Yelp (NYSE:YELP) Conference December 09, 2025 09:20 AM ET Company ParticipantsDavid Schwarzbach - CFOConference Call ParticipantsJosh Beck - AnalystJosh BeckHi, my name is Josh Beck with the Ray Jay Internet Team. We're super happy to have Yelp join us today. We have David, the CFO. He's going to read a quick statement, and then we'll get started. If any questions, just raise your hands.David SchwarzbachThanks, Josh, for having us at the conference. We'll be making some forward-looking statements during the ...

Financial Data and Key Metrics Changes - In Q3 2025, the company reported record net revenue of $376 million, a 4% increase year over year, exceeding the high end of the outlook range by $6 million [11] - Net income rose by 2% year over year to $39 million, representing a net income margin of 10% [11] - Adjusted EBITDA decreased by 3% year over year to $98 million, with an adjusted EBITDA margin of 26%, which was $13 million above the high end of the outlook range [11][12] - Services revenue reached a quarterly record of $244 million, up 7% year over year, while RRNO revenue declined by 2% year over year to $114 million [11][12] Business Line Data and Key Metrics Changes - Services revenue increased by 7% year over year, contributing significantly to overall business performance [5][11] - RRNO revenue experienced a decline of 2% year over year, attributed to a decrease in RRNO locations, which offset growth in services locations [11] - The number of paying advertising locations decreased by 2% year over year to 512,000, with ad clicks declining by 11% year over year [11][12] Market Data and Key Metrics Changes - The operating environment for businesses in the restaurant and retail sectors remained challenging, impacting overall revenue [6] - The company noted a cautious approach among advertisers in their spending as they entered the fourth quarter, particularly in the RRNO segment [19] Company Strategy and Development Direction - The company is focusing on leveraging AI to enhance user experience and business operations, rolling out over 35 new features and updates [5] - The partnership with DoorDash is expected to expand the food ordering network significantly, adding approximately 200,000 new restaurants [9] - The introduction of new AI-driven subscription products, such as Yelp Host and Yelp Receptionist, aims to provide smarter answering services for businesses [9][31] Management's Comments on Operating Environment and Future Outlook - Management highlighted ongoing macroeconomic uncertainties affecting revenue, leading to a lowered full-year revenue outlook [14] - The company anticipates a decrease in net revenue in Q4 compared to Q3, reflecting continued macro pressures [14] - Management remains optimistic about the long-term potential of AI and its ability to transform the business [33] Other Important Information - The company repurchased $75 million worth of shares in Q3 2025, with $127 million remaining under the existing repurchase authorization [13] - The company aims to reduce stock-based compensation as a percentage of revenue to less than 8% by the end of 2025 [12] Q&A Session Summary Question: What is the current macro environment impact on the services segment? - Management noted that macro pressures have persisted, particularly affecting the RRNO segment, while services continue to see consistent demand [19] Question: Can you provide insights on the demand for data licensing products? - Management expressed excitement about the growth in data licensing, emphasizing the value of Yelp's trusted content for AI search platforms [22] Question: How will the DoorDash partnership affect revenue? - The partnership is expected to generate incremental revenue by expanding restaurant coverage and enhancing consumer experience on the Yelp platform [26] Question: What is the scale of the opportunity for Yelp Host and Yelp Receptionist? - Management indicated a large total addressable market (TAM) for these products, with positive early feedback from users [38] Question: What factors are driving the increase in average pricing on the platform? - The increase in average pricing is attributed to a dynamic auction system that optimizes ad budget deployment, resulting in higher cost per click due to fewer clicks overall [40][42]

