Yelp shares plunge, chairman steps down
Yelp, the crowed-sourced reviews site, has taken a big hit from shareholders after a review of its own.
Shares of the site toppled 28% Wednesday after it reported grim second-quarter earnings Tuesday and also announced that chairman Max Levchin is leaving.
Yelp reported a second-quarter loss of $1.3 million (two cents a share) compared to the $2.7 million (four cents a share) profit it registered for the same quarter a year ago, according to its earnings report released Tuesday.
Due to "lower sales headcount growth" and the elimination of its "brand-advertising product," or display advertising, the company said, it slashed revenue guidance from $544 million to $500 million for the year, which is down from prior guidance of $574 million to $579 million.
Meanwhile, the company announced that Levchin, co-founder of PayPal and an early investor in Yelp, has resigned from his position as chairman of the board of directors to pursue other interests, effective immediately.
The company's board has yet to appoint a new chairman, but plans to consider the issue at its September meeting.
"I am extremely proud of what Yelp has accomplished over the last 11 years and believe I leave it well-positioned to take advantage of the large local advertising market," Levchin said in a statement Tuesday.
Yelp, the digital version of word-of-mouth recommendations, posts reviews of local businesses ranging from boutiques to hair salons to restaurants. The company was founded in 2004, and has taken hold in major metro areas across 31 countries.
The company said approximately 83 million visitors — up 22% from last year — have visited the site via mobile devices on a monthly average basis during the second quarter. Yelp said this quarter was the first time mobile traffic was higher than desktop, which saw about 79 million visitors on an average monthly basis.
"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 to year," the company said.
For the third quarter, Yelp expects revenue of $139 million to $142 million, which is below Wall Street estimates of $153 million.
Still, CEO Jeremy Stoppelman offered some optimism during Tuesday's earnings report.
"We believe our rich content married with our highly differentiated local advertising product will position us well to capture a meaningful share of the large local market," he said.
Follow USA TODAY reporter Trisha Thadani on Twitter:@TrishaThadani