Yelp reported third-quarter revenue of $241.1 million vs. estimates for $245.4 million, according to FactSet. Earnings of 17 cents a share beat estimates for 10 cents.
Shares fell 28.5% on Friday to $31.12. Shares were down 25% year to date going into Thursday's earnings report.
The company blamed the revenue shortfall on a change to no longer require advertisers to sign up for a fixed period of advertising.
"Although we achieved our adjusted EBITDA outlook for the third quarter, revenue was lower than we anticipated," said Jeremy Stoppelman, Yelp's co-founder and chief executive officer in a press release. "While the shift to non-term advertising has opened our sales funnel, it has also made our results more sensitive to short-term operational issues."
Stoppelman also noted that the issues would likely affect Yelp's fourth quarter results as well, but was optimistic the changes would be beneficial in the long term.
"We remain positive about the move to more flexible and dynamic advertising terms, as we believe the shift greatly increases our long-term sales opportunity and opens up additional levers to expand Yelp's sales reach and profit margins," Stoppelman said.