Think about it: there are three "stools" to a pitch to list at the NYSE or Nasdaq for a social media company like Yelp: the customer, the company and the merchant.
What matters to Yelp? They want relationships with customers, but also with merchants. Who are the merchants who matter most to a company like Yelp? How about restaurants.
A co-branding deal between Yelp and the NYSE might have included a presentation at the annual meeting of the National Restaurant Association sponsored by the NYSE, for example. NYSE has the long tentacles to build relationships between Yelp and with the merchants who matter.
It cuts both ways. Take Zillow , which elected to list at the Nasdaq. A company like Zillow wants visibility so it can drive people to their website. How about free advertising at the huge Nasdaq sign in Times Square? How about on New Year's Eve, with millions of people in Times Square?
Get it? Each company is different, and each exchange may be able to offer something.
The big issue with these tech start-ups: when will they make money?
That's why I was a little surprised when Yelp CEO Jeremy Stoppelman told our Melissa Lee that Yelp was "Adjusted EBIDTA break-even in Q4."
Huh? What is "adjusted EBIDTA?" Not more dot-com doublespeak, I hope.
I checked with David Menlo at IPOFinancial.com, and together we looked at the company's 424 filing. Turns out, "adjusted EBIDTA" does indeed exist...and is defined as EBIDTA plus stock-based compensation ($1.36 million in Q4) and a contribution to The Yelp Foundation ($5.9 million, all taken in Q4).
According to the 424 statement, this resulted in a loss of $15,000 for the quarter. Bottom line: Stoppelman is basically right: "adjusted" EBIDTA for the quarter is about break-even.
Now, if they could just drop the need to "adjust" the EBIDTA and be straight cash-flow positive...
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