Hi everyone. I'm John Colantuoni, Jefferies Internet Analyst. I'm joined by David Schwarzbach, Yelp's Chief Financial Officer. David, thanks for joining us today. John, thanks for having us at the conference. We'll be making some forward-looking statements during the conversation today that are subject to risks and uncertainties. Please refer to our SEC filings for more information on the risk factors that may affect our results. All right, great. I think that... Okay, great. I think everyone's familiar with Yelp, but the story has evolved over time. I think in the last five-plus years, you've been making a lot of changes. Maybe just catch people up on how the story's evolved for those that aren't as close to it. Yelp has changed quite a bit over the years. Maybe one of the most fundamental changes has been this shift from what had been a sales headcount-driven growth model to very much being a product-driven growth model. That is something that we've really invested in and are accelerating. At the same time that we've invested in accelerating product delivery and really focusing on the product front, there's obviously been tremendous changes in the underlying technology or technologies that are available to us. We'll spend more time on AI, but we are spending a significant amount of effort around capturing this new emerging opportunity that comes with large language models. That is one big change. The other big change for Yelp over the past years has been, certainly we're well known for our restaurant and retail reviews, but now about two-thirds of our revenue comes from services. That is also a huge transition for us over the past five to seven years. We have really doubled down and focused on being able to deliver value to consumers and advertisers alike, but particularly around services. Those are the two big ones. Financially, we continue to grow the company while driving margins higher. Let's start with the services business. It's been, obviously, it's had very consistent momentum. Maybe just talk about what has been driving that momentum, what makes you confident that you can keep driving sort of resilient growth in that business over time. Services performed quite well for us. Throughout 2024, we grew at about 11% each quarter. For the year, in the first quarter of this year, we grew 14%. About 3.5% of that came from an acquisition that we did in the fall, a company called RepairPal, which is focused on the auto segment. What has really driven services over the past several years was home services in particular. We think that we have been able to really drive performance there because we have continued to deliver incremental value to service pros. By driving value to them, that comes from delivering great leads from consumers. Consumers, we want to match them with the right businesses. We did a lot of work around an experience on Yelp that we call Request a Quote. That's where you answer a few questions in order for us to really understand the nature of your project and be able to match you. Home services really drove that performance. We realized as we made all these improvements in home services that there were more widely applicable Request a Quote works in more categories than home services. We continue to build that out. This year, what we've said is that we're expanding the focus to not just be on home services in particular, as we did last year, but broadly services. We're investing now in these other categories like auto. For RepairPal, we really like that acquisition because they have a network of repair shops that have high-quality folks doing work. They have a great quoting engine for what it will cost you to actually get a repair done. I think we've all had that experience. My car needs a repair. I don't know what it's going to cost. If you have a way to estimate it, it gives a lot of confidence in what to expect and who's going to do that work. We thought that was something valuable that we could bring in a Request a Quote on Yelp. Conversely, we thought we could really support their business on things that we think that we do well, whether it's SEM or SEO. We see a lot of strategic value in doing that and value across both the Yelp experience as well as the RepairPal experience. When you combine all those things in this product-led experience, and again, we'll talk more about it, but Yelp Assistant, which is our chatbot, we just see a large opportunity to fundamentally, at the end of the day, what you have to do is deliver value to advertisers and consumers alike. You're focusing more on multi-location in the services business. Maybe talk a little bit about the motivation behind doing that and maybe just describe what a multi-location service is and why you are excited about that opportunity. On the restaurant, retail, and other side, enterprise customers have been a large proportion of that. On the services side, it's actually been far fewer. We use this term multi-location. What we really mean is mid-market and enterprise and also channel partners. We are going after this opportunity to increase the amount of advertising dollars that we can support from services enterprise customers. What's been hard about that and the reason why it's been a smaller proportion is that there is a lot of capability that you need to provide to those enterprise customers for them to be able to realize, to first work a lead and also realize the most value from that lead. We had to build out a variety of APIs to integrate with our CRMs. Everybody, I think, is broadly moving to conversion API. That was an important component. There also has to be lead management for them. You have to be able to do that across multiple locations at scale. We have done a lot of product work over the past year. Now we see the opportunity to really engage with those folks to grow enterprise services revenue, which we have not been as realized as we had been in the past. Broadly, there is just a lot of spend, obviously, by mid-market enterprise customers. We want to participate in that. Great. Request to Quote, it's an initiative that you've had now for a few years. You've had good momentum. Some periods, not as good a momentum in