Good afternoon. My name is Brianna, and I will be your conference operator today. At this time, I would like to welcome everyone to the Yelp Inc. Q1 2024 earnings conference call. Please note that this call is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, please press star one a second time. I will now turn today's call over to Josh Willis, Yelp Investor Relations. Please go ahead. Good afternoon, everyone, and thank you for joining us on Yelp's first quarter 2024 earnings conference call. Joining me today are Yelp's Chief Executive Officer, Jeremy Stoppelman, Chief Financial Officer, David Schwarzbach, and Chief Operating Officer, Jed Nachman. We published a shareholder letter on our investor relations website and with the SEC and hope everyone had a chance to read it. We'll provide some brief opening comments and then turn to your questions. Now I'll read our safe harbor statement. We'll make certain statements today that are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. In addition, we are subject to a number of risks that may significantly impact our business and financial results. Please refer to our SEC filings, as well as our shareholder letter, for a more detailed description of the risk factors that may affect our results. During our call today, we may discuss Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow, which are non-GAAP financial measures. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with generally accepted accounting principles. In our shareholder letter released this afternoon and our filings with the SEC, each of which is posted on our investor relations website, you will find additional disclosures regarding these non-GAAP financial measures, as well as historical reconciliations of GAAP net income loss to both Adjusted EBITDA and Adjusted EBITDA margin, and a historical reconciliation of GAAP cash flow from operating activities to free cash flow. With that, I will turn the call over to Jeremy. Thanks, Josh, and welcome everyone. As we approach 20 years of helping people connect with great local businesses, I am proud of the impact Yelp has had on the many communities we serve. We continue to lean into our strategic focus on services categories, and we have already seen momentum in our efforts to deliver the best home services experience for consumers and pros. In the first quarter, net revenue increased by 7% year- over- year to $333 million. Net income was $14 million, reflecting a 4% margin, and Adjusted EBITDA increased by 19% year- over- year to $64 million, representing a 19% margin. These results reflect our efforts to improve profitability, even as we continue to invest in our strategic growth initiatives. While businesses in our restaurant, retail, and other categories continue to face a challenging operating environment in the first quarter, home services was again a standout performer, with approximately 15% year-over-year revenue growth. Advertising revenue in our services categories grew 11% year-over-year. Request a Quote projects increased by approximately 20% year-over-year in the first quarter, reflecting early positive results from our acquisition of services projects through search engine marketing, as well as continued strength from organic consumer demand. In key categories like movers, we have seen significant increases in Request a Quote projects and ad clicks, as well as a meaningful decline in average CPCs. These promising results were largely driven by our paid project acquisition efforts, and as a result, we plan to continue investing to capture more of the large market opportunity in services. As we continue to execute against our robust product roadmap, we introduced more than 15 new features and updates in April. One standout in services is our new LLM-powered Yelp Assistant. This conversational AI can more accurately interpret a consumer's needs, collect relevant project information in a user-friendly way, and deliver an even more targeted lead to service pros. We also see a broad set of opportunities to bring our trusted content to consumers in new ways. This includes our Yelp Fusion AI API, a new LLM-powered solution enabling partners to tap into Yelp's trusted content. This tool enhances discovery on third-party platforms through natural language search across our broad range of categories, including both services and RNO, expanding Yelp's reach and utility across the web. We believe these new offerings, along with dozens of other AI-powered initiatives on our roadmap, will transform how consumers and businesses connect on Yelp. In summary, Yelp's first quarter results marked a solid start to the year, and I continue to be excited about the depth and breadth of our robust product roadmap, particularly in services. Overall, we remain confident in our strategy to drive long-term, profitable growth and shareholder value. With that, I'll turn it over to David. Thanks, Jeremy. In the first quarter of 2024, we saw net revenue increase by 7% year-over-year to $333 million. Our net income for the quarter was $14 million, or $0.20 per share, improving from a net loss of $1 million in the first quarter of 2023 and reflecting a 4% margin. Adjusted EBITDA increased by 19% year-over-year to $64 million, which was $12 million above the high end of our outlook range, representing a 19% margin. This growth was driven by solid performance in our services categories. Advertising revenue and services increased by 11% year-over-year to $203 million, led by strength in home services, where revenue grew by approximately 15% year-over-year. Investments in Request a Quote drove an approximately 20% year-over-year increase in Request a Quote projects, underscoring the effectiveness of our product-led strategy and early progress in our efforts to acquire projects through paid search. Advertisers also responded positively to our improved matching and services in the first quarter, as reflected by a 6% year-over-year increase in paying advertising locations in these categories, even as our overall paying advertising locations decreased by 4% year-over-year. Advertising revenue from our restaurants, retail, and other categories grew a modest 1% year-over-year to $114 million in the quarter. This reflects the challenging operating environment facing businesses in these categories, characterized by elevated input costs, inflationary pressures, and an inability to pass along higher costs to consumers. Additionally, we may be seeing impacts from trends associated with off-premise dining and delivery. Multi-location revenue increased by approximately 5% year-over-year in the first quarter, also attributable to softness in RNO. We are actively working on enhancing the Request a Quote experience to enable more multi-location services businesses to benefit from this valuable feature. For example, we are in the process of launching an API that aims to streamline the tracking of leads and enhance conversion rates for enterprise customers by connecting directly to their customer relationship software. Our ad system continued to deliver valuable clicks to advertisers in the first quarter. We saw an 8% year-over-year increase in ad clicks across all categories, while average cost per click declined by 1%, with more substantial decreases in services, reflecting the increased value we delivered to these advertisers in the quarter. We believe our improved ad formats and lower CPCs contributed to year-over-year increases in our retention rate for non-term advertisers' budgets in the first quarter. Improvements to the ad purchase flow, along with enhancements in our advertiser marketing, drove another record quarter for customer acquisition in our self-serve channel. Self-serve channel revenue has increased at a compound annual growth rate of approximately 25% since the first quarter of 2021. We also continued to identify opportunities to work with other platforms, like Facebook and Firefox, to tap into searches with local intent that start off of Yelp, with the goal of matching our advertisers with an even larger high-intent audience. Turning to expenses, in our first quarter, we continued to be disciplined in our allocation of resources while focusing on opportunities that have the potential to drive incremental returns. This resulted in an improvement of our Adjusted EBITDA margin by two percentage points year-over-year. We also reduced stock-based compensation expense to 13% of revenue, a two percentage point decrease from last year, and believe we are on track to reduce it below 8% by the end of 2025. We continue to expect the number of shares subject to employee equity awards granted in 2024 to be approximately 65% lower than in 2023. Returning capital to shareholders through share repurchases continues to be a key element of our capital allocation strategy. In the first quarter, we repurchased $62.5 million worth of shares at an average purchase price of $40.95 per share. As of March 31, 2024, we had $519 million remaining under our existing repurchase authorization. We plan to continue repurchasing shares in 2024, subject to market and economic conditions. Turning to our outlook, as Jeremy shared, we are confident in our strong portfolio of initiatives to drive long-term growth. We expect net revenue will be in the range of $350 million-$355 million for the second quarter. For the full year, we are reaffirming our guidance and expect net revenue to be in the range of $1.42 billion-$1.44 billion as our services initiatives gain traction. Turning to margin, we expect second quarter cash expenses to increase from the first quarter, largely driven by incremental marketing investments, particularly in paid project acquisition. The early positive results from our paid search program have given us the confidence to expand our investments in this area, which we believe can drive project growth over the long term. We now expect to spend $40 million or more on services project acquisition in 2024. As a result, we anticipate second quarter Adjusted EBITDA will be in the range of $70 million-$75 million. We are also narrowing our 2024 Adjusted EBITDA guidance to $315 million-$325 million to reflect this increased investment. Prices in our cost per click model are set through an auction, as compared to the cost per lead model. In the past, we have found that when we deliver more clicks for a given amount of advertising budget, average CPCs decline. In turn, as advertisers see more