Yelp Inc (YELP) June 3, 2026 Conference Transcript

So good morning. Welcome back to the conference. Rob Kulberth from the Evercore ISI Internet Research Team. Very pleased to have Yelp Management with us here today. CEO Jeremy Stoppelman, CFO David Schwartzback. Thank you much for being here. I think to start, David would like to read the safe harbor, and then we'll get underway.

Thanks, Rob, for having us at the conference. We'll be making some forward-looking statements during the conversation today that are subject to risk and uncertainties. Please refer to our SEC filings for more information on the risk factors that may affect our results.

Great. Thanks for that, David. So, Jeremy, just to start off with, maybe for those who haven't caught up on the story in a while, it has changed a little bit. A little bit, yeah. Yeah, take us through how Yelp has been evolving over the last couple of years, the AI transformation now underway, and some of the products on the roadmap that you're particularly excited about.

Sure. So, you know, you can kind of divide Yelp's history into a bunch of different epochs, epochs. You know, starting kind of pre-pandemic, we're really go-to-market-led. Sales drove a lot of the revenue growth that you saw show up. Pandemic happened. Obviously, there was a temporary hit to our business, but we really leaned into product-led growth, and especially within the services side of the business. That took us all the way through into the recent era of AI and the AI transformation that's affecting companies all around us, as well as, obviously, Yelp has a lot of opportunities, a lot of uncertainty. And we're really leading in to the opportunity that AI provides. So on the consumer side, we really need to think about transformation. the consumer experience. You know, if you're in chat GPT or you're in Claude, consumers are starting to have a different idea of what they expect from applications like Yelp. And so we want to stay on top of that and have been building Yelp Assistant now for over a year and just launched. First, it started in the services category, like we focused our chatbot on services and have driven significant project growth through that. But now we've recently expanded that across all categories, which is really exciting. We're seeing strong feedback for consumers on the anecdotal side. It's early, you know, as we continue to ramp it up and expose it in all the different places, you know, I'm sure we'll have more stats to share, but I think it's a really exciting moment for Yelp of reinvention. In addition to that, there's other greenfield opportunities that we identified and started building towards, particularly you have, on the restaurant side, Yelp Host that we've built, and that's about answering phone calls using AI for restaurants, also making reservations, and now moving on to food ordering. And the reception that we've gotten from business owners has been fantastic. Go-to-market there is looking quite strong. So we're really pleased with the momentum there. And it shows that we can innovate in an entirely different area. Obviously, we have a lot of in-house expertise built up, leveraging AI technology. We're putting that to work there. And then more recently, we've also acquired Hatch. And, you know, we had been building, you know, when we launched the, when we started the effort on the restaurant side with Yelp host, we also had Yelp receptionist that got us into the services side of answering phones for small businesses. The other, you know, piece of the opportunity when you start answering phones, we were thinking about it in terms of, okay, well, we have a great presence in restaurants. We also have this big service thing, which is a huge TAM. And so as we were building Receptionist, the opportunity came up to purchase the market leader in the space, Hatch, and it's been going really well. In the quarter, we reported 92% year-over-year growth. That's fantastic. Our focus is to keep that momentum going, as well as augment their team with strong engineering on the voice side, as well as, you know, bringing our go-to-market and operations expertise, and, you know, at this point, we've probably about doubled the team size, but being very thoughtful, you know, and trying to make sure that they can, you know, maintain their startup spirit. You know, obviously, it's really valuable features and functionality, but by having a small team, they've been really, you know, nimble, agile, you know, that's helped them get ahead in this market, and it's becoming a pretty competitive market. There's other players out there, and so we want to make sure that they can continue to execute and, you know, capture a significant amount of the opportunity, and it's, you know, it's a very exciting time. So that's kind of a quick tour around, you know, the history as well as the AI transformation that's upon us.

