Hello and welcome to the Second Quarter 2015 Yelp Incorporated Earnings Conference Call. My name is Joe and I will be the operator for your call today. At this time, all participants are in a listen-only mode and later we will conduct a question-and-answer session. Please note that this conference is being recorded. And I would now like to turn the call over to Ms. Wendy Lim. Ms. Lim, you may begin.

Good afternoon, everyone and thank you for joining us on Yelp’s second quarter 2015 earnings conference call. Joining me on the call today are CEO, Jeremy Stoppelman and CFO, Rob Krolik and COO, Geoff Donaker will join us for Q&A. Before we begin I will 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. In addition, we are subject to a number of risks that may significantly impact our business and financial results. 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, non-GAAP net income and non-GAAP EPS, 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 will 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 GAAP EPS to non-GAAP EPS. And with that, I will turn the call over to Jeremy.

Thanks, Wendy and welcome everyone. In the second quarter, we posted financial results in line with expectations and continue to make progress on our goals. Revenue grew 51% year-over-year to almost $134 million. While this year hasn’t gone as smoothly as we anticipated, I am as confident as ever about our future, particularly about the success of our apps and local advertising products. With the strength in our core business, we continue to believe that we can be a $1 billion revenue company by the end of 2017. Internet usage trends continue to evolve with desktop traffic declining and the shift to mobile accelerating. Increasingly, consumers are turning to apps for everything from social media to news to local search. According to a 2014 comScore study, people in the U.S. already spend more than half of their online time in mobile apps and we only expect this to increase. As one of the first apps in the Apple App Store in 2008, we were early leader and built upon this success. In the second quarter, we became one of the top 40 apps overall in the U.S. and app user growth accelerated to 51% year-over-year to about $18 million. I want to take a moment to clarify how we think about traffic and the impact of the shift to apps. We have always measured desktop and mobile website unique visitors using Google Analytics, which is inherently limited due to its cookie-based traffic. For example, accessing yelp.com from a computer work, from a smartphone while on the go and again from a different computer at home would count as three web unique visitors. App usage, however, is measured internally based on the number of unique mobile devices accessing the Yelp app giving us confidence that the number of unique devices is…

Thanks, Jeremy. Please note that we have posted a few slides and a datasheet on our Investor Relations webpage that accompany the financial portion of the webcast. In the second quarter, revenue grew 51% year-over-year to $133.9 million and adjusted EBITDA grew 32% year-over-year to $22.7 million. For the second quarter, local revenue was $107.9 million, up 43% year-over-year. Beginning this quarter, we will break out transactions revenue, which consists of Eat24 platform transactions, Yelp deals and gift certificates. In Q2, transactions revenue totaled $11.3 million compared to $1.2 million in the second quarter of 2014, primarily reflecting our acquisition of Eat24 in the first quarter of 2015, which contributed about $10 million to revenue and made up the vast majority of transaction revenue in the second quarter of 2015. I would like to touch on transactions for a moment. We are investing in our platform for the long-term, putting in place the building blocks for transactions to occur in Yelp. The recent acquisition of Eat24 and the total development of the Yelp platform to facilitate transactions has been successful and are growing. That said we expect local advertising revenue to continue to be our core business and the driver of growth for this foreseeable future. We expect local advertising will account for about 90% of our target revenues in 2017. Brand advertising revenue was $8.3 million, down 8% year-over-year. As Jeremy discussed, we will be phasing out our brand advertising product over the course of the year to focus on the consumer experience and local advertising. We will continue our direct brand sales and programmatic advertising efforts and expect approximately $10 million of revenue through the rest of the year. Given that brand is relatively high margin, lower brand revenue will have a disproportionately large effect on adjusted EBITDA,…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question here comes from Lloyd Walmsley from Deutsche Bank. Please go ahead sir.

Thanks for taking the question. Just wondering if you guys can give us a bit more color on any changes you have done since last quarter sales force reorg. And then what do you think is the best way to think about productivity in the quarter and going forward. It looks like kind of the sequential add in terms of local ad revenue of about $9.3 million was still a bit lower than what you guys added sequentially last year, should we look for that to kind of start to improve going forward as productivity comes back, what’s the best way we should be thinking about that and tying kind of headcount the numbers?

