Yelp Inc (YELP) 2013 Q2 法說會逐字稿

Welcome to Yelp's Q2 2013 earnings call.

Please note that this conference is being recorded.

I will turn the call over to Ms. Stacie Bosinoff.

Ms. Bosinoff, you may begin.

Thank you, Operator.

Good afternoon, everyone, thank you for joining us on Yelp's second-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 turning the call over to the Company, I will 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 the call today, we will discuss adjusted EBITDA, a non-GAAP financial measure.

In our press release issued this afternoon, and in 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.

And with that, I will now turn the call over to Jeremy.

Thanks, Stacie, and welcome, everyone.

We had a fantastic second quarter as we continued to execute in all areas of our business, and again hit record highs in all of our core metrics.

In particular, I want to commend the efforts of our sales teams in the US and in Europe, whose hard work and dedication led to an increase of 6,800 paying accounts, our largest quarterly increase.

The Yelp brand is becoming more prevalent than ever.

Over 100 million visitors a month came to Yelp to search for local businesses because of our high-quality content, as evidenced by the 62% increase in active, local business accounts.

Businesses are increasingly recognizing the value of Yelp.

Along with the great execution this quarter, we continue to make strides in our three key areas -- mobile, European expansion, and closing the loop with local businesses.

First, mobile is a huge opportunity for us, and the numbers bear this out.

In the second quarter, approximately 40% of our local ad impressions were on mobile.

Together, our app and mobile site accounted for 59% of all searches, including approximately 46% just from the app.

Our product team recently launched a number of mobile upgrades, including a Nearby feature that suggests businesses and activities based on your location, behavior, friends' activities, and other data such as the time of day, and even weather.

Second, we are seeing the increased traction in brand awareness we expected to see in Europe.

I visited our London office last month.

And while I was there, I spoke at a conference and conducted a number of media interviews.

I was excited by the number of people who are quite familiar with Yelp, and was pleased with how useful Yelp is becoming, as it helped me find a number of great restaurants.

This quarter, we successfully integrated Qype's content from Italy and Spain into Yelp, and are pleased with the progress we have been making.

Next we plan to integrate Qype's content from France.

We also launched six new Yelp markets globally, including Auckland, New Zealand; Toulouse, France; and Tulsa, Oklahoma.

We have long known that consumers are using Yelp to search for local businesses, with the intent to spend money.

And in the second quarter, a study we commissioned by Nielsen found when that consumers find a local business on Yelp, 89% make a purchase within a week.

This confirms that consumers rely on our high-quality content, which in turn creates the reason merchants advertise on Yelp.

Our product and engineering team is hard at work on new features that help businesses close the loop with our customers.

In the second quarter, we launched a Call to Action feature which allows advertisers to promote a desired transaction directly on their Yelp business listing.

This includes the opportunity to buy movie tickets, print coupons, or link to promotions on their site.

We quickly followed that by announcing the Yelp Platform, which enables consumers to transact with businesses directly on Yelp.

The Yelp Platform launched with restaurant delivery, so now consumers can find a restaurant, and immediately order food for delivery or pickup through our partners, all directly on Yelp.

This ensures one continuous user experience from discovery to transaction.

As you can imagine, our platform has many possibilities in other verticals.

Soon we will be adding spas, fitness studios, dentists, and salons.

Additionally, we announced the acquisition of the SeatMe, an iPad app and web-based reservation with table management system for restaurants and night life establishments.

With SeatMe solution, local restaurants and bars can provide an easy way for customers to book online reservations, enhancing the consumer experience for Yelp users.

There are approximately 1 million restaurant and nightlife businesses listed on Yelp in the US, most of which are not served by the high-end market offerings for reservation management.

SeatMe solution will add reservation capabilities to a broader, underserved market, while also complementing our existing partners.

As I look ahead to the rest of year, I am excited about our plans in each of Yelp's three core areas.

We will continue to innovate, and focus on delivering a great experience to capture the large local opportunity.

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

Thanks, Jeremy.

As Jeremy mentioned, we had a great second quarter.

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

Let me start with the financial results.

We are very pleased with our performance, as we achieved record results in all our key metrics.

In the second quarter, revenue grew 69% year over year to $55 million, an acceleration over Q1's revenue growth of 68%.

Adjusted EBITDA was $7.8 million.

Moving on to the four key operating metrics, cumulative reviews grew 41% year over year to 42.5 million as we added over 3.4 million reviews in the quarter.

Our average monthly unique visitors grew 38% year over year to roughly 108 million.

Approximately 32% of these uniques are accessing our mobile site.

Paying local businesses was 1.2 million, up 55% year-over-year.

And paying and active local business accounts grew 62% year over year to approximately 51,400, resulting in our largest net increase over any previous quarter of 6,800.

