Q3 2025 Yelp Inc Earnings Call

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After the Speakers' remarks, there will be a question and answer session. If you would.

Like to ask a question during this time simply press star followed by the number one on your telephone keypad.

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Thank you.

I would now like to turn the call over to Kate Krieger director of Investor Relations.

Please go ahead.

Good afternoon, everyone and thanks for joining us on Yelps third quarter, 2020 five earnings conference call. Joining me today are Yelp, Chief Executive Officer, Jeremy Stoppelman, Chief Financial Officer, David Schwartzbach, and Chief operating Officer, Chad nothing.

We published a shareholder letter on our Investor Relations website, and with the SEC and hope everyone had a chance to read it will provide some brief opening comments and then turn to your questions now.

Now I'll read our safe Harbor statement.

We will 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.

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 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.

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 adjusted EBITDA GAAP net income margin to adjusted <unk>.

EBITDA margin and GAAP cash flows from operating activities to free cash flow.

And with that I will turn the call over to Jeremy. Thanks.

Thanks, Kate and welcome everyone.

The ops transformation with AI continues to accelerate we are reconsidering the experience on yelp for both consumers and businesses recently rolling out more than 35, new features and updates that leveraged the power of AI in combination with our human generated highly trusted content.

This valuable content also underpins the continued expansion of our data like depreciation taken together, we believe our product led strategy along with our broad reach will enable us to deliver on our ambitious product roadmap and create long term value for our shareholders.

To the third quarter <unk>.

Yelp delivered record net revenue and strong profitability, we generated $376 million of net revenue with a net income margin of 10% and adjusted EBITDA margin of 26%.

Underlying our topline results services revenue increased by 7% year over year and drove our business performance at the same time, the operating environment for businesses in our restaurant retail and other categories remained challenging with our or no revenue declining by 2% year over year.

We're continuing to deepen our focus on services, excluding projects acquired through our paid search initiatives request a quote projects increased by approximately 10% year over year in the third quarter driven by improvements to the request flow in our AI Chatbot Yelp assistant.

In fact project submissions through Yelp assistant increased by nearly 400% year over year, our product and engineering teams also recently rolled out an enhanced version of Yelp assistant that remember as important details and preferences from past projects.

In addition to Yelp assistant we are using AI to simplify how consumers evaluate and select the right service pros, we extended our review insights feature to services categories created a dedicated before and after section and businesses media galleries and expanded our response quality badges for service pros nationwide.

Beyond services, our product and engineering teams continue to leverage AI to transform the way consumers connect with great local businesses in our categories. We recently expanded the emphasis into our business pages, leveraging our trusted content and information from businesses websites to give users in state reliable answers your questions.

About specific businesses.

This is a significant step towards delivering a comprehensive ecosystem that works and uniformly across all categories and entry points. We plan to begin testing our category wide Yelp assistant before the end of the year.

Also recently launched menu vision and augmented reality feature that enables diners to point their camera phones at menus and view photos as well as reviews of individual dishes in.

In addition, we are now partnering with door dash is our preferred food ordering and delivery provider expanding our food ordering network by approximately 200000, new restaurants to a total of more than 500000. We expect this partnership will generate incremental revenue, which will be recorded as other revenue.

Lastly, we rolled out two new voice AI subscription products.

For restaurants, and yell perception is for services. These SaaS solutions combined <unk> with yelps high quality data to provide smarter more human like answering services tailored with information specific to each individual business. We are excited about the potential of these incremental offerings, which we believe are best in class early results indicate a strong.

Product market fit saving restaurants and service pro significant time.

In summary, our focus on services and AI products has continued to transform our business and we remain excited by the opportunities ahead to drive profitable growth and shareholder value over the long term with that I'll turn it over to David.

Jeremy in the third quarter net revenue increased by 4% year over year to $376 million.

$6 million above the high end of our outlook range net income increased by 2% year over year to $39 million or <unk> 61 per share on a diluted basis.

Operator: Yelp Q4 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I'd now like to turn the call over to Kate Krieger, Director of Investor Relations. Please go ahead.

Representing a 10% margin adjusted EBITDA decreased by 3% year over year to $98 million.

Representing a 26% margin putting at $13 million above the high end, Brian Hook range.

As Jeremy mentioned services revenue increased by 7% year over year to a quarterly record $244 million.

Restaurants, and retailers remain pressured in the quarter, resulting in a 2% year over year decline in <unk> revenue to $114 million.

Host for restaurants and yell perceptionist for services, these SAS Solutions combined loms with Yelp high quality data, to provide smarter, more human-like answering Services tailored with information specific to each individual business. We are excited about the potential of these incremental offerings which we believe are best in class early results. Indicate a strong product Market fit, saving restaurants and service pros significant time

Kate Krieger: Good afternoon, everyone, and thanks for joining us on Yelp's third quarter 2025 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. We published the 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, 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 revision to these forward-looking statements in light of new information or future events.

A decrease in our rns locations offset growth in services locations in the quarter. This resulted in an overall decline of 2% year over year in paying advertising locations to 512000.

In summary, our focus on services and AI products has continued to transform our business. And we remain excited by the opportunities ahead to drive profitable growth and shareholder value over the long term with that. I'll turn it over to David. Thanks, Jeremy in the third quarter, net revenue increased by 4% year-over-year to 376 million.

AD clicks declined by 11% year over year in the quarter, primarily due to macro pressures to a lesser extent competitive pressures and our R&M categories and reduced spend on paid project acquisition in the current year period also negatively impacted clinics.

$6 million above the high end of our outlook range, net income increased by 2% year-over-year to $39 million, or $0.61 per share on a diluted basis.

Average CPC increased by 14% year over year, reflecting growth in services demand and fewer clicks overall.

Representing a 10% margin adjusted ebit dot decreased by 3% year-over-year to 98 million representing. A 26% margin putting at 13 million dollars above the high, end of Route, look range,

Turning to expenses, our third quarter results demonstrate the margin potential of our business with a net income margin of 10% and an adjusted EBITDA margin of 26%.

As Jeremy mentioned Services, Revenue increased by 7% year-over-year to a quarterly record 244 million.

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.

We achieved these strong results through disciplined expense management.

Restaurants and retailers remain pressured in the quarter resulting in a 2% year-over-year decline in our rno Revenue to 114 million.

As we continue to focus on allocating resources towards our best opportunities. We continue to expect head count will be approximately flat year over year by the end of 2025.

In the third quarter, we reduced stock based compensation expense as a percentage of revenue by two percentage points year over year to 9%.

A decrease in rrno locations, I'll set growth and services locations in the quarter. This resulted in an overall decline of 2% year-over-year in paying advertising locations to 512,000,

We remain focused on reaching our targets up less than 8% by the end of this year and less than 6% by the end of 2027, we expect these efforts to stack over time, improving the quality of our adjusted EBITDA and benefiting GAAP profitability in the years to come.

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 adjusted EBITDA, GAAP net income margin to adjusted EBITDA margin, and GAAP cash flows from operating activities to free cash flow. With that, I will turn the call over to Jeremy.

Ad clicks declined by 11% year-over-year in the quarter primarily due to macro pressures to a lesser extent, competitive pressures in rrno categories and reduce spend on paid project acquisition. In the current year period. Also negatively impacted clicks

Our capital allocation strategy consists of three main elements first maintaining a healthy cash balance to fund our operations second retaining balance sheet capacity for acquisitions and third returning capital to shareholders through share repurchases in the third quarter, we repurchased $75 million worth of shares.

average CPC increased by 14% year-over-year reflecting growth in Services demand and fewer clicks overall

Turning to expenses are third quarter, results demonstrate the margin potential of our business with a net income margin of 10% and an adjusted hepto margin of 26%.

