Yelp’s first quarter saw mixed results, with the company achieving flat sales despite surpassing Wall Street’s revenue expectations. The market responded negatively, reflecting concerns about persistent challenges in its core advertising business. Management attributed the quarter’s sluggishness to ongoing macroeconomic pressures affecting local businesses and highlighted a notable decline in paying advertising locations and ad clicks. CEO Jeremy Stoppelman commented, “Local businesses have continued to face a challenging economic environment,” and pointed to pressure on ad budgets, especially in categories tied to consumer demand.
Is now the time to buy YELP? Find out in our full research report (it’s free for active Edge members).
Yelp (YELP) Q1 CY2026 Highlights:
- Revenue: $361.5 million vs analyst estimates of $353.7 million (flat year on year, 2.2% beat)
- Adjusted EPS: $0.66 vs analyst estimates of $0.66 (in line)
- Adjusted EBITDA: $79.35 million vs analyst estimates of $61.85 million (22% margin, 28.3% beat)
- The company reconfirmed its revenue guidance for the full year of $1.47 billion at the midpoint
- EBITDA guidance for the full year is $320 million at the midpoint, below analyst estimates of $322.4 million
- Operating Margin: 7.6%, in line with the same quarter last year
- Market Capitalization: $1.26 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are 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 Q1 Earnings Call
- Sergio Segura (KeyBanc): asked why Yelp maintained its full-year outlook despite a strong first quarter. CFO David Schwarzbach explained that continued macro uncertainty, including the effects of the Middle East conflict, led to caution regarding the pace of recovery.
- Cory Carpenter (JPMorgan): inquired about the drivers behind anticipated EBITDA margin growth. Schwarzbach cited both revenue expansion from new AI offerings and operational efficiencies, while CEO Jeremy Stoppelman described productivity gains from AI tools in product development.
- Colin Sebastian (Baird): requested detail on the impact of Yelp Assistant on conversion rates and advertiser ROI. Stoppelman reported early positive signals, with 15% of Request-A-Quote projects now stemming from the AI assistant, and expects further gains as adoption grows.
- Nitin Bansal (Bank of America): pressed for specifics on the OpenAI partnership and Yelp’s visibility on AI platforms. Stoppelman said the deal is still in early stages, with implementation details and revenue impact yet to be determined.
- Nitin Bansal (Bank of America): also asked about growth trajectory in “other revenue.” Schwarzbach highlighted strong momentum across transaction, licensing, and Hatch, but cautioned that variability in local advertising continues to influence overall guidance.
Catalysts in Upcoming Quarters
Our analyst team will be watching (1) whether new AI-powered products like Yelp Assistant and Yelp Host sustain user engagement and advertiser adoption, (2) the pace at which data licensing partnerships with technology platforms generate meaningful revenue, and (3) signs of stabilization or improvement in core advertising trends as local business conditions evolve. Progress on Hatch integration and transaction-based services will also be key indicators of strategic execution.
Yelp currently trades at $22.94, down from $28.50 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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