Yelp's Q2 2025 Earnings Call: Contradictions Unveiled on Macroeconomic Impacts, AI Growth, and Integration Strategies

Macroeconomic impact on services revenue, Yelp Assistant's impact on ad clicks, macro impact on restaurant and services revenue, Yelp Assistant and AI Search API growth, RepairPal's integration and financial impact are the key contradictions discussed in Yelp's latest 2025Q2 earnings call.



Record Revenue and Profitability:
- Yelp Inc. reported record net revenue of $370 million for Q2 2025, up 4% year-over-year.
- The company expanded its net income margin by 1 percentage point and adjusted EBITDA margin by 2 percentage points from the prior year period.
- Growth was driven by a focus on a product-led strategy and AI-powered updates.

Services Revenue Growth:
- Yelp's services revenue increased by 8% year-over-year to a quarterly record $241 million.
- The increase was driven by improvements to the request flow and the AI chatbot Yelp Assistant, which saw a more than 400% increase in project submission.
- The growth was attributed to continuous enhancements and new entry points for the Yelp Assistant.

AI Search API and Data Licensing Momentum:
- AI search API calls increased by 20x over the past year and 10x in just the last 2 months.
- The annual run rate revenue related to AI search surpassed $10 million over the last 2 months.
- The momentum reflects Yelp's value as an essential partner in emerging AI-powered search products.

Restaurants and Retail Challenges:
- RR&AO revenue declined by 5% year-over-year, with a decrease in RR&AO locations offsetting growth in services locations.
- Ad clicks declined by 7% year-over-year, primarily due to macro pressures and increased competition in RR&AO categories.
- The decline was attributed to macroeconomic uncertainties and increased competitive pressures in the restaurant and retail sectors.