VALUATION HIGHLIGHTS

1. Advertising constitutes 77% of the Trefis price estimate for Yelp's stock.

WHAT HAS CHANGED?

Latest Earnings: Q2 FY'26

Yelp reported Q2 FY'26 net revenue of $376 million, up 1% year-over-year and $8 million above the high end of the company's outlook range, driven primarily by 98% growth in Other revenue (including Hatch and data licensing), which offset a 3% decline in advertising revenue. Services ad revenue was flat year-over-year at $241 million, while RR&O ad revenue declined 10% to $102 million. Net income for the quarter was $32 million ($0.57 per diluted share), down 28% from $44 million ($0.67 per diluted share) in the prior-year period. Adjusted EBITDA declined 9% year-over-year to $91 million, though it still came in $16 million above the high end of management's guidance range.

Note: Yelp's FY'25 ended on December 31, 2025. Q2 FY'26 ended on June 30, 2026.

AI Assistant and Local Services Expansion

Yelp expanded its conversational AI assistant, Yelp Assistant, across its mobile platform to enhance lead matching between consumers and local service professionals. This deployment contributed to 10% year-over-year growth in Services Project Submissions, though Services ad revenue remained flat year-over-year at $241 million as pricing gains were offset by flat paying advertising locations in the segment. RR&O ad revenue declined 10% year-over-year to $102 million due to a decrease in restaurant, retail, and other paying advertising locations.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Yelp's value that present opportunities for upside or downside to the current Trefis price estimate:

Advertising Revenues

• Services Category Growth: Monetization improvements in Home & Local Services continue to outperform, yielding higher cost-per-click rates and increased quote volume. Upside scenario relies on continued AI lead-matching enhancements driving monetization rates higher.
• Ad Monetization and CPC Trends: While overall ad clicks experienced minor declines due to macro pressure on small business advertising spend, average cost-per-click increased by double digits, stabilizing overall advertising revenue growth.

For additional details, select a division from the interactive Trefis split for Yelp at the top of the page.

BUSINESS SUMMARY

Yelp connects consumers with local businesses across local services, restaurants, and retail through its website and mobile app. The primary revenue stream is local advertising, where businesses pay for prominent placement, targeted visibility, and lead generation tools.

SOURCES OF VALUE

Services advertising represents Yelp's largest and most lucrative revenue engine.

High-Intent Consumer Traffic

Yelp holds a established position in North American local search, with millions of monthly active unique visitors who exhibit high commercial intent. This high conversion likelihood enables Yelp to command premium pricing for local ad placements compared to general social platforms.

Proprietary Review Database and Trust Network

With over 200 million cumulative reviews, Yelp maintains a significant data moat. Content moderation algorithms and user trust create high barriers to entry for local discovery platforms trying to establish similar scale.

KEY TRENDS

AI Integration in Discovery and Recommendations

Generative AI and automated lead matching are streamlining how users connect with businesses. By leveraging large language models to process user queries into detailed quote requests, Yelp increases intent verification and conversion rates for service providers.

Capital Allocation and Share Repurchases

Yelp continues to generate consistent free cash flow, prioritizing aggressive share buybacks over large-scale M&A. This ongoing capital return strategy reduces diluted share count, providing support to earnings per share performance.