Yelp Q1 2026 Earnings Call Summary

1Key Financial Results and Metrics

Net Revenue:: Increased by 1% year-over-year to $361 million, exceeding guidance by $6 million.

Net Income:: Decreased by 27% year-over-year to $18 million, with a net income margin of 5%.

Adjusted EBITDA:: Decreased by 7% year-over-year to $79 million, representing a 22% margin, and exceeding guidance by $15 million.

Advertising Revenue::

Services Ad revenue up 1% to $234 million.

RR&O Ad revenue down 11% to $99 million.

Other Revenue:: Grew 75% year-over-year to $29 million, driven by Hatch acquisition and growth in data licensing and food ordering.

Paying Advertising Locations:: Decreased by 6% year-over-year to 485,000; ad clicks down 10%.

2Strategic Updates and Business Highlights

AI Transformation:: Yelp is focusing on enhancing local discovery through AI, launching over 35 new features, including the Yelp Assistant, which now accounts for 15% of Request-A-Quote projects.

Partnerships:: Expanded partnerships with DoorDash (food ordering revenue up 88% year-over-year) and new integrations with Vagaro and Zocdoc for booking services.

Acquisition of Hatch:: Contributed to a 92% year-over-year growth in annual run rate revenue, reaching $34 million in March.

Data Licensing:: Secured new agreements with major platforms like OpenAI, Amazon Alexa, and Apple Maps, enhancing Yelp's visibility in the AI ecosystem.

3Forward Guidance and Outlook

Q2 2026 Revenue Guidance:: Expected to be between $363 million and $368 million.

Full Year 2026 Revenue Guidance:: Maintained at $1.455 billion to $1.475 billion.

Adjusted EBITDA Guidance:: Q2 expected between $70 million and $75 million; full year between $310 million and $330 million.

Long-term Target:: Aiming for a $250 million annual run rate in other revenue by the end of 2028.

4Bad News, Challenges, or Points of Concern

Challenging Economic Environment:: Local businesses are facing ongoing difficulties, impacting advertising revenue.

Declining Metrics:: Decrease in RR&O ad revenue and paying advertising locations indicates potential headwinds.

March Performance Impact:: The conflict in the Middle East affected advertiser budgets, leading to cautious guidance for Q2 and the full year.

Ad Clicks Decline:: A 10% drop in ad clicks reflects lower consumer demand in certain categories.

5Notable Q&A Insights

Guidance Maintenance:: Despite Q1 outperforming expectations, management cited ongoing economic uncertainties and March's softness as reasons for maintaining full-year guidance.

Other Revenue Growth Drivers:: Management highlighted transaction revenue, licensing, and Hatch as key components for achieving the $250 million target by 2028.

AI and Product Development:: Significant improvements in product development speed and efficiency due to AI tools were noted, with expectations for continued acceleration in innovation.

OpenAI Partnership:: Management acknowledged the early stage of the partnership and the need for Yelp content to become more prominent in AI services. Overall, Yelp's Q1 2026 results reflect a mixed performance with growth in certain areas, particularly driven by AI initiatives and strategic partnerships, while facing challenges in advertising revenue and a difficult economic landscape.