Wendy Lim - Jeremy Stoppelman - Co-Founder, Chief Executive Officer and Director Geoff Donaker - Chief Operating Officer and Director Robert J. Krolik - Chief Financial Officer and Principal Accounting Officer.

Mark S. Mahaney - RBC Capital Markets, LLC, Research Division Jason S. Helfstein - Oppenheimer & Co. Inc., Research Division Stephen Ju - Crédit Suisse AG, Research Division Charles Eugene Munster - Piper Jaffray Companies, Research Division Lloyd Walmsley - Deutsche Bank AG, Research Division Heath P.

Terry - Goldman Sachs Group Inc., Research Division Mark May - Citigroup Inc, Research Division Brian Patrick Fitzgerald - Jefferies LLC, Research Division Andrew Marok - Cowen and Company, LLC, Research Division Michael Wu - JMP Securities LLC, Research Division Paul Judd Bieber - BofA Merrill Lynch, Research Division Christopher Merwin - Barclays Capital, Research Division Aaron M.

Kessler - Raymond James & Associates, Inc., Research Division Darren Aftahi - Northland Capital Markets, Research Division Thomas Forte - Brean Capital LLC, Research Division James Nie - Needham & Company, LLC, Research Division.

Welcome to the Q4 2014 Yelp Inc. Earnings Conference Call. My name is Adrienne, and I will be your operator for today's call. [Operator Instructions] Please note this conference is being recorded. I'll now turn the call over to Wendy Lim. Wendy Lim, you may begin..

Good afternoon, everyone, and thank you for joining us on Yelp's Fourth Quarter and Full Year 2014 Earnings Conference Call. Joining me on the call today are CEO, Jerry Stoppelman; COO, Geoff Donaker; and CFO, Rob Krolik. Before we begin, I'll read our safe harbor statement.

We will make certain statements today that are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially.

Please note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.

Please refer to our SEC filings as well as our financial results press release for a more detailed description of the risk factors that may affect our results. During our call today, we will discuss adjusted EBITDA and non-GAAP net income, which are non-GAAP financial measures.

In our press release issued this afternoon and our filings with the SEC, each of which is posted on our website, you'll find additional disclosures regarding these non-GAAP financial measures and a reconciliation of historical net income to adjusted EBITDA and non-GAAP net income. And with that, I will turn the call over to Jeremy..

supporting and fostering our community; expanding geographically; and closing the loop with local businesses. Community is at the center of everything we do at Yelp.

Our community is passionate about sharing their experiences with local businesses and the high-quality content they contribute is why tens of millions of consumers come to Yelp as the world has become increasingly mobile, app contributions have outpaced desktop contributions.

In the fourth quarter, 58% of our views and photos were posted via mobile apps. With this evolution in mind, we developed new features with a particular focus on mobile to further engage our communities.

Two of our notable product launches in 2014 were the ability to post videos, which provides even more context about experiences of local businesses, and the review translation feature, which enables consumers to read reviews in 16 languages.

In our effort to expand geographically, we brought Yelp to 5 new countries in 2014, and at the end of the year, had active communities in 29 countries around the world. These communities have contributed rich in-depth content as we added approximately 2 million international reviews in 2014.

As an example, we've been excited about our progress in Japan, our first Asian language country. After only about 9 months, Japan has become one of our top 10 countries in terms of mobile usage. We also developed a number of features to show business owners the valuable leads Yelp delivers to them.

Restaurants are a particularly interesting area for us, given how frequently consumers eat out or order in. When we acquired SeatMe in July 2013, they had approximately 200 customers. By the end of last year, more than 8,000 restaurants accepted reservations through our paid SeatMe and free Yelp Reservations products combined.

With more than 19 million diners seated in 2014, the significant growth demonstrates the power of bringing together our consumer traffic with a compelling product like SeatMe. As we look forward to 2015, we have identified 3 key priorities as we pursue our mission of helping consumers find great local businesses around the globe.

First, we will look to drive mobile engagement by making Yelp even more useful for everyday consumers' needs like eating out. Second, we'll continue to increase awareness of Yelp among consumers. And finally, we'll focus on delivering and measuring ROI for our advertisers.

Looking back, I'm proud of all we've accomplished in our first 10 years, but I'm even more excited about what we can achieve in the next 10. I envision a day when consumers everywhere and in any language will be using Yelp to discover and transact with great local businesses every single day.