Okay, great. Yeah, David, the flip side of the transformation narrative, I guess, is, and what you can do on the revenue side, is arguably the investment intensity required to drive that transformation. So FY26EBIT.Guide, you know, implies, you know, what was it, two, three points of margin compression. Maybe you could take us through the drivers of that across Hatch, you know, some of the internal transformation work. The incremental investments may be in SEM this year, which I think you have a new take on, right? You know, whether thinking of that as sort of a single-year reset or, you know, something that maybe extends out into 27 as well.

So we have definitely approached 2026 as a year of investment, given the significant opportunity immediately in front of us, as Jeremy was talking about. Part of that, of course, is operating expense, which is we have an opportunity to do more for consumers and for business owners. We want to lean in around that. That's the paid search side. Leaned in in 2024, but didn't see the ROI we wanted and learned a lot. And then we put a lot of effort around product in order to really get that incremental lead to someone who would value having that incremental lead and would have budget to buy that lead. And so we spent 2025 doing that. And as we've come into 2026, we've built that whole mechanism, which enables us to go from paid search, create that project, and then direct it to a mid-market or enterprise customer. Who will value it. So that is the whole investment that we've had to make there. And then closing the loop on ROAS for those advertisers so that they know they're getting the return that they expect from a lead. So we see an opportunity there. We're still going to be very disciplined and look to. Deliver the ROI we expect from that paid search. And as we've demonstrated, I think, many, many times that financial discipline is if we can invest more, we will. And if we are not getting the returns that we like, then we will invest less. So that's the paid search piece. And just historically, as you know, we spent very, very little on consumer acquisition. And just as an aside, that's part of the power of Yelp, which is this fantastic brand, trusted, high authority that attracts a tremendous amount of money. Thank you, thanks. And we've been super pleased with that performance, as Jeremy said. What we saw was run rate revenue in March. Annual run rate revenue was $34 million, growing at 92%. We really like that. And we see a lot of opportunity not only to deliver product to those customers, and just as a reminder, this is an AI lead management tool that really enables folks to turn a click into a lead, but we see an opportunity extended to even more categories. So there's a lot of runway there. There's a lot of product opportunity. And so we want to invest. This is a moment. You don't want to back off after you make an acquisition and underfund an asset when you see a tremendous market opportunity. So we're leaning in around that as well. That has translated into guidance for 2026. That has EBITDA lower compared to 2025. But I would just say, over the medium to long term, we see these assets as delivering, whether it's... Yelp host and that AI voice product extending into food ordering, or on the hat side, it's not only increasing the products they offer to their existing categories, but expanding to other categories. And this transformation that's happening for all businesses around how you work, how you build. How you code, how you bring product to market, even around the marketing techniques, using voice for customer success, using AI to coach sales reps to be more productive, coaching managers on how to coach sales reps. There's so many applications here, and that's why we said on the earnings call that over the intermediate to long term, we really do see a strong driver of margin expansion. So, it's this combination of, you need to invest today, you've got to learn how to apply these tools, you've got to change how you work, and at the same time, I think we're all experiencing it. We have very high expectations for the productivity gains that we're going to get out of AI.

So, I'm going to come back and dig into Other Revenue. By the way, I think you need to change the name of Other Revenue. We've gotten that feedback. Very attractive hand. Exactly.

Other.

But I want to spend some time on RRNO. You've seen sort of accelerating declines in the business over the past few quarters. You know, lots of cost pressure right now on local businesses. Are you seeing this as a cyclical issue or more of a structural reset where these businesses just sort of have less money available to spend on marketing, you know, Thank you for the foreseeable future.