Given that Qype markets that we have migrated are small, there is no meaningful impact to our metrics as of yet.

We will continue to update you on these migrations, and call out the numbers when it is meaningful.

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

We are seeing great momentum across all revenue sources.

For the second quarter, local revenue was $44.8 million, up 77% year-over-year.

Brand revenue was $7 million, up 24% year-over-year.

Other revenue increased 87% year over year to $3.2 million driven by new partnerships launched during the quarter, and a big increase in deal revenue.

International revenue contributed about 5% of total revenue in the second-quarter.

Our customer repeat rate, as defined as a percentage of current customers who advertised with us in the past 12 months, was 71% this quarter, which is similar to the last few quarters.

Gross margin was 93%.

Total sales and marketing was approximately 56% of revenue, compared with approximately 62% last year, reflecting significant leverage in the model.

To further illustrate this, domestic sales and marketing was 52% of revenue, compared to 56% in the prior year's quarter.

We intend to continue to invest in sales and marketing, given our significant growth and the large market opportunity.

Product development was approximately 15% of revenue, compared to 13% in the second quarter of last year.

A large portion of this increase is attributable to our hiring of additional engineers.

Our product continues to evolve with additional features like the Call to Action button, enhancing our Nearby feature, and the Yelp platform, which today includes food delivery.

We are proud of what we have been able to accomplish, and have many more ideas on the drawing board.

G&A was approximately 19% of revenue, compared to 18% last year, driven by costs associated with being a public Company, and an increase in stock-based compensation.

Turning to the balance sheet, our cash and cash equivalents position at the end of the quarter was approximately $97 million.

We generated approximately $5 million in cash from operations in the quarter.

Of the approximately $7 million in leasehold improvements associated with our new headquarters this year, we spent approximately $2 million in the first six months of the year.

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

For the third quarter we expect revenues in the range of $58 million to $59 million.

We expect adjusted EBITDA for the third quarter to range between $7.5 million to $8 million.

This takes into account additional hiring expenses expected over the summer, the SeatMe acquisition operating expenses, and our expected move into our new headquarters in September.

For the year, we are raising guidance.

We expect full-year 2013 revenue to be in a range of $222 million to $224 million, or approximately 62% growth year over year.

For the full year, adjusted EBITDA is expected to be in the range of $27 million to $28 million, a six-fold increase over last year.

For modeling purposes, our basic share count in the third quarter will be approximately 66.5 million shares, and 67 million shares for the full year.

We expect stock-based compensation to be approximately $6.3 million per quarter for the remainder of the year, which includes equity grants to the new SeatMe employees.

For the third and fourth quarter, we expect to have an additional expense related to amortization of intangibles from SeatMe.

At this time, the valuation analysis has not yet been complete, and we will update you once we have a number to share.

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

Thank you.

(Operator Instructions)

And our first question comes from Youssef Squali with Cantor Fitzgerald.

Please go ahead.

Thank you very much, and congrats on a really strong quarter.

So a couple questions, please.

First, the operating leverage Q1 to Q2 was very, very impressive.

I was wondering, Rob, you could just kind of go through the details of what drove that?

What is not sustainable and in those drivers, because Q3 guidance it implies a sequential deterioration.

Maybe you can touch on that?

And then, maybe Jeremy, just talk a little bit about your strategic vision behind the Yelp platform?

And kind of where can you take it beyond just the delivery?

And just trying to get a sense of how big and addressable market this opens for you?

Thank you.

Thanks, Youssef, this is Rob.

So Q1 and Q2 leverage, yes, we are pretty happy with where we came out.

I think Q2 was around on, from an EBITDA basis about 14% of revenue.

In terms of your comments, I think the way I would look at it is, we do have some additional expenses coming up in Q3.

And really the rest of the year, we did acquire the SeatMe platform product and technology, as well as the people.

There was about 15 folks associated with that acquisition.

So that' is obviously going to be expense.

In Q3 specifically, we have -- we are going to move into our new headquarters, which is going to be one-time kind of a bit of an expense there.

And then, we have a lot of hiring to do.

So I think in Q2, we are a little bit short of where we thought we were going to be on the sales front, as well as engineering.

And so, we are kind of redoubling our efforts and making sure we catch up.

So for Q3 and Q4, that is where really some of the expense is going to take place.

And how I look at it is, on a EBITDA, an adjusted EBITDA as basis for the full-year, it is a six-fold increase over last year.

But and so we are still delivering margin, at the same time still want to take advantage of all the growth and opportunity that we have before us.

And this is Jeremy.

Just thought I would talk to your question around Yelp platform.

So, really where the vision takes us there, is around the consumer experience.

We have all these people that are coming to Yelp to try and make a decision and ultimately purchase something.

And so, allowing them to do that seamlessly, to transact on their phones, I think makes the Yelp experience that much better.

