Q2 2024 Yelp Inc Earnings Call

August 8, 2024

Operator: Hello, and welcome to the Q2 2024 Yelp Inc earnings conference call. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star 1 on your telephone keypad. I would now like to turn the conference over to Kate Krieger, Director of Investor Relations. You may begin.

I would now like to turn the conference over to Kate Krieger Director of Investor Relations you may begin.

Kate Krieger: Good afternoon, everyone and thanks for joining us on Yelps second quarter 'twenty 'twenty four earnings conference call. Joining me today are you all Chief Executive Officer, Jeremy Stoppelman, Chief Financial Officer, David Schwartzbach, and Chief operating Officer Jed Nachman.

Kate Krieger: Good afternoon, everyone, and thanks for joining us on Yelp's second quarter 2024 earnings conference call. Joining me today are Yelp's Chief Executive Officer Jeremy Stoppelman, Chief Financial Officer David Schwarzbach, and Chief Operating Officer Jed Nachman.

Speaker Change: We published a shareholder letter on our Investor Relations website, and with the FTC and hope everyone had a chance to read it will provide some brief opening comments and then turn to your questions now I'll read our safe Harbor statement.

Kate Krieger: We published a shareholder letter on our investor relations website and with the SEC and hope everyone had a chance to read it. We'll provide some brief opening comments and then turn to your questions. Now, I'll read our Safe Harbor Statement. We'll make certain statements today that are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events.

Kate Krieger: In addition, we are subject to a number of risks that may significantly impact our business and financial results. Please refer to our SEC filings as well as our shareholder letter for a more detailed description of the risk factors that may affect our results. During our call today, we may discuss Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow, which are non-GAAP financial measures. These measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with generally accepted accounting principles.

Kate Krieger: We'll make certain statements today that are forward looking and involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward looking statements reflect our opinions only as of the date of this call and we undertake no obligation to revise or publicly release the results of any revision to these forward.

Kate Krieger: Looking statements in light of new information or future events.

Kate Krieger: During our call today, we may discuss adjusted EBITA, adjusted EBITA margin and free cash flow, which are non-GAAP financial measures. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with generally accepted accounting principles.

Unknown Attendee: Hello and welcome to the Q2 2024 Yelp Inc, earnings conference call. All lines have been placed on you to prevent any background noise. After the speakers remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star one on your telephone keypad.

Kate Krieger: In our shareholder letter released this afternoon and our filings with the SEC, each of which is posted on our investor relations website, you will find additional disclosures regarding these non-GAAP financial measures, as well as historical reconciliations of GAAP net income or loss to both adjusted EBITDA and adjusted EBITDA margin, and a historical reconciliation of GAAP cash flows from operating activities to free cash flow. And with that, I will turn the call over to Jeremy.

Kate Krieger: In our shareholder letter released this afternoon, and our filings with the SEC each of which is posted on our Investor Relations website, you will find additional disclosures regarding these non-GAAP financial measures as well as historical reconciliations of GAAP net income or loss to both adjusted EBITDA and adjusted EBITDA margin in it.

Kate Krieger: I would now like to turn the conference over to Kate Krieger director investor relations. You may begin. Good afternoon everyone and thanks for joining us on Yelp's second quarter. Thank you for joining me today.

Kate Krieger: A historical reconciliation of GAAP cash flows from operating activities to free cash flow and with that I will turn the call over to Jeremy.

Kate Krieger: Our Yelp's Chief Executive Officer, Jeremy Stoppelman, Chief Financial Officer, David Schwarzbach, and Chief Operating Officer, Jed Nachman. We publish a shareholder letter on our investor relations website and with the SEC and hope everyone had a chance to read it. We'll provide some brief opening comments and then turn to questions.

Jeremy Stoppelman: Thanks, Kate, and welcome, everyone. Yelp delivered record net revenue and strong profitability in the second quarter. Net revenue increased by 6% year-over-year to $357 million as we introduced more than 20 new features and updates in the quarter, reflecting our product-led strategy. With a disciplined approach, we expanded net income margin by 6 percentage points and adjusted EBITDA margin by 1 percentage point from the prior year period. Businesses in our restaurant, retail, and other categories continued to face a challenging operating environment in the second quarter, resulting in a decline in revenue for RR&O of 3% year over year.

Jeremy Stoppelman: Thanks, Kate and welcome everyone Yelp.

Jeremy Stoppelman: <unk> delivered record net revenue and strong profitability in the second quarter net revenue increased by 6% year over year to $357 million as we introduced more than 20, new features and updates in the quarter, reflecting our product led strategy with a disciplined approach we expanded net income margin by six percentage points in adjusted EBITDA.

Kate Krieger: Now I'll read our safe harbor statement. We'll make certain statements today that are forward looking and involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward looking statements reflect our opinions only as of the date of this call and we undertake no obligation to revise or publicly release the results of any revision to these forward looking statements in light of new information or future events.

Jeremy Stoppelman: Margin by one percentage point from the prior year period.

Speaker Change: Businesses in our restaurant retail and other categories continued to face a challenging operating environment in the second quarter, resulting in a decline in revenue for our or know of 3% year over year.

Jeremy Stoppelman: At the same time, our services business, which remains the focus of our product-led strategy in 2024, saw continued momentum. Services revenue increased by 11% year over year, making it the 13th consecutive quarter of double-digit growth. We saw even stronger performance in the home services category, which increased by approximately 15% year over year.

Speaker Change: At the same time, our services business, which remains the focus of our product led strategy in 2024 saw continued momentum.

Speaker Change: Services revenue increased by 11% year over year, making it the 13th consecutive quarter of double digit growth.

Speaker Change: Saw even stronger performance in the home services category, which increased by approximately 50% year over year.

Kate Krieger: During our call today, we may discuss adjusted EBITDA, adjusted EBITDA margin and free cash flow, which are non-gap financial measures. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with generally accepted accounting principles. In our shareholder letter released this afternoon and our filings with the SEC, each of which is posted on our investor relations website, you will find additional disclosures regarding these non-gap financial measures as well as historical reconciliation of gap net income or loss to both adjusted EBITDA and adjusted EBITDA margin and a historical reconciliation of gap cash flows from operating activities to free cash flow.

Speaker Change: Request, a quote project growth accelerated from approximately 20% year over year in the first quarter to approximately 35% year over year in the second quarter. This acceleration resulted from both organic improvements as well as paid project acquisition.

Jeremy Stoppelman: Request to quote project growth accelerated from approximately 20% year over year in the first quarter to approximately 35% year over year in the second quarter. This acceleration resulted from both organic improvements as well as paid project acquisitions. Regarding our paid project acquisition, we continue to see strong top of funnel metrics, including projects, ad clicks, and CPCs. As we scaled spend in the quarter, we also saw early indications of retention benefits among newer businesses with fewer reviews, which often experience difficulty competing with established advertisers for leads.

Speaker Change: Regarding our paid project acquisition, we continued to see strong top of funnel metrics, including projects at <unk>.

Speaker Change: <unk> as.

Speaker Change: As we scale spend in the quarter. We also saw early indications of retention benefits among newer businesses with fewer reviews.

Speaker Change: Which often experience difficulty competing with established advertisers for leads.

Jeremy Stoppelman: We plan to leverage this learning to become more precise in lead distribution, narrowing our focus towards the opportunities that we believe have the highest return. With just 20% of services revenue coming from multi-location businesses, we also see an opportunity to extend our success with SMBs in these categories to enterprise businesses. We have been adapting our services and product offerings to better fit the needs of these larger advertisers. We recently launched Request a Quote for Brands and introduced a new Leads API.

Speaker Change: We plan to leverage this learning to become more precise and lead distribution narrowing our focus towards the opportunities that we believe have the highest return.

Jeremy Stoppelman: And with that, I will turn the call over to Jeremy. Thanks, Kate, and welcome everyone. Yelp delivered record net revenue and strong profitability in the second quarter. Net revenue increased by 6% year over year to $357 million as we introduced more than 20 new features and updates in the quarter reflecting our product led strategy. With a disciplined approach, we expanded net income margin by 6 percentage points and adjusted EBITDA margin by 1 percentage points from the prior year period.

Speaker Change: With just 20% of services revenue coming from multi location businesses. We also see an opportunity to extend our success with smbs in these categories to enterprise businesses, we have been adapting our services product offerings to better fit the needs of these larger advertisers. We recently launched request a quote for brands and <unk>.

Speaker Change: Introduced a new leads ATI.

Jeremy Stoppelman: This enables multi-location businesses to compete for the millions of request-to-quote projects available on Yelp and seamlessly manage leads across multiple business pages. More broadly, our product and engineering teams continue to leverage AI to further optimize advertisers' budgets by displaying the most relevant ad content to consumers. In the second quarter, ad clicks increased by 9% year-over-year, while average CPC decreased by 1% year-over-year.

Speaker Change: This enables multilocation businesses to compete for the millions of request a quote projects available on Yelp and seamlessly manage leads across multiple business pages.

Jeremy Stoppelman: Businesses in our restaurant, retail and other categories continued to face the challenging operating environment in the second quarter, resulting in a decline in revenue for RRNO 3% year over year. At the same time, our services business, which remains the focus of our product led strategy in 2024, saw continued momentum. Services revenue increased by 11% year over year, making it the 13th consecutive order of double digit growth. We saw even stronger performance in the home services category, which increased by approximately 50% year over year.

Speaker Change: More broadly our product and engineering teams continue to leverage AI to further optimize advertisers' budgets by displaying the most relevant AD content to consumers in the second quarter AD clicks increased by 9% year over year, while average CPC decreased by 1% year over year. We also rolled out a number of user experience and back.

Jeremy Stoppelman: We also rolled out a number of user experience and back-end improvements to our website and introduced a number of new features to make Yelp more useful for consumers with accessibility needs. In summary, we were pleased with the continued progress on our product roadmap in the second quarter, particularly in services, while we delivered strong profitability. Overall, we remain confident in our strategy to drive profitable growth and shareholder value over the long term.

Speaker Change: And improvements to our website and introduced a number of new features to make it more useful for consumers with accessibility needs in.

Jeremy Stoppelman: Request to quote project growth accelerated from approximately 20% year over year in the first quarter to approximately 35% year over year in the second quarter. This acceleration resulted from both organic improvements, as well as paid project acquisition. Regarding our paid project acquisition, we continue to see strong top of funnel metrics, including projects, ad clicks and CPCs. As we scaled spend in the quarter, we also saw early indications of retention benefits among newer businesses with fewer reviews, which often experience difficulty competing with established advertisers for leads.

Speaker Change: In summary, we were pleased with the continued progress on our product roadmap in the second quarter, particularly in services, while we delivered strong profitability overall, we remain confident in our strategy to drive profitable growth and shareholder value over the long term with that I'll turn it over to David.

