Business

Yelp sees IPO pricing at $12 to $14 a share

SAN FRANCISCO — Online review service Yelp Inc. unveiled on Thursday estimated terms of its initial public offering at 7.15 million shares at a price of $12 to $14 each.

Yelp said it is offering 7.1 million of the shares, while a selling stockholder — the Yelp Foundation — will offer 50,000 shares.

In November, Yelp filed IPO plans to raise up to $100 million to help raise its visibility in the marketplace.

The company, which offers user-generated reviews of businesses through its website and mobile apps, is seeking to float its shares as a wave of similar social media companies goes public. Several internet companies launched offerings recently and interest has renewed after market volatility in August temporarily closed the market for new IPOs.

Yelp has become one of the web’s most popular sites in the US with a free service that allows even anonymous users to read and post reviews of restaurants, hardware stores and other businesses.

The company relies on ads from local businesses and national brands for revenue, but it has angered some merchants, who have said reviews can be stacked against them and want more control over their public online personas.

Yelp’s loss for the year ended Dec. 31 widened to $16.9 million from a year-earlier loss of $9.7 million as total costs and expenses rose. Revenue, most of which comes from local advertising, jumped 74 percent to $83.3 million during the period.

The company cautioned its soaring top-line growth rate is likely unsustainable and likely will decelerate as the business matures. Yelp already has settled into most major US markets, though the company plans to continue its international expansion.

Yelp said it can’t yet detail how it will use proceeds from the offering with certainty, but said it currently plans to use the funds for general corporate purposes including sales and marketing and capital expenditures.

The company has applied to list on the New York Stock Exchange under the symbol YELP.

Yelp’s board approved the establishment of the Yelp Foundation, a non-profit organization, in November. The company contributed 520,000 shares of its common stock as a charitable donation to the Yelp Foundation last year and said it doesn’t expect to make future contributions to the foundation. Yelp won’t receive any of the proceeds from the selling stockholder’s sale of shares.

Read more at The Wall Street Journal