Yelp (YELP) Q4 2025 Earnings Call Transcript

DATE

Thursday, Feb. 12, 2026 at 5:00 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Jeremy Stoppelman
• Chief Financial Officer — David A. Schwarzbach
• Chief Operating Officer — Jed Nachman

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RISKS

• RR&O revenue declined 6% year over year for 2025 and fell 12% in the fourth quarter, with "restaurants and retailers remained pressured" as management cited "a weakened consumer" and "really high input costs."
• Total ad clicks declined 7% year over year, directly linked to "macro pressures" per management.
• "We expect many of the same trends that characterized 2025 to persist into 2026, David A. Schwarzbach: continuing to negatively impact advertising revenue for the year."
• Free cash flow and margin guidance for 2026 may be constrained by planned higher expenses, including AI investment, paid traffic acquisition, and Hatch operations, as management noted "expenses to increase" and margin pressure reflected in lower projected adjusted EBITDA.

TAKEAWAYS

• Net revenue -- $1.46 billion, up 4% year over year, driven by growth in services and product innovation.
• Net income -- $146 million, up 10% year over year, yielding a 10% net income margin.
• Diluted earnings per share -- $2.24, an increase of 19% year over year, supported by share repurchases resulting in a 22% reduction in fully diluted share count since Dec. 31, 2021.
• Adjusted EBITDA -- $369 million, up 3% year over year, delivering a 25% margin.
• Advertising revenue from services -- $948 million, up 8% year over year, with record revenue per location cited as a major driver.
• Advertising revenue from restaurants, retail, and other (RR&O) -- $444 million, a 6% decline year over year; management continued to highlight a challenging RR&O operating environment.
• Total ad clicks -- Down 7% year over year, attributed primarily to macroeconomic pressures and, to a lesser extent, reduced spend on paid project acquisition.
• Average cost per click -- Increased 10% year over year, attributed to higher advertiser demand in the services segment and a reduction in total clicks.
• Total paying advertising locations -- Decreased 3% year over year due to RR&O weakness, while services paying locations grew; average revenue per location reached a record.
• Other revenue -- Up 17% year over year, driven by transaction, subscription, and data licensing growth; data licensing agreements such as with OpenAI contributed.
• Free cash flow -- Reached $324 million, noted as a company record.
• App unique devices -- Down 2% year over year as management attributed lower visitation frequency to restaurants.
• AI-powered product rollout -- 55+ new products/features deployed in 2025, including the AI-powered Yelp Assistant, driving a 400% year-over-year increase in Request-A-Quote project submissions through that tool.
• Share repurchases -- $292 million in shares repurchased in 2025 at an average price of $33.29, including $88.5 million in the fourth quarter; existing authorization balance at year-end was $38.8 million, with an additional $500 million authorized in Feb. 2026.
• 2026 outlook -- Net revenue expected in the $1.46 billion-$1.48 billion range, and adjusted EBITDA projected at $310 million-$330 million, with continued expense increases planned for AI transformation and Hatch integration.
• Stock-based compensation (SBC) -- Reduced in 2025 by two percentage points as a percentage of revenue versus prior year, reaching below 8% in Dec. 2025, with a goal to achieve less than 6% by 2027.
• Hatch acquisition -- Closed and integrated, shifting lead management resources from Yelp Receptionist to Hatch, which management reported as growing 70% year over year.

SUMMARY

Yelp (NYSE:YELP) reported record annual revenue and net income driven by services advertising growth and AI-powered product launches, offsetting softness in RR&O categories. Management disclosed a data licensing agreement with OpenAI and highlighted significant increases in AI-driven product adoption, including a more than 400% surge in Request-A-Quote submissions through Yelp Assistant. Strategic capital deployment focused on share repurchases and the acquisition of Hatch aimed to diversify revenue and accelerate SaaS offerings. Full-year guidance reflected steadier services revenue, anticipated expense growth from ongoing AI initiatives, and margin compression relative to 2025 performance.

