YELP INC — Call Transcript 2026

All right. Good afternoon, everyone. Cory Carpenter, internet analyst at J.P. Morgan. Thanks, Yelp for joining us at the conference again. I'm gonna kick it over for the safe harbor. Thanks much, Cory, for having us at the conference. We'll be making some forward-looking statements during the conversation today that are subject to risks and uncertainties. Please refer to our SEC filings for more information on the risk factors that may affect our results. All right, I got a ton of questions. If anyone on the line has one, I think you can submit it electronically. I have that in front of me or in the room, feel free to raise your hand. Let's start with just the big theme, at least from our perspective in recent quarters. You've talked about re-architecting the company around AI. Maybe to start, could you talk about the changes you're making and just what your vision for this evolution is? We are absolutely reconceiving the entire Yelp experience around AI, but we're also transforming how we work. On the product side, we've invested heavily to build out what we call Yelp Assistant. That's a new experience. It's a conversational experience. We think it's really engaging. One of the things that's clear about LLMs is people want the evidence. Why did the LLM tell me what it did? Oftentimes they seem to turn up results that are incorrect in some way. It's erroneous or hallucinated or just inaccurate. That was a big theme for us, is how do we communicate, given the quality of our content, that this result is relevant to you? That's on the product. We did make an acquisition, Hatch. We'll talk more about that. We've built Yelp Host that we think is best in class. There's a lot of interesting things there. Just I think we all recognize that there's this moment that came in December with that version of Claude that really unlocked an incredible amount of potential productivity. We've embraced that as well, both on the product and engineering side, but also looking at the way that we can apply all of this to customer success, sales, and certainly including the finance and people operations parts of the business. I know I mentioned earlier we're gonna flip it. We usually talk about the advertising business first. This year, I actually wanted to start on, you know, some of the diversification initiatives that you've made. I think first question there is just you've got a few new revenue streams you're building. Maybe talk about the broader strategy behind that, in what you're doing there. Yeah. For us, just for context, Yelp obviously is traditionally very much a advertising business. We have three components to what we call other revenue. One is licensing, one is transactions, and one is subscriptions. For other revenue, we have a partnership with DoorDash that actually grew 88% in the first quarter, so we're pleased with that. On the licensing front, something that we've talked about for quite some time is how Yelp appears on other sites and other experiences. One thing that certainly emerges, there's more players in AI search, and particularly in that vertical which we serve, AI local search. We've been entering into licensing arrangements with other platforms. Most notably and most recently, we signed an agreement with OpenAI. You can now find licensed Yelp content on Meta.ai, in Bing, on Microsoft, Amazon Alexa, and for a long time we've been in Apple Maps, on Yahoo and many other platforms. Just this idea of the ubiquity of Yelp content across the internet on major platforms has been something that we've been very focused on, and we've been able to enter into additional licensing agreements. In addition, we've certainly enjoyed getting traffic back from those sites. That's definitely been part of the strategy and our point of view is simply that given the Yelp content and the directory that we have, if you wanna be in local search, you really do need to partner with us. That's gone extremely well. Most recently, we did make this acquisition of Hatch. Hatch is a AI lead conversion management product. It works across all platforms. It's not unique to Yelp. It works on Angi and Google, Thumbtack, and others as well, of course, as Yelp. We're really pleased with that. March annual run rate was at $34 million. Revenue run rate was at $34 million, growing at 92%. We did acquire the business at the beginning of February. We're still going through that integration process. Things are going well. We are investing. We're bringing people over. We're bringing know-how over. They now have a voice product. We've helped to inform that part of the product roadmap. There's obviously our at-scale lead management side of the business. That is all in service to the target that we've now provided, which is $250 million in run rate revenue and other revenue by the end of 2028. We've wanted to diversify the revenue streams because we have been exposed to the cycle, and that's been certainly more challenging in 2025 and that continued into 2026. I want to ask about that run rate. You did give the by the end of 2028, $250 million or north or at least $250 million. Right now you're, I think, a little over $115 million, so, you know, more than doubling. Just help us with the building blocks, you know, how to get to where you are today to where you're going in 2028, and then also what type of investments you need to make to support that growth. Absolutely. As I mentioned, we're all in on AI, and this AI tool opportunity is extensive. Certainly, we first want to operate Hatch and do that really effectively. We think there's additional product opportunities for the customers they serve. I think this is very much a traditional opportunity to provide software solutions to businesses to make them more efficient or improve their return on their own investments. We see significant opportunity there. We will continue to look for M&A opportunities. We don't have anything to announce today, but we're active. At the same time, certainly we need to show that we can operate the asset successfully, effectively, continue to grow that asset, and bring more product to market there. That's part of the consideration that goes into doing the next transaction. Beyond that, the licensing still presents significant opportunity for us, and we think that there's lots of ways for us to deliver value to consumers even when they're not on Yelp. Those are really the core components of what give us confidence in our ability to grow other revenue. One more, we'll go to advertising and capital allocation. Just as you're diversifying beyond advertising, how does that change your broader resource allocation at the company? How do you expect AI to impact headcount and expenses? Sure. We've guided flat headcount for 2026 with Hatch being a bit of an exception. We're certainly going to add folks there. Just in general, I think we see the opportunity to really drive productivity with AI, and over the next several years, we see significant opportunity. I think we're all learning how to apply this technology, and it's not just simply add technology and magic happens, although it is very impressive in its capabilities. You have to work differently. People have to think about the roles a bit differently, and people have to adapt to the way that the tools are most effective in helping them to do the work. That's still a bit of a journey. Clearly, when you see the capabilities that come with it, the intelligence that's associated with it, the ability to reach throughout an organization for data through various MCP servers in the enterprise that bring back information, that's really interesting. In addition, applying AI, I think we all are very familiar with the product and engineering use cases, but in clearly call centers, inbound calls, customer success, there's clear opportunity for call deflection and in some regards, in moments, even better customer service with AI. What is certainly clear on the sales side is the opportunity for coaching. That's really emerged as a capability. We've built that ourselves, but I think you're hearing that from other companies. This idea that the AI can listen and provide in real time or right after a call, suggestions to a sales rep on how to improve the conversations that they're having, we're having real success with that. Equally interesting is giving the manager tips on how the reps are engaging in conversations so that they can be more effective as managers, and that's rapidly emerging as a way to enhance productivity, so we're excited about that as well. Just building on that, like as we think of EBITDA margins, you've been working through this stock-based comp transition for a couple of years. I think it's fair to say, you know, 2026 is a bit of an investment year for some of the initiatives we've talked about. Also thought it was notable, you did say at earnings a few weeks ago that you expect strong growth in EBITDA margins over the next several years. Yeah. Maybe help us with, you know, where do you expect the cost efficiencies and leverage to come from? Maybe you just kind of answered that with that last question. How does the margin profile of your newer revenue streams compare to the ads business? Certainly. Again, it's gonna take a little bit of time, but if you just think across, and I think there's two camps or two sides to this. There's productivity, and there's efficiency, we definitely are lined up on the productivity side. We wanna grow revenue, we wanna deliver great consumer experiences, we wanna deliver value to our customers, whether they're buying a Hatch product or they're advertising on Yelp. The way we think about it is faster time to market, more output, and really adaptability. When you get feedback from customers, this is what we need. This is what isn't working. I'm willing to buy this if you had it, that cycle time is compressing very rapidly. Again, this is certainly not unique to Yelp, but I'll give you a quick example. We came out with a voice AI product for restaurants, which we call Yelp Host, that picks up the phone, can make a reservation, it can answer questions about hours, location, and things like that. We realized that there's a much larger TAM if we could add food ordering to that. From the time that we realized, "Hey, food ordering is a real opportunity," to where we are now, which is in testing with this product, live with the restaurants, that is couple of months. That was just not possible in the past. By the way, food ordering, super complicated product. If you think about it, someone's gonna call up, they're gonna have additions, changes. They've got specific requirements. They need to send notes to the kitchen about what's being ordered. To be able to handle all those edge cases accurately because the person's going to show up, they're going to see what they ordered, they will have paid for it, and they take it home, and maybe they don't notice the possibility for being disappointed or frustrated is very high. Accuracy really matters. As we were just talking about, LLMs are error-prone. You got to have a lot of know-how and actually a lot of training data to fine-tune the models to be able to do that. Cycle time enables faster time to market, obviously, and ideally more revenue. I talked a little bit about the efficiency of our sales folks. What is still pretty emergent, for me at least, is in the finance and people operations area. I think it's much earlier in terms of the efficiencies that can be achieved there. Things like collections should offer an opportunity, even the way that you handle bad debt should evolve. When you stack that up across product engineering and product managers now prototyping features before they ask engineering to build them, closer partnership and integration between engineering and product, that's a whole opportunity. Sales and marketing becoming more efficient, customer success being more efficient, finance, people, operations. I mean, it's literally the entire enterprise is gonna get more efficient. That's why we said that we believe that there's a very good path to margin expansion over the next several years, even though we have chosen here in 2026 to invest in the business. I want to hit on capital allocation, and then we'll talk about the core ad business after that. Just on capital allocation and strategy, you did a pretty sizable buyback in the most recent quarter. I think you took on debt for the first time. Maybe just talk about how you're thinking about capital allocation going forward. We did deploy a considerable amount of capital in the first quarter. Hatch was a $270 million purchase. We do have $30 million in retention set aside that will pay out over the next two-three years. We had $270 million there. We also did choose to repurchase $125 million in stock in the first quarter, which was considerably more than we've purchased in the past. We did see that diluted shares outstanding from the first quarter of 2025 to the first quarter of 2026 went down 12%, which we think is a significant number. At the same time, you can expect a much more moderate pace of share repurchases through the remainder of 2026 compared to the first quarter, because we did really, obviously buy a significant amount of stock in the first quarter at $125 million. Of course, over time, what we do wanna do is to be able to look at M&A opportunities. We have heard from investors that they'd like to hear more about the capital allocation policy, and we're gonna share a bit more about that on our Q2 call. Okay. Perfect. Shifting to the ads business, still over 90% of your revenue today. Just talk about the state of the RR&O and services segments and the trends that you're seeing across both of those. Yeah. RR&O has continued to be challenged. I think we all saw the both the CPI and the PPI prints of the past week, consumer sentiment is challenged. We see the 10-year at 4.60%, you know, that's also another headwind, plus just a degree of uncertainty about the direction of the economy and price at the pump being something that's very top of mind for folks. When you look at people making those decisions about eating out, where it's more expensive to eat out, and they're concerned about having to spend money on other things to transportation or whatnot, we've definitely seen a continued headwind. Historically, for us, our services business was a very consistent double-digit grower, what we saw as we came into 2025 is that there was a pretty rapid reaction, faster reaction than historically among smaller business owners to tariffs. That impacted 2025. We came into 2026, then the conflict in the Middle East has also created uncertainty for business owners. In California, at least, you have diesel at about $8, you have gas at $6.50, that's top of mind for folks. The dynamics are playing out in that physical local economy. The overall GDP headline number is still obviously quite robust, especially with the CapEx going on in AI, when you look under the hood in that physical local economy, it has become quite challenged. Our goal is to continue to deliver value, whether it's on the restaurant, retail, and other side or the services side, and that way we are participating as things improve. It's also driven this focus on revenue diversification so that we're not as exposed to the cycle as we have been. As someone who just moved to the Bay Area, the gas prices are eye-popping relative to where I was. All right, macro. We got an electric vehicle, though. Macro. Like you said, it's been a headwind to RR&O for a while. I think two follow-ups on that. You know, one, what needs to happen for trends to improve? Like, what are the leading indicators that we should look for? You know, secondly, one question we get on macro is the headwind more due to consumer spending less, advertisers lowering their budgets or perhaps both? I would say very loosely consumer sentiment broadly is an indicator of willingness to spend. I think that's certainly a component. Inflation does need to moderate as if inflation expectations are high, that has an impact on decision-making. It's very hard for businesses not to pass along cost now. They've been squeezed. When a small business, it can't pass along cost, which has been the case, and they're seeing higher input cost, whether