Yelp Inc. Q3 FY2025 earnings call

• Yelp's transformation with AI continues to accelerate, with over 35 new features and updates leveraging AI. - Services revenue grew 7% year-over-year to a quarterly record $244 million. - RR&O revenue declined 2% year-over-year due to challenging operating environment. - Expanded Yelp Assistant to RR&O business pages, launched Menu Vision, partnered with DoorDash (expanding food ordering network to over 500,000 restaurants), and rolled out Yelp Host and Yelp Receptionist voice AI subscription products. - Record net revenue of $376 million, net income margin of 10%, and adjusted EBITDA margin of 26%.

Services revenue increased by 7% year-over-year to $244 million, driving business performance. RR&O (Restaurant, Retail & Other) revenue declined by 2% year-over-year to $114 million. Paying advertising locations decreased by 2% to 512,000. Ad clicks declined by 11% due to macro pressures, but average CPC increased by 14%.

• Lowered full-year net revenue outlook to $1.460 billion to $1.465 billion, reflecting a $8 million decrease at the midpoint due to macroeconomic uncertainties. - Narrowed full-year adjusted EBITDA outlook to $360 million to $365 million, reflecting a $8 million increase at the midpoint, with focus on disciplined expense management.

• Macroeconomic uncertainties impacting advertising spend, particularly in RR&O categories. - Competitive pressures in RR&O categories and changes in consumer spending habits.

Q: Unpack macro environment impact on Services vs RR&O A: David Schwarzbach explained macro pressures persisted, with more caution in RR&O ad spend, while Services saw consistent demand Q: Color on data licensing products and AI search A: Jeremy Stoppelman discussed excitement about data licensing and AI search opportunities, with strong demand and ongoing conversations Q: Scale and contribution of Yelp Host/Receptionist A: Jeremy Stoppelman noted positive feedback, early adoption, and large TAM potential Q: Average pricing and advertiser ROI A: David Schwarzbach explained dynamic auction system, focus on value per lead, and impact of macro factors on pricing Q: Yelp Assistant and EBITDA efficiencies A: Jeremy Stoppelman mentioned early Yelp Assistant rollout, and David Schwarzbach discussed flat headcount and capital allocation efficiencies