NYSE:YELP
YELP INC
A leading US-based digital marketplace connecting consumers with local businesses through reviews, advertising, and subscription services.
Key Metrics
Investment Thesis
Bull Case
Yelp offers an attractive valuation given its consistent revenue growth from $1.19B in 2022 to $1.46B in 2025 and improving profitability with net income reaching $145.6M. The company's aggressive share buyback program of $290.9M demonstrates management's confidence in future cash flows and commitment to returning value to shareholders. Its transition to an advertising-focused model provides high-margin recurring revenue streams that are resilient to economic cycles.
Bear Case
Investors should be wary of the massive net change in cash of -$1.4M combined with heavy investing outflows, which could signal capital intensity issues or aggressive M&A strategies not fully realized yet. The company faces existential threats from tech giants who can replicate its core functionality at a lower marginal cost using their existing user bases. High marketing expenses of $592.1M relative to revenue suggest significant customer acquisition costs that may erode margins if growth slows.
About YELP INC
Yelp Inc. operates a digital marketplace connecting local consumers with service businesses across North America, generating revenue primarily through advertising and subscription-based marketing services. The company leverages its extensive user-generated content and review platform to facilitate transactions between millions of users and local merchants. Key products include its core search engine for local services and data-driven solutions like Yelp for Business.
Analysis
Management Discussion
The company delivered robust financial performance with net income growing to $145.6M in 2025, driven by revenue expansion to $1.46B despite a significant cash outflow from financing activities of -$330.0M due to share repurchases. Operating efficiency remains strong with operating profit at $184.5M, while R&D investments of $297.8M support AI enhancements to the platform. The balance sheet is healthy with current assets of $514.9M against liabilities of $247.6M, providing ample liquidity for strategic growth.
Industry Overview
The local services marketplace industry is highly competitive, dominated by major search engines and social media platforms that offer free alternatives to Yelp's paid services. However, a niche remains for specialized platforms with curated content and community-driven trust signals that large tech giants struggle to replicate authentically. The sector is shifting towards AI-powered personalization and subscription models to sustain profitability amidst rising customer acquisition costs.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $1.19B | $1.34B | $1.41B | $1.46B |
| Cost of Revenue | $105.7M | $114.2M | $123.7M | $142.6M |
| Gross Profit | $1.09B | $1.22B | $1.29B | $1.32B |
| Operating Expenses | $1.03B | $1.14B | $1.14B | $1.14B |
| Operating Income | $58.4M | $79.0M | $151.0M | $184.5M |
| R&D | $294.5M | $320.6M | $310.5M | $297.8M |
| G&A | $164.1M | $212.4M | $185.0M | $182.0M |
| Marketing | $514.9M | $556.6M | $586.0M | $592.1M |
| Stock-Based Comp | $156.1M | $173.5M | $158.2M | $134.0M |
| D&A | $44.9M | $42.2M | $40.4M | $50.1M |
| Amortization | $1.7M | $1.4M | $2.8M | $9.9M |
| Other OpEx | $55.9M | $54.2M | $55.9M | $66.0M |
| Non-Operating Income | $8.4M | $26.0M | $31.9M | $19.5M |
| Pre-Tax Income | $66.8M | $105.1M | $183.0M | $204.0M |
| Income Tax | $30.4M | $5.9M | $50.1M | $58.4M |