• David A. Schwarzbach highlighted a "33%" year-over-year increase in fourth-quarter "other revenue," signaling an acceleration in data licensing and partnership monetization.
• Management described expansion of AI features, including cross-category deployment of Yelp Assistant and enhanced natural language search capabilities, positioning the platform for broader local business discovery and engagement.
• Schwarzbach stated, "today already has, David A. Schwarzbach: in aggregate, a better margin profile than the ad side of the business," indicating a shift toward higher-margin revenue streams.
• The integration and scaling of Hatch were emphasized as immediate growth priorities, with margin improvements expected only over time as management focuses on "significant growth and realizing the opportunity from the acquisition."

INDUSTRY GLOSSARY

• RR&O: Restaurants, Retail, and Other — a segment grouping used by Yelp to report advertising revenue from these business categories.
• Request-A-Quote: A consumer tool on the Yelp platform enabling users to submit service inquiries to multiple businesses for pricing and availability.
• Yelp Assistant: An AI-powered chatbot interface designed to facilitate local business discovery, request submission, and user interaction on Yelp's platform.
• Yelp Host: Yelp's AI-powered restaurant call answering and reservation management SaaS solution.
• Hatch: An AI lead management platform targeting service professionals, acquired by Yelp and integrated as a strategic growth initiative.
• Other revenue: Non-advertising revenue at Yelp, including transaction, subscription, and data licensing streams.
• Paid project acquisition: Spending to acquire consumer project leads for businesses on the platform, referenced as a driver of variable ad spend.
• SaaS: Software as a Service — a recurring revenue model for selling cloud-based software solutions, referenced in connection with Yelp's product roadmap.

Full Conference Call Transcript

Kate Krieger: fourth quarter and full year 2025 earnings conference call. Joining me today are Yelp Inc.'s Chief Executive Officer, Jeremy Stoppelman, Chief Financial Officer, David A. Schwarzbach, and Chief Operating Officer, Jed Nachman. We published a shareholder letter on our investor relations website and with the SEC and hope everyone had a chance to read it. We will provide some brief opening comments and then turn to your questions. Now I will read our safe harbor statement. We will make certain statements today that are forward-looking and involve a number of risks that could cause actual results to differ materially.

Please note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise or publicly release the result of any revision to these forward-looking statements in light of new information or future events. In addition, we are subject to a number of risks that may significantly impact our business and financial results. Please refer to our SEC filings as well as our shareholder letter for a more detailed description of the risk factors that may affect our results. During our call today, we may discuss EBITDA, adjusted EBITDA margin, and free cash flow, which are non-GAAP financial measures.

These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with generally accepted accounting principles. In our shareholder letter released this afternoon and our filings with the SEC, each of which has been posted on our investor relations website, you will find additional disclosures regarding these non-GAAP financial measures as well as historical reconciliations of GAAP net income or loss to both adjusted EBITDA and adjusted EBITDA margin, and a historical reconciliation of GAAP cash flows from operating activities to free cash flow. With that, I will turn the call over to Jeremy. Thanks, Kate, and welcome, everyone.

Jeremy Stoppelman: Yelp Inc. delivered record net revenue and strong profitability in 2025 driven by our focus on services and accelerated pace of

Jeremy Stoppelman: product innovation. We introduced more than 55 new products and features, many powered by AI, as we continue to transform the experience for consumers and businesses. Overall, in 2025, net revenue increased by 4% year over year to $1,460,000,000. We grew net income by 10% year over year to $146,000,000, representing a 10% net income margin.

David A. Schwarzbach: This resulted in 19% year over year growth in diluted earnings per share to $2.24. Adjusted EBITDA increased by 3% year over year to $369,000,000, representing a 25% adjusted EBITDA margin. Underlying our results, the operating environment for RR&O categories remained challenging, with revenue from these businesses declining 6% year over year to $444,000,000. At the same time, services drove our business performance. Advertising revenue from businesses in these categories was up 8% year over year to a record $948,000,000 due to the strength in advertising demand and reflecting record revenue per location.

Excluding projects acquired through our paid search initiative, Request-A-Quote projects increased approximately 15% year over year driven by improvements to the flow and increased adoption of Yelp Assistant. Our AI chatbot continued to resonate with consumers in 2025 with Request-A-Quote project submissions through Yelp Assistant up more than 400% year over year, representing approximately 5% of all Request-A-Quote projects during the year. Total ad clicks decreased 7% year over year driven primarily by macro pressures and to a lesser extent reduced spend on paid project acquisition in 2025 compared to 2024. Average cost per click increased 10% year over year, reflecting growth in advertiser demand in our services categories and fewer clicks overall.

