Yelp shares drop as third quarter guidance falls short of expectations

Investing.com -- Yelp Inc. (NYSE:YELP) reported better-than-expected second quarter results on Thursday, but shares fell 3.5% after the local business review platform issued third quarter guidance that came in below analyst expectations.

The company posted adjusted earnings per share of $0.67 for the quarter ended June 30, 2025, significantly beating the analyst estimate of $0.51. Revenue reached a record $370.4 million, surpassing the consensus estimate of $365.7 million and representing a 3.7% increase YoY. Despite these strong results, investors focused on Yelp’s disappointing guidance for the third quarter, with projected revenue of $1.465-1.475 billion falling short of the $1.54 billion analysts expected.

"Our second quarter results reflect solid execution against our product-led strategy," said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. "We continued to see encouraging momentum from our AI initiatives, including the growing adoption of Yelp Assistant, and we began live testing of Yelp Host, one of our AI-powered call answering services."

The company demonstrated improved profitability, with net income margin expanding by one percentage point and adjusted EBITDA margin increasing by two percentage points compared to the prior-year period. Yelp expects adjusted EBITDA for the third quarter to be between $350 million and $360 million.

"While overall growth moderated amid an uncertain macroeconomic environment, we believe our disciplined financial approach and continued investment in our product-led strategy will drive financial performance over the long-term," said David Schwarzbach, Yelp’s chief financial officer.

The company continues to focus on its Services category and AI-powered product innovations as key drivers for future growth, though the cautious guidance suggests challenges in the near term as macroeconomic uncertainties persist.

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