Yeah. I mean, it's been a tough time out there to be, you know, particularly in the restaurant space. You know, that said, we continue to invest, particularly on the consumer experience, because restaurant traffic is good for Yelp. You know, one way to think about it is it's a high-frequency thing that a lot of people do enjoy doing, and it's a reason to turn to Yelp. And to the extent we can stay relevant and attractive for consumers as they're thinking about whether it's where to go out or even what to order through our DoorDash partnership, it's great marketing for us. It's great activation for those consumers. And eventually, that person who's regularly searching for restaurants or retail or other is going to have a service need. And when they do, we want to be there with Yelp Assistant, for instance, which they're already talking to for the restaurant needs. And it's very natural to say, oh, you know, my sink's broken. Like, I think I need a plumber. And then we go straight into that conversation. A request, a quote, is created, goes out to a few pros. And suddenly, you know, that consumer is both delighted because they're getting a pro that's going to help them solve a problem. But there's also great monetization. And with Yelp Assistant, we have seen growing projects over time. And a significant amount of projects are now flowing through that experience. We continue to see that number rise. And so I think that's a great thing. And that's another nice thing about how we are approaching AI is we do have built-in monetization. So even if we're monetizing in general, you know, less with the struggle that's happening with restaurants, we have built in very strong monetization on the services side.

Got it. Do you find that, I mean, just generally, your continued presence, you know, your authority in restaurants, right, sort of conveys authority across other categories, you know, that helps you maybe even in paid project acquisition? I don't know, maybe if you could complete the thought there for me.

I mean, we're obviously a critical source of human-written content, trusted content, about local businesses. And a lot of that is in restaurants, and restaurants are high frequency. So it's really important, I think, to have great content in that category. And stepping back for a second and looking at this AI transformation that's going on, about a year ago, we pointed to the opportunity in data licensing to a lot of these AI search players. We knew that we had a critical resource for anyone that wanted to deliver a great search experience. If you're not Google, you essentially are going to want our content. Fast forward to today, and we've now signed deals with many of the major AI players. We continue to have high-quality conversations about new opportunities. And so I think that also points It's to just... The quality and the caliber of the content that Yelp has, like all of these mega players are turning to Yelp when they need to be able to deliver a trusted answer about local businesses. And so I think that's very validating. And it also points to the strength that we have in these higher frequency categories as well.

Got it. So, I want to turn to services for a moment. You know, that, it seems like, you know, obviously, it's gotten tougher as well. I mean, so, you're in the sort of low, mid, double digits, entering 2025, you're decelerating down to the low singles. Maybe just sort of unpack some of the drivers there, you know, supply and demand dynamics. It's just, you know, a little more, you know, lighter demand for projects from the consumer side is an issue of budget development. If you're not available to fulfill on the supply side, maybe you just sort of, you know, take us through the drivers.

Yeah, I mean, I think a big thing that we saw was the seasonal pattern got disrupted once again. You know, I think last year, it was tariffs. And we saw that show up in the data very clearly. And then this year was conflict in the Middle East, you know, I think, through consumers off course a bit, you know, as they're contemplating some of these bigger purchases or remodel projects or any of the work that they were doing. You know, and so we did see slower growth there, but at the same time, we continue to lean in and invest. You know, we have a lot to do on the services side in terms of product and engineering, improving Yelp Assistant, improving the business owner account, you know, lots to leverage in terms of AI with respect to what can we put in front of business owners to make their life easier, to help them create ads, to improve targeting. And so that's really where we're focusing our attention.

Got it. And on Assistant, I think maybe one of the benefits that's a little less transparent to investors is you could probably put more ads in there. Maybe you could talk us through that, some of the broader benefits of Assistant to the business in terms of user engagement, in terms of ad delivery, in terms of advertiser satisfaction and what they're seeing in terms of conversion.

Yeah, I mean, there's still opportunity to drive increased monetization. Lots of the leads that are flowing through Yelp continue to flow, not through Yelp Assistant, not through request to quote. And so that might be a person showing up, browsing around and calling a single business. And so to the extent we can convert more people into leveraging this AI experience that we're investing in and we're so excited about, that comes with better monetization. And so there is a real opportunity there, I think, for Yelp.

Okay, so we're finally going to get back to other revenue. We still need to get to a bet. Your favorite category. Yeah, so that's where a lot of the transformation issues I think are centered. So, you set a goal now to more than double your run rate there from, I think it was about 115 million in Q1 to 250 by the end of 28. Hatch obviously going to play a big role. Jeremy, can you talk about the shift in focus there, you know, on the core Yelp advertising opportunity? And David, maybe you could take us through, you know, the three key drivers, I think, which are your Hatch, data licensing, and your revenue share on the food delivery side.

