Executive Summary

Net revenue was $358.534M (+8% y/y), net income $24.391M (7% margin), and adjusted EBITDA $84.944M (24% margin), reflecting continued strength in Services and disciplined expense management .
Services advertising revenue reached a quarterly record $231.576M (+14% y/y), while RR&O declined 3% to $110.425M; average CPC rose 9% y/y as advertiser demand in Services remained strong .
Guidance widened: Q2 net revenue $362–$367M and adjusted EBITDA $84–$89M; FY25 net revenue $1.465–$1.485B (lowered low end by $5M) and adjusted EBITDA $345–$365M (raised high end by $5M) amid heightened macro uncertainties .
S&P Global consensus was exceeded on Q1 revenue and Primary EPS; revenue beat ~$5.4M and Primary EPS beat by ~$0.03 per share (see Estimates Context; values from S&P Global*).
Near-term stock narrative: product-led Services momentum and AI roadmap vs. macro drag in RR&O; catalysts include AI call-answering rollout, RepairPal integration benefits, and multi-location Services traction .

What Went Well and What Went Wrong

What Went Well

Services advertising revenue rose 14% y/y to $231.576M, the 16th straight quarter of double-digit growth; CEO: “We recently rolled out 15 new features… excited about the lineup of AI advancements” .
Adjusted EBITDA of $84.944M was $15M above the high end of outlook; CFO: “Adjusted EBITDA increased by 32% y/y… $15M above the high end of our outlook range” .
Product momentum: Yelp Assistant improvements (AI photo recognition), response quality badges, and Leads API integration with Zapier for multi-location Services workflows .

What Went Wrong

RR&O revenue fell 3% y/y to $110.425M on continued operating headwinds and some competitive pressure from food delivery; paying ad locations declined 3% y/y to 517K .
Ad clicks decreased 3% y/y (macro pressure in RR&O and lower paid search spend), though Services CPC increased 9% y/y given strong demand .
Heightened macro uncertainty caused advertisers to maintain steady spend in April, muting typical budget seasonality; management widened FY ranges and cited cost-of-revenue increases as expense headwinds .

Financial Results

Headline Results and Margins

Metric	Q3 2024	Q4 2024	Q1 2025
Net Revenue ($USD Millions)	$360.344	$361.952	$358.534
Net Income ($USD Millions)	$38.440	$42.220	$24.391
Diluted EPS ($USD)	$0.56	$0.62	$0.36
Net Income Margin (%)	11%	12%	7%
Adjusted EBITDA ($USD Millions)	$101.364	$101.058	$84.944
Adjusted EBITDA Margin (%)	28%	28%	24%

Vs. Wall Street Consensus (S&P Global)

Metric	Consensus	Actual	Surprise ($)	Surprise (%)
Revenue ($USD Millions)	$353.107*	$358.534	+$5.427*	+1.5%*
Primary EPS ($USD)	$0.78*	$0.81*	+$0.03*	+3.1%*

Values retrieved from S&P Global*. Note: “Primary EPS” is an S&P Global convention and may differ from GAAP diluted EPS.

Segment Breakdown and Mix

Metric	Q3 2024	Q4 2024	Q1 2025
Advertising Revenue – Services ($USD Millions)	$228.009	$224.840	$231.576
Advertising Revenue – RR&O ($USD Millions)	$116.397	$120.798	$110.425
Total Advertising ($USD Millions)	$344.406	$345.638	$342.001
Other Revenue ($USD Millions)	$15.938	$16.314	$16.533
Total Net Revenue ($USD Millions)	$360.344	$361.952	$358.534

KPIs

KPI	Q3 2024	Q4 2024	Q1 2025
Total Paying Advertising Locations (‘000)	524	521	517
Services Paying Locations (‘000)	252	250	261
RR&O Paying Locations (‘000)	272	271	256
Ad Clicks (YoY %)	+2%	+5%	-3%
Average CPC (YoY %)	+3%	0%	+9%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Revenue ($USD Billions)	FY 2025	$1.470–$1.485	$1.465–$1.485	Lowered low end by $0.005B
Adjusted EBITDA ($USD Millions)	FY 2025	$345–$360	$345–$365	Raised high end by $5M
Net Revenue ($USD Millions)	Q2 2025	—	$362–$367	New
Adjusted EBITDA ($USD Millions)	Q2 2025	—	$84–$89	New
SBC as % of Revenue (%)	FY 2025	~9%	~9%	Maintained
D&A as % of Revenue (%)	FY 2025	~3%	~3%	Maintained