it's ingredients, materials, and labor, then the room to advertise is compressed. That's certainly been an indicator. At that very top level, I think small business sentiment, important, consumer sentiment, important, inflation, important, I think those are probably broadly indicative of how you could expect many businesses to perform. I'm not sure that's particularly unique to Yelp per se, but those are the actual factors that we think are going to indicate whether or not our business performance can improve. All that being said, we're not pleased with this performance. It's not as if we're sitting on our hands waiting for those things to improve. We wanna continue to improve the product. We came out with, as I mentioned, our Yelp Assistant, which works across all categories. We think there's a opportunity to increase our monetization there as we engage folks in a conversation. That's one thing that we're certainly doing. Clearly, for advertisers, you wanna continue to improve the value that you're delivering. It's not cost per click they care about, it's cost per lead. What are all the things that we can do? In that conversational interface, we actually get more information than we do when someone just types in, "Hey, plumber." Can we match more accurately and deliver a higher quality lead that converts better that therefore has a lower cost per lead for those advertisers? That's absolutely something that we're continuing to work on. We're not sitting on our hands, we're not satisfied at all with the revenue performance, and we're certainly continuing to take action to improve that. All right, one more on macro, then we'll move on. At earnings a few weeks ago, you did say the elevated uncertainty weighed on ad spend in March. I think trends maybe started to improve in April. Could you expand a bit on what you're seeing and what you're assuming in your outlook? Sure. One of the dynamics that played out in 2025 and repeated in 2026 is, with the tariffs in 2025 April. Let me back up. Normally, we see this seasonal ramp in advertising spend as you go into the spring and summer. Makes sense. We're doing repairs on your house, you're traveling more, you're going out more, weather's better. That seasonal ramp was interrupted last year in April, really around tariffs, and that seasonal ramp was interrupted this year in March. You got a flattish shape for ad spend trajectory in both April of last year and March of this year. We did see a bounce back in April of this year after that flattish performance in March. You're starting off with now a somewhat lower base compared to what the expected trajectory would've been. We need to reflect that in the guidance that we've provided for the year. We need to see how things play out. That's the shape of the revenue as we see it for 2026. A couple on services, and you've hit on this a little bit, but I think, you know, I think you mentioned strong double-digit growth historically in recent years for that business. Trends have started to moderate. What's been the driver of the slowdown? Maybe more importantly, how do you think about the growth trajectory from here for that business? Sure. Service is now more than 70% of revenue at Yelp. We definitely have pursued that. For those who have followed Yelp for a period of time, really differentiated the experience on Yelp between restaurant, retail, and other, and services, and that really served us well. We're now in a new era, which is this conversational era, and we continue to see an opportunity to really drive that engagement on the consumer side and deliver value to them, and with that additional information, be able to match those consumers with the exact right service provider. We're also in a new, emerging into a new era around services. It is still a little bit puzzling to us why services decelerated the way it did after such consistent double-digit growth, which we actually saw through the first quarter of last year. That part's a little outside our control. The thing that is very important, obviously, to service pros is, "Hey, I got that lead." It's a little bit of what motivated us to make this Hatch acquisition because if you can use an AI to answer every message that you get or click that you get or call that you get and really improve the conversion, that's a great opportunity to provide value to them, but also means that they're getting the return they expect, and they're willing to spend more on advertising. The strategy is actually very integrated across both the AI tools that we're building, what we learn from doing that, applying some of the capabilities that we've built at Yelp around voice, for instance, and serving our advertising customers more effectively. It's not that the focus on this revenue diversification is something entirely separated. It's actually very integrated as a coherent strategy across all the customers that we're serving. Home services historically, I think still your largest category within services, what type of trends are you seeing within home services in particular? You know, where are the growth opportunities within the services categories that you're seeing? Certainly. on the home services front, I think you've heard some of the larger retailers mention that people have traded down from a remodel, say, to a repair. Some people have traded down from a repair to a do-it-yourself because of the pressure they're experiencing. The ticket size has decreased, and instead of maybe replacing the roof, you patch the roof, and maybe instead of doing a new kitchen, you replace some appliances. That is gonna play out for a period of time yet. Again, as I've already talked about, we're gonna do a lot to certainly focus on the things that are within our control, but that does need to be addressed. I do think that there just needs to be more certainty around the economic outlook for folks. I think we need an environment where people are able to just really focus on delivering against the opportunities in front of them, as opposed, I'm saying for small businesses, as opposed to wondering what might be the case in a month or two. How do I manage my cost? How do I manage my labor? All of these things, if you think about a small business owner, they're doing everything, and there's only so much time in the day, and there's only so much they can concentrate on. Most importantly, they need to win business, deliver it, bill for it, have a happy customer, and move on to the next job. The more distractions there are, the harder it is for that business. A couple questions on product, and then if anyone here has a question, feel free to submit it online or raise your hand, and we'll get to you. You talked about Yelp Assistant. That's now rolled out across all categories. You know, maybe talk about what that is for those less familiar? What are the early signals you're seeing around consumer adoption? Sure. Yelp Assistant is our chat experience on Yelp. It was previously only for services. Now it's for all categories. I'd encourage all of you to try it. Download the Yelp app. There's a icon for it, a tab, and there are things about it that I really, really like. One is it's very engaging. It has a lot of personality and it's very much Yelp. You'll find that the experience is very much what you'd expect from the Yelp brand, and it's insightful. It's taking what you share, and it's really tailoring its commentary to what you're interested in. Even more importantly, it's then surfacing the snippets from reviews that show why it's saying that to you. The evidence is right there in front of you, and I think this is where everybody's gonna have to go because the LLMs have a high degree of error is, it's not just that I got a response that seems credible, reasonable, accurate, it's that I can convince you that I have the evidence to support the reason why I'm making this recommendation for you. Because we have this incredibly high quality content, we're able to surface that evidence, and we can do it in a way that's very compact. You can scroll through and do a little bit more and research more, or you can just see what's the next opportunity and why is it engaging for me. Plus, of course, there's photos. This surface also presents a lot of opportunity to add additional local information. If you think about things that might influence a decision, what's the weather gonna be? Is there an event nearby? Is there a park? Is there something to do with kids afterwards, or is there outdoor seating that's dog-friendly? Suddenly, you can include a lot more information in this experience that isn't so easy when it's just a list of search results. Finally, because it's conversational, you can ask the follow-up question. "Hey, I saw you went out to have Italian food. How was that?" Or, "Hey, you needed a plumber. Did you hire that plumber? Did you get the leak fixed?" Suddenly, just as we've all experienced with other chatbots, they ask the follow-up question, and they're more helpful. They are more engaging, and it's a more useful experience for you. We're doing all of that within that, and we're pretty pleased with it. The early results, they're very, very early, are that people are like it. The early NPS is very encouraging. It's more engaging and people are clicking more. That means that there's an opportunity also within that to increase monetization without the perception of increased ad load. Another product I wanted to ask about, at earnings, you mentioned Yelp Host. I think you said 1.5 million calls on a run rate basis. You know, how should we think about the TAM and just the monetization opportunity that you're going after with Host? Yeah, we definitely think this opportunity is well over $1 billion. Just to give you a sense, we now have 16 languages supported in the product. We have four voices that you can choose from in English, but six regional accents that you can also choose from. Some of those accents are, for instance, French. It might be a French accent. What's super interesting is the person calls up, they realize that the AI has a French accent. Can the AI speak French? Then they start speaking in French, and sure enough, it speaks French. It's a delightful experience, and it's able to answer the questions accurately. The other thing that's been really fascinating in building this product that I certainly have found extremely interesting is in that first half a second, you have to convince the person that they should engage with the AI voice and not just ask to transfer. What we saw in some of the previous iterations was people would give a monosyllabic response, "Transfer." They, like, instantly knew, "This is a bot. I don't want to talk to bot. Transfer me." We made a few small changes. First of all, we have a very human-sounding voice. It has intonation, it has emotional quality to it has cadence. A few changes, suddenly people started speaking in sentences to it. The moment people move from a monosyllabic response, "Yes, no transfer," to a sentence, they use it, and it's useful to them. When they come back, they know that they can just talk with it. That's a pretty incredible moment. To build that takes a lot of skill. There's a lot of know-how. It's not just stitching together different services. You've got to have the training, the fine-tuning for the models based on the corpus. You have to have good engineering, of course. Most important, because we now have this 1.5 million run rate for calls, lots and lots of reps. You have the opportunity to experiment, refine, change, see what works, see what doesn't work. I just see us being able to accelerate the quality of this product over time. Because we're accelerating the quality of this product over time, it's self-reinforcing. We talked about Assistant, Host. You released 35 new features earlier this year. Anything else on the product side you think is important to highlight? We do have a really cool feature that we released, called Yelp Menu Vision. Which is really cool. It's a augmented reality experience where you just point the phone at the menu, and it will show you the dishes and the ratings. That is really cool and very helpful 'cause I don't always know what the dish is, and I'd like to see what it looks like, and I wanna see what people said about it. That's been actually a lot of fun, and people are finding that useful. Interesting. Let's try it out. Okay, two more questions, and I think we'll be out of time. I think one of the common questions we get from investors is around competition, around, you know, consumer traffic in general to Yelp. You know, I know you disclose traffic metrics annually, which you did at Q4 earnings, but what can you tell us at a high level around traffic trends that you're seeing and what type of impact you're seeing from changes in the search market? There's a lot of dynamics going on around internet traffic right now. One thing that we haven't seen is any meaningful impact from AI Overviews. We get that question pretty regularly. Our hypothesis is that these are highly monetizing categories that we serve, and Google wants highly monetizing categories to monetize. That hasn't been something that we've seen, though I believe other content players have seen impact there. In addition, Google seems to also really be prioritizing human-generated content. We're not alone in that, and some of the other platforms have certainly seen real benefit. We've seen benefit from our human-generated content as being a benefit. Broadly, of course, is just this emerging experience that we're all having chatting with the different chatbots, whether it's an OpenAI, it's a Grok, now Claude, which now seems to be a consumer app and not just an enterprise app. I think we're all seeing how that traffic plays out. Because we have this high authority content, we do see that people want to engage with Yelp content. They want to see the Yelp logo next to ratings to know whether the rating is credible. We believe the way that this plays out is as you want more information, you're gonna click through and come to Yelp, and we like the exposure that we get from that. Traffic is certainly evolving, and we continue to believe that we're really well-positioned because of the high-quality content authority and brand that we have. I have a closing question. Anyone in the audience have a question before I do? All right, perfect. Easy. Okay, just ending on a bigger picture question, you know, what are the one to two things you're most excited about but investors are not talking about today and you think could really be transformative for the business in the years ahead? I think we really have covered the topics. I think the part that I'd go back to is this transition to conversation. We've talked about it. We're all experiencing it. I think it's gonna be very transformative in the way that we engage with content. What I don't think is gonna change there, and I, you know, we do have this back and forth, and it's certainly gonna emerge, but I think in the United States, what we're gonna see is specialty verticals where you specialize in a particular type of content, like Yelp, is going to continue to be very differentiated and enjoy a strong competitive position. I think there's just this open question that everybody is still wrestling with, and it's certainly gonna emerge, but do you have terminal value? Is this a sustainable business? Are you gonna be around in the years to come? At least from the way that we think about it and all the research that we do with consumers and what we see through the direct interaction with the app is that people do want that differentiated, vertically specific experience in conversation. Again, this idea that you can add even more information and relevance as part of that and that we can do that as Yelp, that to me is very exciting because it becomes a more comprehensive answer to questions around local for consumers that we haven't answered in the past, but we believe we can answer in the future. There's a really cool roadmap of things to come around Yelp Assistant in particular, even as we start to build out these AI tools, even as we're present across other platforms, and continue, we hope, to deliver value to both consumers and to businesses. Awesome. We'll leave it there. Thank you. Thanks so much.