Hey, Lloyd, this is Geoff, a couple of things. You asked first about sales force reorg, I think there you are referring to our territory rollout for January and February that we have reversed back in March. Really no follow-on after that, generally speaking, productivity that individual kind of – that tenure level has increased back to historical norms since that period of time. So that’s generally a good thing. Now as Jeremy mentioned, we have not grown the sales force quite as quickly as we had expected to, so we are on about a 30% pace now rather than the 40% pace we earlier expected. And that’s a variety of factors but mostly competition in the marketplace, and particularly here in the San Francisco Bay Area. Now because of that, when we are bringing a new rep, those – work he performed at different levels, you have different mix in terms of productivity and that’s what we are seeing in terms of net adds. For example, our net new revenue into business and that will carry over time. But broadly speaking, as the level whether that six months in or a year in, those are performing generally speaking as they have historically.

And thank you. Our next question here comes from Gene Munster from Piper Jaffray. Please go ahead.

Good afternoon. You talked about decisions that will benefit Yelp over the long-term and I just want to be on the same page in terms of what some of those decisions are. You talked about traffic, diversification, improving awareness through advertising to get lift, maybe shifting some of that headcount, eliminating the display within mobile, are there any other kind of key areas that you are focused on in terms of decisions to benefit the company longer term? And then separately, any thoughts on international, it is down 3% year-over-year, but the reviews were up 39%, if I heard that correctly, what do you attribute the gap to? Thanks.

Sure. This is Jeremy. Yes, when we are talking about the long-term, I think part of what we are focused on that particular state and with regards to the brand business and our decision to discontinue that and focus really on the local ad products going forward. That’s really about improving the consumer experience. The ad quality of the brand stuff is a lot lower than our native apps. And we have seen a decline from about 25% of our revenue coming from brand to 6%. So, it felt like our resources would be better spent focused on the core business. And so we are making a long-term decision there. Of course, there is other aspects of investment that we make when we are thinking about the long-term, part of that obviously is continuing to hire as aggressively as we can with sales force. And it’s also making large investments in product and engineering R&D expense. And so I think you can kind of see the numbers there and see that we are really trying to build world-class consumer experience and have a local search product that blows everybody else away.

And on the international, yes, you are right, that the content does continue to grow rapidly and I think that’s a function of community playbook continuing to work well for us in cities all over the world. Now, website traffic internationally is down, that’s right, we mentioned 3% decline in website traffic and that is mostly a function of SEO and things that effectively we see Google having done with their algorithm there. The good news is that as with the rest of our business we do see app traffic growing very nicely in all of our markets. And given that, that is now majority of all kind of user activity, the good news is that their app traffic does continue to grow for us in cities all over the world not just domestically.

And thank you, our next question here comes from Mark Mahaney from RBC. Please go ahead.

Thank you. Two questions. First, the local ad accounts look like it had nice increase. I guess it’s the first time in three quarters we have seen a growth year-over-year. Geoff, is that the kind of recovery a little bit in the sales force productivity? Does that explain that or any color behind why the local ad, the LAAs kind of picked – the growth there picked up? And then the other question I wanted to ask on the sales force, we have been focused on I guess the negative derivatives from the unicorn bubble and I hope you could just – I just don’t think it reflects or impacts you, I think it can impact a lot of companies. But what do you do about that? If you have got much greater competition for engineers and sales force and compensation is rising, is there a way to kind of work through that storm or you just have to ride it out? Thanks.

Hey, Mark. It is Geoff. And yes, let’s start with the local active accounts, you asked is that really a function of sort of sales force recovery and productivity recovery, there is probably some of that, but as we said historically, we don’t actually manage to that LAA number rather that sort of an outcome of both the great work that our sales force is doing as well as all sort of advertisers that come in, some of which are actively directed by us and some of which is just organic folks finding us and signing up. So, while we are pleased to see that number is going up, really we do manage the business by revenue and that’s how our sales force is compensated. So, I can’t point anything specific that we did to drive that LAA number this quarter versus the previous ones. As to the unicorn bubble question and we certainly are feeling those impacts. What are we doing? I think we are trying in general take that Goldilocks approach we have always talk of trying to maintain a high-quality bar on hiring and retention and promoting from within. And we have been really delighted by general strength in our ranks across the sales force in the product and engineering group. And I think for the most part, it is something that we just have to ride out. That having said, you can see the cost in a couple of these areas have gone up, in particular, product and development as a percentage of revenue continued to creep up and that’s a function of compensation in the marketplace. So, we will do what we can to kind of hold the dam on that whole thing and not ride it out, as you said.

