Yelp Inc (YELP) 2013 Q1 法說會逐字稿

Hello and welcome to the Yelp Q1 2013 earnings conference call.

My name is Myesha and I will be your operator for today's call.

At this time, all participants are in a listen-only mode.

Later, we will conduct a question-and-answer session.

Please note that this conference is being recorded.

I will now turn the meeting over to Stacie Bosinoff, you may begin.

Good afternoon everyone, and thank you for joining us on Yelp's first-quarter earnings conference call.

Joining me on the call today is CEO Jeremy Stoppelman, CFO Rob Krolik, and COO Geoff Donaker will join us for Q&A.

Before turn the call over to the Company, I'll read our Safe Harbor statement.

We will make certain statements today that are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially.

Please note that these forward-looking statements reflect our opinions only as of the date of this call and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.

Please refer to our SEC filings as well as our financial results press release for a more detailed description of the risk factors that may affect our results.

During our call today, we will discuss adjusted EBITDA, a non-GAAP financial measure.

In our press release issued this afternoon and our filings with the SEC, each of which is posted on our website, you will find additional disclosures regarding this non-GAAP financial measure and a reconciliation of historical net loss to adjusted EBITDA.

With that, I'll now turn the call over Jeremy.

Thanks Stacie and welcome everyone.

We had a great start to the year.

This quarter, we executed in all areas of our business and hit record highs in all of our core metrics.

More than ever, Yelp is becoming the de facto local search engine for connecting consumers with great local businesses.

We earn the trust of the consumer by having high quality content that reflects real experiences people encounter.

Consumers are also doing more than just reading reviews of local businesses on Yelp.

They are following through and making contact with businesses be it check-ins, reservations, clicks to their website, phone calls and directions.

For example, this quarter, consumers made approximately 15 million calls and generated 19 million directions to local businesses.

These are high-quality leads.

Trusted content drives traffic, and we are always looking for new ways to provide a better consumer experience.

At the urging of the White House and in conjunction with local governments, our engineers worked hard to develop LIVES, an open data standard that allows us to publish public health inspection scores to restaurant business pages.

This has now been rolled out in San Francisco with more cities on the way.

On our last call, I outlined the three key themes that will continue to be our focus throughout the year -- mobile, international and closing the loop with local businesses.

I'd like to take a couple of minutes to update you on our progress.

First, we are making great strides with our mobile strategy.

Our app was used on approximately 10 million devices.

We saw 36% of our total ad impressions served on mobile, an increase from 25% in the fourth quarter.

We also launched display ads on mobile in the first quarter with several great client brands, including Taco Bell, Intercontinental Hotels and MillerCoors.

Second, we are seeing increased traction internationally.

Spain had 1 million monthly uniques for the first time.

Just this morning, we announced that Yelp is now available in our 21st country, New Zealand.

We also started selling Yelp ads for the first time in France and Spain in Q1.

Our primary focus internationally this year will be on integrating great markets onto the Yelp platform.

We started this process in late March by redirecting Ireland, which marked our first movement of content and traffic, and early signs are showing a smooth transition.

We will continue to monitor Ireland's progress in preparation for Italy, which will be the next market we integrate.

And finally, our teams have been working diligently to develop new ways to close the loop with local businesses and help them better measure the value of a Yelp lead.

In the first quarter, Boston Consulting Group published a study on the economic impact Yelp has had on small businesses.

Their results showed that a business sees an average annual revenue lift of $8000 just by claiming their free business owners account.

A business that advertises season average annual lift of about $23,000.

In certain verticals such as automotive or home and local services, the revenue lift is even greater.

These results aren't surprising, given that consumers are using Yelp right at the moment they are making a purchase decision.

A typical business advertises on Yelp for approximately $4000 per year, which represents a significant return on investment according to the BCG findings.

Following the BCG study, we launched a revenue estimator tool on our business dashboard to help owners easily calculate the value of their Yelp leads.

They also have the ability to compare their results to national averages so they can better benchmark their business.

You could expect us to roll out additional features for business owners in the coming quarters.

