YELP INC

Net Revenue

Net revenue for the three months ended September 30, 2026 decreased slightly compared to the prior-year period, primarily driven by a decrease in advertising revenue from RR&O and, to a lesser extent, Services businesses, partially offset by growth in other revenue.

Net revenue for the nine months ended September 30, 2026 was relatively flat compared to the prior-year period, as growth in other revenue was mostly offset by lower advertising revenue, primarily driven by a decrease in advertising revenue from RR&O businesses.

Advertising. Advertising revenue for the three and nine months ended September 30, 2026 decreased 6% and 4%, respectively, compared to the prior-year periods. The decrease for the three months ended September 30, 2026 was primarily driven by a decrease in RR&O revenue and, to a lesser extent, a decrease in Services revenue. The decrease for the nine months ended September 30, 2026 was primarily driven by a decrease in RR&O revenue, while Services revenue was relatively flat. In both periods, the decrease in RR&O revenue was a result of lower ad clicks and lower average CPC. The decrease in Services revenue for the three months ended September 30, 2026 was a result of lower ad clicks, partially offset by higher average CPC.

Other. We generate other revenue through non-advertising contracts, such as our subscription services, which include our Yelp Guest Manager, Yelp Receptionist, Yelp Host and Hatch offerings, as well as our Yelp Places, Yelp AI, and Yelp Insights API programs, which provide Yelp content and data for a fee. In addition, other revenue includes revenue from various transactions with consumers. We generate revenue from our partnership integrations for food ordering through a combination of transaction-based, revenue-sharing agreements, under which we act as an agent and recognize fees on a net basis upon completion of each transaction, and fixed annual fee arrangements that may be adjusted based on engagement metrics such as click to order volume.

Other revenue for the three and nine months ended September 30, 2026 increased compared to the prior-year periods, primarily due to the addition of revenue from Hatch, as well as increased revenue from our Yelp Places API program as a result of data licensing agreements to power AI search tools entered into since the prior-year periods, and increased revenue from food ordering following the launch of our partnership with DoorDash in October 2025.

Trends and Uncertainties of Net Revenue. We anticipate net revenue will decrease modestly in the three months ended December 31, 2026 compared to the prior-year period, reflecting the continued economic challenges facing consumers and local businesses and, to a lesser extent, competitive pressures for ad spend in RR&O categories from food ordering and delivery providers. However, we expect our strategic initiatives will continue to drive strong growth in other revenue.

Costs and Expenses

Cost of Revenue (exclusive of depreciation and amortization). Our cost of revenue consists primarily of website infrastructure expense, which includes website hosting costs and employee-related costs (including stock-based compensation expense) for the infrastructure teams responsible for operating our website and mobile app as well as the RepairPal and Hatch websites, and excludes depreciation and amortization expense. Cost of revenue also includes third-party advertising fulfillment costs, credit card processing fees and revenue share payments, which primarily consist of payments to RepairPal referral partners.

Cost of revenue for the three and nine months ended September 30, 2026 increased compared to the prior-year periods, primarily due to increases in website infrastructure expense of $6.2 million and $16.4 million, respectively, driven by additional costs following the acquisition of Hatch, as well as investments to maintain and enhance our platform, including to support the integration of AI products. These increases were partially offset by decreases of $1.7 million and $4.3 million, respectively, in advertising fulfillment costs, largely attributable to lower costs to syndicate advertising budgets on certain third-party sites as well as decreases in Yelp Audiences spend.

We expect cost of revenue to increase on an absolute dollar basis for the full year 2026 compared to 2025, primarily due to our planned investments in AI capabilities.

Sales and Marketing. Our sales and marketing expenses primarily consist of employee-related costs (including sales commission and stock-based compensation expenses) for our sales and marketing employees. Sales and marketing expenses also include business and consumer acquisition marketing, community management, as well as allocated workplace and other supporting overhead costs.

Sales and marketing expenses for the three and nine months ended September 30, 2026 increased compared to the prior-year periods, primarily due to increases of $1.0 million and $12.8 million, respectively, in marketing and advertising costs, driven by our investments in acquiring Services projects, partially offset by decreases in spend for business owner marketing.

We expect sales and marketing expenses to increase on an absolute dollar basis and as a percentage of revenue for the full year 2026 compared to 2025, primarily due to marketing investments.

Product Development. Our product development expenses primarily consist of employee-related costs (including bonuses and stock-based compensation expense, net of capitalized employee-related costs associated with capitalized website and internal-use software development) for our engineers, product management and corporate infrastructure employees. In addition, product development expenses include allocated workplace and other supporting overhead costs.

