Yelp's advertising revenue fell 6% to $337 million in the third quarter of 2026, as ad clicks dropped 8% and local businesses across restaurants, retail and home services pulled back, according to results the company published on November 5, 2026. Other revenue, a line that now carries the AI lead-management company Hatch, data licensing to AI companies and food ordering, rose 82% to a record $34 million. It was not enough to stop total net revenue slipping 1% to $371 million, and Yelp lowered its full-year revenue range to between $1.455 billion and $1.460 billion - below the $1.465 billion it booked in 2025.

In Short

Yelp makes most of its money when local businesses pay for ads, and fewer people clicked on those ads this summer, so ad money went down. Newer kinds of income, like letting AI companies use Yelp's reviews and selling AI phone and text helpers to businesses, grew fast but still make up less than a tenth of the total. Yelp now expects to take in slightly less money in 2026 than in 2025, and the businesses that advertise on it are paying a little more for each click while getting fewer of them.

The quarter in numbers

Net revenue for the three months to September 30, 2026 was $370.9 million, against $376.0 million a year earlier, according to Yelp's shareholder letter. That was $1 million above the top of the range the company gave in August. Net income fell 12% to $34.6 million, a 9% margin. Adjusted EBITDA, Yelp's preferred profit measure, fell 6% to $92.3 million, a 25% margin, and landed $17 million above the high end of its outlook.

Diluted earnings per share rose, to $0.63 from $0.61. The reason was the share count, not the profit. Weighted-average diluted shares fell 15% year over year, to 54.8 million from 64.2 million, after about $200 million of repurchases in the first nine months of both 2025 and 2026.

Yelp published the results in a letter to shareholders and a press release, both furnished to the Securities and Exchange Commission the same day on a Form 8-K signed by chief financial officer David Schwarzbach. Executives discussed them on a call at 2 p.m. Pacific time.

Over nine months the picture is flat rather than falling. Revenue for January to September was $1.108 billion, up 0.3% on the same period of 2025 by PPC Land's calculation, because other revenue almost doubled to $95.9 million while advertising revenue fell 3.9% to $1.012 billion.

Advertising: fewer clicks, slightly higher prices

Advertising still accounts for 91% of Yelp's revenue, by PPC Land's calculation, down from 95% a year earlier. Both of its categories shrank.

Services

Advertising revenue from Services businesses - home, local, auto, professional, pets, real estate, financial and event services - fell 2% to $238.2 million. According to the letter, the decline was "driven by a decrease in ad clicks from these categories, partially offset by an increase in average cost-per-click." Paying advertising locations in Services fell to 248,000 on a monthly average basis, from 258,000 a year earlier and 259,000 in the second quarter. That is a 4% year-over-year drop by PPC Land's calculation, and the largest quarter-on-quarter fall in the 13 quarters Yelp lists in the letter.

The Services figure matters because it was Yelp's growth engine. In 2024, Services advertising rose 11% to a record $879 million. By the second quarter of 2026, Services revenue had gone flat at $240.96 million. The third quarter is the first year-over-year decline in Services advertising revenue in the nine quarters of comparisons the letter's table allows, by PPC Land's calculation.

Jed Nachman, Yelp's chief operating officer, described what is happening in homes. "We're seeing a lot of behavior in services specifically around repair versus replace, and some of those bigger projects are not getting done," he said on the call. On the business side, "the input costs continue to be very high, both on the labor side, and we can look at things like diesel gas as an example."

Restaurants, Retail and Other

The steeper fall came in Restaurants, Retail & Other, or RR&O, which covers restaurants, shopping, beauty and fitness, health and other categories. Revenue there dropped 13% to $98.8 million, with lower ad clicks and a lower average CPC. According to the letter, "These results reflect the challenging operating environment for businesses in these categories and, to a lesser extent, competitive pressures from food ordering and delivery providers."