And thank you, our next question here comes from Kevin Kopelman from Cowen & Company. Please go ahead.

Hi, thanks. I just had a couple of questions on Eat24. Could you give us a sense of what the year-over-year growth look like on a pro forma basis in the second quarter? And is there any change on your full year outlook for Eat24 versus when you did the deal? Thanks.

Yes. For Eat24, we saw about a 73% growth in revenue in the quarter from a year-over-year standpoint and we are not necessarily giving specific guidance related anymore to Eat24 since it’s incorporated into our full year outlook.

And thank you, we also have a question here from Brian Nowak from Morgan Stanley. Please go ahead.

Great, thanks for taking my questions. I have two. The first one is on the $1 billion revenue target could you just help us understand a little bit how if there is any strategy that you see changing on the local side to really improve the growth trajectory at that business kind of get to that $1 billion or are there other businesses that you see kind of filling the whole from brand? I mean, how should we think about Eat24 over that period versus local? And then the second question on the hiring and the number of salespeople hired, I guess high level if we kind of think about what changed over the last three months from when you thought you could still hire 40% of the – still hire 40% more salespeople versus now? Has churn gone up? Has it – have you been hired – hard to hire new people, can you just kind of breakdown gross versus net additions?

Yes, thanks, Brian. This is Rob. I will take the first one in terms of the $1 billion, because some way to think about it is so we are giving full year guidance of about 45% year-over-year growth this year. We would expect over the next couple of years to achieve kind of a CAGR of about 35% to 40%. So, that’s one way we look at it. And then in response to the brand, we actually had modeled out brand as effectively flat over the next few years, so going from thinking this quarter with 6% going in the next couple of years probably half that. So, it’s a pretty small piece of the pie that would actually go away. And yes, I mean the other businesses I think specifically the transaction business would more than make up for that. It’s growing at a fairly nice rate. Obviously, display was actually negatively impacting our business from a growth rate perspective. So, all that said, maybe some ways to think about it is I think as local ad revenue over the long-term being about 90% of our business, because that’s what we are focused on. About 10% is going to be kind of the transactions and other pieces of the business. And then from a sales force standpoint, how we are looking at it is we expect maybe a 25% or so growth in our sales force over the next two years compounded. And so that would allow us to get to that $1 billion number.

And the answer to the question about what changed over the last few months and why did we take down our growth rate expectation for the sales force from 40% to 30%? It’s just giving us more time to watch the competitive marketplace play out and test a couple of different changes. One is that over the last few months, we have changed our commission curve a little bit to allow reps to participate earlier in their careers and commission. Here at Yelp, you can see what sort of effect that would have, but I think there is just three more months of hiring and figuring out what sort of hiring numbers we could expect to see while keeping our talent bar as high as we have ever had. And so I guess I can say three more months of experience has led us to believe that this 30% number is the right target to shoot for while maintaining the terrific quality bar we have always had. What I think we have done in the not-too-distant passes over Chicago office and that’s been a helpful bar to hiring and now that we have got four domestic offices that we are able to hire into. It helps to offset specifically high competition to anyone office as we see right now in San Francisco.

And thank you, we also have a question here from Stephen Ju from Credit Suisse. Please go ahead.

Okay, thanks, Geoff or Jeremy. So, I am wondering how actively you are selling the Eat24 product if your salespeople who are selling the local product are also marketing Eat24 as well. And Rob, of the 46% of advertisers who are buying CPC-based advertising and if you can share in terms of where their ARPU levels are versus the average and any other color you can share even if it’s on a somewhat anecdotal basis of the 270% ROI that local advertisers are deriving that you guys talked about in the press release? Thanks.