Yelp is about more than just increasing traffic and content.

I'm constantly reminded of the importance of our community, which was top of mind when we hosted over 100 our community managers from all over the world at our headquarters in March.

RCMs are an invaluable part of our team as they are the brand ambassadors for Yelp.

Their hard work and enthusiasm reflects Yelp's unique corporate culture which extends into each local community.

As we look to the rest of the year, we are excited about the large opportunity that lies in front of us.

We'll continue to develop exciting new products to better serve consumers and local business owners.

And now I will turn the call over to Rob for the financial details.

Thanks Jeremy.

As Jeremy mentioned, we had a great first quarter.

Please note that we have posted a few slides on our Investor Relations webpage that accompanies the financial portion of the webcast.

Let me start with the financial results.

We achieved record results again in all our key metrics with both revenue and adjusted EBITDA ahead of guidance.

In the first quarter, revenue grew 68% year-over-year to $46.1 million, an acceleration over Q4's revenue growth of 65%.

Adjusted EBITDA was $3.2 million.

Moving on to the four key operating metrics, cumulative reviews grew 42% year-over-year to 39 million as we added over 3 million reviews in the quarter.

Our average monthly unique visitors grew 43% year-over-year to roughly 102 million.

Approximately 30% of these uniques are accessing our mobile site.

Claim local businesses was 1.1 million, up 58% year-over-year.

And active local business accounts grew 63% year-over-year to approximately 45,000.

Keep in mind that these metrics exclude Qype.

As we migrate each market over to Yelp, we will begin to include those metrics.

To provide some additional color, let me walk down the P&L starting with the revenue mix.

For the first quarter, local revenue was $39 million, up 81% year-over-year.

Brand revenue was $4.8 million, up 19% year-over-year.

Other revenue increased 26% year-over-year to $2.4 million, driven by deals in our partnerships.

International revenue contributed about 6% of total revenue in the first quarter.

As Jeremy said earlier, 36% of local ads were shown on mobile devices in our first full quarter, showing local ads on the app.

As we focus more and more on mobile, we expect to see greater contribution of impressions coming from mobile.

Our customer repeat rate, defined as the percentage of current customers who advertised with us in the past 12 months, was 72% this quarter, which is consistent with the last few quarters.

Gross margin was 93%.

Sales and marketing was 61% of revenue compared to 69% last year, reflecting scale in our model.

Sales and marketing is both the primary point of investment for growth as well as the greatest point of operating leverage.

To that point, domestic sales and marketing was 54% of revenue compared to 62% in the prior quarter -- prior-year quarter.

Product development was 16% of revenue compared to 15% in the first quarter last year.

On a dollar basis, we increased product development by approximately $3 million year-over-year, reflecting a full quarter of the Qype engineering team and shows our commitment to continue to invest in the future of the platform.

G&A was 19% of revenue, down from 39% over last year.

A large portion of this decrease was the result of the acceleration of options related to the IPO in the prior year, which did not repeat again this year.

This quarter, we had an additional one-time charge in the first quarter of approximately $700,000 for final severance charges related to Qype.

Turning to the balance sheet, our cash and cash equivalents position at the end of the quarter was approximately $95 million.

We generated approximately $250,000 in cash from operations in the quarter.

Now, turning to guidance for the second quarter and full year 2013.

For the second quarter, we expect revenues in the range of $52.5 million to $53.5 million.

We expect adjusted EBITDA for the second quarter to range between $4.5 million and $5 million.

We expect full-year 2013 revenue to be in the range of $216 million to $218 million, or approximately 58% growth over last year.

For the full-year, adjusted EBITDA is expected to be approximately $21 million to $23 million, a fivefold increase over last year, even as we continue to invest in the business.

For modeling purposes, our basic share count in the second quarter will be approximately 65 million shares and 66 million for the full year.

We expect stock-based compensation to be approximately $5.5 million per quarter this year.

I will now turn the call over to the operator and open the call up for questions.

(Operator Instructions).

Youssef Squali, Cantor Fitzgerald.