others. I think recently, the momentum has been strong. Maybe just talk a little bit about what you're doing there, how important that is to the services business, and how big of an opportunity you see that over time. Request to Quote is important for a variety of reasons. The first is, if you come to Yelp, the way that we think about services is really much more as a workflow than an ad unit. And what do we mean by workflow? I've got a project or I have a problem with, say, my home. I need a plumber to come out. Plumbers do different work. The nature of my problem can vary a lot. You first have to discern what is exactly required in the job. Then you have to take that information and you have to match with a service pro who can do that work well, who's available in your area. We have to enable a conversation between them because most people want to have a sense that the person that they're inviting into their home is someone who's trustworthy and will do good work. It also is time-consuming. They need to give a quote. They need to do the job. They need to get paid. That whole workflow, we've been focused on enabling better experience. Request a Quote is foundational to that because we ask some more questions. We learn something more that informs our matching model. We also support the conversation. One of the reasons that we're so excited about large language models is that they enable us to do that much more conversationally as opposed to having what is really a fixed question tree in trying to ascertain what the exact job is. Because the flexibility of these models, you can ask a better question, elicit more information in fewer questions that is useful for the matching model. We've invested heavily in Yelp Assistant. That's something that we've rolled out across services. It's something that we intend to roll out across the entire Yelp experience over the course of this year. We're going to continue to invest there in the message center. Two new things that we did announce were enabling people to make reservations using voice AI for both restaurants and services business on Yelp. You can see we're doing a lot around AI, but it's all in service to delivering value to those advertisers. Sticking with services, let's go to the RepairPal acquisition. Talk about the strategic rationale for the acquisition, how you plan to integrate it into the business over time to drive synergies. Auto, third largest category for us before the acquisition. Now, the second largest category, auto is clearly something that is very important to folks. There's a lot of different types of things that can happen in auto categories. You could have detailing. You could have repairs. You could have maintenance and so on, collision. We just see this broad opportunity to bring value to folks when they have an issue with their car. The other thing, of course, is you have a car. It needs to be repaired. You have to do it. It's much less discretionary than, say, some of the other categories might be or, say, a large home remodeling. This was also an opportunity for us to, as I mentioned, expand out beyond home services and drive growth in services more broadly. That was the strategic rationale. In terms of integration, it will remain a standalone asset for us. They have a separate tech stack. We're not going to, I think, integrate the tech stacks. Again, there's a lot of expertise that we can bring to bear. It's been very much over the past six months, landing the team, getting them integrated, and working together. That's the first step in any acquisition. We're going to really look to deliver value on both sides as we continue to work with them. Okay, great. So very strong performance in services. Let's go to the other side of the business, restaurant, retail, and other, which has started to slow recently. Talk about what some of the drivers of that moderation has been and the playbook that you're implementing to get momentum back on track. Yeah. Restaurant, retail, and other has definitely been broadly a category for us that has had its challenges. It really did start in 2024. It certainly played out again in the first quarter of 2025. For those businesses, and I think you've heard this on other earnings calls, input costs have risen. That input costs cover both, say, ingredients for a restaurant, but also on the labor front. It became much harder to pass on those cost increases to consumers. That was possible in 2022 and 2023, say, also in 2021 with inflation. Consumers had really seen a lot of price increases. It wasn't possible to pass those on. The result of that is if you have input costs rising and you're not able to pass those along, margins are squeezed. That certainly has resulted in some pullback in advertising across those businesses. Also, we know that consumers have traded down in a variety of categories due to inflation. That did remain challenged. It did come in at -3% in the first quarter. What are we doing? We want to be well-positioned to participate as that recovers. We have continued to invest in the consumer experience. Our home feed is completely revamped. It is much more visual. It is still very much about high engagement with particularly food. People like food. We are also continuing to look at ways to improve the underlying ad matching technology, not just for services, but broadly, including restaurants, so that we could deliver incremental value to those advertisers. We continue to believe that we are well-positioned when the recovery occurs. We have mentioned that there's also another dynamic at play, particularly in restaurants, which is the food delivery players now do advertising. That's certainly true at the margin. The much bigger driver in restaurant, retail, and other has been this rise in input cost and margin compression. You mentioned the delivery platforms. We often receive questions about how those delivery platforms could be impacting your restaurant business specifically. What is your perspective on how the delivery platforms have impacted your momentum? Do you have any initiatives to help offset competition in general? Yeah. Restaurants today for us is a relatively small category. Marginal advertising