With billions of people interacting with local businesses around the globe, we have an enormous opportunity in front of us. Now I'll turn the call over to Geoff, our COO, who'll provide some color about the evolution of consumer acquisition and local advertising..

the move from desktop to mobile and from impressions to performance-based advertising. These 2 trends have recently hit important inflection points, and we believe we're well positioned to capitalize on them in the year ahead.

We've historically benefited from nearly all of our traffic coming for free, and we've leveraged this traffic to build communities of locals who contribute high-quality content. Over the last couple of years, we've participated in the industry-wide shift away from SEO-driven desktop traffic to a mobile first world.

We believe that local is the perfect space for mobile and that Yelp is uniquely positioned to succeed. Mobile unique visitors grew 37% year-over-year and those mobile users are highly engaged as evidenced by 65% of our searches coming from mobile in the fourth quarter. Consumers who use our app love Yelp.

A recent study with Nielsen showed that 78% of app users had a favorable perception of the Yelp brand, and 77% of them use Yelp within the past month.

While we're encouraged by these statistics, the same survey noted that Yelp only had 26% unaided brand awareness among online American adults, demonstrating considerable opportunity to increase consumer trial of Yelp.

We invested approximately $10 million in online and off-line consumer marketing experiments last year and are encouraged by the promising results.

Given these results, along with the brand identity associated with our increased awareness and usage, we are planning to increase our marketing investment in online and off-line marketing by about $20 million in 2015. The second evolution we're experiencing is the shift from impressions-based to performance-based advertising.

While we have traditionally focused on selling impressions-based advertising packages to local businesses, we made our packaged CPC product widely available in September 2014 and have been pleased with the fast uptake. CPC advertisers represented 32% of local revenue in the fourth quarter, up from 23% in the third quarter of 2014.

The next logical step in our closing-the-loop efforts is to connect advertising spend all the way through to customer leads and spending. We are now tracking these ad-driven leads and associated revenue estimates for all advertisers, and we'll be making this data available in our business owner tools in the coming quarters.

Recent results indicate that our local CPC customers experience an average return on investment of over 500% on their Yelp advertising spend. We believe that if advertisers are able to better measure their ROI, more local businesses will advertise with us.

We've seen increasing traction among consumers who choose to take advantage of self-serve advertising. We've also seen an increasing number of customers who begin the self-serve process and then choose to call and consult with the Yelp salesperson before making a final decision.

Taken together, we believe that most business owners will continue to prefer consulting with our sales people, though many of these conversations may increasingly be what we think of as assisted self-serve. Given the continued success of our sales team and the large opportunity ahead, we plan to increase sales headcount by approximately 40% in 2015.

We're excited about the coming years as more and more businesses understand the power of Yelp and as consumers increasingly rely on Yelp as the place to find and transact with local businesses. Now I'll turn the call over to Rob for financial details..

Thanks, Geoff, and hello everyone. Please note that we have posted a few slides as well as a new data sheet on our Investor Relations web page that accompanies the financial portion of the webcast. In the fourth quarter, we achieved outstanding financial results as both revenue and adjusted EBITDA came in ahead of our guidance.

In the fourth quarter, revenue grew 56% year-over-year to $110 million, and adjusted EBITDA was approximately $25 million. For the fourth quarter, local revenue was $93.1 million, up 60% over last year. Brand revenue was $8.7 million, down 7% year-over-year.

While we were disappointed in brand revenue, we continue to believe it is a nice source of complementary revenue as we remain focused on local advertising. Other revenue increased 143% year-over-year to $8.1 million, primarily reflecting our new partnership with YP in 2014.

International revenue contributed about 3% of total revenue in the fourth quarter. While we are encouraged by the growth of our communities and review content overseas, we expect it to take years for international revenue to develop into a large percentage of revenue, given the strong growth we've seen in the U.S.

Our customer repeat rate, defined as a percentage of existing customers from which we recognize revenue in the immediately preceding 12-month period, was 75% for the fourth quarter of 2014. We continue to see leverage in the model. Total sales and marketing was approximately 49% of revenue in the fourth quarter compared to approximately 55% last year.

Sales headcount in the fourth quarter grew about 40% year-over-year. As Geoff mentioned, we plan to invest an incremental $20 million in marketing and continue to grow our sales headcount in 2015, which will benefit us in future years. Product development was approximately 17% of revenue, which was flat compared to the fourth quarter of last year.

G&A was 15% of revenue compared to 19% in the fourth quarter of last year. GAAP net income was $32.7 million, and GAAP EPS was $0.42 in the fourth quarter.