Good afternoon.

Thank you very much.

Two questions please.

Can you help us maybe quantify the contribution of mobile to revenues this quarter?

I know historically you have not, but as it grows bigger, I was wondering if maybe at least you can give us some idea as to how big its growth trajectory and kind of what's baked into your annual guidance from that.

And secondarily, how do you plan on closing the gap between mobile search on Yelp now, which is roughly almost -- I think you talked about 36% with -- of total impressions, and mobile revenues.

I think, the last time we chatted, I think you guys were talking about increasing sales force, increasing awareness, etc.

Maybe you can update us on your thoughts there.

Thank you.

Sure.

This is Jeremy.

So, we've actually seen the share of ads on mobile rise.

So this quarter, it was 36% and we think that will continue to drift upwards as more users shift to mobile in general.

But it's worth -- it's important to note that all ad opportunities for us are essentially created equal, and so we are somewhat indifferent whether we showing an ad on the Web or on mobile because it's all inventory that we are trying to fill by reaching out to advertisers and selling it.

This is Rob.

To your first question about revenues specific to the mobile, so the way we are selling it, as Jeremy noted, is we are selling it as a subscription bundle, and so you get impressions across the three platforms which are desktop, mobile web and the app.

And so I don't know that it would be a stretch to say that that's a percentage of revenue, but it's more the fact that we are platforming in indifferent, and the fact of the matter is that as we go ahead and get more mobile usage, we are actually in a better spot, given click-through rates and whatnot.

Okay, thank you.

Mark Mahaney, RBC.

Thanks.

There is an acceleration that you generated in the quarter.

I wonder if you could give maybe a little more color on why you think that acceleration occurred.

I guess particularly on the unique visitor side, was that greater contribution from international markets?

Any color on that?

And then secondly, I know, Jeremy, in an investor conference earlier this year, you talked about one of the big priorities being innovation in ad tools.

Could you give any update on that?

I think you touched on it earlier in the call.

But any more clarity on sort of product development from an advertiser side that you're focused on through the balance of the year?

Thank you very much.

Thanks Mark.

Thanks for the question.

I think, as we look at the quarter, we seem to be firing on all cylinders.

We had a great quarter.

I think each individual line item on revenue was incrementally a bit better than we thought.

And so, in total, it performed over and above what we expected, and then is contributing to the raise in guidance for the full year.

I don't know that we can specifically spot anything in particular.

Jeremy, I don't know if you, for the unique visitors, I don't know if there's anything we can call out other than just continued brand ubiquity.

Yes, also our reviews continue to climb.

We have 39 million reviews, which represents some of the most relevant content when searching for local businesses, and that historically has helped us get more traffic primarily through the search engines, namely Google.

And so as we continue to build really robust content, we continue to be rewarded for that.

Geoff, do you want to touch on the ad tool side?

Sure, thanks for that question, Mark.

We did have some nice add tool developments in the first quarter, the most notable of which was this revenue estimator that we put out for local business customers, as well as actually all those who don't pay us who have a claimed account with Yelp.

So preceding that, BCG released a study showing that Yelp advertisers generate an average of $23,000 a year from customers on Yelp compared with $8000 a year from those who don't advertise on Yelp and just have a free profile.

So, we released this revenue estimator (inaudible) for all local businesses to be able to look at their profile page on Yelp and estimate the value of all the leads they are getting from Yelp customers.

That was a pretty exciting feature.

We released that I guess a month or so ago, and it's been quite well-received.

We also have continued to make strides on our ad platform in general, both with overall targeting programs as well as bringing auction-based pricing into our self-serve advertising platform.

So, that was a nice small win as well, and I think you'll continue to see those kind of developments from us throughout the year.

Heath Terry, Goldman Sachs.

Great, thanks.

In reference to the cohort analysis that you include in the slide deck, I was wondering if you could just give us a sense.

When you look at the 2007, 2008 and 2009, 2010 cohorts, how similar are the trajectory that you see in both of those cohorts relative to 2005, 2006?