Product development expenses for the three and nine months ended September 30, 2026 decreased compared to the prior-year periods, primarily due to decreases of $16.3 million and $34.5 million, respectively, in employee-related costs resulting from a higher proportion of employee work directed toward infrastructure enhancements (resulting in more costs included in cost of revenue), more employee costs being capitalized, and lower cost of labor, partially offset by incremental costs related to the Hatch acquisition.

We expect product development expenses to decrease both on an absolute dollar basis and as a percentage of revenue for the full year 2026 compared to 2025, inclusive of additional costs related to the Hatch acquisition, as we realize cost savings within our organization.

General and Administrative. Our general and administrative expenses primarily consist of employee-related costs (including bonuses and stock-based compensation expense) for our executive, finance, user operations, legal, people operations and other administrative employees. Our general and administrative expenses also include our provision for credit losses, certain consulting and professional services costs, including litigation settlements, as well as allocated workplace and other supporting overhead costs.

General and administrative expenses increased for the three months ended September 30, 2026 compared to the prior-year period. The increase was primarily driven by the addition of $2.8 million in acquisition and integration costs related to the Hatch acquisition, partially offset by a $2.1 million decrease in our provision for credit losses primarily due to lower customer delinquencies.

General and administrative expenses for the nine months ended September 30, 2026 were relatively flat compared to the prior-year period, as increases in acquisition and integration costs of $10.7 million related to the Hatch acquisition and legal costs of $2.8 million were offset by:

•decreases in our provision for credit losses of $6.7 million due to lower customer delinquencies;

•decreases in indemnifiable expenses of $3.6 million related to the RepairPal acquisition; and

•decreases in employee-related costs of $3.1 million, primarily driven by lower stock-based compensation expense.

We expect general and administrative expenses to increase on an absolute dollar basis and as a percentage of revenue for the full year 2026 compared to 2025, as we continue to support our business and integrate Hatch.

Depreciation and Amortization. Depreciation and amortization expense primarily consists of depreciation and amortization on capitalized website and internal-use software development costs, computer equipment, leasehold improvements, and intangible assets.

Depreciation and amortization expense for the three and nine months ended September 30, 2026 increased compared to the prior-year periods, primarily due to:

•increases of $3.2 million and $10.2 million, respectively, as a result of amortization of intangible assets acquired in the Hatch acquisition. See Note 6, “Acquisitions,” of the Notes to Condensed Consolidated Financial Statements for further detail; and

•increases of $1.9 million and $5.8 million, respectively, as a result of higher capitalized website and internal-use software development costs.

Other Income, Net

Other income, net consists primarily of the interest income earned on our cash, cash equivalents and marketable securities, research and development tax credits, the portion of our sublease income in excess of our lease cost, accretion of discounts and amortization of premiums on investments, and credit facility-related interest and fees.

Other income, net for the three and nine months ended September 30, 2026 decreased compared to the prior-year periods, primarily due to:

•decreases in interest income of $2.5 million and $7.0 million, respectively, as a result of lower average cash, cash equivalents, and marketable securities balances; and

•increases in interest expense of $1.3 million and $3.8 million, respectively, primarily related to credit facility borrowings incurred during the current year.

Provision for Income Taxes

Provision for income taxes consists of: federal and state income taxes in the United States and income taxes in certain foreign jurisdictions; and deferred income taxes reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Provision for income taxes for the three and nine months ended September 30, 2026 decreased compared to the prior-year periods, primarily due to decreases in income before income taxes in the current-year periods, partially offset by increases in the discrete tax expense primarily related to stock-based compensation and the 2025 federal and state tax provision to return adjustments.

As of December 31, 2025, we had approximately $115.5 million in net deferred tax assets (“DTAs”). As of September 30, 2026, we consider it more likely than not that we will have sufficient taxable income in the future that will allow us to realize these DTAs. However, it is possible that some or all of these DTAs will not be realized. Therefore, unless we are able to generate sufficient taxable income from our operations, a substantial valuation allowance may be required to reduce our DTAs, which would materially increase our expenses in the period in which we recognize the allowance and have a materially adverse impact on our condensed consolidated financial statements. The exact timing and amount of the valuation allowance recognition are subject to change on the basis of the net income that we are able to actually achieve. We will continue to evaluate the possible recognition of a valuation allowance on a quarterly basis.

In July 2025, the congressional bill known as the One Big Beautiful Bill Act (“OBBBA”) was signed into law, which, among other things, restored certain favorable corporate tax provisions, including permitting full expensing of domestic research and development expenses. As of September 30, 2026, the impacts of the OBBBA are reflected in the 2026 estimated annual effective tax rate calculated in accordance with accounting principles generally accepted in the United States (“GAAP”).

Subsequent to quarter end, the statute of limitations expired for certain federal tax years. As a result, we expect to recognize a tax benefit of approximately $30.5 million related to previously unrecognized tax benefits, including related interest and penalties, in the fourth quarter of 2026.