We achieved these strong results through disciplined expense management.

David Schwarzbach: Thanks, Kate, and welcome, everyone. Yelp's transformation with AI continues to accelerate. We are reconceiving the experience on Yelp for both consumers and businesses, recently rolling out more than 35 new features and updates that leverage the power of AI in combination with our human-generated, highly trusted content. This valuable content also underpins the continued expansion of our data licensed memberships. Taken together, we believe our product-led strategy, along with our broad reach, will enable us to deliver on our ambitious product roadmap and create long-term value for our shareholders. Turning to the third quarter, Yelp delivered record net revenue and strong profitability. We generated $376 million of net revenue with a net income margin of 10% and an adjusted EBITDA margin of 26%. Underlying our top-line results, services revenue increased by 7% year over year and drove our business performance.

At an average purchase price of $32 59 per share.

As of September 32025, we had $127 million remaining under our existing repurchase authorization.

As we continue to focus on allocating resources towards our best opportunities, we expect headcount to be approximately flat year-over-year by the end of 2025.

We plan to continue repurchasing shares through the remainder of 2025 subject to market and economic conditions.

In the third quarter, we reduced stock-based compensation expense as a percentage of Revenue by 2 percentage points year-over-year to 9%.

Turning to our outlook with heightened macroeconomic uncertainties, we did not see our typical seasonal increases in revenue in the second and third quarters.

We anticipate that these heightened macroeconomic uncertainty will persist in the fourth quarter with net revenue decreasing from the third quarter as.

We remain focused on reaching our targets of less than 8% by the end of this year and less than 6% by the end of 2027. We expect these efforts to stack over time, improving the quality of our adjusted ibida and benefiting Gap profitability in the years to come.

As such we are lowering our outlook range for the full year. We now expect net revenue will be in the range of $1 46 zero billion.

2146 5 billion.

Reflecting a decrease of $8 million at the midpoint.

David Schwarzbach: At the same time, the operating environment for businesses in our restaurant, retail, and other categories remained challenging, with RRNO revenue declining by 2% year over year. We are continuing to deepen our focus on services, excluding projects acquired through our paid search initiative. Request to Quote projects increased by approximately 10% year over year in the third quarter, driven by improvements to the request flow in our AI chatbot, Yelp Assistant. In fact, project submissions through Yelp Assistant increased by nearly 400% year over year. Our product and engineering teams also recently rolled out an enhanced version of Yelp Assistant that remembers important details and preferences from past projects. In addition to Yelp Assistant, we are using AI to simplify how consumers evaluate and select the right service pros.

Turning to margin, we expect fourth quarter expenses to remain relatively consistent with the third quarter as we remain focused on disciplined expense management.

Our Capital allocation strategy consists of 3, main elements first maintaining a healthy cash balance to fund our operations, second retaining balance sheet capacity for Acquisitions and third returning Capital to shareholders through share repurchases. In the third quarter. We repurchased 75 million worth of shares at an average purchase price of $32.59 per share.

In addition, we expect our efforts to reduce SBC will continue to act as a headwind to adjusted EBITDA, but will not impact net income.

As of September 30th 2025 we have 127 million remaining under our existing repurchase authorization.

As such we are narrowing our range and now expect full year adjusted EBITDA to be in the range of $360 million to $365 million.

We plan to continue repurchasing shares through the remainder of 2025 subject to Market and economic conditions.

And an increase of $8 million at the midpoint.

Turning to our Outlook with heightened, macroeconomic uncertainties. We did not see our typical seasonal increases in Revenue in the second, and third quarters.

In closing yelps third quarter results reflect the underlying profitability of our business. We continue to believe in the opportunities ahead to create shareholder value over the long term as we focus our investment in areas that we believe will transform our business, particularly around AI.

We anticipate that these heightened macroeconomic uncertainties will persist in the fourth quarter with net revenue. Decreasing from the third quarter.

David Schwarzbach: We extended our review insights feature to services categories, created a dedicated before and after section in businesses' media galleries, and expanded our response quality badges for service pros nationwide. Beyond services, our product and engineering teams continue to leverage AI to transform the way consumers connect with great local businesses in RRNO categories. We recently expanded Yelp Assistant to RRNO business pages, leveraging our trusted content and information from businesses' websites to give users instant, reliable answers to questions about specific businesses. This is a significant step towards delivering a comprehensive Yelp Assistant that works uniformly across all categories and entry points. We plan to begin testing our category-wide Yelp Assistant before the end of the year. We also recently launched MenuVision, an augmented reality feature that enables diners to point their camera phones at menus and view photos, as well as reviews of individual dishes.

With that operator, please open up the line for questions.

As a reminder, if you'd like to ask a question. Please press star followed by the number one on your telephone keypad.

As such, we are lowering, our Outlook range for the full year. We now expect, net revenue will be in the range of 1.460 billion to 1.465 billion, reflecting a decrease of 8 million at the midpoint.

We ask that participants limit themselves to one question and one follow up question.

Your first question comes from the line of Eric Sheridan with Goldman Sachs.

Please go ahead.

Hi, This is Alex on for Eric. Thanks for taking my question just wanted to unpack what you're seeing.

Turning to margin. We expect fourth quarter, expenses to remain relatively consistent with the third quarter, as we remain focused on disciplined expense Management. In addition, we expect our efforts to reduce SBC will continue to act as a headwind to adjusted Eva dots, but will not impact net income.

In the macro environment, a little bit more I think if you take just looking at the model. If you take sort of normal normal sequential seasonality in this in the services segment in your Q4 guide it implies a pretty meaningful step down in <unk> or are you seeing sort of more broad based Mac.

As such we are narrowing, our range and now expect full year, adjusted ibida to be in the range of 36060 million to 365 million reflecting, an increase of 8 million dollars at the midpoint.

Macro pressures within the services segment as well or is it really still just concentrated in the <unk> segment. Thank you.

David Schwarzbach: In addition, we are now partnering with DoorDash as our preferred food ordering and delivery provider, expanding our food ordering network by approximately 200,000 new restaurants to a total of more than 500,000. We expect this partnership will generate incremental revenue, which will be recorded as other revenue. Lastly, we rolled out two new voice AI subscription products, Yelp Host for restaurants, and Yelp Receptionist for services. These SaaS solutions combine LLMs with Yelp's high-quality data to provide smarter, more human-like answering services, tailored with information specific to each individual business. We are excited about the potential of these incremental offerings, which we believe are best in class. Early results indicate a strong product-market fit, saving restaurants and service pros significant time.

Alex Thanks for the question this is David so.

Continue to believe in the opportunities ahead to create shareholder value over the long term. As we focus our investment in areas that we believe will transform our business. Particularly around AI.

On the macro front as we mentioned the.

With that operator, please open up the line for questions.

I'm not sure is that we saw emerging in the spring, particularly in April persisted through the second quarter into the third quarter and we did see those persist here into the fourth quarter.

As a reminder, if you would like to ask a question, please press star. Followed by the number 1 on your telephone keypad.

In terms of.

We ask that participants limit themselves to 1 question and 1 follow-up question. Your first question comes from the line of Eric Sheridan with Goldman Sachs.

Pressure on our or no versus services first I think it's important to just recognize our seasonality between those two sites.

Please go ahead.

Of our business on the <unk> front, there is typically a seasonal rise in the fourth quarter.

And on services. There is typically a seasonal decline as service pros wind down for the year and weather changes in terms of <unk> more specifically, we have seen that there is more caution among advertisers and their spend as they come into the fourth.