This is Geoff. I will try with both of your questions and Rob can chime in if I miss something. So, first off, on Eat24, right now that’s being sold separately. The Eat24 team, prior to acquisition, had their own sales force. We have augmented that with some folks who are homegrown here from Yelp as well as some additional hiring that’s been done over the last couple of months, but it is a product that’s sold separately today from the Yelp apps team. You could imagine in time there maybe cross-selling opportunities there since we are both reaching out to restaurants and other local businesses, but we haven’t actively explored that much to this point. As to the question about ARPU, in general, I think the right way to think about this is that with the shift towards packaged CPC from our historical CPM products, there really hasn’t been any material change in ARPU. There actually hasn’t been much change in ROI either. That’s another sort of part of your question. In general, this is just a big project that enables us to service advertisers in a different way that they may want. Some advertisers prefer to pay on an impression basis and many today prefer to pay on a CPC basis and not to shift towards the package CPC product has been an important anything to do given just market dynamics and what advertisers these days are expecting. But fundamentally, in terms of a map of what they receive in terms of both ROI to them as well as how much they pay for advertising, those numbers are approximately the same as they have been over time. Asked the question about ROI, the way that’s been calculated and there is a slide in our updated investor deck that shows you a glimpse of that. Effectively, what’s happening there is we take the dollars that are being spent by the average advertiser for the Yelp ads and then look at the number of leads that are being generated by those ads, so this would be like calls or clicks for direction and multiply that by the average revenue in each category that advertisers have told us through past survey that they derived from a new customer. So that’s where we are coming up with the revenue as well as the cost equation for that ROI.

And thank you. Our next question comes from Jason Helfstein from Oppenheimer. Please go ahead. I am sorry Mr. Jason Helfstein if your line is muted please un-mute it for us. And I am sorry, so we are not able to hear you, we will have to go to the next question. And our next question comes from Heath Terry from Goldman Sachs. Please go ahead Mr. Terry.

Great. Thanks. Just wondering if you could give us a sense of whether or not the issues around the sales force are going to lead you to try and accelerate to more of an automated sales platform, self-serve at least in parts. I know your CPC products have started to take over some of that responsibility, but do you see a model for Yelp evolving that is less sales reliant as it becomes more difficult to repopulate the sales force?

Heath, it’s Geoff, so let me just start with we are enormously happy with our sales team and the productivity that we are seeing from what you might call it a telesales program. We have added a new slide to our investor deck, as Page 13 now, that you can find online and just to get a sense that in their first year of an advertiser relationship, we are actually able to double our investment and that investment is defined by you all selling its for cost. So we are able to double that first year and then subsequent business from that individual account is actually extraordinarily profitable in years two and three and so on as well. So and that’s kind of a fully loaded telesales program. Certainly, to the extent that we are able to do things in a more automated fashion in the future, that’s always great and there are a couple of things that we are actively experimenting with where, for instance there is an inbound team that receives calls that – from advertisers who find Yelp online and want to get some help with self-service. We have some other selling teams who are assisting, what we call rep assistant self-serve and so they are partially automated solutions. And then of course, there is fully automated self service as well, which you might imagine as we have always seen the revenue generated from advertisers who are purely self-serve tends to be far lower than when one of our professional sales reps, which is why we detain our best sales force.

Okay, great. Thank you.

We also have a question here from Paul Bieber from Bank of America Merrill Lynch. Please go ahead.

Hi thanks for taking my questions. Two quick questions, I was hoping you could share what you learned from the sales process. And then secondly, can you provide some color on how the CPC model is impacting pricing in some of the more mature markets?

Hi, Paul. So I guess I will take your question on the CPC pricing. Yes, the beauty of having moved to an auction-based pricing system for both CPC and CPM over the last couple of years is that prices really aren’t determined by the marketplace and that market can change over the course of a month. And it all depends of the level of competition within any given geography and category net. And certainly, there are cases where we see really tight pricing and CPCs rise dramatically and then other periods of time where traffic grows quickly and as a result CPCs are able to fall quickly and advertisers get a great deal for a period of time. So that is the beauty of the per month basis and we have moved to over the last couple of years. And Rob, could you take the first question?

Yes. What have we learned from our sales process changes using like territory cases – maybe using the territory changes there Paul. And I think the big lesson learned there was just the key importance of piloting and testing things in small isolation before we roll them out of the entire sales force, which was something that we do quite regularly and but I think we just moved a little too quickly on the territory change again here, so that was definitely a landmark.

And thank you. Our next question here comes from Colin Sebastian from Robert Baird. Please go ahead.