And it is a huge opportunity.

Obviously all these verticals out there, we just started with one that we knew would be interesting to our users, the food delivery area.

But we have plans, and actually deals in place to go into a lot of other verticals.

And so, you will see us -- dentists will be on the platform, fitness studios like yoga studios, salons, et cetera.

And I think over the next year or so, it is really going to build out, and be an incredible way for consumers to both discover businesses.

And then, close the loop and transact with those businesses.

Thank you.

The next question comes from Brian Fitzgerald with Jefferies.

Please go ahead.

Thanks.

A couple questions on the acquisitions.

Can you give us some color on how many unique visitors came over with SeatMe, and does it have a mobile app?

Was it a competitive process?

And then, any color on your early uptake around the Call to Action product?

Thanks.

Hi, Brian, this is Geoff.

On SeatMe, SeatMe as a relatively nascent product that they have really been selling to businesses and restaurants for about the last six months.

So no material consumer traffic there.

That acquisition was really about the technology and the people, in order for us to offer reservations to a wide range of restaurant and nightlife businesses that are out there.

We think there are about 1 million businesses according to the National restaurant Association that offer food or restaurant-oriented services in the US.

So we are really excited to begin offering a reservation and wait-list type product to all of those businesses, or as many of them as possible.

You also asked about the Call to Action feature that we recently rolled out.

At this point, the uptick has been really good.

We have been offering it for free to our existing clients, and several thousand of them already have new Call to Action products up on their site.

And I think that uptake continues to be pretty strong on a day-to-day basis.

We did just roll that out, maybe a month ago.

The next question comes from Mark Mahaney with RBC Capital Markets.

Please go ahead.

Thanks.

Two questions, please.

First could you just provide an update on where you are in terms of developing new ad tools or tools for your advertisers?

And then secondly as you kind of build out and take Yelp into more of a -- build up the transactions capability of this side?

Does that make you think about additional types of revenue streams or are we still going to be and will you still be primarily or predominately advertising-based for the foreseeable future?

Thank you.

Hi, Mark, this is Jeremy.

So we continue to iterate on the ad side, and continue to come up with new features for business owners.

Obviously, we have Call to Action to talk about right now, and I can't really go into details about the future pipeline.

On the transaction side, I think it -- certainly there is a way to make money there.

But fundamentally we have got our local ad business that is executing incredibly well, and we continue to push hard there.

So I don't see it fundamentally changing the game.

From our perspective right now, it is really all about the consumer experience.

And if you can go pick up your phone and decide you want a massage, and actually book it on your phone, it is just a much better experience.

And so we are not as focused that -- how that is going to change the business model in the future.

Our next question comes from Tom White with Macquarie.

Please go ahead.

Great, thanks for taking my question.

I guess on the guidance, are taking up the full-year outlook well in excess of kind of the 2Q out-performance.

Can you just talk maybe a bit about what parts of the business are kind of tracking better than you expected?

Is there any impact from some of the new acquisitions?

Any color around the performance of kind of newer markets versus your more mature markets?

And then just, last quickly on that Yelp platform, is it safe to say is it safe to say will largely remain sort of a partnership-driven initiative?

Or do you kind of have any plans to build out more transactional tools yourself?

Thanks.

Hi, Tom.

So on the guidance, yes, so for the full-year we are guiding at 62% year-over-year growth rate.

I think when we had originally put out guidance for fiscal year 2013, it had been around 53%.

So we are pretty happy with being able to do that.

I think the core of it is really around the local revenue piece.

It is up 77% year-over-year in Q2, and obviously continues to be very successful in selling it out to local businesses.

So local revenue is really that big piece.

I would say display, brand revenue is doing well.

We are happy with the team there.

I think they have done a really good job of turning it around.

But I wouldn't say that -- I mean I think we have 24% growth year-over-year in Q2.

But if you look at the pattern from last year, it was kind of fairly stable from Q2 to Q3.

So that is how kind of we were looking at it when we provided guidance.

And then other revenue is fairly small, a $0.5 million or $1 million can make a big difference there.

But it's not impacting our numbers dramatically one way or the other in total.

So local revenue is really guiding our guidance, and we did at 6,800 new -- net new clients, and we are looking for that to continue help us out.

And, this is Jeremy.

On your platform question, really we are focused on partnerships.

We don't have any plans to go out and do a lot of building there.

I mean, there is so many different verticals now have very specialized needs.

And so, what we found is pretty straightforward to reach out to folks that are already operating in those verticals, and bring them on the platform.

And so that is going to be the focus -- for that feature, that functionality.

Our next question comes from Heath Terry with Goldman Sachs.

Please go ahead.

Great, thanks.

When you look at the 6,800 new partners in the quarter, any shift that you are seeing in terms of the make-up of those partners relative to your existing base?