value, they generally increase spend over time. However, there is typically a significant lag between a decline in CPC and an increase in ad budget. Given the dynamics of this interaction, as well as the fact that we remain at an early stage in our paid project acquisition initiative, we have not reflected any potential related revenue in our guidance for 2024. In closing, Yelp's first quarter results reflect our multi-year focus on product innovation and the application of AI across our business. We are proud of our team's ability to execute against our strategic initiatives, particularly the work being done to unlock even greater value for consumers and service pros. We have continuing confidence in our ability to innovate, grow, and drive shareholder value over the long term. With that, operator, please open up the line for questions. Thank you. We will now begin the question- and- answer session. If you have dialed in and would like to ask a question, please press star followed by the number one on your telephone keypad to raise your hand and join the queue. To withdraw your question, please press star one again. If you have dialed in via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, please press star one to join the queue. Our first question comes from Jason Kreyer with Craig-Hallum. Please go ahead. Thank you. This is Cal on for Jason. First question from me. Just wondering, any learnings, anything new in Q1 that you saw as you continue to ramp that paid search budget a nd, you know, what opportunities do you see for further efficiencies as you continue to ramp that? Hey there, Cal. This is Jeremy. I think I can take that. We were really pleased, as we expanded our paid budget there. You know, this is a moment we've been building towards over a multi-year period, really leaning into services and, in particular, Request a Quote, and it seems like it's paying off. Q4, we had some test budget, and then Q1 was really about getting that to more significant scale. I think if you look at our project volume, you can see that the needle has been moved. I would say, you know, a portion of that is our paid efforts, and then, of course, a portion of that is leaning into product and engineering enhancements and features a nd I think the early results are really looking great. 20% year-over-year project volume, you know, clicks, ad clicks are up, CPCs are down, you know, especially in these categories where we've added paid budget. I think from a headroom standpoint, we're just getting started. It's still early for us. There's a lot of optimizations that we can continue to make, friction that we can take out, and then, of course, there's the amount of budget that we can put into it. So I think we're on the offense on this one, and really excited to see how it plays out across the year and in the years ahead. Great. T hen, last one from me. Just wanted to touch on the Yelp Assistant. You know, could you provide some more color on what you're seeing as far as reducing that consumer friction? You know, I know it's early, but just curious what you're seeing in terms of reducing that friction point and, you know, increasing those conversion rates. Sure, I can take that one, too. You know, LLMs are a really important part of what we're doing a nd we've been, of course, incorporating AI capabilities for many, many years. I think Yelp Assistant reflects something that just frankly wasn't possible a few years ago. It's a really exciting way for consumers to interact with Yelp. When they have a project in mind, they can talk to a friendly assistant that guides them through the process, collects all the relevant information, and then ultimately asks them if they'd like to submit that project and get multiple quotes on it. We've added it to the project tab as a first step within the app, and we're seeing great results there. It does seem to resonate with consumers, and we'll be evaluating and testing different entry points, either, you know, all over the mobile web, desktop web, as well as app, to make sure that we're able to leverage it to the maximum. Perfect. Very appreciated. Thank you. Our next question comes from Eric Sheridan with Goldman Sachs. Please go ahead. Thanks so much for taking the questions. Maybe two, if I could. We saw the announcement with Perplexity, and just kinda curious if you could give us some sense of how that relationship might evolve and grow, and what the scope might be for additional type partnerships when you think about the rise of AI as consumer facing to an increasing amount in the years ahead. Second, the secondary comment you made about competition for ad dollars in the local space with some of the delivery providers and the like, can you go a little bit deeper in what you're seeing there in terms of teasing out either the cyclicality versus maybe some of the competitive dynamic that was putting some pressure on that business? Thank you. All right, I can take a stab at the first question there. Maybe Jed can jump in on the second one. So, you know, excited to see the Perplexity partnership happen. You know, they're obviously an early innovator trying to push search forward. I think, you know, the important takeaway is that when a company trying