Based on the amount of profit we achieved in 2014 and our expectations of continued profitability on an ongoing basis, we released all of our deferred income tax valuation allowance in the fourth quarter of 2014. We had a onetime tax benefit of $26.2 million or $0.34 per share related to this valuation release.

Non-GAAP net income, which consists of net income and excluding stock-based compensation, amortization and valuation allowance relief, was $18.9 million in the fourth quarter. Non-GAAP EPS, which is non-GAAP net income divided by fully diluted shares, was $0.24.

We generated approximately $19 million in cash flow from operations in the quarter and finished the fourth quarter with approximately $400 million of cash and cash equivalents and marketable securities on the balance sheet. Before I turn to our outlook, I want to go through our operating metrics for the quarter.

We have made a couple of enhancements to these metrics and we believe they will help people understand our business more comprehensively. Average monthly unique visitors grew 13% year-over-year to roughly 135 million. Average monthly mobile unique visitors grew 37% year-over-year to approximately 72 million.

Average monthly desktop unique visitors were flat year-over-year to approximately 78 million. International traffic grew 20% year-over-year to approximately 31 million unique visitors on a monthly average basis.

Year-over-year, unique visitor growth slowed in the fourth quarter, which is consistent with seasonal trends, but we expect traffic to increase sequentially in the first quarter based on traffic in 2015 and historical trends. Going forward, we will provide a separate breakout of desktop and mobile unique visitors.

Active local business accounts grew 39% year-over-year to approximately 93,700. Keep in mind that in the fourth quarter of 2013, we had inorganic increase of about 2,200 advertising accounts related to the Qype Germany integration. Excluding these historical inorganic accounts, active local business accounts grew 44% year-over-year.

Beginning with the fourth quarter, we will provide a new metric, local advertising accounts. Local advertising accounts are defined as active local business accounts, excluding deal customers.

The revenue generated from this local advertising account metric comprises local revenue and we believe will more accurately reflect our core advertising business. Excluding the inorganic account additions associated with Qype, local advertising accounts grew 54% year-over-year to approximately 84,000.

Going forward, we will provide local advertising accounts and do not plan to provide active local business accounts. Cumulative reviews grew 35% year-over-year to approximately 71 million. About 5 million reviews were contributed in the quarter. Claimed local businesses were 2 million, up 36% year-over-year.

Now I'll turn to our outlook for the first quarter and full year 2015. For the first quarter, we expect revenues in the range of $114 million to $116 million, representing a 51% year-over-year increase. We expect adjusted EBITDA for the year -- for the first quarter to range between $19 million and $21 million.

We also expect stock-based compensation to range between $12 million and $13 million, and depreciation and amortization to be approximately 4% to 5% of revenue. We expect our tax rate to be approximately 40%. We expect full year 2015 revenue to be in the range of $538 million to $543 million or approximately 43% growth over 2014.

For the full year, we expect adjusted EBITDA to range between $100 million and $103 million, a 42% increase over 2014. We expect stock-based compensation to range between $58 million and $60 million, and depreciation and amortization to be approximately 4% to 5% of revenue. We expect our tax rate to be approximately 40%.

However, we do not expect to pay significant cash taxes in 2015 due to the use of our NOLs. We expect CapEx to be approximately $25 million. For modeling purposes in the first quarter, we expect our weighted average fully diluted share count to be approximately 78 million shares.

For the full year, we expect our weighted average fully diluted share count to be approximately 79 million shares. We had a fantastic 2014 and expect great things in the future.

Given the enormous opportunity ahead of us and the leverage we continue to see in the model, we now believe that we can achieve long-term adjusted EBITDA margins of 35% to 40%. I'll now turn the call over to the operator to open the call up with questions..

[Operator Instructions] And we have Mark Mahaney from RBC Capital Markets..

A question for Geoff and one for Jeremy.

Geoff, could you provide a little bit more color around that $20 million, how you reached that amount for 2015, why not more, why not less? And then Jeremy, I know in the past, for the last couple of quarters, you've talked about maybe a negative impact from some Google algorithm changes to your overseas traffic, but not to your U.S. traffic.

Could you give us an update on what you're seeing there?.

Thanks for joining us. Yes, about the $20 million, just to clarify, we did say that was a $20 million increase.

So $10 million last year plus $20 million this year would be approximately $30 million of marketing spend this year, and as to why that number -- actually going back to some of the things we've talked about before, we've tried to take a Goldilocks approach of kind of going in as fast as we can while achieving and doing things with quality.

So I think in this case, it's -- given that we sort of spent $10 million last year, we learned a lot on those tests. Basically, as much as we think we could reasonably spend this year would be about $30 million, which gets us to the ability to run many more tests and do some things at scale.

But obviously, we're not yet ready for huge amounts of marketing well beyond that [indiscernible]..

And it's Jeremy, talking about international and what we're seeing there, so yes, we had talked about Google making a bunch of adjustments and that impacting us. We're seeing ups and downs country-by-country, but overall, things are kind of holding steady.

And so we're spending our time just still focused on community building and growing our content there..

And the next question comes from Jeff Helfstein from Oppenheimer..

It's Jason. So 2 questions. The first is, so mobile slowed from 73 million to 72 million. I think that's the first time there was a sequential slowdown. I guess, one, do you still feel like those numbers are reflective, i.e.

of the trends? Or are we still seeing effectively the impact of double usage, multiple devices, if you're not logged in? And then just as you kind of think about it, when you think about the marketing, what are you trying to drive? Are you trying to drive mobile download -- mobile app downloads? Are you trying to drive engagement among existing users? And is there any data you can share with us on the number of mobile app downloads perhaps quarter-to-quarter or year-to-year in the fourth quarter?.

I'll take the first part of that, looking at mobile, first off, there is a seasonal trend that I guess I'd just point to, and so we typically see between Q3 and Q4 a bit of a seasonal slowdown. And then if you look at our growth rate for mobile, we're 37% year-over-year. So we feel pretty good about that overall..

Jason, it's Geoff. On the marketing question, yes, what are we trying to drive? And there are a couple of different channels that we've been experimenting with and we'll continue to, and so it does depend a little bit.

Some of our experiments have been driven towards trying to get folks to get the Yelp app and experiment with the Yelp app because, as I had mentioned, I think, in the earlier part of the call, we do see that when people get that Yelp app, they use Yelp often and then they tend to really love the experience that they have.

So some of our efforts have been in that direction. But then actually, some of the efforts have actually been in a pure kind of unaided awareness direction as well. I think I also mentioned that today we only stand at 26% unaided brand awareness, which just seems shockingly small in the online consumer adult population.

So in a lot of ways, we're also just trying to get people to be familiar with Yelp and try us, whether that be on mobile or the desktop. So overall, in terms of having metrics, the marketing efforts both last year and this year will be all about kind of long-term value. We don't expect to see any kind of immediate gains in terms of overall reach.

However, long term, we would certainly expect to see those things change, meaning over a period of years..

And your next question comes from Stephen Ju from Crédit Suisse..

So Geoff, you mentioned performance-oriented advertisers earlier.

So presumably, those guys are probably spending more versus the normal subscription tranches you are offering, so just wondering if you can give us any color on how much more they might be spending because they're probably not limited by cash flow constraints and probably looking more at ROI..

Thanks, Stephen. Today, when we talked about that 32% so far of local revenue being driven by CPC advertisers, most of them are actually buying our packaged CPC product. So effectively in a lot of ways, their spending is at a very similar level to what our historical impression-based advertisers were spending at.

Certainly, kind of within that number, you do have a range and some advertisers are uncapped, as you described it, meaning they start with a small amount and then they increase their budget over time. However, the averages, kind of the overall median case, is still kind of in that $300 to $500 a month sort of typical, consistent spending range.

We expect there will be more of the kind of variable price advertiser who may increase spending over time, but that's kind of in the out-years as opposed to really where the focus is today..

And our next question comes from Gene Munster from Piper Jaffray..

I might have missed this earlier, but can you just talk about some of just the overall trends in unique user growth and how to think about those going forward? And separately, as you kind of talked about improving retention -- gave some of those metrics, how do we see things like SeatMe starting to have an impact on that in dashboard, and maybe just broader from over the next year or so, how to think about customer retention?.

Sure. Gene, I'll take a stab at this. So looking at the overall traffic trends, I think we have reached a place where we're kind of at peak desktop more or less. And so users are going to mobile. We've been talking about that for a long time.

And I think when you see how broken out the year-over-year growth, mobile is at 37% year-over-year and so we're feeling pretty good about that. I think the age of just going to Google on your desktop and finding your way to Yelp, while it's not over, we've sort of hit that peak and so now it's all about what's happening on mobile.