I am thinking largely along the industry lines, to the extent that maybe are seeing more traffic or traction in restaurants or in other?

But even if it is some trend in terms of size or geography that you think is significant?

And then just a second question is to whether or not you are seeing any additional traction in the non-advertising revenues within local, whether it's deals or CPC, or click-to-call getting more significant traction this quarter versus last?

Yes, Heath, it's Rob.

So when I look at the 6,800 new net new advertisers, they kind of fall in line with how we have seen in the past.

I will say that when I look at the numbers in total, home and local services continues to do very well.

I think Q2, about 24% of our net local revenue was coming from the home and local services, and that' is up from 22% in Q1.

And pretty much every other category is about the same, as what we have seen in the past.

And then in geography and size of business, we are definitely seen some pickup in the -- what we call the national local accounts.

I guess, kind of regional chains noticing us, understanding that what we can deliver to their businesses and signing up.

So that is very helpful.

But it is still largely driven from the sole proprietor, single business location.

And then as far as geography, we -- in our deck that we just put out, it should be on the site.

We are showing that our 2005, 2006 cohort is doing really well.

It grew 43% year-on-year.

So those six markets are continuing to do well.

I think what is interesting to note is that, the markets that on our here -- and including international, is also growing very strongly.

So what that represents, the cohort analysis is the US Yelp markets -- and the Yelp market is defined as those markets where we have a community manager -- but in places where we don't have a community manager, people are starting to utilize Yelp, and businesses are starting to notice Yelp.

So they are using it.

They are signing up for advertising, and that is actually growing fairly quickly, even outside of our Yelp Markets.

And in terms of kind of outside of the -- what I call the subscription packages, we do have deals.

We noticed about 100% increase in deals revenue on a year-over-year basis.

So that is actually going well.

It is actually a fairly small number, but it is gaining a lot of traction, a lot -- it is easy for businesses to sign up.

It is kind of a mad lib-type exercise, where they are just putting up an amount, posting it to the site and they can readily take it down.

So it is, I think fairly easy.

It is self-serviced, and people are enjoying it.

And what I think we have now, maybe around 60,000 deals on the site.

CPC, which is -- deals is included in other revenue.

CPC and click-to-call is included in local revenue, and they are both performing well.

I would say CPC is definitely doing well.

We do move to a market dynamic-based system earlier this year for all advertisers on the CPC.

And we definitely have seen a large amount of interest in a platform.

So kind of across all of these things, we are seeing nice uptake.

Our next question comes from Jason Helfstein with Oppenheimer.

Please go ahead.

Hi, how are you?

So just first to clarify, so all the metrics, right, that we are looking at that is still off of, what we will call basically the US local, right?

So if we take the local number and we strip out international, those metrics that we are still giving out, that still all positive, that number?

That is just the first thing.

And second, I just want to kind of dig a bit deeper, I think consistent with some of the other questions.

So as you are thinking about that other services, which looks like it is going to be your fastest-growing segment this year, and pretty interesting from an open-ended standpoint where that can go.

You have different choices, right?

You can partner with the seamless GrubHub or do it yourself?

Can you just talk about the decision-making on kind of how you do that?

And is it purely economics, the terms you are able to offer versus build it yourself?

Or do you feel like, if there are certain things you can offer the functions directly, you can provide a better customer experience, and ultimately that will make a happier Yelp vendor and Yelp customer?

Thanks.

Hi, Jason, thanks.

This is Rob, I will take the first one on the metrics.

So, and I might need a little help from you to parse through the question.

But, so, for our metrics that we are providing, cumulative reviews, unique visitors, and paying local accounts, those are inclusive of global numbers.

So cumulative reviews on a global basis is up 41% to 42.5 million, unique visitors was 108 million, a 38% increase year-over-year, and paying local business accounts was up to 51,400 up 62% year-over-year.

In the cohort data, that is just US markets, that we have ever given out.

So the 2005, 2006 market where we started, obviously San Francisco was one of those markets, the six markets.

And then 2007, '08, and 2009, 2010 they are all US-based markets and so all of that information is US-based.

And then we said, we talked a little bit about international and it is 5% of revenue, which is $2.7, $2.8 million this quarter.

So we are happy with where that is.

Obviously, the US is growing so fast, it is kind of eclipsing it at this point, but we are happy with where that is.

The other thing I will just throw out, we did have like I said, 108 million unique visitors coming to our site on global basis.

And in international, of that number we had about 17 million of that 108 million, coming internationally from an unique visitors standpoint, that is up.

That is about [16]% of the 108 million, and then backdrop, about 75%-plus year-over-year.

So we are fully good that we are making some traction internationally.

We don't breakout Europe specifically out of that, but obviously most of that is Europe.

