Yelp Inc. (YELP) | Investment Case

1. Company Snapshot

1.a. Company Description

Yelp Inc.operates a platform that connects consumers with local businesses in the United States and internationally.The company's platform covers various local business categories, including restaurants, shopping, beauty and fitness, health, and other categories, as well as home, local, auto, professional, pets, events, real estate, and financial services.

It provides free and paid advertising products to businesses, which include cost-per-click search advertising and multi-location Ad products, as well as enables businesses to deliver targeted search advertising to local audiences; and business listing page products.The company also offers other services comprising Yelp Reservations that provide online reservations for restaurants, nightlife, and other venues directly from their Yelp business pages; Yelp Waitlist, a subscription-based waitlist management solution that allows consumers to check wait times and join waitlists remotely, as well as businesses to manage seating and server rotation; Yelp Knowledge program that offers business owners local analytics and insights through access to its historical data and other proprietary content; and Yelp Fusion, which offers free and paid access to content and data for consumer-facing enterprise use through publicly available APIs. In addition, it provides content licensing, as well as allows third-party data providers to update and manage business listing information on behalf of businesses.Further, the company offers its products directly through its sales force; indirectly through partners; and online through its website, as well as non-advertising partner arrangements.

It has strategic partnership with Grubhub for providing consumers with a service to place food orders for pickup and delivery.Yelp Inc.was incorporated in 2004 and is headquartered in San Francisco, California.

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1.b. Last Insights on YELP

Yelp Inc.'s recent performance was negatively impacted by tepid sales guidance for Q1 2026, despite surpassing Q4 earnings and revenue estimates. The company's record net revenue in 2025 was driven by growth in Services and product innovation, with over 55 new features introduced. However, CEO Jeremy Stoppelman's sale of 66,200 shares worth $1.7 million may have raised concerns. Analysts have a consensus "Reduce" rating on the stock, with two sell, four hold, and one buy rating. Yelp's acceleration in AI transformation and strong profitability in 2025 are notable positives.

1.c. Company Highlights

Last Price	23.74
Change Percentage	2.42%
Open	23.21
Previous Close	23.18
Market Cap ( Millions)	1497
Volume	1263038
Year High	41.22
Year Low	19.6
M A 50	26.68
M A 200	31.33

FCF Yield	21.58%
Dividend Yield	0.00%
ROE	19.96%
Debt / Equity	5.95%
Net Debt / EBIDTA	-69.00%
Price To Book	2.04
Price Earnings Ratio	9.95
Price To FCF	4.63
Price To sales	1.02
EV / EBITDA	5.26

2. Yelp's Record Revenue and Net Income in 2025

Yelp delivered record net revenue of $1.46 billion in 2025, up 4% year-over-year, and net income of $146 million, up 10%. The company's adjusted EBITDA was $369 million, representing a 25% margin. Earnings per share (EPS) came in at $0.61, beating analyst estimates of $0.47. The company's focus on services drove business performance, with advertising revenue from services up 8% year-over-year to a record $948 million.

Publication Date: Feb -17

                                    📋 Highlights
                                    Record Annual Revenue and Income Growth:
                                                Yelp achieved $1.46B net revenue (up 4%) and $146M net income (up 10%) in 2025, with a 25% adjusted EBITDA margin of $369M.
Services-Driven Advertising Growth:
                                                Advertising revenue from services hit $948M (up 8% YoY), driven by improvements in Request-A-Quote and Yelp Assistant adoption (+15%).
Yelp Assistant Expansion Success:
                                                Projects via Yelp Assistant surged 400%, with plans for cross-category expansion and new tools like Yelp Post and Yelp Receptionist.
Strong Data Licensing Growth:
                                                Data licensing revenue rose 17% YoY (30-33% in Q4), supported by human-written reviews and partnerships like OpenAI.
2026 Guidance and AI Investments:
                                                Yelp projects $1.455B–$1.475B revenue and $310M–$330M adjusted EBITDA, backed by AI investments, $500M share buybacks, and the Hatch acquisition.

