San Francisco: Yelp is hoping investors give it a five-star rating, as the popular online review site plans to raise $100 million in an initial public offering.
Yelp made the announcement in a filing Thursday with the US Securities and Exchange Commission. The amount of money the startup is seeking in its IPO will likely change as its bankers determine how many shares should be sold and at what price. That process typically takes three to four months.
San Francisco-based Yelp, a website best known for reviews of restaurants, bars and other local businesses, said in its filing that it recorded a loss of $7.6 million, or 13 cents per share, on revenue of $58.4 million in the first nine months of the year. This compares with a loss of $8.6 million, or 16 cents per share on $32.5 million in the same period a year earlier. Most of Yelps' revenue comes from local businesses advertising on its site.
The company has $32.1 million in debt, and $23.1 million in cash and cash equivalents, the filing said.
Yelp plans to put proceeds from the offering toward general corporate uses, including sales and marketing, capital expenditures and working capital.
Yelp is no newcomer to the tech scene; the company was founded in 2004 by former PayPal employees Jeremy Stoppelman and Russel Simmons as a way for consumers to post reviews about - and discover - local businesses ranging from all-you-can-eat buffets to zip line operators. Stoppelman, 34, is currently its CEO.
The site has grown rapidly in the years since. It had over 22 million reviews at the end of September, and an average of 61 million unique visitors per month. Yelp is available in 43 markets across the country and 22 markets around the world.
Its popularity has not been without controversy. Yelp uses an automated program to weigh reviews and sift out those that are potentially unreliable, such as a negative review that a pizzeria owner might write about a competitor. This has resulted in complaints from business owners about the way reviews can mysteriously come and go from their Yelp pages, and several lawsuits (which were subsequently dismissed). In an attempt to assuage irked merchants, in 2010 Yelp began allowing visitors the option of seeing any filtered reviews.
According to the regulatory filing, Yelp's largest shareholders are currently Bessemer Venture Partners, which holds a 22.5 percent stake, and Elevation Partners, which holds a 22.4 percent stake. Benchmark Capital Partners is its third-largest stakeholder, with 16.2 percent of Yelp's stock.
Max Levchin, a PayPal co-founder and early Yelp investor who is chairman of Yelp's board, owns a 13.8 percent stake, while Stoppelman has an 11.1 percent stake.
Stoppelman, Levchin and some other insiders have already cashed in on Yelp's success. The filing said that as part of a company financing round in Feb. 2010, each man sold 7.4 million shares to Elevation Partners for $15 million apiece. Several others sold stock to Elevation then, too.
Yelp is the latest in a string of tech companies that have navigated the road to an IPO in recent months. It filed its initial IPO papers the same day that another reviews site, Angie's List Inc., began trading on the Nasdaq Stock Market. The stock jumped $3.26, or 25.1 percent, to finish trading at $16.26.
Unlike Yelp, Angie's List charges a monthly fee for access to its reviews of local services such as dentists, veterinarians, roofers and plumbers. Yelp, meanwhile, is free.
Yelp's underwriters include Goldman Sachs, Citigroup and others.
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