Speaker 1: All right. Good afternoon, everyone. Cory Carpenter, internet analyst at J.P. Morgan. Thanks, Yelp for joining us at the conference again. I'm gonna kick it over for the safe harbor. All right. all right Good afternoon, everyone. good afternoon everyone Cory Carpenter, internet analyst at J.P. cory carpenter internet analyst at j.p Morgan. morgan Thanks, Yelp for joining us at the conference again. thanks yelp for joining us at the conference again I'm gonna kick it over for the safe harbor. i'm gonna kick it over for the safe harbor

Speaker 2: Thanks much, Cory, for having us at the conference. We'll be making some forward-looking statements during the conversation today that are subject to risks and uncertainties. Please refer to our SEC filings for more information on the risk factors that may affect our results. Thanks much, Cory, for having us at the conference. thanks much cory for having us at the conference We'll be making some forward-looking statements during the conversation today that are subject to risks and uncertainties. we'll be making some forward-looking statements during the conversation today that are subject to risks and uncertainties Please refer to our SEC filings for more information on the risk factors that may affect our results. please refer to our sec filings for more information on the risk factors that may affect our results

Speaker 1: All right, I got a ton of questions. If anyone on the line has one, I think you can submit it electronically. I have that in front of me or in the room, feel free to raise your hand. Let's start with just the big theme, at least from our perspective in recent quarters. You've talked about re-architecting the company around AI. Maybe to start, could you talk about the changes you're making and just what your vision for this evolution is? All right, I got a ton of questions. all right i got a ton of questions If anyone on the line has one, I think you can submit it electronically. if anyone on the line has one i think you can submit it electronically I have that in front of me or in the room, feel free to raise your hand. i have that in front of me or in the room feel free to raise your hand Let's start with just the big theme, at least from our perspective in recent quarters. let's start with just the big theme at least from our perspective in recent quarters You've talked about re-architecting the company around AI. you've talked about re-architecting the company around ai Maybe to start, could you talk about the changes you're making and just what your vision for this evolution is? maybe to start could you talk about the changes you're making and just what your vision for this evolution is

Speaker 2: We are absolutely reconceiving the entire Yelp experience around AI, but we're also transforming how we work. On the product side, we've invested heavily to build out what we call Yelp Assistant. That's a new experience. It's a conversational experience. We think it's really engaging. One of the things that's clear about LLMs is people want the evidence. Why did the LLM tell me what it did? Oftentimes they seem to turn up results that are incorrect in some way. It's erroneous or hallucinated or just inaccurate. That was a big theme for us, is how do we communicate, given the quality of our content, that this result is relevant to you? That's on the product. We are absolutely reconceiving the entire Yelp experience around AI, but we're also transforming how we work. we are absolutely reconceiving the entire yelp experience around ai but we're also transforming how we work On the product side, we've invested heavily to build out what we call Yelp Assistant. on the product side we've invested heavily to build out what we call yelp assistant That's a new experience. that's a new experience It's a conversational experience. it's a conversational experience We think it's really engaging. we think it's really engaging One of the things that's clear about LLMs is people want the evidence. one of the things that's clear about llms is people want the evidence Why did the LLM tell me what it did? why did the llm tell me what it did Oftentimes they seem to turn up results that are incorrect in some way. oftentimes they seem to turn up results that are incorrect in some way It's erroneous or hallucinated or just inaccurate. it's erroneous or hallucinated or just inaccurate That was a big theme for us, is how do we communicate, given the quality of our content, that this result is relevant to you? that was a big theme for us is how do we communicate given the quality of our content that this result is relevant to you That's on the product. that's on the product We did make an acquisition, Hatch. We'll talk more about that. We've built Yelp Host that we think is best in class. There's a lot of interesting things there. Just I think we all recognize that there's this moment that came in December with that version of Claude that really unlocked an incredible amount of potential productivity. We've embraced that as well, both on the product and engineering side, but also looking at the way that we can apply all of this to customer success, sales, and certainly including the finance and people operations parts of the business. We did make an acquisition, Hatch. we did make an acquisition hatch We'll talk more about that. we'll talk more about that We've built Yelp Host that we think is best in class. we've built yelp host that we think is best in class There's a lot of interesting things there. there's a lot of interesting things there Just I think we all recognize that there's this moment that came in December with that version of Claude that really unlocked an incredible amount of potential productivity. just i think we all recognize that there's this moment that came in december with that version of claude that really unlocked an incredible amount of potential productivity We've embraced that as well, both on the product and engineering side, but also looking at the way that we can apply all of this to customer success, sales, and certainly including the finance and people operations parts of the business. we've embraced that as well both on the product and engineering side but also looking at the way that we can apply all of this to customer success sales and certainly including the finance and people operations parts of the business

Speaker 1: I know I mentioned earlier we're gonna flip it. We usually talk about the advertising business first. This year, I actually wanted to start on, you know, some of the diversification initiatives that you've made. I think first question there is just you've got a few new revenue streams you're building. Maybe talk about the broader strategy behind that, in what you're doing there. I know I mentioned earlier we're gonna flip it. i know i mentioned earlier we're gonna flip it We usually talk about the advertising business first. we usually talk about the advertising business first This year, I actually wanted to start on, you know, some of the diversification initiatives that you've made. this year i actually wanted to start on you know some of the diversification initiatives that you've made I think first question there is just you've got a few new revenue streams you're building. i think first question there is just you've got a few new revenue streams you're building Maybe talk about the broader strategy behind that, in what you're doing there. maybe talk about the broader strategy behind that in what you're doing there

Speaker 2: Yeah. For us, just for context, Yelp obviously is traditionally very much a advertising business. We have three components to what we call other revenue. One is licensing, one is transactions, and one is subscriptions. For other revenue, we have a partnership with DoorDash that actually grew 88% in the first quarter, so we're pleased with that. On the licensing front, something that we've talked about for quite some time is how Yelp appears on other sites and other experiences. One thing that certainly emerges, there's more players in AI search, and particularly in that vertical which we serve, AI local search. We've been entering into licensing arrangements with other platforms. Yeah. yeah For us, just for context, Yelp obviously is traditionally very much a advertising business. for us just for context yelp obviously is traditionally very much a advertising business We have three components to what we call other revenue. we have three components to what we call other revenue One is licensing, one is transactions, and one is subscriptions. one is licensing one is transactions and one is subscriptions For other revenue, we have a partnership with DoorDash that actually grew 88% in the first quarter, so we're pleased with that. for other revenue we have a partnership with doordash that actually grew 88% in the first quarter so we're pleased with that On the licensing front, something that we've talked about for quite some time is how Yelp appears on other sites and other experiences. on the licensing front something that we've talked about for quite some time is how yelp appears on other sites and other experiences One thing that certainly emerges, there's more players in AI search, and particularly in that vertical which we serve, AI local search. one thing that certainly emerges there's more players in ai search and particularly in that vertical which we serve ai local search We've been entering into licensing arrangements with other platforms. we've been entering into licensing arrangements with other platforms Most notably and most recently, we signed an agreement with OpenAI. You can now find licensed Yelp content on Meta.ai, in Bing, on Microsoft, Amazon Alexa, and for a long time we've been in Apple Maps, on Yahoo and many other platforms. Just this idea of the ubiquity of Yelp content across the internet on major platforms has been something that we've been very focused on, and we've been able to enter into additional licensing agreements. In addition, we've certainly enjoyed getting traffic back from those sites. That's definitely been part of the strategy and our point of view is simply that given the Yelp content and the directory that we have, if you wanna be in local search, you really do need to partner with us. That's gone extremely well. Most notably and most recently, we signed an agreement with OpenAI. most notably and most recently we signed an agreement with openai You can now find licensed Yelp content on Meta.ai, in Bing, on Microsoft, Amazon Alexa, and for a long time we've been in Apple Maps, on Yahoo and many other platforms. you can now find licensed yelp content on meta.ai in bing on microsoft amazon alexa and for a long time we've been in apple maps on yahoo and many other platforms Just this idea of the ubiquity of Yelp content across the internet on major platforms has been something that we've been very focused on, and we've been able to enter into additional licensing agreements. just this idea of the ubiquity of yelp content across the internet on major platforms has been something that we've been very focused on and we've been able to enter into additional licensing agreements In addition, we've certainly enjoyed getting traffic back from those sites. in addition we've certainly enjoyed getting traffic back from those sites That's definitely been part of the strategy and our point of view is simply that given the Yelp content and the directory that we have, if you wanna be in local search, you really do need to partner with us. that's definitely been part of the strategy and our point of view is simply that given the yelp content and the directory that we have if you wanna be in local search you really do need to partner with us That's gone extremely well. that's gone extremely well Most recently, we did make this acquisition of Hatch. Hatch is a AI lead conversion management product. It works across all platforms. It's not unique to Yelp. It works on Angi and Google, Thumbtack, and others as well, of course, as Yelp. We're really pleased with that. March annual run rate was at $34 million. Revenue run rate was at $34 million, growing at 92%. We did acquire the business at the beginning of February. We're still going through that integration process. Things are going well. We are investing. We're bringing people over. We're bringing know-how over. They now have a voice product. We've helped to inform that part of the product roadmap. There's obviously our at-scale lead management side of the business. Most recently, we did make this acquisition of Hatch. most recently we did make this acquisition of hatch Hatch is a AI lead conversion management product. hatch is a ai lead conversion management product It works across all platforms. it works across all platforms It's not unique to Yelp. it's not unique to yelp It works on Angi and Google, Thumbtack, and others as well, of course, as Yelp. it works on angi and google thumbtack and others as well of course as yelp We're really pleased with that. we're really pleased with that March annual run rate was at $34 million. march annual run rate was at $34 million Revenue run rate was at $34 million, growing at 92%. revenue run rate was at $34 million growing at 92% We did acquire the business at the beginning of February. we did acquire the business at the beginning of february We're still going through that integration process. we're still going through that integration process Things are going well. things are going well We are investing. we are investing We're bringing people over. we're bringing people over We're bringing know-how over. we're bringing know-how over They now have a voice product. they now have a voice product We've helped to inform that part of the product roadmap. we've helped to inform that part of the product roadmap There's obviously our at-scale lead management side of the business. there's obviously our at-scale lead management side of the business That is all in service to the target that we've now provided, which is $250 million in run rate revenue and other revenue by the end of 2028. We've wanted to diversify the revenue streams because we have been exposed to the cycle, and that's been certainly more challenging in 2025 and that continued into 2026. That is all in service to the target that we've now provided, which is $250 million in run rate revenue and other revenue by the end of 2028. that is all in service to the target that we've now provided which is $250 million in run rate revenue and other revenue by the end of 2028 We've wanted to diversify the revenue streams because we have been exposed to the cycle, and that's been certainly more challenging in 2025 and that continued into 2026. we've wanted to diversify the revenue streams because we have been exposed to the cycle and that's been certainly more challenging in 2025 and that continued into 2026