Thank. Just first of all, I was hoping maybe you could add some color regarding the M&A process that was in the headlines, if you could comment on what we should read into that as it relates to the strategic plan. And then secondly, I haven’t gone through the updated investor deck yet, but just wanted to clarify if there are any changes to the long-term financial targets that you had previously laid out? Thank you.

Hi Colin, I will take the first half of that. We don’t comment on M&A. I can’t give you really any color there, but rest assured we do – we pursue our fiduciary duties and so to the extent I think [indiscernible] ever put forward, we will review that as we have to.

And with regards to the long-term financial target model, it actually hasn’t changed. So we are still expecting adjusted EBITDA long-term target margins of 35% to 40% and we have kind of laid that out in a nice way. We are comparing it over the last few years including even when we went public.

And thank you. Our next question here comes from Brian Fitzgerald from Jefferies. Please go ahead.

Thanks guys. Can you give us any differentiation around pricing in U.S. versus Europe versus Asia, understanding that each market kind of works differently and independently as you mentioned and then additionally, how many local accounts do you have that are outside – based outside the U.S.?

Hi, Brian. I think the punch line to this is our business is overwhelmingly in the U.S. today and that’s really where to focus I think on our energy and your question as far as LA and revenue go. We don’t sell anything in Asia or Latin America yet. And in Europe, we do sell and I think that while prices do vary to my earlier point around market dynamics, you can expect that there is less competition in most cases in those European markets and our business nascent there. International revenue is still only 2% of the overall mix and as a result I think you can assume some thing similar to that on LAs although we don’t have a specific number for you there.

We also have a question here from Blake Harper from Topeka Capital Management. Please go ahead.

Thanks. I just had one question about Eat24 as you kind of looked at the ad products that you are going to – if there is any change in your thought process there about how you would monetize or market Eat24 and if any of the partnerships that you have on the platform or your acquisition of SeatMe in the past has led you to kind of how you think about taking all that into account and think about the products there of Eat24 going forward?

Thanks for your question, Blake. On the Eat24 product, today that is a pretty different product and SeatMe as well as that product. It pays for itself and advertisers or customers of Eat24 really only pay a transaction fee when they are sourced and you would take out delivery orders. And so in some ways that’s a pretty straightforward. So if you want additional take out delivery orders, sign up with us and we will send you orders either online or through a fax and you pay a commission on each one of those. SeatMe, of course, is a reservation based product and you might imagine that there are some restaurants who will use both SeatMe for table management as well as Eat24 to generate new takeout orders. And so at some point, we might bring those products together, but today there is not a ton of demand for that. They do tend to be different kind of customers. And then last but not least, the concept of ongoing advertising and online presence on the Yelp site is really what people are getting from our main sales force selling the Yelp advertising products. And so again, there is cross-selling opportunity down the road, but these are fairly specialized products that each of which tends to require one – a specialist to do it.

And thank you. We also have a question from Ron Josey from JMP Securities. Please go ahead.

Hi, this is Shraddha [ph] for Ron. I have a question on app usage, it looks like app usage growth accelerated around 51% year-over-year, anything specific driving that? And can you talk to how you are attracting app users? And then on the marketing plans, we will be looking for TV ads, but have you thought about app install as on other platforms as well? Thank you.

Hi, there. This is Jeremy. So, looking at app usage growth, you are right, we did accelerate in the quarter to 51%. Year-over-year, we are delighted to see that. I think it’s a function of a lot of different sources working for us. It’s obviously the AppStore drive some organic demands and then mobile web users also is the source of new app users as people get exposed to Yelp repeatedly and ultimately decide to download the Yelp app. So, we have seen really strong engagement there and we continue to invest quite a bit in improving the app experience.

And in terms of the question about TV versus other kinds of marketing, we have experimented with and continue to run app install ads online, so that is definitely part of the 10 million we expect so far this year in marketing. That having been said, at this point, it remains a small percentage of our total app downloads and new app users, organics drive the overwhelming majority of new app usage. But as we look for and find opportunities to drive additional app usage through downloads at reasonable prices, we are certainly happy to do that.

And thank you, our next question comes from Timothy Chiodo from UBS. Please go ahead.

Thank you. I want to say it was last year, maybe Q3, Q4, you mentioned that within the sales force you had reached peak levels in terms of the percentage of rookie sales force members. I just want to see if you could you give us an update on where we sit there in terms of the mix of those considered rookies versus the more experienced sales reps on the team? Thank you.

