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Tag: Reviews

  • Five-Star Review? Maybe Not as Amazon Grapples With Fake Reviews Industry

    Five-Star Review? Maybe Not as Amazon Grapples With Fake Reviews Industry

    Amazon is grappling with an entire industry aimed at providing fake reviews and gaming the system, according to new research.

    Which? is a UK-based company that reviews products and services and helps consumers make educated choices. The company has investigated the state of Amazon reviews and found that fake reviews are being sold in bulk.

    Customers rely on Amazon reviews to make decisions about their purchases. Even when customers ultimately end up purchasing elsewhere, Amazon product reviews often still impact customers’ decisions. Unfortunately, many of those reviews may be fake, according to Which?.

    “More people are shopping online than ever before due to the coronavirus crisis – yet our latest research shows that Amazon is facing an uphill struggle against a relentless and widespread fake reviews industry geared towards misleading consumers,” Natalie Hitchins, Head of Home Products and Services at Which?, said.

    Some companies charge as little as £5 per review, while others charge more, up to £8,000 for 1,000 reviews. Many of the companies provided incentives and rewards programs, along with guidelines to help their armies of reviews avoid detection by Amazon.

    All the sites Which? signed up to gave advice for how to write reviews so as not to arouse Amazon’s suspicion, and in many cases had criteria for reviewers to meet to qualify for rewards. These included leaving reviews that were at least two sentences long, posting an accompanying image or video and not posting reviews until at least four days after receiving a product. Some sites also had no return policies – as returned products are monitored by Amazon and high return rates can affect the chance of an Amazon’s Choice endorsement.

    Which? is calling on regulators to take action against these kind of schemes, in the interest of protecting customers that rely on such reviews to make informed decisions. The company is also calling on tech firms, such as Google and Facebook, to crack down on these companies, as many of them use search and social media platforms to gain reviewers.

    “The regulator must crack down on bad actors and hold sites to account if they fail to keep their users safe. If it is unable to do so, the government must urgently strengthen online consumer protections,” Hitchins added.

    “Amazon, and other online platforms, must do more to proactively prevent fake reviews infiltrating their sites so that consumers can trust the integrity of their reviews.”

    It remains to be seen what, if any, action will be taken. in the meantime, savvy purchasers would do well to take Amazon’s reviews with a grain of salt.

  • Study Finds Consumer-Generated Content Boosts Conversions, Revenue

    Study Finds Consumer-Generated Content Boosts Conversions, Revenue

    Bazaarvoice has some new research out looking at how brands and retailers drive business value with consumer-generated content (CGC). This includes reviews, questions and answers, social media posts, pictures, videos, and chat comments.

    According to the report, brands and retailers are seeing an increase in conversion rates and increased revenue per visitor with customers who interact with CGC before purchasing. The firm says that across its network, if a person who doesn’t interact with CGC spends over $20, one who does interact with CGC spends $39.26. For every dollar of online revenue, another $6.50 of revenue is influenced by CGC, it says.

    “Now more than ever, visual content is an integral aspect of the CGC mix, bringing a more emotional, ‘right-brain’ experience to complement ratings and reviews and influence shoppers,” Bazaarvoice says.

    Here’s a look at where brands and retailers use CGC other than their website:

    bazaarvoice

    “Focusing on key phrases such as ‘wish,’ ‘if only,’ or ‘only problem’ from CGC is helping brands and retailers make improvements more dynamically and in near real-time response to consumer comments,” it says.

    Screen Shot 2016-04-25 at 11.58.45 AM

    According to the findings, 51% of brands and 91% of retailers plan to increase use of CGC across the customer journey over the next year.

    You can find the full report here (via SocialTimes).

    Images via iStock, Bazaarvoice

  • Google Drops the Google+ From Business Reviews

    Google Drops the Google+ From Business Reviews

    Google is reportedly no longer requiring users to have Google+ accounts to leave reviews. Given that Google+’s popularity never really caught on, this could open up the door for local businesses to get a lot more reviews on Google for better or for worse.

    Google has of course been removing the Google+ integration it spent several years building into many of its products, and this is just the latest example. For the most part, users have not seemed to be incredibly thrilled with Google+ being thrust upon their various Google experiences. The YouTube comment integration was particularly unpopular, but Google got rid of that last summer.

    According to reports, all users need to leave reviews on businesses is a Google account. They’re still required to leave a first and last name.

    More Google users leaving more reviews? I can’t imagine that Yelp, a frequent critic of Google, is thrilled with this news.

    Local search guy Mike Blumenthal who reported on the change (via Search Engine Land) also notes that Google has fixed a bug that prevented reviews from being left on mobile browsers if the business had no previous reviews. This is another reason businesses might start seeing their review counts go up.

    In related news, late last week, Google updated its documentation that contains advice for improving your local ranking. More on that here.

  • Google Gives 3 ‘Best Practices’ For Bloggers Reviewing Free Products

    Google Gives 3 ‘Best Practices’ For Bloggers Reviewing Free Products

    On Friday, Google took to multiple company blogs to lay out a few “best practices” for bloggers and companies when it comes to the ladder giving the former free products, and the former reviewing them.

    These are to keep you compliant with Google’s Webmaster Guidelines and therefore in the search engine’s good grace (i.e. not penalized).

    The first rule (and this is not new, mind you) is to make sure that links are properly nofollowed.

    “Links that pass PageRank in exchange for goods or services are against Google guidelines on link schemes,” Google says. “Companies sometimes urge bloggers to link back to: the company’s site; the company’s social media accounts; an online merchant’s page that sells the product; a review service’s page featuring reviews of the product the company’s mobile app on an app store.”

    “Bloggers should use the nofollow tag on all such links because these links didn’t come about organically (i.e., the links wouldn’t exist if the company hadn’t offered to provide a free good or service in exchange for a link),” it adds. “Companies, or the marketing firms they’re working with, can do their part by reminding bloggers to use nofollow on these links.”

    The other two best practices are pretty simple. Disclose the relationship, and “create compelling, unique content.”

    For disclosure, Google says this can appear anywhere in a post, but that the top is the most useful placement.

    Again, none of this stuff is really new, but it’s worth noting that Google is posting this on multiple blogs. The company could be looking at this stuff more closely than in the past.

    Image via Wikimedia Commons

  • Companies Pay Up For Fake Yelp Reviews

    New York Attorney General Eric Schneiderman announced settlements with Machinima, Inc. and three other companies in separate investigations regarding the companies’ role in posting fraudulent content on the Internet. This includes fake Yelp reviews.

    Machinima agrees to pay $50,000 for failure to require disclosure of payments to gaming experts endorsing Xbox on YouTube, while the other three companies (Premier Retail Group, ESIOHInternet Marketing, and Rani Spa) are also forced to pay penalties and agree to stop posting fake reviews.

    According to the AG, Premier Retail Group solicited reviewers through ads posted on Craigslist to write positive reviews in exchange for free samples, vouchers, and other compensation even if they hadn’t visited one of their locations. One such ad said, “Have a Strong Yelp account? Want to make money writing reviews?” The company paid a penalty of $50,000, $30,000 of which is suspended assuming compliance with the settlement agreement.

    ESIOHInternet Marketing, according to the AG, solicited over 50 freelance writers on Craigslist and Fiverr to write over 200 fake reviews of its small business clients for $10 to $15 per review. The company agreed to stop posting fake reviews and related deceptive trade practices and pay a $15,000 penalty.

    Finally, Rani Spa engaged in the efforts of a Candian businessman who offered to boost their online reputation by posting fake Yelp reviews. The company agreed to stop posting fake reviews and related deceptive trade practices and pay a penalty of $50,000.

    A press release from the AG’s office says:

    Ensuring honesty on the Internet is of paramount importance to consumers because of the effect that online reviews can have in influencing consumers’ purchasing decisions. According to one survey, 90% of consumers say that online reviews influence their buying decisions. Multiple studies have concluded that online reviews can make or break companies. A 2015 Nielsen Study reveals that 66% of the global consumers trust consumer opinions posted online, making it the third-most-trusted source of information about businesses after word-of-mouth and recommendations from friends and family. A highly-cited Harvard Business School study from 2011 estimated that a one-star rating increase on Yelp translated to an increase of 5% to 9% in revenues for a restaurant. Cornell researchers have found that a one-star swing in a hotel’s online ratings at sites like Travelocity and TripAdvisor is tied to an 11% sway in room rates, on average.

    The settlements announced today are a continuation of the Attorney General’s commitment to ensuring accurate and reliable consumer reviews. In September, 2013, AG Schneiderman announced “Operation Clean Turf,” the largest investigation into astroturfing by a law enforcement agency, resulting in settlements with 19 companies that paid over $350,000 in penalties. After an extensive undercover investigation into the reputation management industry, AG Schneiderman’s office found that companies had flooded the Internet with fake consumer reviews on websites such as Yelp, Google Local, and CitySearch; used techniques to hide their identities, such as creating fake online profiles on consumer review websites; and paid freelance writers from as far away as the Philippines, Bangladesh and Eastern Europe $1 to $10 per review.

    Yelp discusses the AG’s announcement on its blog:

    Through Yelp’s advanced recommendation software and Consumer Protection Initiative that includes undercover investigations, Consumer Alert program, and legal enforcement efforts, we’ve been able to mitigate the effect of these bad actors. We filed legal action in 2013 against James McNulty, the internet scammer paid by Rani Spa, which led to his admission that Yelp’s recommendation software had foiled his attempts to place fake reviews. ESIOH Marketing halted their services and took down their website in response to our demands in 2014, and Yelp caught Premier Retail Group (aka Infinite Beauty) soliciting reviews on Craigslist the same year, which resulted in us removing many paid reviews and closing associated user accounts.

    The sad reality is that some businesses will always be tempted to try to game the system, which is why Yelp is committed to continuing our efforts and leading the industry in an aggressive stance against astroturfers. We commend the work here of the New York Attorney General and hope to see other regulators follow their lead.

    Yelp posted its Q4 and full-year 2015 earnings earlier this week. The company reported 34% growth in cumulative reviews at about 95 million.

    Image via Wikimedia Commons

  • Yelp Discusses Its Local Ad Sales Efforts

    Yelp Discusses Its Local Ad Sales Efforts

    Yelp released its financials for Q4 on Monday. With the company’s everlasting battle to debunk “conspiracy theories” about its business practices back in recent headlines, we checked in with what the company had to say on its earnings conference call.

    Has Yelp sufficiently put this issue to rest in your opinion? Share your thoughts in the comments.

    The subject actually didn’t come up during the call – even in the Q&A portion. This is perhaps an indication that the company has convinced this particular audience of its defense or that this audience isn’t particularly interested in the narrative.

    The subject of Yelp’s sales efforts of course was very much a part of the conversation, so for those who are interested in the aforementioned battle might be interested in what the company did say.