to deliver a great search experience is in need of great local content, they turn to Yelp. S o that's exciting validation for us. Certainly, there's a lot of activity in the AI space in general and the data licensing space in general. You know, our door remains open. We're having lots of conversations, and we do, you know, as a reminder, have a pretty sizable data licensing business with a whole variety of different partners in a whole wide array of different industries. We do see, you know, AI licensing as a potentially new area. In fact, we just released in our spring product release, the Yelp Fusion AI API, which delivers a conversational search experience, essentially. So that's new to the market. Conversations are happening, and we're excited to see what innovators do with that, bringing Yelp content all over the web and into interesting new AI applications. This is Jed. I can take the second question on competition. You know, certainly in the first quarter, we saw some continued pressure in the restaurant, retail, and other categories. You know, businesses in these categories remain really cautious, given the macroeconomic factors, including labor input costs and not being able to pass through some of the inflationary pressures to the consumer, that those days have ended. T hen, you know, a marginal impact from the broader industry shifts to off-premise. Certainly, when you look at some of the delivery platforms and kind of the pay-to-play that happens on those platforms. You know, at the margin, we believe there's some of those dollars going over to those platforms, but largely, it's a macro impact. You know, at some point, we do believe that RNO will come back. We don't really have the conviction as to the specific timing, given the market conditions. You know, timing is hard to tell. We are well- positioned, however, to take advantage when some of the underlying economic drivers improve. You know, we're staffing against the opportunity, as well as continuing to innovate, you know, via the product side. I n the meantime, you know, stepping back broadly, we're laser-focused on the opportunity and services, and believe that we're in a really strong position to take share. You know, specifically around the enterprise, we believe that we're somewhat under-penetrated and have really started to implement initiatives and invest in services for the enterprise. You know, including better ways to integrate with the CRM and lead management systems on the client side, you know, in order to drive more RAQ adoption a nd that's certainly gonna be impacted by our new services project acquisition strategy as well. Thank you. Our next question comes from Sergio Segura with KeyBanc. Please go ahead. Great. Thanks for taking the questions, yeah, too. So the high end of the EBITDA guide was lowered after EBITDA this quarter was above expectation, and then the revenue outlook for the year was also unchanged. I guess, can you just walk us through what gives you confidence in stepping up the investment for this year, without, you know, seeing those revenue returns that is, that is, contemplated in your outlook, for 2024? That's the first question. Then second, on RNO, you talked about some weakness you saw last quarter. I guess, how did the softness play out versus your expectations? Then, a month into this quarter, how are trends in that segment relative to what you saw in the first quarter? Thank you. Hey, Sergio, it's David. Thanks for the question. So first, obviously, we have the increased spend in Q1, where we went from $2 million at the end of Q4 to $7 million. W hat we saw in the categories where we are buying projects, as with movers as an example, is that we saw significant increases in projects, we saw significant increases in clicks, and we saw meaningful declines in cost per click. Now, in the past, when we have been able to deliver more value in the way that we think about values, more clicks at better pricing, which is what we are seeing in movers in the first quarter, in time, we see that ad budget increases. But it takes time because the mechanism for us is very much through the auction system, where we're adding consumers, and then those advertisers seeing higher quality leads, more valuable leads for the price that they're paying, and then they adjust their budget over time. Now, obviously, we want to drive good economic returns, but the timeframe between when you actually spend and when that shows up in budget has been elongated in the past. But I just want to underscore, broadly, when we've done this in the past, we have seen it show up in ad budget. So we'll look forward to sharing with you updates, obviously, when we get to the Q2 call and the Q3 call. In terms of the guidance, because of the strong early results that we saw in the first quarter, we wanted to provide insight into how we were gonna spend through the year, and the fact that we did intend to absorb some of the EBITDA into paid project acquisition. I do wanna underscore that we think overall, the broad efforts that we've made over the past several years to drive efficiency still continue. J ust as a couple of important points, we obviously achieved a 25% Adjusted EBITDA margin. In 2023, if