And speaking of mobile, we've got the app and those users are highly engaged, but we'd like to see even more engagement there. And so that's where some of the investments that you alluded to, SeatMe and Platform, I think, end up being very important. And so we do have an eye towards some of the high-frequency categories.

That's why we made the investment in SeatMe and that's why we continue to invest. One of the best areas for us on Platform is actually food delivery and we have several partners there that are seeing success..

And your next question comes from Lloyd Walmsley from Deutsche Bank..

Following up on an earlier question on this packaged CPC.

When you guys look at the kind of supply and demand characteristics, do you still have a lot of availability of inventory to sell as these new CPC advertisers come in? And/or are you seeing CPC pricing move up as more people come into these auctions? And kind of where do you think it can go in terms of CPC pricing over time?.

Lloyd, I think the answer is really, really yes to both of those. We do still have an awful lot of effectively unused or unsold inventory within the ecosystem, and so that leaves a lot of upside. And also, we're seeing that in some more competitive categories or geo categories, if you will.

We do see that prices quickly rise within packaged CPC because that is an auction-based dynamic where folks effectively are bringing in an amount of money that they're going to spend on CPC advertising and then leaving it to the bidding to determine what the prices will ultimately be for that inventory.

And so you can imagine tight categories like movers in San Francisco, those prices are able to move up pretty quickly. So I think there is headroom in both price as well as inventory generally..

Yes. I guess, as a follow-up, we've looked at a few categories like lawyer San Francisco, and core search players are recommending bids in some categories at like 2x the levels of you guys.

Are there things you can do to kind of accelerate more auction participants to kind of close that gap?.

Yes, thanks for pointing that out. We noticed the same thing as we've done a little bit of benchmarking, and it obviously gives us comfort with both the ROI that we're giving to advertisers today as well as the headroom in those categories for pricing.

And so the simple answer is just acquisition, and that's why we continue to be focused on bringing in as many CPC advertisers as we can because over time, more competition should mean prices will rise as well as, hopefully, more happy customers..

And our next question comes from Heath Terry from Goldman Sachs..

Great.

Wondering if you could give us a sense, as you focus on beginning to monetize international a little bit more, what you see as being the primary driver in those markets? Is it greater density of users in each of those? Is it more salespeople? How should we think about kind of your goal for international growth longer term? And then to the point that you made at the end of the prepared remarks around long-term margins, can you give us a sense of sort of how you're going to balance that from a timing perspective? I mean, clearly, you can -- there's the classic trade-off between growth and margin expansion.

How important is it for you to get to that kind of a margin number in the intermediate long term versus accelerating or even just driving more top line growth?.

Heath, it's Geoff. I'll take the first half of that question about international monetization. Of course, international monetization, I think we're at 3% of revenue now, so it's still super early days. There's a lot of great signs out of that international team, and yet, in a lot of ways, we're still just getting started.

So yes, one of the key metrics that we look at in each country or in each city, and there certainly are more than one and it is a function of some of the things you already mentioned, obviously, consumer demand, traffic in general, inventory opportunity, and then things, of course, like paying accounts, which tend to be driven historically by salespeople.

So it'll be really all those things. And I think the message there for us internally has continued to be, hey, let's stay patient and focused. And over a long period of time, we expect it to certainly be a very big part of the business, but it is going to be a 1-year-at-a-time kind of a thing..

Heath, this is Rob. On your question about long-term margins, we don't really have a specific year that we'd planned to have the 35% to 40% margins. I guess what we do have is a lot of confidence that we can get there. We've gone in the last couple of years from effectively negative adjusted EBITDA margins to, in 2014, about almost 19%.

And for the fourth quarter, in fact, about 22%. So we feel like it's not necessarily stretched. And even if you look at our -- oldest cohort markets, it's pretty robust on a contribution margin basis. So we feel like it's there for us in terms of taking it. And then how long does it take us to get there, we'll just have to be -- wait and see.

And to your point about driving growth on the top line, we see tremendous amount of opportunity there, and the TAM is still really, really large. You see tens of millions of businesses that we want to bring over to Yelp and have them advertise on us. So I think we'll just have to wait and see, but right now, we don't have any specific time frame..

And our next question comes from Mark May from Citi..

On the outlook for sales headcount growth this year, sorry if I missed this, but maybe if you could provide a little more color about the type of salespeople that you're looking to bring in.

Is this going to be more heavily weighted to some of your new international markets or salespeople, maybe that are focused with the specialties in certain -- selling certain products? And then question, I guess, on some of the things that you're doing to help your customers measure ROI like bringing on Platform partners, et cetera.

Curious if you could put any numbers around the sort of benefit that you've seen as you introduce these ROI tools in terms of sales conversion..

Mark, I will try both of those. First, you asked a question about sales headcount growth. I had mentioned we are going to grow sales headcount by approximately 40% this year and kind of who are those people. The majority of that sales headcount will be what it historically has been, which is in our local sales group.

Many of those folks tend to come to us either straight out of college or within a few years thereafter, but we take all comers and there's all different kinds of folks. But it is a sales training program and so most of that headcount is folks who are reaching out to local businesses of different stripes.

Of course, within that number, there is some international and there is some sort of specialty sales and mid-market franchise and national accounts, but the majority of it is kind of traditional local sales headcount here in the U.S.

As to your other question, yes, we have done things to close the loop and help improve the value and now increasingly ROI for our advertisers.

Do we have any kind of clean metric that says here's how conversion ratios have improved? Unfortunately, we don't, and there is certainly a lot of anecdotal signs, kind of smaller metrics that we can look at that look positive.

But there is no kind of single metric that I can point to that say this metric changed a lot when we released this future or that future..

Maybe a follow-up then on that is maybe take one example like Hipmunk, which I think it was, if I'm not mistaken, one of your first entries into travel and hotels.

Have you seen any noticeable pickup in new business accounts in that vertical?.

Not that I know of. I don't have a metric for you on that. That having been said, interestingly, Platform, while certainly not at odds with our local advertising, doesn't necessarily directly augment our ability to sell local advertising either.

So many times we'll have a local advertiser who -- for whom we turn on a Platform partner whether that be food delivery or travel or something else. And they're happy to have it there, but it doesn't really change the way that they think about their Yelp advertising program overall..

And our next question comes from Brian Fitzgerald from Jefferies..

Maybe along the same lines of questioning. Can you give us any metrics around e-commerce monetization that's coming through the Yelp Platform, what share of overall revenue could that be over time? And then separately, with the Yelp Platform, I think you said you had 60,000 businesses-plus integrated in.

Could you discuss some of the benefits you're witnessing from these closed loop transactions with these businesses in terms of uplift or penetration of your ad offerings?.

Brian, this is Geoff.

Do you want to take the first part, Rob, or do you want to take the second?.

Sure. So in terms of the metrics around monetization, the Platform, I mean, it's fairly small. It actually lives in other revenue. And what we're doing is we're taking a share of what the partner is taking in. So it's a kind of a piece of a piece.

We haven't really shared what that amount is, but really the purpose of Platform at this point is just to show advertisers that we do close the loop, that we do drive leads, and I think that's going to be the measure of that business for the foreseeable future. In terms of what can it grow to, it can grow to -- it depends, I guess, I would say.

It can become a larger and larger piece of the business overall long term, but actually, at this point, we're really focused on local advertising, and what Platform is all about is consumers. So it's providing a consumer complete transaction. I find a place, want to transact, I transact and I'm done and I have a happy experience on Yelp..

I think you covered the second half..

Yes..

And our next question comes from Kevin Kopelman from Cowen and Company..

This is Andrew Marok on for Kevin.

You talked a little bit earlier about your 2014 product launches, but could you expand on product innovation going forward, especially around the Yelp Platform?.

Sure. This is Jeremy. Yes, I mean, I can't really foreshadow much about our product pipeline for 2015, but we will continue investing in Platform and we do expect to bring on a number of other vertical partners, so stay tuned on that. But unfortunately, I can't share a whole lot of what we'll be releasing soon..

Okay. And then on international traction, I know you had announced earlier that you were doing smaller tests in, for instance, London, with outdoor advertising.

Have you seen any early returns from those? And are you expecting to see anything within the next quarter or so?.

Yes, I think that's right. We did mention our outdoor tests, many of which were international last year. And we did, we saw positive signs, as kind of referenced earlier, in those tests, which gives us confidence to continue the testing into this year.

There's no -- none of those tests, including the one in London, are sort of game changing in terms of our overall traffic footprint, got an awful lot of people using our site in London.

And so certainly, some pop in terms of the traffic in a short period of time kind of around when we ran those tests, but nothing overall that would show up in the numbers in a large way..

And our next question comes from Ron Josey from JMP Securities..

This is Michael Wu for Ron.

