Correction (10 Oct 2026): an earlier section on this page showed unsourced figures; it has been removed.
How we source: figures on this page come from the company’s own filings (SEC 10-K, 10-Q and earnings releases, or its annual report), with the period stated next to each number. Last refreshed October 2026. Our methodology.
In short
Yelp makes money by selling ads to local businesses, mostly priced per click through an auction. Advertising was 95% of FY2025 net revenue of $1.46B, and Services businesses such as home and auto pros paid $947.6M of it, up 8%. Restaurants, retail and other categories paid $443.7M, down 6%, and non-ad revenue from subscriptions, data licensing and food-order commissions was $73.7M.
How Yelp Inc. (NYSE: YELP) makes money, FY2025: the income statement as a flow, to scale. Services advertisers now pay nearly two of every three Yelp dollars. Source: Yelp Inc. (NYSE: YELP) Form 10-K for fiscal 2025 (filed 2026-02-27). Gross profit, margins and shares calculated.
Yelp’s ad revenue is the number of ad clicks it delivers multiplied by the average cost per click (CPC), which its auction sets. In FY2025, ad clicks fell 7% while average CPC rose 10%, so advertising revenue grew 3% to $1,391.3M.
Yelp revenue by fiscal year, FY2021 to FY2025, from the company's filings. Chart: The Business Engineer.
Most of that money comes from Services categories (home, local, auto, professional and others), which brought in $947.6M, or 64.7% of total revenue. Yelp says the Services gain came from RepairPal, acquired in November 2024, and a 9% rise in Yelp Ads CPC. RepairPal added about two percentage points of advertising growth.
How Yelp compares
Against its own history, revenue rose from $1,031.8M in FY2021 to $1,465.0M in FY2025, a compound rate of 9.2% a year, but growth slowed to 4% in FY2025.
The two category groups have moved in opposite directions. Services ad revenue rose from $793.1M in FY2023 to $947.6M in FY2025; RR&O fell from $483.4M to $443.7M. Each Services paying location produced about $3,690 of ad revenue in FY2025, roughly twice the $1,750 per RR&O location.
What changed in FY2025
Operating income rose 22% to $184.5M, a 12.6% margin against 10.7% a year earlier, as costs grew 2% and revenue 4%. Net income was $145.6M.
Yelp revenue by line, prior year against FY2025, as reported. Chart: The Business Engineer.
Paying advertising locations averaged 510,000, down 3%, as RR&O locations fell 8% to 253,000 while Services rose 2% to 257,000. Yelp launched two AI phone-answering products, Yelp Host and Yelp Receptionist, and other revenue rose 17% to $73.7M.
What to watch
Yelp says FY2026 revenue may be slightly down year over year, and that demand from Services businesses decreased sequentially in Q4 2025. Q4 advertising revenue was already down 2%.
The company itself warns that charging more per click while delivering fewer clicks can hurt advertiser retention. It also flags Google’s AI Overviews and AI chatbots as a threat to the search traffic that feeds its ads. In February 2026 it bought Hatch, an AI lead-management tool, to add subscription revenue.
Frequently asked questions
How does Yelp make money?
Mainly by selling advertising to local businesses, most of it pay-per-click ads priced through an auction. Advertising was 95% of FY2025 revenue of $1,465.0M; the rest came from subscriptions, data licensing and food-order commissions.
Which businesses pay Yelp the most?
Services businesses such as home, auto and professional services. They generated $947.6M of advertising revenue in FY2025, up 8%, against $443.7M from restaurants, retail and other categories, down 6%.
Is Yelp profitable?
Yes. In FY2025 it reported operating income of $184.5M and net income of $145.6M on revenue of $1,465.0M.
How many businesses advertise on Yelp?
Paying advertising locations averaged 510,000 in FY2025, down 3% from 526,000 in FY2024: 257,000 in Services and 253,000 in restaurants, retail and other.
Yelp works as a sort of social networkplatform for reviews of local businesses. Yelp mostly makes money from advertising based on the cost-per-click where businesses can deliver targeted site-wide ads to users. It also makes money via transaction revenues (commissions on deals) and subscriptions (like Reservations and Waitlist).
Origin Story
Yelp is an online review platform allowing consumers to evaluate a range of businesses, including restaurants, cafes, home repair services, and hotels.
The platform was established in 2004 by two former PayPal employees in Jeremy Stoppelman and Russel Simmons. With a meager $1 million in funding, Yelp originally intended to serve relevant business reviews to consumers living nearby.
As of March 2021, the platform still received more than a hundred million unique monthly visits making it still among the a hundred most popular sites in the US. Users can browse reviews, opening hours, location, price range, and other relevant business information. Many now consider Yelp a social media website where local businesses and users come together to form a vibrant and interactive online community.
Yelp revenue generation
Yelp derives much of its revenue through targeted advertisements in the same way that other social media sites such as Facebook, Twitter, and Pinterest do.
Advertising Revenues
As the company explains in its 10K:
We generate advertising revenue from the sale of our advertising products โ including enhanced listing pages and performance and impression based advertising in search results and elsewhere on our platform โ to businesses of all sizes, from single-location local businesses to multi-location national businesses. Advertising revenue also includes revenue generated from the resale of our advertising products by certain partners and monetization of remnant advertising inventory through third-party ad networks.
