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James Miln - Senior Vice President, Finance and Investor Relations
Jeremy Stoppelman - Co-founder and Chief Executive Officer
David Schwarzbach - Chief Financial Officer
Jed Nachman - Chief Operating Officer
Colin Sebastian - Baird - Analyst
Justin Patterson - KeyBanc - Analyst
Cory Carpenter - JPMorgan - Analyst
Vincent Kardos - Jefferies - Analyst
Operator
Good afternoon. Thank you for attending today's Yelp Third Quarter 2022 Earnings Conference Call. My name is Francis, and I'll be your moderator today. [Operator Instructions].
I would now like to pass the conference over to our host, James Miln, Senior Vice President of Finance and Investor Relations at Yelp.
James Miln - Senior Vice President, Finance and Investor Relations
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 Schwarzbach; and Chief Operating Officer, Jed Nachman. We published a shareholder letter on our Investor Relations website and with the SEC about an hour ago 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'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 filings with 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.
Jeremy Stoppelman - Co-founder and Chief Executive Officer
Thanks, James, and welcome, everyone. In the third quarter, Yelp continued to see robust advertiser demand amidst 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 continue 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 road map 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 continued 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.
David Schwarzbach - Chief Financial Officer
Thanks, Jeremy. Third quarter net revenue increased by 15% year-over-year to $309 million at the high end of our outlook range. Underlying this strong performance, we achieved record average revenue per location and grew paying advertising locations by 7% year-over-year to a record $572,000. As Jeremy mentioned, we also drove growth across our broad set of categories in the quarter. Ad revenue from services businesses grew 15% year-over-year to a record $181 million with records in paying advertising locations and average revenue per location in these categories Restaurant, Retail and Other ad revenue increased by 14% year-over-year to $113 million, largely driven by a 10% year-over-year increase in our RR&O paying advertising locations. Third quarter ad clicks remained consistent with the second quarter, but decreased by 15% from the prior year period, which had benefited from reopening tailwinds and elevated consumer spending. At the same time, we saw strong advertiser demand for our performance-based ad products, resulting in a 36% year-over-year increase in average CPC. Our retention rate for non-term advertisers budgets remained solid in the third quarter due to the value we continue to deliver to advertisers, but declined modestly from the second quarter.
Turning to expenses. In 2022, we have invested in our growth initiatives, which are designed to drive profitable growth over the long term. For example, investments in product as well as performance marketing drove record Self-Serve customer acquisition in the quarter. Even with these investments, we delivered positive net income of $9 million which includes an impairment charge of $10 million related to subleasing a portion of our New York office in July. We also delivered record adjusted EBITDA of $74 million at the high end of our outlook range and representing a 24% adjusted EBITDA margin. As we look ahead, we believe that we can drive leverage through our product and engineering driven growth strategy and reduced workplace operating costs as we continue to embrace a fully remote workplace. We are also evolving our approach to compensation, which we believe will help to reduce stock-based compensation as a percentage of revenue over time. Returning capital to shareholders through share repurchases remains an important element of our overall capital allocation strategy. In the third quarter, we repurchased $50 million worth of shares at an average purchase price of $31.25. To support these ongoing repurchase plans in November, our Board of Directors authorized us to repurchase an additional $250 million worth of shares, bringing our total remaining authorization to $332 million.
Turning to our outlook. In any given year, there are commonly a number of competing seasonal dynamics that affect our performance in the fourth quarter. In services, we expect our typical seasonality while continuing our year-over-year strength. In Restaurant, Retail and Other, evidence of increased caution among some Multi-location advertisers emerged late in the third quarter as they responded to heightened macro uncertainties. As a result, we expect to see a more muted holiday season with less incremental spend from these advertisers than we have seen in the past. We anticipate fourth quarter net revenue will be in the range of approximately $300 million to $310 million and net revenue for the full year will be in the range of $1.185 billion to $1.195 billion. At the midpoint, this full year range is $20 million above the initial outlook range we provided in February and remains in line with the raised range we provided in August. Turning to margins. We expect a modest decrease in expense compared to the third quarter, driven by sales and marketing. At the same time, we are very pleased with the performance of our business amid the macro volatility and have continued to invest in our initiatives to drive profitable growth over the long term. We expect adjusted EBITDA will be in the range of approximately $75 million to $85 million for the fourth quarter and $265 million to $275 million for the full year. In closing, Yelp's broad set of categories, performance ad products and sophisticated ad tech stack have provided us with a durable foundation. At the same time, our teams have consistently executed against our strategic initiatives among continued macro uncertainties, which has led our business to new highs. As we work through our plans for next year, we're excited by our strong portfolio of opportunities and remain confident in our ability to drive long-term profitable growth.
