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YI

YELP INC (YELP)·Q3 2025 Earnings Summary

Executive Summary

  • Record revenue with mixed quality: net revenue grew 4% YoY to $376.0M while Adjusted EBITDA fell 3% to $98.1M (26% margin); GAAP diluted EPS was $0.61. Services advertising was the growth engine (+7% YoY to $243.8M), offset by RR&O softness (-2% YoY to $113.5M) .
  • Beat vs. consensus on both revenue and S&P Primary EPS: $376.0M vs. $368.4M est.; S&P Primary EPS $0.956 vs. $0.918 est. (company-reported GAAP diluted EPS $0.61). Guidance trimmed on FY revenue but raised on FY adj. EBITDA, a likely stock narrative driver into year-end . S&P Global estimates marked with asterisk below.*
  • FY25 outlook: revenue cut to $1.460–$1.465B (from $1.465–$1.475B in Q2) while adj. EBITDA raised to $360–$365M (from $350–$360M); Q4 revenue guided to $355–$360M and adj. EBITDA $77–$82M, reflecting persistent macro and normal Services seasonality .
  • Product momentum continues: >35 AI features launched (Yelp Assistant expansion, Menu Vision; voice AI products Yelp Host and Yelp Receptionist) and DoorDash partnership expanding ordering footprint by ~200k restaurants; management sees incremental “Other” revenue and subscription TAM from voice AI .

What Went Well and What Went Wrong

  • What Went Well
    • Services-led growth: Services ad revenue hit a record $243.8M (+7% YoY), driven by higher average revenue per location and RepairPal contribution; ARPL reached a record .
    • Strong cash generation and capital returns: Q3 operating cash flow $131.5M; free cash flow $118.9M; repurchased ~$75M of stock (avg. $32.59), with $127M remaining authorization .
    • AI/product velocity: rollout of >35 features including Yelp Assistant expansion and voice AI products; CEO: “accelerating Yelp’s transformation with AI…position us well to capture the significant opportunities ahead” .
  • What Went Wrong
    • RR&O softness persisted: RR&O ad revenue declined 2% YoY to $113.5M on lower advertiser demand; management cited macro caution and some competitive pressure from food ordering/delivery .
    • Click weakness and mix: ad clicks down 11% YoY; CPC +14% YoY, reflecting fewer clicks and services-led demand; total paying ad locations fell 2% YoY to 512k .
    • FY revenue guide cut: management lowered full-year revenue outlook by $8M at the midpoint due to persistent macro and Q4 seasonality, though raised FY adj. EBITDA guidance by $8M .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($M)360.3 358.5 370.4 376.0
GAAP Diluted EPS ($)0.56 0.36 0.67 0.61
Net Income Margin (%)11% 7% 12% 10%
Adjusted EBITDA ($M)101.4 84.9 100.5 98.1
Adjusted EBITDA Margin (%)28% 24% 27% 26%

Actual vs. Consensus (S&P Global)

MetricConsensusActual
Revenue ($M)368.4*376.0
Primary EPS ($)0.918*0.956* (GAAP diluted EPS $0.61)
  • Disclaimer: *Values retrieved from S&P Global.

Segment Breakdown (Revenue, $M)

SegmentQ1 2025Q2 2025Q3 2025
Services Advertising231.6 240.8 243.8
RR&O Advertising110.4 112.9 113.5
Total Advertising342.0 353.7 357.4
Other16.5 15.9–16.7 (implied), see note 18.7
Note: Q2 “Other” implied by total revenue minus advertising per company data tables .

