Shares of Yelp declined 5.0% following the quarter, as investors were disappointed by persistent revenue deceleration in core ad segments and margin pressure despite investments in growth initiatives.

• Total net revenue rose just 1% year-over-year to $361 million, with Services Ad revenue up 1% but the more lucrative RR&O ad revenue down 11%.
• Adjusted EBITDA declined 7% year-over-year to $79 million, with margins compressing to 22%, reflecting underlying operational challenges.
• Net income margin dropped to 5% ($18 million), down 27% year-over-year, signaling pressure on profitability.
• Growth in “other revenue” streams was strong (+75% YoY), driven by AI-related initiatives such as Yelp Host and data licensing, but these remain nascent and not yet sufficient to offset core headwinds.
• Management highlighted a challenging macro environment for local businesses, limiting near-term visibility despite ongoing AI investments and strategic acquisitions.