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YI

YELP INC (YELP)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered record net revenue of $370.4M (+4% y/y) and strong profitability: net income $44.1M (12% margin) and adjusted EBITDA $100.5M (27% margin) .
  • Results beat Wall Street consensus on revenue ($370.4M vs $365.9M*) and normalized EPS ($1.07 vs $0.88*), and exceeded internal outlook (revenue $3M above high end; adjusted EBITDA $11M above high end) .
  • Guidance narrowed: FY25 net revenue to $1.465–$1.475B (from $1.465–$1.485B) and adjusted EBITDA to $350–$360M (from $345–$365M); Q3 revenue guided flat q/q at $365–$370M and adjusted EBITDA $80–$85M .
  • Strategic catalysts: Services advertising revenue rose 8% y/y to a quarterly record ($241.0M), while AI data licensing run-rate accelerated to >$10M with API calls up 20x y/y (10x in last two months) .

What Went Well and What Went Wrong

What Went Well

  • Services strength: Services advertising revenue +8% y/y to $240.8M; record average revenue per location helped offset paying location declines .
  • AI momentum: “We continued to see encouraging momentum from our AI initiatives… began live testing of Yelp Host…,” CEO Jeremy Stoppelman; AI search API calls up 20x y/y and run-rate revenue >$10M .
  • Profitability discipline: Adjusted EBITDA margin expanded to 27% (+2ppt y/y); SBC reduced to ~9% of revenue; repurchased $65.9M of stock at $35.58 average .

What Went Wrong

  • RR&O pressure: Restaurants, Retail & Other revenue declined 5% y/y to $112.9M amid macro headwinds and some competitive pressure from delivery providers .
  • Demand/seasonality: “We did not see the seasonal increase in revenue…,” CFO; ad clicks declined 7% y/y, while avg CPC rose 11% y/y, reflecting fewer clicks and services mix .
  • Paying locations: Total paying advertising locations fell 3% y/y to 515k as RR&O declines offset Services growth .

Financial Results

Quarterly trend (actuals)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$362.0 $358.5 $370.4
Diluted EPS ($)$0.62 $0.36 $0.67
Net Income ($USD Millions)$42.2 $24.4 $44.1
Net Income Margin %12% 7% 12%
Adjusted EBITDA ($USD Millions)$101.1 $84.9 $100.5
Adjusted EBITDA Margin %28% 24% 27%

Q2 2025 vs Wall Street consensus (S&P Global)

MetricConsensusActualDelta
Revenue ($USD Millions)$365.9*$370.4 +$4.5
EPS Normalized ($)$0.88*$1.07*+$0.19
Primary EPS ($)$0.88*$1.07*+$0.19

Values marked with * retrieved from S&P Global.

Segment breakdown (advertising revenue)

Metric ($USD Millions)Q4 2024Q1 2025Q2 2025
Services Advertising Revenue$225.0 $231.6 $240.8
RR&O Advertising Revenue$121.0 $110.4 $112.9

KPIs

KPIQ4 2024Q1 2025Q2 2025
Paying Advertising Locations (000s)521 517 515
Ad Clicks y/y %+5% -3% -7%
Average CPC y/y %0% +9% +11%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenueFY 2025$1.465B–$1.485B $1.465B–$1.475B Narrowed; lowered high-end
Adjusted EBITDAFY 2025$345M–$365M $350M–$360M Narrowed; raised low-end, lowered high-end
Net RevenueQ3 2025—$365M–$370M New Q3 guide
Adjusted EBITDAQ3 2025—$80M–$85M New Q3 guide
SBC as % of RevenueFY/Q3 2025~9% ~9% Maintained
D&A as % of RevenueFY/Q3 2025~3% ~3% Maintained
Cash TaxesFY 2025—OBBBA expected to reduce by ~$25–$35M New tax tailwind commentary

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
AI product roadmap (Assistant, call answering)Rolled out 80+ features; Assistant driving projects; call answering announced Live testing Yelp Host; Assistant projects +400% y/y; expanding entry points/categories Improving adoption
AI data licensing & APIEarly discussions with GenAI platforms; experimentation; no material impact yet API calls up 20x y/y; run-rate >$10M; onboarding partners Accelerating monetization
Services vs RR&OServices +11% y/y; RR&O pressured by macro Services +8% y/y; RR&O -5% y/y; budgets modestly increased but below historical; Q3 flat Services resilient; RR&O challenged
Multi-location & Zapier/Leads APILeads API launched; building ML services; opportunity ahead Zapier integration adoption strong; labels/filters improve lead handling Early traction
Ad marketplace dynamicsCPC flat in Q4; clicks +5% y/y Clicks -7% y/y; CPC +11% y/y on services demand/fewer clicks Mixed; quality-over-volume
Capital allocation2024 buybacks; remaining authorization Q2 buybacks $65.9M; $202M remaining authorization Ongoing buybacks
Headcount & SBC disciplineHold headcount flat; reduce SBC % SBC down; targets <8% by YE’25 and <6% by YE’27 reiterated De-risking GAAP EPS

Management Commentary

  • CEO: “We continued to see encouraging momentum from our AI initiatives, including the growing adoption of Yelp Assistant, and we began live testing of Yelp Host…” .
  • CFO: “Net revenue increased by 4% y/y to $370M… net income margin 12%… adjusted EBITDA margin 27%… advertisers exercised increased caution… Services revenue increased by 8% y/y… RR&O declined by 5% y/y” .
  • CEO on AI search: “AI search API calls… increasing by 20x over the past year and 10x in just the last two months… annual run rate revenue related to AI search… more than $10M” .
  • CFO on outlook: “We anticipate… net revenue remaining approximately flat with the second quarter… Q3 adjusted EBITDA… $80M to $85M… FY adjusted EBITDA… $350M to $360M” .

Q&A Highlights

  • Services deceleration and macro: Advertisers’ budgets increased modestly but below typical seasonal levels; macro/policy uncertainty cited as primary headwind .
  • RR&O competitive dynamics: Management emphasized macro pressures over competitive impacts; delivery platforms noted at the margin .
  • AI/Assistant expansion: Assistant driving project submissions (+400% y/y); expansion to logged-out users and more categories planned; potential API exposure to external AI agents .
  • Data licensing opportunity: Strong demand from AI search players; API usage up 10x in last two months; run-rate >$10M .
  • Capital returns: Repurchased $65.9M at $35.58 average; plan to continue buybacks subject to conditions .

Estimates Context

  • Q2 2025 beats: Revenue $370.4M vs $365.9M consensus*; normalized/primary EPS $1.07 vs $0.88 consensus* .
  • FY 2025 consensus currently ~$1.464B revenue* and ~$4.01 normalized EPS*, with company narrowing revenue range to $1.465–$1.475B and adjusted EBITDA to $350–$360M .
  • Note: SPGI “EBITDA Consensus Mean” reflects an EBITDA basis different from company’s adjusted EBITDA; company reported adjusted EBITDA of $100.5M vs consensus EBITDA $87.5M* .
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • The quarter demonstrated resilient Services-led growth and improving profitability despite softer RR&O and weaker seasonality; mix supports sustained margin strength .
  • AI monetization is emerging as a tangible revenue stream (> $10M run-rate) and could be a key multiple driver as external demand for trusted local content accelerates .
  • Near-term setup: Q3 guide calls for flat revenue and lower adjusted EBITDA on seasonal cost increases and SBC mix shift; watch for Services demand and Assistant adoption to offset macro .
  • Quality-over-volume ad strategy (fewer, higher-quality clicks) plus pricing power (CPC +11% y/y) is supporting ARPU even as paying locations decline modestly .
  • Capital returns continue with $202M authorization remaining; SBC reductions and buybacks should leverage GAAP EPS over time .
  • RR&O remains the swing factor; any stabilization in macro or competitive intensity could unlock upside vs cautious guide .
  • Tax tailwind from OBBBA (~$25–$35M reduction in FY25 cash taxes) increases FCF durability in 2H’25 .

Other Relevant Q2 Press Releases

  • Results timing: Company confirmed Q2 release on Aug 7, 2025 with webcast at 2:00pm PT .
  • Upcoming forums: KeyBanc Technology Leadership Forum (Aug 12, 2025) .