Yelp shares fall on outlook for fourth quarter

The Yelp Inc. application is displayed on an Apple Inc. iPhone 5s and iPad Air in this arranged photograph in Washington, D.C., U.S., on Friday, April 25, 2014. Yelp Inc. is expected to release earnings figures on April 30. Photographer: Andrew Harrer/Bloomberg via Getty Images

Yelp, the platform which connects consumers and local businesses, posted third-quarter earnings after the bell on Wednesday.

Yelp’s net revenue for the third quarter was $222.4 million, 19 percent growth for the same period last year. This compares to analyst estimates of $220.8 million, according to Yahoo Finance.

Adjusted net income was $25.4 million, compared to $18.4 million, year-over-year. Earnings per share were nine cents, which is well above the analyst estimates of negative two cents.

Guidance, however, initially spooked investors. The company says it is expecting between $211 and $216 million in revenue for the fourth quarter, well beneath the $233.6 million that analysts were expecting. It says that full-year revenue will be between $839 million and $844 million, when Wall Street was forecasting $860.7 million.

But it turned out that some of the analyst estimates didn’t take into account the sale of Eat24, its food-delivery business that it sold to GrubHub for $288 million.

Citi noted that “shares traded down 7% in after-market trading due, we believe, to confusion on the Q4 guidance (i.e., most sell-side estimates hadn’t been updated to reflect the Eat24 close).”

“Traffic growth continues to be healthy, with app unique devices growing 21% year-over-year, and our retention efforts have contributed to strong double-digit advertiser account growth,” said co-founder and CEO Jeremy Stoppelman, in a statement.

Yelp has had a mixed ride on the stock market since it went public in 2012. The company has a market cap of $3.77 billion.

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