    First, let’s rewind a bit. For years, Yelp has been accused by business owners of burying positive reviews when these owners decline to pay for advertising. Yelp has always denied anything of the sort, pointing to to studies, failed lawsuits, and an FTC investigation, but the accusations and suspicions have failed to ever subside.

    Yelp itself brought the subject up on its corporate blog last week pointing to what it said was the first example of “real reporting” on it, which the company says debunks the “extortion conspiracy”. What they didn’t mention is that this sole example of “real reporting” came from a source who leads strategy for an organization whose board includes the guy who leads sales at Yelp. They also apparently don’t consider an upcoming feature-length documentary full of third-party interviews an example of real reporting.

    So back to the earnings call. Again, none of this was addressed, but CEO Jeremy Stoppelman noted that Yelp’s revenue will be driven by its local advertising business over the next few years and that the company has broken past the 100,000 local advertising account milestone. He talked about how Yelp sees its Transactions business as an increasingly important component in the company’s over all business, but noted that “for the foreseeable future, we see local advertising as the core.”

    According to COO Geoff Donaker, Yelp saw 45% year-on-year growth of its sales force.

    Stoppelman said on the call, “As I think about the year ahead and the large opportunity in front of us, our three priorities are to continue to build our core local advertising business, increase awareness and engagement and grow transactions. The vast majority of local business owners continue to advertise in traditional offline channels. BIA/Kelsey projects that the Yellow Pages industry will generate roughly $7 billion in 2016. Even though according to a 2015 BrightLocal study, more than 90% of consumers read online reviews when looking for a great local business. Migrating these offline marketing budgets online continues to represent a huge market opportunity for us.”

    “As business owners evaluate their marketing options, many are coming to appreciate the value of Yelp advertising,” he continued. “For example, KinderCare Education, a childcare provider with over 1,000 locations across the country, have been a Yelp advertiser for 2 years but stopped in 2013. Based on a decline in the quality of their lead shortly thereafter, so they recently resumed advertising on Yelp to tap into our purchase-oriented consumer traffic. We are pleased to see KinderCare return to Yelp and this experience underscores the importance of communicating ROI to business owners.”

    Later in the call, CFO Rob Krolik, who announced his resignation, said, “So in terms of 2016 guidance in active local accounts and what that means, just as a reminder, our sales folks are compensated on revenue, not specifically on account growth. So while obviously, it’s important, more important is the advertising revenue that we are generating from each client.”

    “I think what I hear from our sales team is that Google and Facebook do come up, but in general, when they hear Google and Facebook from a local advertiser, that’s a really good sign,” he added. “That means that the local advertisers who has already started to shift online and it’s a great opportunity for us to talk with them about Yelp advertising as well and we are very confident with the ROI that we offer the typical advertiser. More often frankly, we are dealing with prospects who don’t advertise online at all yet and that’s a more difficult conversation, because you are trying to get somebody effectively out of print and online, which is happening over time, but is a more gradual process.”

    If you want to read what some business owners have recently said about about their experiences with Yelp advertising and sales calls, you can check out the comments on our article from last week for some of the latest.

    All Yelp quotes are via Seeking Alpha’s transcript of the conference call.

    Have you advertised with Yelp or discussed it with its sales team? What was your experience like? Discuss.

    Image via Yelp (Flickr)

  • Yelp Puts ‘Extortion Conspiracy Theory’ Back Into Spotlight

    Well, the Yelp “extortion” (or lack thereof) narrative is back in the news. For years, the company has been accused by business owners of burying positive reviews when the owners decline to pay for advertising on Yelp. Yelp has always strongly denied such things, pointing to failed lawsuits, studies, etc., but the stories and accusations have never gone away.

    Do you believe Yelp has proven beyond a reasonable doubt that such accusations are completely without merit? Share your thoughts in the comments.

    So why are we talking about this now? Mostly because Yelp itself is. The company has a new blog post out claiming that the “Yelp extortion conspiracy theory” has been “debunked…again.”

    More accurately, Yelp played some phone calls for a guy who works for an organization that a Yelp sales exec is the board member of, and it was concluded that there was no wrongdoing. It’s unlikely that this is going to make the narrative disappear.

    Vince Sollitto, SVP Communications and Public Affairs, writes, “Sometimes people claim Yelp gives more favorable ratings to businesses who advertise on our platform, and some even allege that Yelp threatens to manipulate ratings and reviews of those who don’t advertise. These claims are of course false and have already been scrutinized by courts of law, academic studies, and a closed FTC investigation. They are sensational, however, and the media has often repeated them at face value without doing any investigating or even real reporting. Until today.”

    He’s referring to a report from Greg Sterling, who wrote about a plumber he spoke with who told him “he had been solicited to advertise on the site and that he declined but was told by the telephone sales rep that his reviews could potentially be affected if he didn’t.”

    Yelp played 25 – 30 calls from Yelp to this plumber (only the Yelp side of the conversations are recorded) and concluded:

    There was nothing that sounded like a threat or any suggestion that reviews would be removed or otherwise altered by Yelp if the guy didn’t advertise. There wasn’t anything that could be construed as even implying that.

    If you’re a true conspiracy theorist you might now be inclined to believe that Yelp edited the records or omitted key conversations. But I can tell you it did not; I listened to the entire tiresome sequence of calls.

    Sterling says he believes Yelp’s version of the events after being “exposed to evidence that supported it.”

    Phil Rozek says in the comments on Sterling’s post, “Most of the time (in my experience), business owners’ complaints boil down to, ‘I said no to advertising, and then my reviews started disappearing.’ They wonder why reviews that initially got past the filter got filtered post facto, after the chat with the sales rep. It’s less often that they claim Yelp actually voiced something resembling a threat. I do think there are some rogue Yelp reps who gave business owners a shakedown, but I’ve seen nothing that to make me think it’s systemic.”

    Sterling replied to say, “One would assume that Yelp would aggressively stamp out any rogue sales people at this point to protect its reputation.”

    Rogue salespeople or not, Yelp’s defense and Sterling’s post may appear to “debunk” this particular plumber’s claim, but don’t really do much to do so for the common complaint Rozek speaks of.

    Something else worth noting here is that Sterling is the VP of Strategy and Insights for the Local Search Association, which is described as “a not-for-profit industry association of media companies, agencies and technology providers.” One of the board members for this association is Yelp Chief Revenue Officer Jed Nachman.

    From a Local Search Association press release from last year:

    Jed Nachman, Senior Vice President of Revenue, Yelp. Jed has been with Yelp since early 2007 and is responsible for leading Yelp’s rapidly growing sales, client services, and revenue operations groups, which span across four domestic locations as well as Europe. (emphasis ours).

    Since then, Nachman has been promoted to Chief Revenue Officer. This happened just last month when Yelp CEO Jeremy Stoppelman wrote:

    Since joining Yelp as Head of Local Sales in 2007, Jed has built our sales organization, including client services and revenue operations, from 10 to over 2000 team members. Along the way, Jed and his team have grown Yelp revenue from $500 thousand to $500 million. He has also been an integral member of our executive team — and helped establish our positive, energetic and highly accountable company culture. Now as Chief Revenue Officer, Jed will lead our local advertising business, take a more prominent role in company-wide planning and help push the company past the $1 billion revenue milestone.

    While there are many companies besides Yelp involved with the Local Search Association (which Nachman’s LinkedIn profile still says he is currently a part of), it certainly seems worth mentioning that the organization is tied to Nachman, even if Yelp didn’t deem it so for its blog post on the matter, which simply refers to Sterling as a “well-known analyst and thought leader”.

    To be clear, I don’t bring any of this up to discredit Sterling in any way. I’ve enjoyed his reporting on the search industry for many years. Yelp’s description of him is not wrong. It just leaves out his LSA connection, which Sterling does highlight in his own bio.

    In other words, I’m not implying that Sterling’s report is without merit. It just seems a little disingenuous on Yelp’s part to hold up a report from a guy who leads strategy for an organization with a direct connection to a guy who leads sales at Yelp as the only example of “real reporting” on this topic, especially considering that there’s a feature-length documentary full of interviews expected to be released soon.

    It of course remains to be seen whether the doc, titled “Billion Dollar Bully,” will be able to show us any hard hitting evidence to back up the claims so many people have made, but those who have been following the story for years will no doubt be very interested to see what is presented.

    Prost Production, the company behind the film did provide an update last week:

    We initially thought we would be finished filming this summer, but in true documentary fashion, the story has lead us down many paths that we felt compelled to follow. With all the footage we have acquired, we have been structuring, restructuring, and structuring again the story so that it is told in the best possible way.

    We thought we were done with production in November, but once again, an interview popped up that we couldn’t miss out on and were out filming just last Sunday. Now, we are 99.9% certain we are completely done! The film is near picture lock but needs a little more tweaking. In a few weeks we will be sharing a cut of the film with Kickstarter backers who contributed at the Executive Producer level. We hope to be sharing a finished project with everyone not too long after that!

    Thank you again for your interest in this project. We want to ensure this story is factually-based and done correctly. It takes time to get there, especially when this is such a grassroots effort with a very small crew. It would be a disservice to all those who have participated in the making of this film (supporters, interviewees, etc) if we put out something quickly just for the sake of having a movie. We look forward to sharing details soon about when and where it can be seen.

    I encourage you read Sterling’s post here and check out Billion Dollar Bully when it is released, which will almost certainly present a very different side of the story.

    In other Yelp news, the company announced that it has issued a new round of consumer alerts warning people about 37 businesses busted for violating Yelp policies.

    What do you make of Yelp’s defense? Do you expect the documentary to provide any real evidence? Discuss.

    Image via Yelp (Flickr)

  • Yelp Shows Users View Counts For Their Reviews

    Yelp Shows Users View Counts For Their Reviews

    Yelp announced that all users can now see how many people have viewed their reviews for the 90 days prior. This should only encourage people to post more reviews, because people love to see stats about the things they’ve done online.

    “For years Yelpers have been taking the time to share local insight knowing their reviews and photos help others find the best businesses out there,” says Yelp product manager Jake B. “Compliments let you know when someone finds your review especially useful, funny, or cool, but that’s just a fraction of the people your reviews are reaching. Now users in all Yelp countries can see just how many people are benefiting from their contributions on Yelp with the addition of total views for the last 90 days of their reviews, photos, and profile. These stats are visible only to the user and can be seen on Yelp desktop and mobile. Views are compiled from activity across all platforms.”

    “We know it’s a commitment to be a Yelper, and we’re continually grateful for the time and effort our community puts into sharing their wisdom,” he adds. “It’s fun to share your opinions, but it’s even more fulfilling to know that thousands of people are led to the best ham sandwich they’ve ever tasted, or the small bridal shop where they purchased the perfect wedding gown, or have avoided some wonky dental work, all thanks to the experiences you and your fellow Yelpers shared.”

    The company said in October that its cumulative reviews grew 35% year over year, reaching 90 million in Q3.