David Schwarzbach: In summary, our focus on services and AI products has continued to transform our business, and we remain excited by the opportunities ahead to drive profitable growth and shareholder value over the long term. With that, I'll turn it over to David.

Hi. This is Alex on for Eric, thanks for taking my question. Um just wanted to unpack what you're seeing um in the macro environment, a little bit more you know I think if you take just looking at the model, if you take uh sort of normal normal, normal sequential seasonality in this in the services segment in your Q4 guide, it implies a pretty meaningful step down in our our know. So are you seeing sort of a a more broad-based uh macro pressures within the services segment as well? Or is it really still just concentrated in the RR know segment. Thank you.

Quarter, I think you've heard that from a couple of other.

Jed Nachman: Thanks, Jeremy. In the third quarter, net revenue increased by 4% year over year to $376 million, $6 million above the high end of our outlook range. Net income increased by 2% year over year to $39 million, or $0.61 per share on a diluted basis, representing a 10% margin. Adjusted EBITDA decreased by 3% year over year to $98 million, representing a 26% margin, putting it $13 million above the high end of our outlook range. As Jeremy mentioned, services revenue increased by 7% year over year to a quarterly record $244 million. Restaurants and retailers remained pressured in the quarter, resulting in a 2% year-over-year decline in RRNO revenue to $114 million. A decrease in RRNO locations offset growth in services locations in the quarter. This resulted in an overall decline of 2% year over year in paying advertising locations to 512,000.

Alex. Thanks for the question. This is David. So uh, broadly on the macro front as we mentioned the

Consumer Internet companies. This week and so that is certainly something that we have seen as well on the services front, we continue to see.

Pressures that we saw merging in the spring particularly in April, persisted through the second quarter into the third quarter, and we did see those persist here into the fourth quarter.

Consistent demand from advertisers still wanting to reach consumers as they look at doing projects or having repairs done. So net net it's more significant on the Rms side.

in terms of,

Pressure on rno versus Services. First, I think it's important to just recognize our seasonality between those 2 sides.

Got it thank you.

The next question comes from the line of Jason <unk> with Craig Hallum. Please.

Please go ahead.

Great. Thank you. This is Kyle on for Jason So maybe to start you called out in the shareholder letter the strong demand for data licensing products, particularly in AI search and I think we saw some of that was the growth acceleration in the other segment, but I'm just curious if theres any additional color there on the expanding opportunities for yelp, especially as we're seeing the AI search pilot.

Before I start to stand up more third party integration.

Jed Nachman: Ad clicks declined by 11% year-over-year in the quarter, primarily due to macro pressures. To a lesser extent, competitive pressures in RRNO categories and reduced spend on paid project acquisition in the current year period also negatively impacted clicks. Average CPC increased by 14% year-over-year, reflecting growth in services demand and fewer clicks overall. Turning to expenses, our third-quarter results demonstrate the margin potential of our business with a net income margin of 10% and an adjusted EBITDA margin of 26%. We achieved these strong results through disciplined expense management. As we continue to focus on allocating resources towards our best opportunities, we continue to expect headcount will be approximately flat year-over-year by the end of 2025. In the third quarter, we reduced stock-based compensation expense as a percentage of revenue by 2 percentage points year-over-year to 9%.

Hey, Kyle this is Jeremy.

Yeah, I mean, we continue to be really excited about this area.

<unk>, obviously have highly trusted content about smbs, which we think is a critical ingredient for.

For any of these <unk>.

Of our business on the rno front. There is typically a seasonal rise in the fourth quarter and on Services, there's typically a seasonal decline as service pros wind down for the year and and whether changes in terms of rno more specifically, we have seen that there is more caution among advertisers in their spend. As they've come into the fourth quarter and thank you for that from a couple of other consumer internet companies this week. And so, that is certainly something that we have seen as well on the services front. We continue to see, uh, consistent demand from advertisers still wanting to reach consumers as they look at doing projects or having repairs done. So net net, it's more significant on the RMS.

Based players that are trying to provide.

Search experience, especially one that competes with Google.

Thank you.

We talked about the momentum last quarter I would say the quality of conversations we continue to have with the various folks in this space.

The next question comes from the line of Jason Cryer with Craig Holland.

Please go ahead.

Is excellent I think we'll have more to talk about.

Still kind of early and the development of this area, but we're really excited both on the data licensing side as well as the API is we have to offer.

Thank you I'll pause just a critical resource and I'd say the conversations are showing that so far.

Great. Thank you. Uh, this is Cal for Jason so maybe to start, you know, you called out in the shareholder letter, the strong demand for data licensing products, particularly at AI search and I think we saw some of that with the growth acceleration and the other segments, but just curious, if there's any additional color there on the expanding opportunities, for Yelp, especially as we're seeing these AI search platforms, start to stand up more third-party Integrations.

Great and then just as a follow up you integrated the repair Pal booking system into the Yelp platform and now youre launching the door Dash partnership. So just curious with the greater ability to tie out AD spend on the platform the bookings and transactions what benefits might you expect to see whether its a CPC uplift.

Jed Nachman: We remain focused on reaching our targets of less than 8% by the end of this year and less than 6% by the end of 2027. We expect these efforts to stack over time, improving the quality of our adjusted EBITDA and benefiting GAAP profitability in the years to come. Our capital allocation strategy consists of three main elements: first, maintaining a healthy cash balance to fund our operations; second, retaining balance sheet capacity for acquisitions; and third, returning capital to shareholders through share repurchases. In the third quarter, we repurchased $75 million worth of shares at an average purchase price of $32.59 per share. As of 30 September 2025, we have $127 million remaining under our existing repurchase authorization. We plan to continue repurchasing shares through the remainder of 2025, subject to market and economic conditions.

There are more resilient AD spend any color there would be great.

Yeah. Hey Cal, this is Jeremy. Um yeah I mean we continue to be really excited about this area uh for Yelp obviously have highly trusted content about smbs which we think is a critical ingredient uh for any of these LM uh based players that are trying to provide a general search experience, especially 1 that could compete with Google.

Okay.

Yeah with repair Pal the integration continues to go well.

You have started rolling out bookings there.

To expose repair Pal to Yelp users I think.

That's positive that certainly.

Helping us.

The services revenue side as a contributor there.

You mentioned door Dash, we're really excited about that partnership as well obviously.

Uh, we talked about the momentum, uh, last quarter, I would say, you know, the the quality of conversations we continue to have with the various folks in this space, uh, is excellent. I think, uh, you know, we'll have more to to talk about. Um, you know, we're still all kind of early and uh, the development of this area, but we're really excited. Both on our on the data licensing side, as well as the apis, we have to offer. We think, you know, you helped us just a critical resource and I'd say the conversations are showing

Expands our footprint in terms of restaurant coverage and with very high quality partner leader in this space.

Not so far.

So we do see some incremental revenue coming from that.

Jed Nachman: Turning to our outlook, with heightened macroeconomic uncertainties, we did not see our typical seasonal increases in revenue in the second and third quarters. We anticipate that these heightened macroeconomic uncertainties will persist in the fourth quarter, with net revenue decreasing from the third quarter. As such, we are lowering our outlook range for the full year. We now expect net revenue will be in the range of $1.460 to 1.465 billion, reflecting a decrease of $8 million at the midpoint. Turning to margin, we expect fourth-quarter expenses to remain relatively consistent with the third quarter, as we remain focused on disciplined expense management. In addition, we expect our efforts to reduce SBC will continue to act as a headwind to adjusted EBITDA, but will not impact net income.

As we get further out.

Great. Thanks for taking my question.

Sure thing.

Your next question comes from the line of Josh Beck with Raymond James. Please go ahead.