The odd detail is that RR&O paying advertising locations rose 3% to 261,000, "largely driven by multi-location advertisers," according to Yelp. More locations paid for less. Dividing RR&O revenue by RR&O locations, the quarterly figure per location fell to about $378 from about $447, a drop of roughly 15% by PPC Land's calculation. Nachman explained it as "some multi-location customers that increased locations but didn't necessarily increase average revenue per location." He added a caution: "It was a nice bump to see those paying advertising locations, but I wouldn't read into anything in terms of really sunny days ahead."

Over three years the RR&O decline is substantial. The category brought in $123.9 million in the third quarter of 2023, according to the letter's table. The third quarter of 2026 figure is 20% lower, by PPC Land's calculation, and paying RR&O locations fell from 326,000 to 261,000 over the same period.

Clicks and CPC

Total paying advertising locations slipped 1% to 509,000, while average revenue per location "decreased moderately," according to the letter. Ad clicks fell 8% and average CPC rose 2%, "in each case primarily due to softer consumer demand."

The click decline is now a long run. According to the table in the letter, ad clicks have fallen year over year in each of the last seven quarters, and average CPC has risen in each of them:

Quarter Services ad revenue RR&O ad revenue Ad clicks, y/y Average CPC, y/y Paying locations
Q3 2025 $243.8m $113.5m -11% +14% 512,000
Q4 2025 $231.4m $106.8m -8% +6% 496,000
Q1 2026 $233.8m $98.7m -10% +8% 485,000
Q2 2026 $241.0m $101.5m -5% +1% 510,000
Q3 2026 $238.2m $98.8m -8% +2% 509,000

What the price increase no longer does is offset the volume loss. A year ago, ad clicks fell 11% while average CPC rose 14%, and Services revenue still grew 7%. In the third quarter of 2026, a 2% price rise sat against an 8% fall in clicks.

The definitions are worth reading closely. Yelp counts as ad clicks "user interactions with our pay-for-performance advertising products, including clicks on advertisements on our website and mobile app, clicks on syndicated advertisements on third-party platforms, and Request-a-Quote submissions." Ads sold through Yelp's advertising partnerships are excluded. Average CPC is revenue from performance-based ad products, excluding partnership revenue and some adjustments such as refunds, divided by ad clicks.

That means Request-a-Quote submissions sit inside the click count that fell 8%. Yet Yelp also says overall projects grew about 10% year over year, with Yelp Assistant, its AI chatbot, generating about 10% of Request-a-Quote projects. The project count, according to a footnote, covers projects "created by users through a Request-a-Quote flow or Yelp Assistant," rounded to the nearest multiple of 5%. The letter does not reconcile the two numbers or say how many of those projects were billed to advertisers.

Google's search business moved the other way in the same quarter. Alphabet's quarterly filing showed paid clicks up 8% and average cost-per-click up 4% in the third quarter of 2026.

Other revenue: Hatch, data licensing and food ordering

Other revenue rose to $33.9 million from $18.7 million. According to the letter, the increase came from "the inclusion of revenue from Hatchify Inc. ('Hatch'), as well as significant growth in revenue from data licensing and food ordering." The financial review section names the Yelp Places API program and food ordering through DoorDash as the non-Hatch drivers.

Yelp calculates an annual run rate by multiplying a quarter's results, excluding out-of-period adjustments, by four. On that basis other revenue reached a record $136 million. The company is targeting $250 million by the end of 2028. "While advertising revenue remains pressured, other revenue grew 82% year over year to a record annual run rate of $136 million, gaining traction toward our target of $250 million," Schwarzbach said in the release.

The 82% headline is flattered by the acquisition. Yelp did not own Hatch in the third quarter of 2025. Its deal to buy Hatch for about $270 million in cash, plus $30 million in retention payments, was announced on January 21, 2026 and completed in February, according to Nachman. Hatch's run rate of about $37 million implies roughly $9.25 million of revenue in the quarter. Stripping that out leaves about $24.7 million of other revenue, up roughly 32% on the year-earlier $18.7 million - an approximate PPC Land calculation, since Yelp does not break out the components.

