Yelp Inc. (YELP) Q2 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

Yelp's earnings call presents a mixed outlook. Financial performance shows modest growth, with a 4% revenue increase and strong EBITDA. However, challenges like declining ad locations, increased expenses, and stagnant revenue growth raise concerns. Positive elements include AI advancements and share repurchases. The Q&A highlights macroeconomic pressures and uncertainty in the restaurant segment, which tempers optimism. Given these factors, the stock price is likely to remain stable, resulting in a neutral prediction, especially considering the company's mid-cap status.

Key Financial Performance

Net Revenue $370 million, a 4% increase year-over-year. This growth was driven by a disciplined approach and strong performance in services revenue.

Net Income $44 million, a 16% increase year-over-year, representing a 12% margin. This increase was attributed to disciplined expense management.

Adjusted EBITDA $100 million, a 10% increase year-over-year, representing a 27% margin. This was $11 million above the high end of the outlook range, driven by disciplined expense management.

Services Revenue $241 million, an 8% increase year-over-year, marking a quarterly record. Growth was driven by improvements in request flow and AI chatbot enhancements.

RR&O Revenue $113 million, a 5% decline year-over-year. This decline was due to challenging operating environments for businesses in the restaurant and retail categories.

Paying Advertising Locations 515,000, a 3% decline year-over-year. This was due to a decrease in RR&O locations offsetting growth in services locations.

Ad Clicks Declined by 7% year-over-year. This was primarily due to macroeconomic pressures and increased competition in RR&O categories.

Average CPC (Cost Per Click) Increased by 11% year-over-year, reflecting growth in services demand and fewer clicks overall.

Stock-Based Compensation Expense Reduced by 2 percentage points year-over-year to 9% of revenue. This reduction was part of efforts to improve adjusted EBITDA quality and GAAP profitability.

Share Repurchases $65.9 million worth of shares repurchased at an average price of $35.58 per share. This was part of the capital allocation strategy to return excess capital to shareholders.

You have reached the limit. Sign up to access full content

Get started

Operating Highlights

AI-powered updates: Rolled out several AI-powered updates, including improvements to the request flow and the AI chatbot, Yelp Assistant. Project submissions through Yelp Assistant increased by over 400% year-over-year.

Yelp Host and Yelp Receptionist: Initiated live testing of Yelp Host, an AI-powered call answering service for restaurants, with plans to test Yelp Receptionist later this year.

AI search API: AI search API calls increased by 20x over the past year and 10x in the last 2 months, contributing to an annual run rate revenue of over $10 million.

Services revenue: Increased by 8% year-over-year to a record $241 million, driven by improvements in AI tools and service offerings.

RR&O revenue: Declined by 5% year-over-year to $113 million due to challenges in the restaurant and retail sectors.

Net revenue: Increased by 4% year-over-year to $370 million, exceeding the high end of the outlook range by $3 million.

Net income: Increased by 16% year-over-year to $44 million, representing a 12% margin.

Adjusted EBITDA: Increased by 10% year-over-year to $100 million, representing a 27% margin.

Stock-based compensation: Reduced as a percentage of revenue by 2 percentage points year-over-year to 9%, with targets to reduce further in the coming years.

Capital allocation: Repurchased $65.9 million worth of shares in Q2 2025, with $202 million remaining under the existing repurchase authorization.

Outlook adjustments: Narrowed full-year revenue expectations to $1.465 billion-$1.475 billion and adjusted EBITDA to $350 million-$360 million due to macroeconomic uncertainties.

You have reached the limit. Sign up to access full content

Get started

Risk or Challenges

Macroeconomic and Policy Uncertainties: Advertisers exercised increased caution due to heightened macroeconomic and policy uncertainties, leading to decelerated advertising revenue growth.

Restaurant, Retail, and Other (RR&O) Categories: These categories faced ongoing pressures, resulting in a 5% year-over-year decline in RR&O revenue and a decrease in RR&O locations.

Ad Clicks and Competition: Ad clicks declined by 7% year-over-year due to macro pressures and increased competition in RR&O categories, impacting overall advertising performance.

Seasonal Revenue Trends: The company did not experience the typical seasonal increase in revenue in Q2, and this dynamic is expected to persist in Q3, indicating potential revenue stagnation.

Cost Management Challenges: Expenses are expected to increase in the second half of the year, driven by cost of revenue and seasonal sales and marketing expenses, which could pressure margins.

Paid Advertising Locations: Overall paying advertising locations declined by 3% year-over-year, reflecting challenges in maintaining advertiser engagement.