Speaker 1: I want to ask about that run rate. You did give the by the end of 2028, $250 million or north or at least $250 million. Right now you're, I think, a little over $115 million, so, you know, more than doubling. Just help us with the building blocks, you know, how to get to where you are today to where you're going in 2028, and then also what type of investments you need to make to support that growth. I want to ask about that run rate. i want to ask about that run rate You did give the by the end of 2028, $250 million or north or at least $250 million. you did give the by the end of 2028 $250 million or north or at least $250 million Right now you're, I think, a little over $115 million, so, you know, more than doubling. right now you're i think a little over $115 million so you know more than doubling Just help us with the building blocks, you know, how to get to where you are today to where you're going in 2028, and then also what type of investments you need to make to support that growth. just help us with the building blocks you know how to get to where you are today to where you're going in 2028 and then also what type of investments you need to make to support that growth

Speaker 2: Absolutely. As I mentioned, we're all in on AI, and this AI tool opportunity is extensive. Certainly, we first want to operate Hatch and do that really effectively. We think there's additional product opportunities for the customers they serve. I think this is very much a traditional opportunity to provide software solutions to businesses to make them more efficient or improve their return on their own investments. We see significant opportunity there. We will continue to look for M&A opportunities. We don't have anything to announce today, but we're active. At the same time, certainly we need to show that we can operate the asset successfully, effectively, continue to grow that asset, and bring more product to market there. That's part of the consideration that goes into doing the next transaction. Absolutely. absolutely As I mentioned, we're all in on AI, and this AI tool opportunity is extensive. as i mentioned we're all in on ai and this ai tool opportunity is extensive Certainly, we first want to operate Hatch and do that really effectively. certainly we first want to operate hatch and do that really effectively We think there's additional product opportunities for the customers they serve. we think there's additional product opportunities for the customers they serve I think this is very much a traditional opportunity to provide software solutions to businesses to make them more efficient or improve their return on their own investments. i think this is very much a traditional opportunity to provide software solutions to businesses to make them more efficient or improve their return on their own investments We see significant opportunity there. we see significant opportunity there We will continue to look for M&A opportunities. we will continue to look for m&a opportunities We don't have anything to announce today, but we're active. we don't have anything to announce today but we're active At the same time, certainly we need to show that we can operate the asset successfully, effectively, continue to grow that asset, and bring more product to market there. at the same time certainly we need to show that we can operate the asset successfully effectively continue to grow that asset and bring more product to market there That's part of the consideration that goes into doing the next transaction. that's part of the consideration that goes into doing the next transaction Beyond that, the licensing still presents significant opportunity for us, and we think that there's lots of ways for us to deliver value to consumers even when they're not on Yelp. Those are really the core components of what give us confidence in our ability to grow other revenue. Beyond that, the licensing still presents significant opportunity for us, and we think that there's lots of ways for us to deliver value to consumers even when they're not on Yelp. beyond that the licensing still presents significant opportunity for us and we think that there's lots of ways for us to deliver value to consumers even when they're not on yelp Those are really the core components of what give us confidence in our ability to grow other revenue. those are really the core components of what give us confidence in our ability to grow other revenue

Speaker 1: One more, we'll go to advertising and capital allocation. Just as you're diversifying beyond advertising, how does that change your broader resource allocation at the company? How do you expect AI to impact headcount and expenses? One more, we'll go to advertising and capital allocation. one more we'll go to advertising and capital allocation Just as you're diversifying beyond advertising, how does that change your broader resource allocation at the company? just as you're diversifying beyond advertising how does that change your broader resource allocation at the company How do you expect AI to impact headcount and expenses? how do you expect ai to impact headcount and expenses

Speaker 2: Sure. We've guided flat headcount for 2026 with Hatch being a bit of an exception. We're certainly going to add folks there. Just in general, I think we see the opportunity to really drive productivity with AI, and over the next several years, we see significant opportunity. I think we're all learning how to apply this technology, and it's not just simply add technology and magic happens, although it is very impressive in its capabilities. You have to work differently. People have to think about the roles a bit differently, and people have to adapt to the way that the tools are most effective in helping them to do the work. Sure. sure We've guided flat headcount for 2026 with Hatch being a bit of an exception. we've guided flat headcount for 2026 with hatch being a bit of an exception We're certainly going to add folks there. we're certainly going to add folks there Just in general, I think we see the opportunity to really drive productivity with AI, and over the next several years, we see significant opportunity. just in general i think we see the opportunity to really drive productivity with ai and over the next several years we see significant opportunity I think we're all learning how to apply this technology, and it's not just simply add technology and magic happens, although it is very impressive in its capabilities. i think we're all learning how to apply this technology and it's not just simply add technology and magic happens although it is very impressive in its capabilities You have to work differently. you have to work differently People have to think about the roles a bit differently, and people have to adapt to the way that the tools are most effective in helping them to do the work. people have to think about the roles a bit differently and people have to adapt to the way that the tools are most effective in helping them to do the work That's still a bit of a journey. Clearly, when you see the capabilities that come with it, the intelligence that's associated with it, the ability to reach throughout an organization for data through various MCP servers in the enterprise that bring back information, that's really interesting. In addition, applying AI, I think we all are very familiar with the product and engineering use cases, but in clearly call centers, inbound calls, customer success, there's clear opportunity for call deflection and in some regards, in moments, even better customer service with AI. What is certainly clear on the sales side is the opportunity for coaching. That's really emerged as a capability. We've built that ourselves, but I think you're hearing that from other companies. That's still a bit of a journey. that's still a bit of a journey Clearly, when you see the capabilities that come with it, the intelligence that's associated with it, the ability to reach throughout an organization for data through various MCP servers in the enterprise that bring back information, that's really interesting. clearly when you see the capabilities that come with it the intelligence that's associated with it the ability to reach throughout an organization for data through various mcp servers in the enterprise that bring back information that's really interesting In addition, applying AI, I think we all are very familiar with the product and engineering use cases, but in clearly call centers, inbound calls, customer success, there's clear opportunity for call deflection and in some regards, in moments, even better customer service with AI. in addition applying ai i think we all are very familiar with the product and engineering use cases but in clearly call centers inbound calls customer success there's clear opportunity for call deflection and in some regards in moments even better customer service with ai What is certainly clear on the sales side is the opportunity for coaching. what is certainly clear on the sales side is the opportunity for coaching That's really emerged as a capability. that's really emerged as a capability We've built that ourselves, but I think you're hearing that from other companies. we've built that ourselves but i think you're hearing that from other companies This idea that the AI can listen and provide in real time or right after a call, suggestions to a sales rep on how to improve the conversations that they're having, we're having real success with that. Equally interesting is giving the manager tips on how the reps are engaging in conversations so that they can be more effective as managers, and that's rapidly emerging as a way to enhance productivity, so we're excited about that as well. This idea that the AI can listen and provide in real time or right after a call, suggestions to a sales rep on how to improve the conversations that they're having, we're having real success with that. this idea that the ai can listen and provide in real time or right after a call suggestions to a sales rep on how to improve the conversations that they're having we're having real success with that Equally interesting is giving the manager tips on how the reps are engaging in conversations so that they can be more effective as managers, and that's rapidly emerging as a way to enhance productivity, so we're excited about that as well. equally interesting is giving the manager tips on how the reps are engaging in conversations so that they can be more effective as managers and that's rapidly emerging as a way to enhance productivity so we're excited about that as well

Speaker 1: Just building on that, like as we think of EBITDA margins, you've been working through this stock-based comp transition for a couple of years. I think it's fair to say, you know, 2026 is a bit of an investment year for some of the initiatives we've talked about. Also thought it was notable, you did say at earnings a few weeks ago that you expect strong growth in EBITDA margins over the next several years. Just building on that, like as we think of EBITDA margins, you've been working through this stock-based comp transition for a couple of years. just building on that like as we think of ebitda margins you've been working through this stock-based comp transition for a couple of years I think it's fair to say, you know, 2026 is a bit of an investment year for some of the initiatives we've talked about. i think it's fair to say you know 2026 is a bit of an investment year for some of the initiatives we've talked about Also thought it was notable, you did say at earnings a few weeks ago that you expect strong growth in EBITDA margins over the next several years. also thought it was notable you did say at earnings a few weeks ago that you expect strong growth in ebitda margins over the next several years

Speaker 2: Yeah. Yeah. yeah

Speaker 1: Maybe help us with, you know, where do you expect the cost efficiencies and leverage to come from? Maybe you just kind of answered that with that last question. How does the margin profile of your newer revenue streams compare to the ads business? Maybe help us with, you know, where do you expect the cost efficiencies and leverage to come from? maybe help us with you know where do you expect the cost efficiencies and leverage to come from Maybe you just kind of answered that with that last question. maybe you just kind of answered that with that last question How does the margin profile of your newer revenue streams compare to the ads business? how does the margin profile of your newer revenue streams compare to the ads business

Speaker 2: Certainly. Again, it's gonna take a little bit of time, but if you just think across, and I think there's two camps or two sides to this. There's productivity, and there's efficiency, we definitely are lined up on the productivity side. We wanna grow revenue, we wanna deliver great consumer experiences, we wanna deliver value to our customers, whether they're buying a Hatch product or they're advertising on Yelp. The way we think about it is faster time to market, more output, and really adaptability. When you get feedback from customers, this is what we need. This is what isn't working. I'm willing to buy this if you had it, that cycle time is compressing very rapidly. Again, this is certainly not unique to Yelp, but I'll give you a quick example. Certainly. certainly Again, it's gonna take a little bit of time, but if you just think across, and I think there's two camps or two sides to this. again it's gonna take a little bit of time but if you just think across and i think there's two camps or two sides to this There's productivity, and there's efficiency, we definitely are lined up on the productivity side. there's productivity and there's efficiency we definitely are lined up on the productivity side We wanna grow revenue, we wanna deliver great consumer experiences, we wanna deliver value to our customers, whether they're buying a Hatch product or they're advertising on Yelp. we wanna grow revenue we wanna deliver great consumer experiences we wanna deliver value to our customers whether they're buying a hatch product or they're advertising on yelp The way we think about it is faster time to market, more output, and really adaptability. the way we think about it is faster time to market more output and really adaptability When you get feedback from customers, this is what we need. when you get feedback from customers this is what we need This is what isn't working. this is what isn't working I'm willing to buy this if you had it, that cycle time is compressing very rapidly. i'm willing to buy this if you had it that cycle time is compressing very rapidly Again, this is certainly not unique to Yelp, but I'll give you a quick example. again this is certainly not unique to yelp but i'll give you a quick example We came out with a voice AI product for restaurants, which we call Yelp Host, that picks up the phone, can make a reservation, it can answer questions about hours, location, and things like that. We realized that there's a much larger TAM if we could add food ordering to that. From the time that we realized, "Hey, food ordering is a real opportunity," to where we are now, which is in testing with this product, live with the restaurants, that is couple of months. That was just not possible in the past. By the way, food ordering, super complicated product. If you think about it, someone's gonna call up, they're gonna have additions, changes. They've got specific requirements. They need to send notes to the kitchen about what's being ordered. We came out with a voice AI product for restaurants, which we call Yelp Host, that picks up the phone, can make a reservation, it can answer questions about hours, location, and things like that. we came out with a voice ai product for restaurants which we call yelp host that picks up the phone can make a reservation it can answer questions about hours location and things like that We realized that there's a much larger TAM if we could add food ordering to that. we realized that there's a much larger tam if we could add food ordering to that From the time that we realized, "Hey, food ordering is a real opportunity," to where we are now, which is in testing with this product, live with the restaurants, that is couple of months. from the time that we realized "hey food ordering is a real opportunity," to where we are now which is in testing with this product live with the restaurants that is couple of months That was just not possible in the past. that was just not possible in the past By the way, food ordering, super complicated product. by the way food ordering super complicated product If you think about it, someone's gonna call up, they're gonna have additions, changes. if you think about it someone's gonna call up they're gonna have additions changes They've got specific requirements. they've got specific requirements They need to send notes to the kitchen about what's being ordered. they need to send notes to the kitchen about what's being ordered To be able to handle all those edge cases accurately because the person's going to show up, they're going to see what they ordered, they will have paid for it, and they take it home, and maybe they don't notice the possibility for being disappointed or frustrated is very high. Accuracy really matters. As we were just talking about, LLMs are error-prone. You got to have a lot of know-how and actually a lot of training data to fine-tune the models to be able to do that. Cycle time enables faster time to market, obviously, and ideally more revenue. I talked a little bit about the efficiency of our sales folks. To be able to handle all those edge cases accurately because the person's going to show up, they're going to see what they ordered, they will have paid for it, and they take it home, and maybe they don't notice the possibility for being disappointed or frustrated is very high. to be able to handle all those edge cases accurately because the person's going to show up they're going to see what they ordered they will have paid for it and they take it home and maybe they don't notice the possibility for being disappointed or frustrated is very high Accuracy really matters. accuracy really matters As we were just talking about, LLMs are error-prone. as we were just talking about llms are error-prone You got to have a lot of know-how and actually a lot of training data to fine-tune the models to be able to do that. you got to have a lot of know-how and actually a lot of training data to fine-tune the models to be able to do that Cycle time enables faster time to market, obviously, and ideally more revenue. cycle time enables faster time to market obviously and ideally more revenue I talked a little bit about the efficiency of our sales folks. i talked a little bit about the efficiency of our sales folks What is still pretty emergent, for me at least, is in the finance and people operations area. I think it's much earlier in terms of the efficiencies that can be achieved there. Things like collections should offer an opportunity, even the way that you handle bad debt should evolve. When you stack that up across product engineering and product managers now prototyping features before they ask engineering to build them, closer partnership and integration between engineering and product, that's a whole opportunity. Sales and marketing becoming more efficient, customer success being more efficient, finance, people, operations. I mean, it's literally the entire enterprise is gonna get more efficient. What is still pretty emergent, for me at least, is in the finance and people operations area. what is still pretty emergent for me at least is in the finance and people operations area I think it's much earlier in terms of the efficiencies that can be achieved there. i think it's much earlier in terms of the efficiencies that can be achieved there Things like collections should offer an opportunity, even the way that you handle bad debt should evolve. things like collections should offer an opportunity even the way that you handle bad debt should evolve When you stack that up across product engineering and product managers now prototyping features before they ask engineering to build them, closer partnership and integration between engineering and product, that's a whole opportunity. when you stack that up across product engineering and product managers now prototyping features before they ask engineering to build them closer partnership and integration between engineering and product that's a whole opportunity Sales and marketing becoming more efficient, customer success being more efficient, finance, people, operations. sales and marketing becoming more efficient customer success being more efficient finance people operations I mean, it's literally the entire enterprise is gonna get more efficient. i mean it's literally the entire enterprise is gonna get more efficient That's why we said that we believe that there's a very good path to margin expansion over the next several years, even though we have chosen here in 2026 to invest in the business. That's why we said that we believe that there's a very good path to margin expansion over the next several years, even though we have chosen here in 2026 to invest in the business. that's why we said that we believe that there's a very good path to margin expansion over the next several years even though we have chosen here in 2026 to invest in the business