Great. And then just as a follow up, you know, you integrated, the repair, pal booking system into the yel platform and now you're launching the door Dash partnership. So, just curious, you know what the greater ability to tie out ad spend to on the platform to bookings and transactions. You know what benefits might you expect to see whether it's a CPC uplift or more resilient ad spend any color? That would be great.

Yeah.

Yes. Thanks for the question, maybe just following on the door dash.

<unk> certainly it seems like it's a much bigger footprint of restaurants over half a million dollars.

I'm curious should we think about it as something like a.

No.

Lead generation type of bottle I mean, my experience has been youre on Yelp site something in order of the kind of deep links to jordache. So is that kind of the right trigger for.

Modeling out or any kind of guidance you can give us there.

Jed Nachman: As such, we are narrowing our range and now expect full-year adjusted EBITDA to be in the range of $360 million to $365 million, reflecting an increase of $8 million at the midpoint. In closing, Yelp's third-quarter results reflect the underlying profitability of our business. We continue to believe in the opportunities ahead to create shareholder value over the long term as we focus our investment in areas that we believe will transform our business, particularly around AI. With that, operator, please open up the line for questions.

Yes, Hi, this is Jen I can take that.

As Jeremy mentioned is first of all we're really excited about this partnership the footprint of restaurants has expanded dramatically and again by about 200000 restaurants, and I think if you're a consumer.

Uh, you mentioned door Dash. Uh, we're really excited about that partnership as well obviously. Um, you know, expands our footprint, in terms of restaurant coverage, and with the, you know, very high quality partner leader in the space. Uh, so you know, we do see some uh, incremental Revenue coming from that. Uh, as we get further up,

Great. Thanks for taking my question.

Looking for the best food options in your area, it's a natural progression to then.

Your next question comes from the line of Josh Beck with Raymond James.

Please go ahead.

Transact upon the platform.

And I think the way you described it is in fact, how it is happening on the platform. So.

You have a.

Direct integration into the door dash ordering model by the way we have other food partners that were still partnered with in order to kind of keep that full coverage.

Operator: As a reminder, if you would like to ask a question, please press star followed by the number one on your telephone keypad. We ask that participants limit themselves to one question and one follow-up question. Your first question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead.

Yes, thanks for the question. Maybe just, uh, following on, on the door Dash. Um, partnership certainly seems like it's a much bigger footprint of restaurants, I think over half a million. Um, I'm I'm curious, it should be sick about it as something like a

But we really just think ultimately it's a much better consumer experience to be able to kind of get.

Consummated everything on the Yelp platform and are really excited about moving forward.

[Analyst] (Goldman Sachs): Hi, this is Alex on for Eric. Thanks for taking my question. I just wanted to unpack what you're seeing in the macro environment a little bit more. You know, I think if you take just looking at the model, if you take sort of normal sequential seasonality in the services segment in your Q4 guide, it implies a pretty meaningful step down in RRNO. Are you seeing sort of more broad-based macro pressures within the services segment as well, or is it really still just concentrated in the RRNO segment? Thank you.

Okay, and then maybe.

You know, lead generation type of model on in my experience has been, you know, you're on Yelp and you find something to order and it kind of deep links to Door Dash. So, is that kind of the right trigger, you know, for, uh, modeling it out or, you know, any kind of guide that you can give us their

A follow up.

On the AI strategy.

Seems like there is a lot of.

Vectors you have the on platform push with AI assistant and Yelp assistant and the like.

We've seen some examples.

Last few months of.

Yeah, hi, this is Jed. I can take that, um, you know, as Jeremy mentioned, first of all, we're really excited about this partnership. The, the, the footprint of restaurant has expanded dramatically on Yelp by about 200,000 restaurants. And I think, you know, if you're a consumer, uh, looking for the best food options in your area, it's a natural progression to then, um,

Internet platforms kind of.

Enabling.

Third party chat bots, which in their app not a lot of those examples and then obviously.

David Schwarzbach: Alex, thanks for the question. This is David. Broadly on the macro front, as we mentioned, the pressures that we saw emerging in the spring, particularly in April, persisted through the second quarter into the third quarter, and we did see those persist here into the fourth quarter. In terms of pressure on RRNO versus services, first, I think it's important to just recognize our seasonality between those two sides of our business. On the RRNO front, there is typically a seasonal rise in the fourth quarter, and on services, there's typically a seasonal decline as service pros wind down for the year and weather changes. In terms of RRNO more specifically, we have seen that there is more caution among advertisers in their spend as they've come into the fourth quarter. I thank you for that from a couple of other consumer internet companies this week.

The bigger kind of pushed too.

Jed to commerce.

Logistic browsers and doing partnerships there so there is no.

Obviously, that's probably just a simple, but there's many ways too.

Kind of form this strategy just kind of curious how youre thinking about it.

Transact on the platform. Um, and, you know, I think the way you described it is, in fact how it is happening on the platform. So, um, you know, you have a, um, uh, you know, direct integration into the door, Dash ordering model, by the way, we have other food partners that we're still partnered with in order to kind of keep that full coverage. Um, but we really just think ultimately it's a it's a much better consumer experience to be able to kind of uh get consummate everything on the Yelp platform. And we're really excited about moving forward.

Broadly and maybe where that could head.

In the next year.

Yeah sure thing this is Jeremy I'll take that I think AI for Yelp is really transformative we've.

We've already started down that path you mentioned Yelp assistant.

So that was our first chat bot agent like products are really geared towards services. We have recently expanded it. So now there is a version of Yelp assistant that lives on business pages. So you can ask.

okay, and then maybe, um, a follow-up um, on the AI strategy, you know, it certainly seems like there's a lot of, um, vectors you have the the on platform push with, with AI assistant and or the Yelp assistant and the like, uh, we've seen some examples, um, you know, in the last few months of

internet platforms, kind of

Wide variety of categories, you can ask anything about that business and it's going to give you answers and back it up with our trusted content. So that's really exciting and that's essentially a way point as we get to the cross category up assistant, which we're going to be testing here in Q4 with more of an expansion expected early next year.

David Schwarzbach: That is certainly something that we have seen as well. On the services front, we continue to see consistent demand from advertisers still wanting to reach consumers as they look at doing projects or having repairs done. Net net, it's more significant on the RRNO side.

For us that's a big deal that's going to be the way that consumers interact with Yelp content I think in the future. Obviously a lot of people are getting used to.

enabling, um, you know, third-party chat Bots within, you know, their app, not a lot of those examples. And then obviously, you know, the bigger kind of push to, um, agent to Commerce and, um, project browsers and, and doing Partnerships there. So, you know, there's a obviously that's probably just a sample, but there's many ways to, um, you know, kind of form this strategy, just kind of curious how you're you're thinking about it. Um, broadly and, and maybe where, where that could, um, head, uh, in the next year.

The chat interface as a way to tap into insights and information and we have really great content highly trusted millions of reviews and to be able to put a chat interface on all of that and serve up exactly what youre looking for I think is going to Wow, our consumers. So we're really looking forward to that.

[Analyst] (Goldman Sachs): Thank you.

Operator: The next question comes from the line of Jason Krier with Craig-Hallum. Please go ahead.

We've also built.

[Analyst] (Craig-Hallum): Great. Thank you. This is Cal for Jason. To start, you called out in the shareholder letter the strong demand for data licensing new products, particularly at AI search. I think we saw some of that with the growth acceleration in the other segment. Just curious if there's any additional color there on the expanding opportunities for Yelp, especially as we're seeing these AI search platforms start to stand up more third-party integrations.

