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Yelp will greatly reduce its investment in sales and marketing efforts outside the U.S. and Canada after disappointing results have led the company to refocus on product development in North America and shift its efforts towards a more long-term approach.
The strategy change could lead to the dismissal of up to 175 Yelp employees.
“While our domestic business continues to thrive, it’s become apparent the changes in the international distribution environment have impaired the near-term growth prospects of our business overseas,” said Yelp CEO Jeremy Stoppelman on the company’s Q3 earnings call this morning. “As a result, we have decided to scale back investment outside our domestic market. This was not an easy decision as it may impact up to 175 of our valued employees abroad. While they perform their jobs admirably, our strategy has not panned out.”
The company will stop international sales and marketing potentially as soon as today, according to Stoppelman, since foreign accounts represented only one percent of Yelp’s revenue in Q3. Yelp’s international listings and apps will remain available, in case the company wants to give international growth another try in a few years.
As of the end of 2015, Yelp had a presence in 31 countries outside the U.S., and it generated 2.2 percent of its revenue from abroad. That percentage has been falling over the last couple of years.
Going back to last year, 70 to 80 percent of Yelp’s accounts have been returning customers, which also hastened the decision to abandon business development abroad. Yelp executives tried to spin the cuts as an attempt to refocus on Yelp’s core products.
“We’re in a kind of a nice position right now, where there are a lot of levers in the business that are really clearly driving growth,” said Charles Baker, Yelp chief financial officer. “So, we’re going to continue to invest in product both on the consumer experience to make it captivating and engaging, and also on the business owner side, really trying to make Yelp the sort of daily place that businesses are connecting with consumers.”
The company’s domestic business, however, is strong.
Mobile, in particular, is driving Yelp’s business now; Yelp’s mobile app usage grew 24 percent year-over-year, now representing 70 percent of the company’s total page views. Engagement, transactions, clicks, and page views are higher on mobile than the web, continuing the company’s focus first discussed earlier this year.
Stoppelman also hinted that Yelp will look to push into new verticals, but wouldn’t specify any areas the company is currently planning to enter.