                                

Segment Performance

In Q4 2025, net revenue decreased by 1% year-over-year to $360 million, and net income decreased by 10% year-over-year to $38 million. Adjusted EBITDA decreased by 15% year-over-year to $86 million. The operating environment for Restaurants, Retail & Other (RR&O) categories remains challenging, with revenue declining 6% year-over-year. However, the company saw a 17% year-over-year increase in data licensing revenue, driven by its unique content and the agreement with OpenAI.

Guidance and Growth Prospects

For 2026, Yelp expects net revenue to be in the range of $1.455 billion to $1.475 billion, representing a growth rate of approximately 0.3% to 1.7%, below analyst estimates of 2.8%. The company plans to increase investments in AI transformation, including the recent acquisition of Hatch, and to continue to drive growth in other revenue through AI. Yelp also plans to continue to repurchase shares, with a new authorization of $500 million.

AI-Powered Growth Initiatives

The company is investing heavily in AI-powered tools, including Yelp Assistant, which has driven a 400% increase in projects. Yelp Assistant will be expanded to provide a cross-category experience, allowing consumers to ask questions about local businesses and get relevant information. The acquisition of Hatch is expected to accelerate Yelp's roadmap and provide a significant growth opportunity, driving other revenue, including licensing, transaction, and subscription revenue.

Valuation

Yelp's current valuation metrics indicate a relatively reasonable price for its earnings. The company's P/E Ratio is 8.8, and its EV/EBITDA is 4.61. The ROE is 19.96%, indicating a strong return on equity. The Free Cash Flow Yield is 24.42%, suggesting that the company has a healthy cash flow generation. These metrics suggest that Yelp's stock price may be justified, given its growth prospects and profitability.

3. NewsRoom

Yelp Inc. (YELP) Presents at Morgan Stanley Technology, Media & Telecom Conference 2026 Transcript

Mar -03

Source: seekingalpha.com

3 Top Bargain Stocks Ready for a Bull Run

Mar -03

Source: fool.com

Yelp Releases 2025 Trust & Safety Report

Feb -25

Source: businesswire.com

Why Yelp Stock Is Sinking Today

Feb -13

Source: fool.com

Is Yelp Stock a Buy or Sell After the CEO Sold Shares Worth $1.7 Million?

Feb -13

Source: fool.com

Yelp Q4 Earnings Beat Estimates, Stock Dips on Tepid Sales Guidance

Feb -13

Source: zacks.com

Yelp Inc. (YELP) Q4 2025 Earnings Call Transcript

Feb -13

Source: seekingalpha.com

Yelp (YELP) Q4 Earnings: How Key Metrics Compare to Wall Street Estimates

Feb -13

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.18%)

6. Segments

Advertising - Services

Expected Growth: 7%

Yelp's 7% growth in Advertising Services is driven by increasing adoption of online advertising, rising demand for location-based targeting, and growing popularity of Yelp's platform among small and medium-sized businesses. Additionally, Yelp's investments in artificial intelligence and machine learning are enhancing ad relevance and effectiveness, leading to higher ROI for advertisers and increased spending.

Advertising - Restaurants, Retail & Other

Expected Growth: 5%

Yelp's 5% growth in Advertising - Restaurants, Retail & Other is driven by increasing online ordering and delivery adoption, rising demand for digital marketing solutions, and growing consumer engagement on the Yelp platform. Additionally, the company's investments in AI-powered advertising products and expansion into new markets are contributing to growth.

Other

Expected Growth: 4%

Yelp's 'Other' segment, with 4% growth, is driven by increasing demand for Yelp's non-advertising products, such as Yelp Reservations, Yelp Waitlist, and Yelp Knowledge, which provide additional revenue streams. Additionally, the company's focus on expanding its e-commerce capabilities and improving user engagement through enhanced features and experiences also contribute to this growth.

Transactions

Expected Growth: 8%

Yelp's 8% growth driven by increasing adoption of online food ordering and delivery, expansion of Yelp Eat24, and growth in Yelp Core revenue. Additionally, rising demand for digital advertising, improved sales execution, and increased investments in product development and marketing contribute to the growth.