David Schwarzbach: Thanks Jeremy. In the second quarter, net revenue increased by 6% to a record $357 million, $2 million above the high end of our outlook range, driven by our disciplined approach to net income of $38 million, or 54 cents per share on a diluted basis, representing an 11% margin. Adjusted EBITDA reached $91 million, representing a 26% margin putting it $16 million about the high end over Outlook rent, continued strength, and services categories throughout this group.

David Schwartzbach: Thanks, Jeremy in the second quarter net revenue increased by 6% to a record $357 million $2 million about the hand of our outlook range.

David Schwartzbach: Driven by our disciplined approach net income was $38 million or <unk> 54 per share on a diluted basis, representing an 11% margin.

Jeremy Stoppelman: We plan to leverage this learning to become more precise in lead distribution, narrowing our focus towards the opportunities that we believe have the highest return. With just 20% of services revenue coming from multi location businesses, we also see an opportunity to extend our success with SMBs in these categories to enterprise businesses. We have been adapting our services product offering to better fit the needs of the larger advertisers. We recently launched Request to quote for brand and introduced a new leads API.

David Schwartzbach: Adjusted EBITDA reached $91 million.

Speaker Change: Renting a 26% margin putting that $16 million about the hand around look range.

Speaker Change: Continued strength in services categories drove this growth.

David Schwarzbach: Advertising revenue and services increased by 11% year-over-year to a record $223 million. As Jeremy mentioned, restaurants and retailers remain pressured in the quarter, resulting in a 3% year-over-year decline in RRNO revenue to $118 million. A decrease in our R&O locations, offset growth in service locations in the second quarter. This resulted in an overall decline of 6% year over year in paying advertising locations to 531,000.

Speaker Change: Sizing revenue and services increased by 11% year over year to a record $223 million as Jeremy mentioned restaurants, and retailers remain pressured in the quarter, resulting in a 3% year over year decline in <unk> revenue to $118 million.

Jeremy Stoppelman: This enables multi location businesses to compete for the millions of requests to quote projects available on Yelp and seamlessly manage leads across multiple business pages. More broadly, our product and engineering teams continue to leverage AI to further optimize advertisers budgets by displaying the most relevant ad content to consumers. In the second quarter, ad clicks increased by 9% year-over-year while average CPC decreased by 1% year-over-year. We also rolled out a number of user experience and back end improvements to our website and introduced a number of new features to make Yelp more useful for consumers with accessibility needs.

Jeremy Stoppelman: A decrease in our rns locations offset growth in services locations in the second quarter. This resulted in an overall decline of 6% year over year and paying advertising locations to 531000.

Speaker Change: We remain focused on driving growth through our most efficient channels.

David Schwarzbach: We remain focused on driving growth through our most efficient channel, self-serve. Self-serve continued its momentum, growing approximately 20% year-over-year in the second quarter. This makes it the 15th consecutive quarter with year-over-year growth at or above this level. At the same time, multi-location revenue came in approximately flat year-over-year, reflecting continued softness in RRNO. Similarly, Yelp audiences maintained its annual run rate of approximately $45 million in the second quarter. We continue to see growth opportunities for Yelp audiences and recently expanded its reach to enable advertisers to connect with our high-intent audience through audio platforms, along with additional connected TV platforms.

Speaker Change: Also continued its momentum growing approximately 20% year over year in the second quarter.

Speaker Change: This makes it the 15th consecutive quarter with year over year growth at or above this level at the same time Multilocation revenue came in approximately flat year over year, reflecting continued softness in our earn out. Similarly yelp audience has maintained its annual run rate of approximately $45 million in the second quarter.

Jeremy Stoppelman: In summary, we were pleased with the continued progress on our product roadmap in the second quarter, particularly in services while we delivered strong profitability. Overall, we remain confident in our strategy to drive possible growth and shareholder value over the long term.

Speaker Change: We continue to see growth opportunities for Yelp audiences and recently expanded its reach to enable advertisers to connect with our high intent audience through audio platforms, along with additional connected TV platforms.

David Schwarzbach: With that, I'll turn it over to David. Thanks Jeremy. In the second quarter, net revenue increased by 6% to a record $357 million, $2 million about the hand over outlook range. Driven by our disciplined approach, net income with $38 million, or $54 cents per share on a diluted basis, representing an 11% margin. The adjusted EBITDA reached $91 million, representing a 26% margin, putting at $16 million about the hand over outlook range.

Speaker Change: Turning to expenses in the second quarter, we remain disciplined in our allocation of resources, while focusing on opportunities that have the potential to drive incremental returns.

David Schwarzbach: Turning to expenses, in the second quarter, we remain disciplined in our allocation of resources while focusing on opportunities that have the potential to drive incremental return. This resulted in our net income margin improving by six percentage points year over year and our adjusted EBITDA margin improving by one percentage point year over year. We achieved this even as we invested $12 million in paid services project acquisition during the quarter.

Speaker Change: This resulted in our net income margin improving by six percentage points year over year, and our adjusted EBITDA margin improving by one percentage point year over year.

Speaker Change: We achieved this even as we invested $12 million in paid services project acquisition during the quarter.

David Schwarzbach: In the second quarter, we also reduced stock-based compensation expenses, a percentage of revenue by one percentage point year over year, and remain focused on reaching less than 8% by the end of 2020. We expect these efforts to stack over time, improving the quality of our adjusted EBITDA and benefiting GAAP profitability in the years to come. Returning capital to shareholders through share repurchases continues to be a key element of our capital allocation strategy.

Speaker Change: In the second quarter, we also reduced stock based compensation expense as a percentage of revenue by one percentage point year over year and remain focused on reaching less than 8% by the end of 2025.

David Schwarzbach: Continued strength and services categories drove the scope. However, advertising revenue and services increased by 11% year-over-year to a record $223 million. As Jeremy mentioned, restaurants and retailers remained pressured in the quarter, resulting in a 3% year-over-year decline in R&O revenue to $118 million. A decrease in R&O locations off-site growth and services locations in the second quarter. This resulted in an overall decline of 6% year-over-year in paying advertising locations to $531,000. We remain focused on driving growth through our most efficient channels.

Speaker Change: We expect these efforts to stack over time, improving the quality of our adjusted EBITDA and benefiting GAAP profitability in the years to come.

Speaker Change: Returning capital to shareholders through share repurchases.

Speaker Change: <unk> to be a key element of our capital allocation strategy.

David Schwarzbach: In the second quarter, we repurchased $63 million worth of shares at an average purchase price of $37.94 per share. As of June 30, 2024, we have $456 million remaining under our existing repurchase authorization. We plan to continue repurchasing shares in the second half of 2024, subject to market and economic conditions. Turning to our outlook, in the second quarter, services revenue maintained double-digit growth while our R&O revenue remained impacted by a challenging operating environment for businesses in those categories, with additional pressure as we move through the second half of the quarter. As we look to the third and fourth quarters of the year, we expect these trends to persist.

Speaker Change: In the second quarter, we repurchased $63 million worth of shares at an average purchase price of $37 94 per share.

Speaker Change: As of June 32024, we had $456 million remaining under our existing repurchase authorization.

David Schwarzbach: Self-serve continued its momentum growing approximately 20% year-over-year in the second quarter. This makes it the 15th consecutive quarter with year-over-year growth at or above this level. At the same time, multi-location revenue came in approximately flat year-over-year, reflecting continued softness in R&O. Similarly, Yelp audiences maintained its annual run rate of approximately $45 million in the second quarter.

Speaker Change: Plan to continue repurchasing shares in the second half of 2024 subject to market and economic conditions.

Speaker Change: Turning to our outlook in the second quarter services revenue maintained double digit growth, while our rino revenue remained impacted by a challenging operating environment for businesses in those categories with additional pressure as we move through the second half of the quarter.

David Schwarzbach: We continue to seek growth opportunities for Yelp audiences and recently expanded its reach to enable advertisers to connect with our high-intent audience through audio platforms along with additional connected TV platforms. of course, turning to expenses. In the second quarter, we remain disciplined in our allocation of resources. We're focusing on opportunities that have the potential to drive incremental returns. This resulted in our net income margin improving by six percentage points over year and adjusted EBITDA margin improvement by one percentage point year over year.

Speaker Change: As we look to the third and fourth quarters of the year. We expect these trends to persist in the third quarter. We expect net revenue to be in the range of $357 million to $362 million for the full year. We now expect net revenue will be in the range of one 410 billion to 145 billion.

David Schwarzbach: In the third quarter, we expect net revenue to be in the range of $357 million to $362 million. For the full year, we now expect net revenue to be in the range of $1.410 billion to $1.425 billion, a decrease of $12.5 million from the midpoint of our prior range. Turning to margin, our business continues to demonstrate its underlying profitability, and we remain dedicated to disciplined expense management. In addition, as Jeremy mentioned, we are narrowing the focus of our paid project acquisition efforts and now expect to spend approximately $35 million in total for the year on paid search, having spent $19 million in the first half of the year.

Speaker Change: A decrease of $12 $5 million from the midpoint of our prior range.

Speaker Change: Turning to margin our business continues to demonstrate its underlying profitability and we remain dedicated to disciplined expense management. In addition, as Jeremy mentioned, we are narrowing the focus of our paid project acquisition efforts and now expect to spend approximately $35 million in total for the year on paid search having spent nine.

David Schwarzbach: We achieved this even as we invested $12 million in paid services project acquisition during the quarter in the second quarter. We also reduced stock based compensation expenses of percentage of revenue by one percentage point year over year and remain focused on reaching less than 8% by the end of 2025. We expect these efforts to stack over time, improving the quality of our adjusted EBITDA and benefiting gap profitability in the years to come.

Jeremy Stoppelman: <unk> million dollars in the first half of the year.

Speaker Change: We expect third quarter adjusted EBITDA to be in the range of $82 million to $87 million.

David Schwarzbach: We expect third-quarter adjusted EBITDA to be in the range of $82 million to $87 million. For the full year, we now expect adjusted EBITDA to be in the range of $325 million to $335 million, an increase of $10 million at the midpoint, despite continued RRNO headwinds in the second half of the year. As a result of subleasing a portion of our Toronto office space in July, we expect to incur an impairment charge of approximately $4 million in the third quarter related to right-of-use assets and leasehold improvements associated with the underlying operating leases.

Speaker Change: For the full year, we now expect adjusted EBITDA to be in the range of 325 million to $335 million, an increase of $10 million at the midpoint. Despite continued <unk> headwinds in the second half of the year.

David Schwarzbach: Returning capital is share voters to share repurchases continues to be a key element of our capital allocation strategy. In the second quarter, we repurchased $63 million worth of shares at an average purchase price of $37.94 per share. As a June 30 of 2024, we have $456 million remaining under our existing repurchase authorization. We plan to continue repurchasing shares in the second half of 2024 subject to market and economic conditions. Turning to our outlook in the second quarter, services revenue maintained double digit growth, while RRNO revenue remained impacted by a challenging operating environment for businesses and those categories.