And in terms of where Qype is, we have integrated Ireland, Spain and Italy although those numbers are so small that wouldn't necessarily move the needle on those numbers.

We do expect, obviously, when we integrate the UK and Germany later this year, that they will hopefully move the needle.

And Jason, this Geoff.

On your question about Yelp platform, and how do we think about partners there.

Really the goal of platform is to make sure that every local business that does have a transaction offering is served on Yelp wherever possible.

And so, in the specific example of food delivery, we would love for every local business on Yelp who does offer food delivery, to be able to offer that through the Yelp platform.

And, so, what we started with is two different partners Eat24 and delivery.com, who I think between them offer 10,000-plus local businesses -- 30,000 -- I am getting a signal, 30,000 plus local businesses for delivery services.

So that a good place to start.

We know there is others in the delivery space.

And so we would love to work with them over time, to supplement that number.

And again, offer delivery to as many consumers as possible.

Similar thought logic would apply in every other category.

Next question is from Kerry Rice with Needham & Company.

Please go ahead.

Thanks.

Just a couple quick questions, most have been answered.

But when I think about the kind of customers or advertisers, local business, it sounds like they are getting a little bit larger.

Have you seen any migration to larger subscription packages from, I think the average is around [$]300 today?

And the my collection is around mobile advertising.

I know that is part of the subscription plans, but would you ever consider rolling out a mobile-only advertising product, for what -- it seems like it would be catered to more of the restaurant-type of your customers?

Hi, thanks for your questions.

So I guess, to take them in reverse order.

First, you asked about mobile advertising.

And at this point, that is right, the mobile advertising is just bundled in, whether you buy Yelp on a subscription or CPC basis.

We just serve whichever ads we think are going to perform best for you, which is a combination of mobile and desktop.

I suspect for the foreseeable future that will continue to be the way that we sell it.

There certainly is an opportunity to price differently for mobile in the future.

That is just not a point of focus for us at this point, since we are in acquisition mode and giving up 51,000 customers we have got today in an ocean of millions, it really felt like the right focus is on customer acquisition, rather than pricing leverage.

You also asked about whether price point overall is increasing for our existing customer base or new customers as they come in.

And I think the short answer there is, not really.

We do continue to offer more price points.

And so we certainly see more as Rob mentioned earlier, national and regional advertisers coming in.

But we also see more and more sole proprietors partners coming in.

Some of whom are buying some on a CPC basis, at even lower price points.

So when you really take that mix as a whole, there is not really much variation.

Next question comes from Eric Sheridan with UBS.

Please go ahead.

Thanks.

A question on direct traffic.

You have provided some interesting stats on mobile.

The amount of searches you getting for mobile are for mobile app.

But how many -- are you able to disclose how many searches are coming direct to Yelp, as opposed to coming from other search engines at this point, that we might compare with the year ago?

And second question for us was on salespeople.

What is the number of quota-bearing or salespeople at this point in the organization?

And how do you think ramping that salesforce Q3, Q4, and maybe into next year should look ahead for the opportunity?

Thanks.

Thanks, Eric.

So, let me -- I will take your sales question first.

So we have a little over 1,500 people in the Company in total as of the end of the quarter, I think was 1,536.

And over half of that is sales, so we have been growing our sales by around 50% year-over-year for the last, I want to say four, five, six quarters.

So what we will continue to do, is continue to bring people on board as quickly as we can, but in a very prudent manner.

And the ability for us to train and have them be productive is obviously the critical piece.

So we are not going to bring on, more then we can really take on.

So that is how we kind of look at the salespeople, for part of your question.

In terms of direct traffic, we have 108 million.

We don't pay for traffic, that' is all organic traffic.

I think we said before that over 50% of that comes from Google, and that is kind of how we are looking at it.

In terms of searches, we had about 46 percent searches come from the app.

And then on top of that, we have about 13% of searches come from the mobile site.

So altogether, we have searches of about 59% coming from mobile.

And that is obviously, where I think a lot of our business is headed.

And I think we're extremely well-positioned to help that.

Next question comes from Stephan Ju with Credit Suisse.

Please go ahead.

Rob, it looks like the ARPU for local advertising dropped a bit sequentially, so would you give us some color there?

And as you look to close the loop, and make the ROI more transparent to your advertisers, where do you think that monthly spend for advertisers can go over the longer-term?

And Jeremy, can you help me understand how --maybe this was too specific of an example, but as you -- as I look at them of the most popular restaurants in the Bay Area.

Some of them have in excess of 5000 reviews.

So from Yelp's perspective what is the value of incremental review beyond say, even 100?

Because I don't know if somebody is going to go -- bother to read even 20, before they decide to go to restaurant.

So what can the use case be, for the data beyond a certain level?

Thanks.

This is Jeremy.

Why don't I take that first, and then hand off to Rob.

So we get asked that question a lot.