Core Viewpoint - Yelp's stock experienced an 11.8% increase, closing at $33.83, driven by notable trading volume and a recovery from a 2.1% loss over the past month [1] Group 1: Company Performance - The upcoming quarterly earnings for Yelp are projected at $0.47 per share, reflecting a year-over-year decline of 16.1%, while revenues are expected to reach $367.88 million, marking a 2.1% increase from the previous year [3] - The consensus EPS estimate for Yelp has remained unchanged over the last 30 days, indicating a potential stagnation in stock price movement without earnings estimate revisions [4] Group 2: Strategic Initiatives - Yelp is focusing on AI-driven innovations such as Yelp Assistant, Yelp Host, and Yelp Receptionist, which are contributing to positive market sentiment [2] - The company is experiencing growth in advertising revenue, particularly in the Services category, including Home and Auto Services, which is bolstered by the strategic acquisition of RepairPal [2] - Partnerships and data licensing are expanding monetization opportunities beyond Yelp's core platform [2] Group 3: Industry Context - Yelp operates within the Zacks Internet - Content industry, where another company, DHI Group, has seen a 0.9% decline in its stock price, with a return of -26.9% over the past month [4]

Summary of Yelp (YELP) Conference Call - August 12, 2025 Company Overview - **Company**: Yelp (YELP) - **Industry**: Online local business directory and review service Key Points 1. Q2 Results and Outlook - Yelp experienced a lack of seasonal ramp in advertising budgets due to policy uncertainty, affecting both restaurant retail and services sectors [4][5] - Small businesses are facing rising input costs and consumer uncertainty, impacting Yelp's performance [4][5] 2. Strategic Priorities - **Leading in Services**: Yelp aims to deliver value to advertisers by ensuring high-quality leads through tools like "Request a Quote" and "Yelp Assistant" [6][9] - **Delivering Advertiser Value**: The focus is on matching consumers with service providers effectively, enhancing the overall workflow [10][12] - **Yelp Assistant**: This chatbot has shown a 400% year-on-year increase in generated projects, indicating its effectiveness in consumer interaction [15] 3. Monetization Opportunities - The "Request a Quote" feature generates four times the monetization compared to a single search click, enhancing advertiser value without increasing perceived ad load [17][18] - Yelp is exploring monetization outside its platform, with a tenfold increase in API calls for AI search providers and an annual recurring revenue (ARR) run rate exceeding $10 million [46][47] 4. Acquisition Strategy - The acquisition of RepairPal aims to strengthen Yelp's position in the auto services category, aligning with its goal to lead in various service sectors [31][33] - The integration of RepairPal is progressing well, enhancing Yelp's capabilities in matching consumers with qualified local businesses [32][34] 5. Consumer Experience Transformation - Yelp has modernized its home feed to be more visual and engaging, aiming to provide relevant content to users [35][36] - The company is leveraging AI and chatbots to enhance user engagement and streamline the consumer experience [44] 6. Challenges in Restaurant and Retail Segment - The restaurant sector is under pressure from rising costs and changing consumer behavior, but Yelp remains confident due to its authoritative content and brand recognition [43][44] - The company is modernizing its experience and utilizing chatbots to improve engagement in this segment [44] 7. Internal Efficiency and AI Utilization - Yelp is developing AI voice products for service businesses and restaurants, which will enhance customer interaction and internal processes [49][51] - The company has reduced the time to market for new features by 60% through improved processes and the use of AI [54] 8. Financial Discipline - Yelp is committed to maintaining flat headcount and has a $250 million share repurchase run rate, emphasizing financial discipline in its growth strategy [61][62] 9. Future Outlook - The integration of AI across various business functions is expected to drive significant improvements in efficiency and consumer engagement [60][62] - Yelp is focused on leveraging emergent technologies while ensuring financial success and relevance in the market [62] Additional Insights - The conversation highlighted the importance of human-generated content and its role in Yelp's strategy to maintain authority and relevance in the local business directory space [41][42] - The company is exploring the potential of large language models (LLMs) to enhance internal processes and improve developer productivity [53][54]