Yeah. I mean, I think in a transformation, you know, you don't just want to focus on one thing. You want to focus on the big opportunities. You know, so first and foremost, we've got Yelp. We've got to transform that experience. We've got our big bet on Yelp Assistant. We're seeing some positive signs there. But then as we've got, you know, so much internal talent around AI. Obviously, the thought was, well, what could we build that's Greenfield, that's not 22 years old, that has a big tan that we can attack, that's readily adjacent? And that's how we landed on Yelp Host and Yelp Perceptionist, which sort of morphed into an acquisition and combining forces with Hatch. And I think both represent really exciting opportunities. You know, for restaurants, obviously, it's a lot of work to pick up the phone all the time. And that, you know, if people are on the phones, that means they're not doing other stuff within the restaurant. There's significant costs there. There's also all of the after hours, and this applies both to services and restaurants. Like, you're not picking up your phone. It's going to voicemail. Chances are that's business, you know, that's lost. But what if that person after hours can make a reservation? Suddenly, you've converted that into better monetization, better revenue for your restaurant. So there's a real opportunity there. There was clearly a need, and we felt like we had the talent necessary to execute on it. And I'm really impressed by what the team has built. You can go and check out Yelpost, sample the voice, and see what we built. We think it's really industry-leading. The team was just at the NRA, not National Rifle Association, but the restaurant conference, and there was a very strong reception there. It really feels like Yelp is pushing the envelope in the restaurant sector with voice, and voice is having its moment in that area. And then on the services side, We developed a lot of the capabilities. We had, I think, a great voice experience, but we had the opportunity to partner and ultimately acquire the market leader that had been focused more on the text messaging side, which is also really important in the services sector. A lot of people want to communicate that way, as well as direct messaging. And this is, as a reminder, across all platforms. This isn't specific to Yelp. It's managing leads for services businesses, regardless of where they can. And those leads are really valuable. Oftentimes, the business is paid significant money to acquire those leads. So managing them better, more efficiently, turning more of those into bookings is super important to those businesses. And, you know, Hatch was there, like, from 20, I think it was 2023. They, you know, as soon as the LLMs became capable enough, they had attached it to the system that they had built and really saw the product take off. And so they had an early lead in that space. And then voice now is becoming sort of the other new thing that is, you know, part of what services businesses really expect and want. And so, you know, Hatch has a great voice product. We've augmented that with our voice talent as well. And I think, again, given the execution chops of Yelp, we have in front of us now a very high growth opportunity in a very large TAM. And we're going for it. So it's not about... A massive shift in strategy of, hey, we're going over here and not paying attention over there, it's that a lot is changing rapidly, and so to have an opportunity to continue to build Yelp, to continue to make it better, to drive value to consumers and transform the experience while also pursuing these totally new and exciting high-growth opportunities, leveraging capabilities that we already had, it seems like a no-brainer, and so we're very excited about the possibilities. Granted, it's going to take time, as we pointed to a three-year timeline for how can we get this revenue to be substantial enough to really move the needle on the overall company. And I think that's a bit of a high-class problem in that Yelp has significant revenues, and it will take time for these kind of new startup opportunities to fully bear fruit. But I think looking at the traction that we've got, looking at the quality of the technology that we have out in the marketplace, talking to customers, you know, any investor can figure out that, like, hey, Yelp is on to something here.

Yeah. The aha moment for me was listening to the voice, and it's shockingly good. You know, you've got the hint of Northern California uptalk, a little bit of dismissiveness from the AI receptionist. So, you know, obviously, you also have distribution in spades. When you think about right to win, to your point, there is competition in the market. I think we're probably seeing more come into the market today, arguably, if I look at my screen. Can you talk a little bit about right to win and how you're seeing competition play out and how you think about that? Competition in which space? Invoice.