Speaker Change: As a result of subleasing a portion of our Toronto office space in July we expect to incur an impairment charge of approximately $4 million in the third quarter related to right of use assets and lease hold improvements associated with the underlying operating leases.

Speaker Change: We expect third quarter net income to be reduced by the full amount of the charge, but do not expect it to impact adjusted EBITDA in closing Yelp.

Speaker Change: Second quarter results reflect our ability to drive leverage in the business amid a challenging macro backdrop. We continue to believe in the significant growth opportunities ahead, as we focus our investment on areas that we believe will drive business performance and shareholder value over the long term with that operator, please open up the line for questions.

David Schwarzbach: With additional pressure as we move through the second half of the quarter. As we look to the third and fourth quarters of the year, we expect these trends to persist. In the third quarter, we expect net revenue to be in the range of $367 million to $362 million. For the full year, we now expect net revenue will be in the range of $1.410 billion to $1.425 billion, a decrease of $12.5 million from the midpoint of our prior range.

David Schwarzbach: We expect third-quarter net income to be reduced by the full amount of the charge but do not expect it to impact adjusted EBITDA. In closing, Yelp's second-quarter results reflect our ability to drive leverage in the business amid a challenging macro backdrop. We continue to believe in the significant growth opportunities ahead as we focus our investment on areas that we believe will drive business performance and shareholder value over the long term. Operator, please open up the line for

Speaker Change: Thank you if you would like to ask a question. Please press star one on your telephone keypad. If you would like to withdraw your question simply press Star. One again, please ensure that your phone is not on mute when called upon thank you.

Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Please ensure that your phone is not on mute when called upon. Thank you. Your first question comes from the line of Eric Sheridan with Goldman Sachs. Your line is open.

Speaker Change: Your first question comes from the line of Eric Sheridan with Goldman Sachs. Your line is open.

David Schwarzbach: Turning to margin, our business continues to demonstrate its underlying profitability and we remain dedicated to discipline and expense management. In addition, as Jeremy mentioned, we are narrowing the focus of our paid project acquisition efforts and now expect to spend approximately $35 million in total for the year on paid search, having spent $19 million in the first half of the year. We expect third quarter adjusted EBITDA to be in the range of $82 million to $87 million.

Eric Sheridan: Thanks for taking the question. I know we'll talk a lot about the macro environment tonight, but I wanted to ask maybe two bigger picture questions. First, Jeremy, you know, the AI landscape and what it might mean for search and local services continues to evolve. And there have been a lot of announcements around data licensing in that environment as well. I wanted to get your most updated thoughts on the AI landscape and what that might mean for Yelp in the years ahead.

Eric Sheridan: Thanks for taking the question and then we'll talk a lot about the macro environment Tonight, but I wanted to ask maybe two bigger picture questions first Jeremy.

Eric Sheridan: AI landscape and what it might mean for search and local services continues to evolve and there's been a lot of announcements around data licensing in that environment as well I wanted to get your most updated thoughts on the AI landscape and what that might mean for yelp in the years ahead that would be number one and number two obviously there was the antitrust decision with respect to <unk>.

Eric Sheridan: That would be number one. And number two, obviously, there was the antitrust decision with respect to Alphabet recently. And I know we don't yet know what the remedies might be around that, but how do you think about that ruling? And again, what might it mean over the medium or longer term in terms of competition in the landscape of search and local services? Thanks.

David Schwarzbach: For the full year, we now expect that just the EBITDA to be in the range of $325 million to $335 million, an increase of $10 million at the midpoint despite continued R&O headwinds from the second half of the year. As a result of sub-leasing a portion of our Toronto office space in July, we expect to incur an impairment charge of approximately $4 million in the third quarter related to right of use assets and leasehold improvements associated with the underlying operating leases. We expect third quarter net income to be reduced by the full amount of the charge, but do not expect it to impact adjusted EBITDA.

Speaker Change: Alphabet recently and I know, we don't yet know what the remedies might be around that but how do you think about that ruling and again, what that might mean over the medium or longer term in terms of competition and the landscape of search and local services. Thanks.

Speaker Change: Yes.

Speaker Change: Sure happy to take those Eric Thanks for the questions.

Jeremy Stoppelman: Sure, happy to take those. Eric, thanks for the questions. The A.I. landscape is very exciting. Obviously, we've already taken steps to leverage LLMs and find early wins. Obviously, within search, there are improvements that we've made, such as summarizing business reviews. We've rolled that out.

Speaker Change: AI landscape I would say very exciting.

Speaker Change: Obviously, we've already taken steps to leverage <unk> and find early wins.

Speaker Change: Obviously within search there is improvements that we've made summarizing business reviews, we've rolled that out.

David Schwarzbach: In closing, Yelp's second quarter results reflect our ability to drive leverage in the business amid a challenging macro backdrop. We continue to believe in the significant growth opportunities ahead as we focus our investment on areas that we believe will drive business performance and shareholder value over the long.

Speaker Change: We've incorporated <unk> into our AD tech as well as leverage neural nets.

Jeremy Stoppelman: We've incorporated LLMs into our ad tech, as well as leveraged neural nets. So within the business itself, there's so much that we're able to take advantage of. Yelp Assistant comes to mind, obviously, a recent launch that helps walk people through submitting a project.

Speaker Change: So within the business itself. There is so much that we're able to take advantage of Yelp assistant comes to mind, obviously, a recent launch.

Speaker Change: That helps walk people through.

Unknown Attendee: with that operator, please open up the line for questions. Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Please ensure that your phone is not on mute when called upon. Thank you.

Jeremy Stoppelman: And that's really showing some promise. So very exciting from an Yelp product standpoint. And then when you look out at the wider landscape, I think really exciting opportunities for Yelp. One early search engine out there is Perplexity.

Speaker Change: <unk>, a project and Thats really showing some promise so very exciting from an on yelp product standpoint.

Speaker Change: Then when you look out at the wider landscape I think really exciting opportunities for yelp.

Speaker Change: One early search engine out there as perplexity.

Eric Sheridan: Your first question comes from the line of Eric Sheridan with Goldman Sachs. Your line is open. Thanks for taking the question.

Speaker Change: When they were looking at where to get their local data and how to service their users with a trusted local information they turned out.

Jeremy Stoppelman: When they were looking at where to get their local data and how to service their users with trusted local information, they turned to Yelp. And so that's a really good sign. Obviously, they're one of many companies that are working on this, and we would hope to see many more of these flourish. And that, of course, ties into your antitrust question, which I can take in a second. On the data licensing side, we do have a significant data licensing business. There are lots of conversations going on in that area. We'll keep you posted.

Jeremy Stoppelman: I know we'll talk a lot about the macro environment tonight, but I wanted to ask maybe two bigger picture questions. First, Jeremy, you know, the AI landscape and what it might mean for search and local services continues to evolve and there's been a lot of announcements around data licensing in that environment as well. I wanted to get your most updated thoughts on the AI landscape and what that might mean for Yelp in the years ahead. That would be number one.

Speaker Change: And so that's a really good sign obviously, they're one of many companies that are working on this.

Speaker Change: We would hope to see many more of these flourish and that is of course ties into your antitrust question, which I can take a second on the data licensing side, we do have a significant data licensing business. There is lots of conversations going on in that area. We'll keep you posted we do see a lot of opportunity there both to grow our existing business as well as <unk>.

Jeremy Stoppelman: We do see a lot of opportunity there, both to grow our existing business, as well as to find additional revenue streams through folks that are looking to leverage AI. And, of course, we also have an AI API that we've put out there that is showing some early signs of promise. And also, when I think about the Yelp Assistant and the way that that product works, that lends itself quite well to a potential Yelp API application as well.

Jeremy Stoppelman: And number two, obviously there was the antitrust decision with respect to alphabet recently. And I know we don't yet know what the remedies might be around that. But how do you think about that ruling? And again, what that might mean over the medium or long term in terms of competition in the landscape of search and local services? Thanks.

Speaker Change: And additional revenue streams through folks that are looking to leverage AI and of course, we also have.

Speaker Change: AI API.

Speaker Change: We've put out there that.

Speaker Change: Showing some early signs of promise.

Speaker Change: And also when I think about the Yelp assistant and the way that that product works that lends itself quite well to a potential <unk>.

Jeremy Stoppelman: Sure. Happy to take those Eric. Thanks for the questions. AI landscape, I would say, you know, very exciting. You know, obviously we've already taken steps to leverage LLAMs and find early wins. You know, obviously within search, there's improvements that we've made summarizing. Business reviews. We've rolled that out. You know, we've incorporated LLAMs into our ad tech as well as leverage neural nets. You know, so within the business itself, there's so much that we're able to take advantage of Yelp assistant comes to mind, obviously a recent launch.

Speaker Change: By application as well and so you think about some of these next generation search services. When a user is asking something that has local intent. That's about home services project that can be then hitting our API and matching that user.

Jeremy Stoppelman: And so you think about some of these as next-generation search services. When a user is asking something that has local intent, such as a home services project, that can then be hitting our API and matching that user with relevant businesses.

Jeremy Stoppelman: It has monetization built in, so I think that's a really exciting new area for us to pursue. Obviously, we haven't even built the thing, but just something on my mind. There is a clear vision and opportunity that we have there. On the antitrust decision side, DOJ versus Google.

Speaker Change: With relevant businesses that has monetization built in so I think that's a really exciting new area for us to pursue obviously.

Jeremy Stoppelman: You know, that helps walk people through make submitting a project and that's really showing some some promise. So very exciting from an on Yelp product standpoint. And then when you look out at the wider landscape, I think really exciting opportunities for Yelp. You know, one early search engine out there's perplexity, you know, when they were looking at where to get their local data and how to service their users with trusted local information, they turned Yelp. And so that's a really good sign. Obviously, you know, they're one of many companies that are working on this. We would hope to see many more of these flourish.

Speaker Change: Haven't even built the thing, but it's just something on my mind, there is a clear vision and opportunity that we have there.

Jeremy Stoppelman: Obviously, that's a huge watershed moment, I would say for antitrust. And certainly, we're very excited about it. This is something that we've been calling for, you know, scrutiny of Google regulation and Antitrust Enforcement. So, you know, we're very excited. Obviously, the wheels of justice turn slowly. I testified in front of the Senate in 2011.

Speaker Change: On the antitrust decision side Doj versus Google, obviously, that's a huge watershed moment I would say for antitrust.

Speaker Change: And certainly.

Speaker Change: We're very excited about it is something that we've been calling for scrutiny of Google regulation.

Speaker Change: And anti <unk> anti trust enforcement so.

Speaker Change: We're very excited obviously the wheels of justice turns slowly.