    Images via Yelp, Yelp’s Flickr

  • Yelp Reviews Under Government Spotlight

    Yelp Reviews Under Government Spotlight

    On Tuesday, Yelp and other members of the Consumer Electronics Association, including Zenefits and R Street Institute, briefed Congressional staff, businesses, and advocacy organizations on SLAPPs (Strategic Lawsuits Against Public Participation) and what it calls “chilling impacts” of lawsuits filed “to censor or intimidate critics.”

    In September, a Yelp reviewer was ordered to pay a business owner $1,000 after leaving a series of comments on Yelp and a local site, which a court found ventured beyond free speech and into defamation.

    Do you think the court got that decision right? Let us know what you think.

    Yelp has said repeatedly that it doesn’t want reviewers to be afraid to leave negative reviews, and the company seems to fear that cases like this could make them think twice.

    “We frequently find that a better course of action, rather than suing your customers, is publicly responding to a critical review in the same forum,” a Yelp spokesperson said in relation to that case.

    “Seventy percent of people online use a review site before making a purchasing decision,” said Laurent Crenshaw, director of policy, Yelp. “These platforms allow users to make better purchasing decisions and make businesses more responsive to consumers. For this virtuous cycle to continue, we can’t have chilled speech.”

    According to a press release, the CEA and its members shared with Congressional staff how SLAPPs were used to stifle free speech in many areas. In states without Anti-SLAPP statutes, online reviewers can face “prolonged lawsuits simply for expressing their opinion,” it says.

    Yelp has engaged in lobbying efforts on anti-SLAPP legislation that would prevent such suits. Earlier this year, the company attacked casino mogul Steve Wynn for supporting legislation that would make it easier to sue people for bad reviews.

    “We live in an age where public comment forums are getting a lot of feedback,” said Mike Godwin, innovation policy director and general counsel at R Street Institute. “How do we keep those channels open? States are the laboratories of democracy and 28 states have already put in place protection from SLAPPs.”

    The panel specifically championed the SPEAK FREE Act proposed by Representatives Blake Farenthold (R-TX) and Anna Eshoo (D-CA).

    “We thank Representatives Farenthold, Eshoo, and others for advancing federal anti-SLAPP legislation,” said Michael Hayes, manager of government relations, CEA. “Whether you express your opinion online or offline, you shouldn’t have to worry about the threat, and cost, of a SLAPP. We need a federal fix to ensure that these bogus lawsuits no longer undermine Americans’ free speech.”

    On Wednesday, the Senate Commerce, Science, and Transportation Committee was held to discuss “How Gagging Honest Reviews Harms Consumers and the Economy” and the Consumer Review Freedom Act.

    Crenshaw talked about this on the Yelp blog:

    Thankfully, Congress is taking an important step in protecting consumers’ right to free speech with the Consumer Review Freedom Act of 2015 (S. 2044). This bipartisan effort, introduced by Senators John Thune (R-SD), Brian Schatz (D-HI) and Jerry Moran (R-KS), would nullify any of the non-negotiable clauses that allow businesses to slap consumers with large fines for sharing their honest feedback.

    The protection of free speech, both offline and on, has always been, and should continue to be, a top priority of the government. We at Yelp applaud the Senate Commerce, Science, and Transportation Committee for their dedication to this issue and look forward to a long future where people can share their firsthand experiences with local businesses without facing the threat of fine or unfair retribution.

    This is a battle Yelp has been dealing with for years as businesses who feel they’ve been harmed by user reviews have repeatedly sought retaliation by way of lawsuit. As Yelp has repeatedly pointed out, this often results in a “Streisand Effect,” in which the business ends up getting more negative press as a result of their efforts and ultimately harms itself further.

    Do you agree with Yelp on this issue, or do you worry that any government action will result in negative effects? Share your thoughts in the comments.

    Image via Yelp

  • Yelp Earnings Please Investors

    Yelp just released its financial results for Q3, beating Wall Street expectations with revenue of $143.6 million, and earnings per share of $0.03. Net revenue was up 40% year over year.

    Yelp’s cumulative reviews grew 35% year over year reaching 90 million while app unique devices grew 39% to about 20 million on a monthly average basis.

    Local advertising accounts grew 37% year over year to about 104,200. Local ad revenue totaled $115.9 million for the quarter.

    Transactions revenue was $12 million and brand advertising revenue was $9 million. Other revenue was $6.7 million.

    CEO Jeremy Stoppelman said, “We executed well this quarter. Consumers are increasingly discovering our app, which represents approximately 70% of engagement across our entire ecosystem. We believe that our highly engaging app, combined with our native local advertising products that generate high ROI for our customers, strongly positions us to capture the large market opportunity.”

    “We are pleased with our 40% year over year revenue growth,” added CFO Rob Krolik. “We are investing in the business through our marketing programs and continued sales team growth as we work to achieve our goal of becoming the leading destination for consumers connecting with great local businesses.”

    Yelp shares quickly jumped 7% in after hours trading upon the release.

    Here’s the release in its entirety:

    SAN FRANCISCO, Oct. 28, 2015 /PRNewswire/ — Yelp Inc. (NYSE: YELP), the company that connects consumers with great local businesses, today announced financial results for the third quarter ended September 30, 2015.

    Yelp logo
    • Net revenue was $143.6 million in the third quarter of 2015 reflecting 40% growth over the third quarter of 2014.
    • Adjusted EBITDA for the third quarter of 2015 was $12.5 million compared to $20.1 million in the third quarter of 2014.
    • Cumulative reviews grew 35% year over year to approximately 90 million.
    • App Unique Devices grew 39% year over year to approximately 20 million on a monthly average basis1.
    • Local advertising accounts grew 37% year over year to approximately 104,2002.

    Net loss in the third quarter of 2015 was $(8.1) million, or $(0.11) per share, compared to a net income of $3.6 million, or $0.05 per share, in the third quarter of 2014.

    Non-GAAP net income, which consists of net income excluding stock-based compensation and amortization was$2.7 million, or $0.03 per share, for the third quarter of 2015.

    Net revenue for the nine months ended September 30, 2015 was $396.0 million, an increase of 48% compared to$267.6 million in the same period last year. Adjusted EBITDA for the nine months ended September 30, 2015 was$51.6 million compared to $45.8 million in the first nine months of 2014. Net loss for the nine months endedSeptember 30, 2015 was $(10.7) million, or $(0.14) per share, compared to net income of $3.7 million, or $0.05per share, in the comparable period in 2014. Non-GAAP net income for the nine months ended September 30, 2015 was $19.9 million, or $0.26 per share, compared to non-GAAP net income of $25.8 million, or $0.34 per share, in the comparable period in 2014.

    “We executed well this quarter,” said Jeremy Stoppelman, Yelp’s chief executive officer. “Consumers are increasingly discovering our app, which represents approximately 70% of engagement across our entire ecosystem. We believe that our highly engaging app, combined with our native local advertising products that generate high ROI for our customers, strongly positions us to capture the large market opportunity.”

    “We are pleased with our 40% year over year revenue growth,” added Rob Krolik, Yelp’s chief financial officer. “We are investing in the business through our marketing programs and continued sales team growth as we work to achieve our goal of becoming the leading destination for consumers connecting with great local businesses.”

    Third Quarter Operating Summary

    • Local advertising revenue totaled $115.9 million, representing 36% growth compared to the third quarter of 2014.
    • Transactions revenue totaled $12.0 million, compared to $1.3 million in the third quarter of 2014, primarily due to the acquisition of Eat24 in the first quarter of 2015.
    • Brand advertising revenue totaled $9.0 million, representing a 4% decrease compared to the third quarter of 2014. As previously announced, Yelp plans to phase out its brand advertising product by the end of 2015 to continue its focus on the consumer experience and its native, local advertising products.
    • Other revenue totaled $6.7 million which was flat compared to the third quarter of 2014.

    Business Highlights

    • Mobile Traffic: Consumer adoption of the Yelp app remained strong, as App Unique Devices grew 39% year over year to 20 million. According to comScore data for September 2015, Yelp was one of the top 25 mobile web and app properties.
    • Engagement: Consumers continued to engage with Yelp across the entire ecosystem as page views grew nearly 40% year over year. Similar to the second quarter, app users were our most engaged users and approximately 70% of page views came from the mobile app.
    • Transactions: In the third quarter, Yelp Platform transactions increased approximately 170% year over year. Yelp launched multiple features to enhance the transaction experience on Yelp, such as the ability to order food or make reservations directly from search results, which resulted in more than a 10% lift in Yelp Platform transactions in the month following the change.

    Business Outlook

    Yelp is providing its outlook for the fourth quarter and updated outlook for the full year of 2015.

    • For the fourth quarter of 2015, net revenue is expected to be in the range of $149.5 million to $154.5 million, representing growth of approximately 38% at the midpoint compared to the fourth quarter of 2014. Adjusted EBITDA is expected to be in the range of $20 million to $24 million. Stock-based compensation is expected to be in the range of $16 million to $17 million, and depreciation and amortization is expected to be 5%-6% of revenue.
    • For the full year of 2015, net revenue is expected to be in the range of $545.5 million to $551.5 million, representing growth of approximately 45% at the midpoint compared to full year 2014. Adjusted EBITDA is expected to be in the range of $72 million to $76 million. Stock-based compensation is expected to be in the range of $61 million to $63 million, and depreciation and amortization is expected to be 5%-6% 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 40935655, 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 October 28, 2015 and 11:59 p.m. PT November 4, 2015 by calling 1 (888) 843-7419 or 1 (630) 652-3042, with Passcode 40935655.  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 Franciscoin July 2004. Since then, Yelp communities have taken hold in major metros across 32 countries. Approximately 89 million unique visitors visited Yelp via their mobile device3, including 20 million unique devices accessing the Yelp app1, and approximately 79 million unique visitors visited Yelp via a desktop computer4 on a monthly average basis during the third quarter of 2015. By the end of the same quarter, Yelpers had written approximately 90 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.

    1 Calculated as the number of unique devices accessing the app on a monthly average basis over a given three-month period, according to internal Yelp logs.

    2 Local advertising accounts comprise all local business accounts from which we recognize local advertising revenue in a given three-month period.

    3 Calculated as the number of “users,” as measured by Google Analytics, accessing Yelp via mobile web plus unique devices accessing the app, each on a monthly average basis over a given three-month period.

    4 Calculated as the number of “users,” as measured by Google Analytics, accessing Yelp via desktop computer on an average monthly basis over a given three-month period.

    Non-GAAP Financial Measures

    This press release includes information relating to adjusted EBITDA, non-GAAP net income and non-GAAP net income per share, each of which the Securities and Exchange Commission has defined as a “non-GAAP financial measure.” Adjusted EBITDA, non-GAAP net income and non-GAAP net income per share have been included in this press release because they are key measures used by Yelp 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 and non-GAAP net income have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of Yelp’s financial 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 and non-GAAP net income do 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, Yelp’s working capital needs;
    • adjusted EBITDA and non-GAAP net income do 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 Yelp; and
    • other companies, including those in Yelp’s industry, may calculate adjusted EBITDA and non-GAAP net income differently, which reduces their usefulness as comparative measures.

