry Schwartz):

    To show a consistent reviews experience to our users, reviews that are labeled by “A Zagat User” are being removed from Google products. Reviews from Google users will still appear as usual, and users can still contribute reviews. This may affect the overall rating for some businesses.

    Remember, verified business owners can respond to reviews or report inappropriate reviews.

    If your business has a lot of negative anonymous reviews from Zagat, this is probably good news. If it has a lot of positive ones, then perhaps not so much.

    Either way, Google has been migrating away from anonymity in reviews for quite a while. When it migrated to the Google+ Local model for local search, it started requiring users to be signed into their Google accounts to leave reviews. Still, Google continued to show anonymous reviews that said “A Google User” for new reviews for sometime after that. It still displays these for older reviews.

    Image via BayhomeConsignment.blogspot.com

  • Yelp Launches In Japan, Expands Platform To Spas & Salons

    Continuing its ongoing international expansion, Yelp announced that it has now launched in Japan. This is the company’s 26th country, following a Mexico launch last month.

    Yelp’s efforts in Japan will begin in Toyko and Osaka. The site is available at Yelp.co.jp, or people in Japan can use the mobile app.

    “With over 126 million people, Japan is the tenth most populated country on the planet, and economically speaking, it’s no shrinking cherry blossom,” says Yelp VP of New Markets Miriam Warren.

    Yelp also announced an expansion of the Yelp Platform, initially launched last year for food ordering and delivery. It now supports spas and salons. A select number of them are already utilizing the platform for booking appointments, but Yelp says it will continue to roll out the functionality of the coming weeks.

    Yelp product manager Partha Sundaram writes, “Been dying to try out a Jared Leto-esque ombre or treat your better half to a pamper sesh? Now you can head to Yelp to find just the place, then schedule your appointment directly from a Booker supported spa or salon (like Yelo in New York). Not only can you book directly from your computer or Yelp’s mobile apps, you can choose to save your payment details so you won’t have to enter them again for the billionth time.”

    The company says it will continue to add new categories and partners to the platform so users can “transact directly on Yelp” with more businesses.

    Image via Yelp

  • FTC Has Seen 2,046 Complaints About Yelp In Recent Years

    The FTC disclosed this week that there have been 2,046 complaints filed against Yelp dating from 2008 to March 4th, 2014. While that may seem like a lot, it’s not incredibly shocking given that we see businesses complaining informally about the site pretty much every week.

    Has your experience with Yelp been positive or negative? Let us know in the comments.

    Businesses often vent their frustration in article comments and elsewhere on the Internet, as well as at Yelp’s own events. They often blame the site for major losses in business, and sometimes suggest that the site is holding their positive reviews hostage when they refuse to advertise.

    The FTC’s disclosure was in response to a Freedom of Information Act request from the Wall Street Journal. They sent reporter Angus Loten the complaints (most of them at least). He writes:

    Most of the complaints are from small businesses that claim to have received unfair or fraudulent reviews, often after turning down a pitch to advertise on the site, according to a separate spreadsheet of complaints to the FTC about Yelp, reviewed exclusively by the Journal. For instance, a business owner in Montclair, N.J., whose name was redacted said: “I was contacted by a Yelp salesperson to advertise, which I declined, and since have only had negative posts on their site.”

    Obviously Yelp has always denied that there is any relationship between advertising and reviews.

    Earlier this year, The Court of Appeals of Virginia ordered Yelp to reveal the names of seven reviewers who left anonymous, negative reviews on a business – Hadeed Carpet – which says the names are critical in pursuing a defamation case against the reviewers over what it claims were false reviews from non-customers. Yelp has reportedly been held in contempt for not revealing the names.

    As Loten reports, the case is headed to the Virginia Supreme Court this month. He writes that the business lost millions in revenue after the negative reviews, and had to get rid of 80 workers and sell six trucks.

    Another interesting stat to come out of the report is that Yelp receives roughly six subpoenas a month, sometimes looking to get names of anonymous users.

    Two months ago, another defamation case in Virginia saw an outcome in which neither party truly won. Ultimately the court decided that the two had defamed each other.

    Earlier this week, we looked at a video Yelp released recently, featuring a montage of media personalities talking about and referencing Yelp:

    They left out the People’s Court episode in which a business owner made claims that Yelp was prioritizing negative reviews against his company over the higher quantity of positive reviews. Yelp, he said, then contacted him, and said that if he advertised, his negative reviews would get filtered out.

    Judge Milian responded, “Wow! I don’t know if what you’re saying is accurate or not, but if it is, it’s pretty outrageous.”

    David Lazarus at the LA Times wrote an article five years ago asking if Yelp is a “shakedown racket for merchants,” saying that restaurant owners were saying it was “unusually aggressive in trying to get businesses to pay hundreds of dollars in monthly “sponsorship” fees to improve their ranking in search results and to move their most positive review to the top of the page.”

    Lazarus wrote another article this week talking about yet another business making those familiar “extortion” claims.

    “Yelp just can’t stop living the thug life,” the article begins.

    None of these accusations have actually been proven so far, but there have been so many for so long, it’s hard to completely brush them off.

    Either way, Yelp continues to push on with impressive financials and statistics.

    Last month, the company put out a video and blog post explaining why businesses should advertise on Yelp. It didn’t mention anything about negative review filtering.

    Do you believe complaints against Yelp are legitimate or is it all nonsense as Yelp suggests? Let us know what you think.

    Image via Yelp (Flickr)