Yelp’s first quarter results were shaped by robust growth in its Services segment, which offset weakness in restaurant, retail, and other categories. Management attributed the outperformance to continued investments in product improvements, including AI-driven features such as the Yelp Assistant and enhancements to the Request to Quote process. CEO Jeremy Stoppelman pointed to the rollout of 15 new product features and updates in the quarter, emphasizing that improvements in project matching and lead quality helped drive a 14% year-over-year increase in Services revenue, even as overall advertiser sentiment remained cautious in some verticals.
Is now the time to buy YELP? Find out in our full research report (it’s free).
Yelp (YELP) Q1 CY2025 Highlights:
- Revenue: $358.5 million vs analyst estimates of $352.1 million (7.7% year-on-year growth, 1.8% beat)
- Adjusted EBITDA: $84.94 million vs analyst estimates of $68.16 million (23.7% margin, 24.6% beat)
- The company reconfirmed its revenue guidance for the full year of $1.48 billion at the midpoint
- EBITDA guidance for the full year is $355 million at the midpoint, in line with analyst expectations
- Operating Margin: 8.2%, up from 3.4% in the same quarter last year
- Market Capitalization: $2.19 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Yelp’s Q1 Earnings Call
- Sergio Segura (KeyBanc): asked about quarter-to-date spending trends and advertiser sentiment. CEO Jeremy Stoppelman acknowledged steady spend in April below typical seasonality, with encouraging signs in May, and highlighted resilience in Services amid caution in multi-location restaurant and retail advertisers.
- Sergio Segura (KeyBanc): followed up on differences between enterprise and SMB advertiser strength. CFO David Schwarzbach explained that SMBs remain the primary revenue driver, with Services locations now surpassing RR&O, while enterprise spend in RR&O remains cautious.
- Unidentified Analyst (Craig-Hallum): questioned drivers of rising CPCs and efforts to deliver more value to advertisers. Schwarzbach emphasized a focus on higher-quality leads and category mix shifts, stating, “We are very focused on delivering valuable clicks to advertisers.”
- Unidentified Analyst (Craig-Hallum): inquired about continued adoption of Yelp Assistant despite reduced paid search spend. CEO Stoppelman noted strong adoption, plans to expand entry points and categories, and the potential to offer Yelp Assistant as an API beyond Yelp’s own properties.
- Nitin Bansal (Bank of America): sought clarity on engagement trends and integration of RepairPal. Stoppelman shared that macro pressures persist in RR&O, Services engagement remains strong, and integrating RepairPal into Yelp is expected to unlock further growth opportunities.
Catalysts in Upcoming Quarters
Our analysts will be tracking (1) the pace of adoption and monetization for new AI-powered features such as call answering and Yelp Assistant expansion, (2) stabilization or recovery in restaurant and retail advertiser spending amid macroeconomic uncertainty, and (3) continued progress in integrating and monetizing acquisitions like RepairPal. Execution in these areas will be critical to delivering on the company’s long-term targets.
Yelp currently trades at $34.55, down from $35.73 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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