7. Detailed Products

Yelp Ads

Yelp Ads is a platform that allows businesses to advertise on Yelp, increasing their visibility and reach to potential customers.

Yelp Reservations

Yelp Reservations is a table management system that allows restaurants to manage reservations, waitlists, and table assignments.

Yelp Waitlist

Yelp Waitlist is a waitlist management system that allows restaurants to manage wait times, notify customers, and optimize seating.

Yelp Knowledge

Yelp Knowledge is a business intelligence platform that provides insights and analytics to help businesses understand their online presence and customer behavior.

Yelp WiFi

Yelp WiFi is a guest WiFi solution that allows businesses to offer free WiFi to customers in exchange for their contact information.

Yelp Reviews

Yelp Reviews is a review management platform that allows businesses to manage and respond to customer reviews.

8. Yelp Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Yelp's services are unique, but users can substitute with other review platforms like Google Reviews or TripAdvisor. However, Yelp's strong brand recognition and large user base make it difficult for users to switch.

Bargaining Power Of Customers

Individual customers have limited bargaining power due to Yelp's large user base and diversified customer base. However, businesses may have some bargaining power due to their advertising revenue.

Bargaining Power Of Suppliers

Yelp's suppliers are primarily small businesses and individuals who provide content and reviews. They have limited bargaining power due to the large number of suppliers and the ease of replacing them.

Threat Of New Entrants

The threat of new entrants is high due to the low barriers to entry in the online review platform market. New entrants can easily replicate Yelp's business model, but Yelp's strong brand recognition and large user base provide a competitive advantage.

Intensity Of Rivalry

The online review platform market is highly competitive, with many players competing for market share. Yelp faces intense competition from Google Reviews, TripAdvisor, and other review platforms, which can lead to pricing pressure and advertising revenue competition.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	10.43%
Debt Cost	3.95%
Equity Weight	89.57%
Equity Cost	11.13%
WACC	10.38%
Leverage	11.65%

11. Quality Control: Yelp Inc. passed 9 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Nexstar Media

A-Score: 6.9/10

Value: 7.0

Growth: 8.2

Quality: 5.4

Yield: 7.0

Momentum: 7.0

Volatility: 6.7

1-Year Total Return ->

TEGNA

A-Score: 6.2/10

Value: 7.6

Growth: 5.8

Quality: 4.9

Yield: 6.0

Momentum: 8.0

Volatility: 5.0

1-Year Total Return ->

Yelp

A-Score: 5.2/10

Value: 6.5

Growth: 7.8

Quality: 8.4

Yield: 0.0

Momentum: 2.0

Volatility: 6.3

1-Year Total Return ->

CarGurus

A-Score: 4.7/10

Value: 2.6

Growth: 6.7

Quality: 8.4

Yield: 0.0

Momentum: 5.0

Volatility: 5.7

1-Year Total Return ->

Twilio

A-Score: 4.4/10

Value: 1.6

Growth: 8.1

Quality: 5.4

Yield: 0.0

Momentum: 8.0

Volatility: 3.0

1-Year Total Return ->

IAC

A-Score: 4.0/10

Value: 6.9

Growth: 2.7

Quality: 4.6

Yield: 0.0

Momentum: 3.5

Volatility: 6.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-8.33%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

10.38%

Yelp Inc. - US9858171054

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on YELP

1.c. Company Highlights

Better Quality

Higher Growth

Fairly Valued

Earnings Beats

Medium Volatility

Revenues Beats

Less Volatile

Stable Momentum

Weak Momentum

Revenues Miss

2. Yelp's Record Revenue and Net Income in 2025

Segment Performance

Guidance and Growth Prospects

AI-Powered Growth Initiatives

Valuation

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.18%)

6. Segments

Advertising - Services

Expected Growth: 7%

Advertising - Restaurants, Retail & Other

Expected Growth: 5%

Other

Expected Growth: 4%

Transactions

Expected Growth: 8%

7. Detailed Products

Yelp Ads

Yelp Reservations

Yelp Waitlist

Yelp Knowledge

Yelp WiFi

Yelp Reviews

8. Yelp Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Yelp Inc. passed 9 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

23.74$

Current Price

23.74$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA