Yelp Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Net Revenue: Increased by 1% year-over-year to $376 million, exceeding guidance by $8 million.

Net Income: Decreased by 28% year-over-year to $32 million, with a margin of 8%.

Adjusted EBITDA: Decreased by 9% year-over-year to $91 million, representing a margin of 24%, and exceeding guidance by $16 million.

Services Ad Revenue: Flat year-over-year at $241 million.

RR&O Ad Revenue: Decreased by 10% year-over-year to $102 million.

Paying Advertising Locations: Decreased by 1% year-over-year to 510,000.

Other Revenue: Grew by 98% year-over-year to $33 million, driven by Hatch and data licensing.

2Strategic Updates and Business Highlights

Yelp is advancing its AI transformation, enhancing local discovery and business tools.

Launched Yelp Assistant, improving user engagement and project submissions in the Services category.

Expanded Yelp Host (AI-powered call answering service) to handle 2.4 million calls annually, integrating with OpenTable and adding food ordering functionality.

Acquired Hatch, which saw a 59% year-over-year revenue growth to $35 million, with plans to scale operations and product development.

Partnered with OpenAI, integrating Yelp ratings and reviews into ChatGPT, enhancing local discovery.

3Forward Guidance and Outlook

Q3 2026 Net Revenue Guidance: Expected in the range of $365 million to $370 million.

Full Year 2026 Net Revenue Guidance: Narrowed to between $1.460 billion and $1.470 billion.

Q3 Adjusted EBITDA Guidance: Expected between $70 million and $75 million.

Full Year Adjusted EBITDA Guidance: Narrowed to between $315 million and $325 million.

Continued investments in AI transformation and marketing are anticipated to drive growth in Other revenue.

4Bad News, Challenges, or Points of Concern

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

Declining Metrics: Notable declines in RR&O ad revenue and overall paying advertising locations.

Ad Clicks: Decreased by 5% year-over-year, primarily in RR&O categories.

Market Conditions: Inflation and rising costs are affecting local businesses, creating uncertainty in revenue growth.

5Notable Q&A Insights

Investments in Hatch: Significant resources are being allocated to scale Hatch's operations and product development, with expectations of similar margins to subscription businesses in the long term.

Data Licensing and AI Integration: Yelp sees potential in AI partnerships for driving traffic back to its platform, with early signs of positive impact from integrations with ChatGPT.

Paid Search Strategy: Yelp is now targeting multi-location Services businesses for lead generation, with confidence in the return on ad spend (ROAS) for these customers.

Traffic Trends: Yelp has experienced positive organic traffic growth, attributed to improved SEO and favorable algorithm changes from Google, contrasting with some peers facing AI-related headwinds. Overall, while Yelp is making strides in AI and seeing growth in Other revenue, it faces significant challenges in its core advertising business due to economic pressures and declining metrics.