Real quick, can you guys provide some insight on international revenue growth for Yelp's oldest markets abroad? And then given the recent acquisitions or announced acquisitions of Restaurant-Kritik in Germany and Cityvox in France, could you compare and contrast the 2 markets and how the acquisitions could help you there?.

So in terms of international revenue, international revenue was about 3% in terms of our oldest markets there. So we've been selling into U.K., Spain, France and Germany for the last couple of years actually when we first -- effectively when we first started selling into Europe. So we started out about 2.5 years ago.

We most recently launched in Italy probably in September or so of 2014, and what we've seen is if you look at just organic growth in international revenue, it's been about 80% in 2014. So we feel like the momentum is there and we're continuing to see it in 2015. So we're excited about it.

We just think that as a percent of revenue, it's going to be a fairly small percent in the near term, given the strong growth rate in the U.S..

You asked about our recent acquisitions of Cityvox and Restaurant-Kritik as well. The context for those acquisitions was very similar to our acquisition of Qype at an earlier time and that was -- it's really all about the content and resulting traffic that tends to come in from bringing on these complementary communities of writers and reviews.

So in the case of those 2 properties, they actually have a lot in common and this is why we did it at the same time. Also yes, our market position in France and Germany and the story there is actually relatively similar too. Certainly, we are much earlier in both those countries than we are in the U.S. But in both cases, we've got a nice following.

And then these 2 niche properties, Cityvox and Restaurant-Kritik also had nice followings in and of themselves, so we'll be pursuing a very similar strategy to what we did in Qype where we bring on that content on to Yelp, and over time, really make the focus on the Yelp properties in both France and Germany.

And so you can look to that in the coming months..

And our next question comes from Paul Bieber from Bank of America..

I was hoping, first, on the international front, could you talk about the strategic priorities in international business? And can you remind us in which countries you're actually monetizing internationally? That is actually have salespeople calling on local businesses.

And then secondly, when I look back over the last 2 years, you've guided pretty conservatively at the beginning of the year and your -- especially in the EBITDA line and your eventual actual EBITDA numbers are much higher.

Is there anything different in the guidance this year? I know you guys are investing in advertising, but anything different that's changed your way of approaching guidance..

Okay. So on the first question, you asked about kind of our priorities as far as international. Look, big picture, why are we in 29 markets? Because we believe sort of that the Yelp pitch of helping people find great local business resonates around the world and consumers everywhere want to find great local businesses.

Americans who are already familiar with Yelp want to be able to use Yelp when they're traveling around the world, and so that's really the strategic imperative for us as we try to bring Yelp internationally. Within that, though, do we hope to make money in many of these countries? Certainly, and that's why we have begun to monetize several of them.

I guess, as I'm sort of writing it down here, today, we've monetized -- or we are monetizing France, Germany, the U.K., Ireland, Italy and Spain, if I missed any, and in addition to, of course, the U.S. and Canada. So I guess, the second half of the question..

Yes. So the second half of your question is about guidance. I mean, what we do is we release guidance. So for the year, revenue, we expect $538 million to $543 million in revenue for 2015. And on an EBITDA basis, we're expecting $100 million to $103 million.

So how we look at that, sorry, for -- yes, so how we look at is that we do a model and we put all the inputs in and we get an output based on all the things that we want to do in 2015. And then obviously, we continue to update that through each quarter. So that's what we'll continue to do.

And whether it's conservative or whether it's aggressive, obviously, we won't know until the end of the year..

And your next question comes from Chris Merwin from Barclays..

So you made some changes to the YP partnership after the 3Q, and I think it looks like other revenue, I think you said, was flat sequentially.

So are you comfortable with the terms of that agreement now? And has that partnership had any positive impact on paying account growth where you're basically able to upsell a customer you source from YP to your ad products?.

Yes, so we feel really good about the YP partnership. We did change some of the terms and made it longer and better synced ourselves with them, and we feel really good. And I think so far, it's working out and we expect it to do so in 2015.

In terms of if it's increasing our paying accounts, it's really -- I mean, we already have the ability to sell into those accounts prior to the YP agreement. So I wouldn't say that it's allowing us to sell an account that we weren't able to sell it to.

What I would do is I'd say that, in some cases, we're able to mention that those particular customers are getting a branded profile and that doesn't include advertising. So if they want to include advertising on Yelp, it may help that particular customer out. So we think of it as all positive..

And our next question comes from Aaron Kessler from Raymond James..