And just started selling our Yale posting yelp receptionist products, which are essentially answering services.

That are powered by AI Fantastic technology time, saving also helps businesses capture more value both from their yelp leads but it can be employed across all leads.

There is no reason why that phone number.

And shouldnt be added to their website to Google et cetera, and really create leverage reducing costs, because maybe they don't need to have as many people picking up the phone.

Jeremy Stoppelman: Yeah. Hey, Cal, this is Jeremy. Yeah, I mean, we continue to be really excited about this area for Yelp. Obviously, we have highly trusted content about SMBs, which we think is a critical ingredient for any of these LLM-based players that are trying to provide a general search experience, especially one that competes with Google. We talked about the momentum last quarter. I would say the quality of conversations we continue to have with the various folks in this space is excellent. I think, you know, we'll have more to talk about. You know, we're still kind of early in the development of this area, but we're really excited both on the data licensing side, as well as the APIs we have to offer. We think Yelp is just a critical resource, and I'd say the conversations are showing that so far.

But also capturing critical information, whether it's for a restaurant they can actually tie into our front of house reservations, and waitlist services and have people make bookings or add themselves or take themselves off the waitlist.

Yeah, sure thing is, Jeremy. I'll take that. I think, you know, AI for Yelp is, is really transformative. Uh, you know, we've already started down that path. You mentioned Yelp assistant. Uh, so that was our first chatbot agent like, uh, product, uh, really geared towards Services. Uh, we have recently expanded it. So now there is a version of Yelp assistant that lives on business pages. So you can ask, you know, in a v, why variety of categories, you can ask anything about that business, and it's going to give you answers and back it up with our trusted content. So that's really exciting. And that's essentially a way point as we get to the Cross category, Yelp assistant, which we're going to be testing here in Q4, uh, with more of an expansion expected early next year, I think for us, that's, that's a big deal. Uh, that's going to be the way that consumers interact, uh, with Yelp content, I think in the future, obviously, a lot of people are getting used to, uh, the chat interface is a way to tap into insights and information and we have

Is this really powerful stuff.

With a huge Tam so it's as if we've kind of launched a whole little.

Startup with Yelp.

But with all of our great content as well as our incredible distribution power.

So we're looking forward to seeing how that plays out.

And then also on the AI side as you mentioned.

There's a lot of players trying to create valuable search services and so that's where our data licensing business comes in our Apis that we offer to tap into yelp content as well as our.

You know, really great content, highly trusted millions of reviews and to be able to put a chat interface on all of that and serve up exactly what you're looking for. I think is, is going to wow, consumers. So we're really looking forward to that. Uh, We've also built and uh, just uh, started selling our Yelp post and Yelp receptionist products, which are essentially answering Services. Uh, that are powered by AI. Uh, fantastic technology. Time-saving also helps

AI Tech.

[Analyst] (Craig-Hallum): Great. Just as a follow-up, you know, you integrated the RepairPal booking system into the Yelp platform, and now you're launching the DoorDash partnership. Just curious, you know, with the greater ability to tie out ad spend on the platform to bookings and transactions, you know, what benefits might you expect to see, whether it's a CPC uplift or a more resilient ad spend? Any color there would be great.

Bringing things like Yelp assistant wrapped in and an API is something we definitely want to do and can create monetization opportunities.

Others off Yelp, so theres, just a lot of different ways for us to invest and leverage AI and we're early innings, but we do see it as transformational for the company over time.

Okay, and I don't know if I can sneak in one more for David.

Jeremy Stoppelman: Yeah. With RepairPal, the integration continues to go well. You know, we've started rolling out bookings there to expose RepairPal to Yelp users. I think, you know, that's positive. That's certainly, you know, helping us on the services revenue side as a contributor there. You mentioned DoorDash. We're really excited about that partnership as well. Obviously, you know, it expands our footprint in terms of restaurant coverage, and with a, you know, very high-quality partner, leader in the space. You know, we do see some incremental revenue coming from that as we get farther out.

With respect to the restaurant industry.

Industry, obviously same store sales in Spain.

Challenged.

Broadly.

Reservation and wait list services and have people make bookings or add themselves or take themselves off the wait list. Uh, it's just really powerful stuff and, you know, with a huge Tam. So it's as if we've got a launched, a whole little, uh, startup with the Yelp, um, you know, but but with all of our great content, as well as our incredible distribution power. Uh, so we're looking forward to, to seeing how that plays out.

I guess are you monitoring is that kind of the key external metric for a potential recovery in spend just what should we be watching in terms of macro factors within that vertical.

Yes. Thanks for the question obviously, we.

Also listen and follow what the larger restaurant players are saying about the industry and their expectations and so they have obviously a good read on it we want.

[Analyst] (Craig-Hallum): Great, thanks for taking my question.

To see.

Operator: Sure thing. The next question comes from the line of Josh Beck with Raymond James. Please go ahead.

Starting to dine out more as a good indicator certainly and as opposed to per se delivery.

And, uh, and then also, you know, on the AI side, as you mentioned, uh, you know, there's a lot of players, uh, trying to create, uh, valuable search services and so that's where our data licensing. Business comes in our apis that we offer to tap into your content as well as our, uh, AI Tech. You know, bringing things like Yelp, assistant wrapped in in, in an API is something, you know, we, we definitely want to do and you can create monetization opportunities, uh, for others off Yelp. Um, so there's just a lot of of different ways, uh, for us to invest and leverage Ai and, you know, we're early Innings, but we do see it as transformational for the company over time.

Josh Beck: Yes, thanks for the question. Maybe just following on the DoorDash partnership, certainly it seems like it's a much bigger footprint of restaurants. I think over half a million. I'm curious, should we think about it as something like a, you know, lead generation type of model? I mean, my experience has been, you know, you're on Yelp and you find something and order and it kind of deep links to DoorDash. So is that kind of the right trigger, you know, for modeling it out or, you know, any kind of guidance you can give us there?

That is a factor, but I think if you just step back I think the larger macro picture is a key indicator for US obviously, there have been a variety of your reports out.

Sure for.

Sure.

On spend for folks in lower and mid income levels, and so thats certainly a leading indicator for all that shows what the expectation should be around around restaurants. There is also another factor at play here, which is just a continued pressure on input costs for restaurants.

And I don't know if I can speak in 1 more for David. Um, just with respect to the the restaurant, um, industry. Obviously, same store sales has been, uh, challenged. Um, pretty broadly. Um, you know what I guess are you monitoring is that kind of the key external metric for a potential, you know, recovery and spend just what should we be watching in terms?

terms of, you know, macro factors within that vertical,

They have seen a significant amount of inflation both on the <unk>.

Jed Nachman: Yeah. Hi, this is Jed. I can take that. You know, as Jeremy mentioned, first of all, we're really excited about this partnership. The footprint of restaurants has expanded dramatically on Yelp by about 200,000 restaurants. I think, you know, if you're a consumer looking for the best food options in your area, it's a natural progression to then transact on the platform. You know, I think the way you described it is, in fact, how it is happening on the platform. You have a direct integration into the DoorDash ordering model. By the way, we have other food partners that we're still partnered with in order to kind of keep that full coverage. We really just think ultimately it's a much better consumer experience to be able to kind of.

Ingredients side, but also on the labor side, and so that will play out over time, they've had a harder time passing on that cost to consumers in the current environment, but one of the things that we think is likely to happen is as we lap that inflation increase assuming that it doesn't persist.

Then they will start to be able to generate more margin, which will put them in a better position to advertise to consumers. So you've got a little bit of dynamics playing out both on the consumer side as well as on the restaurant side.

Super helpful. Thanks, Steve.