And I would say for that individual restaurant review, the freshness matters a lot.

And so even if we have 5,000 likes -- we are also constantly getting new reviews.

And so as that restaurant is changing, we are learning more about that business.

With all that data, we can also then summarize it in very interesting ways.

We have, for example, a new highlights feature that can mine the 5,000 reviews, and expose things automatically that would otherwise be very difficult to figure out.

So in my opinion, it is always better to have more data than less.

And that value of the incremental review always gives you some new bit of information.

So we are always pushing to, how can we have more and more local information, so we can always direct consumers to the right business, at that moment today.

And other your other question about ARPU.

So number one, we really don't look at it that way.

So I think what you are taking is local revenue, divided by the number of businesses.

We don't do that internally, but we do look at it just ahead of this call.

And I think it is actually -- if you do it in total, it is actually up for the quarter, slightly up.

And if you strip out the international please completely, it is like down by $1.

So as to what is driving that, part of the reason is that we do have international revenue now, and part about is Qype.

And the Qype businesses that are contributing to revenue or not in the paying accounts.

We kind of called that out before.

So if you strip out all of international, it is actually about flat quarter-on-quarter.

So, but we don't, in terms of direction, where that' is going I think Geoff's kind of said it well earlier.

It is not a number we specifically focus on, it has been flat over the last couple of years.

So we will kind of leave it at that.

And we will just continued to go out and acquire more customers.

Next question comes from Scott Devitt with Morgan Stanley.

Please go ahead.

Hi, it's Jordan Monahan on for Scott.

Thanks for taking our question.

Actually, one question, and then a follow-up from a previous question.

So, you talked a couple of times in the press release and a couple of times in your remarks about closing the loop.

And we are wondering what other opportunities are out there?

So I guess, a couple questions.

One would be, what sort of dated you get from Open Table, if I made a reservation on Yelp?

And then I follow up and dine in the restaurant.

Do you get any of that data passed back to you, and does that help you close the loop?

And then, are other avenues that you could think about, say credit card programs, or other loyalty type of programs?

And then just a second follow-up is, actually the reverse of the prior question on review density.

Is there a number of reviews that is critical toward making that review database relevant?

In other words, if you have five or ten reviews of a restaurant is not relevant, but once you get to 50 then it becomes relevant?

What do you think the hurdle is?

Hi this is Geoff, again, thanks for your questions.

I am going to start with a review density question.

And I think there isn't a perfect science to this.

We have looked at it a number of times in the past, and the short answer is -- almost as Jeremy said, on an individual business level, more content is always better.

So if you are in, so if you are looking for sushi in San Francisco at this point, the price of admission of that is very high.

You got to have dozens of reviews, before a particular business or service is really useful.

But when you're looking for an orthopedist in Boise, frankly, one or two reviews from Yelp (inaudible) members might actually be really, really valuable.

So there is not a line in the sand at 5 or 10 or some other number of reviews.

You asked about closing the loop.

And we have had a number of initiatives this year that have tried to help local businesses on Yelp further understand how consumers are finding them through the Yelp platform.

One, going back a couple of months is the revenue estimator that helped businesses on Yelp understand the value of every one of those leads that they are currently getting from Yelp.

Another one, of course, was this new Call to Action unit that several thousand of our advertisers have recently picked up, that again helps them direct consumers to the right place on their site, to get coupons or reservations or whatever, kind of loop closing they are trying to promote for their businesses.

Then, of course, in the past couple of weeks we both introduced the Yelp platform, and then acquired SeatMe.

And both of those are, of course, about helping to close the loop in various categories as well.

You asked specifically about Open Table, and what kind of data do we get there?

Of course, we do know, and can let local businesses, restaurants who use Open Table know if a consumer has found and made a reservation through Open Table on a Yelp site.

And, of course, that is just one more way to take close the loop for those businesses that are using Open Table.

So you can imagine that as we introduce more and more platform partners, that gives us more data points we can then feed back to those local businesses.

Next question comes from Rob Sanderson with MKM Partners.

Please go ahead.

Yes.

Thanks for taking the question.

So just to beat a dead horse on that platform, on the revenue model, and the opportunities around it.

It sounds like, I don't know if it's intentional or not, but (inaudible) downplaying the significance of the incremental [stream] of revenue that may come out of that.

Is that really the message?

And is this really more to be thought of as an effort to create more transparency and its effectiveness, and therefore, better close the loop?

But how should we be thinking of the revenue model?

This is Jeremy.

Thanks for the question.

So obviously, we are focused on our core business, (inaudible) digital advertising, we think that there is a revenue opportunity here.

But we are just getting started.

We just launched it last couple weeks here.

So as that develops, our understanding might change.

But I think from our perspective here, we still feel like the local ad model is core to what we do, and we are going to keep doing it for a very long time.