Speaker 1: I want to hit on capital allocation, and then we'll talk about the core ad business after that. Just on capital allocation and strategy, you did a pretty sizable buyback in the most recent quarter. I think you took on debt for the first time. Maybe just talk about how you're thinking about capital allocation going forward. I want to hit on capital allocation, and then we'll talk about the core ad business after that. i want to hit on capital allocation and then we'll talk about the core ad business after that Just on capital allocation and strategy, you did a pretty sizable buyback in the most recent quarter. just on capital allocation and strategy you did a pretty sizable buyback in the most recent quarter I think you took on debt for the first time. i think you took on debt for the first time Maybe just talk about how you're thinking about capital allocation going forward. maybe just talk about how you're thinking about capital allocation going forward

Speaker 2: We did deploy a considerable amount of capital in the first quarter. Hatch was a $270 million purchase. We do have $30 million in retention set aside that will pay out over the next two-three years. We had $270 million there. We also did choose to repurchase $125 million in stock in the first quarter, which was considerably more than we've purchased in the past. We did see that diluted shares outstanding from the first quarter of 2025 to the first quarter of 2026 went down 12%, which we think is a significant number. We did deploy a considerable amount of capital in the first quarter. we did deploy a considerable amount of capital in the first quarter Hatch was a $270 million purchase. hatch was a $270 million purchase We do have $30 million in retention set aside that will pay out over the next two-three years. we do have $30 million in retention set aside that will pay out over the next two-three years We had $270 million there. we had $270 million there We also did choose to repurchase $125 million in stock in the first quarter, which was considerably more than we've purchased in the past. we also did choose to repurchase $125 million in stock in the first quarter which was considerably more than we've purchased in the past We did see that diluted shares outstanding from the first quarter of 2025 to the first quarter of 2026 went down 12%, which we think is a significant number. we did see that diluted shares outstanding from the first quarter of 2025 to the first quarter of 2026 went down 12% which we think is a significant number At the same time, you can expect a much more moderate pace of share repurchases through the remainder of 2026 compared to the first quarter, because we did really, obviously buy a significant amount of stock in the first quarter at $125 million. Of course, over time, what we do wanna do is to be able to look at M&A opportunities. We have heard from investors that they'd like to hear more about the capital allocation policy, and we're gonna share a bit more about that on our Q2 call. At the same time, you can expect a much more moderate pace of share repurchases through the remainder of 2026 compared to the first quarter, because we did really, obviously buy a significant amount of stock in the first quarter at $125 million. at the same time you can expect a much more moderate pace of share repurchases through the remainder of 2026 compared to the first quarter because we did really obviously buy a significant amount of stock in the first quarter at $125 million Of course, over time, what we do wanna do is to be able to look at M&A opportunities. of course over time what we do wanna do is to be able to look at m&a opportunities We have heard from investors that they'd like to hear more about the capital allocation policy, and we're gonna share a bit more about that on our Q2 call. we have heard from investors that they'd like to hear more about the capital allocation policy and we're gonna share a bit more about that on our q2 call

Speaker 1: Okay. Perfect. Shifting to the ads business, still over 90% of your revenue today. Just talk about the state of the RR&O and services segments and the trends that you're seeing across both of those. Okay. okay Perfect. perfect Shifting to the ads business, still over 90% of your revenue today. shifting to the ads business still over 90% of your revenue today Just talk about the state of the RR&O and services segments and the trends that you're seeing across both of those. just talk about the state of the rr&o and services segments and the trends that you're seeing across both of those

Speaker 2: Yeah. RR&O has continued to be challenged. I think we all saw the both the CPI and the PPI prints of the past week, consumer sentiment is challenged. We see the 10-year at 4.60%, you know, that's also another headwind, plus just a degree of uncertainty about the direction of the economy and price at the pump being something that's very top of mind for folks. When you look at people making those decisions about eating out, where it's more expensive to eat out, and they're concerned about having to spend money on other things to transportation or whatnot, we've definitely seen a continued headwind. Yeah. yeah RR&O has continued to be challenged. rr&o has continued to be challenged I think we all saw the both the CPI and the PPI prints of the past week, consumer sentiment is challenged. i think we all saw the both the cpi and the ppi prints of the past week consumer sentiment is challenged We see the 10-year at 4.60%, you know, that's also another headwind, plus just a degree of uncertainty about the direction of the economy and price at the pump being something that's very top of mind for folks. we see the 10-year at 4.60% you know that's also another headwind plus just a degree of uncertainty about the direction of the economy and price at the pump being something that's very top of mind for folks When you look at people making those decisions about eating out, where it's more expensive to eat out, and they're concerned about having to spend money on other things to transportation or whatnot, we've definitely seen a continued headwind. when you look at people making those decisions about eating out where it's more expensive to eat out and they're concerned about having to spend money on other things to transportation or whatnot we've definitely seen a continued headwind Historically, for us, our services business was a very consistent double-digit grower, what we saw as we came into 2025 is that there was a pretty rapid reaction, faster reaction than historically among smaller business owners to tariffs. That impacted 2025. We came into 2026, then the conflict in the Middle East has also created uncertainty for business owners. In California, at least, you have diesel at about $8, you have gas at $6.50, that's top of mind for folks. The dynamics are playing out in that physical local economy. The overall GDP headline number is still obviously quite robust, especially with the CapEx going on in AI, when you look under the hood in that physical local economy, it has become quite challenged. Historically, for us, our services business was a very consistent double-digit grower, what we saw as we came into 2025 is that there was a pretty rapid reaction, faster reaction than historically among smaller business owners to tariffs. historically for us our services business was a very consistent double-digit grower what we saw as we came into 2025 is that there was a pretty rapid reaction faster reaction than historically among smaller business owners to tariffs That impacted 2025. that impacted 2025 We came into 2026, then the conflict in the Middle East has also created uncertainty for business owners. we came into 2026 then the conflict in the middle east has also created uncertainty for business owners In California, at least, you have diesel at about $8, you have gas at $6.50, that's top of mind for folks. in california at least you have diesel at about $8 you have gas at $6.50 that's top of mind for folks The dynamics are playing out in that physical local economy. the dynamics are playing out in that physical local economy The overall GDP headline number is still obviously quite robust, especially with the CapEx going on in AI, when you look under the hood in that physical local economy, it has become quite challenged. the overall gdp headline number is still obviously quite robust especially with the capex going on in ai when you look under the hood in that physical local economy it has become quite challenged Our goal is to continue to deliver value, whether it's on the restaurant, retail, and other side or the services side, and that way we are participating as things improve. It's also driven this focus on revenue diversification so that we're not as exposed to the cycle as we have been. Our goal is to continue to deliver value, whether it's on the restaurant, retail, and other side or the services side, and that way we are participating as things improve. our goal is to continue to deliver value whether it's on the restaurant retail and other side or the services side and that way we are participating as things improve It's also driven this focus on revenue diversification so that we're not as exposed to the cycle as we have been. it's also driven this focus on revenue diversification so that we're not as exposed to the cycle as we have been

Speaker 1: As someone who just moved to the Bay Area, the gas prices are eye-popping relative to where I was. All right, macro. We got an electric vehicle, though. Macro. Like you said, it's been a headwind to RR&O for a while. I think two follow-ups on that. You know, one, what needs to happen for trends to improve? Like, what are the leading indicators that we should look for? You know, secondly, one question we get on macro is the headwind more due to consumer spending less, advertisers lowering their budgets or perhaps both? As someone who just moved to the Bay Area, the gas prices are eye-popping relative to where I was. as someone who just moved to the bay area the gas prices are eye-popping relative to where i was All right, macro. all right macro We got an electric vehicle, though. we got an electric vehicle though Macro. macro Like you said, it's been a headwind to RR&O for a while. like you said it's been a headwind to rr&o for a while I think two follow-ups on that. i think two follow-ups on that You know, one, what needs to happen for trends to improve? you know one what needs to happen for trends to improve Like, what are the leading indicators that we should look for? like what are the leading indicators that we should look for You know, secondly, one question we get on macro is the headwind more due to consumer spending less, advertisers lowering their budgets or perhaps both? you know secondly one question we get on macro is the headwind more due to consumer spending less advertisers lowering their budgets or perhaps both

