By Josh Beckerman And Maria Armental
Yelp Inc. lowered its revenue guidance for the year, citing
slower sales head-count growth and the elimination of its
brand-advertising product.
The reviews site expects revenue of $544 million to $550 million
for the year, down from prior guidance of $574 million to $579
million.
Meanwhile, Yelp's chairman and an early investor, Max Levchin,
plans to step down to pursue other interests. The company's board
hasn't yet appointed a new chairman, but plans to consider the
issue at its September meeting.
Yelp said it plans to phase out its brand-advertising product by
the end of 2015 to continue its focus on the consumer experience
and its native, local advertising products.
In after-hours trading, shares plunged 17%, to $27.69. If shares
trade at that level on Wednesday, it will mark a two-year low for
the stock.
For the second quarter, the company posted a loss of $1.3
million, or two cents a share, compared with a profit of $2.7
million, or four cents a share, a year earlier. Earnings excluding
items were 12 cents a share in both periods. Analysts polled by
Thomson Reuters had projected earnings of one cent a share.
Revenue grew 51%, to $133.9 million, compared with the company's
guidance of $131 million to $134 million.
Yelp's rate of traffic growth has been a concern for some
investors. In April, the company said it would no longer provide
total monthly unique visitors, focusing instead on desktop and
mobile monthly unique visitors.
The company said Tuesday that monthly mobile unique visitors
rose 22%, to about 83 million, on a monthly average basis, while
desktop visitors were about 79 million, marking the first time that
mobile traffic was higher than desktop.
"Consumers are increasingly turning to apps when using their
mobile phones, and we are excited about the growth we've seen in
app usage which accelerated to 51% year over year," the company
said.
For the third quarter, Yelp expects revenue of $139 million to
$142 million, below Wall Street estimates of $153 million.
The Wall Street Journal reported in May that Yelp was exploring
a sale, but amid more recent reports of a stalled sales process, B.
Riley & Co. analyst Sameet Sinha downgraded Yelp, saying the
paused effort put "deteriorating" fundamentals in focus. Mr. Sinha
has said that "fickle" small businesses pose a risk to the
company.
Google Inc. has been another threat. Yelp relies on Google's
search engine for more than half its online visitors. That reliance
has created tension between the two companies over the years,
especially as Google has pushed further into its own listings for
restaurants and other local points of interest.
Yelp executives have complained that Google has altered its
search results, directing users to its own local listings, and it
testified in Congress that such practices are anticompetitive.
Yelp started in 2004 after former PayPal executives Jeremy
Stoppelman and Russ Simmons devised a local website to replace
word-of-mouth recommendations. With a $1 million investment from
Mr. Levchin, a PayPal co-founder, Yelp quickly spread to new
markets and drew a community of contributors.
Write to Josh Beckerman at josh.beckerman@wsj.com and Maria
Armental at maria.armental@wsj.com