Yelp has reported record-breaking profits driven by a sharp rise in ad revenue in the third quarter of 2023.

The company’s total net revenue increased 12% year-on-year to $345 million, comprising of:

• $330 million in advertising revenue.
• $3 million in transactions revenue.
• $12 million in other revenue.

The Q3 earnings marked a 12% rise in ad revenue, along with a 9% increase in ad clicks year-on-year..

Why we care. Advertisers are increasingly placing their trust in Yelp, and the platform’s rising number of ad clicks indicates a positive return on investment. This success is likely to pique the interest of other marketers, potentially leading them to consider shifting their advertising budgets towards Yelp. However, with Yelp’s expanding popularity, it’s important to be mindful that ad prices are likely to escalate.

Breaking down the numbers. Yelp’s sharp rise in advertising revenue was driven by ad spend in its services category, which was up 14% year on year to $206 million. Meanwhile, ad spend in Yelp’s restaurants, retail and other category was up 10% to $124 million.

What Yelp is saying. Jeremy Stoppelman, Yelp’s co-founder and chief executive officer, said in a statement:

• “We continued to see strong momentum from our product-led strategy as our team delivered another quarter with a number of record-breaking results.”
• “Third quarter net revenue reached a new high, driven by record advertising revenue in our services category as service pros spent more on Yelp than ever before, 25% growth in our self-serve channel and a 9% increase in ad clicks year over year.”
• “As we continue to execute on our robust product roadmap to make Yelp the go-to platform for services, deliver more value to advertisers, and enhance the overall consumer experience, I’m excited about the opportunities ahead to drive profitable growth and long-term shareholder value.”

Deep dive. Read Yelp’s full Q3 2023 earnings report in full for more information.