Speaker Change: Suffice in front of the Senate.

Jeremy Stoppelman: And that's, of course, ties into your antitrust question, which I can take it a second on the data licensing side. You know, we do have a significant data licensing business. There's lots of conversations going on in that area will keep you posted. We do see a lot of opportunity there, both to grow our existing business as well as find additional revenue streams through folks that are looking to leverage AI. And of course, we also have an AI API that we've put out there that, you know, showing some early signs of promise.

Speaker Change: In 2011, so it's been a long time that we've been advocating for our scrutiny of Google and it's illegal monopolistic pre.

Jeremy Stoppelman: So it's been a long time that we've been advocating for scrutiny of Google and its illegal monopolistic practices, and so it's great that we've reached this moment. I do think it is going to breathe a lot of oxygen into the search space and create opportunities for startups. It's going to create opportunities for innovation for smaller companies like Yelp and others, so it's very exciting. You know, there are a lot of factors at play here.

Speaker Change: Practices and so it's great that we've reached this moment I do think it is going to breathe a lot of oxygen into the search space, it's going to create opportunities for startups, it's going to create opportunities for innovation for smaller companies like Yelp and others. So it's very exciting.

Speaker Change: There is a lot of factors at play here, it's hard to predict exactly what might the remedies be how will it play out obviously, Google will do its best to delay things as well as likely appeal et cetera et cetera. So it's going to take some time to fully play out, but I think a very positive development for you all.

Jeremy Stoppelman: It's hard to predict exactly what might the remedies be, and how it will play out. Obviously, Google will do its best to delay things as well as likely appeal, et cetera, et cetera. So, you know, it's going to take some time to fully play out, but I think it's a very positive development for Yelp.

Jeremy Stoppelman: You know, and also when I think about the Yelp assistant and the way that that product works that lends itself quite well to a potential Yelp API application as well. And so you think about some of these, you know, next generation search services when a user is asking, you know, something that has local intent that's about, you know, home services project that can be then hitting our API and matching that user.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Jason <unk> with Craig Hallum Capital Group. Your line is open.

Operator: Your next question comes from the line of Jason Kreyer with Craig Hallam Capital Group. Your line is open.

Speaker Change: Great. Thank you this is Kyle on for Jason.

Jason Kreyer: Great, thank you. This is Cal on behalf of Jason. So first question, can you just kind of walk us through what you're seeing in paid search? Looks like you might be pulling back the budget a little bit this year, but just curious about your confidence in that opportunity and whether you're seeing any early signs of users returning to the platform after you acquire them through paid search, you know, more engagement. Just kind of curious about your thoughts.

Jeremy Stoppelman: You know, with relevant businesses that has monetization built in. So I think that's a really exciting new area for us to pursue. Obviously, we haven't even built the thing, but you know, just something on my mind.

Kyle: First question can you just kind of walk us through what Youre seeing in paid search it looks like you might be pulling back the budget a little bit this year, but just curious your thoughts on your confidence in that opportunity and whether you're seeing any early signs of users users returning to the platform. After you acquire them through paid search more engagement just kind of curious your thoughts there.

Jeremy Stoppelman: There is a clear vision and opportunity that we have there, on the Antitrust Decision Side DOJ versus Google. Obviously, that's a huge watershed moment, I would say for for antitrust. And certainly, we're very excited about it. This is something that we've been calling for, you know, scrutiny of Google regulation and antitrust enforcement. So, you know, we're very excited, obviously, the wheels of justice turn slowly. I testified in front of the Senate in 2011.

Speaker Change: Yes.

Speaker Change: Yeah, I can take that question so to set the stage a little we're talking about yelp driving our projects.

Jeremy Stoppelman: Yeah, Cal, I can take that question. So to set the stage a little, we're talking about Yelp driving projects through paid search. So those projects show up as Requests to Quote. And if you look at the top of the funnel metrics, Requests to Quote projects up to 35%, you can see that impact there. So you know, we're really excited about what we've learned. Sure enough, there is a large pool of untapped leads that we can bring into the Yelp ecosystem at what we think are pretty reasonable prices.

Speaker Change: Through paid search so this project shop is request a quote.

Speaker Change: And if you look at the top of funnel metrics request, a quote projects up 35% you can see that impact there. So we're really excited about what we've learned.

Speaker Change: Sure enough there is a large pool of untapped leads that we can bring into the yelp ecosystem and what we think are pretty reasonable prices. So thats really exciting first step as we saw those projects flowing through our system, where we saw the most opportunity was and the businesses that seem to be reacting to those additional leads the.

Jeremy Stoppelman: So, it's been a long time that we've been advocating for scrutiny of Google and its illegal monopolistic practices. And so it's great that we've reached this moment. I do think it is going to breathe a lot of oxygen into the search space. It's going to create opportunities for startups. It's going to create opportunities for innovation for smaller companies like Yelp and others. So, it's very exciting. You know, there's a lot of factors to play here.

Jeremy Stoppelman: So that's a really exciting first step. As we saw those projects flowing through our system, where we saw the most opportunity, and the businesses that seem to be reacting to those additional leads the fastest seem to be businesses with fewer reviews, so no reviews, or just a few reviews; they seem to be really picking up on the additional value. And so as a result, as we go into the back half here, we're going to be focusing on that lead distribution, trying to drive those leads to the businesses that are most likely to change their behavior, whether it's upping their budget, retaining for a longer period, etc.

Speaker Change: <unk> fastest seem to be businesses with fewer reviews. So no reviews are just a few reviews they seem to be really picking up on the additional value and so as a result, as we go into the back half year, we're going to be focusing on that lead distribution trying to drive those leads to the businesses that are most likely to change your behavior, whether it's upping their budget.

Jeremy Stoppelman: It's hard to predict exactly, you know, what might the remedies be? How will it play out? Obviously, Google will do its best to delay things as well as likely appeal, et cetera, et cetera. So, you know, it's going to take some time to fully play out. But I think a very positive development for Yelp.

Unknown Attendee: Thank you.

Speaker Change: Retaining for a longer period et cetera. So I think it's still a very exciting area for us we have learned a lot and so we're honing in on where the ROI is and obviously, we want to be thoughtful.

Jeremy Stoppelman: So I think, you know, still a very exciting area for us. We've learned a lot. And so we're honing in on where the ROI is. And obviously, we want to be thoughtful with our shareholders' money and drive a healthy ROI over the long term.

Cal Bartyzal: Your next question comes from the line of Jason Cryer with Craig Helen Capital Group. Your line is open. Great. Thank you. This is Cal for Jason. So, first question, can you just kind of walk us through what you're seeing in paid search? Looks like you might be pulling back the budget a little bit this year. But just curious the thoughts on your confidence in that opportunity and whether you're seeing any early signs of users returning to the platform after you've acquired them through paid search, you know, more engagement.

Speaker Change: With our shareholders' money and drive a healthy ROI over the long term.

Cal Bartyzal: Just kind of curious your thoughts there.

Speaker Change: Perfect makes sense and then secondly can you just kind of give any additional color on the progression of some of these are no pressure.

Jeremy Stoppelman: Perfect. Makes sense. And then secondly, can you just kind of give any additional color on the progression of some of these RRNO pressures throughout Q2 and how that's kind of progressed into Q3?

Speaker Change: Pressures throughout Q2, and how that kind of progressed into Q3.

Speaker Change: Sure. Kyle this is Jed I can I can take that yes, certainly as we move to the back half of the second quarter. We saw some additional pressure on the restaurant retail and other category.

Joseph Nachman: Sure, Cal, this is Jed. I can take that. Yeah, certainly, as we moved to the back half of the second quarter, we saw some additional pressure on the restaurant retail and other categories. You know, and that was a continuation as well from what we saw kind of in the first quarter. Really, our large restaurant retail and other customers have felt the impact of, you know, declining transactions and not really being able to take price like they were able to do over the last couple years.

Cal Bartyzal: Yeah, Cal, I can take that question. So, to set the stage a little, we're talking about Yelp driving projects through paid search. So, this project shop is request-equipped. And if you look at the top of funnel metrics, request-equipped projects, up to 35%, you can see that impact there. So, you know, we're really excited about what we've learned, you know, sure enough, there is a large pool of untapped leads that we can bring into the Yelp ecosystem. And what we think are pretty reasonable prices.

Speaker Change: And.

Speaker Change: A continuation as well from what we saw kind of in the.

Speaker Change: In the first quarter really are large.

Speaker Change: Restaurant retail and other customers have felt the impact of declining transactions and not really being able to really take price like they are able to do over the last couple of years and that's reflected in some of the current marketing budgets. We do believe that we are in a cyclical moment far now and while the timeframe for recovery is unknown.

Joseph Nachman: And that's reflected in some of the current marketing budgets. We do believe that we are in a cyclical moment for R&O. And while the timeframe for recovery is unknown, we expect consumer spending to return, and we are well positioned to participate in that recovery when that happens. In the meantime, we are laser focused on, you know, the services opportunity with a multi-location presence. Right now, service, it's only 20% of services revenue is multi-location.

Speaker Change: We expect consumer spending to return and are well positioned to participate in that recovery when that happens in the meantime, we are laser focused on.

Cal Bartyzal: So, that's a really exciting first step. As we saw those projects flowing through our system where we saw the most opportunity was and the businesses that seem to be reacting to those additional leads, the fastest seem to be businesses with fewer reviews. So, no reviews or just a few reviews, they seem to be really picking up on the additional value. And so, as a result, as we go into the back half year, we're going to be focusing on that lead distribution, trying to drive those leads to the businesses that are most likely to change your behavior, whether it's upping their budget, retaining for a longer period, etc.

Speaker Change: The services opportunity with a multi location.

Speaker Change: Right now service.

Speaker Change: Only 20% of services revenue is multi location.

Joseph Nachman: And we recently launched a bunch of improvements to the business owner platform, you know, that allow for a streamlined handling of leads on the Yelp platform, as well as released a leads API that gives our enterprise customers the ability to ingest Yelp leads into their own CRM and work within their own internal processes. We've also created a playbook for multi-location customers to utilize the request-to-quote system for the first time.

Speaker Change: And we recently launched a bunch of improvements to the business on a platform.

Speaker Change: That will allow for a streamlined ling of leads on Yelp platform as well as releasing of leads API that gives our enterprise customers the ability to ingest yelp leads into their own CRM and work within their own internal processes, but also create a playbook for multilocation customers to utilize the request a quote system for the first time.

Cal Bartyzal: So, I think, you know, still very exciting area for us. We've learned a lot. And so, we're honing it on where the ROI is. And obviously, we want to be thoughtful with our shareholders' money and drive a healthy ROI over the long term.

Joseph Nachman: And, you know, although we're running full speed ahead on that opportunity, while we wait for a full recovery, I will say we're keeping up relationships, certainly on the restaurant retail and other side, and feel that those are very strong, and we'll be well positioned.