Total paying advertising locations decreased 3% year over year as softness in RR&O offset growth in services, while average revenue per location reached an annual record. Other revenue accelerated significantly, up 17% year over year, driven by growth in transaction, subscription, and data licensing revenue. We also continued to grow our review content in 2025; Yelp users contributed 22,000,000 new reviews, bringing cumulative reviews to 330,000,000. App unique devices were down 2% year over year as consumers visited restaurants with reduced frequency. Over the past year, we meaningfully increased our focus on transforming Yelp with AI. We believe combining our authentic human-generated content with advanced AI presents a significant opportunity to redefine how people connect with local businesses.

We plan to build on our progress by investing in three strategic initiatives in 2026.

Jeremy Stoppelman: First,

David A. Schwarzbach: we are reconceiving the Yelp experience to focus on delivering answers and actions. We set the stage for this in 2025 by introducing natural language search, launching AI-powered business highlights, and expanding Yelp Assistant to RR&O business pages. We plan to further expand Yelp Assistant in 2026 to function across categories and entry points, with the goal of making local discovery and task completion seamless. We began testing this comprehensive experience in the fourth quarter and expect to fully roll it out by the end of the first quarter.

To further close the loop between discovery and action, we expanded our food ordering network by adding hundreds of thousands of new restaurants through our DoorDash partnership and integrated RepairPal's booking system into Yelp. Second, we are delivering AI tools that help service pros and other local businesses grow, operate, and succeed. Building on years of investment in delivering value to our advertisers, our focus is shifting toward becoming an even more valuable partner for businesses by helping them operate more efficiently through AI-powered tools. In 2025, we introduced Yelp Host, our AI-powered call answering service for restaurants, which has answered more than 190,000 calls and handled thousands of reservations since launch.

In 2026, we plan to roll out further upgrades, including the ability to take food orders over the phone. To accelerate our broader strategy, we recently closed our acquisition of Hatch, a leading AI lead management platform for service pros. With this acquisition, we have now shifted our focus in lead management from Yelp Receptionist to supporting the rapid growth of Hatch. Lastly, we are further extending our reach to power local discovery across the AI ecosystem. As search evolves towards AI, we believe the value of our first-party data, including 330,000,000 reviews, nearly 500,000,000 photos, and more than 8,000,000 business listings, is becoming increasingly clear.

In 2025, we saw strong demand for our data licensing products; we recently signed an agreement with OpenAI. We believe we are well positioned to be the essential partner providing trusted local content enabling actions whenever consumers are making local decisions. In summary, our focus on product innovation and a differentiated services experience once again drove our results in 2025. Looking ahead, we are confident in our ability to transform Yelp with AI in ways that play to the strengths of our business. We plan to increase our investments in 2026, inclusive of our recent acquisition of Hatch, to capitalize on this opportunity and deliver long-term sustainable growth. With that, I will turn it over to David.

Thanks for that full-year review, Jeremy.

David A. Schwarzbach: Before I discuss our fourth quarter results, I would like to take a moment to highlight the progress we have made transforming Yelp Inc.'s business over the last five years through our product-led growth strategy and disciplined expense management. Through our commitment to share repurchases, we have reduced our fully diluted share count, which includes outstanding stock options, RSUs, and PRSUs, from 86,000,000 to 67,000,000, a 22% reduction between 12/31/2021 and 12/31/2025.

Jeremy Stoppelman: Combined with our demonstrated profitability,

David A. Schwarzbach: this drove earnings per diluted share of $2.24 in 2025, a more than fourfold increase from 2021. In short, Yelp Inc. enters 2026 from a position of greater financial strength with net income of $146,000,000 in 2025, adjusted EBITDA of $369,000,000, cash flow from operations of $372,000,000, and record free cash flow of $324,000,000. Turning to our fourth quarter results. Net revenue decreased by 1% year over year to $360,000,000, $2,000,000 above the midpoint of our outlook range. Net income decreased by 10% year over year to $38,000,000, representing a 10% margin. Adjusted EBITDA decreased by 15% year over year to $86,000,000, $7,000,000 above the midpoint of our outlook range, representing a 24% margin.