Invoice, right. Yeah, I mean, I think there's a bunch of startups primarily, and I guess we focus on the services side, you know, a number of startups, you know, one of which recently raised it at a billion-dollar valuation. And I think, if anything, that's validation for where we've invested. You know, so we got there, we made the acquisition. We had, you know, very quickly have doubled the team size. More or less. And that's because of our conviction of the opportunity. And we can see that it's going to be a race for share. But ultimately, I think product quality and go to market is going to be the thing that causes someone to really be the. You know, the big winner in the space. And I think we come in extremely well prepared. In a way, you know, if I think about when I was pursuing Yelp, you know, as a young founder many years ago, it's like we did have growth and we did the best that we could, but there was so much that we didn't know. And so I think to be able to partner with a startup that is already there, that is already leading the market, and bring in our operational expertise right at the moment where they're scaling up, it's really working. And so they just need to execute on the go-to-market side like hell, so to speak. Yeah, that's Yelp's bread and butter. Not to mention, we can bring, you know, we're not building go-to-market from scratch. We have all of these touch points with a lot of the same clients, deep relationships over many years, many of them advertisers. You know, and so there's a cross-pollination, a cross-connection that really helps us on the go-to-market side. And then on the product side. You know, a lot of in-house senior expertise on AI that we were able to bring in and immediately start, you know, focusing on how do we keep this voice cutting edge? How do we get latency down? You know, so our priorities are focused on a product that blows everyone out of the water and a go-to-market that nobody can match. And I think, you know, so we're coming in, we're coming in pretty strong to this competitive opportunity. And so I look, I look forward to. Showing the results.

Got it. Looking ahead, anything you can share on any sort of key product milestones that you want to hit or key go-to-market milestones that you're thinking about? Anything you could offer there?

Yeah, I mean, I think it's really focusing on... And given that this is AI tooling for these businesses, we're in constant conversation with the big clients and trying to understand what are their needs, what are their expectations, how can we get them even more confident in voice. It's like one of the challenges is a lot of business, especially the big ones, don't want to hand over the entire call center to an automated system at this point, but they want to use it after hours. And so that is really about understanding, well, what is it going to take to unlock that opportunity? Because that's significant revenue expansion with those clients if you can give them the absolute confidence that your AI agent is better than the person that they have on the phones. So, you know, that's one example is giving them visibility into the stats of, like, here's AI agents that are answering the phones. Here's how they're performing. Here's the appointments that you're getting from that. And then also, you know, here's the human side. Here's your, you know, sales reps that are on the phones. Here's how they're doing. There's also, you know, coaching opportunities. So as you're getting all that data from the entire sales force that's on the phone, like, understanding what, you know, the humans are saying and how they're performing and which ones are saying, you know, certain things that perform better. So we are gathering all this feedback from our clients all the time, and we are iterating on very fast cycles. This is not sort of annual planning. This is more like every three to four week kind of planning, because that's the pace that this industry is moving at. And it's really exciting. It brings me back to the old days of Yelp.

So, David, anything involving Gen AI, you know, we have to ask about the gross margin profile, right? So, anything you'd tell us about that and where you think you need to be from an ARR perspective, you know, for this to become sort of even thought accretive, if you will? Yeah.

