Yelp Inc.

Welcome to the Q2 2024 Yelp Inc. Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star 1 on your telephone keypad. I would now like to turn the conference over to Kate Krieger, Director, Investor Relations. You may begin.

Good afternoon, everyone, and thanks for joining us on Yelp's second quarter 2024 earnings conference call. Joining me today are Yelp's Chief Executive Officer, Jeremy Stoppelman, Chief Financial Officer, David Schwarzbach, and Chief Operating Officer, Jed Nachman. We published a shareholder letter on our investor relations website and with the SEC and hope everyone had 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 may discuss adjusted EBITDA, adjusted EBITDA margin, and free cash flow, 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 filings with the SEC, each of which is posted on our investor relations website, you will find additional disclosures regarding these non-GAAP financial measures as well as historical reconciliations of GAAP net income or loss to both adjusted EBITDA and adjusted EBITDA margin, and a historical reconciliation of GAAP cash flows from operating activities to free cash flow. And with that, I will turn the call over to Jeremy.

Thanks, Kate, and welcome, everyone. Yelp delivered record net revenue and strong profitability in the second quarter. Net revenue increased by 6% year-over-year to $357 million as we introduced more than 20 new features and updates in the quarter, reflecting our product-led strategy. With a disciplined approach, we expanded net income margin by 6 percentage points and adjusted EBITDA margin by 1 percentage point from the prior year period. Businesses in our restaurant, retail, and other categories continue to face a challenging operating environment in the second quarter. resulting in a decline in revenue for RR&O of 3% year-over-year. At the same time, our services business, which remains the focus of our product-led strategy in 2024, saw continued momentum. Services revenue increased by 11% year-over-year, making it the 13th consecutive order of double-digit growth. We saw even stronger performance in the home services category, which increased by approximately 15% year-over-year. Request to Quote project growth accelerated from approximately 20% year-over-year in the first quarter to approximately 35% year-over-year in the second quarter. This acceleration resulted from both organic improvements as well as paid project acquisition. Regarding our paid project acquisition, we continue to see strong top of funnel metrics, including projects, ad clicks, and CPCs. As we scaled spend in the quarter, we also saw early indications of retention benefits among newer businesses with fewer reviews, which often experience difficulty competing with established advertisers for leads. We plan to leverage this learning to become more precise in lead distribution, narrowing our focus towards the opportunities that we believe have the highest return. With just 20% of services revenue coming from multi-location businesses, We also see an opportunity to extend our success with SMBs in these categories to enterprise businesses. We have been adapting our services product offerings to better fit the needs of these larger advertisers. We recently launched Request a Quote for Brands and introduced a new leads API. This enables multi-location businesses to compete for the millions of Request a Quote projects available on Yelp and seamlessly manage leads across multiple business pages. More broadly, our product and engineering teams continue to leverage AI to further optimize advertisers' budgets by displaying the most relevant ad content to consumers. In the second quarter, ad clicks increased by 9% year over year, while average CPC decreased by 1% year over year. We also rolled out a number of user experience and backend improvements to our website and introduced a number of new features to make Yelp more useful for consumers with accessibility needs. In summary, We were pleased with the continued progress on our product roadmap in the second quarter, particularly in services, while we delivered strong profitability. Overall, we remain confident in our strategy to drive profitable growth and shareholder value over the long term. With that, I'll turn it over to David.