As Jeremy mentioned, top-line growth was driven by performance in our services categories throughout the year. Advertising revenue in services increased by 3% year over year in the fourth quarter to $231,000,000. Conversely, restaurants and retailers remained pressured in the quarter

Jeremy Stoppelman: resulting in a 12% year over year decline in RR&O revenue

David A. Schwarzbach: to $107,000,000. A decrease in our RR&O locations combined with flat services locations in the fourth quarter resulted in an overall decline of 5% year over year in paying advertising locations

David A. Schwarzbach: to 496,000. Turning to expenses for the year. Our 2025 results highlight both our ability to deliver profitable growth and the margin potential of our product-led strategy, with a net income margin of 10% and an adjusted EBITDA margin of 25%. We again kept headcount approximately flat year over year in 2025, demonstrating our continued commitment to disciplined expense management. We see a significant opportunity to drive growth

Jeremy Stoppelman: in other revenue through our AI transformation.

David A. Schwarzbach: And plan to increase

Jeremy Stoppelman: our investments to capitalize on this opportunity in 2026.

David A. Schwarzbach: Excluding the recently integrated Hatch team, we expect headcount growth to again remain approximately flat year over year in 2026

David A. Schwarzbach: through our product-led strategy, reflecting both our commitment to driving leverage in the business and our team's ability to deliver operational efficiency using AI.

Jeremy Stoppelman: We also remain focused on increasing the quality of our adjusted EBITDA.

David A. Schwarzbach: In recent years, we have taken significant action to shift our compensation mix between stock and cash. While we expect the full impact of these efforts to stack over time, in 2025, we were able to reduce stock-based compensation expense as a percentage of revenue by two percentage points from the previous year.

Jeremy Stoppelman: In line with our target set in 2023,

David A. Schwarzbach: SBC as a percentage of revenue in the month of December 2025 declined to below 8%. We continue to expect that we will reduce SBC expense to less than 6% of revenue by 2027. In 2026, we are deploying capital to support our growth initiatives through investments in our AI transformation, our acquisition of Hatch, and incremental investment in paid search. We intend to continue evaluating potential strategic acquisitions and repurchasing shares subject to market and economic conditions. In 2025, we repurchased $292,000,000 worth of shares at an average purchase price of $33.29 per share.

Jeremy Stoppelman: Including $88,500,000 worth of shares repurchased in the fourth quarter. As of 12/31/2025,

David A. Schwarzbach: we had $38,800,000 remaining

Jeremy Stoppelman: under our existing repurchase authorization.

David A. Schwarzbach: To support our ongoing repurchase plans, in February 2026, our board of directors authorized an

Jeremy Stoppelman: additional $500,000,000 for share repurchases.

David A. Schwarzbach: Turning to our outlook. We continue to believe in the significant long-term growth opportunities ahead as we focus our investments on high-return areas. We expect many of the same trends that characterized 2025 to persist into 2026,

David A. Schwarzbach: continuing to negatively impact advertising revenue for the year. We anticipate the opportunity in other revenue and services to continue to drive our business performance, while our RR&O remains pressured. As a result, for the first quarter of 2026, we expect net revenue will be in the range of $350,000,000 to $355,000,000. For the full year, we expect net revenue will be in the range of $1,455,000,000 to $1,475,000,000. Turning to margin.

Jeremy Stoppelman: We anticipate expenses will increase seasonally from the fourth quarter of 2025 to the first quarter of 2026,

David A. Schwarzbach: primarily driven by payroll taxes and benefits. As a result, we expect first quarter adjusted EBITDA will be in the range of $58,000,000 to $63,000,000. For the full year, we expect expenses to increase, driven primarily by investments in our AI transformation, paid traffic acquisition, and Hatch operations. As a result, we expect adjusted EBITDA for the full year to be in the range of $310,000,000 to $330,000,000. In closing, Yelp Inc.'s 2025 results reflect both disciplined execution and the margin potential of our product-led strategy. We continue to believe in the opportunities ahead to create shareholder value over the long term as we invest in our AI transformation to drive sustainable business performance.

With that, operator, please open up the line for questions.

Operator: Thank you so much. At this time, I would like to remind everyone, in order to ask a question, press star then the number 1 on your telephone keypad. Once again, star 1. Alright. Our first question today comes from the line of Robert Coolbrith with Evercore ISI. Robert, please go ahead. Great. Thanks for the opportunity to ask a question. Just wanted to ask about the environment for services, both on the consumer and the service provider side. You saw some deceleration in Q4 in revenue and a little bit steeper sequential decline in services valves this year versus last.

Just wondering if you could maybe comment on that a bit and what you are looking for from the services business in 2026. Then I will just have a quick follow-up on OpenAI. Thank you. Sure.

David A. Schwarzbach: I can kick things off here, Robert. Thanks for the question. You know, services demand, I think, has softened a bit. You know, where we really see it hit hard with respect to the consumer and the overall macro environment, was RR&O. But, you know, I would say it has spilled over to services somewhat, not to the same extent, obviously. So that gets to the question of what are we doing. Well, we are really leaning in with Yelp Assistant. So that is our key investment there.

You know, we have been working on that for some time, particularly on the services side, but we rolled it out last year to the business pages, and we are looking forward to bringing it cross-category. We think transforming the consumer experience through AI is really a great opportunity for us. You know, obviously, AI is a very disruptive force for a lot of companies out there. And so we are really riding that wave. We think consumers are going to expect to have a more chat-like interface in general to a service like Yelp.

And so we are eager to bring that to our consumers, drive engagement, and, of course, as those users engage with it in high-frequency categories, like restaurants, you would expect them to eventually get to services categories as well. And, you know, when you are in Yelp Assistant, that is a fully monetized experience with Request-A-Quote. So we are really excited to get that out. We expect to begin our launch towards the end of Q1 here. And that is just the beginning. Of course, we plan to continue to invest in that to bring other actions into Yelp. So things like making reservations or booking appointments or having a service provider show up at your house.

Those are all on the roadmap, so we are looking forward to executing on that. And then, we continue to lean into multi-location services. That is a big opportunity there. We have historically been underpenetrated. We made a lot of progress. We have also found ways to deliver additional traffic, go out and acquire some traffic for those customers, and that can generate incremental revenue as well. So we do have a lot of bets that we are placing this year that can improve things on the services side. We look forward to reporting back on that.

Operator: Great. Thanks. And just on OpenAI, anything you could tell us maybe about the general outline of the deal, if that could be a positive factor for traffic, exposure to younger user cohorts, and so forth in addition to whatever monetization opportunity there might be. Thank you.

Jeremy Stoppelman: Sure.

David A. Schwarzbach: Yeah. I will take this one as well on OpenAI. Great to have an agreement there. A couple quarters ago, we flagged for investment that we were seeing really high-quality conversations in that area. Deals were being signed. It was still early days. And I think this is an important milestone on that journey. Yelp Inc. has really great content, millions of human-written reviews, really critical content, critical information. If you want to deliver an experience, you know, a general search experience, eventually those consumers are going to be asking questions with local intent. Historically, Google has reported that something like 50% of queries on traditional search have local intent.

And if you are trying to compete with Google like many of these folks are, you really need that high-quality content. And Yelp Inc. has it. And so we are seeing that reflected both in this agreement as well as others. And the conversations are continuing. This is not the last one we expect to do. I guess I would finish with where does that show up on the revenue side. Other revenue is where data licensing lives. It is up 17% year over year. And, actually, in the fourth quarter, that accelerated and was up 33%.

Operator: Got it. Great. Thank you very much.

Operator: Sure thing. Thank you, Robert. Our next question comes from the line of Jason Kreyer with Craig-Hallum. Jason, please go ahead.

Jeremy Stoppelman: Alright. Great. Thank you. So you talked about this AI transition. Just wondering if you can talk about

Operator: what that looks like through the lens of the consumer. Like, how does this evolve in terms of consumers interacting with Yelp Inc., and consumers interacting with your customers over time?

David A. Schwarzbach: Yeah. Happy to answer that. Obviously, AI is a very disruptive force, and I think it is changing consumer expectations. How are we approaching that? Well, first and foremost, on the consumer experience, we are really trying to leverage AI everywhere that we can. We have rolled out lots of features that are powered by AI. One of the first things we did was enhance our search so you can actually enter natural language queries in there and get back much better answers than you could prior to that. But with Yelp Assistant, that was our foray. We have been working on that for some time, conversational, initially focused on the services experience.

That has driven a lot of projects, incremental projects. And, in fact, as we rolled it out, we have seen a really great adoption there, up 400% in terms of projects going through Yelp Assistant. Fast forward a little bit there, and we brought it to business pages. And so now consumers, increasingly, they are having this expectation that you land on a business page. You do not want to read through all the information. You just want to get the needle in the haystack. And so consumers are now able to do that, type in a question about a business. It digs into the photos. It digs into the reviews. And it comes back with relevant information.

And that was a milestone on our way to where we are headed towards the end of this quarter, which is a cross-category Yelp Assistant. And that is really exciting because you can ask it any question about a local business or what your need is. Whether it is a service request, it will guide you through that process and ultimately match you with businesses. One of the great things, back to that needle in a haystack comment, is that we are able to back up a user's question or user's request with great data. So photos that are an example of what they were looking for or snippets right out of reviews and get really precise.

We think that is going to delight consumers. Ultimately, that is our goal. And I think, with the changing search landscape, some portion of share going to a more generative AI or a ChatGPT-like experience, consumers are changing their expectations, and they do not just want regular search. And so we put a significant investment in transforming the Yelp experience and preparing for the future. We will get our first taste of that as we launch Yelp Assistant at the end of Q1 here. I guess on other areas where we are using AI to transform, I would point you to the opportunity that we see in SaaS tools, AI-powered SaaS tools.

So as you probably know, we launched Yelp Host and Yelp Receptionist last year. Yelp Host is fantastic. We are seeing a great response from restaurants; sales are above our initial expectations. We have answered over 190,000 calls, so great momentum there. And on the Receptionist side, we did get the opportunity to pair up with Hatch. We are delighted. I think that accelerates our roadmap there by a couple years. They were a first mover in the space. And we are able to bring our extensive distribution as well as AI capabilities and talent to bear on the Hatch opportunity. Both are going after very large TAMs.

So we are extremely excited about the AI SaaS opportunities ahead of us.

Jeremy Stoppelman: Yeah. Maybe just sticking with Hatch on a follow-up.

Operator: Just curious what that cross-sell looks like for Hatch's services. And then if there is any Hatch functionality that will

Jeremy Stoppelman: kind of accelerate the roadmap on Host as well.

Operator: Thanks.

David A. Schwarzbach: Yeah. We are already talking to a lot of the same customers, and then there are plenty of contacts that we have that we can introduce Hatch to. So I think that is a really exciting opportunity. They are a relatively small team. We have thousands of sales reps. I think there is also a benefit in that if you get more efficient at managing leads by leveraging AI, your return on advertising is better. So that is kind of an extra win-win in there. So we are very excited about Hatch going after a big TAM, and they are growing rapidly, 70% year over year growth. So exciting times there.

Jeremy Stoppelman: Thank you.

Operator: Alright. Thank you, Jason. Our next question comes from the line of Nitin Bansal with Bank of America. Nitin, please go ahead.

David A. Schwarzbach: Sure. Thank you for taking my question. So AI innovation is accelerating at a very rapid pace, particularly as large platforms disrupt traditional advertising and software models. How do you expand your SaaS offerings with Hatch? What gives you confidence that your product innovation can keep up with the leading players and you will be able to achieve the production level that you are targeting for? Thank you.

David A. Schwarzbach: Sure. For the question. You know, how do we expect to keep up a level of innovation, a pace of innovation such that we could stay ahead of, you know, perhaps bigger players? You know, it is something that we are very familiar with. Obviously, for many years, we have competed with big tech players, particularly Google. And how we have been successful is, I think, our focus. It is early days in the space that Hatch plays in, which is AI lead management for service pros. They are laser focused. They understand their customers. They understand the players in the ecosystem. They have key partnerships that are essential to make that work.

There is just a level of detail and focus that I think is very hard for other companies, especially large ones, that have other big opportunities to pursue, to spend their time on. So we are quite confident that this is an area with a lot of runway, and Hatch has great momentum. Our view is how do we help. They are doing great. The 70% growth year over year is fantastic. And we want to see if we can make that go even faster. So we are bringing our resources to bear. We are bringing our distribution to bear. And they are really experts in the space.

And I think that is very hard for someone to replicate if they have lots of other large opportunities to chase, like some of these bigger AI players. Thank you. If I can ask one more.

