Yelp Inc (YELP) · Nov 5, 2026 · Earnings
Beat — Diluted EPS $0.63 vs ~$0.45 consensus; revenue $370.9M vs ~$369M
Yelp earnings beat Q3 revenue and EPS expectations, but pressured advertising and lower margins temper the AI-driven growth story.
Yelp is midway through an AI transformation: it is trying to offset a pressured advertising business with AI tools for local businesses, the Hatch acquisition, and data licensing. That diversification is beginning to show up in other revenue, but the core advertising engine remains the business’s main constraint. Yelp’s prior outlook called for full-year 2026 revenue of $1.460 billion to $1.470 billion and adjusted EBITDA of $315 million to $325 million.
The quarter beat the published benchmark, but only narrowly on revenue. Revenue of $370.9 million was modestly above the roughly $369 million consensus, while diluted GAAP EPS of $0.63 was well above the approximately $0.45 estimate. Yelp also said quarterly revenue was $1 million above the high end of its own outlook range.
| Metric | Q3 2026 | Q3 2025 | Consensus |
|---|---|---|---|
| Net revenue (Income Statement) | $370.9M (+1.0%) | $376.0M | ~$369M |
| Diluted EPS (Income Statement) | $0.63 (+3.3%) | $0.61 | ~$0.45 |
| Adjusted EBITDA (Non-GAAP reconciliation) | $92.3M (-5.9%) | $98.1M | |
| Adjusted EBITDA margin (Non-GAAP reconciliation) | 24.9% | 26.1% | |
| Net income (Income Statement) | $34.6M (-12.1%) | $39.3M |
The quality of the beat was mixed because the profitable core is weakening. Revenue declined 1% year over year, adjusted EBITDA fell 6%, and adjusted EBITDA margin slipped by roughly 1 percentage point. Management explicitly said advertising revenue remains pressured, while the growth came from newer businesses.
The AI and data strategy is gaining traction, but it has not yet replaced the advertising slowdown. Other revenue’s 82% growth and the launch of more than 30 product updates support Yelp’s diversification story, including AI tools for service businesses and licensing of local data. But the quarter still shows the transition’s near-term cost: product development spending is lower, yet total margins and profit remain below last year while acquisition and integration costs rise with Hatch.
Cash generation remains useful, but the balance sheet now reflects the Hatch investment. Nine-month free cash flow was $190.8 million, down from $251.4 million, while Yelp spent $263.6 million on acquisitions and ended with $120.4 million of cash, cash equivalents and restricted cash versus $231.5 million a year earlier. The company also had $75 million outstanding on its revolving credit facility, making the AI expansion more capital-intensive than the prior-year comparison suggests.
Bottom line: Yelp beat a lowered near-term earnings bar, but the underlying picture is not a clean acceleration: new AI and data businesses are growing rapidly while advertising pressure pulls down margins and cash generation. The event modestly advances the diversification story, without yet proving that it can replace the core business’s slowdown.
Q4 results and 2027 outlook
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