Speaker Change: And.

Speaker Change: We are running full speed ahead on that opportunity.

Speaker Change: We wait for a full recovery I will say, we're keeping up relationships certainly on their restaurant retail on the other side and feel that those are very strong and we will be well positioned when that comes back.

Jed Nachman: Perfect, make sense. And then secondly, can you just kind of give any additional color on the progression of some of these R&O pressures throughout Q2 and how that's kind of progressed in the Q3?

Speaker Change: Great. Thank you guys.

Speaker Change: Your next question comes from the line of Colin Sebastian with Baird. Your line is open.

Operator: Your next question comes from the line of Colin Sebastian with Baird. Your line is open.

Jed Nachman: Sure, Cal, this is Jed, I can take that. Yeah, certainly as we move to the back half of the second quarter, we saw some additional pressure on the restaurant retail and other category, you know, and that those a continuation as well from what we saw kind of in the first quarter, you know, really our large restaurant retail and other customers have felt the impact of, you know, declining transactions and not really being able to really kick price like they were able to do over the last couple of years, and that's reflected in some of the current marketing budgets.

Colin Sebastian: Hi, Thanks, Good afternoon, everybody nice quarter, guys, maybe just to follow up a bit on the outlook revision.

Colin Sebastian: Thanks. Good afternoon, everybody.

Speaker Change: For the second half and the decision to pare back on that on the <unk> project acquisition was there.

Speaker Change: More of a general decision to favor profitability over growth.

Speaker Change: Given macro or are there considerations or is it really just a reallocation of priorities and I think related to that.

David Schwarzbach: Nice quarter, guys. Maybe just to follow up a bit on the outlook revision for the second half and the decision to pare back on the paid project acquisition. Was there more of a general decision to favor profitability over growth, given macroeconomic or their considerations? Or is it really just a reallocation of priorities? And I think related to that, I guess if you're pleased with the levels of retention, do you have confidence that other ways of engaging consumers and service providers will kind of give you that same level of, I guess, lifetime value? Thank you.

Speaker Change: I guess, if you are pleased with the levels of retention.

Jed Nachman: We do believe that we are in a cyclical moment for our know, and while the timeframe for recovery is unknown, we expect consumer spending to return in a well-positioned participate in that recovery when that happens. In the meantime, we are laser focused on, you know, the services opportunity with a multi location. Right now service, it's only 20% of services revenue is multi location, and we recently lost launch a bunch of improvements to the business owner platform, you know, that allow for a streamlined handling of leads on the platform as well as releasing a lead API that gives our enterprise customers the ability to ingest Yelp leads into their own CRM.

Speaker Change: Do you have confidence that that other ways of engaging consumers and service providers will kind of give you that same level of I guess lifetime value. Thank you.

Speaker Change: Hey, Paul It's David I'll answer the first part of that on the outlook the decision.

David Schwarzbach: Hey Collins, David, I'll answer the first part of that. On the Outlook, the decision around paid search was very much independent of the overall profitability that we saw in the second quarter and the Outlook for the year and the impact of what's happening in the RRNO on revenue. So they're actually very separate, and I want to emphasize that we think that we can continue to become even more efficient. And so we are driving that underlying profitability.

Paul: Around paid search was very much independent.

Speaker Change: The overall profitability that we saw in the second quarter and the outlook for the year and the impact.

Speaker Change: What's happening to our Arnaud on revenue. So they are actually very separate I want to underscore.

Speaker Change: That we think that we continue to become even more efficient and so we are driving that underlying profitability and thats, what put us in a position to raise the guide.

Jed Nachman: And work within their own internal processes, also created a playbook for multi location customers to utilize the request code system for the first time. And, you know, all the we're running full speed ahead on that opportunity while we wait for a full recovery, I will say we're keeping up relationships certainly on the restaurant retail on other side and feel that those are very strong and will be well positioned back.

Cal Bartyzal: Great, thank you guys.

David Schwarzbach: And that's what put us in a position to raise the guide for the full year. And then, you know, when we think about the LTV of these, the opportunity with advertisers, we, as Jeremy said, are really looking for the folks who are going to be most responsive. There's work to do in order to ensure that we're actually funneling those leads directly to the advertisers that are most responsive. And what we did see was that folks who are unreviewed or only have a few reviews do respond when they get those leads.

Speaker Change: For the full year.

Speaker Change: And then.

Speaker Change: When we think about the LTV of these.

Speaker Change: The opportunity with <unk>.

Speaker Change: Advertisers.

Speaker Change: We.

Speaker Change: As Jeremy said are really looking for the folks who are going to be most responsive.

Jeremy Stoppelman: And there is work to do in order to ensure that we're actually funneling those leads directly to the advertisers that are most responsive and while we did see was.

Colin Sebastian: Your next question comes from the line of call and Sebastian with Baird, your line is open. Thanks, good afternoon everybody, nice quarter guys, maybe just to follow up a bit on the the outlook revision for the second half and the decision to pair back on the on the paid project acquisition. Was there more of a general decision to favor profitability over growth, given macro or their considerations or is it really just a reallocation of priorities.

Colin Sebastian: And I think related to that, I guess if you're pleased with the levels of retention, you have confidence that that other ways of engaging consumers and service providers will kind of give you that same level of, I guess lifetime value. Thank you. Thank you all and David, I'll answer the first part of that on the outlook, the decision around paid search was very much independent of the overall profitability that we saw in the second quarter and that look for the year.

Bob: Bob folks who are unrest you'd only have a few reviews they do respond when they.

Speaker Change: When they get those leads so.

Speaker Change: We're directing it there, but there's more work to do we're going to keep you posted and we'll come back obviously on the Q3 call to provide the next update.

David Schwarzbach: So we're directing it there, but there's more work to do. We're going to keep you posted. We'll come back, obviously, on the Q3 call to provide the next update. And, you know, we're going to continue

Speaker Change: We're going to continue to refine it.

David Schwartzbach: Okay. Thanks, David.

Speaker Change: Your next question comes from the line of Sanjay <unk> with Keybanc. Your line is open.

Operator: Your next question comes from the line of Sergio Segura with KeyBank. Your line is open.

Sanjay: Great. Thank you for taking the question I wanted to return back to the <unk> weakness you guys saw in the quarter. So.

Sergio Segura: Great, thank you for taking the questions. I wanted to return to the RRNO. We can see you guys in the quarter.

Sergio Segura: So the shareholder letter mentions competition from food delivery as a secondary reason for the weakness in that category. I guess, you know, given the solid results those food delivery platforms reported this quarter, just what gives you the confidence that competition isn't a more significant factor than the challenge for the challenges that you're seeing within that category?

Speaker Change: Shareholder letter mentioned competition from food delivery as a secondary reason for the weakness in that category I.

Speaker Change: I guess given the solid result does food delivery platform supported this quarter just what gives you the confidence that competition is anything more significant factor than the challenge.

Colin Sebastian: And the impact of what's happening in the RRNO on revenue, so they're they're actually very separate, I want to underscore that we think that we can to become even more efficient. And so we are driving that underlying profitability and that's what put us in a position to raise the guide for the four year. And then, you know, when we think about the LTV of the opportunity with, advertisers, we, as Jeremy said, are really looking for the folks who are going to be most responsive.

Speaker Change: For the challenges that youre seeing within that category.

Speaker Change: Thanks, Serge Yeah, I can take that this is jed.

Joseph Nachman: Thanks, Sergio. I can take that. This is Jed.

Jed Nachman: Certainly at the margins there are some pressures from the deal.

Speaker Change: Delivery ad platforms.

Speaker Change: But.

Speaker Change: Our belief is largely macro and in talking to customers their posture.

Speaker Change: In light of what's happened in the consumer these days and.

Speaker Change: Spending habits and.

Speaker Change: What is a volatile outlook for the second half of the year.

Speaker Change: Largely falls in the camp of macro that's not to say there is not a marginal.

Speaker Change: Competitive dynamic coming in from these delivery AD platforms, a lot of that had been baked in.

Colin Sebastian: And there's work to do in order to ensure that we're actually funneling those leads directly to the advertisers that are most responsive. And when we did see with that folks who are unreviewed or we have a few reviews, they do respond when they, when they get those leads. So we're directing it there, but there's more work to do. We're going to keep you posted. We'll come back obviously on the Q3 call to provide the next update and, you know, we're going to continue to refine it. Okay, thanks, David.

Speaker Change: From prior years as consumer behavior changed.

Speaker Change: Understood and then maybe a second one I was hoping you could just talk about the EBITDA outperformance for the quarter that came in nicely above the outlook. You gave so just wondering what was the primary driver behind that.

Speaker Change: Or what was different versus your initial outlook was it more finding efficiencies in the business or is just a shift in investment spend through the second half.

Speaker Change: Just any color behind your EBITDA performance for the quarter would be helpful. Thanks.

Sergio Segura: Your next question comes from the line of Sergio Segura with Keybank. Your line is open. Great.

Sergio: Sure Sergio.

Joseph Nachman: You know, certainly at the margins, there are some pressures from, you know, the delivery ad platforms. But, you know, our belief is that this is largely macro. And in talking to customers, their posture, and in light of, you know, what's happened with the consumer these days, and, you know, spending habits, and, you know, what is a volatile outlook for the second half of the year, it largely falls in the camp of macro.

Sergio: Thanks for the question so in terms of the second quarter.

Joseph Nachman: That's not to say there's not a marginal, you know, competitive dynamic coming in from these delivery ad platforms. A lot of that had been baked in, you know, kind of from prior years as consumer behavior changes.

Sergio: Yeah.

Sergio: We did see.

Sergio Segura: Thank you for taking the questions. I wanted to return back to the RR know we can see guys on the quarter. So the shareholder letter mentions competition from food delivery as a secondary reason for the weakness in that category. I guess, you know, given the solid results of the delivery platform supported this quarter, just what gives you the confidence that competition is any more significant factor than the challenge for the challenges that you're seeing within that category. Thanks, sir.

Speaker Change: Increased efficiency in our marketing spend so while we spent $12 million on paid search across our other marketing spend we've been able to actually improve the results that we're seeing.

Speaker Change: So we got leverage there that was a significant factor.

Speaker Change: Another probably on the more technical side relates to capitalized software cap Dev.

Speaker Change: We had more projects that we were able to capitalize that.

Sergio Segura: And maybe a second one, I was hoping you would just talk about the EBITDA outperformance for the quarter that came in nicely above the outlook you gave. So, you know, wondering what the primary driver behind that was, or what was different versus your initial outlook? Was it more finding efficiencies in the business? Or was it just a shift in investment to the second half? Just any color behind the EBITDA outperformance for the quarter would be helpful. Thanks.

Speaker Change: Contributed.

Jed Nachman: Jack can take that. This is Jed, you know, certainly at the margins. There are some pressures from, you know, the delivery ad platforms. But, you know, you know, our belief is that it is largely macro and in talking to customers, their posture and in light of what, you know, what's happened in the consumer these days and, you know, spending habits and, you know, what is a volatile outlook for the sector.

Speaker Change: There are a third of just the normal puts and takes from a forecasting perspective around things like health care that have some variance to them that ended up being positive. So when you combine those things.

Speaker Change: And just again just to underscore what I was saying to call and we do think that we are continuing to be even more efficient as a business. So we took those and maybe just to clarify what I said in response to Collyns question, certainly the reduction of $5 million from the prior expectation of $40 million.

Jed Nachman: I can have for the year. It largely falls in the camp of macro. That's not to say there's not a marginal, you know, competitive dynamic coming in from these delivery ad platforms. A lot of that had been baked in the, you know, kind of from prior years as consumer behavior change.

Sergio Segura: Understood.

Speaker Change: In 2000 $24 million to $35 million contributes to the higher EBITDA, even though those decisions again are quite independent.

David Schwarzbach: And maybe a second one of helping you just talk about the EBITDA outperformance for the quarter that came in nicely above the outlook you gave. So just, you know, wondering what was the primary driver behind that or what was different versus your initial outlook. Was it more finding efficiencies in the business or just a shift in investment spend to the second half. Just any color behind the EBITDA outforms for the quarter would be helpful.

Speaker Change: So that is a contributor but fundamentally we just see ourselves continuing to.

Speaker Change: Get better and better at delivering against our roadmap and against our marketing targets. When you take those things together.

David Schwarzbach: Thanks.

David Schwarzbach: Sure.

Speaker Change: The 26% adjusted EBITDA in the second quarter again is yet another proof point of continuing leverage that we think we're putting in the business.

David Schwarzbach: Thanks for the question. So in terms of the second quarter, we did see increased efficiency in our marketing spend. So while we spent $12 million on paid surge across our other marketing spend, we've been able to actually improve the results that we're seeing. And so we got leverage there. That that was a significant factor. Another, probably on the more technical side relates to capitalize software. Cap dev. We had more projects that we were able to capitalize so that contributed.

Speaker Change: Understood. Thank you.

Speaker Change: Okay.

Speaker Change: Your next question comes from the line of Josh Beck with Raymond James Your line is open.

Josh Beck: Thanks for taking the question maybe to go.

Speaker Change: Go back to.

Eric Sheridan: To Eric's earlier question about <unk>.

Josh Beck: I'm kind of curious how you may be.

Speaker Change: Bisect.

Speaker Change: The data licensing.

Speaker Change: Benefit from just potential traffic certainly seems like.

Speaker Change: With perplexity that Youre featured quite heavily when it's.

David Schwarzbach: There are third just the normal puts and takes from a forecasting perspective around things like healthcare that have some variance to them that ended up being positive. So when you combine those things at the end of the day, again, just to underscore what I was saying to Colin, we do think that we are continuing to be even more efficient as a business. So we took those and maybe just to clarify what I said in response to Colin's question, certainly the reduction of five million from the prior expectation of 40 million of spend in 2024 to 35 million contributes to the higher EBITDA.

Speaker Change: Local or.

Speaker Change: Review oriented query and I'm, just wondering which one of those two dimensions do you see as the most important and a little bit related.

Speaker Change: Got a pretty good idea of what Apple intelligence system will look like.

Speaker Change: LIFO in 16 and beyond.

Speaker Change: Kind of create any.

Speaker Change: Opportunity for you within the Apple ecosystem.

Speaker Change: Okay.

David Schwarzbach: Sure, Sergio. Thanks for the question. So in terms of the second quarter, we did see increased efficiency in our marketing spend. So while we spent $12 million on paid search, across our other marketing spend, we've been able to actually improve the results that we're seeing. And so we got leverage there. That was a significant factor. Another, probably on the more technical side, relates to capitalized software, CapDev. We had more projects that we were able to capitalize on that contributed.

Speaker Change: Hey, Josh happy to answer those questions.

David Schwarzbach: There are thirdly, just the normal puts and takes from a forecasting perspective around things like healthcare that have some variance to them, but that ended up being positive. So when you combine those things, and just, again, just to underscore what I was saying to Colin, we do think that we are continuing to be even more efficient as a business. So we took those, and maybe just to clarify what I said in response to Colin's question, certainly the reduction of $5 million from the prior expectation of $40 million of spend in 2024 to $35 million contributes to the higher EBITDA, even though those decisions, again, are quite independent.

Speaker Change: On how do we think about data licensing versus traffic I mean this is the age old question for you all but we've had lots of these structures in the past.

David Schwarzbach: Even though those decisions again are quite independent. So that is a contributor, but fundamentally, we just see ourselves continuing to get better and better at delivering against our roadmap and against our marketing targets. When you take those things together, I think that 26% adjusted EBITDA on the second quarter. Again, it's yet another proof point of the continuing leverage that we think we're building in the business.

David Schwarzbach: Thank you.

Speaker Change: And I think the fact that matter is we have very unique data.

Speaker Change: We have very accurate information on local businesses, we have some attributes about them we have hours things like that and then we have all of the subjective information around ratings and reviews with incredible depth.

Speaker Change: And so if you are an AI player looking to do a search experience in local we are a natural partner to turn to and of course, there is Google out there, but theyre competing with everyone else and so I think that plays into our positioning as a go to source of information in the coming years I think it is an exciting.

Josh Beck: Your next question comes from the line of Josh Beck with Raymond James. Your line is open. Thanks for taking the question. Maybe go back to Eric's earlier question about Jeremy AI. I'm kind of curious on how you may be bisect the data licensing benefit from just potential traffic. It certainly seems like just with perplexity that you're featured quite heavily when it's, you know, local or review oriented query.

Speaker Change: <unk> opportunity for us.

Speaker Change: Theres different ways that we can work with some of these potential partners. We can provide Apis, we're happy to do that we have some API is out there we're going to continue building that out.

Speaker Change: For certain experiences it may make more sense to license data, we certainly do that already.

Speaker Change: Brian you have non AI applications, so that's a possibility as well so.

Brian: It's a target rich environment there as it is rapidly developing its hard to say, how big it will be and what it means but I think the thing that we can all come back to is Yelp has an incredible resource for local information for helping people to connect with businesses and so to the extent that we are the <unk>.

Jeremy Stoppelman: And I'm just wondering, you know, which one of those, you know, two dimensions, do you see as the most important and a little bit related, you know, pretty good idea of what the Apple intelligence system will look like with iPhone 16 and beyond. You know, does that kind of create any opportunity for you within the Apple ecosystem?

Speaker Change: Best channel for that kind of information the best place to go I think that will position us well for whatever develops.

Speaker Change: AI space.

Jeremy Stoppelman: Hey, Josh, happy to answer that those questions on how do we think about data licensing versus traffic. I mean, this is the age old question for you. We've had lots of these structures in the past. And, you know, I think the fact of matter is we have very unique data, you know, we have very accurate information on local businesses, we have, you know, sort of attributes about them. We have hours, things like that.

Speaker Change: Then pivoting to the the Apple question, we have a great relationship with Apple.

Speaker Change: Our data is incorporated throughout their maps application you may have noticed request a quote has been added recently.

Speaker Change: Apple maps.

Speaker Change: And so that's that's great as far as what their plans are in the future I.

Speaker Change: I have no idea.

Speaker Change: And.

Speaker Change: And obviously, we are resource to them so to the extent there's opportunities. We're always the doors are open for that.

Jeremy Stoppelman: And then we have all the subjective information around ratings and reviews with incredible depth. And so if you are an AI player looking to do a search experience in local, we are a natural partner to turn to. And of course, you know, there's Google out there, but they're competing with everyone else. And so I think that plays into our positioning as a go to source of information in the coming years. I think it's an exciting opportunity for us.

Speaker Change: But really can't comment on the direction that Apple is going to take things and from an AI perspective.

Speaker Change: Okay.

Speaker Change: We will await anxiously.

Speaker Change: And maybe more of a conceptual framework question.

Speaker Change: EBITDA margins have roughly been.

Speaker Change: Low to mid twenties for the last three to four years.

Jeremy Stoppelman: You know, there's different ways that we can work with some of these potential partners. We can provide APIs. We're happy to do that. We have some APIs out there. We're going to continue building that out. You know, for certain experiences, it may make more sense to license data. We certainly, you know, do that already, you know, in a variety of non AI applications. So that's a possibility as well. So, you know, it's a target rich environment.

Speaker Change: Somewhat of a.

Speaker Change: <unk>.

Speaker Change: <unk> that you would look to hold depending on various macro scenarios as we think about 'twenty five and then just anything else that we need to be mindful of in terms of.

Speaker Change: Trends as we're thinking about the key factors for growth.

Speaker Change: Last year.

Speaker Change: Josh Thanks for the question and obviously, we'll have a lot more to share when we get to the Q4 call.

Jeremy Stoppelman: There's a rapidly developing. It's hard to say how big, you know, it will be and what it means. But I, you know, I think the thing that we can all come back to is Yelp is an incredible resource for local information and for helping people to connect with businesses. And so to the extent that we are the best channel for that kind of information, the best place to go. I think that will position as well for whatever develops in the AI space.

David Schwarzbach: So that is a contributor, but fundamentally, we just see ourselves continuing to get better and better at delivering against our roadmap and against our marketing targets. When you take those things together, I think that 26% adjusted EBITDA for the second quarter is, again, yet another proof point of the continuing leverage that we think we're building in the business.

Speaker Change: Next year.

Sergio Segura: understood. Thank you.

Speaker Change: But fundamentally I just want to underscore again, we think that our product led strategy.

Operator: Your next question comes from the line of Josh Beck with Raymond James. Your line is open.

Speaker Change: We will enable us to deliver margin leverage over time, and I'd say over the past several years margins actually have increased and then what we have done is taken the opportunity as we were doing with paid search to invest in the business. So we're always looking at ways to continue to drive top line performance.

Jeremy Stoppelman: And then from pivoting to the Apple question, you know, we have a great relationship with Apple. You know, our data is incorporated throughout their maps application. You may have noticed request to quote has been added recently to Apple maps. And so that's, that's great. You know, as far as what their plans are in the future. I have no idea. And obviously we're a resource to them, so to the center's opportunities where we're always the doors are open for that but really can't comment on the direction that Apple's going to take things in from a AI perspective. Okay, yeah, I think we all await anxiously.

Speaker Change: And same for US most definitely has been tapping into all of this off yelp traffic, whether it's through paid search whether its through syndication on sites like Facebook.

Speaker Change: And whether it's monetizing our own audience off yelp through something like Yelp audiences. So we're going to continue to look for those opportunities and we're very disciplined if we think there is an ROI to be had then we're going to make that incremental investment, but again, what we have been able to do over the past.

Speaker Change: Number of years is to continue to drive margins.

Speaker Change: <unk>.

David Schwarzbach: And, you know, maybe more of a traditional framework question. It's, you know, even a margins have kind of roughly been low to mid 20s or for the last, you know, three or four years. Is that someone of a line that you would look to hold, depending on, you know, various macro scenarios as we can. Think about 25 and then just, you know, anything else that we need to be mindful of in terms of trends, as we're thinking about key factors for growth next year.

Speaker Change: And hey time, along the way to continue to invest in the business. So.

Speaker Change: The whole time, we've been talking about profitable growth our commitment is to deliver long term profitable growth and we're always evaluating the best way to run the business that takes into account the tradeoffs between topline growth and delivering EBITDA. That's something that we'll continue to do and we'll look forward to sharing more about 'twenty one when we get there I mean excuse me for 'twenty.

Speaker Change: When we get there.

Speaker Change: Super helpful. Thank you.

John <unk>: Our next question comes from the line of John <unk> with Evercore. Your line is open.

David Schwarzbach: Josh, thanks for the question. And obviously we have a lot more to share when we get to the Q4 call next year. But fundamentally, I just want to underscore again, we think that a product led strategy will enable us to deliver margin leverage over time. And I'd say over past over years margins actually have increased. And then what we have done is take an opportunity as we were doing with paid search to invest in the business.

John <unk>: Great. Thanks for taking the question first I have just a follow up on the AI search again for the mentioned perplexity, but maybe at a high level do you have a sense of what are the traffic through these AI search engines have better conversion or higher intent. So you can just kind of share any color around what you've seen.

Josh Beck: Thanks for taking the time to answer the question. Maybe to go back to Eric's earlier question about generative AI, I'm kind of curious about, you know, how you might maybe bisect the data licensing benefit from just potential traffic. It certainly seems like, just with perplexity, that you're featured quite heavily when it's, you know, a local or review-oriented query. And I'm just wondering, you know, which one of those, you know, two dimensions do you see as the most important and a little bit related. We've got a pretty good idea of what the Apple intelligence system will look like, iPhone 16 and beyond. Does that kind of create any opportunity for you within the Apple ecosystem?

Speaker Change: On the user behavior around Yelp content, and then AI search context.

David Schwarzbach: So we're always looking at ways to continue to drive pop line performance. And a theme for us most definitely has been tapping into all of this op yelp traffic, whether it's through paid search, whether it's through syndication on sites like Facebook. And whether it's monetizing our own audience off yelp through something like the audiences. So we're going to continue to look for those opportunities. And we're very disappointed. If we think there's an ROI to be had, then we're going to make that incremental investment.

Jeremy Stoppelman: Yes, Jeremy.

Jeremy Stoppelman: Hey, Josh. Happy to answer those questions on how do we think about data licensing versus traffic? I mean, this is the age-old question for Yelp. We've had lots of these structures in the past. And, you know, I think the fact of the matter is we have very unique data. You know, we have very accurate information on local businesses. We have, you know, sort of attributes about them. We have hours, things like that.

Jeremy Stoppelman: Take that one.

Jeremy Stoppelman: Again, I think AI search represents an exciting opportunity for yelp.

Jeremy Stoppelman: And then we have all of the subjective information around ratings and reviews with incredible depth. And so if you are an AI player looking to do a search experience in the local area, we are a natural partner to turn to. And of course, you know, there's Google out there, but they're competing with everyone else.

Jeremy Stoppelman: And so I think that plays into our positioning as a go-to source of information in the coming years. So I think it's an exciting opportunity for us. You know, there are different ways that we can work with some of these potential partners. We can provide APIs. We're happy to do that. We have some APIs out there.

Jeremy Stoppelman: We're going to continue building that out. You know, for certain experiences, it may make more sense to license data. We certainly do that already in a variety of non-AI applications. So that's a possibility as well.

Speaker Change: As a partner to the.

Speaker Change: The ecosystem that develops here I think it's really too early to say.

Jeremy Stoppelman: So, you know, it's a target-rich environment. It's rapidly developing. It's hard to say how big it will be and what it means.

Jeremy Stoppelman: But, you know, I think the thing that we can all come back to is Yelp is an incredible resource for local information and for helping people to connect with businesses. And so to the extent that we are the best channel for that kind of information, the best place to go, I think that will position us well for whatever develops in the AI space. And then pivoting to the Apple question, you know, we have a great relationship with Apple. Our data is incorporated throughout their maps application. You may have noticed that the request to quote has been recently added to Apple Maps.

Jeremy Stoppelman: And so that's, that's great. You know, as far as what their plans are in the future, I have no idea.

Speaker Change: <unk> described the characteristics are no what it what it means.

Jeremy Stoppelman: And, you know, obviously, we're a resource to them. So to the extent there are opportunities, we're always, you know, the doors are open for that. But I really can't comment on the direction that Apple's going to take things in from an AI perspective.

Josh Beck: Okay, yeah, I think we all await anxiously. And, you know, maybe more of a financial framework question. It's, you know, even margins have kind of roughly been low to mid-20s for the last, you know, three to four years. Is that somewhat of a line that you would look to hold, depending on, you know, various macro scenarios, as we think about 25? And then just, you know, anything else that we need to be mindful of in terms of trends as we think about key factors for growth next year.

Speaker Change: Players that are out there perplexity or otherwise are all pretty small still and if you step back and look at the overall search industry.

Speaker Change: It's still very much structured the same way it always has been which is Google is completely dominant in an abusive monopoly as the court recently ruled.

David Schwarzbach: But again, what we have been able to do over the past number of years is to continue to drive margins up. And take time along the way to continue to invest in the business. So the whole time we've been talking about profitable growth. Our commitment is to deliver long-term profitable growth. And we're always evaluating the best way to run the business that takes into count to trade off between top playing growth and delivering EBITDA. That's something that we'll continue to do. And we'll look forward to sharing more about 24 when we get there. I mean, excuse me for 25 when we get there.

John <unk>: Ruled so unfortunately that structure remains.

Josh Beck: Super helpful.

John <unk>: How AI search develops in infuses competition is interesting possibility and I think antitrust could also play into that so depending on how that all plays out that could breathe oxygen into the environment and create a lot of new and interesting competitors.

Speaker Change: Or Google.

Speaker Change: Got it and second question just on pricing if you can parse out the CPC trends for services on our own separately I am assuming that you are seeing more pricing pressure on <unk> side. If you can double click on that and also just given the improvement you've made in the AD Tech stack should we expect this to be reflect.

Jed Nachman: Our next question comes from the line of the deal with every core. Your line is open. Great. Thanks for taking a question. First, I have a just follow up on the AI search, again, for the, you know, mentioned perplexity, but maybe at a high level. So do you have a sense of whether the traffic through these AI search engines have better conversion or higher in 10. You can just kind of share any color around what you've seen in user behavior around Yelp content and then AI search context.

Speaker Change: Is it an AD pricing improvement maybe to counter or to offset some of the macro pressure.

Speaker Change: As you you're able to drive greater role as I'm trying to attack.

Speaker Change: Stock improvement thank you.

Speaker Change: Yeah.

David Schwarzbach: Josh, thanks for the question. And obviously, we'll have a lot more to share when we get to the Q4 call next year. But fundamentally, I just want to underscore again that a product-led strategy will enable us to deliver margin leverage over time. And I'd say over the past several years, margins actually have increased.

Speaker Change: Thanks for the question just zooming out for one second if I can we have built an auction system core matching consumers with advertisers that that auction system.

David Schwarzbach: And then what we have done is take an opportunity, as we did with paid search, to invest in the business. So we're always looking at ways to continue to drive top-line performance. And a theme for us has definitely been tapping into all of this off Yelp traffic, whether it's through paid search, whether it's through syndication on sites like Facebook, and whether it's monetizing our own audience off Yelp through something like Yelp audiences. So we're going to continue to look for those opportunities. And We're very disciplined.

Josh Beck: If we think there's an ROI to be had, then we're going to make that incremental investment. But again, what we have been able to do over the past number of years is to continue to drive margins up and take time along the way to continue to invest in the business. So the whole time we've been talking about profitable growth, our commitment is to deliver long-term profitable growth, and we're always evaluating the best way to run the business that takes into account the trade-offs between top line growth and delivering EBITDA. That's something that we'll continue to do, and we'll look forward to sharing more about 24 when we get there. I mean, excuse me, 25 when we get there.

David Schwarzbach: Super helpful. Thank you both.

Operator: Our next question comes from the line of Jian Li with Evercore. Your line is open.

Jed Nachman: Jeremy, I can take that one. You know, again, I think AI search represents an exciting opportunity for Yelp. You know, as a partner to, you know, the ecosystem that develops here, I think it's really too early to sort of describe the characteristics or know what it, what it means. You know, the players that are out there perplexity or otherwise are all pretty small still. And if you step back and look at the overall search industry.

Jian Li: Great, thanks for taking the question. First, I have just a follow-up on the AI search, again, for the mentioned perplexity, but maybe at a high level, do you have a sense of whether the traffic through these AI search engines has better conversion or higher intent? Can you just kind of share any color around what you've seen user behavior around Yelp content and then AI search content?

Speaker Change: Takes into account a very large number of parameters.

Jeremy Stoppelman: Jeremy, I can take that one. You know, again, I think AI search represents an exciting opportunity for Yelp. You know, as a partner to, you know, the ecosystem that develops here, I think it's really too early to sort of describe the characteristics or know what it means. You know, the players that are out there, perplexity or otherwise, are all pretty small still. And if you step back and look at the overall search industry, you know, it's still very much structured the way it always has been, which is Google is completely dominant and an abusive monopoly, as the court recently ruled. So, you know, unfortunately, that structure remains.

Jeremy Stoppelman: How AI search develops and, you know, infuses competition is an interesting possibility, and I think antitrust could also play into that. So depending on how that all plays out, that could, you know, breathe oxygen into the environment and create a lot of new and interesting competitors for Google.

John <unk>: And what we're really doing is finding the market clearing price at a moment in time for that visitor in the category. They are searching for in the geography at that time of year.

John <unk>: And what we're always striving to do is to get better and better at doing that matching and fundamentally what we believe is that when we do that well we drive incremental value to the advertisers in terms of cost per lead and we drive the incremental value to the consumer in the form of relevance.

Jed Nachman: You know, it's still very much structured the same way it always has been, which is Google is completely dominant and an abusive monopoly as the court recently ruled. So, you know, unfortunately that structure remains how AI search develops and, you know, infuses competition is an interesting possibility. And I think antitrust could also play into that. So depending on how that all plays out that could, you know, breathe oxygen into the environment and create a lot of new and interesting competitors for Google.

