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YELP Q1 Earnings Decline as Costs Rise, Revenues Increase Y/Y
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Key Takeaways
YELP Q1 EPS was 30 cents, down 16.7% Y/Y, while net revenues rose 0.8% to $361.5M.
Yelp's other revenues jumped 75% to a record $29M, lifted by Hatchify plus data licensing and food ordering.
YELP Assistant adoption hit 15% of Request-a-Quote projects as 35 AI updates expanded local discovery.
Yelp Inc. (YELP - Free Report) reported first-quarter 2026 earnings of 30 cents per share, declining 16.7% year over year. The Zacks Consensus Estimate for the bottom line was pegged at 26 cents.
Net revenues rose 0.8% year over year to $361.5 million and surpassed the consensus mark by 1.9%. Strength in other revenues and steady Services advertising demand drove the outperformance, while Yelp Assistant adoption continued to expand, accounting for about 15% of Request-a-Quote projects in the quarter.
YELP’s Revenue Mix Shows Services Resilience
Total net revenues increased to $361.5 million from $358.5 million a year ago. Advertising revenues declined 2.8% year over year to $332.49 million, reflecting weaker trends in Restaurants, Retail & Other categories.
Services advertising revenues edged up to $233.8 million from $231.6 million, supported by a modest increase in ad clicks and a higher average revenue per location that partially offset fewer paying locations. In contrast, Restaurants, Retail & Other advertising revenues fell to $98.7 million from $110.4 million as softer consumer demand weighed on ad clicks.
Other revenues stood out, rising 75% year over year to a record $29 million. The jump was driven by the inclusion of Hatchify revenues (acquired in February 2026), along with growth in data licensing and food ordering.
Net income attributable to common stockholders declined 27% year over year to $18 million, translating to a 5% net income margin versus 7% in the year-ago quarter. Income from operations was $27.3 million, down from $29.4 million in the year-ago quarter, reflecting higher overall costs and expenses.
Total costs and expenses increased 2% year over year to $334 million. The cost of revenues rose 10% year over year to $38.4 million, partly tied to infrastructure investments, including AI product integration and incremental costs from the Hatchify acquisition.
Sales and marketing expenses increased 5% to $153 million on higher marketing spend and employee-related costs, including a Hatchify-related headcount. Product development expense declined 8% to $77 million, while general and administrative expenses fell 5% to $49 million, reflecting lower stock-based compensation and other items, partially offset by acquisition and integration costs.
Adjusted EBITDA decreased 7% year over year to $79 million, with adjusted EBITDA margin contracting 200 basis points to 22%.
YELP Expands Consumer AI Experience and Partnerships
Yelp continued to accelerate its AI transformation in the first quarter, rolling out more than 35 new features and updates and introducing a new Yelp Assistant that now supports local discovery across every business category. The expanded assistant is designed to provide recommendations with explanations, surfaced reviews, star ratings and other details while letting users refine searches and ask follow-up questions.
Yelp also broadened its partner ecosystem to help consumers complete actions beyond discovery. Food ordering and delivery through the DoorDash partnership drove 88% year-over-year growth in food ordering revenues, reflecting expanded restaurant availability on the platform.
Beyond discovery and ordering, Yelp announced new integrations with Vagaro and Zocdoc to support booking for beauty, wellness, fitness and healthcare appointments. Yelp also enhanced Menu Vision to deliver more visual and detail-rich menu browsing, using AI to improve photo-to-menu matching and recognition of dish names and synonyms.
Yelp Bets on Hatchify, Host and Data Licensing Momentum
Management highlighted a sharper focus on scaling AI-driven offerings that can expand “other revenue” over time. Yelp Host, its AI-powered call answering service for restaurants, surpassed an annual run rate of 1.5 million calls handled in April, more than doubling from January, and the company plans to add capabilities such as placing food orders by phone.
Hatchify also showed strong early momentum post-acquisition. Hatchify’s annual run rate revenues exceeded $34 million in March, up 92% year over year and 27% from November 2025, and Yelp indicated plans to expand Hatchify’s voice capabilities and enhance lead management functionality.
Data licensing remains another key lever. Yelp cited robust demand for its licensing products, including new licensing agreements with OpenAI, and expanding integrations with existing partners such as Alexa+, where users can book and manage Yelp restaurant reservations through the Reservations API. Management reiterated a longer-term goal of reaching an annual run rate of $250 million in other revenues by the end of 2028 compared with an annual run rate of $116 million delivered in the first quarter of 2026.
YELP’s Liquidity Position and Shareholder Return Policy
Yelp’s liquidity remained solid, ending the first quarter with $110 million in cash and cash equivalents, alongside $130 million in net borrowings under its credit facility. During the first quarter, the company generated operating cash flow and free cash flow of $57.8 million and $45.2 million, respectively.
YELP Reiterates FY26 Guidance
For 2026, the company continues to anticipate revenues between $1.455 billion and $1.475 billion. This compares with 2025 revenues of $1.465 billion and the Zacks Consensus Estimate of $1.47 billion. Adjusted EBITDA is still expected in the range of $310-$330 million, which is way lower than the 2025 level of $369 million.
Yelp initiated its guidance for the second quarter of 2026. Yelp anticipates second-quarter 2026 revenues between $363 million and $368 million, which fell short of the Zacks Consensus Estimate of $369.8 million as well as the year-ago quarter’s revenues of $370.4 million. Second-quarter adjusted EBITDA is projected in the band of $70-$75 million.
The Zacks Consensus Estimate for Micron Technology’s fiscal 2026 earnings has been revised upward by a penny to $58.37 per share in the past 30 days, suggesting an increase of 604.1% from fiscal 2025’s reported figure. Micron Technology shares have surged 125.3% year to date (YTD).
The Zacks Consensus Estimate for Broadcom’s fiscal 2026 earnings has moved northward by 9 cents to $11.45 per share over the past 30 days and calls for a year-over-year jump of 67.9%. Broadcom shares have soared 19.2% YTD.
The Zacks Consensus Estimate for NVIDIA’s fiscal 2027 earnings has moved upward by 4 cents to $8.07 per share in the past 30 days, implying a year-over-year improvement of approximately 69.2%. NVIDIA shares have risen 13.6% YTD.
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YELP Q1 Earnings Decline as Costs Rise, Revenues Increase Y/Y
Key Takeaways
Yelp Inc. (YELP - Free Report) reported first-quarter 2026 earnings of 30 cents per share, declining 16.7% year over year. The Zacks Consensus Estimate for the bottom line was pegged at 26 cents.
Net revenues rose 0.8% year over year to $361.5 million and surpassed the consensus mark by 1.9%. Strength in other revenues and steady Services advertising demand drove the outperformance, while Yelp Assistant adoption continued to expand, accounting for about 15% of Request-a-Quote projects in the quarter.
YELP’s Revenue Mix Shows Services Resilience
Total net revenues increased to $361.5 million from $358.5 million a year ago. Advertising revenues declined 2.8% year over year to $332.49 million, reflecting weaker trends in Restaurants, Retail & Other categories.
Services advertising revenues edged up to $233.8 million from $231.6 million, supported by a modest increase in ad clicks and a higher average revenue per location that partially offset fewer paying locations. In contrast, Restaurants, Retail & Other advertising revenues fell to $98.7 million from $110.4 million as softer consumer demand weighed on ad clicks.
Other revenues stood out, rising 75% year over year to a record $29 million. The jump was driven by the inclusion of Hatchify revenues (acquired in February 2026), along with growth in data licensing and food ordering.
Yelp Inc. Price, Consensus and EPS Surprise
Yelp Inc. price-consensus-eps-surprise-chart | Yelp Inc. Quote
Yelp’s Profitability Slips as Costs Rise
Net income attributable to common stockholders declined 27% year over year to $18 million, translating to a 5% net income margin versus 7% in the year-ago quarter. Income from operations was $27.3 million, down from $29.4 million in the year-ago quarter, reflecting higher overall costs and expenses.
Total costs and expenses increased 2% year over year to $334 million. The cost of revenues rose 10% year over year to $38.4 million, partly tied to infrastructure investments, including AI product integration and incremental costs from the Hatchify acquisition.
Sales and marketing expenses increased 5% to $153 million on higher marketing spend and employee-related costs, including a Hatchify-related headcount. Product development expense declined 8% to $77 million, while general and administrative expenses fell 5% to $49 million, reflecting lower stock-based compensation and other items, partially offset by acquisition and integration costs.