First, on the -- according to our survey, some of the merchants, I guess, are still a little bit uncertain about ROI more on the foot traffic side, whereas like home services, do you see a good ROI? I guess, with regards to your comments kind of an improving ROI, what's your plan kind of on more foot traffic type of establishments to help show them improved ROI?.

Aaron, yes, this is the age-old question for us.

I think the good news, if you will, is that there's so many leads that are already being captured through Yelp that advertisers aren't sort of processing today, that if we just take credit for the ad-driven leads that we are capturing, including things like people getting directions on their way as they're walking into a business and whatnot, so again, leads they were already capturing but attributed to an ad.

We see that on average, our CPC advertisers are getting a 500% return on their investment in terms of the Yelp ad spend. So we feel that's a great place to start and showing that to advertisers ought to help.

Longer term, are there even more things we could do to take advantage of the significantly more leads that are coming in through just walk in and people who actually are processing these leads on Yelp? There probably is. Although as we go increasingly mobile, I think we'll be able to take advantage of many of those signals too..

Got it.

And just on marketing spend, the $20 million increase in share, are you flowing that through to revenues at all? Or is that kind of a secondary effect that we should expect?.

Yes, if I understand your question correctly, are we counting on any of that to drive revenue this year? No, we're not. We're really not expecting that to have an impact on metrics on 2015.

These are marketing tests that are very much focused on kind of the long-term brand and unaided awareness opportunity to get people familiar with Yelp and such that hopefully they're loyal users in the out-years..

And our next question comes from Darren Aftahi from Northland Securities..

Just one quick one. You talked about the SeatMe, I think, ramping to 8,000 by the end of '14.

Can you talk about any benefit you're seeing in terms of uplift from paid customers in terms of migration to paying advertising clients?.

Yes, thanks for the question. I guess to -- let's parse that. First of all, you mentioned the 8,000 restaurants, and just to be clear, those are SeatMe plus Yelp Res customers, and we certainly are seeing flow back and forth. It's a nascent business for us.

However, we are seeing flow of people who start with either Yelp Reservations or SeatMe and then choose to buy a Yelp advertising package in order to drive incremental business. And we also see Yelp advertising clients who say, hey, I'd really love to get on your reservation platform.

So there is some cross-pollination that is already happening, but I would describe it as early days and small as a percentage..

[Operator Instructions] And we have Tom Forte from Brean Capital..

Wanted to know where we stood with video to the extent that consumers are adding video to Platform and what's that doing for engagement, and then also to the extent that merchants are adding video to the Platform and if we're close to potentially advertising via video on Yelp..

This is Jeremy. So video is off to a strong start and we just actually had a recent release that boosted videos significantly from where it already was. So we're feeling pretty good about that from a consumer perspective. On the merchant side, they've already been able to host video for quite some time.

We actually have that produced as part of their advertising package, and it's actually now more than half of our advertisers are taking advantage of that. So it's actually a really great part of becoming an advertiser on Yelp, is getting that video up on your page and enhancing it ultimately for consumers. And so you kind of have both angles.

They're pretty separate products. The video that we launched last year was really consumers uploading short video and then we have a bit of a longer form in terms of a few minutes that merchants can take advantage of and they become Yelp advertisers..

And our next question comes from Kerry Rice from Needham & Company..

This is James Nie for Kerry.

Considering that the percentage of ad impressions on mobile is 56% for the quarter, how should we think about the size of mobile revenue? And a follow-up to that is kind of what levers you can push or pull to close that gap between mobile revenue and ad impressions?.

This is Geoff. So I guess let me try the first one. So yes, 56% of ad impressions were on mobile. Again, that's in comparison to desktop. You can't exactly, in most cases, draw a line between ad impressions and revenue and that's why we don't.

You can kind of do your own math or come up with your own calculation on that, and that's because most of our advertisers are agnostic and they're saying, hey, I want to buy it a plumbing impression, and so we'll put the plumbing impression. We're in front of the consumer wherever he or she may be.

As to what levers we can pull, I don't know that they're really any different for us on mobile advertising than they are on historical desktop advertising, and those are just the classic things like bring more advertisers in.

And as we get tighter density and better advertising targeting in any kind of geo category combination, prices rise and there's more demand for the product too, and of course, also more consumers means more impression that we can show. So no special magic on mobile specifically, but all of those numbers tend to push things in the right way..

And that concludes the Q&A session. I will now turn the call over to Rob Krolik for closing remarks..

Thanks, everyone, for joining us on the Q4 call. We look forward to speaking with you in Q1 2015. Thanks..

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating, and you may now disconnect..