Yelp to Acquire Hatch for $270M: A Clear Push Into AI Lead Management for Services Businesses
Yelp plans to acquire Hatch, an AI-driven lead management and communication platform, in an all-cash deal valued at approximately $270 million, plus $30 million in employee retention over two to three years. The transaction is expected to close in early February, pending customary conditions. Hatch reported roughly $25 million in ARR as of November 2025, growing 70% year over year, with modestly negative cash flow.
For executives in services, this is a signal. Lead response, routing, and conversion are moving from manual workflows to AI-assisted, always-on systems. The winners will combine distribution, data, and automation into one motion.
Why this makes sense for Yelp
- Product fit: Yelp already drives high-intent leads. Hatch adds AI-driven follow-up, scheduling, and multi-channel conversations to increase conversion without adding headcount.
- Clear differentiation: Listings and ads plus an AI communication layer is a stronger offer for home, local, and professional services where response speed decides revenue.
- Distribution advantage: Yelp can push Hatch into its services merchant base and bundle it with ads, quotes, and booking to lift LTV and retention.
- Financial logic: At ~$270M on ~$25M ARR, the upfront multiple is ~10-11x ARR (~12x including retention). With 70% ARR growth and negative cash flow, this prices in scale potential and cross-sell upside.
What Hatch gains
- Scale and trust: Immediate access to Yelp's brand and merchant network to speed adoption.
- Go-to-market leverage: Embedded distribution across Yelp's demand channels and sales teams.
- Product runway: Resources to deepen AI assistants, routing logic, and analytics tied directly to booked jobs and revenue.
Key deal terms (at a glance)
- Consideration: ~$270M in cash plus ~$30M employee retention over 2-3 years
- Hatch ARR: ~<$25M> as of Nov 2025; ~70% YoY ARR growth
- Profitability: Modestly negative cash flow
- Timing: Expected to close in early February, subject to customary closing conditions
- Structure: Hatch will operate as a wholly owned subsidiary of Yelp
What to watch in integration
- Product integration: How fast Hatch's workflows surface inside Yelp's Request-a-Quote, messaging, and booking experiences.
- Pricing and packaging: Bundles that pair ads/lead-gen with AI follow-up, SLAs, and reporting. Look for clear ROI narratives tied to "lead-to-job" conversion.
- Sales motion: Transition from selling clicks/leads to selling business outcomes: contact rate, speed-to-lead, show rates, booked jobs.
- Data and privacy: Consent management, message compliance, and first-party data strategy as AI drives more automated communication.
- Onboarding at scale: Templates, playbooks, and self-serve setup that work for small teams without ops specialists.
- Retention risk: Managing overlap with existing CRM, messaging, and scheduling tools; avoiding tool sprawl by integrating rather than replacing where needed.
Signals to the market
AI-led communication is becoming core infrastructure for services SMBs. The edge moves to platforms that control both lead origination and automated follow-up, with measurement tied to revenue, not clicks.
Expect more bundling: advertising + AI assistants + scheduling + payments + analytics. The line between marketing tech and operations tech continues to fade.
Practical actions for services leaders
- Audit your funnel: speed-to-lead, contact rates, response consistency by channel (SMS, email, chat, voice).
- Automate first touch: instant replies, smart routing, and appointment options within 30-60 seconds of inquiry.
- Standardize follow-ups: message cadences by service, ticket size, and lead source; stop one-off manual texts.
- Align reporting to revenue: track booked jobs, close rate, average job value, and time-to-schedule-not vanity metrics.
- Pilot AI assistants on low-risk segments, then scale to all inbound channels once quality thresholds are met.
Leadership quotes
Jeremy Stoppelman, Yelp co-founder and CEO: "The acquisition of Hatch is an important step forward in Yelp's AI transformation, accelerating our strategy to bring powerful new AI tools to local businesses."
Chris Bache, Hatch co-founder and CEO: "We've worked day in and day out to build something that truly helps our customers grow their businesses."
Due diligence questions to run internally
- Where are we losing leads today-speed, channel mismatch, or follow-up quality?
- What percentage of leads receive a reply within 1 minute, 5 minutes, and 15 minutes?
- Which channels drive the highest close rates and average job values?
- What's our CAC payback with and without automated follow-up?
- What compliance and consent controls are in place for automated messaging?
Learn more
Forward-looking statements reminder: closing, integration success, and expected benefits involve risks and uncertainties. See company filings and investor materials for details.
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