    Because of these limitations, you should consider adjusted EBITDA, non-GAAP net income and non-GAAP net income per share alongside other financial performance measures, including various cash flow metrics, net income (loss) and Yelp’s other GAAP results. Additionally, Yelp has not reconciled its adjusted EBITDA outlook for the fourth quarter and full year 2015 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 Yelp’s control and cannot be reasonably predicted, Yelp is unable to provide such an outlook. Accordingly, reconciliation to net income (loss) outlook for the fourth quarter and full year 2015 is not available without unreasonable effort. For a reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see the non-GAAP reconciliations included below 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 Yelp’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 fourth quarter and full year 2015, Yelp’s ability to capture a meaningful share of the large local market, Yelp’s expectations regarding local advertising as the primary driver of growth, Yelp’s estimates regarding local advertisers’ ROI on advertising spend, the future growth in Yelp revenue and continued investing by Yelp in its future growth, Yelp’s ability to drive daily usage and engagement (particularly on mobile), increase awareness of Yelp among consumers, and deliver value to local businesses, Yelp’s ability to take advantage of trends toward app usage and native advertising and to become the leading destination for consumers connecting with great local businesses. Yelp’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: Yelp’s short operating history in an evolving industry; Yelp’s ability to generate sufficient revenue to maintain profitability, particularly in light of its significant ongoing sales and marketing expenses; Yelp’s ability to successfully manage acquisitions of new businesses, solutions or technologies, such as Eat24, and to integrate those businesses, solutions or technologies; Yelp’s reliance on traffic to its website from search engines like Google and Bing; Yelp’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 Yelp’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; Yelp’s  ability to deal with the increasingly competitive local search environment; Yelp’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 Yelp continues to expand geographically and introduce new products and as new laws and regulations related to Internet companies come into effect; Yelp’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 Yelp’s operating results is included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Yelp’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 Yelp on the date hereof. Yelp assumes no obligation to update such statements.

    Investor Relations Contact Information
    Wendy Lim, Allie Dalglish
    (415) 635-2412
    ir@yelp.com

     

    Yelp Inc.
    Condensed Consolidated Balance Sheets
    (In thousands)
    (Unaudited)
    September 30, December 31,
    2015 2014
    Assets
    Current assets:
    Cash and cash equivalents $         171,807 $        247,312
    Short-term marketable securities 197,132 118,498
    Accounts receivable, net 46,942 35,593
    Prepaid expenses and other current assets 31,952 19,355
    Total current assets 447,833 420,758
    Long-term marketable securities – 38,612
    Property, equipment and software, net 78,342 62,761
    Goodwill 173,996 67,307
    Intangibles, net 41,068 5,786
    Restricted cash 16,253 17,943
    Other assets 6,913 16,483
    Total assets $         764,405 $        629,650
    Liabilities  and stockholders’ equity
    Current liabilities:
    Accounts payable $             3,305 $            1,398
    Accrued liabilities 49,246 29,581
    Deferred revenue 2,543 2,994
    Total current liabilities 55,094 33,973
    Long-term liabilities 12,849 7,527
    Total liabilities 67,943 41,500
    Stockholders’ equity
    Common stock – –
    Additional paid-in capital 752,795 627,742
    Accumulated other comprehensive loss (11,679) (5,609)
    Accumulated deficit (44,654) (33,983)
    Total stockholders’ equity 696,462 588,150
    Total liabilities and stockholders’ equity $          764,405 $         629,650

     

    Yelp Inc.
    Condensed Consolidated Statements of Operations
    (In thousands, except per share amounts)
    (Unaudited)
    Three Months Ended Nine Months Ended
    September 30, September 30,
    2015 2014 2015 2014
    Net revenue $ 143,559 $ 102,455 $ 395,980 $ 267,649
    Costs and expenses
    Cost of revenue (1) 14,259 6,174 36,015 17,096
    Sales and marketing (1) 82,949 54,551 214,229 147,470
    Product development (1) 28,511 17,397 78,816 46,105
    General and administrative (1) 20,990 15,185 60,207 41,612
    Depreciation and amortization 7,562 4,604 21,624 12,299
    Total costs and expenses 154,271 97,911 410,891 264,582
    Income (loss) from operations (10,712) 4,544 (14,911) 3,067
    Other income (expense), net (545) 200 346 183
    Income (loss) before income taxes (11,257) 4,744 (14,565) 3,250
    Benefit (provision) for income taxes 3,175 (1,107) 3,894 495
    Net income (loss) attributable to common stockholders $   (8,082) $     3,637 $ (10,671) $     3,745
    Net income (loss) per share attributable to common stockholders:
    Basic $     (0.11) $       0.05 $     (0.14) $       0.05
    Diluted $     (0.11) $       0.05 $     (0.14) $       0.05
    Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:
    Basic 75,019 72,195 74,450 71,697
    Diluted 75,019 77,296 74,450 76,732
    (1) Includes stock-based compensation expense as follows:
    Three Months Ended Nine Months Ended
    September 30, September 30,
    2015 2014 2015 2014
    Cost of revenue $        435 $        253 $        781 $        522
    Sales and marketing 5,568 3,883 16,159 11,008
    Product development 5,947 3,835 17,117 10,333
    General and administrative 3,733 2,947 10,813 8,594
    Total stock-based compensation $   15,683 $   10,918 $   44,870 $   30,457

     

    Yelp Inc.
    Condensed Consolidated Statements of Cash Flows
    (In thousands)
    (Unaudited)
    Nine Months Ended
    September 30,
    2015 2014
    Operating activities
    Net income (loss) $ (10,671) $    3,745
    Adjustments to reconcile net income (loss) to net cash provided by operating activities:
    Depreciation and amortization 21,624 12,299
    Provision for doubtful accounts and sales returns 10,401 3,894
    Stock-based compensation 44,870 30,457
    Loss (gain) on disposal of assets and website development costs 130 (5)
    Premium amortization, net, on securities held-to-maturity 827 214
    Excess tax benefit from share-based award activity (4,298) (899)
    Realized gain on investments (2) (2)
    Changes in operating assets and liabilities:
    Accounts receivable (17,773) (13,772)
    Prepaid expenses and other assets (15,057) (7,338)
    Accounts payable, accrued expenses and other liabilities 23,904 10,899
    Deferred revenue (428) (453)
    Net cash provided by operating activities 53,527 39,039
    Investing activities
    Acquisition, net of cash received (73,422) –
    Purchases of property, equipment and software (25,358) (12,743)
    Capitalized website and software development costs (8,658) (7,969)
    Change in restricted cash 1,664 (9,756)
    Purchase of intangible assets (647) (1,334)
    Proceeds from sale of property and equipment 109 14
    Purchases of investment securities held-to-maturity (172,717) (148,359)
    Maturities of investment securities held-to-maturity 131,870 21,000
    Net cash used in investing activities (147,159) (159,147)
    Financing activities
    Proceeds from exercise of employee stock options 9,889 17,316
    Proceeds from issuance of common stock for Employee Stock Purchase Plan 5,061 4,087
    Excess tax benefit from stock-based award activity 4,298 899
    Repurchase of common stock (482) (1,035)
    Net cash provided by financing activities 18,766 21,267
    Effect of exchange rate changes on cash and cash equivalents (639) (356)
    Net decrease in cash and cash equivalents (75,505) (99,197)
    Cash and cash equivalents at beginning of period 247,312 389,764
    Cash and cash equivalents at end of period $ 171,807 $ 290,567

     

    Yelp Inc.
    Reconciliation of GAAP to Non-GAAP Financial Measures
    (In thousands)
    (Unaudited)
    Three Months Ended Nine Months Ended
    September 30, September 30,
    2015 2014 2015 2014
    Adjusted EBITDA:
    Net income (loss) $ (8,082) $   3,637 $ (10,671) $   3,745
    (Benefit) provision for income taxes (3,175) 1,107 (3,894) (495)
    Other (income) expense, net 545 (200) (346) (183)
    Depreciation and amortization 7,562 4,604 21,624 12,299
    Stock-based compensation 15,683 10,918 44,870 30,457
    Adjusted EBITDA $ 12,533 $ 20,066 $  51,583 $ 45,823
    Non-GAAP Net Income (Loss) and income (Loss) per share:
    GAAP net income (loss) $ (8,082) $   3,637  

    $ (10,671)

    		  

    $   3,745
       Add back: stock-based compensation 15,683 10,918 44,870 30,457
       Add back: amortization of intangible assets 1,723 643 4,757 1,898
       Less: tax effect of stock-based compensation
       & amortization of intangible assets (6,650) (4,333) (19,026) (12,232)
       Add back: valuation allowance release (net of tax) – – – 1,958
    Non-GAAP Net Income $   2,674 $ 10,865 $  19,930 $ 25,826
    GAAP diluted shares 77,704 77,296 77,934 76,732
    Non-GAAP Net Income per share $     0.03 $     0.14 $      0.26 $     0.34

    Images via Yelp

  • Yelp Strips Businesses Deemed ‘Shady’ Of Ratings And Reviews

    Yelp is cracking down harder and harder on businesses it considers to be engaging in shady practices. It’s not only slapping more businesses with consumer alert warnings, but it’s slapping many more with a new “reputation warning”.

    Is Yelp doing a good job of separating shady businesses from legitimate ones? Let us know what you think in the comments.

    Yelp has been issuing rounds of consumer alert warnings on business pages since 2012. These last for 90 days and point Yelp users to evidence Yelp found that shows why they consider that business to have been engaging in shady business practices.

    An example of one of the warnings says, “We caught someone offering up cash, discounts, gift certificates or other incentives in exchange for reviews about this business. We wanted you to know because buying reviews not only hurts consumers, but also honest businesses who play by the rules. Check out the evidence here.”

    Then, there’s a link for the users to see the reviews anyway.

    In January, Yelp issued 85 of these types of warnings on business pages. In June, it issued 51 more. Earlier this week, it announced that it had issued another 51 of them, bringing the year’s total to 187.

    Yelp’s Kayleigh Winslow wrote in a blog post, “Wouldn’t you want to know that Spokane Laptops was caught threatening customers and offering to pay $50 in exchange for the removal of negative reviews before taking your broken laptop into that shop? Likewise, you’d probably appreciate a heads up that this MedRite Urgent Care was caught twice attempting to inflate their ratings before rushing in with a medical emergency. Similarly, you’d want the tip-off that a large number of five-star reviews for Family Dental Care came from the same IP address used to claim the business owner’s account before heading in to get a tooth pulled.”

    “In addition to giving consumers a false perception of the business where they are about to spend their hard-earned money and violating Yelp’s Terms of Service, buying positive testimonials without revealing they were paid for is a form of false advertising,” she added.