So, based on what you're looking at now, would -- another two years out, would that 2007, 2008 cohort reasonably be expected to be doing the kind of almost $3000 in average local ad revenue that the '05 '06 group is doing?

When I look at that, it's a bit hard to answer your question what's going to happen in the next couple of years.

I think that it's growing at the 2007, 2008 cohort, I would say is relatively in line with where kind of 2005, 2006 was back then from a percentage growth standpoint.

I'm not sure it really is from a dollars perspective, given they are a smaller market.

But that being said, now we are running at $3 million on average for the 2005, 2006 markets individually.

And when you look at that, I think, given the markets that those are in, including San Francisco, New York, LA, we think we have a lot of opportunity there.

So the same can be said with the 14 markets.

We've given the example within those 14 markets a 2007, 2008 cohort is the Philadelphia market that we've given excellent example of.

And that grew at 100% in Q4 and we'll update that for everyone coming up in our slideshow presentation for next week at the Jefferies conference.

So it's great growth.

We grew, last quarter in 2007, 2008, we grew at 76%.

This quarter, we are growing at 77%, so it's accelerating a little bit.

Great, thanks.

And then if we look, now that you've launched mobile Web ads, you've got in-app ads and have started to really monetize international, although obviously all at this still relatively early stage, how much of the inventory that's being created by usage across all of your platforms would you say is still sort of unmonetized relative to where you were when you went public?

This is Geoff.

I think one way you could look at that is if you could look at the absolute growth of our traffic across the Web and apps, and then look at that relative to absolute growth of revenue.

That would give you a proxy for a way to think about it.

Overall, what I would tell you is, from a local ads perspective, we are still in very, very low percent sell-through rate across just about every geography and category.

So really, from a monetization perspective, in the short-term, it's all about going out and selling, bringing in new advertisers.

Certainly, long-term inventory is going to be important, but that's not going to be a problem anytime in the foreseeable future.

Brian Fitzgerald, Jefferies.

Thanks guys.

Maybe to follow on to some of Mark's questions, can you give us some color related to the amount of referrals that are coming from Bing or Apple?

And then at 6% of revenue being international, where do you think that can get longer-term as you continue to mature and grow the Company?

Thanks.

So when we're talking about Bing, I guess we are talking about Web traffic.

Bing is a significant minority of Web traffic.

I think, in the search world, it really is a Google game for the most part.

And so most of the traffic is coming from Google on the search engine side.

Apple, we've got a robust relationship there.

We have seen some lift and we're quite happy with that relationship but we haven't broken out the specific numbers.

But just to give you some sense, it's not like the Google situation where it's any kind of majority or anything like that.

Okay.

This is Rob.

Your second question was about what?

Say that again?

If international 6% now, where can that get longer-term?

Yes, so we incremented about 1% from Q4 to Q1.

And we're pretty happy with that as we grow that business.

I come from -- I worked at eBay at one point, and they generate I think 30%, 40-plus% of their revenue internationally.

And so as we grow our business, as we go into all these different countries, I would hope that in X number of years, and that to be determined, but we can get to 30%, 40% of our revenue potentially being generated internationally.

We'll wait and see on how that works itself out, but we are growing quite well in the US.

And obviously from last year to this year Q1, we have significant growth internationally, given that it was almost nothing a year ago.

Jason Helfstein, Oppenheimer.

Thank you.

Just to ask a little more about mobile, given that it's part of the bundle, the real opportunity is, as you go for renewals, you can show better conversion rates, which you alluded to, and presumably could help drive some pricing.

Has the product been out long enough that you have any type of anecdotes where that's been helpful with client renewals?

I don't have any anecdotes for you specific to that.

Certainly I know, as I chat with the folks on our account management team and with clients, that many of them do like to look in their Yelp dashboard and see how many calls they are getting and directions they're getting to their business from Yelp.

And those are good examples of leads that are easy to generate and track to you mobile.

So I think it's very helpful to that point, but I don't have any specific example where our client renewed specifically because of the mobile package.