Management rationale: widened ranges reflect heightened macro uncertainty and expense headwinds primarily from cost of revenue; early May signals turned encouraging after April steadiness .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
AI/Technology initiatives	Yelp Assistant launch contributing to leads; narrowing paid search; enhanced matching; content/video improvements	80+ AI-powered updates in 2024; review insights; expanded summaries; ad tech optimization	AI photo recognition in Assistant; response quality badges; upcoming AI call-answering services; expanding summaries	Expanding AI footprint across consumer and advertiser tools
Macro/tariffs/supply chain	RR&O headwinds persisted; revised FY outlook lower; profitability intact	RR&O pressured; FY25 outlook provided; tax rate commentary	April spend steady vs typical seasonality; macro uncertainties increased; Q2 guide framed by caution	Macro caution rising; budgets more measured
Product performance (Services vs RR&O)	Services +11% y/y; RR&O -6%; Self-serve +15%; CPC +3%	Services +11% y/y; RR&O -3%; ad clicks +5%; CPC 0%	Services +14% y/y; RR&O -3%; ad clicks -3%; CPC +9%	Services momentum accelerating; RR&O soft
Multi-location & APIs	Launch of leads API and Request-a-Quote for brands; flat multi-location revenue	Conversion API; mix shift to Self-serve/Multi-location over years	Early traction: Leads API integration with Zapier; accelerating multi-location Services revenue	Improving tools driving multi-location adoption
RepairPal integration	Acquisition announced; ~$30M revenue, breakeven, synergies expected	Closed by year-end; immaterial 2024 impact; 2025 detail later	Q1 inclusion accelerated Services growth in Auto; integration going smoothly	Integration supportive; category expansion

Management Commentary

CEO Jeremy Stoppelman: “Services revenue increased by 14% y/y… we’re excited about the lineup of AI advancements on our roadmap that will further transform the Yelp experience and streamline operations for local businesses” .
CFO David Schwarzbach: “Adjusted EBITDA increased by 32% y/y to $85M… we believe our consistent execution and disciplined expense management position us well to navigate a complex environment” .
On advertiser demand and CPC: “Advertiser demand in Services remained strong, contributing to a 9% y/y increase in average CPC” .
On macro and guidance: “We currently expect Q2 net revenue $362–$367M… full year adjusted EBITDA $345–$365M” with widened ranges reflecting uncertainty .

Q&A Highlights

April budget seasonality: Advertisers “maintain steady spend in April” amid macro uncertainty, with “encouraging” early May signals; Services resilience (nondiscretionary projects) vs cautious multi-location RR&O .
CPC drivers and value delivery: Robust Services demand and mix shifts raised CPC; focus on “fewer clicks but of higher quality,” guiding pros to deliver better consumer experiences .
Yelp Assistant adoption: Significant runway via new entry points and categories; vision to “reinvent the consumer experience” and potentially expose Assistant via API to external platforms .
RepairPal progress: Integration “going smoothly,” with plans to enable scheduling from Yelp business pages; expected positive upside .
RR&O dynamics: Headwinds largely macro; enterprise advertisers more cautious; investments continue in RR&O consumer experience to capture eventual recovery .

Estimates Context

Q1 2025 revenue beat S&P Global consensus by ~$5.4M (+1.5%); Primary EPS beat by ~$0.03 (+3.1%). Drivers: Services advertising revenue strength, higher average CPC, and inclusion of RepairPal in Auto Services . Values retrieved from S&P Global*.
Implications: Consensus for FY25 may drift toward the widened guidance ranges (lower low-end on revenue, higher high-end on EBITDA) as management balances Q1 outperformance with macro caution .

Key Takeaways for Investors

Services-led model continues to compound: sustained double-digit Services growth, rising CPCs, and product-led monetization offset RR&O softness .
Profit quality improving despite macro: adjusted EBITDA margin at 24% with SBC as % revenue trending down; share repurchases support EPS leverage over time .
Near-term setup: Q2 guide prudent amid macro; watch April/May budget trajectory, cost-of-revenue trends, and RR&O stabilization signals .
Product catalysts: AI call-answering services, Assistant expansion, and expanded AI summaries to millions of businesses could enhance lead quality and advertiser ROI .
RepairPal integration: accelerates Auto Services vertical and creates on-platform scheduling opportunities; monitor synergy realization and multi-location advertiser adoption .
Trading lens: Bias to favor strength in Services execution and AI features; risk from RR&O headwinds and macro-driven budget variability; upside from consensus revisions if momentum persists .
Medium-term thesis: Product-led strategy and AI integration should expand monetization and efficiency, with disciplined capital allocation (repurchases) underpinning shareholder returns .

*Values retrieved from S&P Global.

YELP INC (YELP)·Q1 2025 Earnings Summary