Speaker 2: I would say very loosely consumer sentiment broadly is an indicator of willingness to spend. I think that's certainly a component. Inflation does need to moderate as if inflation expectations are high, that has an impact on decision-making. It's very hard for businesses not to pass along cost now. They've been squeezed. When a small business, it can't pass along cost, which has been the case, and they're seeing higher input cost, whether it's ingredients, materials, and labor, then the room to advertise is compressed. That's certainly been an indicator. I would say very loosely consumer sentiment broadly is an indicator of willingness to spend. i would say very loosely consumer sentiment broadly is an indicator of willingness to spend I think that's certainly a component. i think that's certainly a component Inflation does need to moderate as if inflation expectations are high, that has an impact on decision-making. inflation does need to moderate as if inflation expectations are high that has an impact on decision-making It's very hard for businesses not to pass along cost now. it's very hard for businesses not to pass along cost now They've been squeezed. they've been squeezed When a small business, it can't pass along cost, which has been the case, and they're seeing higher input cost, whether it's ingredients, materials, and labor, then the room to advertise is compressed. when a small business it can't pass along cost which has been the case and they're seeing higher input cost whether it's ingredients materials and labor then the room to advertise is compressed That's certainly been an indicator. that's certainly been an indicator At that very top level, I think small business sentiment, important, consumer sentiment, important, inflation, important, I think those are probably broadly indicative of how you could expect many businesses to perform. I'm not sure that's particularly unique to Yelp per se, but those are the actual factors that we think are going to indicate whether or not our business performance can improve. All that being said, we're not pleased with this performance. It's not as if we're sitting on our hands waiting for those things to improve. We wanna continue to improve the product. We came out with, as I mentioned, our Yelp Assistant, which works across all categories. We think there's a opportunity to increase our monetization there as we engage folks in a conversation. That's one thing that we're certainly doing. At that very top level, I think small business sentiment, important, consumer sentiment, important, inflation, important, I think those are probably broadly indicative of how you could expect many businesses to perform. at that very top level i think small business sentiment important consumer sentiment important inflation important i think those are probably broadly indicative of how you could expect many businesses to perform I'm not sure that's particularly unique to Yelp per se, but those are the actual factors that we think are going to indicate whether or not our business performance can improve. i'm not sure that's particularly unique to yelp per se but those are the actual factors that we think are going to indicate whether or not our business performance can improve All that being said, we're not pleased with this performance. all that being said we're not pleased with this performance It's not as if we're sitting on our hands waiting for those things to improve. it's not as if we're sitting on our hands waiting for those things to improve We wanna continue to improve the product. we wanna continue to improve the product We came out with, as I mentioned, our Yelp Assistant, which works across all categories. we came out with as i mentioned our yelp assistant which works across all categories We think there's a opportunity to increase our monetization there as we engage folks in a conversation. we think there's a opportunity to increase our monetization there as we engage folks in a conversation That's one thing that we're certainly doing. that's one thing that we're certainly doing Clearly, for advertisers, you wanna continue to improve the value that you're delivering. It's not cost per click they care about, it's cost per lead. What are all the things that we can do? In that conversational interface, we actually get more information than we do when someone just types in, "Hey, plumber." Can we match more accurately and deliver a higher quality lead that converts better that therefore has a lower cost per lead for those advertisers? That's absolutely something that we're continuing to work on. We're not sitting on our hands, we're not satisfied at all with the revenue performance, and we're certainly continuing to take action to improve that. Clearly, for advertisers, you wanna continue to improve the value that you're delivering. clearly for advertisers you wanna continue to improve the value that you're delivering It's not cost per click they care about, it's cost per lead. it's not cost per click they care about it's cost per lead What are all the things that we can do? what are all the things that we can do In that conversational interface, we actually get more information than we do when someone just types in, "Hey, plumber." Can we match more accurately and deliver a higher quality lead that converts better that therefore has a lower cost per lead for those advertisers? in that conversational interface we actually get more information than we do when someone just types in "hey plumber." can we match more accurately and deliver a higher quality lead that converts better that therefore has a lower cost per lead for those advertisers That's absolutely something that we're continuing to work on. that's absolutely something that we're continuing to work on We're not sitting on our hands, we're not satisfied at all with the revenue performance, and we're certainly continuing to take action to improve that. we're not sitting on our hands we're not satisfied at all with the revenue performance and we're certainly continuing to take action to improve that

Speaker 1: All right, one more on macro, then we'll move on. At earnings a few weeks ago, you did say the elevated uncertainty weighed on ad spend in March. I think trends maybe started to improve in April. Could you expand a bit on what you're seeing and what you're assuming in your outlook? All right, one more on macro, then we'll move on. all right one more on macro then we'll move on At earnings a few weeks ago, you did say the elevated uncertainty weighed on ad spend in March. at earnings a few weeks ago you did say the elevated uncertainty weighed on ad spend in march I think trends maybe started to improve in April. i think trends maybe started to improve in april Could you expand a bit on what you're seeing and what you're assuming in your outlook? could you expand a bit on what you're seeing and what you're assuming in your outlook

Speaker 2: Sure. One of the dynamics that played out in 2025 and repeated in 2026 is, with the tariffs in 2025 April. Let me back up. Normally, we see this seasonal ramp in advertising spend as you go into the spring and summer. Makes sense. We're doing repairs on your house, you're traveling more, you're going out more, weather's better. That seasonal ramp was interrupted last year in April, really around tariffs, and that seasonal ramp was interrupted this year in March. You got a flattish shape for ad spend trajectory in both April of last year and March of this year. Sure. sure One of the dynamics that played out in 2025 and repeated in 2026 is, with the tariffs in 2025 April. one of the dynamics that played out in 2025 and repeated in 2026 is with the tariffs in 2025 april Let me back up. let me back up Normally, we see this seasonal ramp in advertising spend as you go into the spring and summer. normally we see this seasonal ramp in advertising spend as you go into the spring and summer Makes sense. makes sense We're doing repairs on your house, you're traveling more, you're going out more, weather's better. we're doing repairs on your house you're traveling more you're going out more weather's better That seasonal ramp was interrupted last year in April, really around tariffs, and that seasonal ramp was interrupted this year in March. that seasonal ramp was interrupted last year in april really around tariffs and that seasonal ramp was interrupted this year in march You got a flattish shape for ad spend trajectory in both April of last year and March of this year. you got a flattish shape for ad spend trajectory in both april of last year and march of this year We did see a bounce back in April of this year after that flattish performance in March. You're starting off with now a somewhat lower base compared to what the expected trajectory would've been. We need to reflect that in the guidance that we've provided for the year. We need to see how things play out. That's the shape of the revenue as we see it for 2026. We did see a bounce back in April of this year after that flattish performance in March. we did see a bounce back in april of this year after that flattish performance in march You're starting off with now a somewhat lower base compared to what the expected trajectory would've been. you're starting off with now a somewhat lower base compared to what the expected trajectory would've been We need to reflect that in the guidance that we've provided for the year. we need to reflect that in the guidance that we've provided for the year We need to see how things play out. we need to see how things play out That's the shape of the revenue as we see it for 2026. that's the shape of the revenue as we see it for 2026

Speaker 1: A couple on services, and you've hit on this a little bit, but I think, you know, I think you mentioned strong double-digit growth historically in recent years for that business. Trends have started to moderate. What's been the driver of the slowdown? Maybe more importantly, how do you think about the growth trajectory from here for that business? A couple on services, and you've hit on this a little bit, but I think, you know, I think you mentioned strong double-digit growth historically in recent years for that business. a couple on services and you've hit on this a little bit but i think you know i think you mentioned strong double-digit growth historically in recent years for that business Trends have started to moderate. trends have started to moderate What's been the driver of the slowdown? what's been the driver of the slowdown Maybe more importantly, how do you think about the growth trajectory from here for that business? maybe more importantly how do you think about the growth trajectory from here for that business

Speaker 2: Sure. Service is now more than 70% of revenue at Yelp. We definitely have pursued that. For those who have followed Yelp for a period of time, really differentiated the experience on Yelp between restaurant, retail, and other, and services, and that really served us well. We're now in a new era, which is this conversational era, and we continue to see an opportunity to really drive that engagement on the consumer side and deliver value to them, and with that additional information, be able to match those consumers with the exact right service provider. Sure. sure Service is now more than 70% of revenue at Yelp. service is now more than 70% of revenue at yelp We definitely have pursued that. we definitely have pursued that For those who have followed Yelp for a period of time, really differentiated the experience on Yelp between restaurant, retail, and other, and services, and that really served us well. for those who have followed yelp for a period of time really differentiated the experience on yelp between restaurant retail and other and services and that really served us well We're now in a new era, which is this conversational era, and we continue to see an opportunity to really drive that engagement on the consumer side and deliver value to them, and with that additional information, be able to match those consumers with the exact right service provider. we're now in a new era which is this conversational era and we continue to see an opportunity to really drive that engagement on the consumer side and deliver value to them and with that additional information be able to match those consumers with the exact right service provider We're also in a new, emerging into a new era around services. It is still a little bit puzzling to us why services decelerated the way it did after such consistent double-digit growth, which we actually saw through the first quarter of last year. That part's a little outside our control. The thing that is very important, obviously, to service pros is, "Hey, I got that lead." It's a little bit of what motivated us to make this Hatch acquisition because if you can use an AI to answer every message that you get or click that you get or call that you get and really improve the conversion, that's a great opportunity to provide value to them, but also means that they're getting the return they expect, and they're willing to spend more on advertising. We're also in a new, emerging into a new era around services. we're also in a new emerging into a new era around services It is still a little bit puzzling to us why services decelerated the way it did after such consistent double-digit growth, which we actually saw through the first quarter of last year. it is still a little bit puzzling to us why services decelerated the way it did after such consistent double-digit growth which we actually saw through the first quarter of last year That part's a little outside our control. that part's a little outside our control The thing that is very important, obviously, to service pros is, "Hey, I got that lead." It's a little bit of what motivated us to make this Hatch acquisition because if you can use an AI to answer every message that you get or click that you get or call that you get and really improve the conversion, that's a great opportunity to provide value to them, but also means that they're getting the return they expect, and they're willing to spend more on advertising. the thing that is very important obviously to service pros is "hey i got that lead." it's a little bit of what motivated us to make this hatch acquisition because if you can use an ai to answer every message that you get or click that you get or call that you get and really improve the conversion that's a great opportunity to provide value to them but also means that they're getting the return they expect and they're willing to spend more on advertising The strategy is actually very integrated across both the AI tools that we're building, what we learn from doing that, applying some of the capabilities that we've built at Yelp around voice, for instance, and serving our advertising customers more effectively. It's not that the focus on this revenue diversification is something entirely separated. It's actually very integrated as a coherent strategy across all the customers that we're serving. The strategy is actually very integrated across both the AI tools that we're building, what we learn from doing that, applying some of the capabilities that we've built at Yelp around voice, for instance, and serving our advertising customers more effectively. the strategy is actually very integrated across both the ai tools that we're building what we learn from doing that applying some of the capabilities that we've built at yelp around voice for instance and serving our advertising customers more effectively It's not that the focus on this revenue diversification is something entirely separated. it's not that the focus on this revenue diversification is something entirely separated It's actually very integrated as a coherent strategy across all the customers that we're serving. it's actually very integrated as a coherent strategy across all the customers that we're serving

Speaker 1: Home services historically, I think still your largest category within services, what type of trends are you seeing within home services in particular? You know, where are the growth opportunities within the services categories that you're seeing? Home services historically, I think still your largest category within services, what type of trends are you seeing within home services in particular? home services historically i think still your largest category within services what type of trends are you seeing within home services in particular You know, where are the growth opportunities within the services categories that you're seeing? you know where are the growth opportunities within the services categories that you're seeing

