(Reuters) - SQN Investors LP dropped its threat of challenging Yelp Inc’s board of directors on Thursday, after the company unveiled steps to improve returns that echoed plans the hedge fund had proposed, according to a letter SQN sent to Yelp.

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

Yelp, the online review company, moved last month to address criticism that it was not doing enough in response to a plunge in advertising revenue. It announced planned cost savings and added three independent directors to its board.

In the letter sent on Thursday and seen by Reuters, SQN praised Yelp for its plan to deliver double-digit revenue growth for the next five years, the changes to its board, and a commitment to buy back $500 million worth of stock.

“Considering the numerous changes made or announced by the company, and the stated financial targets for 2019 and 2023, we are prepared to support the newly refreshed Board and refrain from nominating director candidates for election at the 2019 Annual Meeting,” Amish Mehta, SQN’s founder, wrote.

SQN, which bets on tech companies and is not traditionally an activist investor, will not be submitting its own nominees to Yelp’s board this year after the company outlined a plan to turn business around. The hedge fund sent its letter just before the deadline to nominate directors.

Even so, the hedge fund said much work is left to be done to fulfill Yelp’s recently adopted promises. Selling the company may still be necessary if management cannot deliver on a planned turnaround, the fund added, moderating its earlier call for the company to be put up for sale.

A source familiar with Yelp’s strategy said this week that the company is not running any process to sell itself. Yelp did not immediately respond to a request for comment.

SQN urged Yelp to appoint one of the three new directors as its board chair to hold “management accountable to performance targets.”

These include cutting costs by moving some staff out of high-cost centers like San Francisco and considering partnerships, including a potential move with ANGI Homeservices, that could help boost revenue.

Most important, however, may be boosting returns and achieving a mid-teens compound annual growth rate from 2019 to 2023, the hedge fund said. “This implies adding roughly $1 billion in revenue or essentially doubling the size of Yelp by 2023,” the letter said.

SQN, which invests roughly $1.1 billion, is Yelp’s fourth largest investor, according to Refinitiv data, having first bought into the company four years ago and now holding a 4 percent stake.

Late last year, SQN’s patience snapped against a backdrop of financial underperformance by Yelp under its co-founder and chief executive Jeremy Stoppelman. Yelp’s stock tumbled 45 percent in the five years ended on Dec. 7, 2018, while the S&P 500 index gained 62 percent, SQN wrote in an earlier letter.

SQN called for changes in a 112-page presentation released in January, arguing that Yelp’s share price could jump to $65 if the company followed its road map. The stock closed at $35.93 on Wednesday, giving the company a market capitalization of $3 billion.