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Yelp reports surprise loss, revenue forecast disappoints

The Yelp Inc. logo is seen in their offices in Chicago, Illinois, March 5, 2015. REUTERS/Jim Young

By Kshitiz Goliya and Arathy S Nair

(Reuters) - Yelp Inc <YELP.N>, the operator of consumer review website Yelp.com, reported a surprise loss and forecast revenue for the current quarter that fell far below market expectations, sending its shares plummeting in after-hours trading on Tuesday.

The company also reported its slowest revenue growth in 18 quarters in the three months ended June 30, and said Chairman Max Levchin would step down "to pursue other interests." There has been no decision on a replacement, Yelp said.

Yelp, whose shares fell more than 16 percent in extended trading, said it expected to report net revenue of $139 million-$142 million in the third quarter - well below the $152.6 million average analyst estimate.

"The reduction in guidance in a way validates some of the investor concerns around increasing competition, slowing traffic and reduction in salesforce productivity," Barclays Capital analyst Christopher Merwin told Reuters.

Yelp's subscriber growth has been slowing in a crowded market. Competitors include Google Inc <GOOGL.O>, TripAdvisor Inc <TRIP.O> and GrubHub Inc <GRUB.N>.

To counter increasing competition, Yelp has been trying to expand outside the United States and diversify into services such as restaurant bookings, event management and payments.

Yelp also said on Tuesday it would phase out display advertising by the end of the year.

"The industry trend towards increasingly disruptive display advertising is at odds with our focus on the consumer experience," CEO Jeremy Stoppelman said on a call.

Yelp has had a rough ride recently.

"They had terrible two quarters. Then they tried to sell themselves (and) nobody would buy them. And then they come out and say that they are getting out of (display advertising) and reducing guidance. Basically its sign of that things are really wrong at this company," B. Riley & Co analyst Sameet Sinha said.

Yelp put itself on the block earlier this year but then decided not to proceed, Bloomberg reported.

Yelp's revenue rose 50.8 percent to $133.9 million in the quarter, slightly beating the average estimate.

However, the company posted a net loss attributable to common shareholders of $1.3 million, or 2 cents per share, compared with a profit of $2.7 million, or 4 cents per share, a year earlier.

Analysts had expected a profit of 1 cent per share and revenue of $133.5 million.

Yelp cut its full year net revenue forecast to $544 million-$550 million from $574 million-$579 million.

Up to Tuesday's close of $33.51, Yelp's shares had fallen about 39 percent this year.

(Reporting by Kshitiz Goliya and Arathy S Nair in Bengaluru; Editing by Ted Kerr)