Yelp Shares Plummet On Sales Outlook Despite Beating Third Quarter Expectations

Yelp posted its second consecutive quarterly profit and exceeded analyst's forecasts on Wednesday, but that that didn't stop the local business website's shares from sliding down more than 14% in after-hours trading.

While CEO Jeremy Stoppelman and CFO Rob Krolik focused on international expansion and growth among local business accounts on Wednesday's earnings call, investors seemed to react to a lower-than-expected fourth quarter sales outlook, which the company projects to come in between $107 million and $108 million. That contrasts with the average estimate of $111 million from 34 analysts polled by Yahoo . For the year, Yelp increased its sales forecast, and expects revenue to fall between $375 million and $376 million, up from the previous range of $372 million to $375 million.

For the three months ending on Sept. 30, Yelp reported net income of $3.6 million, or 5 cents per share, compared to a net loss of $2.3 million, or 4 cents per share, in the same period last year. A consensus estimate from analysts polled by Yahoo expected profits for the company to come in at two cents a share.

The company's net sales for the period came in at $102.5 million, up 67% from last year's third quarter figure of $61.2 million. That total exceeded the average estimate from analysts, who anticipated net revenue to come in at $99 million.

While active local businesses accounts increased 55% from last year's third quarter to 86,200, Stoppelman and Krolik emphasized that the company was still in the early days in terms of garnering paid accounts.

"We continue still very much to be in an acquisition phase," said the company's CFO. "[Our numbers] are still a drop in the ocean in terms of the millions of businesses that are out there."

That understanding has been the impetus for Yelp's spread into international markets. Since acquiring European local review site Qype in late 2012, the company has continued its expansion on that continent, with executives pointing to the beginning of monetization in Italy in the third quarter as one example of growth. The site is now available in 29 countries, and most recently launched in Chile and Hong Kong, though Stoppelman said it would "be years before we monetize" the Asian market.

On a day when competitor Groupon launched its own individual webpages for local businesses with Groupon Pages, Yelp also made the point that it was working to go beyond being just a reviews site. The company noted that it now had 28,000 businesses on its Yelp Platform, which allows consumers to transact directly with businesses by booking day spa appointments or ordering food directly through Yelp's website.

"Yelp is now a marketplace where consumers can come and also transact and it's a great way to make the user experience better," said Stoppelman. "It's feedback to local businesses so that they can see that transactions are actually happening... with that cold hard cash that's actually going to their bank account."

Shares closed at $70.23 in Wednesday trading and are down nearly 13.1% to $60.90 as of 5:55 pm EST.