Yelp Inc. (YELP): BCG Matrix [Dec-2025 Updated]

You're looking for a clear-eyed view of Yelp Inc.'s business portfolio as of late 2025, and the Boston Consulting Group Matrix is defintely the right tool to map their strategic focus. Honestly, the story shows a clear split: Services advertising, up 7% year-over-year, is the Star driving growth, supported by a Cash Cow base of about 512,000 advertisers delivering strong profitability, forecasted near $360 million in Adjusted EBITDA. But, the legacy Restaurants, Retail, and Other segment is clearly a Dog, seeing revenue drop 2% in Q3, while big, expensive AI bets-like Yelp Host-are unproven Question Marks that contributed to the lowered $1.460 billion revenue guidance. Below, we break down exactly where the company needs to invest and where it needs to manage expenses tightly.

Background of Yelp Inc. (YELP)

You're looking to map Yelp Inc. (YELP) onto the BCG Matrix, so let's ground ourselves in what the company actually looks like as of late 2025. Yelp Inc. operates its web-based platform and mobile application in the United States, connecting consumers with local businesses primarily through reviews, tips, and photos. The core of Yelp Inc.'s business model remains digital advertising sales on its platform.

Looking at the most recent numbers, Yelp Inc. reported record net revenue of $376.0 million for the third quarter ending September 30, 2025, which was a 4.4% increase year-over-year. This performance led to a full-year 2025 revenue outlook being slightly trimmed by management to a range between $1.460 billion and $1.465 billion. For the trailing twelve months ending September 30, 2025, the total revenue stood at $1.47B.

Profitability showed strength in Q3 2025, with net income reaching $39.32 million, which the company noted was a 15-year high, translating to GAAP earnings per share of $0.61. Still, the company is actively managing its cost structure, as evidenced by its focus on disciplined expense management to support its strategic investments.

The revenue picture isn't uniform across its operations; you have to look at the segments. Advertising revenues, which make up about 94.9% of total revenue, are split between two main areas. The Services segment, which includes home and auto services bolstered by the RepairPal Network integration, is the growth engine, with its revenue increasing by 6.9% year-over-year in Q3 2025 to $243.81 million. This segment is definitely where the action is.

Conversely, the Restaurants, Retail & Other (RR&O) division is facing headwinds. In the third quarter of 2025, revenue for this segment actually decreased by 2.4% year-over-year to $113.55 million. This decline reflects the persistent macroeconomic challenges impacting those specific local businesses. Management is clearly leaning into its AI transformation, rolling out new features like Yelp Assistant and Yelp Receptionist to try and drive advertiser value and engagement across the platform.

Financially, Yelp Inc. remains in a solid position, holding $231.1 million in cash and cash equivalents as of the end of Q3 2025, and it has continued its shareholder return program through stock repurchases. The company's strategic focus is clearly on leveraging AI and the high-growth Services category to offset the softness in the more traditional RR&O business.

Yelp Inc. (YELP) - BCG Matrix: Stars

You're looking at the segment of Yelp Inc. (YELP) that is clearly leading the charge in a growing market, which is the textbook definition of a Star in the Boston Consulting Group Matrix. These are the areas where market share is strong and the market itself is expanding, demanding significant investment to maintain that lead.

Services Advertising is the core growth engine, with Q3 2025 revenue up 7% year-over-year to $243.8 million. This revenue stream is where the high-growth market dynamics are most apparent right now. The momentum here is what keeps the entire enterprise moving forward, even when other areas face headwinds.

The underlying demand indicators support this high-growth classification. For instance, Request-A-Quote (RAQ) projects, a key Services feature, showed approximately 25% year-over-year growth in late 2024, indicating high market growth. That kind of acceleration suggests the market for connecting consumers with service professionals is far from saturated.

To capture this growth, product investment is heavily skewed toward specific areas. Home Services categories, including the RepairPal integration, are the primary focus for product investment and market share gains. This targeted investment is necessary to solidify leadership in these high-potential verticals.

What's interesting is the dynamic at the location level. You see high-growth momentum in Average Revenue Per Location (ARPL) within Services, which is offsetting a decrease in total paying locations. Here are the latest figures we have:

The fact that ARPL is hitting records while the total count of paying locations is shrinking by 2% year-over-year to 512,000 as of September 30, 2025, tells you that the remaining advertisers are spending significantly more, which is a hallmark of a successful Star segment. They are extracting more value from each existing relationship.

The strategic implications for this quadrant are clear:

• Investment Focus: Direct capital toward Home Services and RepairPal integration.
• Performance Indicator: Monitor Services ARPL growth against total location churn.
• Future Potential: Sustained success here positions this segment to become a Cash Cow as market growth inevitably decelerates.

This segment is consuming cash to fuel its growth, but the high market share and revenue acceleration suggest that investment is warranted. Finance: draft 13-week cash view by Friday.

Yelp Inc. (YELP) - BCG Matrix: Cash Cows

Cash Cows represent the established, market-leading segments of the business that generate significant, reliable cash flow with minimal need for heavy investment in market expansion.