dollars that the delivery players are absorbing is something that we see. It really is at the margin, on the margin. If restaurants are on the margin, the competition for ad dollars in restaurants is also on the margin. It's not a huge driver, but it's certainly out there. I'd say broadly, you have to recognize that retail ad networks have grown up. Everybody saw the Amazon model. They've replicated that. There is more competition for ad dollars in restaurant, retail, and other. How are we tackling that? It really does all fundamentally come back to we have a terrific audience. Our audience is highly engaged. It's affluent. More than 50% of visitors to Yelp come from households with income over $100,000, highly educated, often homeowners. Advertisers want to reach that audience. It's still true on maybe a lower ASP like a restaurant, but nevertheless. It is also true on the services side. At the end of the day, what we are focused on is our core value proposition, which is human-generated, high-quality ratings and reviews that people can depend on to make decisions. That audience, we believe, is attractive to advertisers, both on the services front and the restaurant, retail, and other side. We continue to be heavily invested in improving that consumer experience, generating those reviews, continuing to be maniacally focused on content moderation to ensure that those reviews are reliable, and then showing advertisers value by matching the right visitor with their business so that when they pay for a click, they're getting a good lead. Let's go to traffic and engagement. Last year, you experimented with paid traffic acquisition, ultimately decided to pull back on that. Maybe you could give some perspective. Why did you decide to experiment there? Why did you decide to pull back ultimately? How important is traffic and engagement growth to your ability to execute on your goals and strategies over time? Last year, we did start out the year. We did spend heavily on paid project acquisition through SEM, paid search ads. We successfully drove up projects. We generated a lot of projects. Those did have a positive impact on CPCs. Just for reference, the way that we approach things is we have an auction for a visitor in a category at that time of day in that area of the country. We are really finding the market-clearing price for that visitor. We are not trying to set CPCs per se or the number of clicks. We are optimizing. We do optimize budget on behalf of advertisers. As we went through that, we added more projects. CPCs came down. We did not see broadly ad budgets go up. We were puzzled by that. We learned that for a lot of advertisers, the incremental visitor was not enough to prompt them to increase budget. What that meant was we really had to direct those visitors, those projects to the right advertisers, the ones who are most sensitive to seeing increased projects. Operationally, that is not simple to do when you are running an at-scale auction system. We did pull back. We had this very important learning. That has been an attribute of how we have thought about going after this mid-market and national services opportunity because we know that those folks will pay for incremental leads. The way that we have thought about it is how can we engineer a system in which we clearly know that when we buy a project, there is someone who will pay for it. We built a lot of capabilities on the back end in order to do that. That is supporting the current initiative to increase the amount of advertising budget that we get from these mid-market and national or enterprise services businesses. I would just add we're just very, very ROI-driven. When we saw that the ROI was not there, we pulled the spend back and we flowed it back through EBITDA. We have no issue doing that. We're going to continue to take swings. We're going to invest. We're going to be experimentation-driven. We're going to A/B test things. If it does not work, hey, no problem. We will either redirect the investment or return it through margin. Great. Let's turn to AI. How are you thinking about the future of the Yelp platform and its use of AI? How do you view the, and also, how do you view the competitive landscape in search advertising evolving? How do you expect or plan to remain competitive as that evolution occurs? For us, we absolutely see AI as a huge opportunity. It starts with the fact that we have these human-generated, high-quality reviews. For AI to be effective, successful, and to deliver results that are accurate and relevant, you really do need to have the right data set. We think that we're in a very, very good position from that perspective. That's the first piece. The second piece, of course, is that you have to have the infrastructure, technology, engineering know-how in order to leverage these technologies. That's really shown up in Yelp Assistant. We think that it is industry-leading. I personally think that it's a terrific experience. We get more relevant information in fewer questions from consumers that enables us to better match them with the right service pros. We've been excited about that. Another thing that large language models are terrific at is extracting sentiment and information that really reflects the gist of what folks have written on Yelp. We use review snippets. We've made those more contextual and more dynamic so that we're reviewing snippets that are more responsive to the query that the person has written. That's an exciting area for us. We announced that we're going to be building these Yelp answering service for both restaurant and service pros. Both restaurants and service pros miss a lot of calls. There's real value if you can pick up every call and do it in a way that's engaging and results in a booking or an appointment. We're very excited about our capabilities there. Again, they're informed by this depth of understanding that we have in the categories, plus our first-party data set, plus the back-end systems that we've built over the years that can support this with low latency and high accuracy. We benefit from the fact that the problems that we're tackling are very constrained. They're very specific. I'm calling