So, maybe just to step back for one second on other revenue and then come back around to the gross margin and the cost of delivering these products that are AI products. So for folks who aren't familiar, the revenue is composed of three components. One is transaction revenue. That's our DoorDash partnership that grew 88% in the first quarter. There is licensing. That's doing very well. You can now find Yelp licensed content, as Jeremy was talking about, on meta.ai, on Bing, Yahoo, Apple Maps. Alexa, other places. So we feel like one of the things that has been true is that if you want to do local search, you partner with Yelp. And then the third component is the subscription revenue that we've been talking about. And we mentioned, of course, that Hatchet grown 92% in the first quarter. Overall, other revenue grew 75% in the first quarter. So obviously a strong start to the year. And we're really pleased overall with the opportunities there, everything that Jeremy was talking about, about how do you deliver value at the end of the day to businesses, and so they want to spend more with you, and they want to adopt more products. In terms of the gross margin for these products, we actually haven't seen a significant expense yet, and there's a couple reasons for that on the product side. The first and foremost is that we have a very specific problem that we're solving. This isn't just broadly ask anything of an LLM and have it be able to respond to every type of query that you might get. It's very focused. And so the benefit of that is we're able to stratify tokens, use the intelligent tokens for the hard part of the interaction, use less expensive tokens for the more routine parts. That's an element of it. The other thing is the way that we've architected the system is we can move between models quite easily. So that enables us to approach it with cost management in mind. Third is that We have really, really good engineering organization, and they're able to architect these products in a way that's quite efficient. We all know that LLMs have a lot of error to them, so that, you know, you have the risk that you're going to inflate costs because of rework or because you have to do a lot, a lot of pre-processing of the response in order to ensure that it's accurate. And I would just underscore something that we haven't yet talked about is our data set enables us to fine tune these models so that they are providing high quality, highly accurate responses at the get go. And this isn't just true, for instance, in the voice product that we've built for host, but I would just say for Yelp Assistant itself, one of the things that's really nice about Yelp Assistant today, and if you haven't tried it, I encourage you to do that, is it actually tells you why it gave you that response. That is very differentiated from other search experiences. I'd say that's the first thing. And then the second thing is it provides the evidence right there. Here are the quotes that support the reason why I gave you that. And if you want to learn more, you can read more reviews, you can look at photos, so on and so forth. So this idea that the Yelp data set enables us to be more efficient with tokens, I think, is probably something that is not obvious to folks. But that's something that we've been able to leverage on the cost side. So that's delivering the products. I think, like, everybody. As our team is adopting these tools, there's a lot of inflation in token use, and there's probably a lot of inefficient token use and a lot of rework that comes from results that may not be as accurate as you need them to be. I think everybody is going to go through this curve, which is, hey, let's get adoption up, let's help folks to learn how these tools can make them more productive, and then we're all going to be very focused on cost management around employee token consumption. And you can see that from a variety of articles that are coming out now. And, again, I think what's going to end up happening is you're just going to see very strict stratification of tokens for different use cases. You're going to see management of token use across teams and looking for ROI, but it's still super early. So you've taken down the token leaderboard? We never had that. We never did the token leaderboard. I mean, just this idea, like, use as many tokens as you can is just the wrong incentive. The AV guys are sick of this. This is like the fifth time I've made the same joke in the last couple of years.

That's the first for us.

Yeah, so there you go.

So I want to switch over to AI licensing. You know, you have content now in a lot of places, including ChatGPT. You've highlighted the licensing era in the past, and just given the growth and other revenue, I imagine it's continuing to scale pretty meaningfully. So just given the trends that you're seeing, you know, how impactful do you think that opportunity can be for the business as a whole? And when you're striking partnerships with people like OpenAI, can you take us through, you know, some of what you're aiming to achieve, both in terms of direct monetization as well as referrals?