Jed Nachman: Consummate everything on the Yelp platform, and we're really excited about moving forward.

Your next question comes from the line of Nathan Bansal.

With bank of America.

Please go ahead.

Josh Beck: Okay. Maybe a follow-up on the AI strategy. You know, it certainly seems like there's a lot of vectors. You have the on-platform push with AI assistant and/or the Yelp Assistant and the like. We've seen some examples in the last few months of internet platforms kind of enabling third-party chatbots within, you know, their app. Not a lot of those examples. Obviously, you know, the bigger kind of push to agentic commerce and agentic browsers and doing partnerships there. You know, that's probably just a sample, but there's many ways to, you know, kind of form this strategy. Just kind of curious how you're thinking about it broadly and maybe where that could head in the next year.

Yeah, thanks for the question. Obviously, we also listen and uh, follow what the larger restaurant, players are saying about the industry and their expectations. And so, they have obviously, a good read on it. We want to see, folks, starting to dine out more is a good indicator. Certainly, and, uh, as opposed to per se delivery, uh, that's a factor, but I think if you just step back, I think the, the larger macro picture is the key indicator for us. Obviously, there have been a variety of reports out pressure for, um, um, on spend for folks in lower and mid income levels. And so, that's certainly a leading indicator for all that shows, what the expectation should be around around restaurants. There's also another Factor at play here, which is just, uh, continued pressure on input cost.

Thank you for taking my question just a follow up on the earlier question you mentioned that your outputs and Youll start expected to drive incremental subscription revenue and <unk>.

But these products.

Can you help us understand the scale of disappointing it again, how much of these products could contribute to revenue next year.

Early adoption and feedback you're seeing so far.

Hey, Nick this is Jeremy.

Us for restaurants. They have seen a significant amount of inflation, both on the uh ingredients side but also on the labor side and so that will play out over time, they've had a harder time passing on that cost to consumers in the current environment. But 1 of the things that we think is likely to happen is as we lap that uh, inflation increase

Sure happy to talk a bit more about your post and receptionist.

It's obviously early we're one month in.

I'll post in just a couple of weeks in a few categories.

With receptionist.

I'd say the feedback has been really positive.

Just assuming that it doesn't persist, then they will start to be able to generate more margin, which will put them in a better position to advertise to Consumers. So you've got a little bit of Dynamics playing out both on the consumer side as well as on the restaurant side.

They are out there in the field answering calls you all posted as risk.

It's super helpful. Thanks.

Thousands of calls.

It's handled hundreds of reservations at this point.

Next question, comes from the line of nitan bonsal with Bank of America.

So it's no longer just in test, it's really out there serving real customers and touching consumers are helping real consumers as far as how big this can be I think we have conviction that it's it's a really large tam.

Please go ahead.

Jeremy Stoppelman: Yeah. Sure thing. This is Jeremy. I'll take that. I think, you know, AI for Yelp is really transformative. You know, we've already started down that path. You mentioned Yelp Assistant. That was our first chatbot agent-like product, really geared towards services. We have recently expanded it, so now there is a version of Yelp Assistant that lives on business pages. You can ask, you know, in a wide variety of categories, you can ask anything about that business, and it's going to give you answers and back it up with our trusted content. That's really exciting. That's essentially a waypoint as we get to the cross-category Yelp Assistant, which we're going to be testing here in Q4 with more of an expansion expected early next year. I think for us, that's a big deal.

Thank you for taking my question. Uh, just a follow up on the earlier. Question, you mentioned that Yelp quotes and Yelp are expected to drive, like incremental, subscription revenue, and a large time for these products.

We have north of 500000 folks.

Yelp advertisers.

That's obviously a natural place to start they already have a relationship with Yelp, but then we also have businesses that have signed up with us over the years as well as maybe businesses that don't even have existing relationship with Yelp Theres. No reason why they wouldn't want an answering service that could potentially save them time and money capture valuable leads.

Can you help us understand the scale of this opportunity? And how much of these products could contribute to revenue next year, and what early adoption and feedback you are seeing so far.

That we're maybe getting dropped.

And so we think there's just a lot of value here to unlock for our business owners both.

Jeremy Stoppelman: That's going to be the way that consumers interact with Yelp content, I think, in the future. Obviously, a lot of people are getting used to the chat interface as a way to tap into insights and information. We have, you know, really great content, highly trusted, millions of reviews, and to be able to put a chat interface on all of that and serve up exactly what you're looking for, I think, is going to wow consumers. We're really looking forward to that. We've also built and just started selling our Yelp Host and Yelp Receptionist products, which are essentially answering services that are powered by AI. Fantastic technology, time-saving. Also helps businesses capture more value, both from their Yelp leads, but, you know, it can be employed across all leads. You know, there's no reason why that phone number.

Smbs, but also mid market multilocation with Multilocation that informs our longer product roadmap because as you get to that scale. There's other needs. So we have things to build but we're really excited about what's ahead of US here. We think this is a very impactful area that will provide incremental revenue and we also as <unk>.

And that's in this is Jeremy. Uh, sure happy to talk a bit more about Yelp posts and receptionist, uh, you know, it's obviously early, we're 1 month in, uh, with the I'll post and just a couple weeks in and a few categories, uh, with receptionist. Uh, but I would say that the feedback's been really positive, uh, you know, they're out there in the field, uh, answering calls y'all post. As, as you know, received thousands of calls, uh, it's handled hundreds of reservations at this point, uh, you know, so it's it's no longer just in test. It's really out there serving real customers, and, and touching

It is a potential expansion opportunity into lead management more generally.

And so we just we think it's the start of something potentially really big for us.

Thank you if I can follow up on one more average.

Average pricing on the platform has been growing at an accelerating pace.

You help us understand like the key factors behind this trend.

Like how it is impacting the.

Ottaway influencing incremental AD spend and retention on the platform.

And then David I'll cover that so just stepping back for one moment.

Jeremy Stoppelman: Can't and shouldn't be added to their website, to Google, etc., and really create leverage, reducing costs because maybe they don't need to have as many people picking up the phone, but also capturing critical information. You know, whether it's for a restaurant, they can actually tie into our front-of-house reservation and waitlist services and have people make bookings, or add themselves, or take themselves off the waitlist. It's just really powerful stuff and, you know, with a huge TAM. It's as if we've kind of launched a whole little startup within Yelp, you know, but with all of our great content, as well as our incredible distribution power. We're looking forward to seeing how that plays out. You know, on the AI side, as you mentioned, there's a lot of players trying to create valuable search services.

On Yelp, we receive AD budget from advertisers and then we optimize the deployment of that AD budget on their behalf through auction. So we don't per se.

The number of clicks or the cost per click, we let that algorithm determined that optimal mix.

With that auction, we're really trying to determine.

What's the price for that visit are in that category at that time of day and that part of the country. So it is a very dynamic system and we like that because it enables us to balance between actually hundreds of parameters that go into that matching algorithms. So that's the backdrop.

Businesses that don't even have uh existing relationship with y'all. There's no reason why they wouldn't want an answering service that could potentially save them time and money capture valuable leads uh that were maybe you know, getting dropped. Um and and so we think there's just a lot of value here to unlock uh, for business owners both, you know, smbs, but also mid-market and multi-location, you know, with multi-location that that informs like a longer product roadmap. Uh, because as you get to that scale there's other needs. So we have things to build, uh, but we're really excited about what's ahead of us here. We, we think this is a very uh impactful area that will provide incremental revenue and we also see it as a potential expansion opportunity into lead management, more General. Um and so we just we think it's the startup thing. Uh potentially really big for us.

In terms of clicks lower end cpc's higher that's going to be a natural outcome, because we have the budget to deploy.