you look at Q1 expenses, they're only up 1% compared to Q1 of last year. So in Q4 this year, overall expenses up just 1% compared to Q1. We think that we've given ourselves capacity to make this type of investment, but again, I just want to underscore that we continue to drive efficiency in order to give ourselves this type of operational flexibility. This is Jed. I can take the second question. Yeah, in terms of RNO weakness in the first quarter, you know, it was a continuation from what we you know, started to see in the fourth quarter, and as we mentioned in the fourth quarter call. In terms of moving into the second quarter, you know, our expectations are reflected in the guide. It's important to mention, too, that you know, we're seeing the RNO impact in both local as well as on the multi-loc channel, and obviously, you know, multi-location will take the brunt of that given the revenue mix. Very helpful. Thank you both. Our next question comes from John Colantuoni with Jefferies. Please go ahead. Thanks for taking my questions. Wanted to zoom in a little bit on the SEM efforts. You know, I think return profiles in general, across SEM, sort of, are often dependent on repeat behavior since that initial paid click isn't profitable. For Yelp specifically, you know, would you characterize the initial return profile and payback of SEM, or how would you characterize the initial return profile and payback of SEM? You know, how those KPIs translate into revenue and profitability, in the near and long term? Thanks. Hi there, John, this is Jeremy. I can take that. Yes, as we're ramping projects, paid projects here, we do believe, we have a unique take, a unique approach, to this space. You know, Yelp obviously has a really strong brand. We're very cross-category. S o unlike other players that may maybe have, invested significantly in this space, we have the reason to talk to consumers for a wide variety of different use cases. S o I think that does give us a very unique advantage in continuing that conversation a nd I think certainly to provide outsized economics, right, we're gonna have to drive repeat behavior. Right now, it's obviously very early. We just got out of a test quarter in Q4, and we're ramping in Q1. S o what we're looking at and working with is sort of very early data. But, you know, I think we can say for sure that the early metrics are looking good, with projects being up 20%. You know, click ad clicks being up as well and CPCs being down. So that's what we wanted to see out of the gate. T hen I guess the other thing I'd point to is that, you know, Yelp historically has been very product and engineering driven. We invest a lot in R&D, and I think that allows us to provide a consumer experience across our app, across the web, across mobile web, that will be, and frankly, is unparalleled in the space. I think Yelp Assistant is a fantastic example of that. No one else has anything like that in the space, period. You know, we are the innovator there, and I think you can expect to see more goodness just like that in the future. Thank you. Our next question comes from Josh Beck with Raymond James. Please go ahead. Hi, this is Kishan Patel on for Josh Beck. Thanks for taking our question. Any color you can share around consumer engagement and the impact around monetization of services, and what metrics are you tracking or managing towards in terms of improving lead gen results? This is Jeremy. You know, from on the, on the services side, we've obviously been investing significantly in, you know, our product. I think a great example of that, as I just talked about, is Yelp Assistant, where we're trying to be really innovative there, and the response we're seeing from consumers is positive. It's within the project tab in the app. You know, we continue to invest in streamlining our Request a Quote functionality, making that easier for folks to use. I also think, you know, it's important to reflect on the business owner side of the equation. I think there's a lot of opportunity there as well, thinking about making it even easier for businesses to reply and, you know, provide good correspondence back to consumers. Whether it's quotes or improving the responses, I think is gonna be a really great opportunity for us, and one that also lends itself to AI improvements as well. So we'll keep you posted as we continue to make improvements, but, you know, we've come a long way, and I think that's reflected in the excellent project performance. You know, Request a Quote projects being up 20%, shows we're doing some things right. A gain, part of that is the paid projects that we're driving, and part of that is the continued innovation and streamlining of our services, features, and functionality. I can add, this is David. On the monetized connections front, there are two things happening. One is we continue to make improvements and drive increased monetization of connections, and we continue to make progress on that in the first quarter. A s we acquire leads through paid search or from off-Yelp traffic, you are gonna see that metric move because you're adding. Obviously, when we bring someone in, we wanna see clicks to make the economics work. So you're gonna see both