Yelp shares take a hit on downbeat outlook, traffic

Investors gave Yelp’s latest results a bad review after the US customer-review site issued downbeat current quarter sales expectations and said consumer traffic declined sequentially in the final three months of the year.

Shares in the San Francisco-based company fell more than 10 per cent in extended trading after the company said it expects net revenue in the range of $195m-$199m in the first quarter, below analysts’ estimates of $204.4m.

The outlook accompanied fourth-quarter results that showed consumer usage declined sequentially from the previous quarter. The number of mobile web unique visitors on a monthly average basis slowed to 65.3m in the fourth quarter, from 72.04m in the third. Moreover, about 24.07m unique devices accessed Yelp via the mobile app on a monthly average basis, down 3.4 per cent sequentially. However, cumulative reviews did climb 5 per cent over the same period to 121m.

However, the company swung to a profit of $8.3m or 10 cents a share, compared with a loss of $22.2m or 29 cents in the prior year quarter. That eclipsed analysts’ estimates of earnings of 2 cents. Adjusting for one-time items, earnings of 27 cents, also topped forecasts.

Meanwhile, sales jumped 27 per cent to $194.8m, broadly in line with estimates.

The company said local advertising accounts, which account for the bulk of its revenue, grew 24 per cent from a year ago to about 138,000, and that revenues totaled $171.1m. The company pivoted away from big brand advertising accounts to local business advertising in 2015, in an effort to increase revenues.

Yelp, which has faced growing competition from the likes of Facebook and TripAdvisor, also said its total headcount was reduced by 100 by the end of the fourth quarter, from the third.

Yelp shares advanced 32 per cent last year and are up nearly 9 per cent so far this year.