And I think our focus on Yelp platform is really about consumer convenience.

We think it just makes using Yelp that much easier, and there is a stickiness factor to, I am a consumer, I go my credit card information loaded into the Yelp app.

I am able to search, and I am actually able to buy.

When you think about the comparable, the experience on Amazon for e-commerce, they go really, really horizontal.

And so any time I am trying to buy just about anything, I know that all my information is in Amazon.

And I can immediately purchase, and have it delivered.

And we want to re-create the type of experience in local.

And that is what we are focused on, not necessarily the monetization at this point.

Next question comes from Gene Munster with Piper Jaffray.

Please go ahead.

Good afternoon.

Thanks for taking my question.

Any updates in terms of the relationship with Apple and how serious progression.

I know you mentioned some of the metrics about the number of searches you have on mobile.

I assume that Siri is included in that, and maybe just a clarification on that?

Thanks.

Yes, so, hi, Gene, it's Rob.

So our relationship with Apple continues to be strong.

As far as the number of searches, I don't believe actually the number of searches that Siri does is actually included in our number.

So when you come over to the Yelp app or the mobile websites.

When you do searches on that, that is how we account for it.

But any searches that are actually done on the Apple platform for lack of a better word, makes Siri itself, we can't capture that data at this point.

So but relationship with Apple is strong, and we are happy to be a partner with them.

Next question comes from Mark May with Citi.

Please go ahead.

Thanks for taking my questions.

While you certainly generate a lot of traffic, elsewhere Google remains a decent traffic source.

And I am wondering given that, why hasn't your business been impacted more by the changes that Google has made in their search results changes, search results for a while now, including the carousel.

But this has been going on for a while.

And then secondly, my numbers may not be right, so part of this is just a clarifying question.

But if so maybe if you could respond, it sounded like your international revenues may not have grown in the quarter sequentially.

And if that in fact is accurate, maybe you could provide some color as to why that is?

And then thirdly, it looks like when we just do a simplifying calculation, and maybe this is the wrong way to look at it, that averages views per unique is sort of stable or not growing.

And I am wondering, so suggesting there is more consumption versus participation if you will.

And if that at all matters to you, if you think that is an issue?

Hi, Mark.

I guess, I will talk a little on the first one, this is Jeremy.

Talk about Google, and all the changes they continue to make.

We have been competing with them for now several years, maybe eight years.

And I think the fact of the matter is we have the highest quality and the best content.

And try as they might, users are willing to jump through hoops to find their way to our content.

And there is really no other resource out there that has the breadth and depth, and size of results.

Consumers just keep flocking to the site, and so we feel really good about our position there long-term.

Hi, Mark, on the international revenue side.

So yes, on an absolute dollar basis, you are right.

It's about $2.8 million or so, in Q1 as well as Q2.

And what people I guess, just need to understand is that what is happening is, Yelp revenue is internationally, growing very quickly, and the Qype revenue is actually trailing off.

So now what is happening is we are actually only selling Qype in Germany as of today.

And we started selling in Q1, Yelp in Spain and France.

So that is -- and that is ramping quite nicely.

I mean, we are coming from a position of effectively zero a year ago.

So we feel good about -- and it is really meeting our expectations, is kind of where we are, and what we are able to achieve there.

So, yes, on a year-over-year basis, it's quite impressive.

And then even on a Q4 to Q2 basis, it is up I think $600,000 or $700,000, which is on a percentage basis, it is a pretty good clip.

I think you also asked about sort of a ratio of reviews to uniques or the other way around.

And I guess a little bit like ARPU, that is certainly a ratio you can look at.

It is not one we pay a lot of attention to internally, to the point of, is there more consumption than writing on a platform?

Certainly, that has always been true at Yelp, the minority of people are contributors, and then there is a lot of people who want to come to Yelp to find local businesses.

And I expect that will continue to be true.

The good news, at the core of that is that both that unique visitor number, as well as that reviews or content number have grown pretty healthily.

And so, that is what we are focusing on.

Next question is from Ron Josey with JMP Securities.

Please go ahead.

Great, thanks for taking the question.

So question about the sales cycle and whether that has contracted, given all the products that were launched this quarter, between either the DCG results, the Nielsen results, the Call-to-Action, the revenue estimator, now the platform and other stuff.

So just overall, in terms of whether -- when you first contact a potential local business to advertise to when they agree, has that contracted based on these new products?

Or is this just something you are seeing over on the business?

Thank you.

Hi, thanks for taking the question.

So the short answer is, there is no new numbers or vast new change on that.

Certainly, all of the things you just mentioned have been positively received, by both our perspective advertisers as well as our sales team.

And so we are getting really good feedback on all those things.

I think of each one of these things as just another arrow in the quiver, in the many conversations that we have local businesses around the country, and now the world.