| Continuing Ops | $36.3M | $99.2M | $132.8M | $145.6M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $36.3M | $99.2M | $132.8M | $145.6M |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $36.3M | $99.2M | $132.8M | $145.6M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $596.0M | $624.2M | $516.9M | $514.9M |
| Cash & Equivalents | $306.4M | $313.9M | $217.3M | $216.1M |
| Marketable Securities | $94.2M | $127.5M | $100.6M | $103.3M |
| Accounts Receivable | $131.9M | $146.1M | $155.3M | $153.2M |
| Prepaid Expenses | $63.5M | $36.7M | $43.6M | $42.4M |
| Other Current Assets | $0 | $0 | $0 | $0 |
| Long-Term Assets | $419.9M | $390.5M | $466.7M | $443.5M |
| PP&E (Net) | $77.2M | $68.7M | $75.7M | $91.7M |
| Intangibles | $9.0M | $7.6M | $58.8M | $49.0M |
| Goodwill | $102.3M | $103.9M | $131.0M | $135.8M |
| Operating Leases | $97.4M | $48.6M | $24.1M | $16.0M |
| Other LT Assets | $134.0M | $161.7M | $177.1M | $150.9M |
| Total Assets | $1.02B | $1.01B | $983.6M | $958.5M |
| Current Liabilities | $182.8M | $175.9M | $155.0M | $172.1M |
| Accounts Payable | $14.5M | $11.9M | $11.9M | $9.8M |
| Current Leases | $39.7M | $39.2M | $20.7M | $7.4M |
| Deferred Revenue | $5.2M | $3.8M | $3.0M | $5.8M |
| Other Current Liab | $-14.5M | $-11.9M | $-11.9M | $149.0M |
| Long-Term Liabilities | $122.8M | $89.3M | $84.6M | $75.6M |
| LT Operating Leases | $86.7M | $48.1M | $22.5M | $17.5M |
| Other LT Liab | $36.1M | $41.3M | $62.2M | $58.1M |
| Total Liabilities | $305.6M | $265.2M | $239.6M | $247.6M |
| Shareholders' Equity | $710.3M | $749.5M | $744.0M | $710.9M |
| Paid-In Capital | $1.65B | $1.79B | $1.90B | $2.01B |
| Retained Earnings | $-923.8M | $-1.02B | $-1.14B | $-1.29B |
| AOCI | $-15.5M | $-12.2M | $-15.4M | $-7.7M |
| Treasury Stock | — | $282.0K | $3.9M | $999.0K |
| Total L&E | $1.02B | $1.01B | $983.6M | $958.5M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $36.3M | $99.2M | $132.8M | $145.6M |
| Non-Cash Adjustments | $21.2M | $189.3M | $112.0M | $155.6M |
| Working Capital Changes | $134.7M | $17.8M | $40.9M | $70.8M |
| Cash from Operations | $192.3M | $306.3M | $285.8M | $372.0M |
| Capital Expenditures | $32.0M | $26.8M | $37.3M | $48.4M |
| Cash from Investing | $-126.1M | $-54.7M | $-77.3M | $-45.7M |
| Share Buybacks | $200.0M | $200.0M | $251.2M | $290.9M |
| Cash from Financing | $-237.5M | $-246.8M | $-303.8M | $-330.0M |
| FX Effect | $-2.1M | $2.0M | $-1.1M | $2.3M |
| Net Change in Cash | $-173.5M | $6.9M | $-96.3M | $-1.4M |
| Beginning Cash | $480.6M | $307.1M | $314.0M | $217.7M |
| Ending Cash | $307.1M | $314.0M | $217.7M | $216.3M |
Frequently Asked Questions
How does YELP INC make money?
Local Search & Discovery driving primary ad revenue; Data Analytics providing insights to enterprises; Subscription Services offering premium business tools; Advertising Solutions including targeted campaigns.
What are the main risks for YELP?
Intense competition from Google Maps, Apple Maps, and emerging vertical-specific apps threatening market share and ad revenue. Dependence on third-party technology providers like AWS and Snowflake creates significant infrastructure cost volatility. Macroeconomic downturns reducing discretionary spending for local services could impact both user traffic and merchant ad budgets.
What is YELP's competitive advantage?
Dominant market share in the US local search space with a massive network of user-generated reviews that creates high switching costs for advertisers. Proprietary AI-driven matching algorithms improve conversion rates for merchants, creating a data moat against smaller competitors. Strong network effects where more users attract more businesses, which in turn generates more content and engagement.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.