YELP — Yelp Inc.

Yelp Q1 2026 Earnings Call Summary

1. Key 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%.

2. Strategic 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.

3. Forward 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.

4. Bad 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.

5. Notable 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.