the numerator and the denominator increasing, and that's gonna increase the percentage there. But we are seeing strength in both an d just to say the obvious, if we get better and better at monetizing connections, that makes it all the more valuable to bring additional projects onto Yelp. So there's a positive loop there. We'll provide more updates as we go through the year on the progress that we're making. T hen, of course, we give the monetized connection number annually. When we get to the Q4 call in 2025, we'll give the numbers there, but both saw strength in the first quarter, driven by those product improvements and through the projects that we were purchasing. Got it. Thank you very much. Again, if you would like to ask a question, please press star one. Our next question comes from Jian Li with Evercore. Please go ahead. Great. Thanks for taking the question. First, I wanna just double-click on your comment on the CPC. You know, you're leaning into investment, you're seeing conversion, but the CPC is pretty muted. Is it just the nature of kind of the current ad market condition, or is there anything you're doing on your ad tech side that's really improving targeting? Maybe even kind of talk about what you're seeing in the competitive intensity of this ad bidding in the services sector specifically, you know, outside of the day-to-day volatility. Thanks. Yeah, thanks for the question. This is David. So one thing, the one dynamic at play here is obviously we report the blended change in CPCs. Now, obviously, that consists broadly of services and restaurant, retail, and other, and then obviously there are subcategories to each of those. W hat we have seen, I just wanna start with the paid project acquisition piece. What we have seen is meaningful reductions in the subcategories where we are purchasing projects, and we're very encouraged by that, b ut we also saw declines in CPCs greater than the -1% in services broadly. That's really coming from the continuous improvement in the ad matching technology, which itself is a combination of better information from the consumer, as well as continued improvement in the algorithm, plus obviously, having those service pros available to us. So we've made progress on that front as well, and we're very pleased. I just point out, overall, we went from CPCs growing 4% in the fourth quarter to -1% in the first quarter. That's still a very meaningful move in aggregate, and that is being very much driven on the services side, where you have much smaller number of clicks. So super happy with that. In terms of, like, bidding intensity, for these types of projects, you know, obviously, we are targeting a return on those projects, and we've been so far pleased by the price that we're able to acquire projects at, and to the point where we're willing to increase spend in 2024, obviously, to the $40 million or more. So very pleased overall with that. I think just to, you know, maybe as a final comment, when we make improvements, as Jeremy's talked about, with something like Yelp Assistant, and we really get better and better at engaging the consumer, creating a great experience for them, we obviously wanna see them come back. But we're also getting more information about the specific job they have. That really helps us with the matching, and that increased information translates quite directly into improved CPCs, which in turn results in better cost per lead economics for service pros. So we're happy overall with the progress that we're making, and I just underscore there's actually lots and lots of projects underway and a lot of room yet to go on continuing to improve that. Great, that's super helpful. Maybe just a follow-up. You know, you shared your general, like, share buyback expectations. That's really helpful. But, you know, given you're leaning into investment, and it sounds like there's still a lot of, like, green shoots, product innovations that's in the pipeline, is there anything that we should consider in the near-term cadence of share buybacks? You know, any, I guess, near-term changes to our capital allocation. Thanks for that question. So in the first quarter, we did buy back $62.5 million of stock. We had been quite consistently buying in prior quarters, $50 million. So we saw an opportunity to, in the first quarter, return additional capital. W e also, in the first quarter, generated $66 million in free cash flow, and we ended the quarter with $421 million in cash. As you know, we're committed to returning capital in excess of our target cash balance. Our perspective on that has not changed, and we remain committed to doing that. So I think I just go back to a comment I made earlier, we think that we have continued to drive real efficiency at Yelp over the past several years. A gain, I just point out, overall expenses being only up 1% in the first quarter of 2024 compared to 2023 is a reflection of that. So we are creating the capacity to invest, at the same time that we're still driving what we think are strong economics for the business. Awesome. Thanks a ton. There are no further questions in the queue. This will conclude today's conference call. Thank you all for your participation, and you may now disconnect.