YELP INC

The following table sets forth our results of operations for the periods presented (in thousands, except percentages). The period-to-period comparison of financial results is not necessarily indicative of the results of operations to be anticipated for the full year 2025 or any future period.

(1)Percentage changes are calculated based on rounded numbers and may not recalculate exactly due to rounding.

Three Months Ended March 31, 2025 and 2024

Net Revenue

Advertising. We generate advertising revenue from the sale of our advertising products — including business page upgrades and performance-based advertising in search results and elsewhere on our platform — to businesses of all sizes, from single-location local businesses to multi-location national businesses (“Yelp Ads”). Advertising revenue also includes revenue generated from the resale of our advertising products by certain partners and monetization of advertising inventory through third-party ad networks, as well as revenue from the RepairPal Network. We present advertising revenue on a disaggregated basis for our high-level category groupings, Services and RR&O.

Advertising revenue for the three months ended March 31, 2025 increased 8% year over year primarily as a result of an increase in revenue from Yelp Ads and, to a lesser extent, the addition of revenue from the RepairPal Network, which contributed approximately one third of the growth. The increase in Yelp Ads revenue was primarily due to a 9% increase in average CPC, partially offset by a 3% decrease in ad clicks.

Other. We generate other revenue through non-advertising contracts, such as our subscription services, which include our Yelp Guest Manager product, and through our Yelp Fusion and Yelp Fusion Insights programs, which provide Yelp content and data for a fee. Other revenue also includes revenue from various transactions with consumers. We generate revenue from such transactions through our partnership integrations, which are mainly revenue-sharing arrangements that provide consumers with the ability to place food orders for pickup and delivery through third parties directly on Yelp. We earn a fee for acting as an agent for transactions placed through these integrations, which we record on a net basis and include in revenue upon completion of a transaction.

Other revenue for the three months ended March 31, 2025 increased 9% compared to the prior-year period primarily due to an increase in revenue from the continued growth of our Yelp Guest Manager, Yelp Fusion Insights and Yelp Fusion programs. This increase was partially offset by a lower volume of food takeout and delivery orders.

Trends and Uncertainties of Net Revenue. Net revenue decreased slightly in the three months ended March 31, 2025 compared to the three months ended December 31, 2024, in line with historical seasonal trends and reflecting ongoing operating challenges for businesses in our RR&O categories. Despite ongoing macroeconomic challenges, we expect our strategic initiatives to drive continued business momentum and anticipate net revenue will increase sequentially in the three months ending June 30, 2025.

Costs and Expenses

Cost of Revenue (exclusive of depreciation and amortization). Our cost of revenue consists primarily of website infrastructure expense, which includes website hosting costs and employee costs (including stock-based compensation expense) for the infrastructure teams responsible for operating our website and mobile app, and excludes depreciation and amortization expense. Cost of revenue also includes third-party advertising fulfillment costs, credit card processing fees and revenue share payments, which primarily consist of payments to RepairPal referral partners.

Cost of revenue for the three months ended March 31, 2025 increased compared to the prior-year period, primarily due to:

•an increase in advertising fulfillment costs of $2.5 million, largely attributable to the expansion of Yelp Audiences and expanded efforts to syndicate advertising budgets on third-party sites;

•an increase in website infrastructure expense of $2.2 million, primarily as a result of investments in maintaining and improving our infrastructure; and

•an increase in revenue share payments of $1.3 million due to our acquisition of RepairPal.

We expect cost of revenue to increase on an absolute dollar basis in 2025 compared to 2024.

Sales and Marketing. Our sales and marketing expenses primarily consist of employee costs (including sales commission and stock-based compensation expenses) for our sales and marketing employees. Sales and marketing expenses also include business and consumer acquisition marketing, community management, as well as allocated workplace and other supporting overhead costs.

Sales and marketing expenses for the three months ended March 31, 2025 decreased compared to the prior-year period, primarily due to a decrease in marketing and advertising costs of $4.8 million, mainly driven by decreased investments in acquiring Services projects through paid search, partially offset by an increase in costs for business owner marketing.

