Yelp Inc.

Good afternoon. Thank you for attending today's Yelp Third Quarter 2022 Earnings Conference Call. My name is Frances and I'll be your moderator today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, James Milne, Senior Vice President of Finance and Investor Relations at Yelp.

Please go ahead. Good afternoon, everyone, and thanks for joining us on Yelp's third quarter 2022 earnings conference call. Joining me today are Yelp's Chief Executive Officer, Jeremy Stoppelman, Chief Financial Officer, David Chorsbach, and Chief Operating Officer, Jed Nockman. We published the shareholder letter on our investor relations website and with the SEC about an hour ago. and hope everyone has 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'll discuss adjusted EBITDA and adjusted EBITDA margin 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 findings of the SEC, each of which is posted on our website, you will find additional disclosures regarding these non-GAAP financial measures, as well as historical reconciliations of GAAP net income to both adjusted EBITDA and adjusted EBITDA margin. And with that, I will turn the call over to Jeremy.

Thanks, James, and welcome everyone. In the third quarter, Yelp continued to see robust advertiser demand amid the backdrop of macro uncertainties. With performance-based ad products and a high intent audience, our business reached new highs. Net revenue increased by 15% year over year to a record of $309 million. Net income was $9 million. we delivered this performance with an adjusted EBITDA margin of 24%. Underlying our record top line, we continue to make inroads across our broad set of categories. Paying advertising locations increased by 7% year-over-year to 572,000. Advertising revenue from services businesses grew 15% year-over-year. The home services category was particularly strong. with year-over-year revenue growth accelerating to approximately 25%. With the benefit of a large organic consumer audience, we continued to focus on the significant opportunity in services advertising by increasing lead quality and monetization. Advertising revenue from restaurants, retail, and other businesses increased by 13% year-over-year, driven by growth in paying advertising locations. In recent years, we have made tremendous progress in improving our ad system to deliver value to advertisers. We will continue to lean into our product roadmap to support restaurant and retail advertisers as they navigate a volatile operating environment. Our portfolio of down funnel ad products that connect local businesses with our high intent and affluent consumer audience have clearly resonated with advertisers. This is a reflection of our long-term focus on building a durable broad-based local advertising platform. In the third quarter, we continue to make progress against our initiative to drive sales through our most efficient channels. Multi-location and self-serve channels each grew approximately 25% year over year to reach record levels in the third quarter. In summary, our performance in the third quarter underscores the strength of our strategy and our team's ability to execute. In an uncertain macro environment, we believe our mission of connecting people with great local businesses is even more relevant. As we look to the fourth quarter and year ahead, our portfolio of initiatives is robust, and we remain committed to driving long-term shareholder value. With that, I'd like to turn it over to David.