Jeremy Stoppelman: That's where our data licensing business comes in, our APIs that we offer to tap into Yelp content, as well as our AI tech. You know, bringing things like Yelp Assistant wrapped in an API is something, you know, we definitely want to do and can create monetization opportunities for others off Yelp. There are just a lot of different ways for us to invest and leverage AI. You know, we're early innings, but we do see it as transformational for the company over time.

Thank you. Um, if I can follow up on more 1, more uh at this pricing on the platform as in growing at like an accelerating Pace. Can you help us understand like, the key factors behind this trend? Additionally, like how it is, impacting The Advertiser Roi and influencing incremental, adjustment, and retention on the platform.

And then in terms of the current dynamics and trends.

The year on year does tend to have shaped to it where it will increase for a period of time historically and then decrease for a period of time. So what we're really looking to have often is that absolute dollar run rate for the click and advertisers are most focused on now it was the.

And then it's David, I'll cover that. So just stepping back for for 1 moment.

Cost per click, but actually with the cost per lead so were always very focused on continuing to drive improved value per lead and to the extent that we can drive improved value that advertisers are certainly willing to pay more per click.

Josh Beck: Okay. I don't know if I can just think of one more for David, just with respect to the restaurant industry. Obviously, same-store sales has been challenged pretty broadly. You know, what I guess are you monitoring? Is that kind of the key external metric for a potential, you know, recovery in spend? Just what should we be watching in terms of, you know, macro factors within that vertical?

Over the course of 2025 here because of the macro pressure we have seen that there are.

On Yelp, we receive ad budget from advertisers and then we optimize the deployment of that ad Budget on their behalf through options. So we don't per say, set the number of clicks or the cost per click, we let the algorithm determine that optimal mix. And with that option, we're really trying to determine um, what's the price for that visitor and that category that time of day in that part of the country. So it's a very dynamic system and we like that because it enables us to balance between actually hundreds of parameters that go into that matching algorithm. So that's the the backdrop.

Fewer clicks on the platform and that's resulted in the higher prices. It has not translated in the third quarter to a change from a year ago period in terms of churn so advertisers I believe recognized.

In terms of uh clicks, uh, lower and cpc's higher, that's going to be a natural outcome because we have the budget to deploy.

David Schwarzbach: Yeah, thanks for the question. Obviously, we also listen and follow what the larger restaurant players are saying about the industry and their expectations. They have obviously a good read on it. We want to see folks starting to dine out more, which is a good indicator, certainly, as opposed to, per se, delivery. That's a factor. I think if you just step back, the larger macro picture is a key indicator for us. Obviously, there have been a variety of reports out, pressure on spend for folks in lower and mid-income levels. That's certainly a leading indicator for us that shows what the expectation should be around restaurants. There's also another factor at play here, which is just the continued pressure on input costs for restaurants. They have seen a significant amount of inflation both on the.

And then, in terms of the current Dynamics and trends.

Couple of things are happening one of course is those leads are valuable to them in an environment, where there may not be as much interest in.

Visits or who are using our services and so.

They want to generate those leads and they are willing to pay for those leads so that's one dynamic we think that we are continuing to increase the value that we are delivering to those advertisers.

The cost for those leads fits within their model as they seen inflation certainly they've also passed on a portion of their costs too.

The year-on-year does tend to have uh shape to it, where it will increase for a period of time historically and then decrease for a period of time. So what we're really looking at often is the absolute dollar run rate for the click and advertisers are most focused on now was the cost per click, but actually, what was the cost per lead. So we're always very focused on continuing to strive improve value per lead, and to the extent that we can drive improved value and advertise, those are certainly willing to pay more per click.

To the.

and uh, over the course of 2025 here, because of the macro pressure, we have seen that there are

The consumer although I called out the challenges, particularly in restaurants for that but setting that aside inflation has certainly been something that has impacted their pricing as well. So you combine all those factors and we certainly are very attentive to the cost per click and ultimately our mission is to.

David Schwarzbach: Ingredients side, but also on the labor side. That will play out over time. They've had a harder time passing on that cost to consumers in the current environment. One of the things that we think is likely to happen is as we wrap that inflation increase, assuming that it doesn't persist, then they will start to be able to generate more margin, which will put them in a better position to advertise to consumers. You've got a little bit of dynamics playing out both on the consumer side, as well as on the restaurant side.

To deliver valuable leads and visits to those advertisers as efficiently as possible.

Competitive with other platforms.

Thank you.

Our last question comes from the line of Sergio <unk> with Keybanc.

Go ahead.

Great. Thanks for taking the questions I have two so maybe first on Yelp assistant I know it's early for the.

The logged out users, but just curious what youre seeing there if it's pretty consistent with what impact you've seen from logged in users and then on the EBIT side, the cost side of the business raising that outlook.

Josh Beck: That's super helpful. Thanks. Thank you.

Um, fewer clicks on the platform and that's resulted in the higher prices. It has not translated in the third quarter to a change from a year ago, period, in terms of churn. So advertisers, I believe recognize, uh, a couple of things are happening. 1, of course, is those leads are, are valuable to them in an environment where there may not be as much interest in, uh, visits or or using their services. And so, uh, they want to generate those leads and they're willing to pay for those leads. That's 1 Dynamic. We think that we are continuing to increase the value. That we are delivering to those advertisers and the cost for those leads fits within their model as they've seen inflation. Certainly, they've also passed on a portion of their costs, uh, to the

Operator: The next question comes from the line of Nathan Bonsall with Bank of America. Please go ahead.

Can you provide us a little bit more color on the efficiencies that you're seeing there that are driving that improved outlook.

Nathan Bonsall: Thank you for taking my question. Just a follow-up on the earlier question. You mentioned that Yelp Host and Yelp Receptionist are expected to drive incremental subscription revenue and a large TAM for these products. Can you help us understand the scale of this opportunity, how much of these products could contribute to revenue next year, and what early adoption and feedback you are seeing so far?

Sergio.

This is Jeremy.

The consumer, although I I called out the challenges particularly in restaurant for that but setting that aside uh inflation is certainly been something that's impacted their pricing as well. So you combine all those factors and we certainly are very attentive to the cost per click and ultimately our mission is to deliver valuable leads.

Yes, Yelp assistant the logged out.

The logged out release is just starting to roll. So it's a bit early to say the exact effects, but overall yelp assistant on the services side is doing great. We were up in terms of projects, 400% year over year.

And visits to those advertisers as efficiently as possible, uh, competitive with other platforms.

Thank you.

Jeremy Stoppelman: Hey, Nathan, this is Jeremy. Sure. Happy to talk a bit more about Yelp Host and Receptionist. You know, it's obviously early. We're one month in with Yelp Host and just a couple of weeks in and a few categories with Receptionist. I would say that the feedback's been really positive. You know, they're out there in the field answering calls. Yelp Host has, you know, received thousands of calls. It's handled hundreds of reservations at this point, you know, so it's no longer just in test. It's really out there serving real customers and touching real consumers or helping real consumers. As far as how big this can be, I think, you know, we have conviction that it's a really large TAM. You know, we have north of 500,000 folks that are Yelp advertisers. That's obviously a natural place to start. They already have a relationship with Yelp.

Our last question comes from the line of Sergio Segura with KeyBank.

Please go ahead.

And so we'll keep you posted as we get more data on the rollout, but there is a lot of opportunity there as we highlighted last quarter too.

Expose yelp assistant and a variety of different places, especially been logged out users.

And Mr. David Sergio turning to your question on EBITDA.

We.