With that, operator, please open up the line for questions.
Operator
Thank you. [Operator Instructions] Our first question comes from the line of Colin Sebastian with Baird. Please go ahead.
Colin Sebastian - Baird - Analyst
Great. Thanks very much. A couple of questions, if I can. I guess, first off, how sustainable are you guys thinking that the growth in both the paying advertising accounts and revenue per advertiser will be, I guess, in particular, given the macro issues and some of the change in retention rates that you noticed or noted from Q2. And then secondly, we're just hoping you could talk about some of the initiatives to enhance the consumer-facing parts of the business, and how that might translate into engagement trends going forward. Thank you.
Jed Nachman - Chief Operating Officer
Colin, this is Jed. I can take the first question on PALs. Paying advertising locations, we're really pleased with that performance. It was a record $572,000 as well as a record revenue on a per location basis. On the PALs side, it's important to understand that they can move up and down on a quarter-to-quarter basis depending on a multitude of factors, particularly spending on seasonal campaigns by our national advertisers. Still, it's a really large TAM for us to pursue, and there are a lot of possible paying advertising locations out there. And we also believe that there's an opportunity to drive revenue growth within our existing business. Acquisition has been strong in both on the SMB side as well as on the Multi-location side. And our post sales team has a really large opportunity to upsell within our existing book of business. Overall, we hope to drive a balance between growing revenue per location, increasing PALs, given the large TAM, and we believe there's a lot of headroom there.
Jeremy Stoppelman - Co-founder and Chief Executive Officer
Colin, I can take the second part here. This is Jeremy talking about, as you mentioned, consumer initiatives and what are we doing on that side. For the past few quarters, you may have seen in the notes talking about some of the Android improvements we've been making. If you go back a few years, a lot of our focus admittedly has been on monetization, creating a portfolio of initiatives around that and particularly ads and ad matching. And frankly, that's worked really well for us, and we still have a deep portfolio there. So we're going to keep leaning in, in that direction. But we've also taken the opportunity to direct more of our attention and resourcing towards the consumer experience. So Android being kind of simple to understand first step where it's lagging behind the iOS experience. We've made some improvements, unlock some inventory there. And I think there's a lot more that we can do. But beyond Android, across all platforms, there's now a series of initiatives, a whole portfolio approach and we've begun executing against that. And we're seeing early signs of success it just started this year, and we'll keep you updated as we turn the quarter into '23. But given our execution and success with this approach on the ad side, I think we're feeling confident that we'll continue to make strides there, despite, of course, all the macro uncertainties that everyone knows about.
Colin Sebastian - Baird - Analyst
All right. That's helpful. Thank you guys.
Operator
Thank you, Colin. Our next question comes from the line of Justin Patterson with KeyBanc. Please proceed.
Justin Patterson - KeyBanc - Analyst
Good afternoon and thank you for taking the questions. Two, if I can. First, David, I just wanted to unpack a little bit more about the guidance commentary around Retail, Restaurant and Other. Can you talk about some of that softness you observed exiting the quarter, how that's played out into early October. And I did notice that PALs for that category dipped a little bit sequentially. Is that what we're observing there? And then I'll have a follow-up after that.
David Schwarzbach - Chief Financial Officer
Justin, so maybe just to answer in reverse the slight dip there that you saw does reflect that increased caution, particularly for Restaurant and Retail. And this is in our Multi-location channel, which as you know, consists of both national advertisers as well as mid-market. And what we have historically seen is an increase in ad spend for holiday. And that's the part that we don't think we're going to see here in 2022. So the guidance we provided reflects that movement by these national and mid-market advertisers to be more cautious through the fourth quarter. I would still underscore, though, for you that we're pleased overall with the performance. Obviously, a record Q3, particularly happy about the acceleration on the home services front from about 20% growth in the second quarter due, about 25% growth in the third quarter. And I think broadly as a theme for us and one worth underscoring is we do think that this portfolio of categories on Yelp really helps us to manage overall performance and is the foundation for long-term profitable growth.
Justin Patterson - KeyBanc - Analyst
Got it. That's helpful. And then for the follow-up, I think about your PALs entering the pandemic and then where they're at today. It looks like there's just a much more durable base within there. So as we head into whatever 2023 brings on the macro side, you look at the PAL composition, you look at the product portfolio, the go-to-market strategy. How should we think about the business as being different from the churn perspective and, say, in the past?