The overall Yelp Platform's existing base of approximately 512,000 paying advertising locations provides stable revenue. This base, though seeing a slight year-over-year decline of 2% in Q3 2025 to reach 512k, underpins the high market share in the mature local services discovery space.

Strong pricing power is evident, with Average Cost Per Click (CPC) increasing 14% year-over-year in Q3 2025. This pricing leverage, despite a reported 11% year-over-year decline in ad clicks in Q3 2025, shows the value capture from the high-intent traffic Yelp delivers.

Full-year 2025 Adjusted EBITDA is forecasted to be strong at $360 million to $365 million, showing high profitability from the mature business. This compares to the record 2024 Adjusted EBITDA of $358 million.

Core brand recognition and trusted review content generate high-margin traffic with minimal incremental marketing spend. The focus shifts to infrastructure investment, such as AI enhancements, to improve efficiency and further boost cash flow. The company's Q3 2025 operating cash flow was $131.5 million, with free cash flow at $118.9 million.

Here's a quick look at the key metrics supporting the Cash Cow status for the advertising base:

The business unit's ability to generate cash is further demonstrated by its capital returns activity. In Q3 2025, the company repurchased approximately $75 million of stock.

The stability and cash generation of this segment fund other parts of the portfolio through these key characteristics:

• Generates cash exceeding investment needs.
• High market share in a mature segment.
• Low investment in promotion/placement.
• Focus on infrastructure to boost efficiency.
• Supports Question Mark funding.

Yelp Inc. (YELP) - BCG Matrix: Dogs

You're looking at the segment where growth has stalled, and market share isn't moving the needle. The Restaurants, Retail, and Other (RR&O) advertising revenue for Yelp Inc. declined 2% year-over-year in Q3 2025, landing at $113.5 million. This is the classic profile of a Dog; it's not consuming massive cash, but it's certainly not generating the growth you need elsewhere in the portfolio. Honestly, it's a drag on overall momentum.

Here's a quick look at how this segment performed in Q3 2025 compared to the high-growth Services segment:

The underlying user engagement in these mature areas shows weakness. Total Ad Clicks decreased 11% year-over-year in Q3 2025. That sharp drop suggests diminishing organic traffic value in these established segments, which is a real problem for a click-based revenue model. It means the existing ad inventory isn't pulling its weight like it used to.

The legacy display advertising products face intense competition from social media and search giants, limiting growth potential. You see this pressure reflected in the overall environment for restaurants and retail businesses, which are still navigating macroeconomic headwinds. Expensive turn-around plans here are unlikely to yield significant returns; the market has moved on to other platforms for these specific needs.

This segment, therefore, requires disciplined expense management to maintain profitability, as growth is flat to negative. You can't afford to let operating expenses creep up while revenue is shrinking. The focus must be on minimizing cash consumption and ensuring this unit breaks even without diverting critical capital away from the Stars or promising Question Marks. Finance: draft 13-week cash view for RR&O cost centers by Friday.

Yelp Inc. (YELP) - BCG Matrix: Question Marks

You're looking at the new, high-growth bets Yelp Inc. is placing, which fit squarely in the Question Marks quadrant: significant market potential but currently low, unproven market share. These are the capital-intensive ventures that haven't yet proven their return on investment. The Fall 2025 product release saw the launch of Yelp Host and Yelp Receptionist, two voice-driven AI tools designed to automate customer management for local businesses. These represent a high-investment area where buyers are just beginning to discover the utility. Yelp Host, aimed at table-service restaurants, starts at $149 per month, while Yelp Receptionist, for a broader range of service businesses, starts at $99 per month.

The 'Other' revenue segment, which houses new monetization streams like data licensing, is small relative to the core business but shows explosive growth potential. For the full fiscal year 2024, Advertising revenue was $357.35M, representing 95.03% of total revenue, while the 'Other' segment was only $18.69M, or 4.97%. However, the AI data licensing run-rate accelerated to over $10M as of Q2 2025, with AI search API calls increasing by 20x year-over-year. This rapid growth in a small base is the classic Question Mark profile.

The overall financial outlook reflects the macro uncertainty surrounding these new initiatives. Yelp Inc. updated its full-year 2025 net revenue guidance to a range of $1.460 billion to $1.465 billion, reflecting a decrease of $8 million at the midpoint compared to a prior projection. This cautious guidance signals the cash consumption risk inherent in these high-growth, low-market-share bets.

The ongoing investment in existing AI features, like the Yelp Assistant, is a direct bet on capturing future market share, especially against advancements from competitors like Google. The prior iteration of the AI chatbot, Yelp Assistant, drove a 50% sequential increase in project submissions from Q3 2024 to Q4 2024. This level of adoption is what management is counting on to convert these Question Marks into Stars. You need to see these adoption metrics continue to climb sharply to justify the cash burn.

• AI search API calls: up 20x year-over-year as of Q2 2025.
• AI search annual run-rate revenue: over $10M as of Q2 2025.
• Yelp Assistant project submissions: 50% sequential increase (Q3 to Q4 2024).

Finance: draft 13-week cash view by Friday.