This decrease was partially offset by an increase in sales and marketing employee costs of $3.7 million, primarily resulting from higher average headcount.

We expect sales and marketing expenses to increase in 2025 compared to 2024 as our sales and marketing employees become more tenured as well as due to the additional headcount from the acquisition of RepairPal. However, we expect sales and marketing expenses to decrease as a percentage of net revenue as we realize efficiencies from our sales and marketing initiatives.

Product Development. Our product development expenses primarily consist of employee costs (including bonuses and stock-based compensation expense, net of capitalized employee costs associated with capitalized website and internal-use software development) for our engineers, product management and corporate infrastructure employees. In addition, product development expenses include allocated workplace and other supporting overhead costs.

Product development expenses for the three months ended March 31, 2025 decreased compared to the prior-year period, primarily due to a decrease in product development employee costs of $7.3 million, resulting from lower average headcount and more employee costs being capitalized.

We expect product development expenses to remain relatively consistent on an absolute dollar basis in 2025 compared to 2024, but decrease as a percentage of net revenue as our distributed operations provide leverage.

General and Administrative. Our general and administrative expenses primarily consist of employee costs (including bonuses and stock-based compensation expense) for our executive, finance, user operations, legal, people operations and other administrative employees. Our general and administrative expenses also include our provision for credit losses, certain consulting and professional services costs, including litigation settlements, as well as allocated workplace and other supporting overhead costs.

General and administrative expenses for the three months ended March 31, 2025 increased compared to the prior-year period, primarily due to:

•expenses in connection with an indemnification obligation assumed in the RepairPal acquisition of $5.1 million; and

•an increase in general and administrative employee costs of $1.8 million primarily driven by higher cost of labor.

These increases were partially offset by a decrease in our provision for credit losses of $1.1 million primarily due to the release of a higher amount of bad debt reserves compared to the prior-year period.

We expect general and administrative expenses to increase on an absolute dollar basis in 2025 compared to 2024 to support our business, but remain relatively consistent as a percentage of net revenue.

Depreciation and Amortization. Depreciation and amortization expense primarily consists of depreciation on computer equipment, software, leasehold improvements, capitalized website and internal-use software development costs, and amortization of purchased intangible assets.

Amortization expense for the three months ended March 31, 2025 increased by $2.1 million from the prior-year period, mainly as a result of intangible assets acquired in the RepairPal acquisition. See Note 7, “Acquisition,” of the Notes to Condensed Consolidated Financial Statements included under Part I, Item 1 in this Quarterly Report for further details.

Other Income, Net

Other income, net consists primarily of the interest income earned on our cash, cash equivalents and marketable securities, research and development tax credits, the portion of our sublease income in excess of our lease cost, accretion of discounts and amortization of premiums on investments, credit facility fees, and foreign exchange gains and losses.

Other income, net for the three months ended March 31, 2025 decreased compared to the prior-year period primarily due to a $1.8 million decrease in interest income as a result of lower cash, cash equivalents and marketable securities balances and lower federal interest rates.

Provision for Income Taxes

Provision for income taxes consists of: federal and state income taxes in the United States and income taxes in certain foreign jurisdictions; deferred income taxes reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Provision for income taxes for the three months ended March 31, 2025 increased from the prior-year period primarily due to an increase in profit before tax in the current-year period as well as an increase in the discrete tax expense primarily related to stock-based compensation.

As of December 31, 2024, we had approximately $139.6 million in net deferred tax assets (“DTAs”). As of March 31, 2025, we consider it more likely than not that we will have sufficient taxable income in the future that will allow us to realize these DTAs. However, it is possible that some or all of these DTAs will not be realized. Therefore, unless we are able to generate sufficient taxable income from our operations, a substantial valuation allowance may be required to reduce our DTAs, which would materially increase our expenses in the period in which we recognize the allowance and have a materially adverse impact on our condensed consolidated financial statements. The exact timing and amount of the valuation allowance recognition are subject to change on the basis of the net income that we are able to actually achieve. We will continue to evaluate the possible recognition of a valuation allowance on a quarterly basis.