Hi, Timothy. While we don’t have a specific percentage to share on that today, what I can tell you is that rookies as a percent of sales force remains quite high today. I don’t know how that compares to Q3 and last year. But given our growth rates off an increasingly large base, we are continuing to hire very quickly in all of our markets. And as a result, there is an awful lot of, what we would call, historically rookies or folks under six-month to nine-month tenure in the system. And so that is a factor when you are looking at things like productivity and trying to do that math as that mix is changing and remains towards the rookie side of things. Of course, that’s going to be a factor on productivity.

Thank you.

And thank you, our next question here comes from Chris Merwin from Barclays. Please go ahead.

Thank you. So, I just have a follow-up on the ROI question from earlier. I know you have always focused on helping merchants understand ROI with products like the ROI calculator and Yelp platform. But when you talk to merchants, do you find that they do in fact have a clear understanding of the ROI and Yelp? And what else can you do to help clarify that ROI for your advertising customers going forward and possibly reduce customer churn as well? And just a second quick one on marketing, you talked about the $30 million in the plan for this year, I guess majority of which will come in the back half. But how do you settle on that number? And in particular longer term, as you think about growing traffic, is $30 million the right number or given all the competition in the various verticals in local could that potentially grow over time? Thanks.

Sure, Chris. So, starting with the ROI, certainly, there is a wide range of understanding and level of paying attention amongst merchants out there. I think we have great understanding using both our tools in their own of what sort of ROI they are getting from their yield advertising spend and others less so, which is why we continue to iterate on that, the product and tools you mentioned in the revenue estimator and whatnot. We are adding more versions of an ROI calculator into the tools later this year. And then as advertisers are spending increasingly on a CPC basis, especially time gives them the ability to adjust pricing if they choose to although historically that has been a small percentage of our advertisers. As to the question around marketing, how do you get to the $30 million number? In a lot of ways, this is again our attempt to take the Goldilocks approach of moving as fast as we think we appropriately can. But given that we are coming from spending a smaller amount last year, we think that we could invest $30 million this year wisely and give it a good shot between both TV and online and other forms of advertising. If we see the kind of lifts that we saw in our test, in the first half of this year, I think we may very well be pleased with it and choose or propose investing even more in 2016, but it’s really too early to tell, but have to see how back half of this year goes.

And our next question comes from Steve Cho from Wells Fargo Securities. Please go ahead.

Hi, thanks for taking my questions. I have two quick ones related to CPC versus CPM. First, as local advertisers roll off CPC campaigns, do you actively try to convert them to CPCs or do you look to renew them on CPMs? And secondly, can you comment on your approach overseas just wondering if the sales team besides the CPM or CPC in conversations with local advertisers?

Steve, point of clarification, typically when advertisers roll off their initial contract terms, they don’t actually go back and sell them a new contract rather they just roll month-to-month in most cases. So, that is the comp experience. So, there is no active program to try to convert people either to CPC or to CPM, they just tend to be in their existing contract. If they have a question and reach out to one of our account managers, we can certainly always switch their program, but that’s not an active focus. In terms of the international team, particularly those in Europe, they are selling more or less the same product in price range that we are in the U.S., which is primarily these days a package CPC product although they sell CPM as well.

Got it. Thanks so much.

And thank you, our next question comes from Matthew Thornton from SunTrust. Please go ahead.

Yes, thanks for taking the question. Two if I could and I apologize if these were already answered earlier. First, I was just wondering if you had disclosed or would be willing to disclose what the total unique visitors were in the quarter. And then just secondly, I was just trying to get a little more color on brand and the decision to shut a brand in the quarter. Obviously, you exited last quarter and talked about a much better pipeline and talked about kind of opening up the mobile inventory to the programmatic channel and to kind of now turn around it and shutter that product. Just kind of curious kind of what happened in the quarter there? Thanks a lot.