    The consumer alerts fall under a broader initiative that the company refers to as its Consumer Protection Initiative, which also includes its work with government and research agencies as well as its health score information for restaurants.

    Since the announcement about the latest round of consumer alerts, Yelp has made yet another announcement about its consumer protection efforts. This one involves slapping another 100+ businesses with a new “reputation warning”.

    “Although most businesses earn their reputations fairly, some are becoming sophisticated in their attempts to manipulate their online reputation,” wrote Vince Sollitto in another blog post. “Fortunately, Yelp is just as committed to protecting the integrity of our content and we are constantly learning and improving our mechanisms to detect suspicious behavior.”

    He explains, “Yelp has issued a new Reputation Warning on more than 100 listings for moving companies across the U.S. who are connected to the Movers Alliance, a group that operates many mover and relocation businesses under several names and listings on Yelp, other consumer sites, and government databases. We have evidence that this group and the businesses connected to it pressure customers into writing positive reviews (sometimes on the spot) in exchange for a discount, manipulate customers into posting reviews to listings other than the one they transacted with (sometimes in an entirely different state), ask customers to sign a contract preventing them from publishing negative reviews in case of a dispute, and purchase fake reviews online.”

    For businesses with the “reputation warning,” Yelp goes even further than that it does with those with the regular consumer alert. It actually removes the reviews and star ratings for the business, and instead just displays a warning with a link to its evidence.

    So just know that this is a think Yelp could do to more businesses in the future if it compiles what it sees as sufficient evidence.

    Is Yelp improving things for honest businesses with its ongoing consumer protection efforts? Share your thoughts in the comments.

  • Yelp Slaps 51 More Businesses With Consumer Alert Warnings

    Yelp announced that it has released a new round of 51 consumer alerts, which will be posted on business pages for 90 days. That brings the total for this year so far to 185.

    In January, Yelp announced a round of 85 alerts. Then in June, they announced another round of 51. Once again, Yelp is calling out specific businesses in its announcement.

    Yelp’s Kayleigh Winslow writes in a blog post, “Wouldn’t you want to know that Spokane Laptops was caught threatening customers and offering to pay $50 in exchange for the removal of negative reviews before taking your broken laptop into that shop? Likewise, you’d probably appreciate a heads up that this MedRite Urgent Care was caught twice attempting to inflate their ratings before rushing in with a medical emergency. Similarly, you’d want the tip-off that a large number of five-star reviews for Family Dental Care came from the same IP address used to claim the business owner’s account before heading in to get a tooth pulled.”

    She adds, “In addition to giving consumers a false perception of the business where they are about to spend their hard-earned money and violating Yelp’s Terms of Service, buying positive testimonials without revealing they were paid for is a form of false advertising.”

    The consumer alerts fall under a broader initiative that the company refers to as its Consumer Protection Initiative, which also includes its work with government and research agencies as well as its health score information for restaurants.

    Image via Yelp (Flickr)

  • TSA Doesn’t Really Care About Your Yelp Reviews

    TSA Doesn’t Really Care About Your Yelp Reviews

    Earlier this week, Yelp announced a new partnership with the federal government that allows agencies to claim their Yelp pages and respond to reviews.

    It turns out, however, that the TSA is like nah, screw that.

    Apparently, the Transportation Security Administration is just fine with their Twitter outreach, and have no immediate plans to give their Yelp pages any attention.

    In fact, a TSA spokesman said he didn’t even know about the deal.

    From Politico:

    David Castelveter, a TSA spokesman, said he wasn’t aware of the program that Yelp recently announced with the headline “How Many Stars Would You Give the TSA? Review Federal Agencies on Yelp…and Maybe Get a Response.”

    Castelveter didn’t rule out using the program in the future, but as of now the agency will not be responding to the reviews.

    “We look forward to learning more about the functionality of this new program,” he said. However, he added “we think there are more benefits to a two-way real time exchange between TSA and travelers using Twitter.”

    This is especially funny, considering Yelp used the TSA specifically in their headline, and as the main example of how the initiative will work.

    “We encourage Yelpers to review any of the thousands of agency field offices, TSA checkpoints, national parks, Social Security Administration offices, landmarks and other places already listed on Yelp if you have good or bad feedback to share about your experiences. Not only is it helpful to others who are looking for information on these services, but you can actually make an impact by sharing your feedback directly with the source,” said Yelp.

    The “partnership” doesn’t force anyone to participate, and each government agency can decide whether or not it wants to deal with Yelpers – and it looks like, at least for now, the TSA isn’t really into all that.

    A General Services Administration official says that right now, only the State Department’s passport office has jumped on board Yelp’s offering.

  • Yelp Yanks Carly Fiorina’s TSA Review

    Yelp Yanks Carly Fiorina’s TSA Review

    Yelp is a place where people can go to bitch about restaurants, local businesses, and more. This week, Yelp became a place where people can go bitch about the government.

    Yelp recently announced that it had partnered up with the federal government to let federal agencies and offices claim their Yelp pages, read, and respond to their reviews.

    “We encourage Yelpers to review any of the thousands of agency field offices, TSA checkpoints, national parks, Social Security Administration offices, landmarks and other places already listed on Yelp if you have good or bad feedback to share about your experiences,” said Yelp’s Laurent Crenshaw.

    “It’s clear Washington is eager to engage with people directly through social media,” she added.

    Well, it appears those looking to make it to Washington are also eager to engage.

    Republican Presidential hopeful and former HP head Carly Fiorina took the opportuntiy to review the TSA.

    I’ll give you three guesses as to her rating, but you’ll only need one.

    But if you check the page, the review is no longer there. What happened?

    Well, the likely culprit is that “Join us: carlyforpresident.com” plug. As Daily Dot notes, Yelp strictly prohibits that sort of self-promotion from regular users.

    “[Users are not allowed to] promote a business or other commercial venture or event, or otherwise use the Site for commercial purposes, except in connection with a Business Account and as expressly permitted by Yelp,” read the site’s terms.

    Guess we’ll have to wait for the second review.

    Image via Carly Fiorina, Twitter

  • Being A Yelp Reviewer Doesn’t Make You A Yelp Employee , Rules Federal Judge

    It’s hard to believe that anybody thinks Yelp should pay them for the reviews they write, but some do, and some even banded together in a class action lawsuit against the company to try and seek out wages for reviews posted.

    The suit was filed last year by reviewers who claimed they should be paid for performing “the exact same work” that people who are paid by Yelp do.

    “This is a lawsuit merely to provide the wages to all writers of Yelp and not just the ones which Yelp, Inc. chooses to pay in wages,” the complaint said.

    A federal judge has now ruled that reviewers are volunteers, not employees (Duh.), and dismissed the suit. Courthouse News Service reports (via Consumerist):

    Lead plaintiff Lily Jeung complained she was “hired” by Yelp, that Yelp controls reviewers’ “work schedule and conditions” and that two of the three named plaintiffs were “fired” with “no warning and a flimsy explanation.”
     
    Seeborg found the plaintiffs “use the term ‘hired’ to refer to a process by which any member of the public can sign up for an account on the Yelp website and submit reviews, and the term ‘fired’ to refer to having their accounts involuntarily closed, presumably for conduct that Yelp contends breached its terms of service agreement.”
     
    But the reviewers’ contributions to the site “at most would constitute acts of volunteerism,” he wrote.

    Yelp finds itself at the center of a lot of different kinds of lawsuits, but this is one of the sillier ones if not the silliest. To think that anyone could sign up for a Yelp account and post reviews and just expect to be compensated as an employee is laughable, and it’s good to see that the court basically agreed.

    Image via Yelp (Flickr)

  • Yahoo: We’re Still Using Yelp Reviews [Updated]

    Yahoo: We’re Still Using Yelp Reviews [Updated]

    Update 2: Blumenthal points to another response from Yahoo on reddit:

    “Thanks for pointing this out! I work for Yahoo, and I’ve reported this to our Yahoo Local team*. They’ll be taking a look at this for sure. Yahoo Local doesn’t use the Yelp API, rather we have a data feed from them that we merge into this feed. They’ll be examining this to see if and what the problem may be. Thanks again for pointing this out to us!

    Update: A spokesperson for Yahoo tells us the company is not running any tests that would remove Yelp’s content, and that it’s possible that the listings I tried just didn’t have listings with Yelp reviews (presumably same with Blumenthal’s).

    As a matter of fact, Blumenthal noted in the comments of his own post that he is now seeing some Yelp listings. False alarm apparently.

    Early last year, Yahoo and Yelp announced a partnership in which Yahoo would begin showing Yelp reviews in its local search results. Some businesses were frustrated with the move claiming Yahoo had trashed “years of positive feedback from customers” in favor of Yelp’s reviews, which have of course been controversial on their own.

    That didn’t stop the partnership from carrying on. Yahoo would go on to feature Yelp reviews for all kinds of local search results. While we haven’t yet heard anything about it from the companies, it looks like Yahoo is no longer using Yelp reviews, and is once again using its own local content.

    Screen Shot 2015-08-04 at 12.09.54 PM

    This was pointed out by local search watcher Mike Blumenthal, who wrote in a brief blog post, “It appears that Yahoo is no longer serving up Yelp reviews. Drop maps, change their name and poof. Your old Yahoo reviews are back.”

    Yahoo announced the closure of maps.yahoo.com in June, by the way. It noted at the time, “However, in the context of Yahoo search and on several other Yahoo properties including Flickr, we will continue to support maps. We made this decision to better align resources to Yahoo’s priorities as our business has evolved since we first launched Yahoo Maps eight years ago.”

    That announcement made no mention of ditching Yelp.

    We’ve reached out to Yahoo for content, and will update accordingly.

    Images via Yahoo

  • Yelp Earnings Disappoint As Chairman Leaves And Company Moves Away From Display Ads

    Yelp reported its second quarter earnings on Tuesday with better than expected revenue, but worse than expected profit, sending shares tumbling. But that wasn’t the only news to come out of the company. Yelp also announced the resignation of Max Levchin from its Board of Directors, and said it will discontinue display advertising by the end of the year.

    Levchin Leaves

    Let’s start with Levchin leaving. He was Chairman and Director, and he is officially leaving “to pursue other interests”. His departure is effective immediately. The Board has yet to appoint a replacement Chairman, but says it “plans to consider the issue at the next Board meeting in September.”

    “We thank Max for all his contributions to Yelp since its founding in 2004 when he provided the seed capital to start the company,” said CEO Jeremy Stoppelman. “Max saw Yelp grow from just an idea in my head to a company worth billions of dollars with Yelpers around the world. We have mutually agreed this is the right time for him to step down given the demands on his time. I am grateful for his contributions to Yelp’s success and wish him all the best going forward.”

    “I am extremely proud of what Yelp has accomplished over the last 11 years and believe I leave it well-positioned to take advantage of the large local advertising market,” said Levchin. “I spoke with Jeremy and felt now is the right time to transition off the board. I’m confident that Yelp is prepared to continue its success as I increase my focus on my CEO responsibilities at Affirm, along with other demands on my time.”