Businesses use Yelp advertisements to target consumers who live in their local area based on a cost-per-click (CPC) model. That is, Yelp charges each business a fee every time one of its ads is clicked on. These ads are targeted according to the industry the business operates in. For example, more lucrative businesses such as law firms pay a higher CPC amount than a restaurant. They can also be targeted according to the demographic of the consumer.
Profile pages can also be upgraded to offer targeted advertising. Yelp offers two options:
Branded profiles โ which include features such as enhanced call-to-action (CTA) buttons, a dedicated About section, video functionality, and photo slideshows.
Enhanced profiles โ offering all of the above plus the ability for a business to remove competitor ads.
Each of these profile options attracts a monthly subscription fee that is inversely proportional to ad spend. The more a business spends on Yelp advertising, the lower the fee.
Transaction Revenues
Yelp also makes money from commissions on transactions it facilitates for third parties. Note that transaction revenue comprises less than 10% of total revenue.
This revenue can be grouped into four main categories:
Yelp Deals โ encompassing prepaid vouchers consumers can use to shop at a particular business. Yelp receives a commission only once the voucher is redeemed.
Gift certificates โ which work in a similar way to Yelp Deal vouchers and are gifted to others.
Grubhub and Eat24 integration โ Yelp receives a commission for any food order on its platform facilitated by complementary platforms in Grubhub and Eat24.
Yelp platform โ consumers can buy a range of products or services on the Yelp platform through diverse partner integration. This allows Yelp to facilitate transactions and collect a fee across multiple devices.
Subscription Services And Other Revenues
Another chunk of revenues is generated through subscription services, including Yelp Reservations and Waitlist.
Beyond that, Yelp also makes money via its Knowledge program, providing access to Yelp data for a licensing fee.
Revenue Streams (Financial Model)
Advertising Yelp generates substantial revenue by selling advertising space to local businesses. Businesses can promote their services through sponsored listings and display ads, reaching a larger audience on Yelp’s platform.
Transaction Fees Yelp earns revenue from transaction fees for services such as Yelp Reservations and Yelp Deals. These services facilitate bookings and special offers, adding value for both businesses and users.
Business Subscriptions Yelp offers premium subscriptions that provide businesses with enhanced profiles and features. These subscriptions offer tools for better visibility and customer engagement, creating an additional revenue stream for Yelp.
Products and Services (Technological Model)
Business Listings Yelp provides comprehensive listings of local businesses across various categories. These listings include essential information such as contact details, business hours, and customer reviews, helping users find the right local services.
User Reviews The platform allows users to write and read reviews of local businesses. User reviews are a cornerstone of Yelp’s service, providing valuable insights and ratings that help other users make informed decisions.
Reservation Services Yelp offers tools for making reservations at restaurants and other businesses. This service simplifies the booking process for users and helps businesses manage reservations efficiently.
Deals and Offers Yelp provides special deals and offers from local businesses. These deals incentivize users to try new services and help businesses attract more customers.
Ecosystem (Distribution Model)
Local Business Partnerships Yelp collaborates with local businesses to enhance their online presence. By partnering with businesses, Yelp can offer a wide range of services and promotions, benefiting both parties.
Integration with Social Media Yelp integrates its services with popular social media platforms. This integration allows users to share reviews and recommendations, increasing Yelp’s visibility and user engagement.
Mobile Application Yelp provides a mobile app for users to access Yelp on the go. The app offers all the functionalities of the website, including search, reviews, reservations, and deals, enhancing user convenience.
Community Engagement Yelp builds and maintains an engaged community of users and reviewers. Community engagement is fostered through features like reviews, ratings, and social interactions, creating a vibrant user base.
User Value (Value Model)
Trusted Reviews Yelp provides trusted reviews and ratings of local businesses. Users rely on these reviews to find quality services, making Yelp a valuable resource for local information.
Convenience Yelp offers a convenient platform for finding and reviewing local businesses. The easy-to-use interface and comprehensive information make it simple for users to discover new places and share their experiences.
Exclusive Deals Yelp provides access to exclusive deals and offers from local businesses. These deals add value for users and encourage them to explore new services.
Community Insights Yelp delivers valuable insights and recommendations from the local community. User-generated content offers diverse perspectives and helps others make better-informed choices.
Conclusion
The Yelp business model is a comprehensive framework that drives its success in the local business review industry. By leveraging diverse revenue streams, offering a wide range of products and services, fostering a robust ecosystem, and providing significant user value, Yelp maintains its leadership position and continues to grow. This detailed understanding of Yelp’s business model highlights the strategic elements that contribute to its dominance in the market.
AI is fundamentally transforming Yelp’s revenue model by enhancing its advertising precision and user engagement capabilities. The platform now leverages machine learning algorithms to analyze user behavior, review patterns, and search queries to deliver highly targeted ads to businesses seeking local customers. For example, when a user searches for “Italian restaurants near me” and frequently reviews upscale dining establishments, Yelp’s AI system can identify them as a high-value customer for premium restaurant advertisers, allowing the platform to charge higher rates for these targeted ad placements. Additionally, AI-powered review filtering and business matching algorithms improve user experience โ as explored in the interface layer wars reshaping consumer tech โ by surfacing more relevant businesses and reducing fake reviews, which increases user trust and engagement. This enhanced user experience translates directly into higher click-through rates on sponsored listings and increased willingness from businesses to pay for Yelp’s advertising services, ultimately boosting the company’s advertising revenue streams.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
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