Yelp Reports 1% Revenue Growth but 28% Decline in Net Income for Q2 2026

Yelp Inc. reported its financial results for the second quarter of 2026, revealing a slight increase in net revenue to $375.5 million, up 1% from $370.4 million in the same period last year. For the first half of 2026, the company generated $737.0 million in revenue, also reflecting a 1% increase compared to $728.9 million in the first half of 2025. However, net income attributable to common stockholders decreased significantly, with the company reporting $31.7 million for the second quarter, down 28% from $44.1 million a year earlier, and $49.4 million for the first half, a decline of 28% from $68.5 million in the prior year.

The company's operational metrics showed mixed results. The number of paying advertising locations decreased by 1% to 510,000 in the second quarter, with a notable decline in the Restaurants, Retail & Other (RR&O) category, which fell by 2%. Ad clicks also dropped by 5% year-over-year, primarily due to lower engagement in the RR&O sector. Despite these challenges, Yelp's other revenue streams, which include subscription services and data licensing, saw substantial growth, increasing by 98% in the second quarter, largely driven by the acquisition of Hatch, an AI lead management platform, which contributed $8.5 million in revenue since its acquisition in February 2026.

Yelp's strategic initiatives continue to focus on enhancing its AI capabilities and improving user engagement. The company has made significant investments in product innovation, including the expansion of its AI-powered call answering service, Yelp Host, which has seen a tripling in call volume since January 2026. The integration of Hatch is expected to further bolster Yelp's AI offerings, with the company projecting an annual run rate of $250 million in other revenue by the end of 2028.

Financially, Yelp's total assets increased to $990.6 million as of June 30, 2026, compared to $958.5 million at the end of 2025. However, cash and cash equivalents decreased significantly to $94.1 million from $216.1 million, primarily due to the cash outflow associated with the Hatch acquisition, which totaled approximately $271.2 million. The company also reported a revolving credit facility of $325 million, with $100 million drawn as of the end of the quarter.

Looking ahead, Yelp anticipates continued challenges in the advertising revenue sector due to adverse economic conditions affecting local businesses. The company expects a slight year-over-year decrease in net revenue for the third quarter of 2026 but remains optimistic about the growth potential of its other revenue streams. Yelp plans to increase its investments in AI and marketing initiatives, which may lead to a decrease in adjusted EBITDA in the near term as it navigates these economic uncertainties.