• by Mark Walsh  @markfwal, July 31, 2013

Yelp on Wednesday reported a 69% gain in revenue in the second quarter, fueled by continued growth in local and mobile advertising by small and medium-sized businesses.
 
Revenue in the quarter increased to $55 million, up from $32.7 million in the year-earlier period. Yelp posted a net loss of $878,000 -- one cent a share -- compared to a net loss of $2 million, or three cents a share, a year ago.
 
Analysts, on average, had forecast a loss of four cents a share on revenue of $53.3 million for the quarter.
 
Yelp said active local business accounts, or the total of businesses that advertise with the local ratings and review service, rose 62% to 51,400 in the second quarter. The company had about 108 million monthly active users globally, up 38% from a year earlier.
 
"We had a great second quarter with strong execution in all areas of our business, as the Yelp brand becomes increasingly prevalent around the world," said Yelp CEO Jeremy Stoppelman, in the earnings release.

Stoppelman added that the company would continue its focus on mobile innovation, integration of Europe-based directory Qype, and “closing the loop with local businesses.” Continuing its geographic expansion, the company said it has incorporated Qype content and traffic from Spain and Italy, and added six new markets in the quarter, including four internationally and two domestically. It bought Qype last October for about $50 million in cash and stock.
 
Yelp began rolling out local advertising for its app in the fourth quarter of 2012. That effort has since ramped up, with 40% of its local search ads now appearing on mobile devices. Furthermore, the company said 59% of searches in the quarter took place in mobile, across its app and mobile Web site.
 
In July, the company began allowing users to complete transactions and orders directly within its app and through its Web site. More than half (51%) of Yelp users make local purchase decisions after visiting the online ratings and review site, according to Nielsen findings released in June. To help businesses promote the transactional feature, the company also launched a Call-to-Action feature in their business listings.
 
Expanding its mobile offerings, Yelp recently acquired SeatMe, a Web and iPad-based reservations app that competes with the likes of OpenTable.
 
Yelp isn’t the only company capitalizing on the expansion of local and mobile advertising. Facebook last week reported that almost 1 million local businesses were using the social network’s ad products in the second quarter, more than twice the number a year ago. Mobile advertising now makes up 41% of Facebook total ad revenue, up from 30% in the prior quarter and almost nothing in early 2012.
 
With the wider rollout of Graph Search in the second quarter, Facebook is poised to become a more direct competitor to Yelp in local search.

Looking ahead, Yelp projects revenue in the range of $58 million to $59 million for the current quarter, and $222 million to $224 for the full year. That’s higher than the $216 million to $218 million forecast in a JP Morgan analyst report on Yelp’s quarterly results released Wednesday.

Yelp shares were up about 6.5% to $45.50 in after hours trading immediately following its earnings announcement after closing Wednesday at $41.80.