Yelp Inc. — Third Quarter 2026 Earnings Summary

Financial Performance

• Net revenue decreased 1% year-over-year to $371 million for the quarter, exceeding the high end of the outlook range by $1 million.
• Net income decreased to $35 million for the quarter, reflecting a 9% net income margin compared to 10% in the prior year period.
• Adjusted EBITDA decreased 6% year-over-year to $92 million, reflecting a 25% margin compared to 26% in the prior year period.
• Other revenue grew 82% year-over-year to a record annual run rate of $136 million, moving toward a $250 million target.
• For the nine months ended September 30, 2026, net revenue was $1.108 billion compared to $1.105 billion in the prior year.
• Net income for the nine months ended September 30, 2026, was $83.9 million, down from $107.8 million in the prior year.
• Free cash flow for the nine months ended September 30, 2026, was $190.8 million, down from $251.4 million in the prior year.
• Cash and cash equivalents stood at $119.8 million as of September 30, 2026, down from $216.1 million at the end of 2025.
• Deferred revenue increased to $10.7 million as of September 30, 2026, from $5.8 million at the end of 2025.
• A $75 million revolving credit facility was outstanding as of September 30, 2026, with no balance at the end of 2025.

Guidance and Future Outlook

• Updated 2026 Net Revenue guidance to a range of $1.455 billion to $1.460 billion.
• Updated 2026 Adjusted EBITDA guidance to a range of $320 million to $325 million.
• Management expects consumers and local businesses to continue facing a challenging economic environment.
• The company anticipates continued demand for trusted local content across the AI ecosystem driving growth in data licensing revenue.

Business Segments and Product Lines

• Introduced more than 30 new features and updates in the third quarter, including a smarter and more personalized Yelp Assistant.
• AI tools for businesses are gaining traction, supported by advances in voice AI for Yelp Host and Hatch.
• Advertising revenue remains under pressure.
• The company continues to integrate acquired products, including Hatch, to monetize new solutions.

Market and Competitive Landscape

• The company relies on internet search engines and application marketplaces, some of which offer products competing directly with Yelp.
• Competition in the industry is described as rapid and evolving.
• Yelp positions its platform as a community-driven solution combining authentic human content with AI technologies.

Risks and Challenges

• Adverse macroeconomic conditions affecting local economies, consumer behavior, and advertiser spending.
• Challenges in maintaining and expanding the advertiser base.
• Risks associated with executing strategic initiatives, including the AI transformation, and the effectiveness of these investments.
• Dependence on maintaining user traffic and engagement, including the ability to generate relevant and reliable content.
• Reliance on third-party service providers and strategic partners.
• Potential difficulties in managing remote workforces and retaining key talent.
• Risks related to the successful integration and monetization of acquisitions, specifically Hatch and RepairPal.

Management Commentary and Tone

• Jeremy Stoppelman, CEO, stated confidence that strategic initiatives will position Yelp to deliver long-term shareholder value despite economic challenges.
• David Schwarzbach, CFO, highlighted that the disciplined approach and focus on high-return areas are expected to create long-term value.
• Management expressed confidence in the traction of AI tools for businesses and the growth of data licensing revenue.

Other Key Points

• The company acquired Hatch, incurring acquisition and integration costs of $2.8 million for the quarter and $10.7 million for the nine months ended September 30, 2026.
• The company acquired RepairPal, resulting in indemnifiable expenses of $0.1 million for the quarter and $1.4 million for the nine months ended September 30, 2026.
• Goodwill increased significantly to $353.4 million as of September 30, 2026, from $135.8 million at the end of 2025, reflecting acquisition activity.
• Intangible assets increased to $86.4 million as of September 30, 2026, from $49.0 million at the end of 2025.
• Stock-based compensation totaled $23.1 million for the quarter and $79.3 million for the nine months ended September 30, 2026.
• The company repurchased $200.1 million of common stock during the nine months ended September 30, 2026.
• Proceeds from the revolving credit facility were $165 million, with repayments of $90 million during the nine months ended September 30, 2026.
• A live webcast was hosted on November 5, 2026, to discuss results and outlook.