Sure. Yeah, we're really pleased with the traction that we've seen on the data licensing side, especially with respect to the AI players. Obviously, there's the revenue there, but as you alluded to, there's other ancillary value as well. So for example, this is fairly recent. If you go to ChatGPT and pull out any business at this point, I think, you're going to see business data that's an information that's being pulled from Yelp data. And with that, there's a Yelp logo. There's the rating. The star rating from Yelp, and you can click through on that and end up back on Yelp. And I think this is just the beginning. If you think about what consumers expect, I think the way that these search services deliver information isn't quite ideal in the sense of, you know, when they first started out, it was all about providing answers, not providing really their sources. Once they provided the sources, they were like buried as little footnotes. I don't think that's actually the consumer-optimal approach, and now that consumers understand that the information isn't always perfectly accurate, or maybe they want to do a little bit of digging and confirmatory diligence themselves, the interface is begging for change, which is like, just link to stuff sometimes. Just put in the link, put in the hyperlink to the source material in a more prominent way. And I think we're starting to see flashes of that in the various LLM providers and their consumer experiences. And I think there's going to be a move towards that. It would take the balance in general between these LLMs and the content providers to a healthier place. So that's kind of a prediction. I think we could very well see that happen. And in general, when we've done these deals, this isn't our first time licensing to search providers. Obviously, we have a long history and an illustrious list of partners. And in those relationships, we typically do get anywhere from healthy to very healthy traffic back to the content. And so it's very early with the AI players. A lot of their experiences really haven't been built out yet. So I don't know exactly the magnitude, but I do think it is a real interesting opportunity for Yelp to gain some incremental distribution as well. So obviously, the revenue is significant and has grown rapidly as these players have adopted and needed Yelp content. But then there's this second order element of like, and what will the distribution be? The other piece, too, is just the branding and to have all these prominent companies putting Yelp logo and sort of content right in front of consumers, I think also has a very positive effect that shouldn't be ignored as well. So from a strategic standpoint, I think the fact that this is happening, again, cements the importance of Yelp. If you want to provide a great local search experience, local discovery experience, you really need Yelp data. We are the key provider if you are not Google. And I think that's showing up both in the deals we've already signed, the deals we probably will sign. And I think that, you know, it's very exciting and maybe an underappreciated element of the Yelp story.

Got it. Is that helping you? I mean... We perceive a little bit of a generational divide. For people my age, people love us on, there's only one answer for that. But maybe for younger people, it's a little more fragmented. Is it, you know, the distribution via LLM, is that starting to help us or may bridge a generational divide if there is one?

I think it certainly could introduce younger folks more quickly to Yelp. It's just very early, so I can't really say for sure, but obviously younger people are using ChatGPT, using Claude, using all these new search. And so to the extent that Yelp is showing up very prominently, I think that bodes very well for the overall health of Yelp and cementing it as a critical piece of what's needed if you're building a search experience.

I want to spend a moment on that third component of other revenue, the food delivery economics. You add DoorDash as your sort of key partner there, and you've already, you know, as your point, David, you know, seen strong acceleration. I think in the past you had sort of an approach of checkout within the four walls of Yelp. Now you're passing people cleanly over to DoorDash. I can use my Dash best. I love it. So you I wanted to get your sense of what anything we're in, in terms of driving awareness of that shift within the Yelp user base. People know that they can now make this seamless, okay, that's the wrong word to use, definition to door reaction.

I would say it's still actually very early in terms of awareness on Yelp, and this is part of the reason why I think we're excited about the Yelp Assistant conversational experience, is it's just so easy to do in product marketing using a conversation. Hey, I see you're ordering. Did you know you could use your DashPass? Like, that's just such a natural, easy complement to the query in the first place. So I think we're super excited about that. And then just going back to Yelp host and answering phone calls for restaurants, like, there's a double-up benefit there. One of the things that we've seen is this rapid adoption, as Jeremy was talking about, and we shared on the earnings call that in April, We had a run rate, annual run rate, just over one and a half million. Actually, just in May, that went up to over two million. So just from April to May, it increased by 33%. So that adoption does a variety of things for us that's important. We are getting into the order-taking business ourself of getting those orders over the phone for restaurants. That makes us more intelligent about what consumers are searching for. It means that we can improve our in-product experience on the Yelp side, even as we cement the relationship with those restaurants, and enable them to get food delivery through DoorDash. So it actually fits all together very nicely.

Okay, got it. So, David, we're finally going to dig into the numbers a little bit more, but first I'll check and see if there are any questions in the room. Please.

Just, I want to do quickly on the data licensing piece. It just seems like there should be, like, a lot of benefit. Like, I'm curious how you're valuing the benefit that you're getting from this. It doesn't seem like you're getting that much money for what it should be a really, really valuable data.