You have reached the limit. Sign up to access full content

Get started

Guidance & Outlook

Revenue Outlook: Net revenue for the third quarter is expected to remain approximately flat with the second quarter, in the range of $365 million to $370 million. For the full year, net revenue is projected to be between $1.465 billion and $1.475 billion.

Adjusted EBITDA Outlook: Third quarter adjusted EBITDA is expected to be in the range of $80 million to $85 million. For the full year, adjusted EBITDA is projected to be between $350 million and $360 million.

Expense Projections: Expenses are expected to increase in the second half of the year, primarily driven by cost of revenue and seasonal sales and marketing expenses. Efforts to reduce stock-based compensation (SBC) will act as a headwind to adjusted EBITDA but will not impact net income.

Stock-Based Compensation Reduction: The company aims to reduce SBC as a percentage of revenue to less than 8% by the end of 2025 and less than 6% by the end of 2027, improving adjusted EBITDA quality and benefiting GAAP profitability in the long term.

Share Repurchase Plans: The company plans to continue repurchasing shares through the remainder of 2025, subject to market and economic conditions, with $202 million remaining under the existing repurchase authorization as of June 30, 2025.

You have reached the limit. Sign up to access full content

Get started

Shareholder Return Plan

Share Repurchase Program: In the second quarter, Yelp repurchased $65.9 million worth of shares at an average purchase price of $35.58 per share. As of June 30, 2025, the company had $202 million remaining under its existing repurchase authorization. Yelp plans to continue repurchasing shares through the remainder of 2025, subject to market and economic conditions.

You have reached the limit. Sign up to access full content

Get started

Key Q&A

Q:What caused the deceleration in services revenue growth this quarter?

A:The deceleration was attributed to macroeconomic factors, policy changes, and volatility. Consumer sentiment was impacted starting in April. Although budgets increased through the second quarter, they did not grow at traditional seasonal levels. This trend is expected to persist through Q3.

Q:What progress has been made with Yelp Assistant and its impact?

A:Yelp Assistant has seen a 400% year-over-year increase in projects going through its flow. New entry points are being added, and logged-out users will gain access in the second half. Additional category expansion is expected to boost usage and stickiness. The team is working on enhancing the experience, with delivery expected in the second half.

Q:What updates are there on the multi-location services side?

A:Progress has been made with the integration of the leads API with Zapier, making it easier for multi-location businesses to access leads from Request-a-Quote, respond timely, and win more business.

Q:What is the status of AI search API and data licensing?

A:Usage of the AI search API has increased 10x in the last two months. Revenue from search licensing has grown to a $10 million run rate. Yelp content is seen as essential for AI search players due to its trustworthiness and relevance in the local content space.

Q:Has there been any change in competitive headwinds from food delivery providers in the restaurant segment?

A:The main issue in the restaurant segment is macroeconomic uncertainty, including consumer sentiment and inflationary impacts. Competitive pressures from food delivery providers exist but are not the primary factor.

Q:How might Yelp Assistant impact the restaurant segment and other high-frequency categories?

A:Yelp Assistant could support higher frequency categories like restaurants by enabling specific and conversational searches (e.g., vegan restaurants with organic wine). The functionality may also be wrapped in an API for use by emerging AI search players, providing opportunities to showcase Yelp's content.

Q:Review of Unclear Management Responses

A:Management avoided directly addressing whether competitive headwinds from food delivery providers have significantly changed, instead emphasizing macroeconomic factors as the primary issue.

You have reached the limit. Sign up to access full content

Get started

Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

YELP Transcript

Yelp Inc. (YELP) Q3 2025 Earnings Call Transcript

Positive11-6

The earnings call reveals a mixed performance with record-high services revenue and strategic partnerships, such as with DoorDash, expected to drive future growth. Despite a slight EBITDA decline, disciplined expense management and reduced stock-based compensation are positives. The Q&A highlights strong demand for AI products and optimistic management sentiment. However, macroeconomic pressures and cautious advertising spend are concerns. Considering a market cap of approximately $2.5 billion, the stock is likely to react positively, within the 2% to 8% range, due to strategic growth initiatives and strong service revenue.

Yelp Inc. (YELP) Presents At Goldman Sachs Communacopia + Technology Conference 2025 Transcript

Neutral9-10

Yelp Inc. (YELP) Q2 2025 Earnings Call Transcript

Unknown8-8

Yelp at Jefferies Conference: Strategic Shift Towards Services and AI

Neutral5-29

YELP Report

Frequently Asked Questions

Where does this earnings call transcript come from?

All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.

How soon is the transcript available after the earnings call ends?

Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.

Is the transcript edited or altered in any way?

No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.

Why do some answers appear as “Unclear” or “Inaudible”?

When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.

Who creates the AI Summary and Key Q&A highlights shown above the transcript?

They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.