And so we want to continue to add to that quiver, but I don't have any sort of cycle time as changed by X percent number for you.

Next question comes from James Cakmak with Telsey Advisory Group.

Please go ahead.

Hi, thanks.

So, you have already had I guess reservation capabilities through your partner program for some time.

Can you talk about how, as your traffic has grown by impressive amounts, how the traffic and transactions through the partner program, the reservations, how those have been trending?

Have they been growing, on just this past as your audience and your unique visitors have?

And then secondly, with the -- we are starting to see the scale of the local business pretty clearly now, and you are outperforming on EBITDA front, how are you thinking about your investments to expand into new markets?

Because profitability is trending ahead of expectations, would you consider accelerating into new market entry and how do you see reinvesting in the business?

Thanks.

Thanks, James.

So in terms of partners, and what they are experiencing on the platform, I think I can't tell you exactly that is nearing traffic growth, but I know it's going up.

So I know that we are obviously creating more reservations.

We are grading more deals, transactions through to our platform in Q2 2013 than we did in Q2 2012.

So I think directionally, it is definitely increasing.

And it is hard to say whether it is really tracking to traffic growth.

I know deals, in and of itself, is actually up 100% quarter on -- year-over-year, so is actually growing faster than traffic.

But we are pleased with where it is trending, and we feel like the more partners we can add to the platform, especially the new Yelp platform, the more benefit those people will get.

And especially from a consumer experience standpoint, they will just spend -- benefit tremendously.

In terms of where we are tracking, it is nice to be sitting where we are sitting.

I think the expansion into new markets, we will -- we are going to go as fast as we have been planning to go.

I don't think that we will necessarily go crazy, and spend a lot more.

I think it is really about how can we methodically go through this process of entering in a new market, and getting a total and then expanding that over time.

It is for us, once we go into a new market, it does take -- it is not a couple of years to really get a hold on that market, and start generating revenue maybe two to three years down the road.

So we try to think of it, a longer time horizon than just a quarter.

And but at the same time, we are continuing to invest.

So we are hiring salespeople, hiring engineers, and we are doing what we can to continue to take advantage of all this growth.

Next question comes from Kevin Kopelman with Cowen and Company.

Please go ahead.

Hi, thanks.

So first on deals, what are the acceleration deals in a quarter, and to what extent did that contribute to your net advertiser additions?

And then on users, could you just give us the active mobile app users in the quarter?

Thanks.

Yes, so active mobile apps was 10.4 million in the quarter on a monthly average basis.

So get that out of the way.

And then for deals, what is driving that?

I think year-over-year, the number of deals on the platform is probably up 100%.

So it is not necessarily surprising that we are generating a lot more transactions through deals.

And so I think that kind of make sense.

Again, it is not a tremendous amount of money.

I think it is more for the convenience of the consumer coming to the site, finding something at a local business that they think is great.

And then, hey, that local business has a great deal, why don't they buy it right then and there.

Next question comes from Todd Van Fleet, First Analysis.

Please go ahead.

Todd, your line is open now to ask a question.

Great We will go to the next question, from Blake Harper with Wunderlich.

Please go ahead.

Yes, thanks.

I had a question about international business.

I know that you had hit on it Geoff, but if I -- beside the revenue right now, if you could talk about what it is, now that you have Qype under your belt, and you have integrated some of the markets over.

Is there anything different or is anything different about those markets, as far as the level of engagement, the reviews, or anything about the local business customers that you see compared to the US?

And how does that impact any of your confidence, or ability to re-create what you have done in the US business and scaled the US businesses, as in Europe?

Sure, thanks for your question.

So just to recap on Qype.

As Jeremy mentioned earlier, we have made sort of progress, good so far.

And we' have now integrated the Qype sites in Ireland, Italy and Spain into Yelp.

And so now we're one big happy site and family in those countries.

Next step, we will be integrating Qype in France.

And then, the really big Qype countries, the UK and Germany are yet to come later this year.

So, that has been sort of a big area of focus for us in Europe.

Now as to your question about market differences.

Certainly each market, as we have gone internationally, has been differences.

There is all kinds of cultural differences from one market to the next.

That having been said, broadly what we are seeing is very to similar trends, in terms of how communities get formed at the local level, how consumers come in and flock to that local content.

And then, the conversations that we have in local businesses for mark to market.

So, by and large, we are still sticking with our, in the out years, we think the European business could be as big, or in the range of as big as US business.

But that is certainly not going to happen overnight, and we are just getting started now.

Thank you.

At this time, I would like to turn the call back to management for closing comments.

Thanks for joining us on this quarter, and we look forward to updating you in Q3.

Thanks.

Thank you.

Ladies and gentlemen, this concludes today's conference.

Thank you for participating.

You may now disconnect.