David A. Schwarzbach: Looking out a few years from now, how do you envision Yelp Inc.'s revenue mix to evolve between recurring revenue versus variable

David A. Schwarzbach: ad revenue?

Jed Nachman: And what would it mean for your overall top-line growth and margin profile three to five years down the line?

David A. Schwarzbach: Thanks for the question, Nitin.

David A. Schwarzbach: We do see the opportunity to diversify revenue by driving other revenue.

Jeremy Stoppelman: Just as a quick reminder, other revenue consists of three components. There is the licensing revenue, there is transaction revenue, and things are going well with DoorDash. We are very happy there.

David A. Schwarzbach: Then, of course, there is the subscription revenue. With this significant opportunity across the SaaS landscape, especially with our distribution, we do see the opportunity to diversify our total revenue mix, which is obviously heavily ad-driven today. So, yes, that is definitely an opportunity from our perspective. Obviously, there are different margin profiles between SaaS performance and ad-driven business models. That being said, if you look over time at where SaaS businesses go in terms of margin, it is also very attractive. So my expectation is that our ability to drive SaaS margins will converge with where we are or better than the ad revenue.

And as a reminder, when you look at licensing or transaction, that is almost entirely margin. So that is a very nice mix there for us. I would say overall, other revenue,

David A. Schwarzbach: today already has,

David A. Schwarzbach: in aggregate, a better margin profile than the ad side of the business.

David A. Schwarzbach: Thank you.

Operator: Thank you, Nitin. Just a reminder, ladies and gentlemen, if you would like to ask a question, press star 1. Our next question comes from the line of Kishan Patel with Raymond James. Kishan, please go ahead.

David A. Schwarzbach: Hi. This is Kishan Patel on for Josh Beck. Thanks for taking the question. In restaurants and retail, what do you think needs to change for that advertiser base to stabilize and then improve, and how do you prioritize the changes over the next few quarters?

Jed Nachman: Yeah. Thanks. I can take that question. This is Jed speaking. Obviously, there have been some headwinds in restaurant, retail, and other. We saw those over the course of 2025. There is a lot of these restaurants dealing with a weakened consumer, and there is the additional pressure of really high input costs that makes it a tough battle out there on Main Street in the local economy. We do believe that over time in-restaurant dining will return and that we are very well positioned for that.

I think when you look at the transformation of Yelp Inc., and Jeremy had mentioned Yelp Assistant, cross-category Yelp Assistant, that is going to provide an entirely new interface for consumers to interact with all of the Yelp data, and we believe the investment there will position us well when a lot of this comes back. But we are not resting on our laurels. Jeremy mentioned Yelp Host.

Jed Nachman: And we have been thrilled with the progress there thus far.

Jed Nachman: We believe there is a very large TAM. As we mentioned in the letter, we will soon have food ordering available on the Yelp Host product. And I believe we are really well positioned from a voice perspective, and it is obviously a very large TAM that we can go after and bring our existing infrastructure to bear on that

Jed Nachman: opportunity. So, overall, we are going to continue to invest

Jed Nachman: in that consumer experience and also see other opportunities to drive on those AI-based SaaS tools.

Kishan Patel: Got it. And, regarding Hatch, can you provide more color on the margin trajectory goals for Hatch after closing, given the cash flow disclosure and how that impacts the full-year EBITDA outlook versus the core business? Thanks for the question. It is David. Because Hatch is growing very rapidly, we remain focused on driving that top-line growth. Margin, driving margin, is not the immediate focus for us. We want to go and

Jed Nachman: really realize the opportunity by providing the solution to as many service pros as we can.

David A. Schwarzbach: Again, I do think over time that the margin profile will converge with the typical SaaS margin profile. But

Cal Bartyzal: that is not immediate. So it is reflected in the guidance that we have given on adjusted EBITDA for the year. From an operating expense perspective, just as a side note, the retention amounts that we are paying out are being added back to EBITDA, so we are adjusting those. You can see those numbers in the shareholder letter for reference. But what we want to really achieve right now is this significant growth and realizing the opportunity from the acquisition. Thank you. Alright. Thanks, Kishan.

Operator: And that does conclude our Q&A session today, as well as our call. Thank you so much for joining us today, and you may now disconnect. Have a great day, everyone.

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