Adjusted EBITDA decreased 7% year over year to $79 million, with adjusted EBITDA margin contracting 200 basis points to 22%.
YELP Expands Consumer AI Experience and Partnerships
Yelp continued to accelerate its AI transformation in the first quarter, rolling out more than 35 new features and updates and introducing a new Yelp Assistant that now supports local discovery across every business category. The expanded assistant is designed to provide recommendations with explanations, surfaced reviews, star ratings and other details while letting users refine searches and ask follow-up questions.
Yelp also broadened its partner ecosystem to help consumers complete actions beyond discovery. Food ordering and delivery through the DoorDash partnership drove 88% year-over-year growth in food ordering revenues, reflecting expanded restaurant availability on the platform.
Beyond discovery and ordering, Yelp announced new integrations with Vagaro and Zocdoc to support booking for beauty, wellness, fitness and healthcare appointments. Yelp also enhanced Menu Vision to deliver more visual and detail-rich menu browsing, using AI to improve photo-to-menu matching and recognition of dish names and synonyms.
Yelp Bets on Hatchify, Host and Data Licensing Momentum
Management highlighted a sharper focus on scaling AI-driven offerings that can expand “other revenue” over time. Yelp Host, its AI-powered call answering service for restaurants, surpassed an annual run rate of 1.5 million calls handled in April, more than doubling from January, and the company plans to add capabilities such as placing food orders by phone.
Hatchify also showed strong early momentum post-acquisition. Hatchify’s annual run rate revenues exceeded $34 million in March, up 92% year over year and 27% from November 2025, and Yelp indicated plans to expand Hatchify’s voice capabilities and enhance lead management functionality.
Data licensing remains another key lever. Yelp cited robust demand for its licensing products, including new licensing agreements with OpenAI, and expanding integrations with existing partners such as Alexa+, where users can book and manage Yelp restaurant reservations through the Reservations API. Management reiterated a longer-term goal of reaching an annual run rate of $250 million in other revenues by the end of 2028 compared with an annual run rate of $116 million delivered in the first quarter of 2026.
YELP’s Liquidity Position and Shareholder Return Policy
Yelp’s liquidity remained solid, ending the first quarter with $110 million in cash and cash equivalents, alongside $130 million in net borrowings under its credit facility. During the first quarter, the company generated operating cash flow and free cash flow of $57.8 million and $45.2 million, respectively.
YELP Reiterates FY26 Guidance
For 2026, the company continues to anticipate revenues between $1.455 billion and $1.475 billion. This compares with 2025 revenues of $1.465 billion and the Zacks Consensus Estimate of $1.47 billion. Adjusted EBITDA is still expected in the range of $310-$330 million, which is way lower than the 2025 level of $369 million.
Yelp initiated its guidance for the second quarter of 2026. Yelp anticipates second-quarter 2026 revenues between $363 million and $368 million, which fell short of the Zacks Consensus Estimate of $369.8 million as well as the year-ago quarter’s revenues of $370.4 million. Second-quarter adjusted EBITDA is projected in the band of $70-$75 million.
YELP’s Zacks Rank and Stocks to Consider
Currently, Yelp carries a Zacks Rank #3 (Hold).
Some better-ranked stocks worth considering in the broader Zacks Computer and Technology sector are Micron Technology (MU - Free Report) , Broadcom (AVGO - Free Report) and NVIDIA (NVDA - Free Report) . Micron Technology sports a Zacks Rank #1 (Strong Buy) at present, while Broadcom and NVIDIA each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Micron Technology’s fiscal 2026 earnings has been revised upward by a penny to $58.37 per share in the past 30 days, suggesting an increase of 604.1% from fiscal 2025’s reported figure. Micron Technology shares have surged 125.3% year to date (YTD).
The Zacks Consensus Estimate for Broadcom’s fiscal 2026 earnings has moved northward by 9 cents to $11.45 per share over the past 30 days and calls for a year-over-year jump of 67.9%. Broadcom shares have soared 19.2% YTD.
The Zacks Consensus Estimate for NVIDIA’s fiscal 2027 earnings has moved upward by 4 cents to $8.07 per share in the past 30 days, implying a year-over-year improvement of approximately 69.2%. NVIDIA shares have risen 13.6% YTD.