YE (YELP) Earnings Date & Reports

Key Takeaways

• Yelp reported third-quarter net revenue of $370.9 million, down roughly 1% year over year but slightly above its own outlook range and analyst consensus.
• GAAP (generally accepted accounting principles) diluted earnings per share (EPS) came in at $0.63, topping consensus estimates, while net income fell to $34.6 million from $39.3 million a year earlier.
• "Other revenue" surged 82% year over year to a record $34 million, driven by AI (artificial intelligence) offerings such as Yelp Host, Hatch, and data licensing.
• The company lowered its full-year 2026 net revenue outlook to $1.455 billion–$1.46 billion, below its prior guidance range.
• Full-year 2026 Adjusted EBITDA is now expected between $320 million and $325 million, with fourth-quarter revenue guided to $347 million–$352 million.
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Earnings Context and Why It Matters

Yelp's third-quarter report arrives at a pivotal moment for the local-search and advertising platform. Advertising revenue, long the company's core business, remains under pressure as consumers and small businesses navigate a challenging economic environment. At the same time, management has aggressively repositioned the company around AI, rolling out more than 30 new features and leaning into offerings such as Yelp Assistant, Yelp Host, and Hatch. This earnings release matters because it tests whether growth in newer, AI-driven revenue streams can meaningfully offset weakness in the legacy advertising business. The results and updated guidance also offer investors a clearer read on management's profitability discipline and capital-allocation strategy heading into 2027.

Reported Results

For the third quarter ended September 30, 2026, Yelp reported net revenue of $370.9 million, a decline of about 1% year over year from $376.0 million. The figure came in roughly $1 million above the high end of the company's own outlook range and slightly ahead of the consensus estimate of approximately $368.9 million. GAAP diluted EPS was $0.63, exceeding consensus expectations of around $0.45 per share. Net income declined to $34.6 million from $39.3 million in the year-ago period, while Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization, a common profitability measure) was $92.3 million, down from $98.1 million, representing a 25% margin.

The standout was "other revenue," which grew 82% year over year to a record $34 million, reflecting contributions from Hatch as well as growth in data licensing and food ordering. However, management lowered full-year guidance, now projecting net revenue of $1.455 billion to $1.46 billion, down from a prior range of $1.46 billion to $1.47 billion. Full-year Adjusted EBITDA guidance was narrowed to $320 million–$325 million, and fourth-quarter revenue is expected to be $347 million–$352 million.

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Market Reaction and Investor Sentiment

Despite a top-line beat and stronger-than-expected EPS, investor sentiment turned cautious in after-hours trading as the company trimmed its full-year revenue outlook. The revised guidance, which sits below the prior range and below Wall Street's roughly $1.47 billion consensus, underscored that advertising demand remains soft even as AI-driven revenue accelerates. Shares had already been under pressure heading into the report, reflecting concerns about the durability of Yelp's core advertising business. The combination of a modest revenue decline, lower forward guidance, and continued economic headwinds for local businesses framed the print as a mixed result, with investors weighing cost discipline and AI momentum against persistent advertising weakness.

Forward Outlook and Key Factors to Monitor

Looking ahead, investors will be watching whether Yelp's AI-driven revenue can sustain its rapid growth. Management is targeting an annual run rate of $250 million in other revenue by the end of 2028, up from a $136 million run rate in the latest quarter. The pace of adoption for Yelp Host and Hatch, along with continued demand for data licensing, will be central to that trajectory.

Advertising revenue remains the key swing factor. Yelp expects the challenging economic environment for consumers and local businesses to persist into the fourth quarter, with increased pressure on advertising spending across categories. Any stabilization or recovery in local advertising would meaningfully shift the growth outlook.

Cost discipline is another area to monitor. Management reduced stock-based compensation as a percentage of revenue to 6% in the quarter and expects it to fall below that level in the fourth quarter, ahead of its prior target. Finally, capital allocation will draw attention, as Yelp paused share repurchases to pay down its revolving credit facility and expects to resume buybacks in 2027. These factors, taken together, will shape how the market evaluates Yelp's transition from a legacy ad-driven model to an AI-enabled platform.

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