Yelp Revenue Tops Analysts' Estimates as CFO Steps Downby
Yelp Inc. dropped to its lowest price since 2012 amid a broad market decline after forecasting revenue that met analysts’ estimates and announcing the departure of its chief financial officer.
The customer-review website said Monday that revenue in the current quarter will be $154 million to $157 million and full-year sales are projected at $685 million to $700 million. Analysts estimated $154.1 million in the quarter and $687 million for the year, according to data compiled by Bloomberg. Yelp also announced that Chief Financial Officer Rob Krolik will leave in the coming months and a search has begun for his replacement.
Yelp started in 2004 as one of the first companies to build a successful business around online customer reviews. Now technology giants such as Facebook Inc. and International Business Machines Corp., as well as startups like MunchAdo and Mona, are working to make reviews more useful. Facebook has been testing a new part of its site for searching and rating local businesses. Yelp was working with a bank early in 2015 to explore a sale, but decided in July to halt those plans, people familiar with the matter have said.
Yelp reported sales in the fourth quarter increased 40 percent from a year earlier to $153.7 million on growth of local advertising. Profit, excluding certain items, of 11 cents a share missed the average analyst estimate of 12 cents, according to data compiled by Bloomberg.
Yelp plunged 11 percent to $16.06 at the close in New York, the lowest value since June 2012. The quarterly results were scheduled to be reported after the close of trading on Monday, but were released early because of a vendor error, a Yelp representative said in an e-mail.
Unless a company reports exceptionally strong earnings, it will still get “whacked” in the market under the current conditions, said Matthew Thornton, an analyst at SunTrust Robinson Humphrey. Investors will be closely listening to what the CFO transition signifies, he said.
“Investors are going to wonder whether this will increase the chance of a sale of the company, or whether this leads to improved guiding and communication with investors to restore Yelp’s credibility there,” said Thornton, who has a buy rating on Yelp.
Krolik, who joined Yelp in 2011, will continue in his position until a replacement is found or Dec. 15 if no one has been hired, Yelp said in the statement.
(An earlier version of this story published an incorrect estimate for Yelp’s quarterly adjusted earnings per share.)