Yelp Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net revenue for the quarter ended September 30, 2026, was $371 million, a 1% decrease year over year compared to $376 million in the prior year period.
• Net income was $35 million, down from the prior year, reflecting a 9% net income margin.
• Adjusted EBITDA was $92 million, a 6% decrease year over year, with an Adjusted EBITDA margin of 25% (down from 26% in the prior year).
• Other revenue grew 82% year over year, reaching a record annual run rate of $136 million.
• Total costs and expenses for the quarter were $322 million, compared to $323 million in the prior year.
• Stock-based compensation totaled $23 million for the quarter, down from $33 million in the prior year.
• Free cash flow for the nine months ended September 30, 2026, was $191 million, down from $251 million in the prior year period.
• Cash and cash equivalents decreased to $119.8 million at September 30, 2026, from $216.1 million at December 31, 2025.
• Deferred revenue increased to $10.7 million at September 30, 2026, from $5.8 million at December 31, 2025.
• A revolving credit facility balance of $75 million was recorded as of September 30, 2026, compared to zero at the end of 2025.

Guidance and Future Outlook:

• Updated 2026 Net Revenue outlook to a range of $1.455 billion to $1.460 billion.
• Updated 2026 Adjusted EBITDA outlook to a range of $320 million to $325 million.
• Management expressed confidence that strategic initiatives will position the company to deliver long-term shareholder value despite a challenging economic environment for consumers and local businesses.
• The company aims to grow other revenue toward a target of $250 million.

Business Segments and Product Lines:

• Introduced more than 30 new features and updates, 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.
• Revenue from data licensing grew due to continued demand for trusted local content across the AI ecosystem.
• Advertising revenue remains under pressure.
• The company continues to integrate acquired products, including Hatch.

Market and Competitive Landscape:

• The company operates in an industry characterized by rapid evolution and competition.
• Yelp relies on internet search engines and application marketplaces, some of which offer products competing directly with Yelp.
• The company faces risks related to maintaining and expanding its advertiser base and sustaining user engagement.

Risks and Challenges:

• Adverse macroeconomic conditions affecting local economies, consumer behavior, and advertiser spending.
• Execution risks regarding AI transformation and strategic initiatives.
• Reliance on third-party service providers and strategic partners.
• Potential impact of other income (expense), net, and income taxes on GAAP Net income, which creates uncertainty in reconciling non-GAAP measures.
• Risks associated with managing a remote workforce and retaining key talent.

Management Commentary and Tone:

• Jeremy Stoppelman, CEO, stated that the company continued to advance its AI transformation and noted that AI tools for businesses are gaining traction.
• David Schwarzbach, CFO, noted that quarterly net revenue was $1 million above the high end of the prior outlook range.
• Management emphasized a disciplined approach and strategic focus on high-return areas to create long-term value.

Other Key Points:

• The company completed an acquisition of Hatch, resulting in $263.6 million in acquisition-related cash outflows for the nine months ended September 30, 2026.
• Goodwill increased significantly to $353.4 million at September 30, 2026, from $135.8 million at December 31, 2025, likely due to the Hatch acquisition.
• Intangible assets increased to $86.4 million at September 30, 2026, from $49.0 million at December 31, 2025.
• Repurchases of common stock totaled $200.1 million for the nine months ended September 30, 2026.
• Proceeds from the issuance of common stock for employee stock-based plans were $19.5 million for the nine months ended September 30, 2026.
• The company hosts a live webcast to discuss results and outlook, with a replay available on the Investor Relations website.