San Francisco-based review site Yelp posted its third-quarter revenue report yesterday, beating analysts' expectations with a reported growth in revenues of 40 percent over the same quarter last year. The company's stock price rose 7 percent in after-hours trading on the news. However, all is not five stars for the crowd-sourced ratings site, as even with the increased revenue the company is still losing money.
The San Francisco Business Times reports that the company has "continued to struggle with losses, losing $8.1 million, or 11 cents a share, after higher costs associated with an sweeping ad campaign and hiring hurt its bottom line."
It seems that Yelp has been on an advertising and hiring binge, and that these expenditures have led to losses, reports the Times.
“We are investing in our future, as we believe our marketing campaign along with the continued growth of our sales team, will benefit our business over the long term,” Chief Financial Officer Robert J. Krolik was quoted as telling analysts yesterday.
Yelp has also begun to generate revenue that is completely independent of advertising — its existing revenue mainstay. TechCrunch notes that the earnings report details revenue generated from Eat24, which Yelp purchased in February of this year for $134 million in a mixture of cash and Yelp stock.
“Transactions revenue totaled $12.0 million, compared to $1.3 million in the third quarter of 2014, primarily due to the acquisition of Eat24 in the first quarter of 2015,” according to the report.
Yelp went public in 2012.