Speaker 2: Certainly. on the home services front, I think you've heard some of the larger retailers mention that people have traded down from a remodel, say, to a repair. Some people have traded down from a repair to a do-it-yourself because of the pressure they're experiencing. The ticket size has decreased, and instead of maybe replacing the roof, you patch the roof, and maybe instead of doing a new kitchen, you replace some appliances. That is gonna play out for a period of time yet. Again, as I've already talked about, we're gonna do a lot to certainly focus on the things that are within our control, but that does need to be addressed. I do think that there just needs to be more certainty around the economic outlook for folks. Certainly. on the home services front, I think you've heard some of the larger retailers mention that people have traded down from a remodel, say, to a repair. certainly on the home services front i think you've heard some of the larger retailers mention that people have traded down from a remodel say to a repair Some people have traded down from a repair to a do-it-yourself because of the pressure they're experiencing. some people have traded down from a repair to a do-it-yourself because of the pressure they're experiencing The ticket size has decreased, and instead of maybe replacing the roof, you patch the roof, and maybe instead of doing a new kitchen, you replace some appliances. the ticket size has decreased and instead of maybe replacing the roof you patch the roof and maybe instead of doing a new kitchen you replace some appliances That is gonna play out for a period of time yet. that is gonna play out for a period of time yet Again, as I've already talked about, we're gonna do a lot to certainly focus on the things that are within our control, but that does need to be addressed. again as i've already talked about we're gonna do a lot to certainly focus on the things that are within our control but that does need to be addressed I do think that there just needs to be more certainty around the economic outlook for folks. i do think that there just needs to be more certainty around the economic outlook for folks I think we need an environment where people are able to just really focus on delivering against the opportunities in front of them, as opposed, I'm saying for small businesses, as opposed to wondering what might be the case in a month or two. How do I manage my cost? How do I manage my labor? All of these things, if you think about a small business owner, they're doing everything, and there's only so much time in the day, and there's only so much they can concentrate on. Most importantly, they need to win business, deliver it, bill for it, have a happy customer, and move on to the next job. The more distractions there are, the harder it is for that business. I think we need an environment where people are able to just really focus on delivering against the opportunities in front of them, as opposed, I'm saying for small businesses, as opposed to wondering what might be the case in a month or two. i think we need an environment where people are able to just really focus on delivering against the opportunities in front of them as opposed i'm saying for small businesses as opposed to wondering what might be the case in a month or two How do I manage my cost? how do i manage my cost How do I manage my labor? how do i manage my labor All of these things, if you think about a small business owner, they're doing everything, and there's only so much time in the day, and there's only so much they can concentrate on. all of these things if you think about a small business owner they're doing everything and there's only so much time in the day and there's only so much they can concentrate on Most importantly, they need to win business, deliver it, bill for it, have a happy customer, and move on to the next job. most importantly they need to win business deliver it bill for it have a happy customer and move on to the next job The more distractions there are, the harder it is for that business. the more distractions there are the harder it is for that business

Speaker 1: A couple questions on product, and then if anyone here has a question, feel free to submit it online or raise your hand, and we'll get to you. You talked about Yelp Assistant. That's now rolled out across all categories. You know, maybe talk about what that is for those less familiar? What are the early signals you're seeing around consumer adoption? A couple questions on product, and then if anyone here has a question, feel free to submit it online or raise your hand, and we'll get to you. a couple questions on product and then if anyone here has a question feel free to submit it online or raise your hand and we'll get to you You talked about Yelp Assistant. you talked about yelp assistant That's now rolled out across all categories. that's now rolled out across all categories You know, maybe talk about what that is for those less familiar? you know maybe talk about what that is for those less familiar What are the early signals you're seeing around consumer adoption? what are the early signals you're seeing around consumer adoption

Speaker 2: Sure. Yelp Assistant is our chat experience on Yelp. It was previously only for services. Now it's for all categories. I'd encourage all of you to try it. Download the Yelp app. There's a icon for it, a tab, and there are things about it that I really, really like. One is it's very engaging. It has a lot of personality and it's very much Yelp. You'll find that the experience is very much what you'd expect from the Yelp brand, and it's insightful. It's taking what you share, and it's really tailoring its commentary to what you're interested in. Even more importantly, it's then surfacing the snippets from reviews that show why it's saying that to you. Sure. sure Yelp Assistant is our chat experience on Yelp. yelp assistant is our chat experience on yelp It was previously only for services. it was previously only for services Now it's for all categories. now it's for all categories I'd encourage all of you to try it. i'd encourage all of you to try it Download the Yelp app. download the yelp app There's a icon for it, a tab, and there are things about it that I really, really like. there's a icon for it a tab and there are things about it that i really really like One is it's very engaging. one is it's very engaging It has a lot of personality and it's very much Yelp. it has a lot of personality and it's very much yelp You'll find that the experience is very much what you'd expect from the Yelp brand, and it's insightful. you'll find that the experience is very much what you'd expect from the yelp brand and it's insightful It's taking what you share, and it's really tailoring its commentary to what you're interested in. it's taking what you share and it's really tailoring its commentary to what you're interested in Even more importantly, it's then surfacing the snippets from reviews that show why it's saying that to you. even more importantly it's then surfacing the snippets from reviews that show why it's saying that to you The evidence is right there in front of you, and I think this is where everybody's gonna have to go because the LLMs have a high degree of error is, it's not just that I got a response that seems credible, reasonable, accurate, it's that I can convince you that I have the evidence to support the reason why I'm making this recommendation for you. Because we have this incredibly high quality content, we're able to surface that evidence, and we can do it in a way that's very compact. You can scroll through and do a little bit more and research more, or you can just see what's the next opportunity and why is it engaging for me. Plus, of course, there's photos. This surface also presents a lot of opportunity to add additional local information. The evidence is right there in front of you, and I think this is where everybody's gonna have to go because the LLMs have a high degree of error is, it's not just that I got a response that seems credible, reasonable, accurate, it's that I can convince you that I have the evidence to support the reason why I'm making this recommendation for you. the evidence is right there in front of you and i think this is where everybody's gonna have to go because the llms have a high degree of error is it's not just that i got a response that seems credible reasonable accurate it's that i can convince you that i have the evidence to support the reason why i'm making this recommendation for you Because we have this incredibly high quality content, we're able to surface that evidence, and we can do it in a way that's very compact. because we have this incredibly high quality content we're able to surface that evidence and we can do it in a way that's very compact You can scroll through and do a little bit more and research more, or you can just see what's the next opportunity and why is it engaging for me. you can scroll through and do a little bit more and research more or you can just see what's the next opportunity and why is it engaging for me Plus, of course, there's photos. plus of course there's photos This surface also presents a lot of opportunity to add additional local information. this surface also presents a lot of opportunity to add additional local information If you think about things that might influence a decision, what's the weather gonna be? Is there an event nearby? Is there a park? Is there something to do with kids afterwards, or is there outdoor seating that's dog-friendly? Suddenly, you can include a lot more information in this experience that isn't so easy when it's just a list of search results. Finally, because it's conversational, you can ask the follow-up question. "Hey, I saw you went out to have Italian food. How was that?" Or, "Hey, you needed a plumber. Did you hire that plumber? Did you get the leak fixed?" Suddenly, just as we've all experienced with other chatbots, they ask the follow-up question, and they're more helpful. They are more engaging, and it's a more useful experience for you. If you think about things that might influence a decision, what's the weather gonna be? if you think about things that might influence a decision what's the weather gonna be Is there an event nearby? is there an event nearby Is there a park? is there a park Is there something to do with kids afterwards, or is there outdoor seating that's dog-friendly? is there something to do with kids afterwards or is there outdoor seating that's dog-friendly Suddenly, you can include a lot more information in this experience that isn't so easy when it's just a list of search results. suddenly you can include a lot more information in this experience that isn't so easy when it's just a list of search results Finally, because it's conversational, you can ask the follow-up question. "Hey, I saw you went out to have Italian food. finally because it's conversational you can ask the follow-up question "hey i saw you went out to have italian food How was that?" Or, "Hey, you needed a plumber. how was that?" or "hey you needed a plumber Did you hire that plumber? did you hire that plumber Did you get the leak fixed?" Suddenly, just as we've all experienced with other chatbots, they ask the follow-up question, and they're more helpful. did you get the leak fixed?" suddenly just as we've all experienced with other chatbots they ask the follow-up question and they're more helpful They are more engaging, and it's a more useful experience for you. they are more engaging and it's a more useful experience for you We're doing all of that within that, and we're pretty pleased with it. The early results, they're very, very early, are that people are like it. The early NPS is very encouraging. It's more engaging and people are clicking more. That means that there's an opportunity also within that to increase monetization without the perception of increased ad load. We're doing all of that within that, and we're pretty pleased with it. we're doing all of that within that and we're pretty pleased with it The early results, they're very, very early, are that people are like it. the early results they're very very early are that people are like it The early NPS is very encouraging. the early nps is very encouraging It's more engaging and people are clicking more. it's more engaging and people are clicking more That means that there's an opportunity also within that to increase monetization without the perception of increased ad load. that means that there's an opportunity also within that to increase monetization without the perception of increased ad load

Speaker 1: Another product I wanted to ask about, at earnings, you mentioned Yelp Host. I think you said 1.5 million calls on a run rate basis. You know, how should we think about the TAM and just the monetization opportunity that you're going after with Host? Another product I wanted to ask about, at earnings, you mentioned Yelp Host. another product i wanted to ask about at earnings you mentioned yelp host I think you said 1.5 million calls on a run rate basis. i think you said 1.5 million calls on a run rate basis You know, how should we think about the TAM and just the monetization opportunity that you're going after with Host? you know how should we think about the tam and just the monetization opportunity that you're going after with host

Speaker 2: Yeah, we definitely think this opportunity is well over $1 billion. Just to give you a sense, we now have 16 languages supported in the product. We have four voices that you can choose from in English, but six regional accents that you can also choose from. Some of those accents are, for instance, French. It might be a French accent. What's super interesting is the person calls up, they realize that the AI has a French accent. Can the AI speak French? Then they start speaking in French, and sure enough, it speaks French. It's a delightful experience, and it's able to answer the questions accurately. Yeah, we definitely think this opportunity is well over $1 billion. yeah we definitely think this opportunity is well over $1 billion Just to give you a sense, we now have 16 languages supported in the product. just to give you a sense we now have 16 languages supported in the product We have four voices that you can choose from in English, but six regional accents that you can also choose from. we have four voices that you can choose from in english but six regional accents that you can also choose from Some of those accents are, for instance, French. some of those accents are for instance french It might be a French accent. it might be a french accent What's super interesting is the person calls up, they realize that the AI has a French accent. what's super interesting is the person calls up they realize that the ai has a french accent Can the AI speak French? can the ai speak french Then they start speaking in French, and sure enough, it speaks French. then they start speaking in french and sure enough it speaks french It's a delightful experience, and it's able to answer the questions accurately. it's a delightful experience and it's able to answer the questions accurately The other thing that's been really fascinating in building this product that I certainly have found extremely interesting is in that first half a second, you have to convince the person that they should engage with the AI voice and not just ask to transfer. What we saw in some of the previous iterations was people would give a monosyllabic response, "Transfer." They, like, instantly knew, "This is a bot. I don't want to talk to bot. Transfer me." We made a few small changes. First of all, we have a very human-sounding voice. It has intonation, it has emotional quality to it has cadence. A few changes, suddenly people started speaking in sentences to it. The other thing that's been really fascinating in building this product that I certainly have found extremely interesting is in that first half a second, you have to convince the person that they should engage with the AI voice and not just ask to transfer. the other thing that's been really fascinating in building this product that i certainly have found extremely interesting is in that first half a second you have to convince the person that they should engage with the ai voice and not just ask to transfer What we saw in some of the previous iterations was people would give a monosyllabic response, "Transfer." They, like, instantly knew, "This is a bot. what we saw in some of the previous iterations was people would give a monosyllabic response "transfer." they like instantly knew "this is a bot I don't want to talk to bot. i don't want to talk to bot Transfer me." We made a few small changes. transfer me." we made a few small changes First of all, we have a very human-sounding voice. first of all we have a very human-sounding voice It has intonation, it has emotional quality to it has cadence. it has intonation it has emotional quality to it has cadence A few changes, suddenly people started speaking in sentences to it. a few changes suddenly people started speaking in sentences to it The moment people move from a monosyllabic response, "Yes, no transfer," to a sentence, they use it, and it's useful to them. When they come back, they know that they can just talk with it. That's a pretty incredible moment. To build that takes a lot of skill. There's a lot of know-how. It's not just stitching together different services. You've got to have the training, the fine-tuning for the models based on the corpus. You have to have good engineering, of course. Most important, because we now have this 1.5 million run rate for calls, lots and lots of reps. You have the opportunity to experiment, refine, change, see what works, see what doesn't work. The moment people move from a monosyllabic response, "Yes, no transfer," to a sentence, they use it, and it's useful to them. the moment people move from a monosyllabic response "yes no transfer," to a sentence they use it and it's useful to them When they come back, they know that they can just talk with it. when they come back they know that they can just talk with it That's a pretty incredible moment. that's a pretty incredible moment To build that takes a lot of skill. to build that takes a lot of skill There's a lot of know-how. there's a lot of know-how It's not just stitching together different services. it's not just stitching together different services You've got to have the training, the fine-tuning for the models based on the corpus. you've got to have the training the fine-tuning for the models based on the corpus You have to have good engineering, of course. you have to have good engineering of course Most important, because we now have this 1.5 million run rate for calls, lots and lots of reps. most important because we now have this 1.5 million run rate for calls lots and lots of reps You have the opportunity to experiment, refine, change, see what works, see what doesn't work. you have the opportunity to experiment refine change see what works see what doesn't work I just see us being able to accelerate the quality of this product over time. Because we're accelerating the quality of this product over time, it's self-reinforcing. I just see us being able to accelerate the quality of this product over time. i just see us being able to accelerate the quality of this product over time Because we're accelerating the quality of this product over time, it's self-reinforcing. because we're accelerating the quality of this product over time it's self-reinforcing