I think it's -- as Jeremy and Rob described, we are relatively platform agnostic, and I think it's helpful and important to have mobile apps now as part of that story.

Just remind us, when did it -- when did the mobile ads go live?

The ads on mobile apps specifically went in late Q4 I believe.

But we had ads on the mobile site early last year.

Right.

But to the extent that if the average contract of the year, we really won't see then kind of the benefit of those renewals until the fourth quarter this year.

So --

I guess that would be one way to think about it, sure.

Again, although renewals are certainly important to our business and we're very happy to preserve as many of those 45,000 existing customers as we've got, the focus at this point is very much on customer acquisition, and I suspect it will be for years to come, given how big our total market opportunity is out there in terms of local businesses.

Tom White, Macquarie.

Great, thanks for taking my question.

It's on international.

And I realize it's still early but you guys have now had I guess a couple of quarters focused on monetizing those markets.

When we think about the big sort of urban centers there, are you seeing -- I guess maybe you could share some sort of early findings or color there.

And are you seeing any signs that the trajectory of local ad revenue in those markets would be meaningfully different from kind of the early markets of the early cohorts in the US?

I guess what I'm trying to get at is the playbook that you guys have been using has been -- you guys have stuck to it pretty tightly.

Any reason to think that you might need to sort of stray from that either in terms of the way you market yourself or other way affects?

Thanks for the question.

This is Geoff again.

I think the short version of the answer would be, in general, we've seen more or less the same playbook working for us out of the London office, and now most recently with the Hamburg office that was formerly part of the Qype team that we've seen in the US.

The difference is just of course we had to start from a smaller base, which we haven't had to do in the US since many years ago now.

And so because the only people selling into London or any of the European centers are based in one of our very newest offices, we are really very much starting from scratch on the teams there.

So by and large, takeaway would be we think the playbook will be the same and the overall trajectory should be the same as what it was in San Francisco in the relatively early days, but we are having to build a sales force from scratch in London, and that team just got started last summer.

Okay, great.

Then one quick follow-up.

What about the competitive landscape there?

Any -- obviously, you guys had an early mover advantage in your early cohorts in the US.

Anything else there that we should be aware of internationally?

Internationally we bought our closest competitor, I guess you could say, particularly for Europe and even more specifically for the UK and Germany.

And we are in the middle of bringing that content into the Yelp platform.

We actually just did our first market with moving content from Ireland into Yelp and so far things are going smoothly there.

That was the most obvious thing in Europe that looked like Yelp.

Beyond that, there are other companies out there but we feel pretty good about our competitive position and the uniqueness of our content.

[Kasad Gatlah], JPMorgan.

Great, thanks for taking the question.

I was wondering if you could break out what percentage of international came from Qype.

I think, last quarter, you said it was about two-thirds.

And then I was wondering if you could also just talk about the -- what's driving ARPU higher.

Is it just the Qype local business accounts are not in the denominator, and it's in the numerator?

Anything you'd like to call out on that?

Yes, so this is Rob.

So international revenue did contribute in the quarter about 6%.

It's still a small percentage of revenue in total.

We are not going to breakout Qype going forward because we've already transitioned the UK, the London sales team to start selling Yelp versus Qype, so that's already happened as of January 1. And then later this year, the Hamburg team will be in the same spot as just operating Yelp packaging.

So it's kind of a mixed bag.

You can imagine, though, it's a big percentage of that 6%.

At the same time though, what I would say is the increment from 5% to 6% from Q4 to Q1 is largely all Yelp driven in additional revenue.

So, we feel really good about that.

We think that the London sales team specifically is doing a great job and Hamburg is doing actually as well.

So, we are pretty pleased with where our positioning is in that market, and the fact that kind of, month-over-month, we continue to gain momentum is a good thing.

You also ask a question about ARPU.

And I think the short version of that is you certainly can do that math.

That's just not a metric that we watch.

And there's all kinds of noise that can be in that from period to period, one example being the one that you mentioned there, but there's all kinds of other things in terms of just product mix that advertisers tend to buy in a period, or the percentage of self-serve, or things like that.