Operate we believe in a very efficient way in deploying capital and investing across the business, we're constantly monitoring that and making adjustments as you recall, we committed to flat head count here in 2025, we expect to be flat as we come to the end of the year. That's a commitment we made in 2024 and 2023.

Uh, can you provide us a little bit more color on the efficiencies that you're seeing? Uh, there that are driving? That improved Outlook, thanks.

Hey, Sergio.

Uh, this is Jeremy. Um,

Three as well and we believe that we continue to.

Increased.

<unk> leverage.

Jeremy Stoppelman: We also have, you know, businesses that have signed up with us over the years, as well as, you know, maybe businesses that don't even have an existing relationship with Yelp. There's no reason why they wouldn't want an answering service that could potentially save them time and money, capture valuable leads that were maybe, you know, getting dropped. We think there's just a lot of value here to unlock for business owners, both, you know, SMBs, but also mid-market and multi-location. You know, with multi-location, that informs like a longer product roadmap because as you get to that scale, there's other needs. We have things to build. We're really excited about what's ahead of us here. We think this is a very impactful area that will provide incremental revenue.

Across yelp from the contributions of everybody working it yet so we are overall pleased with the progression. There. There's also element of being able to capitalize more.

Software, because we're doing more new greenfield projects. So for instance, help assist you all post receptionist and <unk>.

yeah, Yelp assistant the logged out. Uh, the logged out release is just starting to roll. So it's a bit early to see the exact effects, but overall Yelp assistant on the services side, you know, is doing great. We were up uh in terms of projects 400% year-over-year um you know and so we'll keep you posted as we get more data on the roll out, but there is a lot of opportunity there as we highlighted last quarter, uh, to expose the health assistant in a variety of different places, especially with logged out users

And Mr. David Sergio turning to your question on Ava.

Portions of the work that associated with Yelp assistant so the overall profile of our investment even in product and engineering.

We?

Reflects the fact that we are increasing our.

Our velocity and particularly our innovation. So we're very excited about our ability to leverage a high two <unk>.

Jeremy Stoppelman: We also see it as a potential expansion opportunity into lead management more generally. We just think it's the start of something potentially really big for us.

These new products deliver more value to both consumers and advertisers and obviously, we will continue to be very disciplined in the way that we allocate capital going forward.

Nathan Bonsall: Thank you. If I can follow up one more, one more. Average pricing on the platform has been growing at like an accelerating pace. Can you help us understand like the key factors behind this trend? Additionally, like how it is impacting the advertiser ROI and influencing incremental ad spend and retention on the platform?

Operate, we believe in a very efficient way in deploying capital and investing across the business. We're constantly monitoring that and making adjustments. As you recall, we committed to Flathead count here in 2025, we expect to be flat. As we come to the end of the year. That's a commitment if we made in 2024 and 2023 as well, and we believe that we continue to uh, increase the efficiency and Leverage.

There are no further questions at this time.

And gentlemen does that.

Concludes today's call. Thank you all for joining and you may now disconnect.

Across Yelp from the contributions of of everybody working at Yelp so we are overall pleased with the progression there. There's also, uh, element of being able to capitalize more,

David Schwarzbach: It's David. I'll cover that. Just step me back for one moment. On Yelp, we receive ad budget from advertisers, and then we optimize the deployment of that ad budget on their behalf through auctions. We don't per se set the number of clicks or the cost per click. We let the algorithm determine that optimal mix. With that auction, we're really trying to determine what's the price for that visitor in that category, that time of day, in that part of the country. It's a very dynamic system, and we like that because it enables us to balance between actually hundreds of parameters that go into that matching algorithm. That's the backdrop. In terms of clicks lower and CPCs higher, that's going to be a natural outcome because we have the budget to deploy.

Software because we're doing more new Greenfield projects. So, for instance, Yelp assist, uh, Yelp post yel perceptionist and, uh, portions of the work that associated with Yelp assistant. So the overall profile of our investment, even in product and engineering.

Reflects the fact that we are increasing our velocity and particularly our Innovation. So, we're very excited about our ability to leverage AI to build these new products deliver more value to both consumers and advertisers. And obviously, we'll continue to be very disciplined in the way that we allocate Capital going forward.

There are no further questions at this time, ladies and gentlemen. This is a concludes today's call. Thank you all for joining and you may now disconnect

David Schwarzbach: In terms of the current dynamics and trends, the year-on-year does tend to have a shape to it where it will increase for a period of time historically and then decrease for a period of time. What we're really looking at often is the absolute dollar run rate for the click. Advertisers are most focused on not with the cost per click, but actually what was the cost per lead. We're always very focused on continuing to drive improved value per lead. To the extent that we can drive improved value, then advertisers are certainly willing to pay more per click. Over the course of 2025 here, because of macro pressure, we have seen that there are fewer clicks on the platform, and that's resulted in the higher prices.

David Schwarzbach: It has not translated in the third quarter to a change from a year-ago period in terms of churn. Advertisers, I believe, recognize a couple of things are happening. One, of course, is those leads are valuable to them in an environment where there may not be as much interest in visits or using their services. They want to generate those leads, and they're willing to pay for those leads. That's one dynamic. We think that we are continuing to increase the value that we are delivering to those advertisers. The cost for those leads fits within their model as they've seen inflation. Certainly, they've also passed on a portion of their costs to the consumer, although I called out the challenges, particularly in restaurants for that. Setting that aside, inflation has certainly been something that's impacted their pricing as well.

David Schwarzbach: You combine all those factors, and we certainly are very attentive to the cost per click. Ultimately, our mission is to deliver valuable leads and visits to those advertisers as efficiently as possible, competitive with other platforms.

Nathan Bonsall: Thank you.

Operator: Our last question comes from the line of Sergio Segura with KeyBanc. Please go ahead.

Sergio Segura: Great. Thanks for taking the questions. I have two. First, on Yelp Assistant, I know it's early for the logged-out users, but just curious what you're seeing there, if it's pretty consistent with what impact you've seen from logged-in users. On the EBITDA side, the cost side of the business, you know, raising that outlook, can you provide us a little bit more color on the efficiencies that you're seeing there that are driving that improved outlook? Thanks.

Jeremy Stoppelman: Hey, Sergio. This is Jeremy. Yeah, Yelp Assistant, the logged-out release is just starting to roll, so it's a bit early to see the exact effects. Overall, Yelp Assistant on the services side, you know, is doing great. We were up in terms of projects 400% year over year. You know, we'll keep you posted as we get more data on the rollout, but there is a lot of opportunity there, as we highlighted last quarter, to expose Yelp Assistant in a variety of different places, especially with logged-out users.

David Schwarzbach: This is David. Sergio, turning to your question on EBITDA. We operate, we believe, in a very efficient way in deploying capital and investing across the business. We're constantly monitoring that and making adjustments. As you recall, we committed to flat headcount here in 2025. We expect to be flat as we come to the end of the year. That's a commitment we made in 2024 and 2023 as well. We believe that we continue to increase the efficiency and leverage across Yelp from the contributions of everybody working at Yelp. We are overall pleased with the progression there. There's also an element of being able to capitalize more software because we're doing more new greenfield projects. For instance, Yelp Host, Yelp Receptionist, and portions of the work that are associated with Yelp Assistant.

David Schwarzbach: The overall profile of our investment, even in product and engineering, reflects the fact that we are increasing our velocity and particularly our innovation. We're very excited about our ability to leverage AI to build these new products, deliver more value to both consumers and advertisers. Obviously, we'll continue to be very disciplined in the way that we allocate capital going forward.

Operator: There are no further questions at this time. Ladies and gentlemen, this concludes today's call. Thank you all for joining, and you may now disconnect.