I'd say it's important to view the licensing from a few perspectives. One is this is very, very, very high margin. So a dollar of revenue is. Almost a dollar of EBITDA in cash flow. So the leverage that we get from these licensing agreements, just from an EBITDA perspective, is very, very high. So that's the first piece to bear in mind. The second, and I really wouldn't dismiss this, is we're balancing across several competing benefits from working with these very, very large platforms. One is, of course, the licensing dollars, but this ubiquity, having the Yelp logo everywhere is quite valuable to us, and then ideally seeing a lot of traffic coming back to us. It's almost the ideal situation. We're getting paid for market awareness and for traffic the other way around. So I wouldn't view it solely as the dollars. The other thing is one of the things we have been absolutely unwilling to do is to license our data for training. And we think that this is obviously Yelp's strategic competitive advantage, and so as part of those conversations, there's some back and forth about, hey, if you're not going to allow me to train, I'm not going to pay for that. So it is this balance across a variety of competing interests as we work with them, and at the same time, we still see a lot of opportunity ahead for licensing.

Got it. What, if anything, would change your stance on, other than a whole boatload of money, what would change your stance on allowing access for training?

A whole boat load a month.

That works. So speaking of which, David, you've flipped from, you know, traditionally an unlevered position in the business to now being a net debt position. You know, do you think of that as a structural change in the capital structure that you're sort of comfortable with maintaining, or is this just a question, hey, you know, obviously we had the opportunity to hatch. We have an opportunity with our share price. We're taking advantage of those, and, you know, we're going to work our way back up at the net cash position.

So we did deploy a considerable amount of capital in the first quarter, the $2.70 for a hatch, but we also repurchased $125 million in shares in the first quarter. Deluded shares outstanding from Q1 of 25 to Q1 of 26 declined by 12%. It's pretty substantial. And we also shared publicly that we would be repurchasing at a slower pace as we move through 2026. It is different now for Yelp. We've run very large cash balances historically. We're also a very, very strong free cash flowing business. We generated $324 million of free cash flow in 2025. That's over 20% cash flow yield, I believe, and that's exceptional. So the way that we're thinking about it is fundamentally we have this opportunity immediately ahead of us, which is to really expand our presence around AI tools. We've done one acquisition in that space with Hatch. We want to execute against that to earn the right to do more M&A, and if there's an opportunity for us to do that, then we don't want to be constrained by capital in order to pursue it. At the same time, we're going to remain very, very disciplined in what we're willing to pay for an asset. So that's the first piece. And then the second piece, of course, is our longstanding commitment to return excess capital to shareholders. That's not going to change. But we're going to share. We've gotten a lot of feedback and questions from investors over the past few weeks since the earnings call. And we're going to share more about our capital allocation strategy on the Q2 call.

Got it. And David, maybe you can just walk us through the SBC reduction plan. Obviously, you're giving us a cleaner EBITDA year by year, but talk us through how that's playing out across, you know, changing compensation mix versus aggregate comp and, you know, how it's competitive market out there, right? There's some big companies in San Francisco. How that's playing out among the engineering organization that's doing a great job for you.

So these changes we made several years ago now, and what we shared at the time was that things have gone very well, things have continued to go very well, and I think you have to step back and recognize, first of all, Yelp's, we believe, a great place to work. We just did our annual people experience survey. Results were extremely strong, so we're pleased with that. We haven't seen undue attrition in product engineering. We haven't seen undue attrition in sales and marketing or in finance, so we're happy with the culture and environment that we've created. We think that we are very clear in the mission serving local communities and economies, and we think that we've created a great experience in place for people to work on interesting problems. Those are all very important to us and to our employees. So, so far, it has gone really well, and that's enabled us to reduce stock-based compensation. It's a percentage of revenue to less than 8 percent at the beginning of last year. I believe it was 8 percent in the first quarter, and we committed to reducing it to less than 6 percent by 2027. So, we're on track. We don't need to do more structural change in compensation in order to achieve this next goal. It's going to be an outcome of the transition that we already made. And first and foremost, we want to make sure that Yelp is a great place to work.

I think I'll open it one more time. We've got about 80 seconds left. Any last questions or thoughts from the audience? Seeing none, that's a great place to stop. Thanks so much. Thank you.