According to a recent eMarketer report on the US mobile advertising market, the sector is projected to grow 82% in 2014 to $9 billion. eMarketer expects US mobile advertising to grow to $28.4 billion by the year 2018 and account for 85.9% of the US digital advertising market compared with the 39.5% share this year. Google remains the leader in the market with 68.5% market share in 2013. However, other players are eating into its share. Google’s share is projected to drop to 65.7% in 2014 and to 64.2% in 2016. The researcher predicts that local reviews site Yelp will perform impressively in the coming quarters with their market share growing from 1% in 2013 to 1.9% by 2016.
Yelp (NYSE: YELP) saw revenues grow 68% over the year for the September quarter to $102.5 million, ahead of the market’s expectations of $99 million. Yelp’s primary source of revenues, the local business ad segment, saw sales improve 66% over the year to $85.1 million. A quarter ago, that number had improved 69%. Yelp reported the quarter’s EPS at $0.05, also ahead of the Street’s target of $0.03.
Among operating metrics, Yelp saw cumulative reviews increase 41% over the year to 67 million. Monthly users improved 19% to 139 million and average monthly mobile unique visitors grew 46% to approximately 73 million. Active local business accounts increased 51% over the year to 86,200 which was short of the market’s expectations of 87,000 accounts.
For the current quarter, Yelp projected revenues of $107 million-$108 million compared with the Street’s forecast of $111 million.
Yelp’s International Growth
Yelp has been focused on delivering growth through international expansion. During the recently ended quarter, Yelp added their presence in Chile and Hong Kong, making their services available in 29 countries in 16 languages. Keeping with the need for local language presence, Yelp also introduced mobile review translation that lets global consumers translate reviews into any of their supported languages.
More recently, Yelp grew their European operations through two acquisitions. Earlier this month, they announced the acquisition of German restaurant review site Kritik. They followed it with the purchase of France’s biggest review site CityVox. Terms of the deals were not disclosed. Yelp plans to leverage the acquisitions not only to add a user base, but also to improve local-focused content in local language. CityVox, for instance, has an impressive photo content which would be beneficial for Yelp.
Since Yelp is looking at acquisitions to grow their presence, I think Zomato would be a good add to their portfolio as well. Zomato is a restaurant discovery site founded in India in 2008. Today the company has expanded their presence internationally to presence in fifteen countries including the latest additions in New Zealand, The Czech Republic, and Slovakia. Zomato plans to expand to ten more countries this year including Poland, Ireland, Malaysia, Vietnam, Lebanon, Jordan, Kuwait, and Canada. They have information on over 250,000 restaurants with access to more than 23 million users and are expected to end the current year with revenues of INR100 crore (~$16.3 million).
Yelp’s Improved Offerings
Additionally, Yelp is also improving their offerings. It has recently added Yelp Platform transactions and reservations to the business dashboard. The new feature will let businesses see how many consumers are interacting with these businesses through Yelp. Yelp already supports over 28,000 businesses on the Platform that lets these local restaurants and hotels conduct business transactions directly through their site. More than 250,000 transactions were conducted on the Platform during the last quarter.
Their stock is trading at $60.58 with a market capitalization of $4.39 billion. It touched a 52-week high of $101.75 in March this year.