YELP - Yelp Inc.

Yelp operates the Yelp local business review and discovery platform, connecting consumers with local businesses across restaurants, home services, beauty, and other categories primarily in the United States. The business model is advertiser-supported, selling cost-per-click and flat-rate advertising packages to local and national businesses seeking visibility on the platform. Yelp generates approximately $1.4B in annual revenue, with the vast majority derived from the U.S. market. The core customer on the revenue side is small-to-medium local businesses purchasing search advertising, while consumers use the platform for free to read reviews and find local services.

Past Year Trends

• Yelp's Services advertising revenue reached a record $879 million in FY2024, growing 11% YoY and marking 15 consecutive quarters of double-digit Services revenue growth, driven by Home Services category expansion. (Bullish)
• Yelp's total paying advertising locations declined 5% YoY in FY2024 as the Restaurants, Retail & Other segment posted a 3% revenue decline, with ad clicks falling approximately 11% YoY, signaling structural erosion in the non-Services advertiser base. (Bearish)
• Yelp repurchased $251 million of shares in 2024 at an average price of $37.52 and authorized a new $500 million buyback program in February 2024, reducing share count and supporting per-share earnings growth to $0.61 diluted EPS in Q3 2025 from $0.56 a year earlier. (Bullish)

Next Year Trends

• Yelp's 2026 guidance of $310–$330 million adjusted EBITDA implies an ~11% year-over-year decline from 2025 levels due to heavy investment in AI products including the Yelp Assistant chatbot and Menu Vision AI, compressing EBITDA margin from ~25% to ~21–22% even as revenue grows only ~3–4%. (Bearish)
• The February 2026 acquisition of Hatch, an AI-powered lead management platform with ~$25 million ARR growing at 70% YoY, is expected to deepen monetization of Yelp's Home and Auto Services advertisers by automating lead follow-up, representing the primary near-term upside lever for Services revenue acceleration. (Bullish)
• Multiple Wall Street analysts cut their price targets on Yelp in early 2026—JPMorgan to $22, Baird to $25, Goldman Sachs to $33—citing slowing revenue growth and margin compression, which increases the risk of multiple contraction and limits the stock's re-rating potential unless AI investments translate to measurable advertiser retention improvements by late 2026. (Bearish)

Red Flags

No severe red flags identified as of August 2025.