How Will Yelp Look In the Next 2 Years?
Yelp (NYSE:YELP) is a online directory for discovering local businesses ranging from restaurants, and cafes to hairdressers, spas, and gas stations. Users can also search for and review businesses around them. The company’s Local Advertising business, which makes revenue from the sale of advertising and listing space on the Yelp Platform, is expected to contribute $1.1 billion to Yelp’s 2020 revenues, making up 98% of the company’s $1.1 billion in revenues for 2019. Yelp is moving away from its Deals and other services business, and therefore its expected contribution is only 2% to the total revenues.
We have created an interactive dashboard on Yelp Revenues: How Does It Make Money?, which details Yelp’s business model, followed by sections that review past performance and 2020 expectations for the company’s revenue drivers, and competitive comparisons with Google and TripAdvisor.
Yelp’s Total Revenue has grown 32% from $710 million in 2016 to almost $940 million in 2018, and is expected to grow over 32% to around $1.3 billion in 2 years
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- Yelp has added $230 million to its revenue over the last two years.
- Increasing sales from Local Advertising division is likely to add in revenue over the next two years
(A) Revenue from Local Advertising to increase 36% (about $323 million) in the next two years, with its share of Total Revenue expected to be about 98% by 2020
- Overall, Local Advertising revenue increased from $630 million in 2016 to $908 million in 2018, driven by increased active business accounts.
- We expect revenue to grow by 36% in the next two years, to about $1.2 billion in 2020, driven by a partnership with GrubHub and an increase in salesforce productivity.
- Local Advertising sales contributed 96% of total revenue in 2018. This share is expected to go up to 98% in 2020.
(B) Revenue from Deals & other Services to decline 30% about $10.5 million) in the next two years, with its share of Total Revenue expected to be about 2% by 2020
- Segment revenue decreased from $83 million in 2016 to $35 million in 2018.
- We expect revenue to decline by about 30% in the next two years to $25 million in 2020. Deals & Other Services revenues will continue to decline as the company is moving away from this business.
- Deals and Other Sales contributed 4% of total revenue in 2018. This share is expected to go down to 2%.
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