Financial Data and Key Metrics Changes - The company reported record net revenue of $370 million, representing a 4% year-over-year increase, exceeding the high end of the outlook range by $3 million [11] - Net income increased by 16% year-over-year to $44 million, translating to $0.67 per share on a diluted basis, with a net income margin of 12% [11][12] - Adjusted EBITDA rose by 10% year-over-year to $100 million, achieving a margin of 27%, which was $11 million above the high end of the outlook range [11][12] - Average cost per click (CPC) increased by 11% year-over-year, reflecting growth in services demand despite a decline in ad clicks by 7% [12][13] Business Line Data and Key Metrics Changes - Services revenue increased by 8% year-over-year to a record $241 million, while revenue from restaurants and retail (RR and O) declined by 5% year-over-year to $113 million [11][12] - The overall number of paying advertising locations decreased by 3% year-over-year to 515,000, driven by a decline in RR and O locations [12] - Project submissions through Yelp Assistant surged by over 400% year-over-year, indicating strong momentum in service offerings [7][10] Market Data and Key Metrics Changes - The operating environment for businesses in the restaurant and retail sectors remains challenging, with macroeconomic pressures impacting consumer sentiment and spending [6][32] - Despite modest increases in advertiser budgets during the second quarter, they did not reach traditional seasonal levels, indicating ongoing caution among advertisers [11][21] Company Strategy and Development Direction - The company is focused on a product-led strategy, emphasizing AI-powered updates and services to enhance user experience and drive growth [6][10] - Yelp is expanding its AI capabilities, including the rollout of Yelp Assistant and live testing of Yelp Host, an AI-powered call answering service for restaurants [9][10] - The company aims to leverage trusted content as a differentiator in an AI-driven market, with significant growth in AI search API calls and data licensing products [9][28] Management's Comments on Operating Environment and Future Outlook - Management noted that heightened macroeconomic uncertainties have affected revenue growth, with expectations of continued flat revenue in the third quarter [15][21] - The company anticipates increased expenses in the second half of the year, primarily due to cost of revenue and seasonal sales and marketing expenses [15][16] - Despite current challenges, management remains optimistic about long-term shareholder value creation through investments in AI and service enhancements [17] Other Important Information - The company repurchased $65.9 million worth of shares at an average price of $35.58 per share, with $2 million remaining under the existing repurchase authorization [14][15] - The company aims to reduce stock-based compensation expense as a percentage of revenue to less than 8% by the end of the year and less than 6% by 2027 [13][14] Q&A Session Summary Question: Can you walk us through the deceleration in services revenue growth this quarter? - Management attributed the softness in services revenue to macroeconomic and policy changes affecting consumer sentiment, noting that budgets increased but not to traditional seasonal levels [21][22] Question: Can you provide more detail on the AI search API and data licensing momentum? - Management reported a 10x increase in API usage over the last two months, indicating strong demand for local content in AI search applications [25][28] Question: Has there been any change in competitive pressure from food delivery providers? - Management indicated that macroeconomic uncertainty continues to be the main story affecting the restaurant segment, with competitive pressures being a secondary factor [32] Question: How does Yelp Assistant support activity in the restaurant category? - Management expressed optimism that Yelp Assistant will enhance user experience by providing tailored recommendations, potentially increasing engagement in high-frequency categories like restaurants [33][34]

Summary of Yelp (YELP) Conference Call - May 29, 2025 Company Overview - **Company**: Yelp (YELP) - **Industry**: Online review and local services platform Key Points Evolution of Business Model - Transition from a sales headcount-driven growth model to a product-driven growth model, focusing on product delivery and leveraging emerging technologies like AI and large language models [4][5] - Approximately two-thirds of revenue now comes from services, marking a significant shift from the traditional focus on restaurant and retail reviews [5] Services Business Performance - Services grew at approximately 11% each quarter in 2024, with a 14% growth in Q1 2025, partly due to the acquisition of RepairPal [6][7] - Home services have been a major driver of growth, with enhancements in the "Request Quote" feature allowing better matching of consumers with service providers [7][8] - Expansion into other service categories, including auto services through the RepairPal acquisition, is expected to drive further growth [8][20] Multi-Location Services Strategy - Focus on mid-market and enterprise customers to increase advertising revenue from services [12][13] - Development of APIs and lead management systems to support enterprise customers across multiple locations [13][14] Challenges in Restaurant and Retail Sector - The restaurant and retail segment has faced challenges due to rising input costs and inability to pass these costs onto