Yelp’s third quarter saw a positive market reaction as the company delivered results that surpassed Wall Street’s expectations for both revenue and profitability. Management credited the outperformance to ongoing investment in artificial intelligence (AI) features, which have enhanced user engagement and advertiser value, particularly in the Services segment. CEO Jeremy Stoppelman highlighted that “project submissions through Yelp Assistant increased by nearly 400% year-over-year,” helping offset weaker trends in the Restaurant, Retail & Other (RR&O) categories. The company also benefited from disciplined expense management, supporting stronger operating margins even in a challenging environment for some customer segments.
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Yelp (YELP) Q3 CY2025 Highlights:
- Revenue: $376 million vs analyst estimates of $368.2 million (4.4% year-on-year growth, 2.1% beat)
- Adjusted EPS: $0.96 vs analyst estimates of $0.92 (4.1% beat)
- Adjusted EBITDA: $98.07 million vs analyst estimates of $84.85 million (26.1% margin, 15.6% beat)
- The company dropped its revenue guidance for the full year to $1.46 billion at the midpoint from $1.47 billion, a 0.5% decrease
- EBITDA guidance for the full year is $362.5 million at the midpoint, above analyst estimates of $357.8 million
- Operating Margin: 14.1%, up from 12.9% in the same quarter last year
- Market Capitalization: $1.83 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 From Yelp’s Q3 Earnings Call
- Alex (Goldman Sachs) asked about macro pressures affecting advertising demand. CFO David Schwarzbach clarified that while challenges are more significant in RR&O, services demand remains consistent.
- Cal Bartyzal (Craig-Hallum) inquired about data licensing opportunities in AI search. CEO Jeremy Stoppelman described ongoing discussions with AI platform partners and emphasized the value of Yelp’s content.
- Cal Bartyzal (Craig-Hallum) followed up on platform integrations like RepairPal and DoorDash. Stoppelman highlighted incremental revenue potential and improved advertiser value from these integrations.
- Josh Beck (Raymond James) questioned the DoorDash partnership model. COO Jed Nachman confirmed the direct integration is expected to boost user experience and expand transaction volumes.
- Nitin Bansal (Bank of America) asked about the scale and adoption of new voice AI products. Stoppelman noted strong early feedback from businesses and outlined the large market opportunity among Yelp advertisers.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will be watching (1) the adoption and monetization of Yelp’s new AI-powered tools, especially cross-category expansion of Yelp Assistant, (2) stabilization or improvement in advertiser demand within the Restaurant, Retail & Other categories, and (3) the financial impact of expanded partnerships such as DoorDash integration. Execution on product velocity and cost controls will also be important for sustaining profitability.
Yelp currently trades at $29.65, down from $32.13 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).
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