Unfortunately, the lower-than-expected revenue is expected to drag on, the company said, forecasting second-quarter revenues of $202 million to $206 million, and full-year revenues of $850 million to $865 million.
That's well below the second quarter estimate of $215 million, and the full-year revenue of $889 million expected by Thomson Reuters consensus. Shares fell more than 25 percent after hours.
"While we are lowering our revenue .... outlook for the year, sales productivity has rebounded, transactions revenue has accelerated and we've seen promising results from our newly expanded retention efforts, giving us confidence in our ability to grow and scale in 2017 and beyond," Yelp's chief financial officer, Lanny Baker, said in a statement.
The company's local advertising accounts, a closely followed barometer of Yelp's business, were 143,000 during the quarter, slightly below the 144,000 analysts expected. Yelp said it plans to retire that metric to emphasize all business accounts.
Paying advertising accounts, which hit 139,000, and the number of devices accessing the Yelp app (26 million) both saw double-digit year-over-year growth.
Despite falling short of Wall Street's predictions, Yelp's revenue in the first quarter was up 24 percent from a year ago, as advertising revenue and transaction revenue both grew over 20 percent from a year ago. The company has also narrowed its losses considerably from last year's 20-cent-per-share loss in the first quarter.
Rival TripAdvisor also reported quarterly earnings after the bell. While TripAdvisor's results fell slightly short of estimates, shares rose about 7 percent after hours, as the company said it is seeing particularly strong growth in the U.S.
User reviews and opinions grew 43 percent year-over-year, TripAdvisor said, reaching 4.3 million restaurant reviews and 500 million total reviews. At Yelp cumulative reviews grow 26 percent year-over-year to approximately 127 million.