Hi, Matthew. Why don’t I take the first question and Jeremy can talk to the brand change. On unique visitors, one of the things that we are trying to do to help investors better understand our traffic mix, is differentiate these different animals. So, in terms of website unique visitors, on the desktop, we had 79 million, on mobile, it was 83 million, and in terms of app unique devices, that’s 18 million. Now, it’s important to understand that, that app unique devices, is really apples and oranges from those unique visitor numbers. Unique visitor numbers tend to be cookies, which that you could have many cookies per person where the unique device is a device, which is why Jeremy, in the prepared remarks and also on the slide that you might find useful in the investor deck Slide 9, we have tried to break out some other way to look at the ecosystem in a slightly more apples-to-apples manner. And I think when you look at it this way, what you can see is both the ecosystem does continue to grow at a rapid rate as well as you can see that the apps actually powering about 70% of all activity. Over to you, Jeremy.

Yes. On the brand question just touching on it real quick, I mean, it’s really a long-term investment in the consumer experience. So, if you look at how much real estate these brand ads are taking up, it’s actually quite large and the CPMs end up being quite well. And if you look to the future of where our business is headed, 70% of our page views are now coming from the app and the units on mobile get even worse. And so it ends up slowing down the experience where we feel like over time it’s just unacceptable. And if you look at it from a revenue standpoint, if you go back to say 2010, we have about 25% of revenue was coming from this product and that’s not declined to 6%. So, it feels like now is a good time to actually make that commitment to improve the consumer experience and move our brand stuff by the end of the year and also reallocate those resources. We do have some real resources dedicated towards that product and we will be able to move those into more productive places going forward.

And thank you very much. Our final question comes from Youssef Squali from Cantor Fitzgerald. Please go ahead.

This is actually Naved Khan for Youssef. Just a couple of questions. So, if I look at the revenue for some of your oldest cohorts, I see sort of a pretty mugged and deceleration in the second quarter, what could possibly be driving that? And then I had a follow-up.

Yes, in terms of the cohort revenue, we do give in our investor deck that information around the cohort. Our cohort revenue tends to be fairly volatile. It can go up and down. We don’t sell into each market depending – we don’t direct a sales person to sell into a cohort market specifically. So we don’t really manage the business that way. It’s really a way for you to see that we are, say generating X millions of dollars from a particular cohort. And in a market like San Francisco or L.A. or New York, $7 million or $8 million in a particular quarter, so call it $30 million on an annual basis. And if you think about what that market represents in terms of ad dollars is probably hundreds of millions of dollars. So it’s more of a way for people to get their arms around what’s the ultimate market opportunity. And so the quarterly fluctuations are not as a meaningful as maybe they would be in our local ad revenue.

Okay. And then a follow-up question I had was on the long-term goal of getting to $1 billion, how should we think about it in terms of U.S. versus non-U.S. revenue. And then just on the international, what do you see as the – sort of the key gating factors sort of still keeping the revenue opportunity in check right now?

Let me take the long-term, so in terms of our $1 billion goal, we are thinking that we would be able to hit that in 2017. In terms of the components of that is really local ad revenue takes up the lion share approximately heading towards 90% and then the other parts of the business will make up around 10%. We haven’t broken that out U.S. versus international, but you can imagine that the vast majority of that will be U.S. given how – where our international business is. That said, we feel like long-term, international will be a fair component, but I think for the next medium-term, next few years, U.S. will be the lion share.

Yes. And then in terms of the international approach in general, why hasn’t that gotten a bit faster, it’s funny I think internally, we have a slightly different way of looking at that, which is we might have invested in trying to sell in international or monetize international a little too early. And so if anything, I think we may have wanted in retrospect have waited until our brand and our site and apps were even better established before bothering trying to build our sales force over there. I give a lot of credit to the sales team that is in Europe. We have made good progress there, but definitely starting from a standing start just a couple of years ago and that’s a hard thing to do. We had the benefit in 2005 through 2008 in the U.S. starting with a very small team of five or six people then slowly grew and we are trying to take jumpstart Europe with about 100 people and then with the Qype acquisition. And so if anything, I think we made a little hard on our team and ourselves there by trying to get a little too big too fast. So I think what you will see there from us in the future is slightly more modest expectations and continuing to sort of slow grow as appropriate and take that Goldilocks approach.

Thank you. This concludes the question-and-answer session. I would now like to turn the call back over to Mr. Rob Krolik for closing remarks.

Thanks. Thanks everyone for joining us on the Q2 earnings call. We will talk to you on the Q3 call in a couple of months. Thanks.