Sequentially, other revenue rose about 3% from the second quarter's $33.0 million, by PPC Land's calculation.

Hatch

Hatch's annual run rate revenue reached approximately $37 million in the quarter, up 55% year over year and 6% quarter over quarter, according to the letter. In June, Hatch's run rate stood at $35 million, up 59%. A footnote says Hatch revenue includes overage fees and that growth rates rest on pre-acquisition records that "have not been audited or reviewed by an independent accounting firm."

An analyst from KeyBanc Capital Markets noted that growth had moderated. Nachman said the 55% was "in line with last quarter." Yelp says more than 150 million cumulative leads have passed through Hatch since 2018 for HVAC, plumbing, roofing and general contracting companies. The company plans to extend it to handyman services, home cleaning, masonry, moving, pest control, auto repair and pressure washing. On the call, Nachman listed the most recent additions as moving, pest control and lawn care, the last of which does not appear in the letter's list.

Hatch's voice product moved to OpenAI's GPT-Live-1 in the third quarter, and its ServiceTitan integration now includes "real-time booking with adaptive capacity." Yelp announced the GPT-Live-1 switch for both Hatch and Yelp Host in September. An image caption in the letter adds that Yelp has begun testing an integration with Yelp for Business "to drive interested Service pros to the Hatch sales team."

Response speed is the commercial logic. "Speed to lead is of critical importance to both sides of the transaction," chief executive Jeremy Stoppelman said. The same pressure shows up elsewhere: Google began charging Local Services advertisers for missed calls over 20 seconds from October 1, 2026.

Yelp Host

Yelp Host, the AI phone agent Yelp sells to restaurants, handled calls at an annual run rate of 2.5 million in October 2026, up 15 times from October 2025, according to the letter. Two caveats apply to that multiple. Yelp Host only became available on October 21, 2025, so the base month covers only its last 11 days. And growth has slowed sharply: the run rate was already 2.4 million calls in July 2026, so October was only about 4% higher than July by PPC Land's calculation, although both figures are rounded. Through June, call volume had been growing at an average of 38% a month.

Other figures point to where the product is heading. Food orders through Yelp Host grew more than sixfold from June, when ordering started, to October. "In testing with a major restaurant client," Yelp says, food order conversion rose 13% after GPT-Live-1 went in during September. Yelp names neither the client nor the baseline. Callers, it adds, have "more frequently spoken in full sentences," and Yelp Host can now detect and answer callers "in nearly all major languages." Yelp is expanding its go-to-market team for the product.

"This is a big step for a lot of these customers to turn over their voice to an AI voice agent. So, it is oftentimes a land and expand," Nachman said.

Data licensing

Yelp reported "robust demand for our data licensing products, including from our partnerships with OpenAI and Meta." It does not disclose licensing revenue, contract terms or how much each partner pays. Yelp licensed reviews, photos and business information to OpenAI for use inside ChatGPT on July 24, 2026, and in the third quarter integrated Yelp Reservations and Waitlist into ChatGPT. That booking integration went live on August 10.

Stoppelman went further on the call. "Our Request-a-Quote feature is now fully baked into ChatGPT. So you'll see Request-a-Quote buttons when those listings come up, and you can dive right into our flow," he said, adding that this was "partially a contributor" to the 10% growth in Request-a-Quote projects. The letter does not mention Request-a-Quote inside ChatGPT.

A Goldman Sachs analyst asked about consumer AI agents such as Meta's Muse, which launched in the US on September 8, 2026. Stoppelman said the Meta deal, which he dated to "last quarter," gives Meta "all of our data across all of their properties, including Muse." He set out what an agent needs: reputation, reviews, photos and accurate listing data, including whether a business is still open and its hours. "So I think for anyone building in the personal agent space, they are going to want to look at Yelp, unless their name is Google," he said.