So I probably wouldn't really focus on that metric but rather kind of the overall growth in both the active account space as well as revenue itself.

Scott Devitt, Morgan Stanley.

This is [John Engbert] in for Scott.

You talk about your web search dependence on Google.

So with the uptick in mobile usage presumably reducing that dependence, are you able to give us an update on the percentage of the overall traffic driven by Google?

And are you seeing any other benefits or efficiencies from your shift in traffic towards mobile, maybe faster adoption outside the US?

Because we've seen some good numbers on (inaudible) for example of adoption.

Thanks.

Sure.

This is Jeremy.

So we continue to see more than 50% of our traffic coming from Google, but we have some of the most unique content out there.

We generate far more of it than just about anyone else I can think of.

And so it feels like a pretty good position.

And we do see that mobile apps in particular represent somewhat of an independence from that world in the new distribution channel for us.

And we've seen strong growth in mobile active devices, so a number of smartphones out there with the Yelp app.

We are now looking at north of 10 million monthly active apps.

So, that's really exciting, and it represents essentially a disintermediation of Google.

I don't have the numbers in front of me around international, but I think usage is sort of tracking overall.

James Cakmak, Telsey Advisory Group.

Thanks.

So, it's encouraging to see the developments on your efforts to close the ROI loop for your advertiser base.

Can you just talk about how you're communicating that to your customers?

As you communicate to new potential advertisers, are you seeing better adoption as you can start to quantify what they're getting for their dollars?

And for existing subscribers, are you starting to see perhaps increased demand to further their spending with you?

And then secondly, you talked about the enhanced content with adding the public health scores.

Are there other areas where you could potentially add more content to better serve your consumer base?

Just real quick to answer that, the second part of your question around public health data, that is something that we are looking at.

It was a very interesting project, sort of began with the White House and gathered steam with some local governments, and we continue to push on that.

And I think the reception from consumers has been very strong.

So we are looking at additional opportunities to provide similar information through the Yelp platform because I think it's better for consumers, better for the public, and it's really helpful, and in this case drives public health, which is awesome.

As to your question about how do we communicate with our local business customers, there are a variety of channels that we use.

And the three big ones are the website itself with the business owners account that is, again, business owner accounts can go ahead and log into and look at these various tools themselves in order to estimate their business.

Every one of these business owners also gets a weekly e-mail new newsletter highlighting their stats and what's going on on Yelp for them.

And then three is the phone.

Of course, each one of these guys has an account manager that they may have a conversation with from time to time on the phone.

That's a great opportunity for us to chat with them about how their business is going and what sort of metrics and revenue they are generating again on Yelp.

So those are sort of the channels.

As you could imagine, for every business owner out there, there's different preference as to how to interact with Yelp and whatnot.

I don't have any specific metrics for you as to how any of these new products has kind of changed revenue trajectory for our customer base.

At this point, they're all pretty new.

And historically, what we've seen is it takes a lot of small individual product launches and it's hard to sort of track back a revenue trajectory change to any single one of them.

Rather it's the aggregation of a lot of product and pricing announcements over time that helps.

Eric Sheridan, UBS.

Thanks guys.

Two questions, one of the international opportunity.

I wanted to think out longer-term on when do you think those markets will sort of mature and monetize at different levels from what is seen over the last couple years in the US.

So how you sort of think about that broader opportunity is the first question, thanks.

Yes, so, and you're talking about the cohort analysis?

Yes, exactly.

So if you kind of do an annualization of the quarter for let's say the 2005-2006 cohort from $3 million, you get a $12 million run rate for each of those arcades.

You can imagine -- I look back and think about how the Yellow Pages were doing.

Last year, I think they generated about $6.9 billion.

And so in markets like LA and San Francisco and New York, we are definitely north of $12 million, probably in the hundreds of millions of dollars.

So the way we look at it is we are at the starting gate of where we think we can go, so kind of single-digit percentages points of where it's going to eventually be.

So that's kind of how we think about it.

And that was your first question?

Yes.

