Yelp (YELP) J.P. Morgan 54th Annual Global Technology, Media and Communications Conference summary

Strategic transformation and AI integration

• Re-architecting around AI, with major investments in conversational experiences like Yelp Assistant and AI-powered tools across the organization.

• Acquisition of Hatch, an AI lead conversion management platform, to expand product offerings and integrate advanced AI capabilities.

• AI adoption is driving productivity in product, engineering, sales, customer success, and operations, with a focus on leveraging LLMs and automation.

• Flat headcount expected through 2026, except for Hatch, as AI enables efficiency and changes in workforce roles.

• Real-time AI coaching for sales and management is enhancing productivity and effectiveness.

Revenue diversification and growth targets

• Diversifying beyond advertising with new revenue streams: licensing, transactions, and subscriptions.

• Licensing partnerships with major platforms like OpenAI, Meta.ai, Bing, Amazon Alexa, and Apple Maps are expanding reach.

• Hatch acquisition adds a fast-growing revenue stream, with a $34 million run rate and 92% growth.

• Targeting $250 million in run rate revenue from other revenue streams by end of 2028, more than doubling current levels.

• Continued focus on M&A and product innovation to support growth and diversification.

Financial outlook, capital allocation, and margin expansion

• 2026 is positioned as an investment year, but strong EBITDA margin growth is expected in subsequent years.

• AI-driven productivity and efficiency gains are expected to compress cycle times and improve margins across the enterprise.

• Significant capital deployed in Q1: $270 million for Hatch acquisition and $125 million in share repurchases, with a 12% reduction in diluted shares.

• Share repurchases to proceed at a more moderate pace for the rest of 2026; more details on capital allocation to be shared in Q2.