Yelp’s latest quarter saw a modest decline in sales, with the market responding negatively despite beating Wall Street expectations for both revenue and profit. Management attributed the results to ongoing challenges in the advertising market, especially within the services and restaurants, retail & other (RR&O) segments, as consumer demand remained soft. CEO Jeremy Stoppelman described the environment as "challenging" for both consumers and local businesses, citing inflation and cautious spending. At the same time, Yelp’s AI-driven offerings delivered notable growth in other revenue streams, particularly from its Hatch acquisition and data licensing partnerships.
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Yelp (YELP) Q3 2026 highlights:
- Revenue $370.9 million vs S&P analyst consensus of $368.7 million (1.4% year-on-year decline, 0.6% beat)
- Adjusted EPS $0.96 vs S&P analyst consensus of $0.81 (17.5% beat)
- Adjusted EBITDA $92.27 million vs analyst estimates of $73.87 million (24.9% margin, 24.9% beat)
- Operating margin 13.2%, in line with the same quarter last year
- Market capitalization $1.06 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our top 5 analyst questions from Yelp’s Q3 earnings call
- Alex Vegliante (Goldman Sachs) asked about Yelp’s role in powering consumer AI agents and the monetization potential of data licensing. CEO Jeremy Stoppelman emphasized the importance of trusted local content and strong partnerships, positioning Yelp as an essential provider in the personal agent ecosystem.
- Robert Coolbrith (Evercore ISI) inquired about expense favorability and the outlook for Q4 spending. CFO David Schwarzbach attributed expense discipline to marketing optimization and capitalized development, while noting that investment levels will rise in the coming quarter to support AI initiatives.
- Jason Kreyer (Craig-Hallum) requested specifics on which AI tools are most effective for consumer engagement. CEO Jeremy Stoppelman pointed to the success of Yelp Assistant and agentic features like Check for Me and Keep Me Posted, which are driving repeat usage and higher Request-a-Quote volumes.
- Sergio Segura (KeyBanc Capital Markets) questioned the ongoing decline in advertising revenue and prospects for stabilization. COO Jed Nachman cited persistent macro challenges and highlighted the company’s focus on diversifying revenue via Hatch and Yelp Host.
- Shweta Khajuria (Wolfe Research) asked about the margin profile as other revenue grows and the path to the $250 million annual run rate. CFO David Schwarzbach explained that transaction and licensing streams offer higher margins, while continued investment in AI products may impact near-term profitability.
Catalysts in upcoming quarters
In upcoming quarters, the StockStory team will be monitoring (1) the pace of adoption and revenue growth for Hatch and Yelp Host, (2) signs of stabilization or improvement in advertising revenue despite ongoing macroeconomic pressures, and (3) the effectiveness of Yelp’s AI-driven features in boosting consumer engagement. Progress in expanding partnerships for data licensing and scaling new product offerings will also be key indicators of strategic execution.
Yelp currently trades at $19.27, down from $20.52 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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