consumers, resulting in a 3% decline in Q1 2025 [24][25] - Competition from food delivery platforms and retail ad networks has increased, impacting advertising budgets [28][29] - Yelp is enhancing consumer experience and ad matching technology to retain advertiser interest [26][30] Traffic and Engagement Insights - Experimentation with paid traffic acquisition led to increased project generation but did not result in higher ad budgets from advertisers, prompting a pullback in spending [31][33] - Focus on ROI-driven strategies to ensure that advertising budgets are effectively utilized [34] AI Integration and Future Outlook - AI is viewed as a significant opportunity, with investments in Yelp Assistant and other AI-driven features to enhance user experience and service matching [35][36] - Plans to leverage AI for improving call handling and customer engagement [37][38] Macroeconomic Sensitivity - The restaurant and retail business is more cyclical and sensitive to economic downturns, while the services business has a significant non-discretionary component [41][42] - Service professionals tend to increase advertising during economic slowdowns to maintain business [42] Revenue Guidance and Margin Outlook - Revenue guidance for Q2 2025 indicates a slowdown, with expectations for acceleration in the second half of the year [44] - Factors contributing to margin pressure include increased data spending for AI products, the lower gross margin from RepairPal, and fluctuations in employee-related expenses [48][51] Conclusion - Yelp is focused on delivering value to both consumers and advertisers, with a strong emphasis on enhancing product offerings and leveraging AI technologies to drive future growth [43][52]

Investment Ratings - The overall industry view is rated as Attractive [4] - Specific company ratings include Equal-Weight (EW) for Compass, Inc. (COMP), DoubleVerify Holdings Inc (DV), Playtika Holding Corp (PLTK), FIGS, and Peloton Interactive, Inc. (PTON) [6][9][10][11][12] - Underweight (UW) rating for Yelp Inc (YELP) [11] Core Insights - Compass, Inc. (COMP) reported lower-than-expected results in 1Q, with revenue and EBITDA 4% and 15% below estimates, but management remains optimistic about future growth [2] - DoubleVerify Holdings Inc (DV) showed encouraging signs of stabilization with 1Q revenue 7% above estimates, driven by strong growth in Activation [6] - Playtika Holding Corp (PLTK) posted solid 1Q results, with revenue and EBITDA exceeding estimates, but faces challenges in its social casino segment [9] - FIGS delivered strong 1Q results, but lowered its FY25 EBITDA margin guidance due to tariff impacts [7][8] - Yelp Inc (YELP) exceeded expectations in 1Q, but faces uncertainty in long-term growth due to macroeconomic pressures [11][12] Company Summaries Compass, Inc. (COMP) - 1Q results were below expectations, but management added 700 new agents and expects positive free cash flow by year-end [2][5] - Revenue guidance for 2Q is 5% and 2% ahead of estimates, indicating potential recovery [5][69] DoubleVerify Holdings Inc (DV) - 1Q revenue growth was driven by a 20% increase in Activation, with profitability exceeding estimates [6] - The company maintains a FY revenue growth guide of 10% despite solid 1Q results [6] Playtika Holding Corp (PLTK) - 1Q revenue and EBITDA were 12% and 6% above estimates, but social casino challenges persist [9] - The company is optimistic about improving margins and increasing direct-to-consumer revenue [9] FIGS, Inc. (FIGS) - Strong 1Q results with revenue and EBITDA above consensus, but lowered FY25 EBITDA margin guidance due to tariffs [7][8] - Management is focused on long-term growth despite near-term challenges [8] Yelp Inc (YELP) - 1Q results exceeded expectations, driven by strength in Services advertising [11] - The company has widened its revenue and EBITDA guidance for FY25, reflecting ongoing macro uncertainty [12]

Financial Data and Key Metrics Changes - Yelp reported an 8% year-over-year revenue growth, generating $359 million in net revenue, with net income increasing by 72% to $24 million, representing a 7% margin [5][11] - Adjusted EBITDA rose by 32% year-over-year to $85 million, reflecting a 24% margin, exceeding expectations by $15 million [11][14] - The company expanded its net income margin by three percentage points and adjusted EBITDA margin by four percentage points compared to the prior year [5] Business Line Data and Key Metrics Changes - Services revenue increased by 14% year-over-year to $232 million, marking the sixteenth consecutive quarter of double-digit growth [11][12] - Revenue from restaurants and retail (RR and O) declined by 3% year-over-year to $110 million, with a decrease in paying advertising locations to 517,000 [12][13] - Ad clicks also fell by 3% year-over-year, primarily due to macro pressures in the RR and O categories [12] Market Data and Key Metrics Changes - The operating environment for businesses in the restaurant and retail sectors remains challenging, contributing to the decline in RR and O revenue [6] - Despite the challenges in RR and O, services categories showed strong momentum, with a 10% increase in Request to Quote projects year-over-year [6][7] Company Strategy and Development Direction - Yelp's product-led strategy continues to strengthen the business, with recent rollouts of 15 new features and updates [5] - The company is focusing on enhancing the hiring experience through AI-powered tools and integrating with platforms like Zapier to connect with over 800 CRM systems [8] - Yelp is investing in AI technologies to improve consumer interactions and is excited about the potential of Yelp Assistant to transform user experiences [9][38] Management's Comments on Operating Environment and Future Outlook - Management noted that while the first quarter showed resilience, macroeconomic uncertainties have increased, impacting advertiser sentiment [20][22] - The company expects second-quarter net revenue to be between $362 million and $367 million, with full-year revenue guidance widened to $1.465 billion to $1.485 billion [17][18] - Management remains optimistic about long-term shareholder value creation despite current macro challenges [18] Other Important Information - Yelp repurchased $62.5 million worth of shares in the first quarter, with $268 million remaining under the existing repurchase authorization [14] - The company aims to reduce stock-based compensation as a percentage of revenue to less than 8% by the end of 2025 [13] Q&A Session Summary Question: Can you discuss trends in advertiser sentiment and vertical performance? - Management indicated that services performed well with 14% year-over-year growth, while RR and O advertisers are more cautious due to macro uncertainties [20][21] Question: What are the drivers of CPC growth? - CPC growth was driven by robust advertiser demand in services, while RR and O faced softer trends leading to fewer clicks [29][30] Question: Can you elaborate on the AI strategy and its impact? - Management highlighted the potential of AI in enhancing user experience and lead generation, with new features like photo recognition and intelligent matching being developed [41][42] Question: What are the engagement trends across mobile and web? - Engagement trends showed macro pressure in RR and O, but strong growth in services, with project volume increasing by 15% year-over-year [48][49]

Financial Data and Key Metrics Changes - Yelp reported an 8% year-over-year revenue growth, generating $359 million in net revenue, with net income increasing by 72% to $24 million, representing a 7% margin [5][11] - Adjusted EBITDA rose by 32% year-over-year to $85 million, reflecting a 24% margin, exceeding expectations by $15 million [11][14] - The company expanded its net income margin by three percentage points and adjusted EBITDA margin by four percentage points compared to the prior year [5] Business Line Data and Key Metrics Changes - Services revenue increased by 14% year-over-year to $232 million, marking the sixteenth consecutive quarter of double-digit growth [11][12] - Revenue from restaurants and retail (RR and O) declined by 3% year-over-year to $110 million, with a decrease in paying advertising locations to 517,000 [12][13] - Ad clicks also fell by 3% year-over-year, primarily due to macro pressures in the RR and O categories [12] Market Data and Key Metrics Changes - The operating environment for businesses in the restaurant and retail sectors remains challenging, contributing to the decline in RR and O revenue [6] - Despite the challenges in RR and O, services categories showed strong momentum, with a 10% increase in Request to Quote projects year-over-year [6][7] Company Strategy and Development Direction - Yelp's product-led strategy continues to strengthen the business, with recent rollouts of 15 new features and updates [5] - The company is focusing on enhancing the hiring experience through AI-powered tools and integrating with platforms like Zapier to connect with over 800 CRM systems [8] - Yelp is investing in AI technologies to improve consumer interactions and enhance service offerings, including upcoming AI-powered call answering services [9][46] Management's Comments on Operating Environment and Future Outlook - Management noted that while the first quarter showed resilience, macroeconomic uncertainties have increased, impacting advertiser sentiment [20][22] - The company expects second-quarter net revenue to be in the range of $362 million to $367 million, with full-year revenue guidance modestly widened to between $1.465 billion and $1.485 billion [17][18] - Management remains optimistic about long-term shareholder value creation despite current macro challenges [18] Other Important Information - Yelp repurchased $62.5 million worth of shares in the first quarter, with $268 million remaining under the existing repurchase authorization [14] - The company aims to reduce stock-based compensation as a percentage of revenue to less than 8% by the end of 2025 and less than 6% by the end of 2027 [13][14] Q&A Session Summary Question: Can you discuss trends in advertiser sentiment and vertical performance? - Management indicated that services performed well with 14% year-over-year growth, while RR and O advertisers are more cautious due to macro uncertainties [20][21] Question: What are the drivers of CPC growth? - CPC growth was driven by robust advertiser demand in services, while RR and O faced headwinds leading to fewer clicks [29][30] Question: Can you elaborate on the AI strategy and its impact on CPCs? - Management highlighted the potential of AI in enhancing consumer interactions and improving lead quality, which could support CPC increases [41][42] Question: What are the engagement trends across mobile and web? - Engagement trends showed macro pressure in RR and O, but strong growth in services, with project volume increasing by 15% year-over-year [48][49]

Financial Data and Key Metrics Changes - In 2024, net revenue increased by 6% year over year to $1.41 billion, with net income growing by 34% year over year to $133 million and adjusted EBITDA increasing by 8% year over year to $358 million [2][3][33] - The company expanded net income margin by two percentage points and adjusted EBITDA margin by one percentage point from 2023 [3][20] - For Q4 2024, net revenue was $362 million, net income increased by 54% year over year to $42 million, and adjusted EBITDA was $101 million, representing a 28% margin [16][46] Business Line Data and Key Metrics Changes - Revenue from services increased by 11% year over year to a record $879 million, while RRNO revenue declined by 3% year over year to $470 million [4][34] - The home services category showed strong performance with annual revenue growth of approximately 15% year over year [4][34] - Advertising revenue in services increased by 11% year over year in Q4 to $225 million, while RRNO locations decreased, leading to a 4% year-over-year decline in paying advertising locations to 521,000 [17][47] Market Data and Key Metrics Changes - The company experienced a challenging operating environment in the restaurant and retail sectors, impacting overall performance [4][34] - Despite the challenges in RRNO, the services categories continued to show strength, contributing to the overall revenue growth [4][34] Company Strategy and Development Direction - The company plans to focus on three strategic initiatives in 2025: leading in services, driving advertiser value, and transforming the consumer experience, leveraging AI capabilities [10][40] - Following the acquisition of RepairPal, the company aims to accelerate growth in the auto services category and enhance its offerings for multilocation services businesses [12][41] - The company is committed to maintaining a disciplined approach to expense management while investing in high-return areas to drive profitability [19][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the services segment, noting strong performance and growth potential despite macroeconomic challenges [66][97] - The company anticipates that the trends observed in 2024 will persist into 2025, with continued pressure on RRNO and strong performance in services [25][55] - Management highlighted the importance of AI in transforming the consumer experience and enhancing operational efficiency [78][82] Other Important Information - The company acquired RepairPal for approximately $80 million, which is expected to contribute positively to the auto services category [24][120] - The company repurchased $251 million worth of shares in 2024, demonstrating a commitment to returning capital to shareholders [53] Q&A Session Summary Question: What are the abilities to invest behind demand generation in RRNO? - Management acknowledged headwinds in RRNO due to inflationary pressures but emphasized ongoing investments in services to capture future opportunities [63][64] Question: What are the key investment areas for growth in services? - Management highlighted strong growth in services, particularly home services, and the introduction of new features like the leads API to enhance service offerings [66][67] Question: What is the contribution of RepairPal to revenue guidance? - Management indicated that RepairPal's performance is integrated into overall guidance but did not provide specific figures [101][122] Question: How is the competitive landscape affecting restaurant and retail performance? - Management attributed challenges in the restaurant and retail sectors to macroeconomic factors rather than competitive pressures [131]