    Display No More

    During the company’s earnings conference call, Stoppelman revealed that Yelp will phase out display advertising by the end of 2015 as it turns its ad focus to native and local products. Here’s what he had to say about it (via SeekingAlpha’s transcript of the call):

    Our mission is to connect people with great local businesses. Consumers are increasingly relying on our 83 million reviews when choosing where to spend their money, making Yelp the ideal place for local businesses to advertise. To better leverage Yelp’s strengths with consumers and local businesses, we decided to phase out brand advertising by the end of the year. We believe that eliminating brand advertising, which we also refer to as our display advertising product, will benefit the company over the long-term. The industry trend towards increasingly disruptive display advertising is at odds with our focus on the consumer experience, particularly within the app.

    Direct brand advertising sales is in decline, while programmatic advertising has its own challenges with privacy implications, ever declining CPMs, and lower ad quality. For example, ads that play video or audio intrude upon the consumer experience increasing load times and data usage on smartphones. We believe that prioritizing the consumer experience while delivering highly relevant native local advertising will provide us with the strategic long-term advantage. Given that our brand advertising as a percent of total revenues declined from 25% in 2010 to 6% in the second quarter of 2015 now is the right time for us to reallocate those resources to our highly differentiated core business

    The Results

    Yelp reported net revenue of $133.9 million for the quarter, which is up 51% year-over-year. It also reported a $0.02 per share loss, which put off Wall Street, which expected a positive $0.01 per share net income.

    Cumulative reviews grew 35% year-over-year, reaching 83 million, while mobile unique visitors surpassed the desktop number for the first time, growing 22% to 83 million on a monthly average basis. Local advertising accounts grew 40% year over year to 97,1004.

    Brand ad revenue was $8.3 million, which is a decrease of 8%.

    Here’s the full earnings release:

    SAN FRANCISCO, July 28, 2015 /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, 2015.

    Yelp logo
    • Net revenue was $133.9 million in the second quarter of 2015 reflecting 51% growth over the second quarter of 2014.
    • Adjusted EBITDA for the second quarter of 2015 was $22.7 million, reflecting a 32% increase over the second quarter of 2014.
    • Cumulative reviews grew 35% year over year to approximately 83 million.
    • Mobile Unique Visitors1 surpassed the number of Desktop Unique Visitors2 for the first time, growing 22% year over year to approximately 83 million on a monthly average basis. App Unique Devices grew 51% year over year to approximately 18 million on a monthly average basis3.
    • Local advertising accounts grew 40% year over year to approximately 97,1004.

    Net loss in the second quarter of 2015 was $(1.3) million, or $(0.02) per share, compared to a net income of $2.7 million, or $0.04 per share, in the second quarter of 2014.

    Non-GAAP net income, which consists of net income excluding stock-based compensation and amortization was$9.4 million, or $0.12 per share, for the second quarter of 2015.

    Net revenue for the six months ended June 30, 2015 was $252.4 million, an increase of 53% compared to $165.2 million in the same period last year. Adjusted EBITDA for the six months ended June 30, 2015 was $39.1 millioncompared to $25.8 million in the first six months of 2014. Net loss for the six months ended June 30, 2015 was$(2.6) million, or $(0.03) per share, compared to net income of $0.1 million, or $0.00 per share, in the comparable period in 2014. Non-GAAP net income for the six months ended June 30, 2015 was $17.3 million, or $0.22 per share, compared to non-GAAP net income of $15.0 million, or $0.19 per share, in the comparable period in 2014.

    “We continue to demonstrate solid topline growth, with total net revenue increasing 51% year over year to approximately $134 million,” said Jeremy Stoppelman, Yelp’s chief executive officer. “Consumers are increasingly turning to apps when using their mobile phones, and we are excited about the growth we’ve seen in app usage which accelerated to 51% year over year. We believe our rich content married with our highly-differentiated local advertising product will position us well to capture a meaningful share of the large local market.”

    “Our core local advertising business remains strong, and we are investing in Yelp’s future,” added Rob Krolik, Yelp’s chief financial officer. “We expect local advertising will continue to be our primary driver of growth as we work towards our goal of generating one billion dollars of revenue in 2017.”

    Second Quarter Operating Summary

    • Local advertising revenue totaled $107.9 million, representing 43% growth over the second quarter of 2014.
    • Transactions revenue, which was previously included in Other revenue and will be broken out separately going forward, totaled $11.3 million, compared to $1.2 million in the second quarter of 2014, primarily due to the acquisition of Eat24 in the first quarter of 2015. Transactions revenue is comprised of Eat24, Platform transactions, Yelp Deals and Gift Certificates.
    • Brand advertising revenue totaled $8.3 million, representing an 8% decrease compared to the second quarter of 2014. As of today, Yelp is announcing that it plans to phase out its brand advertising product by the end of 2015 to continue its focus on the consumer experience and its native, local advertising products.
    • Other revenue totaled $6.4 million, representing 128% growth over the second quarter of 2014. Other revenue is primarily comprised of revenue from partnership arrangements.

    Business Highlights

    • Mobile Traffic: Mobile Unique Visitors surpassed Desktop Unique Visitors for the first time in company history in the second quarter of 2015, growing to approximately 83 million compared to approximately 79 million Desktop Unique Visitors. Growth in unique devices accessing the Yelp app accelerated to 51% over the second quarter of 2014. The majority of Yelp consumer engagement now occurs on the app with approximately 70% of new reviews and photos and approximately 70% of calls, clicks for directions and map views coming via the Yelp app.
    • Local Advertising: With the full rollout of its packaged cost-per-click (CPC) advertising package inSeptember 2014, Yelp increased the percent of local revenue generated by CPC advertisers to 46% in the second quarter of 2015, an increase from 40% in the first quarter of 2015. Based on Yelp’s internal analysis, local advertisers on Yelp receive on average approximately 270% ROI on their advertising spend, demonstrating the compelling nature of its highly relevant, native advertising products.

    Business Outlook

    Yelp is providing its outlook for the third quarter and lowering its outlook for the full year of 2015 based on slower sales headcount growth and the elimination of its brand advertising product.

    • For the third quarter of 2015, net revenue is expected to be in the range of $139 million to $142 million, representing growth of approximately 37% compared to the third quarter of 2014. Adjusted EBITDA is expected to be in the range of $12 million to $15 million. Stock-based compensation is expected to be in the range of $16 million to $17 million, and depreciation and amortization is expected to be 5%-6% of revenue.
    • For the full year of 2015, net revenue is expected to be in the range of $544 million to $550 million, representing growth of approximately 45% compared to full year 2014. Adjusted EBITDA is expected to be in the range of $72 million to $78 million. Stock-based compensation is expected to be in the range of $62 million to $64 million, and depreciation and amortization is expected to be 5%-6% 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 40205168, 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 28, 2015 and 11:59 p.m. PT August 4, 2015 by calling 1 (888) 843-7419 or 1 (630) 652-3042, with Passcode 40205168.  The replay will also be available on Yelp’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 Franciscoin July 2004. Since then, Yelp communities have taken hold in major metros across 31 countries. Approximately 83 million unique visitors visited Yelp via their mobile device1, including approximately 18 million unique devices accessing the Yelp app3, and approximately 79 million unique visitors visited Yelp via a desktop computer2 on a monthly average basis during the second quarter of 2015. By the end of the same quarter, Yelpers had written approximately 83 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.

    1 Calculated as the number of “users,” as measured by Google Analytics, accessing Yelp via mobile web plus unique devices accessing the app, each on a monthly average basis over a given three-month period.

    2 Calculated as the number of “users,” as measured by Google Analytics, accessing Yelp via desktop computer on an average monthly basis over a given three-month period.

    3 Calculated as the number of unique devices accessing the app on a monthly average basis over a given three-month period, according to internal Yelp logs.

    4 Local advertising accounts comprise all local business accounts from which we recognize local advertising revenue in a given three-month period.

    Non-GAAP Financial Measures

    This press release includes information relating to adjusted EBITDA, non-GAAP net income and non-GAAP net income per share, each of which the Securities and Exchange Commission has defined as a “non-GAAP financial measure.” Adjusted EBITDA, non-GAAP net income and non-GAAP net income per share have been included in this press release because they are key measures used by Yelp 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 and non-GAAP net income have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of Yelp’s financial 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 and non-GAAP net income do 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, Yelp’s working capital needs;
    • adjusted EBITDA and non-GAAP net income do 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 Yelp; and
    • other companies, including those in Yelp’s industry, may calculate adjusted EBITDA and non-GAAP net income differently, which reduces their usefulness as comparative measures.

    Because of these limitations, you should consider adjusted EBITDA, non-GAAP net income and non-GAAP net income per share alongside other financial performance measures, including various cash flow metrics, net income (loss) and Yelp’s other GAAP results. Additionally, Yelp has not reconciled its adjusted EBITDA outlook for the third quarter and full year 2015 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 Yelp’s control and cannot be reasonably predicted, Yelp is unable to provide such an outlook. Accordingly, reconciliation to net income (loss) outlook for the third quarter and full year 2015 is not available without unreasonable effort. For a reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see the non-GAAP reconciliations included below 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 Yelp’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 2015, Yelp’s ability to capture a meaningful share of the large local market, Yelp’s target revenue for 2017 and its expectations regarding local advertising as the primary driver of growth, Yelp’s estimates regarding local advertisers’ ROI on advertising spend, the future growth in Yelp revenue and continued investing by Yelp in its future growth, and Yelp’s ability to drive daily usage and engagement (particularly on mobile), increase awareness of Yelp among consumers, and deliver value to local businesses. Yelp’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: Yelp’s short operating history in an evolving industry; Yelp’s ability to generate sufficient revenue to maintain profitability, particularly in light of its significant ongoing sales and marketing expenses; the impact of Yelp phasing out its brand advertising products by the end of 2015; Yelp’s ability to attract, retain and motivate well-qualified employees, particularly in sales and marketing; successfully manage acquisitions of new businesses, solutions or technologies, such as Eat24, and to integrate those businesses, solutions or technologies; Yelp’s reliance on traffic to its website from search engines like Googleand Bing; Yelp’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 Yelp’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; Yelp’s  ability to deal with the increasingly competitive local search environment; Yelp’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 Yelp continues to expand geographically and introduce new products and as new laws and regulations related to Internet companies come into effect; Yelp’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 Yelp’s operating results is included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Yelp’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 Yelp on the date hereof. Yelp assumes no obligation to update such statements.