Speaker 1: We talked about Assistant, Host. You released 35 new features earlier this year. Anything else on the product side you think is important to highlight? We talked about Assistant, Host. we talked about assistant host You released 35 new features earlier this year. you released 35 new features earlier this year Anything else on the product side you think is important to highlight? anything else on the product side you think is important to highlight

Speaker 2: We do have a really cool feature that we released, called Yelp Menu Vision. Which is really cool. It's a augmented reality experience where you just point the phone at the menu, and it will show you the dishes and the ratings. That is really cool and very helpful 'cause I don't always know what the dish is, and I'd like to see what it looks like, and I wanna see what people said about it. That's been actually a lot of fun, and people are finding that useful. We do have a really cool feature that we released, called Yelp Menu Vision. we do have a really cool feature that we released called yelp menu vision Which is really cool. which is really cool It's a augmented reality experience where you just point the phone at the menu, and it will show you the dishes and the ratings. it's a augmented reality experience where you just point the phone at the menu and it will show you the dishes and the ratings That is really cool and very helpful 'cause I don't always know what the dish is, and I'd like to see what it looks like, and I wanna see what people said about it. that is really cool and very helpful 'cause i don't always know what the dish is and i'd like to see what it looks like and i wanna see what people said about it That's been actually a lot of fun, and people are finding that useful. that's been actually a lot of fun and people are finding that useful

Speaker 1: Interesting. Let's try it out. Okay, two more questions, and I think we'll be out of time. I think one of the common questions we get from investors is around competition, around, you know, consumer traffic in general to Yelp. You know, I know you disclose traffic metrics annually, which you did at Q4 earnings, but what can you tell us at a high level around traffic trends that you're seeing and what type of impact you're seeing from changes in the search market? Interesting. interesting Let's try it out. let's try it out Okay, two more questions, and I think we'll be out of time. okay two more questions and i think we'll be out of time I think one of the common questions we get from investors is around competition, around, you know, consumer traffic in general to Yelp. i think one of the common questions we get from investors is around competition around you know consumer traffic in general to yelp You know, I know you disclose traffic metrics annually, which you did at Q4 earnings, but what can you tell us at a high level around traffic trends that you're seeing and what type of impact you're seeing from changes in the search market? you know i know you disclose traffic metrics annually which you did at q4 earnings but what can you tell us at a high level around traffic trends that you're seeing and what type of impact you're seeing from changes in the search market

Speaker 2: There's a lot of dynamics going on around internet traffic right now. One thing that we haven't seen is any meaningful impact from AI Overviews. We get that question pretty regularly. Our hypothesis is that these are highly monetizing categories that we serve, and Google wants highly monetizing categories to monetize. That hasn't been something that we've seen, though I believe other content players have seen impact there. In addition, Google seems to also really be prioritizing human-generated content. We're not alone in that, and some of the other platforms have certainly seen real benefit. There's a lot of dynamics going on around internet traffic right now. there's a lot of dynamics going on around internet traffic right now One thing that we haven't seen is any meaningful impact from AI Overviews. one thing that we haven't seen is any meaningful impact from ai overviews We get that question pretty regularly. we get that question pretty regularly Our hypothesis is that these are highly monetizing categories that we serve, and Google wants highly monetizing categories to monetize. our hypothesis is that these are highly monetizing categories that we serve and google wants highly monetizing categories to monetize That hasn't been something that we've seen, though I believe other content players have seen impact there. that hasn't been something that we've seen though i believe other content players have seen impact there In addition, Google seems to also really be prioritizing human-generated content. in addition google seems to also really be prioritizing human-generated content We're not alone in that, and some of the other platforms have certainly seen real benefit. we're not alone in that and some of the other platforms have certainly seen real benefit We've seen benefit from our human-generated content as being a benefit. Broadly, of course, is just this emerging experience that we're all having chatting with the different chatbots, whether it's an OpenAI, it's a Grok, now Claude, which now seems to be a consumer app and not just an enterprise app. I think we're all seeing how that traffic plays out. Because we have this high authority content, we do see that people want to engage with Yelp content. They want to see the Yelp logo next to ratings to know whether the rating is credible. We believe the way that this plays out is as you want more information, you're gonna click through and come to Yelp, and we like the exposure that we get from that. We've seen benefit from our human-generated content as being a benefit. we've seen benefit from our human-generated content as being a benefit Broadly, of course, is just this emerging experience that we're all having chatting with the different chatbots, whether it's an OpenAI, it's a Grok, now Claude, which now seems to be a consumer app and not just an enterprise app. broadly of course is just this emerging experience that we're all having chatting with the different chatbots whether it's an openai it's a grok now claude which now seems to be a consumer app and not just an enterprise app I think we're all seeing how that traffic plays out. i think we're all seeing how that traffic plays out Because we have this high authority content, we do see that people want to engage with Yelp content. because we have this high authority content we do see that people want to engage with yelp content They want to see the Yelp logo next to ratings to know whether the rating is credible. they want to see the yelp logo next to ratings to know whether the rating is credible We believe the way that this plays out is as you want more information, you're gonna click through and come to Yelp, and we like the exposure that we get from that. we believe the way that this plays out is as you want more information you're gonna click through and come to yelp and we like the exposure that we get from that Traffic is certainly evolving, and we continue to believe that we're really well-positioned because of the high-quality content authority and brand that we have. Traffic is certainly evolving, and we continue to believe that we're really well-positioned because of the high-quality content authority and brand that we have. traffic is certainly evolving and we continue to believe that we're really well-positioned because of the high-quality content authority and brand that we have

Speaker 1: I have a closing question. Anyone in the audience have a question before I do? All right, perfect. Easy. Okay, just ending on a bigger picture question, you know, what are the one to two things you're most excited about but investors are not talking about today and you think could really be transformative for the business in the years ahead? I have a closing question. i have a closing question Anyone in the audience have a question before I do? anyone in the audience have a question before i do All right, perfect. all right perfect Easy. easy Okay, just ending on a bigger picture question, you know, what are the one to two things you're most excited about but investors are not talking about today and you think could really be transformative for the business in the years ahead? okay just ending on a bigger picture question you know what are the one to two things you're most excited about but investors are not talking about today and you think could really be transformative for the business in the years ahead

Speaker 2: I think we really have covered the topics. I think the part that I'd go back to is this transition to conversation. We've talked about it. We're all experiencing it. I think it's gonna be very transformative in the way that we engage with content. What I don't think is gonna change there, and I, you know, we do have this back and forth, and it's certainly gonna emerge, but I think in the United States, what we're gonna see is specialty verticals where you specialize in a particular type of content, like Yelp, is going to continue to be very differentiated and enjoy a strong competitive position. I think we really have covered the topics. i think we really have covered the topics I think the part that I'd go back to is this transition to conversation. i think the part that i'd go back to is this transition to conversation We've talked about it. we've talked about it We're all experiencing it. we're all experiencing it I think it's gonna be very transformative in the way that we engage with content. i think it's gonna be very transformative in the way that we engage with content What I don't think is gonna change there, and I, you know, we do have this back and forth, and it's certainly gonna emerge, but I think in the United States, what we're gonna see is specialty verticals where you specialize in a particular type of content, like Yelp, is going to continue to be very differentiated and enjoy a strong competitive position. what i don't think is gonna change there and i you know we do have this back and forth and it's certainly gonna emerge but i think in the united states what we're gonna see is specialty verticals where you specialize in a particular type of content like yelp is going to continue to be very differentiated and enjoy a strong competitive position I think there's just this open question that everybody is still wrestling with, and it's certainly gonna emerge, but do you have terminal value? Is this a sustainable business? Are you gonna be around in the years to come? At least from the way that we think about it and all the research that we do with consumers and what we see through the direct interaction with the app is that people do want that differentiated, vertically specific experience in conversation. Again, this idea that you can add even more information and relevance as part of that and that we can do that as Yelp, that to me is very exciting because it becomes a more comprehensive answer to questions around local for consumers that we haven't answered in the past, but we believe we can answer in the future. I think there's just this open question that everybody is still wrestling with, and it's certainly gonna emerge, but do you have terminal value? i think there's just this open question that everybody is still wrestling with and it's certainly gonna emerge but do you have terminal value Is this a sustainable business? is this a sustainable business Are you gonna be around in the years to come? are you gonna be around in the years to come At least from the way that we think about it and all the research that we do with consumers and what we see through the direct interaction with the app is that people do want that differentiated, vertically specific experience in conversation. at least from the way that we think about it and all the research that we do with consumers and what we see through the direct interaction with the app is that people do want that differentiated vertically specific experience in conversation Again, this idea that you can add even more information and relevance as part of that and that we can do that as Yelp, that to me is very exciting because it becomes a more comprehensive answer to questions around local for consumers that we haven't answered in the past, but we believe we can answer in the future. again this idea that you can add even more information and relevance as part of that and that we can do that as yelp that to me is very exciting because it becomes a more comprehensive answer to questions around local for consumers that we haven't answered in the past but we believe we can answer in the future There's a really cool roadmap of things to come around Yelp Assistant in particular, even as we start to build out these AI tools, even as we're present across other platforms, and continue, we hope, to deliver value to both consumers and to businesses. There's a really cool roadmap of things to come around Yelp Assistant in particular, even as we start to build out these AI tools, even as we're present across other platforms, and continue, we hope, to deliver value to both consumers and to businesses. there's a really cool roadmap of things to come around yelp assistant in particular even as we start to build out these ai tools even as we're present across other platforms and continue we hope to deliver value to both consumers and to businesses

Speaker 1: Awesome. We'll leave it there. Thank you. Awesome. awesome We'll leave it there. we'll leave it there Thank you. thank you

Speaker 2: Thanks so much. Thanks so much. thanks so much