The second, on the display advertising piece, especially around mobile, how do you think there about balancing sort of user experience, user engagement with the opportunity to target, which I am sure you are having pretty healthy dialogue with advertisers about.

So drawing that balance in the coming years between sort of engagement against the dollars they probably want to target there.

Thanks.

Sure.

Yes, we've always been very careful about our user experience, the site is not laden with ads.

We're very strategic about which brands to bring onto this site and where we show them.

We actually already have -- or we just recently launched display units on mobile.

And it's been I think performing well and thus far hasn't really gotten in the way of the consumer experience, which is essentially what we're shooting for.

We want to provide our advertisers a way to reach consumers.

We want to do it in a positive and unobtrusive way, and I think mobile allows for that and also offer some unique targeting capabilities.

Todd Van Fleet, First Analysis.

Good afternoon guys.

I wanted to inquire or see if you could tell us what the percentage of your revenue stream is that's comprised of service providers and if there is any kind of distinction between how you're thinking about that -- closing that consumer loop for your different sets of -- your different advertisers, that is the service providers versus some of those that are more in kind of maybe the restaurant or the entertainment industry.

I think you've talked to some degree about the restaurant owners, but if there's any distinction to be made between the service providers and other advertisers.

Thanks.

So, service providers, so home and local services were approximately, of local ad revenue, was about 22% in Q1.

And then the next highest was restaurants at 16%.

And just to round out the top five, beauty and fitness was 14%; shopping was 12%; and health is 11%.

And what I would say is that it's somewhat consistent with kind of Q1 2012, although we did notice a little bit of a bump in home and local services from Q1 2012 of 19% to Q1 2013 of 22%.

But everybody else was about in line or maybe a little less as we shipped out into the long-tail categories.

So of local revenue, that's where home and local services sit.

As to the question about how are we thinking about differentiation between those categories, certainly the need to do vary quite a bit from vertical to vertical.

And an example of that is our integration with OpenTable in terms of reservations for restaurants.

And of course, that's a very obvious lead type for a restauranteur of a certain type, again those who accept reservations.

You can imagine that, for different kinds of restaurants as well as for home services and other providers, there's all kinds of different variations of payments and service and reservation services, etc.

And we'll be looking to have relationships and offerings along those kind of vertical lines in the years to come, but no specific priorities there.

Stephen Ju, Credit Suisse.

Thanks guys.

So Jeremy, right now, you are requiring your users to complete their reviews at home, I guess on a desktop even if you start the review process on mobile.

So at what point do you think you'll let people begin and end the process completely on mobile, especially as you're now looking to be increasingly platform agnostic?

And do you think this current requirement to finish on the PC is hampering your review growth?

And Rob, I guess it's hard to be specific since the numbers are small now, but it looks like you saw some acceleration in terms of the growth in local active business accounts.

Will you give us some color on the productivity of your sales force?

Thanks.

This is Jeremy.

On the contribution side, we continue to look for different ways to innovate and create kind of a mobile first experience.

And so our approach there has been to drive both mobile drafts to the longer-form content creation because we think, on the go in general, like starting your review, it is a good place to do it on the go, and then you can finish it up on the desktop.

If you want to post content straight from your phone, right now the way to do that is through Tips.

And so we've seen a quite significant adoption of Tips, there's a lot of Tips that you can find when you're using your mobile device at this point.

That said, this is an area that we continue to be very focused on.

We get an enormous amount of contributions overall now on mobile, be it tips, check-ins and photos.

And I think this is an area of exploration for us.

So, stay tuned.

To your question about productivity of sales force, first of all, I have to commend the sales force.

I think they're doing a fantastic job of communicating the benefits of the Yelp platform to the potential customers that they are calling on.

So, kudos to them.

As it relates to productivity, I would say productivity is up a bit higher than what we had probably expected, but relatively in line with how it's been over at least the last six months.

So we will see how that develops, but so far so good.

Ron Josey, (inaudible).

Thanks guys, actually from JMP.

So real question, thanks for taking the question, real quick on the BCG study a little bit more.