    Investor Relations Contact Information
    Wendy Lim, Allie Dalglish
    (415) 635-2412
    ir@yelp.com

     

    Yelp Inc.
    Condensed Consolidated Balance Sheets
    (In thousands)
    (Unaudited)
    June 30, December 31,
    2015 2014
    Assets
    Current assets:
    Cash and cash equivalents $ 181,460 $        247,312
    Short-term marketable securities 186,673 118,498
    Accounts receivable, net 41,339 35,593
    Prepaid expenses and other current assets 22,713 19,355
    Total current assets 432,185 420,758
    Long-term marketable securities – 38,612
    Property, equipment and software, net 72,603 62,761
    Goodwill 173,296 67,307
    Intangibles, net 42,458 5,786
    Restricted cash 16,285 17,943
    Other assets 4,560 16,483
    Total assets $ 741,387 $        629,650
    Liabilities  and stockholders’ equity
    Current liabilities:
    Accounts payable $     1,706 $            1,398
    Accrued liabilities 37,716 29,581
    Deferred revenue 2,546 2,994
    Total current liabilities 41,968 33,973
    Long-term liabilities 13,254 7,527
    Total liabilities 55,222 41,500
    Commitments and contingencies
    Stockholders’ equity
    Common stock – –
    Additional paid-in capital 734,867 627,742
    Accumulated other comprehensive loss (12,130) (5,609)
    Accumulated deficit (36,572) (33,983)
    Total stockholders’ equity 686,165 588,150
    Total liabilities and stockholders’ equity $  741,387 $         629,650

     

    Yelp Inc.
    Condensed Consolidated Statements of Operations
    (In thousands, except per share amounts)
    (Unaudited)
    Three Months Ended Six Months Ended
    June 30, June 30,
    2015 2014 2015 2014
    Net revenue $ 133,913 $ 88,787 $ 252,421 $ 165,194
    Cost and expenses
    Cost of revenue (1) 13,057 5,845 21,756 10,922
    Sales and marketing (1) 68,014 47,798 131,280 92,919
    Product development (1) 26,345 14,726 50,305 28,708
    General and administrative (1) 19,280 13,257 39,217 26,427
    Depreciation and amortization 7,167 4,034 14,062 7,695
    Total cost and expenses 133,863 85,660 256,620 166,671
    Income (loss) from operations 50 3,127 (4,199) (1,477)
    Other income (expense), net 329 (15) 891 (17)
    Income (loss) before income taxes 379 3,112 (3,308) (1,494)
    Benefit (provision) for income taxes (1,684) (369) 719 1,602
    Net income (loss) attributable to common stockholders $   (1,305) $   2,743 $   (2,589) $        108
    Net (income) loss per share attributable to common stockholders:
    Basic $     (0.02) $     0.04 $     (0.03) $       0.00
    Diluted $     (0.02) $     0.04 $     (0.03) $       0.00
    Weighted-average shares used to compute net loss per share attributable to common stockholders:
    Basic 74,631 71,714 74,009 71,444
    Diluted 74,631 77,056 74,009 76,903
    (1) Includes stock-based compensation expense as follows:
    Three Months Ended Six Months Ended
    June 30, June 30,
    2015 2014 2015 2014
    Cost of revenue $        222 $      119 $        346 $        269
    Sales and marketing 5,654 3,728 10,591 7,125
    Product development 6,065 3,456 11,170 6,498
    General and administrative 3,575 2,780 7,080 5,647
    Total stock-based compensation $   15,516 $ 10,083 $   29,187 $   19,539

     

    Yelp Inc.
    Condensed Consolidated Statements of Cash Flows
    (In thousands)
    (Unaudited)
    Six Months Ended
    June 30,
    2015 2014
    Operating activities
    Net income (loss) $        (2,589) $         108
     Adjustments to reconcile net income (loss) to net
     cash provided by (used in) operating activities:
    Depreciation and amortization 14,062 7,695
    Provision for doubtful accounts and sales returns 6,076 2,581
    Stock-based compensation 29,187 19,539
    Loss (gain) on disposal of assets and website development costs 144 (5)
    Premium amortization, net, on securities held-to-maturity 481 93
    Excess tax benefit from share-based award activity (3,952) (460)
    Changes in operating assets and liabilities:
    Accounts receivable (7,855) (6,716)
    Prepaid expenses and other assets (7,079) (5,980)
    Accounts payable, accrued expenses and other liabilities 15,616 3,567
    Deferred revenue (426) (433)
    Net cash provided by operating activities 43,665 19,989
    Investing activities
    Acquisitions, net of cash received (73,422) –
    Purchases of property, equipment and software (18,059) (7,212)
    Capitalized website and software development costs (6,012) (4,327)
    Change in restricted cash 1,672 (397)
    Purchase of intangibles (314) –
    Proceeds from sale of property and equipment 109 14
    Purchases of investment securities held-to-maturity (93,914) (122,226)
    Maturities of investment securities held-to-maturity 63,870 –
    Cash used in investing activities (126,070) (134,148)
    Financing activities
    Proceeds from exercise of employee stock options 8,534 10,841
    Proceeds from issuance of common stock for Employee Stock Purchase Plan 5,061 4,087
    Excess tax benefit from share-based award activity 3,952 460
    Repurchase of common stock (396) (642)
    Net cash provided by financing activities 17,151 14,746
    Effect of exchange rate changes on cash and cash equivalents (598) 35
    Net decrease in cash and cash equivalents (65,852) (99,378)
    Cash and cash equivalents at beginning of period 247,312 389,764
    Cash and cash equivalents at end of period 181,460 $   290,386

     

    Yelp Inc.
    Reconciliation of GAAP to Non-GAAP Financial Measures
    (In thousands)
    (Unaudited)
    Three Months Ended Six Months Ended
    June 30, June 30,
    2015 2014 2015 2014
    Adjusted EBITDA:
    Net income (loss) $ (1,305) $   2,743 $ (2,589) $      108
    Provision (benefit) for income taxes 1,684 369 (719) (1,602)
    Other (income) expense, net (329) 15 (891) 17
    Depreciation and amortization 7,167 4,034 14,062 7,695
    Stock-based compensation 15,516 10,083 29,187 19,539
    Adjusted EBITDA $ 22,733 $ 17,244 $ 39,050 $ 25,757
    Non-GAAP net income and income per share:
    GAAP net income (loss) attributable to common

    shareholders
    $ (1,305) $   2,743 $ (2,589) $      108
       Add back: stock-based compensation 15,516 10,083 29,187 19,539
       Add back: amortization of intangible assets 1,803 629 3,034 1,255
       Less: tax effect of stock-based compensation & amortization of intangible assets
    (6,660) (4,039) (12,376) (7,899)
       Add back: valuation allowance release (net of tax) – – – 1,958
    NON-GAAP NET INCOME $   9,354 $   9,416 $ 17,256 $ 14,961
    GAAP diluted shares 78,749 77,056 78,205 76,903
    NON-GAAP NET INCOME PER SHARE $     0.12 $     0.12 $     0.22 $     0.19

    Image via Yelp (Flickr)

  • Amazon Is Changing How It Shows Reviews And How Ratings Work

    Amazon Is Changing How It Shows Reviews And How Ratings Work

    Amazon is reportedly changing how it displays customer reviews on product pages in the U.S. It’s using machine learning to figure out which reviews are most helpful to users, and giving those more weight in the algorithm. It’s also putting more weight on newer reviews.

    This is according to a report from CNET, which interviewed Amazon spokesperson Julie Law about it. According to her, the system will “learn what reviews are most helpful to customers,” and “improve over time” to “make customer reviews more useful”.

    The new system, which also influences products’ star ratings, apparently went into effect on Friday, though it may not be noticeable by many right away. Products’ star ratings are expected to change more frequently due to the way reviews are now weighted. CNET’s Ben Fox Rubin reports:

    The new platform was something the company looked at “very closely” before instituting, Law said, though she declined to say how long Amazon had been developing it.

    “It’s just meant to make things that much more useful,” Law said, “so people see things and know it reflects the current product experience.”

    While it’s still early, I suspect we’ll be hearing a lot of feedback from people who have products listed on the site. Reviews – especially the ones that are most visible – can make or break a product’s sales, and I’ll be surprised if we don’t see some anger arise from this.

    Ultimately, the system should better serve customers if it works as it’s supposed to, but anytime there’s a major change like this that has a direct effect on others’ ability to make money, there’s almost always a built-in controversy. We’ll see how this one plays out.

    Image via Amazon

  • Yelp Tells Businesses How To Respond To Reviews

    Businesses have a tricky relationship with Yelp. On the one hand, it can be a great way for customers to find a business, and a positive Yelp presence can encourage the customer to actually visit. On the flipside, negative reviews can be very damaging, and have led to plenty of defamation suits.

    Do you interact with negative reviews of your business? What approach do you take? Let us know in the comments.

    Yelp is now giving some advice to business owner about how they should response to reviews. Senior manager of local business outreach at the company wrote a blog post as a “how-to guide”. Within this are “two important things you should know about responding to reviews on Yelp”. Remmers writes:

    Always respond to reviews in a diplomatic, polite way. You can respond to both your negative and positive reviews on Yelp. You’re also able to respond to each review either privately or publicly. A private message is rather like a personal email and is only visible to that individual reviewer and you. It’s ideal for thanking patrons and also a good first step to find out more information from a dissatisfied customer. The other option is a public message which is visible to everyone. Make sure when posting a public response, that you thank the reviewer for their feedback, state your policies and address any of their concerns.

    Negative review? Although around 80% of the reviews on Yelp are 3 stars or higher, there is a chance you may get a negative review at some point. For starters, don’t send the reviewer a defensive private message or post something publicly accusing the reviewer of being a fraud. It’s viewed negatively by other consumers that encounter it and ends up only drawing more attention to the review. Instead, send the reviewer a private message to determine if they’re willing to connect with you privately to provide more details of what may have transpired.

    Last year, as one defamation suit was making headlines, Yelp told users not to be afraid to leave negative reviews.

    “It’s important to keep in mind that the First Amendment guarantees the rights of consumers to express their opinion about a business and honestly describe their experience,” wrote Yelp Senior Director of Litigation Aaron Schur. “These strong protections are why these suits are unlikely, especially when a reviewer has thoughtfully shared their views (Yelp provides guidance on how to do this in our Content Guidelines). We find the most useful reviews include a rich narrative, a wealth of detail and perhaps a helpful tip for others who are looking to spend their hard-earned money at that local business.”

    It’s in Yelp’s best interest that negative reviews exist, because who would trust a site where all reviews are positive? You’re going to get negative reviews. Addressing them the right way, however, could help you save a significant amount of space and help you avoid the Streisand effect.

    About six months ago, Yelp launched the Yelp for Business Owners app to make it easier for businesses to keep up with reviews. Available on Android and iOS, it notifies business owners in real time of new Yelp messages and reviews so businesses can respond in a timely fashion.

    “Since launching in June of 2014, consumers are now sending an average of 55,000 messages each month to businesses through our free Message the Business tool,” Yelp said at the time. . “With more than 64% percent of Yelp searches done on mobile and 73 million monthly unique visitors using Yelp via their mobile device as of Q3 2014, it’s clear there’s a demand to conduct these conversations on the go.”