Jed Nachman - Chief Operating Officer
Sure. Justin, this is Jed. I can talk about that. Yes, we feel like we have a really durable and diversified customer base. It's made up of a broad set of categories as well as a broad set of customer size. We've experienced periods of volatility in the past, not the least which was COVID. And inevitably, certain categories will do better than others. Right now, we're seeing a lot of strength on the Services side, as David mentioned, acceleration in Home Services quarter-over-quarter and overall 15% growth there. And ultimately, we believe we have a very high intent down-funnel audience that's performance-based. And so in volatile macro environments, that is certainly something that advertisers value. And particularly, when you look at services I think the value of leads has become more important in this type of environment where you may see a consumer pullback those advertisers are certainly in need of driving valuable leads, and we've seen that kind of show up in those home services numbers. But broadly speaking, the breadth of our categories is really helpful. And ultimately, the performance-based nature of our advertising really shines through in this type of environment.
Jeremy Stoppelman - Co-founder and Chief Executive Officer
I guess - this is Jeremy. I would just add, I think our product and engineering execution helps out quite a bit as well, just driving lead quality, improving matching, streamlining things like Self-serve, adding additional tools to arsenal in the Multi-location side. I think all of that execution contributes to being able to maintain growth even in a volatile macro environment.
Justin Patterson - KeyBanc - Analyst
Thank you.
Operator
Thank you for your question, Justin. Our next question comes from Cory Carpenter with JPMorgan. Please go ahead.
Cory Carpenter - JPMorgan - Analyst
Hello. Thanks for the question. Hoping you could expand a bit on what's working so well for you in the Home Services category. It feels like you're taking share from some of the other companies out there, certainly had less exciting results on the Home Services side. So what's working so well for you? And then how sustainable do you think this is a request volume does continue to moderate going forward? Thank you.
Jeremy Stoppelman - Co-founder and Chief Executive Officer
Cory, this is Jeremy, again. Yes, we're really pleased with our 25% year-over-year growth in Home Services revenue. And frankly, I think it speaks to our large organic audience that is on Yelp to transact. I mean they're doing research. They're trying to figure out how to solve a problem. And it's clear if you're delivering valuable leads to advertisers, especially in a time where maybe their trucks aren't rolling as frequently as they'd like. They're going to seek out higher ROI channels to advertise. And it does seem like given the demand, they're finding Yelp is really meeting the quality bar. And so we're really encouraged by that, encouraged by our progress and momentum relative to other players in the field. And so we're going to keep leaning into that, improving the product experience, streamlining the consumer experience. We talked about boosting engagement there and continuing to improve across all platforms. So it feels like our approach on the product and engineering side is working. We've got this broad portfolio of initiatives in various areas that we're going to keep executing at them and try to continue our momentum.
Cory Carpenter - JPMorgan - Analyst
Great. Thank you.
Operator
Thank you for your question, Cory. Our next question comes from the line of John Colantoni with Jefferies. Please go ahead.
Vincent Kardos - Jefferies - Analyst
This is Vincent Kardos on for John. Thanks for the question. I'd be curious to hear a little bit about your outlook for small and medium-sized businesses going into next year, so beyond Q4. So in an environment where we're currently having declining consumer sentiment rising rates, high inflation, etc. a lot of chatter of will we - won't we have a consumer recession into 2023? How do you see '23 shaking out for those small and medium businesses that you work with? And looking back at comparable downturns, how do those businesses tend to adjust their ad spend in these sorts of climates? Thanks.
Jed Nachman - Chief Operating Officer
Great. I can start out with that one, Vincent. As I mentioned we have a pretty varied customer base in terms of category and size and have gone through these macro periods in the past. Our advertisers and services actually tend to skew more SMB, while the advertisers in the Restaurant, Retail and Other categories skewed toward the Multi-location side. And in the quarter, obviously, you saw really strong growth on Services, overall at about 15% year-over-year. And we believe that, that is - the SMB segment is durable. We've seen strong acquisition and solid performance on the retention side there. And ultimately, as we go through these macroeconomic periods, we've seen a lot of resilience out of our customer base in the past when we have gone through these.
Jeremy Stoppelman - Co-founder and Chief Executive Officer
Yes. I guess I'll chime in. It's Jeremy here. I mean we've been through a lot of ups and downs over the years, I think it is my 18th year. And the one thing that always comes into play is just the breadth across so many categories. I mean even in the worst of the pandemic, we saw home services pop up is particularly strong, and we're continuing to see really great demand on the home services side from advertisers. So I think that is a strength in an uncertain environment that accrues to Yelp uniquely.
Vincent Kardos - Jefferies - Analyst
Thanks guys.
Operator
There are currently no questions registered. [Operator Instructions] There are no questions waiting at this time.