Yelp Files for $100M IPO

Filing touts growth in local advertising

Popular business review site Yelp declared its intentions to go public Thursday through a filing with the Securities and Exchange Commission.

According to the filing, Yelp,  a site featuring crowd-sourced user reviews of restaurants and businesses, plans to raise $100 million in its IPO. That's significantly less than some of the big Web IPOs this year—Groupon raised $700 million, and Zynga has filed for a $1 billion offering. It's even less than the $500 million that Yelp reportedly turned down when it walked away from acquisition talks with Google in 2009.

The filing gives a rundown about the company's current user numbers and financials. Yelp is averaging 61 million unique visitors per month, a 63 percent increase from the same period last year, and those users have now created 21 million reviews. The company's advertising revenue is growing at a healthy pace—it made $40 million from local advertising and $13 million from brand advertising in the first nine months of the year, compared to $24 million and $7.6 million during the first nine months of 2010.

Yet overall, Yelp is posting a $7.6 million loss for the year so far. The challenge, as the company notes in the filing, is to continue a high rate of growth: "Our recent growth rate will likely not be sustainable, and a failure to maintain an adequate growth rate will adversely affect our results of operations and business."

Still, Yelp is spinning that its business model is "attractive" because, thanks to its user reviews, Yelp has been able to attract a large audience with relatively low content or traffic acquisition costs. Plus, it notes that local advertising continues to move from the offline world to the online one.

Yelp CEO Jeremy Stoppleman has been talking about the IPO for a while now. In June, he emphasized that he sees the offering as another stage in the company's evolution, rather than a big cash out. Which makes sense. After all, what could be a more definitive crowd-sourced review than a public offering?