John <unk>: <unk>.

David Schwarzbach: Got it.

Jian Li: Got it. And second question, just on ad pricing, if you can parse out the CPC trends for services and RO separately, I'm assuming that you're seeing more pricing pressure on the RO side, if you can double-click on that. And also, just given the improvement you've made in the ad tech spec, should we expect this to be reflected in ad pricing improvements, maybe to counter or to offset some of the macro pressure? As you know, you're able to drive greater ROAS from the ad tech, ad stack improvement?

John <unk>: So.

John <unk>: The trends over the past several quarters has been around this.

John <unk>: Same level of growth.

John <unk>: Which is 9% click growth with <unk>.

John <unk>: Flat CPC growth now I just want to underscore we did see real strength in growth in clicks in the second half of next year, so over the coming two quarters.

David Schwarzbach: And a second question, just on app pricing. If you can parse out the CPC trends for services and RO separately, I'm assuming that you're seeing more pricing pressure on RO side, if you can double click on that. And also, just given the improvement you've made in the at tech spec, should we expect this to be reflected in app pricing improvement, maybe to counter or to offset some of the math core pressure.

John <unk>: We do expect that <unk> will moderate and that has to go up a few percentage points in click growth will come down a few percentage points, but obviously its clicks time CPC and that's what supports the guide that we've given you now.

Speaker Change: What are the things that we're concerned with in terms of.

Speaker Change: Uh huh.

Speaker Change: Being able to continue to deliver value we're continuing to also.

David Schwarzbach: As you, you know, you're able to drive great at ROA. From the at tech at stack improvement. Thank you. Thanks for the question. Just assuming off for one second, if I can, we have built an auction system for matching consumers with advertisers that that auction system takes into account a very large number of parameters. And what we're really doing is finding the market clearing price. At a moment in time for that visitor in the category they're searching for in the geography at that time of year.

John <unk>: To deliver on the revenue targets that is where we're always trying to drive and again I just want to underscore cost per lead if we have a more relevant lead and we do believe that advertisers would be willing to pay more on a cost per click basis. So that's something that we track very closely it's something that we've been able.

John <unk>: To do in the past.

John <unk>: And we do have quite a robust roadmap to continue to drive improvements in the AD Tech stack.

John <unk>: Thank you very much.

Speaker Change: Once again, ladies and gentlemen, if you have a question. It is star one on your telephone keypad.

David Schwarzbach: And what we're always striving to do is to get better and better at doing that matching. And fundamentally, what we believe is that when we do that well, we drive incremental value to the advertisers in terms of cost per lead. And we drive the incremental value to the consumer in the form of relevance. So the trends over the past several quarters has been around this, the same level of growth, which is 9% click growth with about flat CPC growth.

John <unk>: Your next question comes from the line.

John <unk>: Yes.

Speaker Change: It looks as though my apologies. Your next question comes from the line of Georgia Anderson with Wolfe Research. Your line is open.

Georgia Anderson: Hi, I'm on gross water to jewelry, yet and I just had a question and.

Georgia Anderson: In relation to your guidance for the full year, what kind of what's giving you confidence there.

Speaker Change: You can raise EBITDA and if I can.

Speaker Change: $10 million and how do you really plan to offset those.

David Schwarzbach: Now, I just want to underscore we did see real strength in growth and clicks in the second half of next year. So over the coming two quarters, we do expect that CPCs will moderate. And that is to go up a few percentage points and click growth will come down a few percentage points. But obviously it's clicks time CPC. And that's what supports the guy that we've given you. Now, what are the things that we're concerned with in terms of being able to continue to deliver value with continuing to also deliver on the revenue.

Speaker Change: Weakness in iron ore that we've talked about so far.

Speaker Change: Thanks for the question George.

David Schwarzbach: Thanks for the question. I'm just zooming out for one second if I can.

Speaker Change: Fundamentally there is there are a couple of things that are happening simultaneously that do give us the confidence to be able to.

Speaker Change: Raised the EBITDA guide.

Speaker Change: The first is again, notwithstanding the fact that.

Speaker Change: We have been.

John <unk>: $12 million on paid search in the second quarter and.

John <unk>: Still have $19 million in the first half.

David Schwarzbach: We're trying to target that is where we're always trying to drive. And again, I just want to underscore cost per lead. If we have a more relevant lead, then we do believe that advertisers would be willing to pay more on a cost per click basis. So that's something that we track very closely. It's something that we've been able to do in the past. And we do have quite a robust roadmap to continue to drive improvements in the head text back.

John <unk>: We revised our estimate of $35 million, so even as we spend.

Unknown Attendee: Thank you very much.

John <unk>: $16 million in the second half, we believe that the improvements that we've been able to make to the way that we.

John <unk>: Build our advertising programs that those will persist and there's something I did want to underscore that's very important about our broad effort around peak search.

John <unk>: Something that we've said in the past which is <unk>.

David Schwarzbach: We have built an auction system for matching consumers with advertisers, and that auction system takes into account a very large number of parameters. And what we're really doing is finding the market clearing price at a moment in time for that visitor in the category they're searching for in the geography at that time of year. And what we're always striving to do is to get better and better at doing that matching. And fundamentally, what we believe is that when we do that, well, we drive incremental value to the advertisers in terms of cost per lead.

John <unk>: As we have built out our capability to purchase leads at scale and as we've worked to do that efficiently and generate ROE as we've made numerous improvements to the site and the experience.

Unknown Attendee: Once again, ladies and gentlemen, if you have a question, it is star one on your telephone keypad.

Georgia Anderson: Your next question comes from the line. It looks as though my apologies, your next question comes from the line of Georgia Anderson with wolf research. Your line is open.

John <unk>: Whether it's new account creation.

John <unk>: Magic links for log in the way that we buy those ads the landing pages that we land folks too.

David Schwarzbach: Hi, I'm angler shwada cajuria and I just had a question in relation to your guidance for the full year. What kind of what's giving you confidence that you could raise even a kind of by 10 million and how do you really tend to offset This weakness and our know that we've talked about so far. Thanks for the question, Georgia. Fundamentally, there's the, there are a couple things that are happening simultaneously that do give us the confidence to be able to raise the EBITDA guide.

John <unk>: Now embarked on improving the way that we correct those leads that hasnt benefit not just for paid search around consumer acquisition, but more broadly all of the marketing that we're doing in paid search for instance around business acquisition, and then broadly making consumers.

John <unk>: Enabling consumers to use yelp and a more seamless way and also rolls over to the request a quote side, while we've continued to make improvements. So you take this.

John <unk>: Focus on continuous improvement you combine it with.

Speaker Change: Very very strong discipline around incremental spend and we feel that that supports obviously the guide that we've provided for the second half of the year.

David Schwarzbach: The first is, again, notwithstanding the fact that we have spent $12 million on some paid search in the second quarter and still have, so that's 19 million in the first half. We revised our estimate to 35 million. So even as we spend $16 million in the second half, we believe that the improvements that we've been able to make to the way that we build our advertising programs that those will persist. And there's something I didn't want to underscore that's very important about our broad effort around paid search, something that we've said in the past, which is, as we have built out our capability to purchase these at scale.

David Schwarzbach: And we drive the incremental value to the consumer in the form of relevant content. So the trends over the past several quarters have been around this, the same level of growth, which is 9% click growth with about flat CPC growth. Now, I just want to underscore that we did see real strength in growth in clicks in the second half of next year. So over the coming two quarters, we do expect that CPCs will moderate, and that is to go up a few percentage points, and click growth will come down a few percentage points, but obviously, it's clicks times CPC, and that's what supports the guide that we've given you.

David Schwarzbach: Now what are the things that we're concerned with in terms of being able to continue to deliver value? We're continuing to also deliver on the revenue targets. That is where we're always trying to drive. And again, I just want to emphasize the costs per lead. If we have a more relevant lead, then we do believe that advertisers would be willing to pay more on a cost per click basis. So that's something that we track very closely. It's something that we've been able to do in the past, and we do have quite a robust roadmap to continue to drive improvements in that.

Operator: Once again, ladies and gentlemen, if you have a question, it is star one on your telephone keypad. Your next question comes from the line. It looks as though, oh my apologies, your next question comes from the line of Georgia Anderson with Wolf Research. Your line is open.

Georgia Anderson: Thanks for the question, Georgia. Fundamentally, there are a couple things that are happening simultaneously that do give us the confidence to be able to raise the EBITDA guide. The first is, again, notwithstanding the fact that we have spent $12 million on paid search in the second quarter and still have, so that's 19 million in the first half. We revised our estimate to $35 million.

David Schwarzbach: So even as we spend $16 million in the second half, we believe that the improvements that we've been able to make to the way that we build our advertising programs will persist. And there's something I did want to underscore that's very important about our broad effort around paid search. Something that we've said in the past, which is, As we have built out our capability to purchase leads at scale, and as we've worked to do that efficiently and generate a ROAS, we've made numerous improvements to the site and the experience.

David Schwarzbach: Whether it's new account creation, magic links for login, the way that we buy those ads, or the landing pages that we land folks on, we're now embarked on improving the way that we direct those leads. That has benefits, not just for paid search around consumer acquisition, but more broadly, all of the marketing that we're doing in paid search, for instance, around business acquisition. And then, broadly, making consumers, enabling consumers to use Yelp in a more seamless way.

David Schwarzbach: It also rolls over to the request-to-quote side, where we've continued to make improvements. So you take this focus on continuous improvement and you combine it with very, very strong discipline around incremental spend. And we feel that that supports, obviously, the guidance that we provided for the second half of the year.

John <unk>: Okay.

Speaker Change: That's helpful. Thank you.

Speaker Change: This concludes the question and answer session concludes today's conference call. Thank you for joining you may now disconnect your lines.

Operator: This concludes the question and answer session and concludes today's conference call. Thank you for joining us. You may now disconnect your line.

John <unk>: Okay.

John <unk>: Hum.

John <unk>: Yeah.

David Schwarzbach: And as we've worked to do that efficiently in generate a row as we've made numerous improvements to the site and the experience, whether it's new account creation. And then magic links for login, the way that we buy those ads, the landing pages that we land folks to, we're now embarked on improving the way that we direct those leads that has benefit, not just for paid search around consumer acquisition, but more broadly all of the marketing that we're doing in paid search, for instance, around business acquisition.

David Schwarzbach: And then broadly making consumers, enabling consumers to use yelp in a more seamless way. It also rolls over to the request to quote side where we've continued to make improvements. So you take this focus on continuous improvement, you combine it with very, very strong discipline around incremental spend. And we feel that that supports, obviously, the guys that we've provided for the second half of the year.

Unknown Attendee: This concludes the question and answer session and concludes today's conference call.

Unknown Attendee: Thank you for joining.

Unknown Attendee: You may now disconnect your line.

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