    Business owners can also use the new app to view their business page activity, such as the number of user views and customer leads they have generated over the past 30 days. They can respond to reviews by private message or public comment, and respond to customer inquiries from the Message the Business feature. Advertisers can also use the app to view reports on ad clicks from Yelp users.

    Earlier this month, Yelp put out a call for small business owners to volunteer for its Small Biz Advisory Council. Specifically, they’re looking for Yelp aficionados who wish to act as representatives for business owners around the world and share insights with Yelp execs.

    According to the company, those selected will be able to make connections with small business leaders from around the world, travel to San Francisco for a summit at the Yelp headquarters, provide input on products in development, brainstorm new ideas for the company to consider, and be a resource for other business owners who have questions about Yelp’s products.

    Do agree with Yelp about how businesses should respond to reviews? Tell us what you think.

    Image via Yelp (Flickr)

  • Dealing With An Increasingly Mobile Yelp

    Yelp released its Q1 financial results on Wednesday with a 55% revenue increase compared to the same quarter last year, but falling short of analysts’ expectations and sending its stock price down. Still, the company grew its cumulative reviews by 36% to 77 million, including a record 6 million reviews contributed during the quarter.

    Do you expect Yelp’s increasing mobile user base to have an impact on your business? Let us know in the comments.

    Mobile Growth

    Mobile is a major growth area for Yelp, and businesses should understand the effects of that.

    The company reported that average monthly mobile unique visitors grew 29% year-over-year to approximately 79 million while average monthly desktop unique visitors declined 3% to about 80 million. Combined, average monthly unique visitors grew 8% to 142 million. In other words, there are now nearly as many mobile users as desktop users, and it’s only a matter of time until the mobile number overtakes desktop.

    Keep in mind, the ability to write reviews from mobile devices hasn’t even been around for two years. The feature hit the Yelp iPhone app in August, 2013, and then the Android app the following October.

    Last year, the company added a feature that enables users to upload videos so users can show various aspects of a business, such as ambiance, lighting, noise level, etc.

    They also added a mobile review translation feature, making content more useful for travel.

    What Yelp is saying about mobile

    CEO Jeremy Stoppelman had plenty to say about Yelp’s progress in mobile during the earnings conference call.

    “The way consumers contribute and consume content today is rapidly becoming mobile-centric,” said Stoppelman. “And as one of the first apps in the Apple App Store, we’ve been at the forefront of this trend. Mobile has been and continues to be one of our top product priorities and we’ve seen that focus result in strong mobile consumer traffic and engagement.”

    Over 50% of reviews and photos were contributed via Yelp’s mobile apps during the quarter, while mobile devices accessing the apps grew 47% year-over-year to about 16 million. According to the CEO, those are Yelp’s “most valuable and engaged” users.

    “If you fast forward a few years in to the future, you can imagine that our business is quite reliant on mobile traffic. And that’s where we frankly continue to invest a lot of our time and attention and resources particularly on the products and engineering side,” Stoppelman said during a Q&A. “And the good news is it seems to be paying off. Mobile web, if you include mobile web you’re looking at 29% year-over-year and then we talked about the app number being even stronger. So we feel good about where the business is headed but it’s certainly a period of transition where you are seeing desktop decline as users give up their desktop machines and switch over to iPhones and whatnot.”

    “One thing we’re quite encouraged by, as users do shift from desktop to mobile, particularly mobile app, we do see much higher engagement,” he said. “Just as an indicator that we’re seeing 65% of searches now are happening on mobile. We’re also seeing more and more content, I think it’s about close to 50% of content is now north of 50% of content is coming from mobile and of course a big portion of that, vast majority is coming from the mobile app.”

    He also talked about Yelp’s relationship with Apple, and how its review content is consistently surfaced through iOS functionality.

    Stoppelman even responded to a question about Google’s mobile-friendly update, saying that while it’s still too early to say for sure, there are no signs of a massive impact on Yelp’s search rankings either way. He noted that Yelp content is largely mobile-friendly, and that he doesn’t expect any significant impact one way or the other.

    What Yelp didn’t say about mobile

    What he didn’t mention is that another recent Google update has the potential to increase Yelp’s search visibility on Android. Google recently started surfacing content from apps in its search results, and if people continue to use the Yelp app, there is some potential opportunity for the company there. In fact, even since Google turned on app indexing as a signal, it has begun showing apps that users haven’t even downloaded in search results, encouraging app installs. This could very well lead to more Yelp Android app downloads.

    Another major component of Yelp’s mobile presence that they didn’t really get into on the call was the API, which gives developers the ability to pull Yelp data and use it in their own apps, potentially making your business information available in more places from mobile devices (and the web).

    Last summer, Yelp opened up its API to all developers for free, and increased the call limit to make it easier for them to use. 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.

    “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,” said Yelp VP Business & Corporate Development Mike Ghaffary in July. “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.”

    What can businesses do to deal with increased mobile use of Yelp?

    Well, there’s probably not a lot to do in terms of mobile Yelp optimization beyond the things that apply to the desktop. You should make sure you’ve claimed your business, and add photos, business hours, and other important information. Respond to customer reviews (in a professional manner). You can create deals or mobile check-in offers to try and increase conversions.

    “Optimizing your Yelp listing is equivalent to optimizing your website for search engines such as Google,” writes Amanda DiSilvestro at Search Engine Journal. “You want to utilize keywords in your business listing, and try to earn backlinks wherever you can either through guest posting, press releases, or better yet, naturally.”

    “Yelp also offers social features for users to help them find their friends on Yelp and see what they have been reviewing and what they recommend in any given area,” she adds. “This is more of a feature for users than businesses, but it’s good to know it exists in case your business ever wants to check out what people are saying about businesses in the area (your competition maybe?). You can check out these social features by clicking Find Friends’ at the top of a Yelp page. If you don’t already have an account, it will prompt you to add in information and confirm your email address. You’ll be set to go in less than two minutes.”

    DiSilvestro also recommends including a link to your Yelp page on your website and/or in your email signature.

    Just be careful about asking for Yelp reviews, because Yelp considers this spam. “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.”

    Last last year, Yelp gave businesses their own mobile app, enabling them to get to get real-time notifications of new Yelp messages and reviews. This should help businesses keep a closer eye on their Yelp presence and be able to jump in and respond to any negatively quickly.

    In December, Yelp said consumers were sending an average of 55,000 messages each month to businesses through its Message the Business tool.

    Business owners can also use the new app to view their business page activity, such as the number of user views and customer leads they have generated over the past 30 days. They can respond to reviews by private message or public comment, and respond to customer inquiries from the Message the Business feature.

    Advertisers can also use the app to view reports on ad clicks from Yelp users.

    Overall, the more Yelp’s mobile user base grows, the more businesses are likely to be affected by Yelp, because when users can leave a quick review for a business from the device in their pocket while their experience is freshest in their mind, it only makes sense that reviews will happen more frequently.

    Yelp also expects to open up mobile ad inventory and programmatic advertising this year.

    On the earnings call, Yelp also talked about how its ramping up its salesforce and trying to get more advertisers. More on that here.

    Do you think increased mobile usage of Yelp will help your business? Discuss.

    Images via Yelp

  • Yelp Filter Not Catching Biased Reviews

    Yelp Filter Not Catching Biased Reviews

    It may be a new year, but there are still problems with Yelp’s review filter. We’ve been tipped to some research finding reviews featuring promo codes, which would seem to violate Yelp’s guidelines, showing up for Uber and Lyft, as well as a competing taxi service. Yelp’s filter has long been the subject of controversy with small business owners, and these findings highlight yet another issue with it.

    Are you happy with Yelp’s review filter? Do you think it does a good job of eliminating spam? Let us know what you think.

    “We conducted some research that found many customers of Uber are spamming Yelp’s review in order to promote their promo code. These codes work as an affiliate program so whenever a new customer uses the code, then the person gets $5 in Uber credit,” Strategy Response tells WebProNews in an email. “In smaller markets, most of the 5-star reviews for Uber are clearly biases as they are promoting a code. These codes allow the person to receive credit when someone else uses their code.”

    These promo codes got some attention last year when celebrities like Lindsay Lohan, Snoop Dogg, and Neil Patrick Harris were promoting their codes on social media.

    As Strategy Response notes, such a conflict of interest on the part of reviewers is a clear violation of Yelp’s guidelines. This is what Yelp actually says under the “Conflicts of interest” section:

    Your contributions should be unbiased and objective. For example, you shouldn’t write reviews of your own business or employer, your friends’ or relatives’ business, your peers or competitors in your industry, or businesses in your networking group. Business owners should not ask customers to write reviews. Emphasis added.

    While this sort of thing might be fine on a platform like Twitter, Yelp is a different animal. It has direct influence on whether or not people use a business. That’s the whole point. It’s easy to see why reviews with these promos would be a violation of Yelp’s guidelines. They’re obviously biased. The problem is that the filter isn’t doing its job in eliminating them.

    Strategy response found examples in a variety of cities across the U.S. In Louisville, there’s only a single review for Uber, and that review gives the company a five-star review and includes a promo code.

    The same goes for Kalamazoo. In Charleston, 3 of the 4 reviews include a promo code. In Des Moinses, 2 out of the 3 reviews promotes a code.

    You can see an example for Lyft in Raleigh-Durham here.

    Yellow Cab in Austin, which has a one-and-a-half star review, displays this review promoting an Uber user’s code:

    So this is also something that could potentially have an impact on competition.

    “We believe that this is a serious issue as it brings into question Yelp’s filter,” Strategy Response tells WebProNews, noting that in many of our previous articles about Yelp, readers mentioned their frustration and anger with Yelp’s ‘recommended reviews’ section. “Also, Uber is gaining an unfair competitive advantage from an artificially higher Yelp review based on these biased reviews. A Harvard study found that restaurants are able to get a 5 to 9 percent increase in business based on an increase of one-star on Yelp. With some markets only have a single 5 star review for Uber based on a reviewer promoting their own code, this gives them an unfair advantage that Yelp has been unable to address.”

    In its report, Strategy Response says:

    What we do want to highlight is that Yelp’s filter system is not perfect. These reviews got through the filter, and once they were posted, it appears as if there were no further quality control investigation by Yelp. There has been many articles written about Yelp’s filter. If you have a small business, you have probably express anger, frustration, and fear when the filter prevents customers from leaving a glowing review. However, in addition to worrying over your own profile, it is also very important to check your competitors profile to see what has gotten through. In these examples, the competing taxi companies and ride-sharing apps in these markets should have flagged these reviews to get them removed. Regardless of the true intentions of the reviewers, the fact that it included a promo code should have prevented them from being displayed.

    Last month, Yelp launched a new app for business owners aimed at enabling them to better manage their Yelp reputations and respond to consumers more quickly. Based on our reader response, businesses aren’t very impressed.

    Do you think Yelp’s filter is adequate, or is it detrimental to businesses? Share your thoughts in the comments.