a plumber. We know a lot about plumbing and how to answer questions and ask questions about plumbing. That makes it possible for us to really target the experience in a way that I think is high quality and differentiated. We're most certainly excited about that. Broadly, as an organization or as a company and enterprise, we're looking at ways to apply AI across everything we do, whether it's coding tools like Copilot or ChatGPT. Every single employee at Yelp has access to large language models to help them in the work that they do. We continue to look for additional avenues to be more productive with the folks that we have. Let's turn to macro. Give us your perspective on how sensitive you'd consider the Yelp business to macroeconomic shifts, changes, pullbacks, et cetera. Maybe just give us your perspective on how that might break down or differ between the services business versus the RR&O business, et cetera. We've certainly seen that restaurant, retail, and other is more cyclical. I think there's more discretionary spend around that. As I already talked about, for those businesses in restaurant, retail, and other, if people are trading down or if they have less business or input costs are higher, they are going to spend less on advertising. It's pretty different, though, on the services front. Services, there's a significant portion of it that is just non-discretionary. If I'm locked out of my home, I need a locksmith. If I have a leak in my home, I've got to have that repaired. There's a lot that is non-discretionary. There is also discretionary. What we've seen historically in services, though, is as things have slowed, those service pros have increased their advertising to stay busy. That was a little bit counterintuitive for me when I first saw this a few years ago. It certainly could play out differently in the future. That makes it a little less cyclical, maybe a little more acyclical than the restaurant, retail, and other side of the business. At the end of the day, it really still comes back to this fundamental premise, which is we have to be able to deliver value to consumers who, especially in an economic downturn, are going to be more careful with how they spend their money. We think we deliver value in helping them make better decisions. Then we're delivering those high-intent customers who have money to spend to advertisers. Therefore, we can generate a return on that advertising spend for those folks. Maniacally focused on delivering value to consumers and advertisers alike. Let's talk about guidance. We'll start with revenue. The revenue guidance for the second quarter implies a bit of a slowdown. The full-year outlook implies a bit of an acceleration in the second half. Talk about the drivers of that and what you're seeing that's helping inform your outlook for the second quarter and for the full year. Absolutely. My comments are absolutely restricted to our date of earnings earlier in May. What we said, what we saw about April was that given the uncertainty, we did not see the typical seasonal rise in ad budgets. Why does it rise seasonally? On the restaurant, retail, and other side, people are traveling. Summer's coming. Spring's there. People do do more projects once spring comes. There's also an element of that which has to do with tax refunds. In general, advertisers know that consumers are spending more as you move into the summer months through the spring. They increase their ad spend. We did not see that. People held their budgets flat because they were more cautious. That certainly impacts our expected performance for the second quarter and is reflected in the guidance. Now, what we also said was that at the beginning of May, again, I'm keeping my comments to that period, we did see some early positive signals that as some of the uncertainty declined, there was increased confidence. We are really going to have to see how this plays out over the course of the year. I would say there's still uncertainty on policy and how everything's going to play out on the tariff front. We certainly always need to reflect in our guidance the risks and uncertainties that we see. All right. We're running out of time. Let's do one quick one on margins and profitability. The outlook for the full year implies EBITDA dollars are roughly stable despite mid-single-digit growth in revenue and the upside that you delivered in the first quarter. What are the sources of margin pressure that's contemplated in your outlook? Talk about the impact of RepairPal and how that's factored into your outlook for margins. There are a few dynamics at play. One, there are particular expenses that are harder to estimate. How much vacation time are people taking? How much healthcare expenses are there going to be? That was lower than we expected in the first quarter. It tends to even out. You have to expect that expense to show up as you move through the rest of the year. That is one of the things that drove what was clearly outperformance on adjusted EBITDA in the first quarter, both expectations from a margin perspective. That is, we expect, going to smooth out. A second component on the gross margin front is RepairPal is a lower gross margin business than us, and therefore, we see some impact there. Third, we are spending a lot more on data in order to power these AI products. That is also a contributor from a margin perspective. The fourth thing is we've made a concerted effort to move away from stock-based comp to lower stock-based comp expense and move that towards cash comp. That's still playing out here in 2025. That's a headwind on EBITDA. When you combine all of those things, that's what informs our guidance expectations for 2025. I just point out for the third year in a row, we've guided to flat headcount. Yet we think that we're continuing to drive great performance or we're driving continued improvement in the experience on Yelp. We're just maniacally focused on being more productive with the folks that we have. All right. We're going to have to stop there. David, thank you so much for joining us today. Appreciate it. Thanks so much. This presentation has now finished. Please check back shortly for the archive.