I'm wondering, and this might be a dovetail on the last question, I'm wondering how the Company is infusing these results within sales and marketing.

And specifically have you seen any sort of change in local business interest post the release of these results.

And does this help answer any maybe the biggest pushback you're getting from SMBs when talking to them about advertising on the platform?

Thank you.

Sure.

Hi.

The short version of the answer is these things take time.

It's been a really useful study and anecdote to point local businesses and advertising agencies to when they want to better understand the ROI that a variety of different customers and segments are seeing on Yelp, so it's great to have a third-party study out there that we can point to that helps them kind of look at how those results appear to be overall for a large segment of customers.

How are we getting that information out?

Really some of the same channels I talked about before.

We've of course got the site of the channel.

We've got e-mail.

We actually have direct mail as a possible channel.

And then of course we've got the phones as well.

So these are useful anecdotes and studies to point to in all of those channels.

But again, I couldn't point to any particular day or moment which the trajectory changed or suddenly a flood gate opened and lots of new advertisers came in.

Blake Harper, Wunderlich Securities.

Thanks guys.

You had talked about your mobile app.

You had over 15 million calls to businesses, and 19 million clicks for directions.

I was just thinking about what's your thought process about how you monetize them?

And how many of them are you monetizing and are there other types of actions that you can benefit from on the mobile app besides just ad impressions?

We could.

We don't currently monetize many of those calls and directions directly.

Some portion of those of course are generated from advertisers, and therefore they are indirectly monetized either on an impression or a pay-per-click basis.

And they of course get those incremental ad-based calls and directions as part of their package.

In the future, we certainly could look at other forms of pricing that would go more towards calls and directions and reservations and other forms of lead generation.

And we've explored some of those things and I think we'll continue to experiment there.

At this point, what we've seen and continue to experience is that both clicks and impressions or sort of package-based pricing seem to be the most widely accepted and understood by the local business market, so we'll probably really focus there for the foreseeable future, although these other forms of lead-gen are prospective interesting places to monetize in the future.

(Operator Instructions).

Rory Maher, Hillside Partners.

Thanks.

A couple of questions on mobile, one housekeeping and one more strategic.

Excuse me if I missed it, but did you mention what percentage of your searches were from mobile apps this quarter?

And then bigger picture, so there is a lot of press going on about a quote yesterday from a mobile executive speculating that we might not have any tablets in five years.

And I guess I was a little surprised by that.

As a company that's heavily invested in mobile, can you envision such drastic changes in landscape long-term?

And if so, how do you prepare for that?

This is Jeremy.

Were you talk about tablets?

I'm not familiar with the quote.

Yes.

There was a mobile executive from a fairly large company the last couple of days that speculated that we might not have tablets anymore in five years, that some other technology could come along and replace it.

So, I'm just curious what your take on that is, if you envision that kind of drastic change over the long term, or not.

Sure.

I think, in the tech world, there's obviously a lot of change.

It's not -- you don't have to go back that many years before we didn't even have an iPhone or really a smart phone.

So it's hard to predict exactly where things are going.

But needless to say, I think it's a constant that users will want to know which local businesses to choose based on the best local, most useful, most relevant content, which is something that we have quite a lot of.

So as these new platforms have come up, we've been able to bring our content to the consumer.

And that's why we've been successful on smart phones; that's why we've been successful on iPads.

So if iPads somehow went away, which, frankly, I don't see any time in the near future, I don't know that that would be a real threat to the business or a big problem for us.

We would simply adapt to the new format, the new platform.

And then your other question was about how much of our search traffic is now coming from mobile apps.

So, the answer is 45% of our searches are coming just from the apps, and that's not counting mobile web.

If you counted mobile web, I think goes around --

Around 55%, 56% if you all-mobile, which includes mobile web and app.

Okay, great.

Thank you so much and good quarter.

We have no further questions at this time.

I'd like to hand it back to management for closing remarks.

Thanks everyone for joining us on this call.

We look forward to reporting Q2 next time.

Thanks.