Key KPIs

KPIQ1 2025Q2 2025Q3 2025
Paying Advertising Locations (k)517 515 512
Ad Clicks (YoY %)-3% -7% -11%
Average CPC (YoY %)+9% +11% +14%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenueFY 2025$1.465B–$1.485B (Q1) ; $1.465B–$1.475B (Q2) $1.460B–$1.465B Lowered vs. Q2
Adjusted EBITDAFY 2025$345M–$365M (Q1) ; $350M–$360M (Q2) $360M–$365M Raised
Net RevenueQ4 2025N/A$355M–$360M New
Adjusted EBITDAQ4 2025N/A$77M–$82M New
SBC as % of RevenueQ4 2025N/A~8% New
SBC as % of RevenueFY 2025~9% (reiterated) ~9% Maintained
D&A as % of RevenueQ4/FY 2025~3% / ~3% ~3% / ~3% Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/Technology initiativesQ1: Yelp Assistant driving +135% seq. submissions; photo recognition; response badges; Leads API to Zapier; upcoming voice AI services . Q2: Assistant momentum; live test of Yelp Host; data licensing run-rate >$10M; API calls +10x in 2 months .Expanded Assistant to RR&O pages; >35 features; Menu Vision; launched Yelp Host/Receptionist; planning cross-category Assistant tests; strong early product-market fit for voice AI .Accelerating feature velocity and monetization avenues
Macro/advertiser cautionQ1: April spend below typical seasonality; RR&O more cautious; services resilient . Q2: Heightened uncertainties; ad clicks -7% YoY; RR&O -5% YoY .Uncertainties persisted; RR&O caution into Q4; seasonality expected; total clicks -11% YoY .Macro pressure continues; seasonality headwind in Q4
Services vs. RR&OQ1: Services +14% YoY; RR&O -3% YoY . Q2: Services +8%; RR&O -5% .Services +7%; RR&O -2%; net paying locations -2% YoY .Services leading; RR&O remains soft
Data licensing / AI searchQ2: Strong demand; run-rate >$10M; API usage up sharply .Continued strong conversations; strategic importance of Yelp’s trusted content .Ongoing momentum; early but expanding
Partnerships & commerceQ1: RepairPal integration roadmap . Q2: —DoorDash partnership adds ~200k restaurants; incremental “Other” revenue expected .Expanding transactional connectivity

Management Commentary

  • “With the recent rollout of more than 35 new features and updates, including the expansion of Yelp Assistant and our AI-powered call answering services Yelp Host and Yelp Receptionist, we are accelerating Yelp’s transformation with AI.” — Jeremy Stoppelman, CEO .
  • “While macro challenges persisted, Services continued to drive our business performance… strategic investments in our AI transformation and disciplined expense management position us well to deliver long-term growth.” — David Schwarzbach, CFO .
  • On the DoorDash partnership: “Expands our food ordering network by approximately 200,000 new restaurants to a total of more than 500,000… we expect this partnership will generate incremental revenue, recorded as other revenue.” — Jeremy Stoppelman .
  • On voice AI products: “Yelp Host handled thousands of calls and booked hundreds of reservations… we see a very large TAM… and incremental revenue opportunity.” — Management .

Q&A Highlights

  • Macro and mix: Management called out advertiser caution in RR&O into Q4; Services demand steadier; seasonality expected to reduce Services into year-end .
  • Data licensing/AI search: Ongoing strong interest from AI search platforms; Yelp’s trusted SMB content seen as critical asset; conversations progressing .
  • DoorDash economics: Direct integration flow; broadened ordering footprint; incremental “Other” revenue expected; maintains other partners for coverage .
  • Voice AI TAM: Early but promising adoption; subscription-priced ($99–$149/mo typical entry) products expected to add incremental revenue and efficiency for customers .
  • CPC/click dynamics: Fewer clicks and higher CPCs reflect macro and mix; focus is on cost-per-lead value; churn unchanged YoY despite higher CPC .

Estimates Context

  • Q3 2025: Revenue $376.0M vs $368.4M est.; S&P Primary EPS $0.956 vs $0.918 est. (company GAAP diluted EPS $0.61) .*
  • Q4 2025: Revenue est. $359.1M; S&P Primary EPS est. $0.903.*
  • FY 2025: Revenue est. $1.4638B; S&P Primary EPS est. $4.007; company guides revenue $1.460–$1.465B and adj. EBITDA $360–$365M .*
  • Implications: Revenue guide narrowed below prior range but within proximity of consensus; EBITDA raise suggests operating discipline amid top-line moderation.
  • Disclaimer: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Services strength offsets RR&O softness; the mix dynamic and lower clicks/higher CPCs are likely to persist near term as macro caution lingers .
  • Despite trimming FY revenue, the FY adj. EBITDA raise points to cost discipline and improving EBITDA quality as SBC declines as a % of revenue .
  • Product cadence is a bright spot: expanded Assistant, Menu Vision, and voice AI services can open new subscription and licensing revenue streams; DoorDash should lift “Other” revenue in coming quarters .
  • Q4 guide implies sequential revenue downtick on seasonality and macro; watch RR&O trajectory and advertiser budgets through holiday period .
  • Monitor KPIs: paying locations (continued drift), clicks/CPC mix, Services ARPL, and “Other” revenue growth as DoorDash and data licensing scale .
  • Near-term trading setup hinges on reception to revenue cut vs. EBITDA raise; medium-term thesis supported by AI-led monetization, Services focus, and capital returns (ongoing buybacks) .