The exception is pointed. In August 2024, Yelp sued Google alleging monopoly abuse in local search, claiming Google used its general search position to favour its own local results and local search ads.

Schwarzbach broke other revenue into three margin profiles. Transactions, such as orders through DoorDash, and data licensing carry higher margins. The subscription products - Hatch and Yelp Host - are expected over time to "normalize to what you typically see for a SaaS or software enterprise software product." In the near term, he said, "we're certainly investing against growth opportunities."

Google, AI Overviews and traffic

Asked by an Evercore ISI analyst whether Google's AI Overviews or AI Mode had cut traffic, Stoppelman described the effect as limited. "In the quarter, I know there was a lot of discussion around Google dialing up AI Overviews and that having impact. We saw some impact, but stepping back and looking at overall results, it was somewhat muted in the big picture," he said.

His explanation was commercial. "The queries that we typically get a lot of our most valuable traffic from are highly monetizable, and as a result, Google seems to be a bit more cautious with those queries," he said. The effect was "not dramatic, not as dramatic as reported elsewhere." He also pointed to an Apple partnership that "drives considerable traffic" and to direct app traffic. Yelp's investor relations site lists 28 million app unique devices as a 2025 monthly average.

Yelp gave no traffic figures to support the claim. Others have reported larger effects. Reddit chief executive Steve Huffman named AI Overviews or AI Mode as the biggest factor in falling search referrals on October 29, 2026. Chartbeat's third-quarter data showed search falling to 12% of North American publisher pageviews, from 21% a year earlier. Google itself told investors on October 28 that growth in AI Mode queries had weighed on revenue because of lower monetisation.

The attribution question also runs the other way. In May, a Foundation Marketing and AirOps study found that Yelp received 3.4 times more AI citations than any rival platform in local search answers, most of them in Google AI Mode. Citations in AI answers are not the same as visits to Yelp, and Yelp's results do not show how many of them turn into ad clicks.

Product changes that touch advertisers

The letter describes more than 30 new features and updates released recently. Several affect how ads and leads are served.

Ad formats. "We recently began exploring advanced AI techniques, including semantic IDs, to surface relevant advertisers in a carousel," according to the letter. Semantic IDs, in recommender systems, represent items as learned codes derived from their content rather than as arbitrary numbers. Yelp gives no launch date, test result or description of where the carousel appears.

Lead tools. In the fourth quarter, Yelp plans to roll out Smart Lead Reply, a paid agentic product that, according to the letter, "responds to requests on behalf of service pros." Yelp priced Smart Lead Reply at $30 a month in its October 20 fall release. In the third quarter Yelp added lead-management integrations with ServiceTitan, Housecall Pro, Jobber and Workiz, and redesigned its Aggregated Leads Center, which consolidates Request-a-Quote leads for multi-location Services businesses into one inbox. It also expanded its Calendly integration so users can book pros through Yelp Assistant and search.

Consumer features. Yelp Assistant now saves chats, uses chat history for personalised answers and will "soon" use search history and other app activity. An OpenTable integration lets consumers book at "tens of thousands of additional restaurants," and the assistant can add users to a Yelp Waitlist. The letter calls Check for Me, an AI agent that phones restaurants to ask about wait times, "upcoming"; on the call, Stoppelman's prepared remarks said Yelp had "rolled out" the agent. A My Lists tab lets users save and share places.

Costs, margins and stock-based compensation

Total costs and expenses were $322.0 million, essentially flat. The mix moved.

Cost of revenue rose 16% to $42.2 million, about 11% of revenue. According to the letter, the increase came from infrastructure costs after the Hatch deal and investment to support AI products. Offsetting it was a fall in advertising fulfilment costs, "largely attributable to lower costs to syndicate advertising budgets on certain third-party sites as well as a decrease in Yelp Audiences spend." In other words, Yelp spent less on syndication of advertisers' budgets to outside sites and less on buying media for Yelp Audiences, its off-platform display product. The letter does not name the sites. In September, Amazon began showing Yelp-sourced plumber and roofer ads on order confirmation and package tracking pages; Yelp's results do not say whether that arrangement affects these costs.

Sales and marketing rose 1% to $151.5 million, driven by spending on acquiring Services projects - paid traffic bought to generate quote requests - partly offset by less business-owner marketing. "Where we see green shoots, we're going to lean into it, and where we're not seeing the return, we're not going to spend as much," Nachman said.

Product development fell 17% to $64.7 million. Part of that is reclassification rather than saving. The letter attributes the decline to "a higher proportion of employee work directed toward infrastructure enhancements (resulting in more costs included in cost of revenue), more employee costs being capitalized, and lower cost of labor." Purchases of property, equipment and software, which include capitalised software, rose to $15.4 million from $12.6 million. General and administrative costs rose 2% to $46.3 million, including Hatch integration costs, partly offset by lower credit losses from fewer customer delinquencies. Depreciation and amortisation rose 39% to $17.4 million, mostly from intangible assets acquired with Hatch.

Stock-based compensation fell to $23.1 million from $32.9 million, or 6% of revenue against 9%. Within that, product development's share almost halved, to $8.7 million from $16.6 million. Yelp now expects stock-based compensation below 6% of revenue in the fourth quarter, "one year ahead of our target," and said it will stop giving regular updates on the metric.

Asked how AI affects internal costs, Nachman pointed to engineering velocity and homegrown sales tools. "We want to make sure that they're measurable and have impact, and you're not spraying the AI hype around the company," he said. Yelp has held overall headcount "approximately flat" in recent years, according to the letter.

Other income dropped 75% to $1.4 million, reflecting less cash earning interest and interest paid on the credit facility.

Cash, buybacks and the credit facility

Operating cash flow was $100.0 million in the quarter, down from $131.5 million. Free cash flow fell 29% to $84.5 million, and to $190.8 million over nine months from $251.4 million.

The balance sheet shows the cost of Hatch. Cash and cash equivalents stood at $119.8 million on September 30, against $216.1 million at the end of 2025, and short-term marketable securities of $103.3 million have been run down to zero. Together, liquid holdings fell by about $200 million, by PPC Land's calculation. The Hatch acquisition consumed $263.6 million net of cash received. Goodwill rose to $353.4 million from $135.8 million and intangibles to $86.4 million from $49.0 million.

Yelp drew $165 million on its revolving credit facility this year and has repaid $90 million, leaving $75 million outstanding on September 30. The balance was $100 million at the end of June.

In the third quarter Yelp repurchased about 1.0 million shares for $25 million at an average of $26.14, bringing 2026 repurchases to about $200 million. It then paused the program to pay down the revolver. With $339 million left on its authorisation, Yelp expects to resume repurchases in 2027, "subject to market and economic conditions as well as business requirements." Its stated capital allocation priorities are investment, acquisitions funded with "a combination of cash and financing," and returning more than 50% of free cash flow each year through buybacks.

Outlook: a smaller fourth quarter

Yelp expects "increased pressure on advertising revenue across categories" in the fourth quarter. It guided to net revenue of $347 million to $352 million and adjusted EBITDA of $57 million to $62 million.

Fourth-quarter 2025 revenue was about $360 million, which PPC Land derived from Yelp's 2025 total of $1.465 billion less its nine-month figure. The new range therefore implies a year-over-year decline of roughly 2% to 4%, by PPC Land's calculation. Adjusted EBITDA in the fourth quarter of 2025 was about $86 million on the same basis, so the guidance implies a fall of roughly 27% to 33%, and a margin of about 16% to 18%. Schwarzbach said expenses will be "modestly higher" as Yelp invests in Hatch and Yelp Host.

For the full year, Yelp now expects net revenue of $1.455 billion to $1.460 billion. In August it had narrowed its range to $1.460 billion to $1.470 billion, from $1.455 billion to $1.475 billion. The new range sits 0.3% to 0.7% below 2025 revenue, by PPC Land's calculation. Full-year adjusted EBITDA guidance moved to $320 million to $325 million, the top of the August range of $315 million to $325 million, against $369 million in 2025 - a decline of 12% to 13%.

Two items sit outside the adjusted figures. The ranges exclude accrued acquisition- and integration-related payments for continuing Hatch employees of about $3 million in the fourth quarter and $12 million for the year. And Yelp expects to recognise a tax benefit of about $30 million in the fourth quarter "related to previously unrecognized tax benefits," which will lift net income but not adjusted EBITDA.

Nachman offered no timeline for a recovery. "We do not expect the local advertising market to turn anytime soon," he said.

Market reaction

Yelp's investor relations site showed the shares at $19.31 at 3:00 p.m. on November 6, down $1.21, or 5.90%, on the day. That is about 26% below the $26.14 average price Yelp paid for its own shares in the third quarter, by PPC Land's calculation.

Why this matters for the marketing community

Yelp runs its own auction for local advertising, with 509,000 paying advertising locations and, according to its investor relations site, 8.4 million active claimed local business locations at the end of 2025. Its numbers describe what small and multi-location businesses are buying. In the third quarter, they bought fewer clicks, paid slightly more for each, and in RR&O spread less money over more locations.

The company's response is to sell something other than clicks. Hatch and Yelp Host are subscriptions. Smart Lead Reply carries a monthly fee. Data licensing earns money when Yelp content appears inside ChatGPT, Meta's assistants and other AI products, where the consumer may never visit Yelp and the advertiser on Yelp may not be shown. None of these revenue streams is broken out, and Yelp does not say how much of the $136 million run rate comes from licensing versus subscriptions or transactions.

Some of the figures that support the AI strategy are narrow. The 13% conversion lift comes from one unnamed client. The 15-fold Yelp Host multiple is measured against a partial launch month and masks three months of little change since July. Hatch growth rates rest on unaudited pre-acquisition records. The comment that AI Overviews had a "muted" effect came with no traffic data.

For advertisers on Yelp, the definitions carry the most practical weight. Ad clicks include Request-a-Quote submissions and clicks on syndicated ads on third-party platforms. Yelp spent less on syndicating budgets in the quarter, and more of its quote requests now arrive through Yelp Assistant and ChatGPT. Yelp does not report how those channels are priced or counted.

Timeline

Summary

Who: Yelp Inc. (NYSE: YELP), with chief executive Jeremy Stoppelman, chief financial officer David Schwarzbach and chief operating officer Jed Nachman. The results affect the 509,000 business locations paying to advertise on Yelp, along with AI companies licensing its data, including OpenAI and Meta.

What: Third-quarter 2026 net revenue fell 1% to $371 million. Advertising revenue fell 6% to $337 million, with Services down 2% to $238 million and Restaurants, Retail & Other down 13% to $99 million. Ad clicks fell 8% and average CPC rose 2%. Other revenue rose 82% to $34 million, helped by Hatch, data licensing and food ordering. Net income fell 12% to $35 million and adjusted EBITDA 6% to $92 million. Yelp lowered its full-year revenue range to $1.455 billion to $1.460 billion and guided to fourth-quarter revenue of $347 million to $352 million.

When: The quarter ended September 30, 2026. Yelp published the results and held its earnings call on November 5, 2026. Smart Lead Reply rolls out in the fourth quarter, buybacks are expected to resume in 2027, and the $250 million other revenue target is set for the end of 2028.

Where: Yelp is based in San Francisco. Its advertising business is concentrated in the United States, and its licensed data appears in third-party AI products such as ChatGPT and Meta's assistants.

Why: Yelp attributes the advertising decline to a "challenging economic environment" for consumers and local businesses, including deferred home projects, high input costs and, in restaurants, competition from food ordering and delivery providers. It is shifting investment towards subscription AI products and data licensing, which it expects to offset part of the advertising pressure over time.