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Yelp cratered more than 30 percent Friday, a day after releasing third quarter earnings that revealed advertisers are abandoning the site and denting revenue.
The company added zero net new advertising customers during the quarter. The company earlier this year switched from long-term advertising contracts in local markets to more flexible, non-term contracts. That change resulted in significant contract cancellations.
Yelp reported revenue of $241 million for the quarter, just shy of analyst projections of $245 million. It also adjusted fourth quarter revenue guidance due to slower new account growth.
“We do not believe that there was any one single factor behind the new sales shortfall relative to our expectations. Instead, a number of smaller, compounding issues arose, including slower-than-expected sales head count growth, a change in advertising promotions, a technical issue in flowing leads to our reps and a lower success rate in contacting business decision-makers by our outbound sales calls,” Chief Financial Officer Charles Baker said on the company’s earnings call.
In light of lower-than-expected net adds and corresponding advertising revenue, Yelp slashed its full-year revenue guidance to a range of $938 million to $942 million, down from a previously stated range of $952 million to $967 million.
Friday’s plunge sends Yelp to a new 52-week low and puts the stock on pace for its worst day of trading since going public in 2012.